Dian Ariffahmi, Teguh Prasetyo & Venissa Tjahjono
The appointment of MS Hidayat as industry minister has been welcomed by the Indonesian Employers Association (Apindo). The group is confident that Hidayat’s frequent anti-free trade stances would not seriously disrupt cooperation with the Trade Ministry.
Under Hidayat’s predecessor, Fahmi Idris, the Industry Ministry was often at loggerheads with the Trade Ministry, especially over the issue of whether Indonesia should join more free-trade agreements.
While Hidayat is also a FTA-skeptic and has been outspoken in voicing his concerns about the threat they pose to domestic industry, Apindo expects Hidayat to have a closer and more fruitful relationship with Trade Minister Mari Elka Pangestu, who has been reappointed to a second term.
“There is no conflict between them,” said Apindo chairman Sofyan Wanandi. “They’re good friends and can communicate with each other just fine as long as it is for the sake of the nation’s economy.
“Hidayat has built a strong network of relationships with entrepreneurs during his time as chairman of Kadin [Indonesian Chamber of Commerce and Industry],” Sofyan added. “He can act as an intermediary to push industry forward.”
On Wednesday, Hidayat and Mari held a closed-door meeting in an effort to build cooperation and coordinate their stands on key issues.
After the meeting, Hidayat said he had requested that the Trade Ministry consult with the Industry Ministry before any new FTA agreements were signed by Indonesia. “I have had a discussion with Mari. We have identified some crucial problems and have agreed that the Trade Ministry must take industrial competitiveness into account,” Hidayat said.
“So before we sign the next FTA, it must be discussed with the major players in national industry. Mari took my views on board and promised regular coordination between the ministries on these issues.”
Mari declined to comment about the meeting.
Indonesia is a party to the Asean-China Free Trade Agreement, signed in Bangkok in mid-August. It comes into effect in 2010.
It’s also a party to the Asean-Australia-New Zealand Free Trade Agreement, the Asean-India Free Trade Agreement and a bilateral FTA between Indonesia and Japan.
Indonesia is also currently in bilateral free-trade negotiations with New Zealand.
Djimanto, secretary general of Apindo, urged the Trade Ministry to play a more significant role as a facilitator between producers and consumers and to make sure Indonesian products are more competitive with imports.
“Business people also expect Mari Pangestu to help reduce costs caused by so many overlapping trade regulatory bodies responsible for labeling and supervising product quality,” he said.
Energy: Darwin Saleh
Darwin Saleh appears happy. President Susilo Bambang Yudhoyono has just chosen the 49-year-old University of Indonesia economics lecturer to replace Purnomo Yusgiantoro as the next minister of energy and mineral resources.
Darwin, who holds a PhD in financial management and an economics degree from the University of Indonesia, lacks energy-sector experience. But the father of three said he felt confident that he could take the reins from Purnomo, who has led the ministry for nine years. “Many people doubt that I can do this job, given my background,” Darwin said. “But I have studied energy issues and I am confident I can do the job.”
Darwin, who currently heads the Democratic Party’s economics and finance division, declined to reveal any specific policy plans, but offered a few hints.
“We need to reshuffle the bureaucracy,” he said.
He added that he would maintain many of Purnomo’s policies, such as a focus on the development of renewable energy. One of his first priorities would be to establish fuel stocks to last for a minimum of 23 days.
Beyond that, he said he would need to review Purnomo’s policies on specific issues, such as the domestic price of natural gas from the Donggi-Senoro project, before setting the direction of energy policy. He also said he would try to increase investment in the energy sector.
Pri Agung Rakhmanto, an energy analyst at the Reforminer Institute, said bureaucratic reform should not be a priority. “The potential threat of rising oil prices is a more important issue. The electricity crisis and unresolved issues related to the Donggi-Senoro project are far more pressing concerns,” he said.
But Pri said he thought Darwin could overcome his lack of experience in energy. “There is a huge experience gap between Darwin and [Purnomo],” he said. “Darwin will need to think carefully about how he will tackle problems in the energy sector and he must not make decisions that are biased toward the interests of other departments.”
Kurtubi, an independent energy analyst, said the new minister should streamline regulations in the energy and mineral resources sector to help attract more investment.
The fifth of eight children, Darwin has an MBA from the Middle Tennessee State University in the United States. He started teaching in 1990 and was an assistant lecturer at the university in 1993 before returning to Indonesia.
He has also worked at PT Kutai Timber Indonesia and PT Bahana Securities.
Relative Unknown Surprise SOE Minister
Janeman Latul & Venisa Tjahjono
A relatively unknown former caretaker governor of Aceh has beaten out some of the country’s most-high profile candidates, including the incumbent minister and the president director of the country’s largest bank, to take over as state enterprises minister.
President Susilo Bambang Yudhoyono, who has in recent weeks praised outgoing Minister Sofyan Djalil, on Wednesday named a former classmate, 60-year-old Mustafa Abubakar, as state enterprises minister.
Mustafa, a native of Pidie, Aceh, also edged out PT Bank Mandiri president director Agus Martowardoyo, who was initially seen as a leading candidate for the job.
Mustafa most recently served as president director of the State Logistics Agency (Bulog). He has also worked as inspector general at the Ministry of Maritime Affairs and Fisheries.
His appointment drew mixed reactions from analysts. Some said he lacked experience in the corporate world, while others said they feared the restructuring of state-owned enterprises would be delayed until he learned the ropes. Other analysts, however, said his short tenure at Bulog - just a little more than two years - could help him with the challenges he will face in his new post. “The president asked me to lead the ministry, but I felt that I lacked experience,” Mustafa said.
Yanuar Risky, an independent market analyst, said he was skeptical about Mustafa’s credentials. “What I see from the new cabinet is that competency was not a top factor [in appointments],” Yanuar said. “Mustafa’s track record neither speaks to his competency nor is it suitable for transforming SOEs so they can compete internationally.”
A senior economist at a state-owned brokerage firm also questioned Mustafa’s credentials.
“He only has a background in fisheries and agriculture,” the economist said, on condition of anonymity. “Why should he be selected as the SOE minister? Sofyan and Agus would have been better.”
Poltak Holtadero, head of research at PT Recapital Securities, said the market should withhold judgment until Mustafa had been given a chance to prove himself.
Former State Enterprises Minister Tanri Abeng praised Mustafa’s leadership at Bulog. “Mustafa is qualified for the position,” Tanri said.
Sofyan, Mustafa’s predecessor at the State Enterprises Ministry, credited Mustafa with making major changes at Bulog, particularly for creating the rice self-sufficiency program.
Mustafa earned a PhD at Bogor Agriculture Institute. He graduated the same year as Yudhoyono.
Suswono Pledges to Work for Farmers
Newly appointed Agriculture Minister Suswono is no stranger to his new assignment.
The cellphone of this politician from the Prosperous Justice Party (PKS) has recently been inundated with hundreds of congratulatory text messages from farmers and heads of farming groups.
“I haven’t been able to answer them all,” he said, smiling. “The messages keep on coming.”
Suswono, 50, was born in Tegal, Central Java. In 1984, he enrolled at the Bogor Institute of Agriculture, where he earned a master’s degree in agricultural management.
In 2004, he was elected to the House of Representatives, serving as deputy speaker for Commission IV, which oversees agriculture, plantations, forestry and marine, and fisheries and food affairs.
He has contributed numerous articles on agriculture-related topics to newspapers. In 2007, he published a book, “Bangkitlah Petani dan Nelayan Indonesia” (“Indonesian Farmers and Fishermen, Wake Up!”). Suswono said his main goals as agriculture minister would be to increase the amount of land available to farmers, ensure that they have better access to capital, and review the government’s agricultural subsidy system.
Because of the difficulty of eking out a living from a small plot of land, Suswono is keen to restart the transmigration program to give farmers access to more land.
“I have already talked with the National Land Agency [BPN],” he said. “There are seven million hectares of land outside of Java Island that are suitable for food crops. We can use that land to increase farmers’ welfare.”
Suswono also wants to change the government’s current price-subsidy mechanism for fertilizer and seeds. The system has been subject to fraud and has not benefited farmers, he said.
He added that he will look into paying subsidies directly to farmers instead of producers.
“There will be a pilot project in some areas to test the new subsidy mechanism,” he said.
President Susilo Bambang Yudhoyono has also identified 10 agricultural issues he wants Suswono to concentrate on. They include food security and rice self-sufficiency, boosting farm and plantation productivity, increasing farmers’ buying power by raising their incomes, and lifting cattle production to achieve red meat self-sufficiency by 2014.
Suswono said the goals could be achieved during his five-year term. As agriculture minister, he now has the power to make sure he won’t be letting his text-messaging well-wishers down.