Prijadi who?<\/p>\n
Some may argue that it is prejudiced and entirely unfair to
\ngive the thumbs-down to President Abdurrahman Wahid's new Cabinet
\nbefore the ministers have even been installed, let alone started
\nworking. Others may also contend the reasons why analysts raised
\nso much hell about a single minister (Minister of Finance Prijadi
\nPraptosuhardjo) out of a 26-member Cabinet.<\/p>\n
But that is precisely the verdict meted out by the market. The
\nrupiah made a 5 percent freefall and the Jakarta Stock Exchange
\nfell more than 4 percent immediately after the announcement of
\nthe Cabinet lineup on Wednesday afternoon. On Friday, the rupiah
\nregained only 0.70 percent of its loss on Wednesday and stock
\nprices inched up very little.<\/p>\n
That is the way the market operates and we have to live with
\nthis reality. The very negative market reaction to the Cabinet's
\neconomic team is based on the perception of possibilities and
\nrisks, and this perception is formed by what market players know
\nabout core members of the team.<\/p>\n
The market foresees at least three big risks inherent within
\nthe new Cabinet in so far as the process of economic recovery is
\nconcerned. The greatest risk lies in the questionable
\nqualification of the finance minister, Prijadi Praptosuhardjo,
\nwhose appointment to the Cabinet seems to be based only on his
\nlong personal friendship with the President. Prijadi's only track
\nrecord known to the market is his recent failure to pass a
\ncentral bank test of his professional and ethical qualifications
\nfor the presidency of state Bank Rakyat Indonesia.<\/p>\n
Appointing someone, whose professional and ethical
\nqualifications are in doubt, to such an important portfolio
\ncompletely unnerved the market. The problem is that the economic
\ncondition is so fragile that a very small mistake could have a
\ndevastating impact. This sense of foreboding is understandable
\nbecause the finance minister is responsible not only for fiscal
\npolicy and the state budget but, after the disbandment of the
\nministry of state enterprises, for the oversight of the 162 state
\ncompanies as well.<\/p>\n
On top of that, he also oversees the Indonesian Bank
\nRestructuring Agency (IBRA) which manages around Rp 600 trillion
\n(US$71.4 billion) worth of assets taken over from closed and
\nnationalized banks. This means that almost 80 percent of
\nproduction units in the country and all the largest banks fall
\nunder his jurisdiction.<\/p>\n
Some may still argue that a minister is only a political
\nappointee who can come and go anytime, such as in Japan or
\nThailand where the cabinet can change without causing much impact
\non the bureaucratic capacity for policy execution. But
\nIndonesia's condition is much different due to the weakness of
\nits bureaucratic institutions, stifled by 32 years of former
\npresident Soeharto's authoritarian system whereby personality was
\nparamount, loyalty was fickle and patronage the rule.<\/p>\n
Abddurrahman's stubbornness in bringing Prijadi to the Cabinet
\nagainst all odds also spooks the market. In spite of his widely-
\nrecognized moral authority and political skill, Abddurrahman is
\nalso known for his disinterest in complex economic issues.
\nTherefore, he is not seen as the best judge of the qualifications
\nof a person to fill the position of finance minister.<\/p>\n
Moreover, Abddurrahman's dogged insistence on appointing
\nPrijadi indicates his soft spot for cronysm. This is seen as an
\nominous sign and an indication that the President may intervene
\nin policy measures on the back of cronies' ill advice, while the
\nministers, as 'all the President's Men,' may not have the courage
\nto stand up against such unwarranted interference. Such a
\nsycophant attitude on the part of Cabinet ministers under
\npresident Soeharto brought the nation into its current multi-
\ndimensional crisis.<\/p>\n
The market also sees a big risk in the virtual exclusion of
\nVice President Megawati Sukarnoputri's Indonesian Democratic
\nParty of Struggle and the Golkar Party, since Megawati is
\nsupposed to be in charge of the day-to-day operations of the
\ngovernment. An adversary relationship with the House of
\nRepresentatives, which is dominated by the two parties, is the
\nlast thing the President needs right now, given that most
\ndecisions on the reform measures, sorely needed to lead the
\nnation out of its almost three years of crisis, will have to be
\napproved by the House.<\/p>\n
It is indeed a daunting task for Vice President Megawati to
\ncorrect the flaw inherent in the new Cabinet. In spite of her
\napparent disillusionment with the formation, this is a great
\nopportunity for her to show the quality of her stateswomanship by
\ndiscarding her personal feelings and doing her best to lead the
\nCabinet, seeing to it that her major faction in the House will
\nnot resort to an inordinately adversary stance against the
\ngovernment.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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