Cabinet delay frustrates market
Cabinet delay frustrates market
JAKARTA (JP): Further delays in the Cabinet announcement
frustrated the market and tempered optimism of a competent
economic team, as suspicion grew of intensified politicking
undermining the team's capability, economists said on Thursday.
Economist Faisal Basri said the ongoing delay was a strong
signal that political parties, vying for seats in the Cabinet,
had intensified their lobbying.
"People have started to wonder how a solid team can emerge
under these circumstances," he told reporters.
After two weeks since her induction, President Megawati
Soekarnoputri has yet to announce her Cabinet.
A Thursday meeting with leaders of political parties, which
backed her presidency, failed to end in agreement over the
Cabinet lineup.
President Megawati was expected to announce the Cabinet either
Friday or Saturday, but postponed it until next week for reasons
that are, so far, unclear.
Political analysts have said Megawati wanted to ensure her
Cabinet would receive broad political support by opening doors
for compromise.
"If the principle applied here is to accommodate everyone's
interests, not everyone can be satisfied," Faisal warned, adding
this could lead to more infighting within the Cabinet.
He said that if parties that favor political compromise were
given positions in the new Cabinet it could muffle critics
against the new government.
"This is political collusion, where everyone shuts their
mouths, eyes and ears," he explained.
Faisal added that, even if core members of the economic team
were credible and experienced professionals, it would be
meaningless if other ministerial posts fell victim to political
compromise.
"You can cripple a good economic team, if say, the Ministry of
Industry and Trade, the forestry ministry and the agriculture
ministry fall into the hands of political parties," Faisal said.
Confidence of a competent economic team has kept the rupiah
from falling amid strong corporate demand for the U.S. dollar.
But as President Megawati's indecisiveness has lingered, so
the market's optimism has waned. The rupiah closed on Thursday
trading down at 9,640 compared to 9,630 the day before.
The Jakarta Stock Exchange Composite Index made a hefty loss,
ending the day down 1.5 percent at 436.41 from 443.19.
Economist Pande Silalahi questioned how long market optimism
could prevail given President Megawati's slow performance.
He said that as long as she could bring out a credible
economic team, the market would not mind the long wait.
Commenting on the Cabinet lineup, he said it was unlikely
Megawati would assign ministerial posts to all the best
economists in her party, the Indonesian Democratic Party of
Struggle (PDI-P).
Some of the economists should remain behind the stage to
become Megawati's economic think tank.
"If everyone is out on the front, who is guarding home?" he
said.
According to him, President Megawati will probably retain Kwik
Kian Gie as her economic advisor to discern input from her
economic team.
Legislators and politicians also expressed their concerns over
the impact that the Cabinet delay would have on the market.
Akbar Tandjung, speaker of the House of Representatives,
admitted that he and his Golkar Party did not know the reasons
behind President Megawati's decision to defer forming her
Cabinet, but said this could receive a negative response from the
market and raise negative speculation about her new government.
"We suggested that the Cabinet lineup be announced this
weekend, amid the market's positive response to the new
government; but the President has decided to do it next Thursday,
for reasons that are unclear," he said, after a meeting of party
leaders.
Akbar said the urgent task for the new government was to
stabilize the rupiah's exchange rate to win the confidence of
domestic and foreign markets in Indonesia's economy.
"We fully support Megawati's government and we hope the market
will not raise negative sentiments against it," he said.
(bkm/rms)