Market, analysts give thumbs-down to economic team<\/p>\n
JAKARTA (JP): Analysts and the market gave a thumbs-down to
\nPresident Abdurrahman Wahid's choice of new economic ministers,
\nparticularly the new Minister of Finance Prijadi Praptosuhardjo.<\/p>\n
The rupiah immediately tumbled from a 3-month high of Rp 8,090
\nper U.S. dollar before the announcement of the new Cabinet to Rp
\n8,365 to the dollar in late trading on Wednesday.<\/p>\n
\"Prijadi is a problem because he did not even pass the central
\nbank's fit-and-proper test,\" University of Gadjah Mada (UGM)
\neconomist A. Tony Prasetiantono said.<\/p>\n
Prijadi, a close friend of the President, was a former
\ndirector at state-owned Bank Rakyat Indonesia (BRI). The
\nPresident had previously insisted that Prijadi be appointed
\nBRI's president, but unfortunately he didn't pass Bank
\nIndonesia's fit-and-proper test due to past mistakes he
\nreportedly made at BRI.<\/p>\n
But Abdurrahman immediately defended his choice on Prijadi.
\n\"I know him very well because I have observed him for more than
\n16 years,\" he said in reply to a reporter's question immediately
\nafter the announcement of the new Cabinet.<\/p>\n
Prijadi will replace Bambang Sudibyo.<\/p>\n
\"I think Bambang is much better than Prijadi,\" Tony added.<\/p>\n
He also questioned Prijadi's limited expertise in macro
\neconomic and fiscal issues.<\/p>\n
\"His background as a banker is not sufficient to hold the
\nfinance minister portfolio which requires fiscal expertise,\" he
\nsaid.<\/p>\n
Tony said that the new Coordinating Minister for Economic
\nAffairs Rizal Ramli had sufficient \"quality and economic
\nexpertise\", but the problem was that a coordinating minister must
\nbe supported by a credible finance minister to help bring the
\ncountry out of its economic crisis.<\/p>\n
Rizal is currently Head of the State Logistics Agency (Bulog).
\nHe was previously an economic analyst and consultant.<\/p>\n
Rizal will be assisted by Cacuk Sudarijanto, currently
\nChairman of the Indonesian Bank Restructuring Agency (IBRA), who
\nwas appointed as Junior Minister for Economic Restructuring in
\nthe new Cabinet.<\/p>\n
Another UGM economist, Sri Adiningsih, said that the
\nappointment of Rizal and, even more notably, Prijadi was against
\nfinancial market expectations.<\/p>\n
\"The market doubts Prijadi's capability after he failed to
\npass a test even just to become the president of a bank,\" Sri
\nsaid.<\/p>\n
\"Rizal Ramli is not welcomed by the market either. So there's
\na strong impression that Gus Dur (the popular nickname of
\nAbdurrahman) is forcing his own will at the expense of the
\ncredibility of his Cabinet,\" she added.<\/p>\n
Sri said that the government will be facing a formidable task
\nin obtaining the market's confidence with the new economic team.<\/p>\n
Megawati<\/p>\n
Sri said the market also questioned the absence of Vice
\nPresident Megawati Soekarnoputri during the announcement of the
\nnew Cabinet lineup.<\/p>\n
The failure of Kwik Kian Gie, a confidant of Megawati, to be
\nreappointed as the coordinating minister for economy, finance and
\nindustry, is seen by the market as a potential source of conflict
\nbetween the President and Vice President.<\/p>\n
Kwik, together with Indonesian Ambassador to the U.S.
\nDorodjatun Kuntjoro-Jakti, had been championed by the market to
\nhold the top economic minister post.<\/p>\n
Centre for Strategic and International Studies (CSIS)
\neconomist Pande Radja Silalahi said that individually the new
\neconomic ministers had the necessary expertise in their
\nrespective fields, although in the case of Prijadi there was a
\npublic image problem.<\/p>\n
\"But the question now is can the President or Vice President
\nmake them an effective economic team to resolve the country's
\neconomic crisis,\" Pande said.<\/p>\n
The previous economic team had been criticized for their
\nineffectiveness and lack of team work.<\/p>\n
\"As for Prijadi, he must work hard to prove that he is
\ncapable. This will not be easy,\" Pande said.<\/p>\n
Meanwhile, president of the Jakarta Futures Exchange (JFX)
\nHasan Zein Mahmud said that the appointment of the new economic
\nministers was a total disappointment to the financial market.<\/p>\n
\"In the short term, we may see the rupiah plunging. I wouldn't
\nbe surprised if it reached the Rp 10,000 level,\" said the former
\npresident of the Jakarta Stock Exchange (JSX).<\/p>\n
Hasan said Rizal's appointment would not please the
\nInternational Monetary Fund because he had recently recommended
\nan overall review of the government's deal with the IMF.<\/p>\n
The IMF is organizing a multi-billion dollar bailout to help
\nthe country finance its economic reform programs. The IMF is
\nscheduled to disburse another US$400 million later this month.<\/p>\n
Goei Siauw Hong, an analyst from Nomura Securities company,
\nsaid the market was quite uncomfortable with the economic team,
\nas can be seen from the fall in the rate of the rupiah
\nimmediately after the announcement.<\/p>\n
\"The absence of Vice President Megawati Soekarnoputri from the
\nannouncement ceremony also raised a big question, especially
\nbecause she is supposed to manage the Cabinet,\" Hong added.<\/p>\n
He said appointing Prijadi, who failed in April to pass a fit-
\nand-proper test for the presidency of state Bank Rakyat
\nIndonesia, as the finance minister \"was too much\".<\/p>\n
\"This simply means that President Abdurrahman stubbornly
\nforced his will on the Cabinet,\" Hong said in a RCTI television
\nbroadcast.<\/p>\n
Hong doubted the objectivity of what he considered a personal
\nassessment by Abdurrahman of his friend, Prijadi.<\/p>\n
'Black' conglomerate<\/p>\n
Hong also cited Rizal's association with what he dubbed as a
\n'black' conglomerate, claiming that it was a negative factor that
\ncould affect his integrity in the market.<\/p>\n
Rizal acted as a consultant for the Texmaco Group last
\nNovember when the widely-diversified conglomerate faced a
\nnational controversy and charges of corruption in relation to the
\nalleged abuse of $1.3 billion in government loans it had received
\nin 1997 on the back of a strong recommendation from then
\nPresident Soeharto.<\/p>\n
Before his appointment as head the National Logistics Agency
\nin April, Rizal was a founding director of an economic research
\nagency, Ekonit, which he set up together with former Minister of
\nState Enterprises Development Laksamana Sukardi, who disclosed
\nTexmaco's alleged credit scam last October.<\/p>\n
Analyst Sjahrir said he was not surprised by the new Cabinet
\nline-up.<\/p>\n
\"What the President did was simply appoint his own men. The
\nCabinet is nothing but all the President's men,\" Sjahrir told the
\nSCTV television broadcast.<\/p>\n
He agreed with other analysts that the new finance minister,
\nPrijadi, is the most contentious appointee, given his failure in
\nApril to pass a fit-and-proper test by the central bank for the
\npresidency of Bank Rakyat Indonesia.<\/p>\n
\"But I reckon Gus Dur is not concerned about the finance
\nministry. What he thinks is at stake with the new Cabinet is the
\nfuture of his presidential seat,\" Sjahrir added.<\/p>\n
Rizal, Prijadi and Cacuk Sudarijanto, the junior minister in
\ncharge of economic restructuring seconded to Rizal, are all
\nconfidants of the President, according to Sjahrir.<\/p>\n
\"Cacuk will be very powerful if his area of responsibility
\nincludes the oversight of state enterprises and if he retains his
\ncurrent position as chief of the Indonesian Bank Restructuring
\nAgency (IBRA),\" Sjahrir added.<\/p>\n
The new Cabinet no longer has a minister in charge of state
\nenterprises and investment promotion.(rei\/bkm\/vin)<\/p>",
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