Analysts skeptical of new economic ministers
JAKARTA (JP): Analysts doubted the Cabinet reshuffle by President Abdurrahman Wahid on Monday would improve the ability of the government's economic team to lead the country out of its crisis.
They also warned the move might create negative market sentiment.
University of Gadjah Mada economist A. Tony Prasetiantono said the merits of the replacement of State Minister of Investment and State Enterprises Development Laksamana Sukardi with Rozy Munir were highly "questionable".
Tony said Laksamana brought with him a proven track record as a banker, and held a strong vision of how to develop state enterprises and attract investment back to the country.
Rozy is known as an executive of the National Awakening Party, which was founded by the President.
He noted Laksamana was often in conflict with Rozy, the secretary-general at his office, regarding the management of state companies.
"I was really surprised by Gus Dur's choice of Rozy. Maybe the President received ill advice or heard inaccuracies about Laksamana's conduct," Tony told The Jakarta Post.
Laksamana is also chairman of the Jakarta Initiative Task Force, an agency created by the government to help facilitate the restructuring of the country's massive corporate debt overhang.
It was unclear if Laksamana would also leave the latter position.
Tony added that Minister of Trade and Industry Jusuf Kalla's replacement by Army Lt. Gen. Luhut Panjaitan, currently the ambassador to Singapore, was not a good choice either.
He acknowledged doubting Kalla's ability to lead the ministry from his appointment in October because he had no experience in dealing with the World Trade Organization (WTO).
"The most difficult task of this ministry is to lobby the WTO," he said.
Tony said Kalla also lacked the vision to develop domestic trade and industry despite his business background.
"But Panjaitan is not the best choice as he is also lacking in this field. He may be successful in lobbying in Singapore, but it needs more than this to lobby and deal with the WTO," he said.
Tony said the financial market would be "skeptical" about the choice of the two new ministers.
He added it would further damage confidence in the economy, which was badly hit by last week's downgrading of the country's long-term foreign currency issuer credit rating to selective default by Standard & Poor's.
Head of research at BNI Securities Adrian Rusmana concurred the third Cabinet reshuffle by Abdurrahman would send a signal of instability to the market.
"This could create negative market sentiment."
However, he added the reshuffle could also be construed as a strong indicator the President was now in full control of his Cabinet because most of the important portfolios were held by his close allies.
"Let's wait and see," he said.
The reshuffle was long rumored in the capital, particularly due to the President's disappointment about in-fighting among the economics ministers which resulted in the delayed implementation of many reform measures.
There have also been rumors that Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie will be replaced.
Head of Research at PT SG Securities Lin Che Wei believed the reshuffle was an effort by Abdurrahman to enhance the performance of his economic team.
"They cannot adopt and pursue a good strategy if they do not profess mutual trust and mutual understanding," he said,
Lin warned that Abdurrahman's appointment of people from his own political party or organization would inevitably cause suspicion the President was attempting to centralize power.
"This might cause the market to be nervous."
He said the President should have picked technocrats instead of members of political parties for his economic team. (rei/udi)