Prolonged crisis of confidence feared

JAKARTA (JP): Analysts warned over the weekend that markets could react negatively to the new cabinet, as most appointees were not perceived to be pro-reform and this could hinder the process of regaining public confidence in the government.

However, business leaders and some other observers were cautiously optimistic, saying that the new cabinet would be able to strike a better understanding with the President when tackling the crisis.

Economists Faisal Basri and Hartojo Wignjowijoto said the new cabinet line up failed to address domestic and international concern over blatant nepotism, collusion and corruption in Indonesia.

"Judging by their track records, most of the people in the cabinet are incompetent," said Faisal Basri, a noted economist at the University of Indonesia, adding that it is difficult to expect economic reform from the new cabinet.

Most of them are Soeharto loyalists and would do anything to serve the President's interests, Faisal added.

"This once again demonstrates that the President has not paid heed to widespread criticism of nepotism, collusion and corruption," Faisal said.

Furthermore, by appointing timber tycoon Muhammad 'Bob' Hasan, a long-time confidant of Soeharto's, as Minister of Industry and Trade, the President has further strengthened the perception of widespread cronyism in Indonesia, Hartojo said.

Hasan lost a highly lucrative and much criticized cartel-like plywood marketing organization under reforms carried out in exchange for US$43 billion in loans from the International Monetary Fund (IMF).

Sri Mulyani Indrawati, a senior economist from University of Indonesia, observed that regaining public confidence in the government was the first task facing the new cabinet.

"What we have now is not merely a currency crisis but a crisis of public confidence in the government," Mulyani was quoted by Antara as saying Saturday.

She refused to comment on why most economists from her university had been overlooked for cabinet posts, but she said "we should give them a chance to work."

Both Faisal and Hartojo regretted the reappointment of problematic ministers from the previous cabinet like Haryanto Dhanutirto, Subiakto Tjakrawerdaya and Sanyoto Sastrowardoyo.

Haryanto, formerly minister of transportation, was appointed as State Minister for Food, Drug and Horticulture, Subiakto was retained in his previous position as Minister of Cooperatives and Small Enterprise and Sanyoto remains the Minister of Investment Development.

Besides allegations of corruption, Haryanto was seen as incapable of managing the country's transportation sector during his last term in office.

Subiakto has been strongly criticized for suggesting what many businesspeople feared would become a new form of clove trading monopoly, one of the monopolistic practices which was supposed to come to an end under the IMF-arranged reforms.

"Both domestic and international fund managers know exactly who they are. This could be the beginning of the end for this new order government," Hartojo said.

Anwar Nasution, dean of the University of Indonesia's Faculty of Economics, also warned that the new cabinet could exacerbate the crisis of confidence in the government.

"You can not send a satpam (a civilian security guard) to face the Kopasus (a special army commando)," Anwar said.

Meanwhile, agronomist Bungaran Saragih of the Bogor Institute of Agriculture welcomed President Soeharto's decision to appoint Sumahadi as Minister of Forestry and Plantations and Justika Sjarifudin Baharsjah as Minister of Agriculture.

But Bungaran expressed surprise that the new cabinet contained only a small number of capable economists, and especially experts in macroeconomic policy.

"It is rather strange because our country is facing a dreadful economic crisis which will take a long time to solve. The new cabinet should have included a lot of economic experts to help lift the nation out of its crippling economic situation," he said.

Chairman of the Indonesian Footwear Association Anton J. Supit said people should give the new cabinet two or three years to prove their ability.

"We must give them a chance. Everyone has his or her first opportunity," Anton said Saturday.

Supit refused to comment on some of the new names in the cabinet, but he commended the appointment of former director general of mining Kuntoro Mangkusubroto as the new mines and energy minister.

"Kuntoro is a perfect choice based on his experience, credibility, integrity and character," he said.

Commenting on the new industry and trade minister Bob Hasan, Supit said that doing business and working as a cabinet minister were totally different tasks.

"Businessmen must be profit oriented, but ministers have to serve the public," he said of Bob Hasan.

The chairman of the Association of Edible Oils Industries, Nafis Daulay, said that the new cabinet members were agreeable as they had been the choice of President Soeharto.

"These are the people Soeharto thinks can assist him in governing the country. We can only pray that they will succeed," Navis, who is also an executive of the Indonesian Association of Palm Oil Producers, said in a telephone interview from Medan, North Sumatra.

Nafis lauded the decision to move responsibility for the plantation sector, formerly under the Ministry of Agriculture, with the Ministry of Forestry.

The decision would improve coordination and make issuing plantation licenses more efficient, he said. (team)