Investors seek savvy ministers

JAKARTA. With Indonesia’s economy facing the prospect of a downturn next year, the composition of president-elect Joko “Jokowi” Widodo’s economic team is under close scrutiny, as it will play a key role in implementing the country’s economic reforms.

Several global fund managers have expressed skepticism over Jokowi’s ability to pass economic reforms after he suffered a string of political defeats regarding leadership placements at the House of Representatives and the People’s Consultative Assembly (MPR) to the political coalition supporting defeated presidential candidate Prabowo Subianto.

Thus far in October, the Jakarta Composite Index (JCI) has fallen 6 percent, while rupiah has plunged to its weakest level in eight months.

But analysts have also said that the makeup of Jokowi’s economic team could restore confidence if strong and credible figures are appointed to crucial posts such as those of finance minister and coordinating economic minister.

“Alongside coalition developments, the lineup of the new president’s Cabinet, particularly the finance and coordinating economic portfolios, are likely to be watched closely in the coming weeks,” analysts from UK-based Barclays Bank wrote in a note distributed to clients.

Among those whose names have been floated for the two crucial posts are current Finance Minister Chatib Basri and his deputy, Bambang Brodjonegoro; former Bank Indonesia (BI) governor Darmin Nasution; and World Bank managing director Sri Mulyani Indrawati.

Also on the list of candidates is Rini Mariani Soemarno, a former trade and industry minister and a close aide to Megawati Soekarnoputri, and Luhut Panjaitan, a retired general and former Golkar Party politician.

Both Rini and Luhut serve on Jokowi’s economic team.

“Our sense is that it will likely be a combination of veteran ministers from Megawati’s days, figures from SBY’s [President Bambang Susilo Yudhoyono] Cabinet and some new blood,” said Wellian Wiranto, an economist with OCBC Bank in Singapore.

One of the major tests facing the pool of technocrats poised to assume positions on Jokowi’s economic team will be how effectively they lobby the president-elect to reform the fuel subsidy, Wellian noted.

Chatib, who succeeded in persuading Yudhoyono to raise fuel prices just a month after being installed as finance minister in May last year, as well as Sri Mulyani, who oversaw two fuel-price hikes during her stint as finance minister in Yudhoyono’s administration, have proven track records.

However, Chatib has said that he plans to take a break following a lengthy stint in the Yudhoyono administration where he has also served as chief of the Investment Coordinating Board (BKPM).

Sri Mulyani has yet to indicate how she might respond if offered a ministerial post, according to a source in Jokowi’s transition team.

Meanwhile, Bambang, who has also been tipped as a strong contender for finance minister due to his decisive, no-nonsense leadership style, has refused to be drawn into the discussion.

“You can’t apply to become a minister. Let me ask you: Has there ever been an ‘opening’ for a ministerial post?” Bambang once said to journalists, when asked about the prospect of serving as finance minister in the Jokowi administration.

Jokowi’s economic team will confront a volatile global environment, with the possibility of shocks to financial markets as the US Federal Reserve begins raising its interest rate, which could trigger capital outflows from emerging economies.

“For ministerial posts in the economy, the markets will prefer people with [proven] track records,” said Aldian Taloputra, an economist with state-run securities firm Mandiri Sekuritas.

“Leadership is imperative. We need someone who has held top positions in government institutions or companies and possesses experience handling crisis,” he added. (Satria Sambijantoro)