The Jakarta Post
President Susilo Bambang Yu-dhoyono has named economist Chatib Basri, the nation's new finance minister.
Chatib, who currently heads the Investment Coordinating Board (BKPM), is slated to be inaugurated by Yudhoyono on Tuesday.
The President said that Chatib, who has served as Indonesian 'sherpa' for the G20 meeting and as deputy chairman of the President's Economic National Committee (KEN), was well qualified for his new job.
Yudhoyono said that Chatib was 'able to make investment in Indonesia grow significantly' during the year he spent leading the BKPM.
As finance minister, Chatib will have three main tasks: Maintaining and developing prudent fiscal policies; making policies that support increased investment and encouraging investment to create more jobs, according to the President.
'His priority tasks will be to shepherd the draft revision for the 2013 state budget [RAPBNP], which is now ready to be discussed with the House of Representatives, and the draft of the 2014 state budget,' Yudhoyono told a press conference at the Presidential Office on Monday.
Revisions to the 2013 state budget are expected to tackle plans to raise subsidized fuel prices and to provide financial aid to the poor (BLT) as insulation from follow-on inflation following fuel price hikes.
Two weeks ago, Yudhoyono said that he hoped that lawmakers would cooperate with the government regarding his plans.
Chatib said he would face a challenge over the remaining 16 months of Yudhoyono's final term in office, adding that there would always be room for improvement.
The appointment of Chatib, a respected economist with no ties to political parties, was well received by the Indonesia Stock Exchange (IDX), which rose 1.3 percent to touch 5.145.68 on Monday.
In April, Yudhoyono named Coordinating Economic Minister Hatta Rajasa acting finance minister, a decision that surprised observers, who expected Agus, who was named to lead the central bank, to be replaced by non-partisan technocrat.
Hatta is the chairman of the National Mandate Party (PAN) and a potential contender in the 2014 presidential election.
Citi Research economist Helmi Arman attributed the market's positive reception of Chatib to a positive appraisal of his tenure at the BKPM and an expectation that he would extend investment incentives.
'We expect new types of fiscal incentives to possibly be introduced going forward for company research and development activities. Currently, Indonesia does not have any fiscal incentive for R&D,' he wrote in a research note released after the announcement.
However, there remain concerns on whether Chatib can convince lawmakers in deliberations on the 2014 state budget, given his reputation as a close ally of former finance minister Sri Mulyani Indrawati, who is known for her tense relationship with House politicians.
'Chatib Basri's close ties with Sri Mulyani, and his reputation for being a proponent of the Bank Century bailout, could hamper effective lobbying at the House,' Fauzi Ichsan, an economist with Standard Chartered said.
Chatib would unlikely introduce drastic fiscal policy changes or reforms, Fauzi said. 'I think he was appointed to ensure that the economy will not be derailed from its current autopilot mode.'
Chatib Basri's road to the Finance Ministry
'¢ Chairman of Investment Coordinating Board, June 2012-May 2013
'¢ Vice Chairman of the National Economic Committee of the President of the Republic of Indonesia, 2010-2012
'¢ Member of Independent Regional Advisory Group for Asia Pacific, International Monetary Fund (IMF), 2010-2012
Senior Lecturer, Department of Economics, University of Indonesia, 1992 - 2013
'¢ Senior Partner and Co-Founder of CReco Consulting, a Jakarta Based consulting firm, 2010-2012
'¢ Research Associate, The Institute for Economic and Social Research, Faculty of Economics, University of Indonesia (LPEM-FEUI), Jakarta, Indonesia
'¢ Member of the High Level Trade Expert Group, co-chaired by Jagdish Bhagwati and Peter Sutherland, 2010-2011. The report was launched in Davos, January 2011 by President Yudhoyono (Indonesia), Prime Minister Cameron (UK) and Chancellor Merkel (Germany). Member of Asia Pacific Advisory Board of Toyota Motor Corporation, 2010 -2012
Sources: The Jakarta Post