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Commentary: Wanted: Big
Foot for finance minister

Finance Minister Sri Mulyani Indrawati may seem small, but when she leaves for her new job as a managing director of the World Bank in Washington next month, she will leave big shoes to fill.

Most likely, her successor must have feet big enough to fill size-50 in European shoe measurements.

They don’t make this size (the largest size you will find in most stores apparently is 48 ½ , or 15.5 in US measurements).

Shoes of this size are custom-ordered. And that is just the point: The finance minister is such a huge and challenging job for any one person to handle that none of the candidates touted to succeed Mulyani is likely to be able to fill such big shoes.

We are not suggesting that Mulyani has big feet, but the 47-year-old economist has taken on such huge tasks over the last five years, from reforming the ministry, including the tax office and the customs agency, aggressively collecting more taxes from the public, managing the state budget and the nation’s economy, and no less important, representing Indonesia at the G20 meetings.

If we want to be fair, she has done a great job on all these fronts.

That the economy grew by 4.5 percent in 2009 when most of the rest of the world was contracting, was not widely appreciated. Instead, Mulyani was faulted for the one measure she believed may have spared Indonesia from a financial calamity.

The Bank Century bailout was deemed necessary to prevent the possibility of a rush on other banks that would surely have triggered another banking crisis of the scale we saw in 1998.

With tax collections increasingly becoming more important to replace income from the oil and gas sector, much of her time at the ministry was taken up overseeing the operation of the tax office, including cleaning up its act and then convincing the public to pay their taxes. In most other countries, the tax office job is so huge and complicated that it is managed independently of the Finance Ministry.

Here, under her supervision, the government has managed to increase the number of income taxpayers from 4.35 million to nearly 16 million in the last five years, and tax receipts grew by around 20 percent each year to more than Rp 600 trillion in 2010. Indonesia still has a long way to go, and the task of the new finance minister is to continue the fine work Mulyani has started.

Reforming the Finance Ministry stands to suffer the most with her departure. She succeeded where previous ministers tried and failed in breaking down the powerful resistance bureaucrats have put up.

She has had shortfalls as evidenced by the recent revelations of corruption scandals in the tax office, in spite of the reforms that included hiking the tax officers’ take-home pay to the tune of 10 times their peers in the rest of the bureaucracy. This is not so much a set back to her reform program as a reminder of the huge challenges any minister faces in reforming the bureaucracy.

Mulyani’s reform efforts were so widely recognized that when she was reappointed to the Finance Ministry at the start of President Susilo Bambang Yudhoyono’s second term in October, he asked her to handle 12 other ministries, on top of her daily job.

It is not clear if the next minister will be given the same burdensome task.

Ironically, it was probably her success that helped bring about her downfall. As she brought massive changes in the Finance Ministry, she inevitably stepped on many people’s toes and created many enemies. Some of these colluded with politicians in the House of Representatives to help push her out of the job. One person that comes to mind is the ousted tax chief Hadi Purnomo, who returned to power as chairman of the Supreme Audit Board, and who happily helped politicians produce reports they wanted to hear in bringing down Mulyani over the Bank Century case.

Another area her successor may not live up to is her performance in representing Indonesia at the G20 meetings of finance ministers. The University of Illinois-trained economist has been a popular figure at these conferences, not only because of her easy going style, but also because of the body of knowledge that she possesses. As the big economies went into recession last year, she was in a position to tell her counterparts from the US and other major economies how Indonesia came out of the devastating 1998 Asian financial crisis and then survived the global economic recession last year.

Leading the Finance Ministry must rate as the second-toughest job in the country after the presidency. Among qualifications necessary are a strong knowledge of the economy and the financial world, managerial and administrative skills, leadership and vision and good communication skills. Also important for this job are characteristics such as professionalism, toughness, resoluteness, efficiency, discipline, and a strong heart and stamina. And then there are the national and international dimensions to consider.

Mulyani may have all of the above, but she is no superwoman. Like all technocrats, she needed a political shield in order to work effectively and deliver. Sadly this protection was not forthcoming when it mattered most, as seen when she was mauled by politicians over the Bank Century bailout.

Mr. President, you may or may not have found Big Foot to replace Mulyani, but the chief lesson from this episode is that if you don’t want to lose another finance minister in the future, you had better provide him or her with strong political cover. There are such big shoes to fill and it is a very vulnerable position politically. Even the best ones like Mulyani, can slip.

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