Indonesian president reshuffles Cabinet to boost economy

Indonesian President Joko Widodo replaced major economic ministers in a cabinet reshuffle Wednesday less than a year into his term, after facing criticism for failing to revive growth which is at a six-year low.

Widodo has come under mounting pressure from his own party and the public to reshuffle his team of ministers amid signs that efforts to reverse an economic slowdown are not working.

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.

Meanwhile, Indonesia’s currency, the rupiah, has fallen 8.5 percent against the U.S dollar since the beginning of 2015.

Four other ministers dropped were Coordinating Minister for Political, Legal and Security Affairs Tedjo Edhy Purdijatno, Coordinating Minister for Maritime Affairs Indroyono Soesilo, Trade Minister Rachmat Gobel and National Development Planning Minister Andrinof Chaniago.

Now in his early 40s, Lembong worked at Deutsche Bank and Morgan Stanley before co-founding Quvat Management private equity firm that specialises in growth capital and buyouts, in particular in Indonesia, Malaysia and Singapore. Lembong is known for his involvement in restructuring Indonesia’s banking sector following the Asian Financial Crisis in the late 1990s.

Mr Widodo 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.

A source familiar with Widodo’s reshuffle plan said he was keen to dispel impressions of weak leadership and policy muddle.

By appointing ministers with global experience and an external focus he may address concerns that his government too readily resorts to protectionism and is not wholly committed to nurturing foreign investment, the source said. According to Douglas Ramage, a Jakarta-based analyst, the decision to award Lembong the trade portfolio was in part designed as a “corrective measure” to counter rising negative perceptions of Indonesia’s protectionist trade policies.

Instead, he has been widely seen as sometimes out of his depth and struggling to get around entrenched vested interests.

“There is thus a better chance of policy coordination”, he Wiranto said. It lost further ground on Tuesday and Wednesday after China announced a devaluation of its tightly controlled yuan.

While many consider Ramli a seasoned economist, his appointment along with Anung is seen as a move to appease former president Megawati, who has made no secret of her demands on Widodo to toe the party line.