JAKARTA: Indonesia s President Susilo Bambang Yudhoyono on Friday gave a rosy assessment of his government's performance over the past four years, setting the stage for a re-election bid next year

Yudhoyono, a reform-minded ex-general, is seen by many people as the most accomplished of Indonesia s post-Suharto leaders, due to his sound economic management and focus on reform, although his popularity plummeted after he hiked fuel prices in May, hurting millions of people who live on $2 a day or less

If he won a second five-year term, he could continue the job of tackling the nation s main impediments to even better growth, including creaking infrastructure, bloated bureaucracy, widespread corruption and unpredictable courts. In an annual address to parliament ahead of the Aug. 17 independence day, he pledged peaceful elections for the country s 226 million people next year, a decade after protests swept former president Suharto from power.

Our democracy is again put under test. Can we pass the election year well and safely? I think we all agree to respond: Yes, we can, said Yudhoyono, dressed in a dark business suit and traditional black Indonesian hat

Yudhoyono, 58,has not formally said whether he will stand for re-election in 2009,but is widely expected to do so. He has consistently been ranked the most popular presidential candidate, well ahead of his rival, former President Megawati Sukarnoputri, until recently, when she took the lead In his speech, he pointed to Indonesia s success in resolving many of its religious and secessionist conflicts in hot spots such as Poso, Aceh, and Papua, although he said vigilance was needed since the ;country is still unsafe from terrorist acts.

Under Yudhoyono, Southeast Asia s top economy has had its best sustained performance since the Asian financial crisis, but has also been buffeted by high food and fuel prices

ELECTION HINGES ON ECONOMY

Even though law and security aspects are great, the thing that will pave his way to be re-elected is the economy,; said Muhammad Qodari, director of pollster Indo Barometer

Yudhoyono forecast economic growth of 6.2 next year, against the government s forecast of 6.0-6.4 percent for this year

Growth of six-plus percent, while high for Indonesia, is still well below the country s potential given its abundant natural resources -- palm oil, tin, nickel and coal -- and lags the pace seen in China and India

Many of Yudhoyono s policies, particularly a focus on economic management and reform, have been welcomed by foreign investors, although red tape and worries about contracts has stalled new investment in the key mining and energy sectors

Despite better growth, many of the poor have seen little trickle-down benefit while being treated to an almost daily diet of news about corruption among the elite

;These corruption investigations simply remind people how widespread the problem is, eroding trust in the elite,; said Max Lane, a visiting fellow at National University of Singapore

Despite being an oil and gas producer, Indonesia has been hit by soaring energy prices because it subsidises certain types of fuel, but Yudhoyono vowed to maintain macroeconomic stability

He said the government would spend a total of 227.2 trillion rupiah ($24.76 billion) on subsidies next year, leaving a budget deficit of about 1.9 percent of gross domestic product.

Source : MMD