Political realignment jeopardises Jokowi reform agenda

Significance

He initially intended to announce a decision this week. In January Jokowi submitted Budi's nomination to parliament, where nine out of the ten parties endorsed his candidacy. A few days later the popular Corruption Eradication Commission (KPK) named Budi a suspect in an investigation dating back to 2010, triggering a public outcry over his appointment. The controversy has ignited a political crisis, realigning major power blocs and putting Jokowi at risk of impeachment.

Impacts

• Jokowi is likely to adopt protectionist policies to recover popular support.
• He will probably secure parliamentary approval for the revised 2015 budget, redirecting savings from subsidy cuts to infrastructure.
• The need for foreign participation in infrastructure will persist, but lack of action on corruption will dampen appetite.