Indonesian tycoon gets top coalition job : Golkar official
Indonesia's president has given a prominent tycoon a senior post in his coalition, in a sign the political old guard may be regaining influence at a critical time. Saturday, 08 May 2010 16:40
Indonesia's president has given a prominent tycoon a senior post in his coalition, in a sign the political old guard may be regaining influence at a critical time in a power struggle with reformers.
The appointment of Suharto-era businessman Aburizal Bakrie comes at a time of considerable uncertainty over President Susilo Bambang Yudhoyono's commitment to fighting widespread corruption, seen as crucial to attracting investment and spurring economic growth.
On Wednesday, Finance Minister Sri Mulyani Indrawati, the country's top reformer, quit to join the World Bank, in what many analysts consider a setback for the reform drive, in particular of the bloated and corrupt civil service.
Her chief adversary was Bakrie, head of the Golkar Party which is a member of Yudhoyono's coalition; Bakrie has now assumed the role of managing chairman of Yudhoyono's coalition, a senior Golkar official told Reuters on Saturday, confirming local media reports.
"The decision was taken two or three weeks ago," said Theo L. Sambuaga, a deputy chairman of Golkar.
He said that in some situations, the coalition's meetings would be led by Bakrie, for example in the absence of Yudhoyono, the chairman.
"This signals a profound shift -- a resurgence for the fortunes of the Bakrie Group and a major retreat by Yudhoyono from reform," said Kevin O'Rourke, a Jakarta-based political risk analyst.
"It will likely stall institutional reforms needed to sustain growth and Indonesia's democratic transition, including reforms of the civil service and judiciary, as well as anti-corruption efforts and regulatory professionalism."
Indrawati and Bakrie had clashed on several occasions.
The finance minister pushed ahead with reforms that hurt many of the country's old-style businessmen and corrupt officials, for example by clamping down on smuggling and tax evasion.
Bakrie's Golkar Party joined the opposition parties in parliament in pushing for an investigation of Indrawati and another leading reformer, Boediono, over their decision to bail out a small lender during the financial crisis.
Yudhoyono backed both Indrawati and Boediono, and no evidence was found of their wrongdoing.
Sri Mulyani Indrawati, Indonesia’s well-regarded finance minister, will leave Jakarta next month to take a senior position with the World Bank in a move that could have long-term consequences for the country’s booming economy, stock market and anti-corruption drive.
Her sudden departure is seen as a compromise to end battles between the government and legislators. Powerful lawmakers have spent months trying to orchestrate the ouster of Ms Mulyani and Boediono, the vice president, for alleged errors in approving the 2008 bailout of Bank Century, an ailing private lender.
While Susilo Bambang Yudhoyono, president, has publicly backed the two officials, sniping lawmakers in recent weeks have continued their attacks on the internationally respected economists. The tussle has been widely portrayed in the media as a battle between honest reformers trying to push Indonesia into the 21st century versus corrupt, old-school vested business interests from the era of Suharto, the late authoritarian president.
The Jakarta Composite Index was down 3.2 percent at midday, its biggest drop in nearly a year, following news of Ms Mulyani’s pending departure. The central bank announced it had decided to keep its benchmark reference rate steady at 6.5 per cent.
Ms Mulyani is widely credited with spearheading key macroeconomic reforms that helped make Indonesia the world’s third-best performing economy in 2009. She has been lauded by the World Bank and others for her reform drives and anti-corruption efforts, including cleaning out the state Customs Department and more recently the Directorate-General of Taxation.
“It’s a big loss for our country. She’s been one of the best finance ministers we’ve ever had,” said Edwin Sinaga, president director of brokerage PT Financorpindo Nusa in Jakarta. “Right now, I don’t think we have the candidate to replace her.”
The House of Representatives spent more than two months investigating the Bank Century bailout following now-discounted allegations that money went missing. In what was widely seen as a political witch hunt, the House declared Ms Mulyani and Mr Boediono as “most responsible” for the $730m rescue and demanded they be investigated by law enforcement agencies.
“The [World Bank] news is correct,” Ms Mulyani told reporters. “[But] I am currently still doing my job at the finance ministry in these transition weeks.”
Ms Mulyani has been in the cabinet since 2004 and was not expected to remain until its current term expires in 2014.
One of the chief political figures who called for Ms Mulyani’s removal was Aburizal Bakrie, one of Indonesia’s richest men and chairman of the powerful Golkar party. Mr Bakrie and Ms Mulyani publicly sparred when they both served as ministers in Mr Yudhoyono’s first cabinet, and Ms Mulyani said last December that Golkar lawmakers wanted her out because they disagreed with her reform program.
Ms Mulyani’s sudden move to the World Bank leaves the appearance that Mr Yudhoyono reached a compromise with Mr Bakrie and Golkar, which still plays a key role in running the country and economy.
“I think this was a political resolution regarding Bank Century,” said one Jakarta-based market analyst who declined to be named. “I imagine that the tax investigations against the Bakries will also be dropped, but it will put the onus on Yudhoyono on whether he can go forward with his reforms.”
In announcing his appointment of Ms Mulyani as one of three managing directors, Robert B. Zoellick, World Bank president, said, “She has been an outstanding finance minister with in-depth knowledge of both development issues and the role of the World Bank Group,” he said. “As a member of the senior team she will play a key role in helping to lead the bank as we move to strengthen client support, implement our reform program, and anticipate future challenges.”
Ms Mulyani, 47, will replace Juan Jose Daboub, who will complete his four-year term on June 30. In her new role Ms. Indrawati will supervise Latin America and the Caribbean, the Middle East and north Africa, and east Asia and the Pacific.