Protests Rock Indonesia After One Killed In Police Clash

(MENAFN- Live Mint) (Bloomberg) -- Indonesian President Prabowo Subianto called for calm as authorities sought to contain rising public anger that has fueled protests into a third day, leading to declines for the rupiah and stocks.

In his first remarks since the protests erupted this week, Prabowo apologized for the death of a motorcycle taxi driver who was struck and killed by an armored police vehicle during the protests on Thursday evening. He promised to hold the police officer accountable.

The death has stoked public discontent with the government and marks a key test for Prabowo, who is less than a year into his presidency. Protests over the incident came after thousands took to the streets to oppose lawmakers' excessive allowances while workers struggle to get an increase in minimum wage.

“On behalf of myself and the Indonesian government, I would like to express my deepest condolences and sympathy,” Prabowo said in a televised address.“I am shocked and disappointed by the excessive actions of the officers. I have ordered a thorough and transparent investigation into last night's incident.”

The president also called on Indonesians to remain calm and be vigilant against“elements that always want to cause unrest and chaos.”

Members of the army and navy were seen on social media livestreams securing parts of Jakarta as motorcycle taxi drivers gathered at the headquarters of the police's mobile brigade corps, demanding justice for the victim. Protesters burned cars and hurled rocks, while riot police used tear gas to try to disperse the crowds.

Indonesian stocks fell as much as 2.3% on Friday, while the rupiah weakened as much as 0.9% in Friday trading - both the worst performers in Asia as the escalating unrest unnerved investors. Yields of 5- and 10-year government bonds saw their biggest jumps in months, soaring 7.1 basis points and 4 basis points, respectively. Bank Indonesia said it is ready to intervene to stabilize the currency and ensure it trades according to fundamentals.

The recent protests in Jakarta“have increased volatility in Indonesia's markets,” said Shier Lee Lim, lead currency and macro strategist at Convera Singapore.“The rupiah, equities and bonds have all come under pressure as investors reassess the risks of heightened policy uncertainty and social unrest.”

While Prabowo has pledged to battle corruption and create jobs, massive layoffs and weakening purchasing power have sparked discontent in Southeast Asia's largest economy.

Hundreds of University of Indonesia students also plan to stage a demonstration outside the national police headquarters Friday, demanding the removal of the police chief and accountability for recent arrests and violence against protesters, a student spokesman said in a text message to Bloomberg News.

The unrest has heightened concerns about Prabowo's ability to manage political dissent. Rights groups have warned that a crisis of trust could unfold if those responsible for the fatality are not held accountable. Police have apologized and detained the officer driving the vehicle.

“We've been working closely with various parties all afternoon to keep the situation under control,” State Secretary Prasetyo Hadi said in a press briefing late Thursday.“Any incident, no matter how minor, is regrettable and unwanted.”

Several government meetings set for Friday have been canceled, including the Finance Ministry's monthly budget briefing and a separate national inflation coordination meeting where Prabowo was due to speak. Many companies have also instructed their employees to work from home, while major roads in the capital were closed.

Foreign flows have turned negative in the past two days as international investors may be“getting slightly nervous about the domestic unrest,” said Bloomberg Intelligence's equity strategist Sufianti.“It seems to me it's more of a short-term selloff, but if it escalates further, then it could turn into a real risk.”

--With assistance from Grace Sihombing, Norman Harsono and Jon Herskovitz.

(Updates and recasts to include military deployment, market reactions.)

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