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)