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New Indonesian finance chief faces uphill battle: analysts
Thu, May 20, 2010
AFP

JAKARTA, May 20, 2010 (AFP) - Indonesia's new finance minister faces an uphill struggle to restore investor confidence after the shock resignation of his respected predecessor, analysts said Thursday.

President Susilo Bambang Yudhoyono appointed PT Bank Mandiri chief Agus Martowardojo late Wednesday to replace independent economist Sri Mulyani Indrawati, who resigned on May 4 for a top job at the World Bank.

Yudhoyono said Martowardojo ' another independent technocrat ' had the 'capacity and integrity' required to handle Southeast Asia's biggest economy, which is forecast to grow 5.5 percent this year.

Indrawati's resignation on May 4 sent the Jakarta stock exchange into a tailspin as investors fretted over the pace of long-term reform to tackle rampant corruption.

The 47-year-old had won broad praise for her uncompromising efforts to clean up the corrupt tax and customs offices ' a task deemed vital for economic growth but which put her at odds with powerful vested interests.

Analysts said only time would tell whether Martowardojo, a 54-year-old who was nominated for central bank governor in 2008, had the spine to take on the business and political forces that effectively ousted Indrawati.

'With a track record of leading change at Indonesia's largest bank, he can be expected to push for improved efficiency and better performance in the civil service,' The Jakarta Globe said in an editorial.

'More important, he can be relied on to continue to crack down on corruption within the finance ministry and beyond.

'But his critics will argue that he is a political novice and has not had many dealings with the House of Representatives.

On this front he will have a steep learning curve and will have to adjust to political currents quickly.'

Moody's analyst Aninda Mitra said Martowardojo was 'well-regarded by the market' and his appointment was a 'supportive development in terms of policy continuity'.

'He's seen as relatively clean and is well respected. He's also well regarded by the president,' he said in an analysis report.

Indrawati's departure for the number-two job at the World Bank, starting June 1, followed months of political attacks from Yudhoyono's coalition partners over a controversial bank bailout.

It is unclear whether she walked or was pushed from office as part of a deal between Yudhoyono and Golkar party chief Aburizal Bakrie, a business tycoon and coalition playmaker who led the attacks on Indrawati over the bank rescue.

Indrawati stood up to Bakrie by refusing to shield a Bakrie-linked coal company from a stock market sell-off in 2008. She also clashed with him over hundreds of millions of dollars in allegedly unpaid company taxes.

Speaking to business leaders earlier this week, the outgoing minister compared the current administration to the crony-dictatorship of the late general Suharto, whose resignation in 1998 opened an era of democratic change.

'We have learnt from the 30-year regime of president Suharto, where relationships between personal and public interests were so mixed-up,' she said.

In what some observers interpreted as a parting shot at the ruling elite, she added that although the current system had the trappings of democracy it was more like a 'cartel' or a 'same-sex marriage'.

Anti-corruption expert Zainal Arifin Mochtar said a key test for Martowardojo would be the tax case against Bakrie-linked company Bumi Resources.

'Agus has no track record in dealing with corruption. We'll know he's part of the deal (between Yudhoyono and Bakrie) if we see those taxation cases involving Aburizal's companies dropped,' he told AFP.

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