Fri, 12 Feb 2010
Susilo Bambang Yudhoyono, the Indonesian leader, should be riding high after victories for himself and his party in last year’s presidential and legislative elections and sustained economic growth through the global financial crisis.

But his agenda to continue his relatively successful first-term assault on corruption and to tame the country’s disorderly bureaucracy is foundering amid infighting in his ruling coalition and pressure from vested interests.
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“He has set out with a moderately ambitious agenda within an environment that is not conducive to significant change,” said Damien Kingsbury of Deakin University in Australia. “The first term is where the achievements were made and the second will be more difficult to get significant gains.”

The fight against corruption, which has been the former general’s priority, suffered a symbolic setback on Thursday as a Jakarta court sentenced Antasari Azhar, who ran the country’s well-respected anti-graft agency until last year, to 18 years in prison for orchestrating the murder of a businessman.

Mr Antasari has denied the charges, claiming he was framed. Before he was removed from his post, he had successfully convicted a senior prosecutor and several politicians.

The assault on the anti-graft agency has gone deeper. Two deputy chairmen were suspended from duty for three months last year amid allegations of bribery and abuse of power. They were found to have been framed, in a case implicating two wealthy businessmen and senior officials from the police and attorney-general’s office.

The two leading technocrats on Mr Yudhoyono’s economics team are also on the defensive. Sri Mulyani Indrawati, the finance minister, and Boediono, the vice-president who until last year served as central bank governor, have been severely criticised over the 2008 bail-out of Bank Century, then a small, ailing and largely unknown bank.

Rescue costs ballooned from Rp632bn ($67m, €49m, Ł43m) to Rp6,700bn. A big depositor is being questioned over how he was able to extract funds that were frozen and allegations were made that rescue money benefited donors to Mr Yudhoyono’s campaign.

Most parties represented on a parliamentary committee investigating the rescue, including some in the governing coalition, last week alleged legal wrongdoing in the bail-out.

One observer said the barrage of criticism levelled at Mrs Sri Mulyani and Mr Boediono is indicative of the power struggles within the government over budgets and control of Indonesia’s huge state-owned enterprises.

During Mr Yudhoyono’s first term, Mrs Sri Mulyani began a broad sweep against companies and members of the elite who were underpaying taxes.

“I thought that everybody was happy with the reform,” Mrs Sri Mulyani told the Financial Times. “But maybe I was wrong.”

The complexity of Indonesia’s politics is demonstrated by the fact the Golkar party – a partner in Mr Yudhoyono’s government – led many of the attacks both on the president and his allies. The ruling party under Suharto, Indonesia’s late dictator, Golkar remains a bastion of vested interests in the bureaucracy.

Aleksius Jemadu, professor at Pelita Harapan University in Jakarta, said the old guard and “especially Golkar” want “to change the domination of SBY and his Democratic party, which have the potential to marginalise their interests”.

Three Golkar legislators have been convicted for graft and Bumi Resources, a coal group controlled by the family of Aburizal Bakrie, party chairman, is being chased for tax evasion, a charge it denies.

The stakes for the country are high. “What we have been lacking in the past 10 years is really reform on bureaucracy, and that really dampens the investment climate,” said Sandiaga Uno of Saratoga Capital. “This is going to be the make or break [test] for Indonesia emerging in the next five years as a real powerhouse.”



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