Business, Finance & Economics

Indonesia: You call this reform?


JAKARTA, Indonesia — As the names of President Susilo Bambang Yudhoyono’s revamped cabinet began to leak Wednesday, it became clear that the liberal former general would not wield his overwhelming mandate in the manner everyone had hoped.

Though his much praised economic team remains largely intact, with some hopeful new additions, many of the other posts look poised to be filled by lackluster political appointees, analysts said.

The reform-minded president won a second and final five-year term in July with 60 percent of the vote. The Democrat Party, which he founded only six years ago, is now the largest party in a crowded parliament.

Having won by such a margin, anticipation was high that Yudhoyono would use this new clout to appoint highly effective professionals who could tackle enduring issues like endemic graft, crumbling infrastructure, rampant poverty and an unreliable judicial system.

Instead, the president appears to have acquiesced, reserving only economic posts for the technocrats while doling out others, like the key ministry of law and human rights, to members of the handful of political parties that supported his re-election bid.

Peaceful presidential and parliamentary elections earlier this year, coupled with the government’s smooth handling of the economic crisis, has made Indonesia one of the most stable democracies in Southeast Asia.

But major reforms are still needed to increase foreign investment and reduce poverty. Analysts has hoped Yudhoyono would have the stregnth to push through such reforms during his second term.

“It was a surprise and somewhat disappointing that he made so many political accommodations this time around,” said Endy Bayuni, chief editor of the Jakarta Post, the country’s main English-language newspaper. “We were all hoping that the president, given his mandate, wouldn’t need to oblige so many politicians.”

During his second inauguration speech on Tuesday, the president made a point of the need for reform within the country’s fractured justice system.

“We want to create justice which is marked by a respect for non-discrimination and equal opportunities while continuing to maintain social solidarity and protection for the weak,” he said.

For the crucial ministry of law and human rights, however, Yudhoyono chose Patrialis Akbar, a career politician from the Islam-based National Mandate Party, an early supporter of the president’s re-election.

Akbar is not known as a particularly fervent defender of human rights, and analysts fear that he lacks the commitment needed to clean-up the country’s corrupt judiciary or diffuse a debilitating conflict between the national police and the highly regarded anti-corruption commission.

The president also appointed yet another politician from Golkar, the former political vehicle of Suharto, to the coordinating ministry of people’s welfare — a post previously held by the Golkar billionnaire businessman Aburizal Bakrie, whose family’s drilling company has been blamed for triggering a mudflow that has displaced tens of thousands in East Java.

Yudhoyono’s new economic team, which includes some old faces, will likely build on the country’s improving economic condition. But his appointment of a longtime political ally, Hatta Rajasa, to the umbrella position of minister for coordinating economic affairs, has raised questions.

Rajasa has little financial experience and was sacked as transportation minister in 2007 following a series of deadly air crashes. Rajasa, however, delivered the National Mandate Party during July’s elections.

“I don’t think he was appointed for his economic competency,” said Mohammad Qodari, an independent political analyst. “Hatta has been a friend to Yudhoyono.”

Another analyst told the Indonesian webportal,, that Yudhoyono’s cabinet was flirting with cronyism.

Yudhoyono, however, retained several celebrated economic reformers, including finance minister Sri Mulyani and trade minister Mari Pangestu, both professionals — and added Gita Wirjawan, formerly the chief of JP Morgan in Jakarta, to head the country’s investment board. The team will likely be welcomed by investors and appears well-positioned to maintain Indonesia’s economic growth, currently one of the word’s best.

The president also created a new agency aimed at accelerating badly needed projects, such as infrastructure and the reform of the country’s unwieldy civil service. The president appointed Kuntoro Mangkusubroto, a former energy minister and technocrat known for getting things done quickly, to lead it.

Kuntoro successfully managed billions of dollars as head of Aceh’s reconstruction agency following the devastating tsunami there in 2004.

“We are seeing some very good names in the cabinet. But I think he could have done much better,” Bayuni said. “Either way, I think we are going to see a very different government from last the five years.”