The changes are not expected to shift President Susilo Bambang Yudhoyono’s priorities of boosting growth and jobs, helping the poor and preserving the environment, while conflict will remain between ministers who are pro-investment and those who favor subsidies and domestic protectionism.
Yudhoyono pledged to lift economic growth and stamp out graft after a landslide second election victory in 2009, but his administration has been plagued by corruption scandals and slow policy-making, with parliament passing few bills in 2011.
Nevertheless, investors have poured into Southeast Asia’s biggest economy in the past two years. Indonesia has weathered the global financial crises to post growth of more than six percent this year, though many reforms have been postponed.
“Most will see the drip-fed reshuffle for what it is — change made to achieve certain internal political aims rather than anything more ambitious. Few would expect more, and the market impact will be limited,” said James Bryson, director of Jakarta-based fund management firm PT HB Capital Indonesia.
The most significant change would appear to be the removal of the internationally respected Mari Pangestu as minister of trade after clashes with the agriculture and fisheries ministers over imports hurting domestic industries.
Under Pangestu’s seven-year tenure, the country’s exports have posted strong growth, but imports have also boomed this year and she came under fire for trade pact between Southeast Asia’s 10-member ASEAN group and China that led to a flood of cheap Chinese imports.
Pangestu could be offered the tourism portfolio, analysts said.
“Public acceptance is key for Yudhoyono. It is a concern for Yudhoyono if a minister has created controversy that left a bad image for the person and for the cabinet,” said Kuskridho Ambardi, executive director of polling agency Indonesia Survey Institute , referring to Pangestu’s removal as trade minister .
Her replacement, Gita Wirjawan, is likely to maintain a pro-trade liberalization stance .
Wirjawan, the country’s investment chief and a former banker, has been rewarded for bringing investors in to the G20 member though analysts say he and others will have their work cut out making a difference in the cabinet’s remaining three years.
Wirjawan announced his appointment on Monday. The full reshuffle, which many analysts see as a largely cosmetic gesture, is due to be announced later on Tuesday.
Yudhoyono looks set to keep his finance minister, Agus Martowardojo, who has won praise for safely steering the economy and bringing in policies such as tax incentives for direct investors and a bond stabilization fund.
Political sources say the central bank fought to keep him, after Martowardojo came under fire this year from lawmakers from the Golkar Party, the country’s largest and part of the ruling coalition, over his handling of a government purchase of a stake in a Newmont Corp. copper mine, which had led to speculation he could face the axe.
Instead, sources say Golkar’s deputy chairman, Sharif Cicip Sutardjo, may get the nod to become fisheries minister.
Tourism Minister Jero Wacik, from Yudhoyono’s Democrat Party, said on Tuesday he has been offered the job of energy minister. The incumbent, Darwin Saleh, has failed to help the former OPEC member achieve government targets for oil production in recent years.
Analysts say Wacik would likely maintain a pro-foreign investment stance, though investors still face policy flip-flops, red tape and rampant corruption in the resource sector.
He is also likely to favor maintaining fuel subsidies to keep voters happy in the world’s fourth most populous country.
Subsidies are seen as a drag on the budget by ratings agencies, who policymakers are trying to impress to win an investment grade sovereign rating in the next year that would cut government borrowing costs and spur greater investment.
Yudhoyono, seeing falling popularity in recent polls, has avoided cutting fuel subsidies this year as planned.
Since the president cannot stand again in an election due in 2014, and has no obvious successor, analysts said the reshuffle looked like a move to shore up his Democrat Party’s support base and keep opponents at bay.
“This is about Yudhoyono’s reputation. Yudhoyono is the key factor for the Democrat Party’s popularity, and his reputation and his performance until 2014 is important to determine his political prize — not to be re-elected as president, but to endorse his successor,” said Ambardi.
Other appointments in the 34-member cabinet are likely to be determined by incumbents’ failure to meet targets or by being tainted by hints of impropriety.
Manpower Minister Muhaimin Iskandar may be switched, after anti-graft officials recently found thousands of dollars stuffed in a fruit box at his ministry, allegedly kickbacks for a migrant worker settlement project.
