Indrawati stays as finance minister in new Indonesia Cabinet
INDONESIA’S new President Prabowo Subianto unveiled his Cabinet just hours after taking the oath on Sunday (Oct 20), with Sri Mulyani Indrawati staying on as finance minister in a sign of policy continuity in South-east Asia’s largest economy.
Prabowo’s 109-strong Cabinet is the largest since the fall of dictator Suharto in 1998 and is stacked with some of his closest allies. About a third of Cabinet posts are held by incumbents from the previous administration under Joko Widodo, including Indrawati. The ministers are set to be sworn in on Monday.
“In agreement with all of the leaders in our coalition we named this Cabinet the Red-White Cabinet,” Prabowo said on Sunday, referring to the colours of the national flag.
Reappointing Indrawati, who has served two other presidents in the past 20 years, could bolster investor confidence in Indonesia’s fiscal outlook in the face of Prabowo’s ambitious spending plans, which include an almost US$30 billion free lunch programme for school children. Her inclusion together with several key faces from the previous Cabinet suggests Prabowo is consolidating his hold over Indonesia’s political and government elites.
A sterling economist and a former official at the World Bank and International Monetary Fund, Indrawati has consistently kept the budget deficit within its legal limits of 3 per cent of gross domestic product, helping bolster Indonesia’s investment-grade credit ratings.
Prabowo expanded his new government by splitting up several departments and forming new coordinating ministries. They include coordinating ministry for food affairs, helmed by Zulkifli Hasan, and another one for infrastructure, led by Agus Harimurti Yudhoyono. Both would oversee his flagship free meal scheme and housing projects.
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The president removed the coordinating seat for investment and maritime affairs previously held by Luhut Panjaitan, who spearheaded the country’s industry downstreaming effort. Instead, Prabowo created the investment and downstreaming ministry, which will be led by Rosan Roeslani, the previous investment minister. Rosan now has a bigger task of seeing through the president’s agenda to expand downstreaming to commodities beyond critical minerals, such as nickel.
Although some ministerial decoupling is intended to focus oversight on priority issues, there are concerns that the enlarged Cabinet could bring more red tape, foster patronage politics and boost spending on government servant salaries.
“As every minister now has more limited scope-of-work, Prabowo’s Cabinet expansion could heighten sectoral ego among top government officials,” Satria Sambijantoro, head of research at PT Bahana Sekuritas, said in a note to clients on Sunday. Prabowo’s top-down leadership style, however, could still lead to policymaking efficiency, he added.
Other key appointments overseeing the over US$1 trillion economy include Airlangga Hartarto as coordinating minister for economic affairs, Erick Thohir as state-owned enterprises minister and Agus Gumiwang Kartasasmita as industry minister. They were all part of Widodo’s cabinet.
In his earlier speech as president, Prabowo urged his government against being “too complacent” about an economy that’s grown roughly 5 per cent annually in the last decade. He is aiming to bring that to 8 per cent during his five-year term.
“Poverty in Indonesia is still too high. Many children are still malnourished. Many people do not have good jobs. Many schools are not maintained. We have to have the courage to look at all this and solve it,” he said. BLOOMBERG
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