Jokowi reshuffles Cabinet to boost economy

Indonesian leader tries to lift confidence in his govt's ability to handle slowing economy

(From left) Thomas T.Lembong,44, Luhut Binsar Panjaitan, 67, Darmin Nasution, 66, Rizal Ramli,60, Pramono Anung, 52 and Sofyan Djalil, 61
(From left) Thomas T.Lembong,44, Luhut Binsar Panjaitan, 67, Darmin Nasution, 66, Rizal Ramli,60, Pramono Anung, 52 and Sofyan Djalil, 61PHOTO: AGENCE FRANCE-PRESSE

Indonesian President Joko Widodo replaced four ministers, moved one and appointed a senior party cadre in a key palace role in an attempt to shore up confidence in the government's handling of the slowing economy and strike a political compromise with his ruling party.

Among the moves are the promotion of two of Mr Joko's trusted aides and the entry of two party backers to the Cabinet. A seasoned bureaucrat known for his firm leadership was also appointed.

Mr Joko's appointment of former central bank chief Darmin Nasution to replace Mr Sofyan Djalil as Coordinating Minister for Economy is a move seen as ensuring better coordination in a key ministry.

Mr Darmin doubled Indonesia's annual growth in tax collections in his third year as the country's director general of tax in 2008.

Mr Sofyan will take over the country's national development planning agency, Bappenas.

  • Who's who in the new Cabinet

  • Trade Minister Thomas T. Lembong, 44

    He is the chief executive of private equity firm Quvat Management, which he co-founded.

    The Harvard-educated banker previously worked with financial institutions Deutsche Bank, Morgan Stanley and Farindo Investments. He served a two-year stint in senior posts at the Indonesian Bank Restructuring Agency.

    Coordinating Minister for Security and Political Affairs Luhut Binsar Panjaitan, 67

    One of the President's trusted advisers, he takes over this post in addition to being the chief of staff. The retired general served as  ambassador to Singapore in 1999 before taking  up the post of Minister for Trade and Industry from 2000 to 2001. Mr Luhut, who set up Toba Sejahtera Group in 2004, which deals in coal and palm oil, went into business with Mr Joko in 2009 to supply wood from his concessions in Kalimantan to the latter's furniture business.

    Coordinating Minister for Economics Darmin Nasution, 66

    As  governor of the central bank, Bank Indonesia, from 2010 to 2013, he introduced a 40 per cent cap on foreign ownership of Indonesian banks. Known as a nationalist, it was under him that Singapore's DBS Group Holdings failed to acquire Indonesian Bank Danamon and, instead, was given a 40 per cent share. The outspoken academic-turned-bureaucrat earned a doctorate in economics from the University of Paris in Sorbonne and is known for his firm leadership.

    Coordinating Minister for Maritime Affairs Rizal Ramli, 60

    He was finance minister and coordinating minister for economics in 2001. A prominent economist with a doctoral degree from Boston University, he was a harsh critic of then President Susilo Bambang Yudhoyono and often appeared in the same forum as Mrs Megawati Sukarnoputri. He takes on a new portfolio Mr Joko created as part of the President's plan to boost the maritime economy. He leads ministries that cover the areas of energy, transport and tourism.

    Cabinet Secretary Pramono Anung, 52

    He was a deputy speaker in the previous administration under the previous Susilo Bambang Yudhoyono administration. The senior member of the President's PDI-P party is close to party chief Megawati Sukarnoputri. His appointment is one of the few political additions to the Cabinet and is seen as a way to appease critics in the ruling coalition.

    Minister for National Development Planning Sofyan Djalil, 61

    He was moved from Coordinating Minister for Economics into this role. He studied law in Indonesia and then went to Tufts University in the United States where he earned two master's degrees and a doctorate. He was telecommunications minister and state-owned enterprises minister during the first of then President Susilo Bambang Yudhoyono's two terms.

    Zubaidah Nazeer and Wahyudi Soeriaatmadja

Former general and past diplomat Luhut Binsar Panjaitan, a loyalist of Mr Joko and his long-time business partner, was made Coordinating Minister of Political, Legal and Security Affairs to replace the severely criticised incumbent Tedjo Edhy Purdijatno. Mr Luhut retains his post as Chief of Staff.

Former parliamentarian Pramono Anung, a close adviser to Mrs Megawati Sukarnoputri, chairman of the ruling Indonesian Democratic Party-Struggle (PDI-P), was made Cabinet Secretary, replacing former academic Andi Widjajanto, whose relations with Mrs Megawati had become increasingly bitter.

The much-awaited reshuffle comes as the President faces plunging popularity and rising investor concerns on his ability to push through reforms he had promised when he took power last October.

It also comes a week after Indonesia had its second consecutive quarterly growth of under 5 per cent, a level not seen since 2009, on the back of lower government spending, a weakening rupiah and a lack of coordination among ministers.

China's slowing economy has added to Indonesia's woes, weakening demand for its exports, while the impending rise in US interest rates is putting pressure on the rupiah, now Asia's second-worst performing currency after the Malaysian ringgit.

For months, there had been speculation that the economic and legal portfolios could see changes due to the ministers' poor performance.

"Clearly, the changes are aimed at managing the economic issues first, because you have Darmin who is an experienced bureaucrat and economist, together with Tom, an independent banker, to help address the economic issues," said political analyst Yohanes Sulaiman, referring to Mr Darmin and Mr Thomas Lembong, the president's economic adviser who replaces Mr Rachmat Gobel as Trade Minister.

"Overall this seems like a compromise to reduce the snapping from Mrs Megawati while moving to shore up confidence in business circles," he added. Mr Joko has faced harsh criticism from elites of his own PDI-P party who have sometimes undermined his decisions.

Analysts also say the move to have strong Megawati backers like Mr Pramono and Mr Rizal Ramli, who takes over as Coordinating Minister for Maritime Affairs, is strategic as it could pave the way towards greater  political stability.

Singapore-based OCBC analyst Wellian Wiranto notes that having strong leaders in some of the key positions, like Mr Darmin and Mr Luhut, spells hope for better coordination among the ministries - a chronic issue in managing the country's bloated bureaucracy.

Additionally, Mr Luhut's elevation may be seen as a way for Mr Joko to build up his own power base as the President tries to balance his party's demands, he said.

"All in all, this element of the Cabinet reshuffle probably tells the story of a president who is not yet fully comfortable with his political base, but is nonetheless trying to make sure it does not get chipped away too much while he focuses on trying to deliver a turnaround in economic growth," said Mr Wellian.

A version of this article appeared in the print edition of The Straits Times on August 13, 2015, with the headline 'Jokowi reshuffles Cabinet to boost economy'. Subscribe