President Susilo Bambang Yudhoyono, who begins his second five-year term next month, may create new ministerial posts to accelerate development of the natural resources sector, government sources said.
The country has some of the world’s largest deposits of natural gas, nickel, copper, tin and coal, while it is the world’s biggest palm oil producer and second-biggest rubber producer.
However, a combination of red tape, legal uncertainty, graft and heightened nationalism has deterred many foreign investors and held back development of energy and mineral resources, depriving the economy and the government of important sources of revenue.
“One idea is to establish a new coordinating minister for resources to accelerate permits and licensing to develop natural resources,” said a government source, who declined to be identified by name.
The new arrangement to help accelerate development could also lead to a separation of the energy and mining portfolios, which are now under one minister. The coordinating minister would oversee these, as well as the agriculture, forestry and environment ministries, the source said.
Disputes between ministries have often held up development of natural resource projects.
Another source said that under the law, the president would have to scrap other portfolios to establish new portfolios. One possibility is that Yudhoyono could decide to merge the trade and industry ministries.
The current trade minister, Mari Elka Pangestu, has a high international profile and generally favours promarket policies.
Mari and Industry Minister Fahmi Idris appeared at odds over some protectionist policies during the economic crisis, including when Idris urged civil servants to only buy locally produced shoes.
Yudhoyono’s government passed a new mining law last year, after years of delays. The drawn-out process and delays in setting new regulations has resulted in few mining investments, while in the energy sector the country has also become a net importer of crude oil as its older fields age.
Yudhoyono will reveal his cabinet before he is sworn in for a second term on Oct. 20. He has said he is still undecided about who will serve in which posts. Now that his Democrat Party has the biggest share of seats in Parliament, he is expected to choose more technocrats for his new cabinet.
One key area of uncertainty and friction is between the mining, forestry and environment ministries, where legislation at central and local government levels may be conflicting. The result is that investors are uncertain about who is issuing permits.
Possible candidates for energy minister include Evita Legowo, currently director general of oil and gas at the Energy Ministry, and Gita Wirjawan, a former banker who now runs an investment firm specializing in the energy sector. Kuntoro Mangkusubroto, a former energy minister, has also been mentioned. Energy and Mineral Resources Minister Purnomo Yusgiantoro is a possible candidate for the new coordinating post if that structure is adopted, a government source said.