Muhamad Al Azhari & Roffie Kurniawan

Newly appointed cabinet ministers are sworn-in during a ceremony at the State Palace in Jakarta on Thursday. (AP Photo)

Indonesian Economic Ministers Urged to Get Right to Work

Foreign and local observers are cautiously optimistic that the economy is in capable hands following President Susilo Bambang Yudhoyono’s announcement of the business-related portfolios in his new cabinet.

Observers commented on the mix of technocrats and political appointments to the new economic team and said it was now time for action.

“The retention of the key members of the economic team, including the ministers of finance and trade, should please foreign lenders and investors alike,” said Philip J Shah, chairman of the tax committee at the International Business Chamber.

“They are supported by Vice President Boediono, a man with considerable economic experience,” he noted.

“It is also encouraging to see MS Hidayat appointed as the minister of industry and Gita Wirjawan as the chairman of BKPM [the Investment Coordinating Board],” he said

However, Philip said energy investors were surprised by the appointment of the Democratic Party’s Darwin Saleh as energy and mineral resources minister.

“Investors in the oil, gas and mining sectors are likely to be disappointed by a minister with no evident experience or knowledge in this major component of Indonesia’s economy,” Philip said.

Because previous ministers had already drafted work programs, it was more important that the incoming ministers concentrate on speeding up the process of change, said Erwin Aksa, chairman of the Indonesian Young Entrepreneurs Association.

“The business community is impatient to see some changes,” he said.

Top priorities should be completing major infrastructure projects such as coal-fired electricity plants and the trans-Java toll roads, Erwin said.

Other business-related portfolio appointments included Fadel Muhammad, a rich businessman from the Golkar Party, who has become maritime affairs and fisheries minister.

His predecessor in that post, the Democratic Party’s Freddy Numberi, an old friend of Yudhoyono’s, becomes transport minister.

The Coordinating Ministry for the Economy will be headed by Hatta Rajasa of the National Mandate Party, a close ally of Yudhoyono’s who was previously the state secretary.

Joachim Von Amsberg, the World Bank’s country director for Indonesia, said he had high hopes for the new cabinet.

“It’s obviously a combination of technocrats and political appointments,” he said.

“I think that’s healthy because the government needs both the technical and political skills.

“Hopefully the right technical and political skills will come together for effective governance, but given the policy direction that the president has given, I am very confident that this team is able to continue and actually accelerate reform that will lead to higher growth and faster poverty reduction.”

The World Bank remained upbeat about Indonesia’s economy, Joachim said.

Its forecasts of 4.3 percent growth for 2009 and 5.4 percent for 2010 remain unchanged, he said.

Foreign investors wanted to see a simplification of the rules on investment, a reduction in non-tariff trade barriers, an improvement in the performance of the judicial system and a continuation of the fight against corruption, he said.

Peter Fanning, the chairman of the International Business Chamber, said that because the previous cabinet had spent a long time designing policy and work programs, it was up to the new cabinet to implement them.

“Don’t spend too much time on preparation and procedures,” he said.

“It’s time for implementation. It’s time for action.”

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