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Commentary: What's at stake
from losing reform icon
Mulyani

An alliance of mysterious forces is aligning its power to unseat Vice President Boediono and/or Finance Minister Sri Mulyani Indrawati. At the very least, they want Mulyani out. Their chances are 50-50.

For them, Boediono is less of a threat. Mulyani, however, is ruthless toward corrupt officials and fraudulent businesspeople. For them, Boediono is hard to topple as he is an elected public official, but Mulyani is a lot easier target to unseat.

Who are these forces who want Mulyani out? They include political parties in the opposition, as well as parties in the ruling coalition trying to increase their bargaining power, businesspeople whose interests are threatened by Mulyani's position at the Finance Ministry, and even crooked bureaucrats and public officials close to crooked businesspeople who are uncomfortable with Mulyani.

They have successfully built up public opinion that Mulyani and Boediono were wrong to bail out the trouble-ridden Bank Century (now Bank Mutiara), which cost the government (or the Deposit Insurance Corporation) Rp 6.76 trillion (US$716 million).

For those in the banking sector who followed closely the development of the crisis last year, Mulyani and Boediono's decision to bail out Bank Century was the right decision in a time of crisis to save the banking sector from collapse.

It's hard to imagine now how bad the situation was at that time. Just as an illustration, during October and November last year, liquidity was draining out of the domestic market and money was flying out of Indonesia in big numbers, while the rupiah was under heavy attack.

During this period, foreign exchange reserves dropped by $10 billion to $50 billion. On top of that, the central bank had spent $18 billion to intervene in the market to arrest the rupiah's free fall.

Because of the dire situation, the central bank decided not to let any banks fold during the crisis, to prevent any panic. That was the basis of the central bank's insistence that Bank Century had to be bailed out, to which Finance Minister Sri Mulyani reluctantly agreed.

In fact, it wasn't just Bank Century that needed help at that time. Even three state-owned banks also suffered liquidity crunches and needed the government's bridging finance, totaling Rp 15 trillion.

It's true that Bank Century went bust because of various crimes committed by shareholders, bank managers and affiliated parties. There are also possibilities that some people might have illegally gained financial benefits after the bailout.

But those are criminal acts that must be separated from the decision to bail out the bank. Instead of running after Boediono and Mulyani, who gained no financial benefits from their decision, politicians and law enforcers must run after those criminals who made off with a huge sum of money from Bank Century.

Now that the Corruption Eradication Commission (KPK) has launched its investigation into the Bank Century scandal, we hope it will uncover the truth of the matter, all the crimes committed to defraud the bank and the crimes following the bailout decision.

We also hope the political process at the House of Representatives will not be used to criminalize a decision-making process to save the economy, or to kick Mulyani out of her seat.

What's at stake if these politicians, with the helps of businesspeople unhappy with Mulyani and corrupt public officials, are successful in removing her from the post of finance minister?

For many of us, Mulyani is a reform icon in the government. She successfully reformed the tax office and the customs office - two institutions previously considered among the country's most corrupt.

Her move to clean the customs and tax offices had apparently affected some influential businesspeople used to colluding with customs and tax officials to get big tax breaks, including import taxes.

She cleaned the Finance Ministry from corrupt officials, although some eventually landed in more powerful positions. Now they are collaborating with the forces to remove Mulyani.

She is the iron lady who does not bend, even when her boss Yudhoyono reportedly sought her favor to help then coordinating economic minister Aburizal Bakrie, whose family business took a battering on the stock market last year. Reports have it that Mulyani even threatened to resign, but Yudhoyono eventually stood behind her.

Thus if these forces are successful in unseating Mulyani from the Finance Ministry, they would be joyous, but the rest of us would be on the losing side.

Many of us who invest in the market, including foreign investors, would also lose out. Mulyani has helped the credibility of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) in its duty to better protect the interests of public investors.

For many foreign investors, Mulyani is an icon of clean bureaucracy, and therefore removing Mulyani would remove one important element of foreign confidence in the country.

And it wouldn't just be us: Yudhoyono, who won the election on his anticorruption pledge, would also lose out, by losing one of his most credible and capable ministers.

Yudhoyono must also realize that some of those joining the fray to force Mulyani out of his Cabinet are using Mulyani just as a bridging target. Their eventual target is the President himself.

Thus, even for Yudhoyono, the iron lady would be his best defense to face down those wanting to unseat him through an impeachment process. So better keep Mulyani, and start the fight clean.

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