A campaign without issues for an election whose results are predictable began in Indonesia today - with a ruling party that is in fact the army being challenged by two parties that know they have no chance.

The vote scheduled for May 2 - Indonesia's third election since gaining independence from the Netherlands 32 years ago - could easily be dismissed as a charade, and some of this sprawling capital's residents see it as just that.

But even these critics admit that appearances must be maintained, for Indonesia - by far Southeast Asia's largest, most populous and, potentially, richest nation - is facing its most serious crisis of confidence in a decade.

So no one is likely to complain a very loudly that local and foreign journalists' coverage of the campaign is being curbed sharply, that no diplomats or other outside observers are being allowed into the hinterlands during the campaign, or that the ruling party has decided that official corruption - which ties the government is knotss - is not to be an issue.

The outcome is not a matter of doubt. "Even if the elections were free and fair - and of course they won't be, because the government takes no chances - the country wouls still return the government to power," said a Western diplomat with several years of service here.

Rather, the aim is to create an atmosphere of popular participation: To do less, observers agree, would invite a resurgence of dissidence and divert the military-backed regime's efforts from development to costly suppression.

At stake is a country that, despite the attention paid Thailand since the Communist victories in Vietnam, is truly the region's prize.

Its oil and natural gas, along with its varied and largely untapped mineral resources, make Indonesia all but irresistible - not just for the energetic Vietnamese, but for the Soviet Union and China as well.

Furthermore, its vastness - 13.667 islands stretching in an arc more than 3,000 miles from the Malay Peninsula in the Indian Ocean to Australia in the pacific - means that Indonesia is a guardian of some of the world's most vital shipping lanes.

One measure of the importance the United States places on Indonesia's future may be the sudden increase in the number of military advisers assigned to the U.S. embassy here following their withdrawal from Thailand.

"The military contingent is probably the largest part of the staff," said an embassy source, although he refused to disclose actual numbers.

Once the Suharto government is returned to power, the regime will come under unprecedented pressure to restore economic advance.

Though not wuquite standing still, the economy is certainly in the doldrums. The most severe problem is in oil exploration, now at its lowest level in more than three years. American and other Western oil companies hauled their floating rigs away from the Indonesian coast a year ago, when the government demanded an 85 per cent share of earnings.

The government has since been forced to offer the companies new incentives, and negotiations have just resumed. But oil industry experts doubt that the companies will make any decisions on resuming exploration until the election are completed.

Oil production itself is at an all-time high of 1.6 million barrels a day, and accounts for more than half of the government's revenues and more than 70 per cent of export earnings. Indonesia ranks fourth behind Saudi Arabia, Venezuela and Nigeria, in oil exports the United States.

The problem, according to one specialist, is that Indonesian oil deposits are shallow, and without continuing exploration for new wells the present supplies will rapidly be exhausted.

Evidently taking their cue from the oil companies, other potential investors are lying low. Most of the American businessmen who hustle through the capital's huge luxury hotels say they're simply keeping tabs on current operations, not negotiating new deals.

"There's no way we're going to sink any more money into this place until we see the oil people back on their rigs," a Singapore-based American representative for a large heavy-machinery company said.

Many, if not all, of Indonesia's present financial problems can be traced directly to the near-collapse of the state oil company, Pertanmina, in 1975. Under the free-wheeling direction of its former director, Maj. Gen. Ibnu Sutowo, the company led Indonesia to the brink of bankruptcy.

Still, foreign financiers express guarded admiration for the government's force in tackling the Pertamina crisis. Indonesia remains a reasonably good credit risk, and a consortium of 14 nations and agancies have pledged loans for more than $1.billion for the present fiscal year. The United States is the second-largest individual donor, with a contribution $116.7 million.

All of this, of course, concerns Suharto and the other military leaders who have been in power since they toppled President Sukarno and his system of "guided democracy" more than a decade ago. To the vast majority of Indonesia's 132 million people, the nation's economic problems are beyond comprehension.

As with improverished people anywhere, most Indonesians are concerned simply with surviving. How well they are surviving is a subject for heated debate here.

"I recently toured central and east Java and found terrific improvements everywhere I went," said an American diplomat who had been based hereat he end of the Sukarno regime and returned for a second posting last year. "You see lots of new houses and the old ones freshly painted. People are better dressed. Just about everyone has a transistor, and if they don't have motorcycles they've at least got bicycles."

Not so, claimed a retired Indonesian diplomat, one of the country's most respected intellectuals. "The fact is that 40 to 60 per cent of the population exists below the poverty line," he said.

Asked how he defined the "poverty line", he cited a recent study by a Dutch sociologist in the central area of Java, the archipelago's most densely populated island. He asked villagers simply whether they had enough food "for today and tomorrow."

"His results showed that 25 per cent of the villagers he interviewed said they didn't have even enough for today," the former diplomat said. "Nearly 50 per cent replied that they didn't have adequate food for the next day."