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Jakarta Post

Economy first, foremost

  • Editorial Board

    The Jakarta Post

Jakarta   /   Tue, October 15, 2019   /   08:40 am
Economy first, foremost Finance Minister Sri Mulyani Indrawati speaks with reporters following a meeting with President Joko "Jokowi" Widodo and 40 major exporters at Bogor Palace, West Java. (JP/Anton Hermansyah)

Despite his impressive achievement in reducing the huge infrastructure deficit over the past five years by building many roads, airports, ports and power stations and his all-out drive to improve the investment climate and improve the ease of doing business, economic issues will continue to be the most pressing challenges for President Joko “Jokowi” Widodo during his second (and last) five-year term starting Sunday.

In fact, the economic problems he will face will be even more challenging, given the global economic slowdown, the United States-China trade war that could escalate into currency wars, Brexit, Japan-Korea trade tensions and the ongoing turmoil in Hong Kong.

Therefore, the market’s and general public’s attention will focus on the economic team in the new Cabinet that Jokowi will set up next week.

We should point out that many, if not most, areas of economic policy are quite technical and their ramifications are so complex that decisions about them are better left to professionals than to politicians and pressure groups.

But our concern is that since the President is facing so much pressure from competing demands by the many political parties in his coalition government he may make a lot of compromises in appointing members of the economic team in a bid to keep all the factions within the House of Representatives content.

Despite the pressure, we don’t think Jokowi would be so ill-advised as to “kick up” Sri Mulyani Indrawati as the coordinating economic minister without first giving this portfolio a broader and stronger authority and mandate.

Sri Mulyani as the chief economics minister, but with more resources and a much stronger mandate than what Darmin Nasution now has, and Chatib Basri (finance minister in 2013 to 2014) would form a strong macroeconomic management team with the current Bank Indonesia board of governors.

However, the President must protect the economic team from intervention by vested interests and should ensure that the chief economics minister is completely in charge of making and directing economic policies based on the strategy outlined by the President.

Sri Mulyani more than likely comprehends the importance of a coherent and credible strategy that outlines how the various individual policies hang together. She has the managerial capability and leadership to see to it that the economic team makes bureaucratic action more important than bureaucratic procedures and rigidities, resolving problems by executive fiat on the spot. Such a team couldn’t perform miracles, but the impeccable integrity, credibility and competence of its members would help enlighten the market of the broad direction in which the economy was being steered.

A strong and technically competent economic team is even more crucial now in view of the string of negative external factors that will be encountered in the coming years and the more difficult reform measures that have to be taken.

Despite the seemingly all-out deregulation drive over the past five years with 16 reform packages already launched, Indonesia remains by regional standards a difficult place to invest, as asserted in a recent World Bank report on Indonesia.