Indonesia's President Joko Widodo takes a swipe at egos blocking economic progress

Indonesian President Joko Widodo addresses members of parliament in Jakarta, Indonesia on Aug 14, 2015. PHOTO: REUTERS

JAKARTA (Reuters) - Indonesian President Joko Widodo called on bureaucrats and politicians on Friday to set aside their egos and work together to kickstart economic reforms that have foundered amid slumping growth since he took office last October.

In his first state-of-the-nation address to Parliament, he took a swipe at the bickering within government agencies and political parties that has hamstrung an administration whose failure to turn the economy around has disappointed investors.

"To overcome the issues this country is currently facing we have to work shoulder to shoulder. We should not be divided by political or short-term interests," he said in the speech, delivered ahead of the South-east Asian nation's 70th anniversary of independence from Dutch colonial rule.

"The erosion of a culture of mutual respect and tolerance in official institutions such as law enforcement agencies, communities, media and political parties, is causing this country to be caught in a web of egos."

Indonesia's economic growth slipped to 4.7 per cent, its slowest pace in six years, in the second quarter amid drooping domestic demand and sliding prices for coal and commodities, key earners for the country.

The first Indonesian president to come from outside the military or political establishment, the former furniture businessman won last year's election in large part because he was seen as someone who cared for issues facing ordinary people.

But Mr Joko's ambitious plans to improve infrastructure have been tangled up in red tape, putting a further brake on the economy.

The rupiah has dropped by nearly 10 per cent against the dollar this year to trade at 17-year lows and is Southeast Asia's worst performer after Malaysia's ringgit.

Mr Joko this week hit the reset button on his government, replacing two key economic ministers in a Cabinet reshuffle.

"Prospects for some economic reforms do now exist to some extent with the new Cabinet... but he's not inclined to institutional reform because he's still not emphasising issues such as land acquisition and civil service reform," said political analyst Kevin O'Rourke.

"With worsening economic conditions and continued neglect of reforms, I think the outlook remains grim."

In what was widely seen as a bid to restore faith in South-east Asia's largest economy, Mr Joko installed experienced technocrats Darmin Nasution and Tom Lembong as the chief economic minister and trade minister respectively.

"I made the decision to speed up the implementation of our development programmes ... it's one of the best ways to fulfil my promises to the people to improve their welfare," he said.

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