The Boediono factor<\/p>\n
Boediono's appointment as coordinating minister for the
\neconomy is surely the main point of interest in the Cabinet
\nshuffle announced by President Susilo Bambang Yudhoyono on Monday
\nnight.<\/p>\n
The Wharton-trained economist, who was finance minister
\nduring Megawati Soekarnoputri's administration from 2001 to 2004,
\nmore than any other person was responsible for Indonesia's return
\nto macroenomic stability following the 1997 financial crisis. He
\ncommands a great deal of respect both at home and abroad for his
\nintegrity and competence.<\/p>\n
Boediono's record as finance minister is even more impressive
\nconsidering it was achieved in extremely difficult circumstances,
\nwhen the country was still under the tough oversight of the
\nInternational Monetary Fund, the highly assertive House of
\nRepresentatives was eager to meddle in the nitty-gritty of
\neconomic policy and foreign investors remained reluctant to
\nreturn to the country. And, of course, Megawati rarely reached
\nout to the public to argue for economic reforms.<\/p>\n
With Sri Mulyani Indrawati, formerly the head of the National
\nDevelopment Planning Board, being named finance minister and Mari
\nPangestu being retained as the trade minister in the new Cabinet,
\nSusilo has formed a solid economic team, which, as Boediono
\nhimself has acknowledged, is key to successful economic
\nmanagement.<\/p>\n
The other new members of the economic team -- industry
\nminister Fahmi Idris and the new state minister for national
\ndevelopment planning\/National Development Planning Board
\nchairman, Paskah Suzetta, both from the Golkar Party, and
\nagriculture minister Anton Apriyantono of the Prosperous Justice
\nParty (PKS) -- seem to have been appointed more for their
\npolitical parties' support for Susilo's government, rather than
\nfor their technical competence and track records<\/p>\n
Boediono will go a long way toward improving the integrity
\nand credibility of the government's economic policy-making,
\nunlike his predecessor, businessman Aburizal Bakrie, who
\nconstantly found himself under suspicion for having conflicts of
\ninterest. Boediono's knowledge of the bureaucracy, which is
\ncrucial for his role as coordinating minister, is impressive
\nthanks to his previous stints as state minister for national
\ndevelopment planning and deputy governor of Bank Indonesia.<\/p>\n
Boediono's calm and careful approach to getting things done
\nwill also serve him well as his team works to persuade the House
\nof the merits of government reform packages. We were deeply
\nimpressed by the patience Boediono showed when, as finance
\nminister, he spent about half of his time persuading and prodding
\nHouse members to approve the government's economic reforms.<\/p>\n
However, to be effective Boediono and his team must have the
\nfull trust and backing of the President. Only this will allow the
\neconomic team to draft and implement coherent and consistent
\neconomic policies.<\/p>\n
Boediono realizes the importance of a coherent and credible
\nstrategy that outlines how the various individual policies hang
\ntogether, outlining the broad direction in which the economy is
\nbeing steered. This is an important element that was notably
\nlacking under the previous economic team due to a lack of strong
\nand credible leadership.<\/p>\n
The President must shield his new economic team from
\nintervention by vested interests, and should see to it that
\nBoediono, as the chief economics minister, is fully in charge of
\ndrafting and implementing economic policies, based on the
\ndirection set by Susilo.<\/p>\n
The new economic team will have to hit the ground running
\nbecause the economy remains the country's most troublesome
\nsector. Further strengthening macroeconomic stability, in itself
\na formidable task, is not enough. Macroeconomic stability must be
\ntranslated into vibrant microeconomic sectors to generate
\nproductive jobs.<\/p>\n
Boediono must act immediately to improve coordination between
\nfiscal and monetary policies in the current high inflationary
\nenvironment, and expedite the disbursement of the 2005
\ndevelopment budget, of which only about 30 percent has so far
\nbeen realized.<\/p>\n
He should also resume the restructuring of the finance
\nministry, which seems to have been stopped by bureaucratic
\ninertia and vested interests, to allow the ministry to perform
\nits new functions as stipulated in the Law on State Finances and
\nthe Law on the Treasury.<\/p>\n
He should exert strong leadership to gain a national political
\nconsensus on the tax and customs bills being deliberated by the
\nHouse. It is worth remembering that inefficient and corrupt tax
\nand customs services have proven to be the main barriers to new
\ninvestment.<\/p>\n
Boediono cannot perform miracles, but his impeccable
\nintegrity, credibility and competence will help improve the
\ncredibility and consistency of the government's economic policy-
\nmaking, as well as showing the market in which direction the
\neconomy is being steered.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-boediono-factor-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}