Mon, 29 Mar 2010


By Mulyanda Djohan
JAKARTA, March 29 (Xinhua) -- The hope is high that the Indonesian government led by re-elected President Susilo Bambang Yudhoyono could continue to push for reform plans, although the progress may not run as smoothly as expected.

A strong support from parliament, as his Democrat Party has formed a coalition and control over 70 percent seats, is expected to help pave the way for the president to implement his policies to boost gross domestic product, reduce poverty and unemployment, and boost investment climate in the country with over 230 million population.

Yudhoyono has been hailed by investors and international communities for his success to create stability, strong economic fundamental, overhaul legal institutions, bureaucracy and crack down corruption in the Southeast Asia's largest economy.

However, the president's cabinet must face an attack on a bailout case of a small bank, Bank Century, and must involve in the settlement of the controversial conflict between the police and the anti-corruption watchdog, which may cause social unrest.

The case may hamper the government's concentration to boost infrastructure as an effort to increase economic efficiency to raise competitiveness during the implementation of some free trades with several foreign countries.

The president must face and counter the accusation from opposition that his party has used some of the 6.7 trillion rupiah (some 730 million U.S. dollars) bailout funds for his presidential campaign.

Besides, he must defend two of his top reformers in the cabinet, Vice President Boediono and Finance Minister Sri Mulyani Indrawati from demand for their resignation. The approval of the two reformers on the rescue funds in 2008 has been considered illegal by the parliamentary inquiry team, although they have explained that the decision aimed at preventing the country from the deepening impact of the global crisis.

Analysts have warned that the resignation of the two reformists may disappoint investors and market.

The bailout case seems to end the coalition formed by the president's Democrat Party, as most of coalition partner supported Democrat Party's final recommendation at the parliamentary inquiry team. It may lead the president to reshuffle his cabinet.

Recently, a new case which is expected to be able to crack down the massive corruption in police has appeared. A senior police officer has made a testimony to media over the mafia case which involve bribery among the top police officers and those in tax office.

This case is hailed by the public thank to Indonesia's press freedom and public courage to express their support on the truth, which are much different from that of at the 32-year-era of dictator former president Soeharto.

Many expect that such case would be a momentum to clean the police institution, which has made a tremendous success in fighting terrorism in the country institutions, and the tax office, in which graft is still the main obstacle in creating favorable investment climate.

Under President Yudhoyono's administration since 2004 scores of officials from lawmakers to active central bank governor have been sent to jail and undergone legal process for corruption charges, the first ever in the history of the nation.

Investors expected him to continue and strengthen his policies at his second term.

But, President Yudhoyono's clean government reputation could be destroyed should the court find later the that some of the bailout funds is proven to have been used for his presidential campaign.

The success of Indonesia's reform has led Fitch and Moody rating investors to raise Indonesia investment grade recently to one notch under investment grade.

The Indonesian finance minister recently said that she was optimistic that the grade may jump to investment grade within one year. Fitch advised Indonesia to boost monetary and fiscal policies to lift the grade.