(Bloomberg) -- Indonesian lawmakers agreed to reconsider controversial election law changes on Thursday as protests intensified in multiple cities including the capital, triggering a sharp drop in the rupiah and stocks.
Lawmakers will pause legislation that would have undercut a Constitutional Court ruling earlier this week, and take time to assess the public reaction, Achmad Baidowi, the chairman of the parliament panel, said in a statement after the parliament adjourned proceedings earlier in the day.
Outside the parliament building in Jakarta, protesters knocked down the iron fences in the main and back entrances and demanded to enter the compound. In Semarang, demonstrators were hosed as they attempted to push back against the police.
Proposed electoral changes seen as favoring the alliance of President Joko Widodo and his successor, Prabowo Subianto, infuriated many in Indonesia and set off widespread protests, with some burning tires and throwing stones at police in the capital.
The president’s office said it will abide by the Constitutional Court’s decision if lawmakers don’t change the law. “Indonesia guarantees free speech and open democracy,” spokesman Hasan Nasbi said. “The hope is that there shouldn’t be any spread of disinformation, lies and hate that can lead to violence and riots. We need to remain peaceful.”
Lawmakers aligned with Jokowi and Prabowo want to change the law to effectively allow Jokowi’s 29-year-old youngest son to run to be a regional deputy governor. They would also reinstate thresholds that could enable Prabowo and Jokowi allies to run virtually uncontested in elections in Central Java and Jakarta.
But backlash came after a parliamentary panel on Wednesday rushed through draft legislation that would undercut the Constitutional Court’s Aug. 20 ruling that maintained age limits and ensured smaller parties can run in regional elections in November.
Students and workers continued to assemble through the day, with celebrities and other influencers addressing demonstrators in downtown Jakarta. One banner called for a “New Indonesia, Without Jokowi Dynasty,” while Indonesia’s Metro TV showed protests in at least three other major cities.
Indonesia’s benchmark stock gauge fell as much as 1.3% before paring its loss, while the rupiah closed 0.7% weaker against the greenback, the worst performer among Asian currencies on Thursday. Government bond yields edged higher.
“This raises uncertainty for the business sector as they have to review the level of political and market stability,” said Achmad Sukarsono, a Singapore-based associate director at Control Risks, who focuses on Indonesia. “There’s also higher risk for the student protest to grow larger because now they are getting the backing from political factions that want to see an end to Jokowi’s distasteful power plays.”
Lawmakers from PDI-P, the single biggest party, appear to have boycotted proceedings on Thursday and plan to file a memorandum of objection to the proposed revisions. Parliament must push through the legislation before candidates’ registrations start on Tuesday, according to the election commission.
There’s already widespread anger over a 2023 decision by the Constitutional Court, when it was chaired by Jokowi’s brother-in-law, that eased age rules and let his eldest son make a successful run to become vice president. Underscoring the tensions on Thursday, some protesters threw drinking bottles at a car occupied by Habiburokhman, the deputy chairman of Gerindra’s faction as he gave a speech.
“It’s okay to play politics and strategize to get a share in power,” former constitutional judge Mahfud MD said on Instagram. “But there are democratic and constitutional principles that govern the political game.” It will be dangerous if tactical coalitions are used to grab power, he said.
Even actors and singers shared an “emergency warning” image online, with thousands using the hashtag #KawalPutusanMK, calling for a defense of the court decision, which many see as supporting Indonesia’s young democracy.
“History shows that once democracy is undermined, authority is lowered, opportunities to work will be lost,” Thomas Lembong, a former minister in Jokowi’s cabinet, told the protesters through a loudspeaker. “So let’s fight together.”
Jokowi, whose eldest son will become vice president in October, sought to downplay the crisis.
“We respect the authority and decisions of each state institution,” Jokowi said in a televised address late Wednesday. “This is a constitutional process that usually happens in our state institutions.”
--With assistance from Matthew Burgess, Grace Sihombing, Philip J. Heijmans, Faris Mokhtar and Claire Jiao.
(Updates with comments, details of protests, markets.)
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