By Ben Otto And I Made Sentana
JAKARTA, Indonesia--Indonesia's Constitutional Court rejected a
legal challenge to President-elect Joko Widodo's electoral win,
clearing the final hurdle for him to take office in October.
After two weeks of proceedings, the Constitutional Court ruled
Thursday that Prabowo Subianto--the former army general who lost
the country's election last month by six percentage points and
mounted the legal appeal--failed to prove his allegations of
widespread voting irregularities.
The court "rejects the appeal from the plaintiff," Chief Justice
Hamdan Zoelva said at the conclusion of the reading of the verdict,
which took more than six hours.
The court is the country's highest authority for election
disputes, and its decision can't be appealed. That means Mr.
Widodo, governor of the capital Jakarta, will assume office Oct.
20, when President Susilo Bambang Yudhoyono steps down after
reaching his two-term limit.
Thousands of Subianto supporters turned out on streets near the
court Thursday afternoon, with police briefly firing tear gas and
using water cannons to keep them outside barbed-wire barricades set
up near the court. Several police and almost a dozen protesters
were taken to a government hospital for minor injuries, a hospital
paramedic said.
The number of protesters steadily dwindled during the reading of
the verdict, and there were no reports of unrest outside the
capital.
The nine-member court rejected most claims of voting
irregularities submitted by Mr. Subianto's lawyers late last month.
It did accept that some irregularities occurred in places like the
remote province of Papua, but said that a revote there wasn't
necessary given that it couldn't overturn the results of the
election, which Mr. Widodo won by more than eight million
votes.
Mr. Subianto's team said it was disappointed by the court
decision but respected the ruling. In a statement read to reporters
by his spokesman, Mr. Subianto offered no concession to the winner
and reiterated his belief that the vote count was plagued by
irregularities.
"Based on all of the facts and the witnesses' testimony, we are
sure there is an indication of fraud and injustice within the
presidential election of 2014," Mr. Subianto said, according to the
statement.
The tradition of the loser offering a concession speech has yet
to develop in Indonesia's brief democratic history. Neither of the
runner-up teams in Indonesia's previous two direct presidential
elections, in 2004 and 2009, made concession speeches after
similarly mounting unsuccessful legal challenges at the
Constitutional Court.
The court ruling frees Mr. Widodo to focus on an economy in dire
need of reinvention, and the next few weeks will likely provide
more clues to how he will govern. He has catapulted onto the
national stage in a manner similar to Barack Obama's ascent to the
White House, and the high hopes--as well as apprehensions--around
him are similarly weighted.
Popularly known as Jokowi, he takes over at a time when economic
growth is slipping as a commodity boom fades and as Indonesia looks
to shift away from tin, nickel and timber and other resource
exports to attract foreign investment in manufacturing and
value-added industries.
His ability to address issues involving foreign investment or
macroeconomics has yet to be tested. Nevertheless, his brief stint
as governor of Jakarta has inspired hopes he will be able to push
through the corruption and parliamentary gridlock that has stalled
the government of President Yudhoyono. Foreign businesses have
taken heart in statements that Mr. Widodo will honor the rule of
law, including existing contracts.
The country's resources and population of more than 240 million
has attracted record amounts of foreign investment in recent years,
but the pace of investment growth has declined, and investments in
manufacturing have often lost out to countries like Vietnam that
offer more competitive wages and tax incentives.
Investors are asking the president-elect for two things above
all: legal certainty in sectors from mining to oil exploration, and
a spending bonanza on infrastructure to clear up paralyzing
bottlenecks that have held back Indonesia's economic growth.
"The sense...from talking to those around [Mr. Widodo] is that
he will be pragmatic and will be a decision maker," said Andrew
White, managing director of the American Chamber of Commerce in
Jakarta. "It has been the lack of pragmatism and the lack of
decision making that has ground down the patience of investors in
the second administration" of Mr. Yudhoyono.
Foreigners will be watching especially how he approaches mining.
The industry traditionally has been one of the greatest sources of
foreign investment, but new rules have forced many foreign
companies to reduce their ownership in companies and alter the
terms of their long-term contracts. Phoenix-based Newmont Mining
Corp. is currently seeking international arbitration over a
contract dispute with the government.
"He's saying the right things in the sense of expressing a
willingness to sit down with mining companies and other
stakeholders in the mining industry in an endeavor to understand
the issues currently facing" the industry, said Bill Sullivan, a
Jakarta-based adviser to major miners.
In a statement late Thursday, Mr. Widodo said the court decision
cleared the way for him to prepare his government. Last week he
named a small team to oversee the transition period, which was
working to bring some political parties aligned with Mr. Subianto
into his fold. If successful, that would give his ruling coalition
a majority in the national parliament, alleviating some concern
among investors that lawmakers will hold him hostage in his reform
agenda.
He has also continued to say his cabinet will comprise
professionals and be free from horse trading among political
parties that has traditionally led to fractious cabinets.
The first major economic test of his government--one that has
bedeviled previous governments--will be to rein in spending on
subsidies that make fuel in Indonesia some of the cheapest in the
region. Those subsidies have ballooned to take up almost a fifth of
all government spending. Curbing them would free up funds to
improve infrastructure in the world's largest Muslim-majority
country.
People familiar with the matter say Mr. Widodo's transition team
is in talks to persuade the current administration to raise fuel
prices before he assumes power, giving him some breathing room to
roll out new programs.
Ideally, an increase in fuel prices will be "split by the
current and next governments," Mr. Widodo said Tuesday.
He will also be particularly aware of the need to recast
Indonesia as a place open for business for foreigners to attract
more investment and narrow a persistent deficit in the current
account.
Mr. Widodo said last week that South Korean electronics giant
Samsung will expand manufacturing operations to produce handphones
in Indonesia after years of passing up the country in favor of
Vietnam. Samsung has said only that it is considering an
investment.
Earlier this year, Mr. Widodo also met with the head of
Taiwan-based Hon Hai Precision Industry Co.--the manufacturer also
known as Foxconn that assembles many of Apple Inc.'s devices--to
announce plans for a major factory complex in Indonesia. Those
plans have since stalled, but the company says it continues to
weigh its options in Indonesia.
Linda Silaen, Andreas Ismar and Richard C. Paddock contributed
to this article.
Write to Ben Otto at ben.otto@wsj.com
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