Markets down a bit on SBY's Cabinet

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta stock market tumbled on Thursday amid reservations from investors over the Cabinet of President Susilo Bambang Yudhoyono, specifically the ministers dealing with money matters.

Some market analysts theorized that the team may be unwilling to push through badly needed economic reform programs.

The Jakarta Composite Index ended at 0.79 percent or 6.622 points lower at 834.169, off its intraday low of 824.597, extending losses for the seventh consecutive day.

"The market expected too much from the new President. They are expecting figures who can bring drastic economic reforms, but it turns out to be fairly disappointing," said stock and currency analyst Ryan Kiryanto of Bank BNI.

Ryan said the market had never expected that Yusuf Anwar would be appointed as finance minister, nor did it expect that Aburizal Bakrie would be named Coordinating Minister for the Economy.

Yusuf, a veteran finance ministry bureaucrat, is considered a figure with links to the past governments and does not reflect the drive for sweeping changes in economic management.

Yusuf was the secretary-general of the Ministry of Finance during the Soeharto era in 1993.

Meanwhile, Aburizal is a business tycoon who is also a politician from the Golkar Party. Several analysts have criticized him for his companies' poor record in repaying debts to international creditors after the Asian financial crisis in late 1997.

The disappointment came as Susilo selected his Cabinet, apparently with eye on balancing political appointees with professionals, in order to make enough compromises to appease what could become a hostile House of Representatives. His small political party, the Democratic Party only controls 10 percent of House seats.

However, it seems that the professionals may have also been selected based on input from politicians, thus causing suspicions on the part of investors that the economic ministers were selected based on "horse-trading".

"I think during their first 100 days in office they will mostly focus on trying to adapt among themselves. This is just a waste of time. Yusuf and Aburizal should immediately lay out the government's short-term programs in order to raise market confidence," said Ryan.

Analysts feared that a failure by the ministers to come up with concrete policy actions within the first 100 days would cause business confidence in the new government to decline, and eventually hamper the country's efforts to tackle skyrocketing unemployment.

Elsewhere, disappointment over the Cabinet apparently was the cause of a drop in the local currency. The rupiah weakened to Rp 9,115 against the U.S. dollar on Thursday from Rp 9,080 on Wednesday.