Bareksa.com - Indonesia's parliament on Friday approved legislation ending direct elections for governors and mayors, a move president-elect Joko Widodo criticised as a "big step back" for the country.

Indonesia introduced direct elections for regional leaders in 2005, allowing for a new breed of politician to emerge that were not linked to the political elite, with Widodo being the best-known example.

But direct elections in Indonesia, Southeast Asia's largest economy and the world's third largest democracy, have also proven to be costly and in many cases corrupt.

"More than 60 percent of regional leaders were linked to corruption cases because they have spent a lot of money. This is the new reality, the time to evaluate our system," said Rindoko Dahono Wingit, a lawmaker with the Gerindra party that voted for the bill.

Despite strong public opposition, a divided parliament passed the bill giving legislative assemblies the power to choose local leaders. Some opinion polls before the vote showed that up to 91 percent of Indonesians favoured direct elections.

"(The bill) is a big step back. A step back for democracy," Widodo told reporters on Thursday. Widodo, who is also known as Jokowi, takes office on Oct. 20.

Indonesian stocks opened down more than 1 percent following the vote.

"(This) highlights the enormous political challenges that lie ahead for the Jokowi government," Bahana Securities said in a research note.

Advisers to president-elect Widodo did not expect the bill to have a significant effect on how they govern. Widodo's party, Indonesian Democratic Party-Struggle, is the largest in 55 percent of the country's 34 local legislatures, analysts said.

The vote took place after a marathon session that turned rowdy at moments, with the party of outgoing president Susilo Bambang Yudhoyono walking out in protest after their amendments were not included in the bill.

Local non-governmental organisations have said they would file a challenge in the Constitutional Court if the bill passed.

Indonesia, home to the world's largest Muslim population, has embraced democratic reform since the downfall of autocratic leader Suharto in 1998.

This year's presidential election, the closest ever in Indonesia's history, went off without major violence or military intervention.

The smooth transition was a contrast to developments in other Southeast Asian countries such as Thailand and Cambodia, which have both seen political turmoil this year. (Source: Reuters)