The Jakarta Post
President Joko “Jokowi” Widodo’s decision to bestow Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan an even greater role is sending a strong message that the government wants to debottleneck investment hurdles and accelerate infrastructure development at a desperate time. Both are strategic issues for the President, who is in his second and final term, but it comes along with risks, primarily of coordination and a power struggle.
Besides his old portfolio, Luhut will oversee the Public Works and Housing Ministry, Environment and Forestry Ministry and Investment Coordinating Board (BKPM), which previously fell under the scope of the Office of the Coordinating Economic Minister.
Luhut, a senior Golkar Party politician, is no stranger to the business community and foreign investors. A businessman himself with coal and mining assets in Kalimantan, Luhut has been widely known as Mr. Doer or Mr. Fixer to businesses facing regulatory issues in investment. He is now Minister Doer and Fixer.
The 72-year-old has toured around the world to secure some of the biggest funding for Indonesia’s infrastructure and development projects, from China’s Belt and Road Initiative to the United Arab Emirates’ Mubadala state fund and the United States’ new International Development Finance Corporation.
The biggest challenge for Luhut may sound basic and generic, but it’s how he can coordinate the ministers under his watch, with the different perspectives they may have in policymaking and the sectoral ego that may become a great wall to take on. Some big-ticket infrastructure and development projects may face environmental issues, clashing two ministers under his watch. The BKPM may also find difficulties cutting red tape for projects.
Jokowi’s plan for coordinating ministers to veto regulations issued by ministries or institutions under their domain that contravene the President’s vision and mission may come as enlightenment. However, we need to see if this will materialize soon.
It is logical for Jokowi to think that he needs strong coordinating ministers to get the jobs done, especially considering he has tried to bring many circles and oppositions into the Indonesia Onward Cabinet.
It’s high time for Indonesia to overturn an exacerbating economic slowdown by boosting investment, which accounts for nearly a third of gross domestic product and is Jokowi’s priority. But structural reforms, including a major breakthrough in cutting red tape and deregulations, have not been enough.
The pace of reform needs acceleration, with weakening investment in the third quarter this year dragging down economic growth to the lowest level in more than two years, while the global economy is set to remain weak next year.
Minister Doer and Fixer has taken charge to rake in multibillion-dollar projects that should spur job creation and sustainable development to Indonesia. The President has taken the risk to put the weight of the world on the shoulders of the coordinating minister. We can only hope that the President’s judgment is spot on about Luhut.