The new central bank chief<\/p>\n
The House of Representatives election of Burhanuddin Abdullah
\nas the new governor of Bank Indonesia strongly proved that high
\nmorality and integrity were the most important factors assessed
\nin the interview process of the three candidates that were
\nsubmitted by President Megawati Soekarnoputri in February.<\/p>\n
That was precisely called for by the 1999 Central Bank Act,
\nwhich stipulates, among other things, that the central bank
\ngovernor shall possess high standards of morality and integrity.<\/p>\n
Burhanuddin, 56, will thus become the first governor of the
\ncentral bank that underwent a democratic selection process at the
\nHouse since Bank Indonesia became a politically independent
\ninstitution in May 1999.<\/p>\n
Thirty four, or 64 percent, of the 52-member House Finance and
\nBanking Commission voted on Monday night for Burhanuddin, a
\ncareer central banker, and the other 18 members for Miranda
\nSwaray Goeltom, currently a deputy governor at the central bank.<\/p>\n
Cyrillus Harinowo, though highly respected for his high moral
\nand impeccable integrity, predictably failed to gain even a
\nsingle vote because he was virtually unknown to the major
\nfactions at the House commission.<\/p>\n
Miranda, who commands a high degree of popularity thanks to
\nher role as the articulate spokesperson of the central bank, was
\ninitially tipped as the favored candidate to win the Bank
\nIndonesia top slot, especially because she was backed by the
\nsingle largest faction, the Indonesian Democratic Party of
\nStruggle (PDI Perjuangan).<\/p>\n
However, her chances were hurt over the last few weeks by wide
\ndisclosures of her questionable involvement in businesses and
\nquestionable transactions in Bank Indonesia securities. Her
\nspecial questioning by the commission in charge of verifying the
\npersonal assets of state officials (KPKPN) also raised many
\neyebrows regarding her probity.<\/p>\n
Burhanuddin's appointment will certainly be welcomed by the
\nmarket. Even though he was a career central banker, he was never
\nimplicated in any of the scandals and allegations of corruption
\nand collusion which beleaguered Bank Indonesia during the peak of
\nthe economic crisis in 1997-1999.<\/p>\n
During this period, Burhanuddin was a director in charge of
\nforeign economic relations before he was appointed a deputy
\ngovernor in early 2000. He is therefore well-positioned to make a
\nclean break from the central bank's scandal-tainted past.<\/p>\n
His four years of working experience at the International
\nMonetary Fund executive board from 1989 to 1993 should have
\nbroadened his expertise in global monetary affairs.<\/p>\n
His one month stint as the chief economics minister in June
\n2001, should have provided him with a good opportunity to
\nunderstand the operations of the government bureaucratic
\nmachinery, thereby making him more able to manage good
\ncoordination with the fiscal authorities.<\/p>\n
Hence, in terms of integrity, technical competence,
\nmanagerial capability and leadership, Burhanuddin appears to be
\nthe most qualified to lead the central bank in exercising its
\nfunction as the bedrock of the monetary system, the guardian of
\nmonetary policy and the arbiter of the financial system.<\/p>\n
Technical competence is indeed crucial for the chief of the
\ncentral bank because monetary policy is the most-closely watched
\nindicator of economic policy, and monetary policy action tends to
\nhave a fairly immediate impact on real economic activities.<\/p>\n
In fact, it is the integrity and leadership of its chief that
\ninspires market confidence in an institution, notably such a
\npolitically independent one like the central bank.<\/p>\n
The central bank has thus far performed fairly well, despite
\nthe politically turbulent period it underwent in 2000 when the
\ncurrent governor Sjahril Sabirin was found guilty of corruption
\nbut was eventually acquitted of all charges by the Supreme Court.<\/p>\n
Nevertheless, the challenges facing Burhanuddin are no less
\ndaunting, especially with regard to the urgent need for restoring
\nthe institutional integrity of the central bank. Moreover, unlike
\ncentral banks in most other countries which are tasked only with
\neither maintaining currency stability or guarding inflation
\nrates, Bank Indonesia is responsible for maintaining the
\nstability of the rupiah, general price stability (low inflation)
\nand banking supervision, at least for the next three to five
\nyears.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-new-central-bank-chief-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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