Indonesian stocks should rally yesterday after Vice-President Jusuf Kalla took over the opposition Golkar party, a move that should smooth the president?s testy ties with parliament and make the passing of laws easier. Kalla won the leadership of Indonesia?s biggest opposition group over the weekend. Kalla said Golkar should be objective in supporting the government and criticising its policies, local media reported on Monday.

?This victory... will guarantee the support of parliament toward the government?, said Fendi Susiyanto, senior equity analyst at BNI Wealth Management in Jakarta. Kalla indicated that the days were numbered for a group of opposition parties controlled by Golkar in parliament called the Nationhood Coalition. That bloc controls more than half the seats in the 550-legislature.

?The situation for the coalition is not like it was before. It was temporary?, the Koran Tempo newspaper quoted the vice-president as saying late on Sunday. The leading Kompas daily quoted him as saying Golkar would still be a check and balance on the government. Kalla had kept his post as patron of one of the strongest factions in Golkar despite joining forces with President Susilo Bambang Yudhoyono this year to run in Indonesia?s first direct presidential election.

Kalla easily defeated incumbent and favourite Akbar Tandjung in the Golkar leadership ballot on the resort island of Bali in the early hours of Sunday. But political analysts have said while the win was positive for Yudhoyono in the short-term, it increased Kalla?s already substantial power. That raises questions over his influence on economic policy.

Kalla has already called for more aggressive fiscal policy at a time when Indonesia is under pressure to rein in its budget deficit. Previous vice-presidents were largely ceremonial. Golkar holds 23 percent of seats in Indonesia?s fractured 550-member parliament, the most of any party. Yudhoyono?s party holds just 10 percent. Golkar, the political vehicle of ousted autocrat Suharto, had been hit by discontent among some who felt the party should support the government, where it has little presence. Golkar has already frustrated Yudhoyono in parliament. Only days after Yudhoyono took office on October 20, the bloc took over all the commissions in legislature, whose cooperation is vital to his plans to make Indonesia more business friendly, sell state assets and pass tougher anti-terror laws.