Concerns over Indonesia bank shuffle
By Andjarsari Paramaditha, ReutersJAKARTA -- Moves by Indonesia's President Susilo Bambang Yudhoyono to put his finance minister in charge of the central bank is leading to concerns that he may be seeking someone more malleable to run the state coffers in the run up to next year's elections.
March 6, 2013, 12:46 am TWN
Yudhoyono made the surprise announcement on Feb. 22 that he wanted Agus Martowardojo to take over the central bank when the current governor's term expires in May. He has given no explanation for not seeking to extend Governor Darmin Nasution's term.
Nor has there been any explanation why the president wants to move Martowardojo out of the cabinet, and take charge of monetary policy for Southeast Asia's biggest economy.
On Tuesday night, parliament is due to take the first step by deciding whether Yudhoyono's sole candidate for the five-year term is eligible to face the fit and proper test that he must pass to take over the governorship of Bank Indonesia from late May.
The president had proposed Martowardojo for the central bank job before, in 2008, but parliament ruled him ineligible for consideration at the time, in a decision that was seen as a more related to politics than specific objections to Martowardojo.
Some MPs have grumbled that Martowardojo lacks monetary policy skills and question his links to graft cases that have been ripping apart Yudhoyono's ruling Democrat Party. The finance minister has been questioned as a witness over one major scandal, but there has been no suggestion he was involved.
Martowardojo was also in the ministry when Indonesia introduced laws, including a controversial tax on mineral exports, which have attracted warnings that the government may be pushing away foreign investors.
So far, foreign direct investment has been at record highs and a major factor in rapid economic growth.
“We do not expect any immediate changes to the current monetary policy stance. In our view, (the Bank of Indonesia) will remain reluctant to tighten its policy stance,” Nomura wrote in a research note, in reference to the benchmark rate which has been at a record low of 5.75 percent for a year.