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Indonesian President Joko Widodo reappointed Sri Mulyani Indrawati as finance minister in a new cabinet, providing stability to his team as he seeks to deliver on pledges to boost Southeast Asia’s biggest economy.
A former World Bank managing director, Indrawati, 57, joined Widodo’s first-term cabinet as finance minister in July 2016. She’s been credited with stabilizing government finances, helping Indonesia earn multiple credit-rating upgrades.
“Indonesia today is facing a global economy that is very dynamic and uncertain and a weakening economy that brings pressure from all over the world,” Indrawati told reporters Tuesday after meeting with Jokowi, as the president is known. “Hence, we need continuous policies in guarding our economy.”
Jokowi was sworn in Sunday for another five years against the backdrop of weakening economic growth and a public backlash over some policy proposals. He has put economic reform at the heart of his second-term agenda, promising to overhaul laws that hinder investment and job creation.
Luhut Pandjaitan will return as the minister in-charge of maritime affairs and investment with the oversight of the country’s oil, mineral and other resources sectors. The former general will focus on measures to lower the country’s crude oil imports and encourage processing of minerals such as nickel, he told reporters after meeting the president.
On Tuesday -- his second day of such meetings -- Jokowi held talks with several high-profile figures who may get cabinet posts, including:
Budi Karya Sumadi to return as transport ministerBambang Brodjonegoro, a national planning minister in Jokowi’s first termJohnny G. Plate, a politician from the NasDem party -- part of the ruling coalition -- who has been a member of parliament’s finance committeeSofyan Djalil, who served in various roles during Jokowi’s first term, including coordinating minister for economyYasonna Laoly, a politician from Jokowi’s Indonesian Democratic Party of Struggle who served as minister of law and human rights during the president’s first termFachrul Razi, a businessman and former deputy commander of the Indonesian military
Jokowi also drafted his main political rival, Prabowo Subianto -- whom the president defeated in the April election -- into the cabinet, strengthening his grip over parliament. Another key addition was Nadiem Makarim, 35, co-founder of ride-hailing service Gojek.
Message to Markets
Indrawati is one of the few incoming ministers to state which post she’ll hold. She said the president asked her to confirm her role to the media, a sign that Jokowi wants to reassure investors.
“This will be seen as positive by the market,” said Enrico Tanuwidjaja, head of economics and research for PT UOB Indonesia in Jakarta. Jokowi’s second-term agenda, including plans for labor-law reform and relocating the nation’s capital, will benefit from continuity, he said.
“With Indrawati as finance minister we can still be prudent but also afford to spend a little bit more, especially in productive sectors, to retrain labor and shift subsidies into more development,” Tanuwidjaja said.
The rupiah extended gains after Indrawati’s appointment was announced, rising as much as 0.6% to its highest level since mid-September. The benchmark Jakarta Composite Index closed 0.4% higher at 6,225.497.
Jeffrosenberg Tan, director and head of investment strategy at PT Sinarmas Sekuritas, said Indrawati’s “credibility on fiscal restraint” would gladden foreign investors. Some domestic constituents might be less sanguine, said Harry Su, head of equity capital markets at Samuel International.
“The capital market participants love her as a symbol of good governance, while some businessmen may fear her tax regime,” Su said.
Indonesia’s growth has hovered around 5% for most of Jokowi’s first term, not fast enough to combat poverty or create jobs for the millions of young people who enter the workforce every year. The International Monetary Fund last week revised down its forecast for Indonesia’s growth this year to 5%, from a July estimate of 5.2%.
Indrawati also served as finance minister from 2005-2010 under Susilo Bambang Yudhoyono, building a reputation as a strong technocrat and economic reformer. Jokowi lured her back after a stint at the World Bank in Washington, and she helped steer his ambitious tax amnesty program.
A former university academic, Indrawati has a PhD degree in economics from the University of Illinois. In her three years in office she has been focused on getting Indonesians to pay more taxes to help bolster government revenue.
(Updates with details of investment minister in fourth paragraph)
--With assistance from Rieka Rahadiana and Harry Suhartono.
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