The government has fired the chiefs of the tax and customs offices, a move widely seen as a renewed bid to root out graft in the notoriously corrupt agencies.
Aside from raising the confidence of the business community, the decision also counters the assumption that Finance Minister Sri Mulyani Indrawati -- like her predecessors -- was powerless to deal with the two agencies.
The Finance Ministry announced in a press statement Friday that President Susilo Bambang Yudhoyono had appointed chairman of the Capital Market Supervisory Agency (Bapepam) Darmin Nasution as the new director general of taxation, replacing Hadi Purnomo.
It was an unhappy 59th birthday present for Hadi, who was celebrating the day with his subordinates at the Directorate General of Taxation. He was scheduled to retire next year.
Darmin's current position will be filled by former head of the state treasury management agency, Ahmad Fuad Rahmany, currently an executive with the Aceh and Nias Reconstruction and Rehabilitation Agency (BRR).
Yudhoyono also appointed "Mr. Clean" Anwar Suprijadi -- chairman of the state administrative agency -- to replace Eddy Abdurrahman as director general of customs and excise.
Eddy was replaced following his failure to curb smuggling and underinvoicing activities, which not only cause huge state losses but also undermine the competitiveness of the country's industries.
The new officials will be sworn in next week after Mulyani returns from Washington D.C., where she is attending the spring meeting of the World Bank and the International Monetary Fund.
"We expect the new people installed will erase protracted mutual distrust between the business community and the tax and customs offices," chairman of the National Economic Recovery Committee Sofjan Wanandi said.
He said the replacement of the tax chief would also help accelerate the deliberation of tax amendment bills, following allegations several tax officials were deliberately trying to stall the process to maintain the status quo.
The amendments, which are still being deliberated in the House of Representatives, concern Law No. 16/2000 on general taxation arrangements and procedures, Law No. 17/2000 on income tax and Law No. 18/2000 on VAT and luxury tax. They are now expected to be enacted in 2007 after a delay from the initial target of 2006.
Darmin's appointment was not a surprise to many, because he has been a close and trusted associate of the finance minister since they were both lecturers at the University of Indonesia.
They also were together in the university's agency for economic research (LPEM) in the early 1990s, when Darmin headed the institution and Mulyani was his deputy for research.
In a recent gathering attended by Finance Ministry senior officials, Mulyani reportedly declared that Darmin was the only official at the ministry that she currently trusted.
"Mulyani did not appoint officials from the internal ranks of the tax office because she could not trust anyone there. This is obvious because of the scale of corruption at the agency," said economist Faisal Basri, another confidant of Sri Mulyani.
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