SK Zainuddin

Hatta Rajasa (Antara Photo)

Big Challenges, Great Expectations for Hatta Rajasa, GlobeAsia’s Man of the Year

Loyal, dedicated, eloquent and effective. Those qualities have distinguished Hatta Rajasa since he entered politics a decade ago — and GlobeAsia magazine recognizes them in naming Hatta 2009 Man of the Year.

A minister in former President Megawati Sukarnoputri’s cabinet, he has held several posts under President Susilo Bambang Yudhoyono, emerging as the president’s right-hand man and most trusted minister. Now the coordinating minister for the economy, he faces perhaps the biggest challenge of his career.

Hatta’s political skills are widely respected. In 1999, he played a key role in the formation of the “central axis” of Islamic parties, which paved the way for the rise of Abdurrahman Wahid as president. He is also bidding to become chairman of his National Mandate Party (PAN).

As the leader of Yudhoyono’s campaign team this year, he is credited with the president’s whopping electoral victory.

“Hatta is very loyal to whoever he is serving,” says Alvin Lie, a PAN member and former legislator. “He gives his heart and soul to his job and responsibilities.”

Because of his loyalty, Hatta has earned the trust of his superiors — one reason he is Yudhoyono’s point-man in dealing with the House of Representatives’ investigation into the Bank Century bailout.

“Hatta is the most experienced politician in Indonesia today,” says Fauzi Ichsan, chief Indonesia economist at Standard Chartered Bank in Jakarta.

If he succeeds in maintaining the economy’s momentum, and boosting manufacturing and infrastructure development, he could emerge as a potential successor to Yudhoyono in 2014.

Surprise pick

Hatta’s appointment as chief economics minister was a surprise because he had no previous experience running an economic ministry. His short stint as transport minister was marked by a number of high-profile aviation accidents, including the Garuda crash in Yogyakarta and the Adam Air crash off South Sulawesi.

“Initially, the market was disappointed when he was appointed as the coordinating economic minister as people expected Boediono [to serve dual roles] ... or Kuntoro Mangkusubroto to be picked,” Fauzi said. “But what he lacks in economic policy experience, he more than makes up for with his administrative and political skills.”

Hatta is now a central player in the unfolding Bank Century saga. His public support of Finance Minister Sri Mulyani Indrawati and Vice President Boediono was welcomed by the markets and the public.

He has also begun to improve coordination between the different economic ministries, the lack of which proved a stumbling block to getting things done in the previous government. He recently led a team comprising Trade Minister Mari Elka Pangestu and Industry Minister MS Hidayat to Batam to streamline procedures and clear up misunderstandings regarding the island’s status as a free-trade zone.

Resolving the Batam-Bintan issue is a key priority for the new government. It sends a powerful message to investors that the government is serious about making Indonesia more investor-friendly. Attracting foreign direct investment is vital to achieving economic growth of 6 percent or higher.

Hatta is fully aware of this fact. “We need a second wave of FDI and I am optimistic that the money will come because as Asia grows, Indonesia’s position will be important,” he told GlobeAsia in a recent interview. The state budget, which accounts for 20 percent of the country’s GDP, is insufficient to stimulate the economy, he notes, making private investment crucial.

To achieve economic growth of more than 6 percent, Indonesia will need FDI to the tune of 30 percent of GDP, which currently stands at $500 billion. This means the country will need in excess of $20 billion in FDI a year for the next few years, significantly higher than the amount that has been flowing in recent years.

Hatta’s priorities for 2010 and beyond will be to push for quality growth that generates jobs and spreads the benefits more widely. This will include a program to boost electricity supply by implementing sound energy policies and thus put an end to the costly rolling blackouts Jakarta and other major cities in Java have experienced over the past year.

“We have enough resources such as coal, oil and gas,” says Hatta. “Combined we have the capacity to produce 3 to 4 million barrels of oil equivalent per day so we need to get our policies right.”

The key challenge, however, remains proper coordination. Building power plants involves many government departments, including finance and transportation and, more importantly, the House of Representatives.

High expectations

Hatta said his biggest task will be to remove bottlenecks that impede progress on everything from bureaucratic reform and infrastructure development to revitalizing the real economy. He said he wanted civil servants to be more service-oriented and entrepreneurial in their search for solutions.

“I favor the entrepreneurial management approach which values achievements but is quick to cut losses,” he said. “I believe that to improve productivity we must make use of technology and adopt a different culture.”

The business community will be watching because his actions will have far-reaching implications. If he can remove road blocks, push infrastructure and streamline the bureaucracy, he will have earned a place among the country’s most admired economic ministers.

Business leaders are ready to support him, said Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), but they want results.

“Hatta has to coordinate the ministers better,” Sofyan said. “The government must attract investments to Indonesia as we face huge challenges especially with the China-ASEAN Free Trade Agreement to come into effect.”

Time, he said, is running out for Indonesia to become more competitive.

Hatta will need to use all of his considerable skills to set the bureaucratic machinery in motion if the economy is to grow by the 5.5 percent forecast by the government.

Excerpted from the January 2010 issue of GlobeAsia, a sister publication of the Jakarta Globe. On sale now.

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