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Jokowi’s Cabinet overhaul gets thumbs up from business
While voicing their support for President Joko “Jokowi” Widodo’s plan to shake up ministerial structures as part of his second-term bureaucratic reforms, businesses and analysts have said that more could be done to further support efforts to revitalize the economy
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span>While voicing their support for President Joko “Jokowi” Widodo’s plan to shake up ministerial structures as part of his second-term bureaucratic reforms, businesses and analysts have said that more could be done to further support efforts to revitalize the economy.
In a recent meeting with chief editors, including The Jakarta Post’s, Jokowi unveiled some of his plans to merge ministries and establish a new ministry, a new investment ministry that will supervise the Investment Coordinating Board’s (BKPM) effort to attract investment.
The Trade Ministry will, for example, be merged with the Industry Ministry to focus on domestic trade and industrial affairs, while the former’s international trade role will be carried out under the Foreign Ministry in a push to boost export performance.
Presidential Chief of Staff Moeldoko said the shakeup would reinforce Jokowi’s policy priorities, such as improving exports and investment figures to combat the deficit in the current account, as well as upgrading Indonesia’s competitiveness through investment in human capital.
“This kind of approach is in the mind of [President Jokowi], so there will be changes in the structure [of ministries],” said Moeldoko in Jakarta last week, adding that the Administrative and Bureaucratic Reform Ministry had created the formula for new ministerial structures and had already presented it to Jokowi.
While such a move was welcomed, the government could step up interministerial coordination in order to ensure the effectiveness of the shake-up, businesspeople have said.
Indonesian Chamber of Commerce and Industry (Kadin) vice chairwoman Shinta Kamdani said improving coordination among ministries was vital in order to bring the ministries in line with Jokowi’s economic agenda, which is to boost exports and encourage investment, adding that a further directive from the President was also important to ensure that the government carried out its functions in an effective manner.
“There should be a new mechanism, formalized by the President, to ensure that all of our policies are streamlined to support the big economic reform agenda that is pro-business and investment,” said Shinta.
Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani echoed Shinta’s view, adding that rolling out regulations that were consistent and synchronized with prevailing rules was also important to ensure a conducive business climate for the private sector.
Investment has played a more important role in pushing economic growth as the pace of consumer spending, the main driver of GDP growth, slowed to 5.01 percent in the second quarter of this year from 5.85 percent over the same period last year, Statistics Indonesia (BPS) data show.
Exports, meanwhile, were down by 5.12 percent year-on-year (yoy) in July amid a weakening of global trade caused by the ongoing trade spat between China and the United States.
Center of Reform on Economics (CORE) Indonesia executive director Mohammad Faisal urged the government to look at the issues that plague Indonesia’s exports and investment from a holistic point of view, as the matters are cross-sectoral in nature involving many stakeholders.
He urged the government to provide a clear roadmap that reflects its goals so as to ensure the effectiveness of the shakeup.
Bank Central Asia (BCA) chief economist David Sumual said the bureaucratic reform ideas offered by Jokowi should also address the lack of synchronicity among the country’s trade, investment and industrial policies.
“If the bureaucratic reform could synchronize those three areas and produce clear results, the market would definitely support it,” said David.
Echoing Faisal, David said the government should first put forward its goals in the medium to long-term before establishing new structures for ministries, adding that the government could also look at the best practices in other countries, such as the US, Japan and China, among others, in establishing an efficient bureaucracy.
