For Indonesia’s finance chief Sri Mulyani, what will a ‘bigger’ role in new Jokowi cabinet entail?
- The president wants to give the former World Bank managing director, who turns 57 today, more responsibilities in his new cabinet
- Analysts say a promotion would be for Sri Mulyani, who has rock star appeal among citizens, to take on the additional role of coordinating minister for economic affairs
Widodo earlier this month hinted at giving Sri Mulyani, who turns 57 today and is a mother of three, a “bigger responsibility” in his new team. Then, Ahmad Syafi’i Maarif, the former leader of the influential Muslim organisation Muhammadiyah, said Vice-President Jusuf Kalla had told him that Jokowi wanted to either reappoint Sri Mulyani as finance minister or promote her to be coordinating minister for economic affairs.
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But several analysts see the coordinating minister role as a lesser position, because the finance minister has a larger budget and command over government funds.
Kevin O’Rourke, author of the Indonesia-focused newsletter Reformasi Weekly, said giving her only a coordinating minister role would be a demotion.
“The coordinating economics role is a higher rank, in theory, but in practice it entails less power,” he said.
“[Sri Mulyani] has instincts that differ with those of Widodo, especially with regard to resource nationalism and the role of state enterprises, and therefore as coordinating minister she might often go ignored.”
Eko Listyanto, vice-director at Jakarta-based think tank Institute for Development of Economics and Finance (INDEF) said: “On paper, the coordinating minister role might seem more prestigious than being finance minister, since the former would orchestrate the country’s economic policies and have an eagle eyed view of anything related to the economy.
“The finance minister focuses on technicalities. But then, that ministry has a larger budget than that of the coordinating minister and the finance minister has the final say on the state budget.”
Ani – as Sri Mulyani is commonly known – has proven her credentials for the top jobs.
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Then in 2016, when the renowned economist was on a three-day visit to Jakarta to speak at her alma mater, the University of Indonesia, Widodo jumped at the opportunity to recruit her into his cabinet, and back to the role of Minister of Finance.
It was a moment in her career that she does not remember joyfully, as she recounted to reporters in Jakarta recently.
“The announcement for the new cabinet might have made other people excited, but it made me really depressed.
“Jim Kim was shocked,” she said, referring to the president of the World Bank at the time, Jim Yong Kim. “The board asked him ‘why did you let her go?’”
Being an executive at such a prestigious organisation meant she could not simply resign and call it a day. To speed things up, Widodo contacted Kim directly and, according to Sri Mulyani, proceeded to “hijack” her.
After careful deliberation, she accepted Widodo’s offer, breaking her own rule to never return to an old job.
“If a president, who was elected by the people, asked you to join him to realise Indonesia’s ambition, I don’t think anyone can say no to that,” she said.
The coordinating economics role is a higher rank, in theory, but in practice it entails less power
Analysts said Widodo also clearly trusts Sri Mulyani’s no-nonsense approach to managing the economy.
“Jokowi is aware about the economic situation in Indonesia and in the world, so it is rational for him to appoint a genuine economist like Sri Mulyani to be coordinating economics minister,” said Edbert Gani, a political economist with the Jakarta-based Centre for Strategic and International Studies. “During the election campaign, [Jokowi’s opposition] targeted him about Indonesia’s growing foreign debt, investment, and other basic economic issues. Jokowi sees Sri Mulyani as the right spokesperson to fend off [criticism] on these issues.”
For Sri Mulyani, a real promotion would be to be both finance minister and coordinating minister for economic affairs – not unprecedented in Indonesia as Hatta Radjasa did for a month in 2013, during Yudhoyono’s time.
Either way, Sri Mulyani will have her work cut out for her in the next few years.
Indonesia posted a trade deficit of US$8.6 billion last year, and is currently recording a US$1.93 billion trade deficit for January to July this year. A gaping deficit in Indonesia’s universal health coverage, the world’s biggest, is also pressuring the state budget as it is projected to reach 28.5 trillion rupiah (US$2 billion) this year, jumping from 9.1 trillion rupiah last year.
Analysts say Sri Mulyani will need to accelerate economic growth and turn the US-China trade war into an opportunity to promote Indonesia as an investment destination. Indonesia’s economy grew by 5.17 per cent last year, only slightly higher than the previous year, but far from Jokowi’s ambitious goal of seven per cent. Tax revenues have also dipped.
“Sri Mulyani’s formula for Indonesia’s fiscal policies has worked to stabilise the economy amid global uncertainty, but they could not accelerate growth,” said Eko of INDEF.
“Slow growth will not reduce poverty and unemployment. Thailand, Malaysia, and Vietnam can take advantage of the US-China trade war but we are still risk-averse. She needs to put the pedal to the metal to boost our economy.”
