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Newly elected Indonesian President Joko Widodo wave to crowds while on his journey to Presidential Palace.Ulet Ifansasti/Getty Images

They streamed through Jakarta's streets by the thousands. Retired security guards. Construction workers. Students. Activists. Street food vendors. Their red-and-white flags and banners bore the beaming face of an unlikely leader who has filled Indonesia with a stirring new hope.

They had all come to celebrate the remarkable rise of Joko Widodo, a self-made businessman who became the governor of Jakarta and built his reputation on delivering results and on what Indonesians call blusukan – Mr. Widodo's tradition of dropping in on ordinary people, in ordinary communities, to see how they're doing and negotiate with them directly if he needs their co-operation.

On Monday, Mr. Widodo, who is known universally by his nickname Jokowi, was sworn in as President of Indonesia, the world's fourth most-populous country and the third-largest democracy after India and the United States. Indonesia's 250 million people had grown tired of the corruption and economic mismanagement that have denied the country its vast potential. And Mr. Widodo's election this summer shattered the cozy world of Jakarta elites who dominated the archipelago nation's fledgling democracy since the fall of the dictator Suharto in 1998.

"Jokowi has changed everything," says Arif, a textile salesman who flew in from the island of Kalimantan for the festivities.

Arif, who has one name like many Indonesians, spoke as he marched with others toward the centre of the city, where a large stage was erected under Jakarta's towering national monument. Throughout the afternoon, hard-rock bands – a genre beloved by Indonesians, including Mr. Widodo – blared out songs about injustice and change in front of two giant screens showing sleek animations of the new president. As distorted guitars shrieked, Mr. Widodo was shown having tea with fishermen on a beach, playing soccer with village kids – and rolling up his sleeves.

"I've never been interested in politics before, but now I only support Jokowi," said Boim, a 23-year-old cellphone technician with unruly curls and a prominent necklace bearing the logo of the popular Indonesian rock band Slank, which headlined Mr. Widodo's inauguration. "Jokowi is a simple man," Boim said. "He's supported by Slank. By the people."

Mr. Widodo, who appears more at ease in a slum than in a suit, nevertheless looked relaxed and bemused as he went through the all-day inauguration.

The occasion provided a joyous break from tense postelection drama. His defeated rival, Prabowo Subianto, a former special forces general under Suharto who kidnapped democracy activists, at first tried to challenge the election results. He met Mr. Widodo to congratulate him only on Friday, several months after the vote.

A coalition of parties led by Mr. Subianto holds a majority in parliament and managed, before the inauguration, to pass a law that bans local direct elections of governors and mayors – precisely the type of election that led to the rise of people-focused politicians such as Mr. Widodo and Basuki Tjahaja Purnama, who became Jakarta's first ethnically Chinese mayor when his former boss became president.

Still, that negativity has not dampened the enthusiasm of his supporters. "It's a new era," says Andersen Tjoeng, an ethnically Chinese Indonesian whose family changed its name from Chung to a more Indonesian spelling after experiencing discrimination. After years of lacklustre government, he adds, and few meaningful choices between leaders, the passion with which people approached this election was a landmark. "It's really exciting. We have never felt this."

But as he takes over, Mr. Widodo faces a host of challenges. Indonesia's economy has slowed as China's demand for its resources has waned. That makes building roads and boosting manufacturing key priorities. He also needs to upgrade port infrastructure to make it cheaper for Indonesians to ship between its thousands of islands, which would reduce prices in the less developed eastern islands. Economists also say he needs to cut a wasteful fuel subsidy that consumes around one-fifth of the country's budget, a necessary measure that would free up cash for the education and health-care programs that defined him in Jakarta and when he was the mayor of the small city of Solo.

"He can make Indonesia prosperous," says Iwan Fahmi, a 40-year-old street food vendor. "Jokowi cares about the people's welfare."

There are also expectations that Mr. Widodo, a businessman who is not considered an elegant speaker or a grand thinker, will use Indonesia's foreign policy to secure more benefits for ordinary citizens and attempt to fashion Indonesia – the world's largest Muslim-majority country – into a moderate role model across the Islamic world, says Dewi Fortuna Anwar, an adviser to the vice-president. "Indonesia's foreign policy must benefit the common people," she says.

Indonesia, of course, is a complicated, often dysfunctional country whose previous leaders have barely made a dent in the country's big challenges. Mr. Widodo has a clear track record in kick-starting stalled but crucial infrastructure – such as Jakarta's rapid-transit system and an outer ring road, both of which are now under construction. But he will still need all the help he can muster from Indonesians if he is to accomplish similar feats at the national level.

As he bounded up on stage beneath the national monument on Monday evening, two hours later than scheduled, he immediately opened with a semi-serious joke.

"When I was coming here, it was the call to prayer, so I had to pray first," he said sheepishly, making the huge crowd ripple with laughter. In a tone of mock accusation, he then asked: "Have you prayed yet?"