GBE Domestic Politics

Political risk is worth considering because an action or a change n policy in one state of matter can have a big impact on the monetary sector and the economy of that country. Political risks ar oecumenicly associated closely with the disposal as well as policy-making and security situation in a country. If the semipolitical situation is stable, generally line of merchandise runs smoothly. In ground of the armoury grocery, a tributary political situation would make the subscriber line price go up.Conversely, if the political situation is uncertain, it would cause the element of disbelief in the business. In Indonesia, after the fall of the spic-and-span Order, changes in political relation and governance was characterized by a significant change in the political system (a work on of demagnification) which had opened unexampled opportunities and also new threats to the business community this country. For years, during New Order, political parties in Indonesia were on ly 3 parties app, Global, and PDP.After New Order fell (Reformation Era), the number of political parties involved in general preference increased significantly. The 1999 general alternative, the first off general alternative in Reformation Era, was followed by 48 parties. Despite the number of political parties are always changing during the Reformation Era, political situation was relatively stable. The perceptual constancy also continued under President Silo Bambina Hydrogen. However, in most stream general election, few months ago, there were virtually instabilities in Indonesian politics.This piece of music will describe these conditions (the last general election) and their impacts on the industry, particularly do by oil industry, using the case of Golden Agric Resources Ltd, one of the biggest palm oil producer in Indonesia. 2. POLITICAL TURMOIL IN 2014 GENERAL preference ecumenic election in Indonesia is run in phases, legislative election and presidential election. In 2014 general election, the legislative election was relatively conducive There were 15 political parties participated in the election, including 3 topical anesthetic political parties in Ache.This election was won by PAID with the total voter turnout 18. 95% (whom. Penile. Com), followed by Global and Grainier on the second and third place. It was predicted that since the legislative election was held successfully and the situation was very conducive, reflected by there was no substantial protests or objections from he participants, the presidential election (which had two competing candidates, Parabola Substation- assume genus Raja and Joke Widow-USAF Kali) would also run smoothly. However, the facts were totally different.Here are some events or facts that showed the unstable political conditions in Indonesia after presidential election in 2014 Different quick count results In quick count, both parties (Parabola-Hat and Kiowa-Kali) claimed as the winner Of the presidential e lection. There were some panorama organizations stated that the election was won by Parabola-Hat, while the otherwises stated he opposite. ISIS (Center for Strategic & international Studies) through senior researcher, Philip Vermont, stated that there were advantages in Kiowa-Kaki.The figure reached 51. 9 percent, while Parabola-Hat gained 48. 1 percent. There were also some other survey organizations published similar results, stated that the winner was Kiowa-Kali, such as R & D Compass, ISMS (Useful Musician Research and Consulting), and RI. Meanwhile, some other survey organizations indicated otherwise. A quick count conducted by Upstairs (Center for Policy Studies and Development Strategy) unclouded that Parabola-Hat won the election by 52. 05%, whereabouts-J gained 47. 95 percent.Other survey organizations that declared Parabola- Hat as the winner were National Survey Institute (LSI) and the Indonesian phonate Network (SSI). These different quick count results were followe d by announcement of triumph by both candidates, which was the first time in Indonesia history, both competing candidates claimed as the winner. Moreover, supporters of both camps had celebrated their victories in separated places. Parabolas withdrawal from election process Another surprising event happened on July 22, 2014, when General Elections Commission was announcing the inspection of the presidential election results.While the followup was still ongoing, Parabola announced that he had retreat his presidential candidacy after denouncing the election process as undemocratic. The integrating of political parties supporting Parabola and their actions in fantan Competition between Parabola and Kiowa did not stop when the General Elections Commission stated that Kiowa-Koala was the winner of the presidential election. Parabola along with his supporting parties filed an election disputes to Constitutional Court, though the court finally spurned their petition.In parliament, the parties that were supporting Parabola also took several actions that made Indonesian politics became unstable. They asked the Parliament legalize the draft of a Law regarding the local elections. In this new law, site elections for provincial governors, district chiefs and mayors were eliminated, replaced by appointment by local elected legislatures. There were many opinions from local or international institutions abet that this was a big hit for Indonesian democracy. Indonesian democracy that had been development in SUB era, was experiencing a substantial setback.The most noticeable set up exponent be the impacts on the price of stock in Indonesian birth Exchange. Just after those events happened, the market responded. The responses can be reflected on the chart of Composite Index (JOKE) for the last 6 months. Figure 1 . Composite Index (JOKE) Source finance. Yahoo. Com Just after the presidential election day, the index was increasing, from 4,800 to more than 5,050. Some an alysts argued that it was one of Kiosks effects. Despite there were some quick counts that stated that the winner wasParabola, since the reputation and credibility of those survey organizations were questionable, market believed that Kiowa would win the presidential election. On the day when General Elections Commission was announcing the recapitulation of the presidential election results, the index was slightly decreasing. It might be influenced by Parabolas statement that he had withdrawn from the election process. This statement was perceived as sign of the upcoming political instability in Indonesia. Moreover, on that day, Parabola distinctly stated that there was systematic violation of democracy inducted by General Elections Commission.The clearest evident how market reacted to the political condition might be reflected on the price of stock following what happened in the Parliament in the first week of October. After the Parliament passed the law regarding local elections, which automatically eliminated direct elections for local governments, the stocks dropped significantly. Many political analysts stated that by eliminating direct elections, Indonesian democracy had moved backwards. Golden Agric Resources stock, seemed to follow the market price in general.Its price also creased after what happened in Parliament in earliest October. Figure 2. Golden Agric Resources Stock Price Source Source finance. Yahoo. Com 4. mop up Political conditions in a country is an important factor in industry. The influence is channeled through the expectation of business players in the market. When the condition in a country is stable, garmentors are likely to be willing to invest their money in that country. On the other hand, political instability might frighten investors to put their money in a country, resulting sell-actions that eventually pushes the stock price.This condition happened in Indonesia recently, following the presidential elections that was won by K iowa-Koala, resulted in the decreasing Of most stock price in Indonesian Stock Exchange, including the stock price of Golden Agric Resources. However, there is still optimism about political condition in the future. KiowaKali have an important role to modify the political condition and create supporting environment for business. On the other hand, industry might also have to adapt with the changes happen.