JAKARTA (Reuters) – Dressed in the style of Indonesia’s first leader, even using replica 1950s microphones, presidential hopeful Prabowo Subianto roared to thousands of supporters at a recent rally in the capital: “Indonesia cannot be bought”.
It is a nationalistic tone that has been on the rise in campaigns by the major political parties ahead of elections to choose a parliament on April 9 and a new president on July 9.
The question of whether Indonesia is souring on the foreign money that helped bankroll much of its growth was thrust into the spotlight this year with a new law that aims to boost the country’s profits by banning the export of minerals unless they have been processed first.
That threatens the fortunes of some of Indonesia’s biggest investors, notably two major U.S. mining companies with large operations in the country – Freeport-McMoRan Copper & Gold and Newmont Mining Corp. To continue exporting, mining firms must now either pay 20-25 percent tax from this year, rising to up to 60 percent by the second half of 2016, or invest hundreds of millions of dollars on new smelters.
The more prickly language, and its occasional echo of the jingoistic rhetoric of founding president Sukarno who famously told the United States in 1964 to “Go to hell with your aid!”, comes as record foreign direct investment looks to be peaking.
In part, that reflects investor concern over muddled government policy, barely functioning infrastructure and a sharp rise in labor costs in the world’s fourth most populous country. Approved foreign investment outside the oil, gas and banking sectors last year was around $22 billion, roughly the same as 2012 in dollar terms.
“In dealing with globalization, Indonesia should have a stronger position … We should ensure that we are independent, not relying only on foreign investment,” said Budiman Sudjatmiko, a member of parliament of the PDI-P party.
Opinion polls suggest that PDI-P, currently in opposition, will win the most seats in parliament and easily grab the presidency with its hugely popular candidate, Jakarta governor Joko “Jokowi” Widodo.
He has won national approval for his straight-forward leadership style but has yet to detail any economic policy.
Behind PDI-P are Prabowo’s Gerindra party and also Golkar, the parliamentary vehicle for autocrat Suharto’s 32-year rule, which has managed to resurrect its fortunes in the 16 years since its patron was forced from office and Indonesia became a democracy.
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