Joko Widodo’s cabinet shake-up
18 Aug 2015|

Indonesian Parliament

With Indonesia’s annual growth rate now heading below 5%, President Joko Widodo’s cabinet reshuffle may have been mainly designed to revitalise the country’s flagging economy. But the political changes and what lay behind them also tell an interesting story.

Presidential chief of staff Luhut Pandjaitan’s concurrent appointment as political coordinating minister provides firm evidence he has mended fences with Megawati Sukarnoputri, leader of Widodo’s ruling Indonesian Democratic Party for Struggle Party (PDI-P).

Pandjaitan replaces retired admiral Tedjo Edhy Purdijatno who was brought off the bench last October after Megawati objected to the former army special forces general and trade minister taking the post because of a perceived slight 15 years ago.

At the same time, Cabinet Secretary Andi Widjajanto, another figure on Megawati’s black list, was sacked in favour of veteran PDI-P politician, Pramono Anung, who will improve Widodo’s relationship with PDI-P and also act as an effective liaison with Parliament.

Anung has had his own up-and-down relationship with Megawati, joining the party in 1998 in the wake of President Suharto’s downfall, serving as party secretary-general and later as vice-speaker of the House of Representatives between 2009 and 2014.

Critics of Anung’s appointment have unrealistic expectations of how Widodo should deal with PDI-P, where he’s never held more than a minor post. Like it or not, party politics—and particularly coalition politics—is a fact of life that can’t be ignored, no matter how much the craving for a Cabinet of well-meaning technocrats.

Megawati would also have liked nothing better than to see the back of estranged State Enterprise Minister Rini Soemarno, once her closest confidante. But with the capable businesswoman now ensconced in his inner circle, Widodo would have been accused of being weak if he had bowed to the party leader’s wishes.

Still to be made clear is whether Pandjaitan will retain his chief of staff post or whether a rumoured second round of changes will see a re-structuring of the presidential office. Allowing him to hold both jobs would antagonise Vice-President Jusuf Kalla, who isn’t happy with Pandjaitan’s considerable clout as it is.

Still regarded as the president’s closest adviser, it will be interesting to see how Pandjaitan tackles the police, whose insubordination and refusal to cooperate with the Anti-Corruption Commission (KPK) is the main reason why Widodo has taken such a hit in the popularity polls since assuming office.

Kalla already appears to have lost ground with close associate Sofyan Djalil being moved from economic coordinating minister to the National Development Planning Agency (Bapenas) to make way for new chief economic minister Darmin Nasution, in the reshuffle’s most significant change.

The former central bank governor is a much stronger character than Djalil. But it has always been the case—even under Suharto’s long rule—that the coordinating minister is only as effective as the president allows him to be, particularly in directing ministers to pull in the same direction.

That hasn’t been apparent in the current administration. Baffling to many investors is the way Manpower Minister, Hanif Dhakiri, has been slashing work permits for foreigners when Widodo has been trying to attract more foreign investment to boost manufacturing and create more jobs.

Some of that has to do with the Government’s fear of being overwhelmed with skilled workers from neighbouring countries when the ASEAN Economic Community finally kicks in at the end of the year. But even local businessmen acknowledge there’s a serious shortage of the sort of workers needed to drive the economy forward.

Widodo did, however, take care of another irritant, replacing bumbling trade minister Rachmat Gobel, with a close adviser, Harvard-educated Thomas Lembong, an investment banker and senior vice-president of the Indonesian Bank Restructuring Agency between 2000 and 2002.

Lembong has little trade experience, but unlike Gobel he speaks fluent English and is seen to be a quick learner with an understanding and appreciation of international markets. He will have to be with economic nationalism continuing to have a contradictory influence on Widodo’s policies.

A poor choice from the outset, the last straw for Gobel may have been his decision to slash live cattle imports from Australia, which has caused widespread beef shortages and led to prices soaring from Rp. 90,000 to a record-high Rp. 130,000 a kilogram.

Toying with meat and livestock imports was part of the previous government’s efforts to convince Indonesians the country could become self-sufficient in beef. But without taking any effective steps to meet that goal, it has been an exercise in deception which could rebound on Jakarta with China now entering the live cattle market.

Perhaps the strangest new Cabinet choice was one-time finance minister Rizal Ramli, who takes over as maritime coordinating minister. An outspoken critic of past and present governments, Ramli’s portfolio includes oversight of the mines and energy sector, which remains in the doldrums because of the nationalist policies he strongly supports.

Widodo didn’t use the long-awaited reshuffle to invite other parties into his administration, although insiders say at a 10 August meeting with senior officials of the National Mandate Party (PAN), Megawati expressed the view that the five-party coalition needed a broader base.

It could still happen, of course, but Widodo may feel that having 14 political appointees in his 34-strong Cabinet is quite enough when he needs greater competency—and a deeper sense of unity of purpose—to dig the country out of its current rut.

But first, Indonesia’s president has to understand that weak infrastructure spending, contradictory policies and smoke-and-mirror solutions aren’t the way to go.