Indonesian tycoons: donation strategy for the 2024 election

There are no official statistics on the cost of presidential campaigns in Indonesia. Fahri Hamzah, a senior politician, has estimated it at around IDR 5 trillion (US $317 million). Meanwhile, Ridwan Kamil, former governor of West Java, said it costs around IDR8 trillion (US $507 million) to run for president.

But in the 2019 presidential elections, the Joko Widodo-Maaruf Amin team reported campaign expenses of just IDR 606 billion (US $38 million). The Prabowo Subianto-Sandiaga Uno team reported an even lower spend of IDR 213 billion (US $14 million).

These official campaign reports are far indeed from the Ridwan and Fahri estimates, which are probably more accurate. This is because the shortfall is covered by unofficial donations from konglomerat (tycoons) and business groups that contribute large sums of money in exchange for relationships and influence.

For many Indonesian businesses, and the tycoons who own them, the next presidential administration will be crucial to achieving their commercial agenda. Business permits, licenses, import quotas, fiscal incentives, tax holidays and land permits can all hinge on the presidential outcome and the new leader’s cabinet choices.

And for these business tycoons, political donations might be the most important investment decisions they make over the next five years.

 

Buying friends in high places

One of the most important entry points for securing relationships with political leaders is by offering financial support to election campaigns.

In doing so, Indonesian business donors generally fall into two camps – public donors, which have a formal relationship with a political party; and private donors, which do not have a formal connection with a political party.

Public backers make their support for a particular candidate or party well known. In fact, they often hold leadership positions within their respective political parties.

For instance, Aburizal Bakrie and Jusuf Kalla have long been powerbrokers in Golkar, media mogul Surya Paloh is chairman of the National Democrat Party (NasDem), while Harry Tanoesoedibjo is synonymous with the Indonesian Unity Party (Perindo).

Public backers openly ‘pick a side’ – but even if their candidate loses the election, they are often compensated by a political presence in parliament.

Private backers, on the other hand, prefer to keep the details of their financial support away from the public eye.

This more discreet approach is popular among tycoons because it allows them to put their eggs in every basket (although, they will usually place more eggs in the basket with the greatest chance of success).

Diversification reduces risk for the tycoons and offers business continuity beyond the five-year election cycle.

 

Protecting the investment

It is important to understand that donating to campaigns and managing relationships with candidates are two completely different ball games.

The challenge for private donors is to keep their donations a secret, but at the same time, ensure their contributions are recognised by candidates.

To maintain relationships with political candidates, tycoons will often channel donations via another major business figure associated with the party or appoint a well-connected former politician or government official as an advisor. Some tycoons are also able to develop a direct personal connection with candidates.

In practice, the relationships between political players and big business are fluid, regardless of their public political views and activities.

This is because Indonesia’s political elites live in a surprisingly small world – they can be simultaneously business partners, competitors, relatives, members of the same place of worship and alumni of the same schools – or simply rely on the same contacts in government.

 

Donations as insurance for Chinese Indonesians

Many major Indonesian business groups are led by Indonesians of Chinese descent. For instance, a review of the Forbes’ list of the 50 richest Indonesians shows most of Indonesia’s top business titans are from Chinese Indonesian families.

But despite their access to economic power, Chinese Indonesians face widespread discrimination and intolerance, which hampers their political expression and representation in government.

Elections are, therefore, always a tense time for Chinese communities and the fear of chaos and conflict is ever present. Identity politics and anti-Chinese sentiment can quickly emerge in campaigns, like when widespread religious politicking helped oust Basuki Tjahaja “Ahok” Purnama, the Chinese Indonesian governor of Jakarta.

Campaign finance can be a way for wealthy Chinese Indonesians to exchange their economic power for political representation. And the deep pockets of the top Chinese Indonesian tycoons can have a bearing on elections in Indonesia.

In the last presidential election in 2019, for example, many Chinese Indonesian titans supported Jokowi, partly due to concerns radical groups were aligning with Prabowo’s camp – although they also saw the incumbent Jokowi having a better chance of winning.

Identity politics might work as an electioneering strategy – like during Jakarta’s 2017 gubernatorial elections – but it can also isolate Chinese Indonesian donors who want security for their families and communities.

This is an important consideration for presidential elections because high campaign costs only increases the need for an inclusive campaign finance strategy.

 

Donors waiting on the final ballot for 2024

The situation in 2024 presents a dilemma for Indonesia’s tycoons because there is no clear frontrunner or incumbent candidate. For private backers, a two horse race provides more assurance at a lower cost. But for public backers, a two horse race reduces their ability to gain a coattail effect from the candidates who need support for their parliamentary agenda.

According to a political advisor at a leading Indonesian konglomerat, donors are currently in a holding pattern. While some tycoons have donated small amounts of money, the big donors will only start spending once the candidates officially submit their candidacy to the election commission. The deadline for the registration of candidates is 25 October.

The offering of donations is dynamic and can evolve as the political situation develops, but the approach of tycoons is often pragmatic – especially those without close links to political parties or politicians. This is because in a highly regulated economy with opaque licensing and approval processes, the financial performance of many major Indonesian business groups hinges on getting direct access to Indonesia’s next president.

With the high cost of politics and poorly enforced campaign audits in Indonesia, tycoons and business groups have become the primary source of campaign funds in Indonesia.

It’s hard to see this changing, so long as campaign donations remain such attractive business investments.