Economic experts fear the political escalation over the government's decision to bail out Bank Century may derail Indonesia's economic performance, which was on track to benefit from the global economic recovery.
The political row, they said, would be detrimental if it led to the ousting Indonesia's two "economic stalwarts", Vice President Boediono and Finance Minister Sri Mulyani Indrawati.
"Asking Boediono and Sri Mulyani to step down is too drastic and may hurt not only the economic recovery but also other sectors," Faisal Basri, an economist for the Indonesian Chamber of Commerce and Industry, said.
Faisal said businesspeople and investors had confidence in Boediono and Mulyani's extensive experience in monetary and fiscal policy planning, so efforts to remove them from power would create uncertainty in the future of the economy.
The House of Representatives has established an inquiry team to probe the bailout after an audit by the Supreme Audit Agency (BPK) said the mechanism for issuing the bailout had no legal grounds. Both Boediono and Mulyani played a role in forming the bailout policy.
The audit was also prompted by events at the Corruption Eradication Commission (KPK). These circumstances have intensified public protests demanding the two step down.
Boediono and Mulyani have argued repeatedly that the bailout was carried out with the sole intention of protecting the economy from a potential systemic effect to the banking sector should Bank Century be left to collapse in the middle of a global liquidity crisis.
Mirza Adityaswara, an economist from state-owned Bank Mandiri, echoed Faisal's opinion, saying Indonesia's economy would be negatively impacted should Boediono and Mulyani be ousted.
"Regardless *of the political row over Bank Century*, Boediono and Mulyani are still well-regarded by businesspeople because of their track records. This is why the market is stable now, but it will not be so if they are forced to relinquish their positions," Mirza said.
Capital analyst Adrian Rusmana suggested President Susilo Bambang Yudhoyono take "quick and decisive action" to settle the matter.
"The stock market is currently not affected by the case, but investors have begun considering their long-term moves. If Boediono and Mulyani are gone, the market will be shocked. Yudhoyono must intervene," Adrian said.
He also suggested Yudhoyono appoint reputable replacements in the event that the two were ousted, to ensure that the market would recover from the blow of losing the two economic stalwarts.
Chatib Basri, an adviser to the finance minister, said the government had set optimistic targets in 2010 given the positive economic performance this year, but needed political stability.
He said the government was forecasting an economic growth rate of 5.5 percent next year, up from 4.3 percent expected by the end of this year.
Chatib added the inflation rate would reach about 6 to 7 percent in 2010 assuming the rupiah held steady at 9,800 against the US dollar.
Next year the economy is expected to also receive a boost from a rebound in the export sector, which saw a significant decline of 15 percent in the middle of this year, he said.
"Exports have begun to recover but the pace is still slow. The global economic crisis has eased but it takes time to have an impact on investments and exports," Chatib said, adding that a decline in exports would remain possible, but at a lower rate. "Exports may drop by only about 10 percent *by the end of 2009*."
Unlike exports, the investment rate has strengthened and showed a positive growth of about 4 percent this year.
"Barring any political turmoil, next year's growth targets are very feasible," he said. (bbs)
