Shoeb Kagda – President Abdurrahman Wahid yesterday unveiled a new Cabinet tilted strongly in his favour, catching many observers and market analysts off guard. They had expected some concessions towards Vice-President Megawati Sukarnoputri, who, in recent days, had become more strident in pushing her claim to power as well as having a say in the running of the country.
Financial markets reacted negatively to the new Cabinet line-up, because Ms Megawati, in essence, has been left out in the cold despite the president's willingness to share power with her recently. This, analysts said, does not bode well for the political climate.
The rupiah shed most of its gains over the past few days, plunging nearly 5 per cent to 8,355 against the US dollar after the announcement.
The main concern, analysts said, was a possible political backlash against the new Cabinet given that the top posts were filled by the president's allies and friends and a lack of confidence in the economic team.
Mr Abdurrahman named two confidants as his key ministers – the ambitious retired general Susilo Bambang Yudhoyono as chief political minister and respected economist Rizal Ramli as top economics minister.
While the two appointments were widely expected, his choice for finance minister, banker Prijadi Praptosuhardjo, drew negative comments from observers, who labelled the appointment as controversial. A very close ally of Gus Dur, as the president is popularly known, Mr Prijadi had recently failed a central bank "fit and proper" test to head state-run Bank Rakyat Indonesia (BRI).
Mr Abdurrahman, answering questions from journalists, however defended his choice of finance minister saying: "I know [Prijadi] very well because I have observed him for 16 years."
The president also promoted the head of the Indonesian Bank Restructuring Agency (Ibra), Cacuk Sudarijanto, as a junior minister for economic restructuring, while keeping retired general Luhut Panjaitan as trade and industry minister.
The new economic team, said market analysts, is unlikely to break with the International Monetary Fund's (IMF) economic recovery programme although Mr Rizal has been critical of some of the Fund's policies in the past.
An independent thinker who was jailed for his strong criticism of the government of former president Suharto, Mr Rizal was appointed to head the State Logistics Body (Bulog) earlier this year.
The IMF's Indonesian representative praised the choice of Mr Ramli to run the economy. "He has always struck me as a very capable and practical person. I think the market will react positively," John Dodsworth said.
Umar Juoro, from the Centre for Information and Development Study, however, noted that Mr Rizal could move to limit the IMF's role in economic management in Indonesia although "he will not risk losing his job by undermining the IMF". He added that the new team could work well together under Mr Rizal as the new ministers were all loyal to the president and there was no personal rivalry between them. "There are several good people in the team but with Prijadi as minister for finance, it could be highly controversial."
He also warned that unless the new ministers "scored a big economic success soon", they would face a hostile Parliament as the other major political parties were now all aligned against the government.
Mr Rizal and his team would have to tackle several economic issues immediately: revamping the moribund banking sector; creating a better investment climate to facilitate sale of assets currently under Ibra's control; and tackling the huge problem of outstanding corporate debt. Having promised to hand over the day-to-day running of the government to Ms Megawati, it was all the more surprising that her party, the Indonesian Democratic Party-Struggle (PDIP), did not secure any of the key economic portfolios.
In fact, palace sources told The Business Times that she had quarrelled with the president and left the palace just before the Cabinet announcement. The cabinet list was instead read out by Cabinet Secretary Marsilam Simanjuntak in a live broadcast.
"[She] was in a hurry to have a bath," joked Mr Abdurrahman, when asked why his vice-president was not present. But the joke was lost on market analysts who saw it as a bad omen for the start of the new government on whom high hopes have been pinned.
"Everyone is starting to wonder why Megawati did not make the statement if this is a Cabinet she has to work with," said Andre Cita from Kim Eng Securities. "There is no one in the Cabinet who is close to her which spells trouble for the government."
The sensitive post of attorney-general went back to widely-respected Marzuki Darusman, while Gus Dur named academic Mahfud MD as defence minister and Purnomo Yusgiantoro, the mines and energy minister. Mr Purnomo, a civilian, is currently deputy head of the military's think-tank Lemhanas.
The Cabinet, to be sworn in on Saturday, has shrunk from 35 ministers to 25, as the president has combined a number of ministries such as home affairs and regional autonomy as well as agriculture and forestry. It will also mark a radical change in the way the government will be run.
Apart from giving a greater role to his vice-president, Mr Abdurrahman has effectively split the Cabinet into two groups – one covering economics and the other politics and security. Each will have an overall minister-in-charge.