Indonesia's presumed president Prabowo vows smooth transition, pushes privatisation

By Gayatri Suroyo and Stefanno Sulaiman

JAKARTA (Reuters) - Indonesia's presumed president Prabowo Subianto on Tuesday promised a "very smooth" transfer of power later this year and opened the door to privatising state-run firms while maintaining government control of key economic sectors.

Speaking at an investment forum, Prabowo, who unofficial vote counts show won the Feb. 14 presidential election by a huge margin, also said he believed economic growth could reach 8% annually within the next four or five years.

Prabowo said that while the state could continue to regulate and maintain decision-making in strategic areas in Southeast Asia's biggest economy, the private sector should be allowed to thrive and take the leading role.

"Maybe we have to really have a programme of rationalising and privatising many of the state owned enterprises. The state can regulate, the state can (provide) oversight, the state must also have strategic decision-making in the strategic sectors," he said.

"I don't see for instance why we need to be present in every sector of the economy ... now we must allow private sectors to be more and more dominant."

State companies in sectors such as banking, telecommunication, construction and mining currently play a dominant role in Indonesia's economy.

Prabowo, 72, pledged to continue the policies of incumbent Joko Widodo, who has overseen a big push to modernise infrastructure, and said he aimed to significantly improve tax ratios by widening the tax base, not necessarily by raising taxes.

He said his government could widen the fiscal gap to up to 2.8% of gross domestic product, from under 2% in 2023, and would still comply with the mandatory deficit ceiling of 3% of GDP.

Investors have been closely watching Prabowo's fiscal plans, after previous comments on potentially upping Indonesia's debt-to-GDP ratio raised alarms. Rating agencies warn his signature promise of free school lunches could be costly.

Prabowo pledged to maintain Indonesia's track record of fiscal prudence, but repeated that he thought there was space to increase public spending and debt, with their ratios relative to GDP being lower than other countries.

Prabowo also said Indonesia would strive for food self-sufficiency, which he was optimistic could be achieved quickly, leading to the nation exporting food within four years.

He said Indonesia was open for investment and that his government would ensure protection for foreign and domestic investors.

DEMOCRACY 'VERY, VERY TIRING'

In a wide-ranging speech that lasted nearly an hour, Prabowo said Indonesia should be proud of last month's election, though he said he was not satisfied with his country's democracy, without elaborating.

"Let me attest, testify that democracy is really very, very tiring. Democracy is very, very messy, democracy is very, very costly," he said. "There is a lot of room for improvement."

Prabowo, who is currently defence minister, looks to have easily won his third attempt at the presidency, buoyed by the tacit and controversial support of the hugely popular Jokowi, as the president is known, and the inclusion of the incumbent's son on his ticket as running mate.

Jokowi, who has been in power a decade, has been widely criticised for unfairly favouring Prabowo as a means of preserving his legacy, and exerting influence over institutions to influence the election outcome, which his allies reject.

The official election result is expected by March 20 and, if confirmed winner, Prabowo will take office in October.

(Reporting by Gayatri Suroyo and Stefanno Sulaiman; Additional reporting by Ananda Teresia; Writing by Martin Petty; Editing by Michael Perry)