Reshuffle Not Going to Make A Huge Impact on Investment in Indonesia

JAKARTA, KOMPAS.com - Indonesian President Susilo Bambang Yudhoyono vowed to root out corruption as he swore new ministers into his cabinet Wednesday, in a bid to boost investor confidence and dismal approval ratings.

The long-awaited cabinet reshuffle included leadership changes in 12 of the country’s 34 ministries, focussed on improving economic management in a nation hampered by poor infrastructure and endemic graft.

“Whatever happens, corruption eradication should be our main agenda. It’s not fair if we work day and night to improve the welfare of the people if state money is stolen by a few irresponsible people,” Yudhoyono said.

He added that the reshuffle was aimed at ensuring Indonesia’s resilience to global economic turmoil in the United States and Europe, and pledged to balance the national budget by 2014, his final year as president.

The president’s key appointment was the new trade minister Gita Wirjawan, a respected former investment banker likely to support bureaucratic reform in the sprawling Asian archipelago of some 240 million people. But Indonesian analysts said the new appointments announced Tuesday were unlikely to improve economic mismanagement.

“By and large the reshuffle is not going to make a huge impact on investment. The government has only three more years in its term, and having new ministers coming in is not necessarily going to be efficient,” Standard Chartered economist Fauzi Ichsan told AFP.

Indonesia is a member of the G20 group of leading economies and has one of the fastest growing economies in the world, with growth expected to top six percent this year. Yet it is befuddled by red tape, mired in corruption and its ports, roads and airports are hopelessly inadequate for the pace of growth it hopes to sustain in coming years, according to investors and analysts.

The government last year announced plans to spend 140 billion dollars on infrastructure until 2014, more than half of which would have to come from the private sector. Prominent political analyst Arbi Sanit blasted Yudhoyono’s cabinet shake-up as cosmetic.

“He’s a coward. He’s too afraid of offending political parties by sacking underperforming ministers,” he told AFP.

“The new ministers are all low-profile people. There are better people out there but he chose them because they are able to compromise to serve his interests,” Sanit added.

The president has been battling to improve his plunging approval rating which hit a seven-year low this month to 42.6 percent, down from 60.7 percent this time last year, according to the Indonesia Survey Institute.

Yudhoyono’s critics say he has lost control of the parliament, which has failed to create effective policy this term, and that he too often kowtows to coalition parties with conflicting agendas.

In 2009, the president won a landslide election on the back of a fervent corruption-fighting first term, which saw some senior officials and wealthy businesspeople put behind bars.

But Yudhoyono’s critics say the president has gone soft on corruption in his second term, stymied by scandals implicating party members, including the vice president.