Indonesia president-elect to announce cabinet in early October

JAKARTA - Indonesia's Joko Widodo will announce his cabinet team in early October, according to a senior adviser to the president-elect, as he steps up preparations to become the next leader of the world's third largest democracy.

All eyes are on Widodo's choices to head the main economic ministries, who will inherit problems in Southeast Asia's biggest economy ranging from a widening current account deficit and cooling investment to the slowest growth since 2009.

But the most pressing problem will be cutting big fuel subsidies, a politically sensitive issue that raises the spectre of protests within weeks of the new administration taking office.

"Subsidies are a top priority for us to solve," said Luhut Panjaitan, an adviser on the team handling Widodo's transition into office and a leading contender for the position of chief economics minister.

"With a huge fuel subsidy how can you send a good signal to the markets?" Widodo narrowly won last month's election and is set to take office on Oct. 20. He is bound by law to appoint a cabinet within two weeks of his inauguration.

According to an economic adviser to Widodo, those in the running to become chief economics minister, who aims to coordinate the work of different ministries, include Panjaitan, Rini Soemarno, former finance minister Sri Mulyani Indrawati, central bank governor Agus Martowardojo and a former central bank governor, Darmin Nasution.

Panjaitan, a retired four-star general-turned-coal baron, was an important supporter of Widodo's presidential campaign.

He was trade and industry minister under former president Abdurrahman Wahid, and a former ambassador to Singapore, and is seen as armed with considerable business and political credentials.

Hope on subsidies

Soemarno, a close aide of former president Megawati Sukarnoputri and head of Widodo's transition office, has kept a low profile since serving as trade and industry minister in Megawati's administration 10 years ago.

Educated abroad, she won respect in business circles as head of Astra International, the country's largest automobile distributor. She told Reuters this month it was too early to comment on the possibility of taking a ministry job.

Sri Mulyani won praise for her reformist approach as finance minister under Yudhoyono but resigned in 2010 amid political pressure. She is a managing director at the World Bank.

Martowardojo and Nasution both have technocratic backgrounds.

Widodo is scheduled to meet outgoing President Susilo Bambang Yudhoyono this week to discuss the possibility of raising fuel prices before the October handover. "We are hoping Yudhoyono agrees to increase fuel prices otherwise there is no room for Jokowi's cabinet to move,"Panjaitan said, referring to Widodo by his nickname.

Panjaitan said an increase of 3,000 rupiah (25 US cents, 32 Singapore cents) per litre would help save US$15 billion next year.

Indonesia has among the lowest gasoline prices in the region, at 6,500 rupiah a litre. Nearly 40 per cent of Indonesians live on $2 a day.

Any decision on price increases before Oct. 20 will only come into effect in November, Panjaitan said, adding that the government would prepare cash handouts for the poor who are likely to be hit hardest by an increase in fuel prices which would in turn push up food prices.