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Anwar Ibrahim

Posted: 13 Aug 2015 07:23 PM PDT

Anwar Ibrahim


Indonesia’s President Replaces Ministers Amid Economic Slowdown

Posted: 12 Aug 2015 08:31 PM PDT

New York Times

Less than 10 months into his term, President Joko Widodo of Indonesia on Wednesday fired four cabinet ministers, including crucial members of his economic team, in a much-anticipated reshuffle that reflected growing frustration with his government's struggles to improve the country's sluggish economy.

The economy is growing at its slowest pace since 2009, with gross domestic product rising only 4.7 percent year on year in the second quarter. The currency, the rupiah, is at its lowest level against the dollar since the late 1990s.

Mr. Joko has publicly expressed frustration at his government's inability to spend more of the tens of billions of dollars earmarked for extensive infrastructure projects across the sprawling Indonesian archipelago. Analysts say he is counting on those projects to improve G.D.P.

Mr. Joko did not speak or make any statements after swearing in his new cabinet members on live national television.

The biggest casualty of the reshuffle was Sofyan Djalil, the president's coordinating minister for the economy, who was replaced by Darmin Nasution, the former governor of Bank Indonesia.

Mr. Sofyan was reassigned to become head of the country's national planning agency, which is also a cabinet position, replacing Andrinof Chaniago.

Rachmat Gobel, the country's trade minister, was also replaced on Wednesday, by Thomas Lembong, a private investment fund manager.

In addition, Mr. Joko appointed Rizal Ramli, who served as coordinating minister for the economy more than a decade ago, as coordinating minister for maritime affairs, a sector that the president is counting on to help his economic turnaround plans.

Indonesia had among the highest economic growth rates in Asia between 2010 and 2012, at 6 percent or higher, but last month, the World Bank projected that growth for this year would be only 4.7 percent. The government had estimated economic growth at 5 percent or higher.

"I think the pressure on Joko Widodo's government has been growing since a few months ago to restore confidence," said Didik J. Rachbini, a prominent economist and former member of the National Economic Committee, which advises the president. "The market response to his first government was not much, but this should increase confidence and make the government's coordination better in implementing economic policies."

Mr. Joko, 54, won the presidency in July 2014 as a political outsider and "pro-people" candidate, and he is the first leader not to come from the military or the country's aloof political elite. Yet he filled the majority of his cabinet with appointees from his governing Indonesian Democratic Party of Struggle, known as the P.D.I.P., and other political parties that backed his campaign. As a result, analysts say, Mr. Joko's government has been gridlocked by an absence of coordination, as ministers act unilaterally and make public pronouncements about state policy that run counter to the presidential palace.

In addition, despite Mr. Joko's openly courting foreign investment into the country during prominent visits to China, Japan and Singapore this year, his government has passed a series of protectionist trade policies and drastically increased tariffs on more than 1,000 kinds of imports, from beef to cars to condoms.

The appointment of Mr. Lembong, a Harvard-educated businessman, as trade minister, however, "is a hopeful sign that Indonesia understands the importance of open trade," said Douglas Ramage, a political and economic analyst based in Jakarta.

Mr. Joko also moved to shore up his inner circle on Wednesday, appointing Luhut Panjaitan, his chief of staff and a former army general, to the powerful post of coordinating minister for political, legal and security affairs. He also appointed Pramono Anung, a senior politician from the P.D.I.P., as his new cabinet secretary.

"He has brought into his inner circle in Pramono Anung one of the P.D.I.P.'s most professional and talented members," Mr. Ramage said. "It will help to smoothen and professionalize the operations of the president's office and improve the process of policy and legislative development."

Mr. Anung is also a close confidant of Megawati Sukarnoputri, a former president of Indonesia and the current chairwoman of the P.D.I.P. Ms. Sukarnoputri handpicked Mr. Joko to be the party's presidential candidate last year because of his high polling numbers and maintains significant political influence within the government.

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