New Cabinet a wasted opportunity for Gus Dur

New Cabinet a wasted opportunity for Gus Dur

The only hope to be found in the much criticized new Cabinet
is that it may solidify and that the personnel under the
ministers are professionals, says economist A. Tony Presetyantono
from Gadjah Mada University in Yogyakarta. Excerpts:

Question: The new Minister of Finance Prijadi Praptosuhardjo
is the most criticized member of the new lineup. Your comment?

Answer: His appointment is worrisome. The post requires an
expert in fiscal affairs while Prijadi has more experience in
finance. His failure to pass a "fit and proper" test by the
central bank twice makes it difficult for us to understand (his
appointment).

We don't have enough time anymore to give Prijadi a chance to
learn what he should do. In addition, the minister of finance
supervises many state-owned enterprises.

The post also requires a person with a good understanding of
the macroeconomy. I frankly do not know yet about Pak Prijadi's
knowledge on that subject.

What about Rizal Ramli who is now Coordinating Minister for
the Economy?

Rizal has a point in his favor that is very significant in
this regard. He will not easily cave in and say "yes" to the
International Monetary Fund (IMF) and he has the concept of
making the IMF return to its core competencies in restructuring
our banking and monetary systems.

The IMF has to date been too involved in fields where it has
little mastery, such as fuel subsidies and poverty alleviation.

What do you think of Cacuk Sudaryanto, the Junior Minister for
the Reconstruction of the National Economy under the Ministry of
Finance?

It depends on what the junior minister's task is. Cacuk is not
a suitable person if the scope of the junior ministry is
macroeconomic reconstruction. But he suits the post if the
ministry's scope is the reconstruction of state-owned companies.
We know well that Cacuk is a management expert. He used to lead
the state-owned telecommunications firm and he led the Indonesian
Bank Restructuring Agency (IBRA) for a month.

The President has retained Luhut Panjaitan as Minister of
Industry and Trade. Is he really up to the job?

I think Luhut deserves to be entrusted again with that post;
during his term the trade surplus increased markedly regardless
of oil price increases at that time. Anyhow, my observations tell
me that he's the kind of man who learns fast. We need such a man
in charge of the Ministry of Industry and Trade.

What other ministry will significantly influence the economy
and the economic team's performance?

Of course, IBRA has the ability to contribute the funds but
these will have to be well managed. In the long-term I expect
much from Bungaran Saragih, our Minister of Agriculture. We also
have high expectations for Purnomo Yusgiantoro who's the right
man for the Ministry of Energy and Mineral Resources.

How do you see the Cabinet composition in general?

It's no better than the last although it's smaller now.
Politically it lacks support ... For instance Bungaran and Sony
Keraf are from the Indonesian Democratic Party of Struggle (PDI
Perjuangan) but they're below the acceptable level (in the party
hierarchy), under (former state minister of investment and state
enterprises' development) Laksamana Sukardi.

It doesn't really matter as long as they're professionals but
they're mostly not really experts in their respective fields,
except for one or two like Bungaran ....

There is speculation that Vice President Megawati
Soekarnoputri was very disappointed with the new lineup
notwithstanding the fact that she's now in charge of the
technical details of government. Is this a source of worry to the
markets?

Her disappointment is surely also felt by the markets; at a
glance a rapport between the ministers and Ibu Mega will be
difficult ... while they're supposed to be under her coordination
for four years. I fear the cabinet won't last long.

I hope I'm wrong. Should Gus Dur reshuffle this new cabinet
again in the next few months? That would be like a soccer team
with players continuously going on and coming off during the
game.

Minister Rizal sees the negative market reaction as reflected
by a drop in the rupiah of around 300 points as only temporary.
Does the Cabinet now have the chance to win the confidence of the
public and the markets?

There were two things the markets were waiting for but which
the government failed to deliver. Firstly that the President was
consistent in assigning part of his duties to Megawati.

But the new lineup has raised the suspicion that Megawati's
authority will be very limited. Secondly, the Cabinet must be
good and solid. But we can see that this Cabinet is not much
better than the previous one. So it must at least try to be
solid.

Therefore, the only opportunity there is which could help
raise confidence is to firmly limit political influence at the
first echelon, while the posts below ministerial level should all
be filled by professionals.

If the government can do that then there is hope that market
confidence can be rebuilt. If not, the drop in the rupiah will no
longer be a temporary phenomenon.

What should the priorities of the economic team be?

It should negotiate with the IMF and the World Bank. The
Coordinating Minister for the Economy should show his vision to
the public, the IMF and the World Bank.

The latter bodies will first show that they support the new
Cabinet. So although Rizal has disagreements with the IMF, the
relations between them should not become contentious.

In short, Rizal should be good at diplomacy with outsiders so
that what he does will be market-friendly.

He shouldn't be like (former minister)pak Kwik Kian Gie who
always argued that the economic team was already being
intensively coordinated. The issue is not how many times they
meet to coordinate their actions but rather the results of such
coordination.

For instance, the recapitalizing of Bank Rakyat Indonesia
(BRI) took such a long time. Then there were the intrigues
involved in the selection of the new directors of the state-run
telecommunications firm PT Telkom when then minister Laksamana
was away on pilgrimage.

Such lack of teamwork and coordination must be corrected by
Rizal.

Do you think Rizal's concept in negotiating with the IMF will
be reflected in the new Letter of Intent?

Yes, I hope in the next Letter of Intent we no longer see
items being included that are outside of the scope of the IMF in
the monetary and banking fields. Let the World Bank be involved
in issues like the social safety net, fuel subsidies, etc.

We hope that through Rizal we can say "no" to the IMF to avoid
things getting out of proportion. I think Kwik's weakness was his
limited understanding of macroeconomics and his inability to say
"no."

The problem is whether Rizal can say "no" to Gus Dur
(Abdurrahman Wahid) regarding technical economic matters. He has
to convince the President that he can be relied on for technical
economic matters.

What are the primary challenges facing this new Cabinet?

There are indeed many problems which have tended to
increasingly accumulate and become more severe. From free trade
to regional autonomy, etc. But the main thing is foreign debt.

This demands strong lobbying skills on the part of the
economic team. I don't know whether Rizal or Prijadi are strong
lobbyists.

The other priority is still the banking sector;
recapitalization is not enough without conducive support from the
social and political sectors.

Even if recapitalization is carried out, if loans can't be
extended then investment won't happen and a stagnant real sector
will kill the banking industry.

Any further comments on the Cabinet?

I regret that Gus Dur missed a golden opportunity to increase
confidence just like that. I imagined this chance for a reshuffle
would bring us back to the position at the end of October 1999
when there was much faith placed in the new government led by Gus
Dur and Megawati.

The rupiah at that time reached Rp 6,700 per U.S.dollar. But
now it's hovering around Rp 8,400. Should the next opportunity
take the form of another reshuffle? We're exhausted.

Reshuffling the Cabinet is wasting time, which we have
precious little of; and people are already apathetic about a
third reshuffle.

Gus Dur didn't optimally avail of our human resources. (Asip
A. Hasani)