News analysis

Indonesia's Cabinet reshuffle: Now politically stronger, Jokowi seeks to fulfil reform agenda

What a difference a year makes.

This time last year, President Joko Widodo's popularity was on the wane amid questions about his ability to deliver on reforms promised when he was elected.

Indonesia had also just suffered its second consecutive quarterly growth of under 5 per cent - levels not seen in five years - coming on the back of low government spending and a flagging rupiah.

The former businessman, who goes by the moniker Jokowi, was then working with a Cabinet built in part to repay political favours and lacking in cohesiveness.

Observers, however, say that he is now in a much stronger position politically while Indonesia may be on the verge of an economic resurgence.

This is partly because he has successfully pushed through the Tax Amnesty Bill, which was the first piece of legislation ratified by a Parliament where Mr Joko has majority support for the first time since taking office in 2014.

Yesterday, Mr Joko sacked nine ministers and demoted two more, and in their place were at least five highly rated technocrats or professionals in their field of work.

Economists like Mr Wellian Wiranto from OCBC Bank said Mr Joko's latest Cabinet reshuffle strengthens the President's political foundation and promotes his policy focus.

Mr Wellian said that Mr Joko had awarded enough ministerial positions to his new political allies, such as Golkar and Hanura parties, without sacrificing too much professionalism.


"It appears that he feels confident enough with his current political cards to essentially appoint the most promising candidates to the most important economic portfolios, rather than being so insecure as to kowtow to political calculations," added Mr Wellian.

Among those "promising" changes was the appointment of Dr Sri Mulyani Indrawati, currently managing director at the World Bank, to the post of Finance Minister, observers told The Straits Times. She had served in the same post from 2005 to 2010 during the presidency of Dr Susilo Bambang Yudhoyono, during which she was credited for fixing the bureaucracy at the ministry.

American consulting firm Stratfor said her appointment is widely seen as a move favoured by market reform advocates.

She won over market players with her straight-talking style and was named Euromoney Finance Minister of the Year in 2006, and EM's Finance Minister of the Year in 2007/2008, said Mr Wellian.

She also managed to keep the Indonesian economy steady during the 2008 global financial crisis.

"A confident ability to preserve macro-economic stability without resorting to outlandish, unorthodox economic policies in a testing period of global shock has to be one of the factors which prompted Jokowi to ask her back, given the still-uncertain global economic outlook," he added.

While many welcomed the President's sweeping changes, particularly in economic-centric ministries, some were surprised by the move to replace Coordinating Minister for Political, Legal and Security Affairs Luhut Pandjaitan with former general Wiranto - no relation to the economist.

Activists questioned the Hanura party leader's human rights record during Indonesia's 24-year occupation of the former East Timor. "His appointment is a sign that this Cabinet reshuffle did not take into consideration human rights sensitivities," said think-tank Setara Institute research director Ismail Hasani.

Other experts, however, say this is as close to a "Dream Team" as Mr Joko can get to help him achieve his reform agenda.

Today's Cabinet appointments will not reduce the scale of challenges for Indonesia, said Mr Wellian, "but it has unquestionably boosted its chances of victory".

A version of this article appeared in the print edition of The Straits Times on July 28, 2016, with the headline 'Now politically stronger, Jokowi seeks to fulfil reform agenda'. Print Edition | Subscribe