Vincent Lingga , The Jakarta Post , Jakarta Tue, 06/30/2009 10:54 AM Headlines
With two of its former governors and four of its deputy governors now in jail for corruption, a good reputation, more than anything else, is what Bank Indonesia, the main plank for our monetary management, badly needs.
That need can surely be met by Sri Mulyani Indrawati, currently finance minister and acting coordinating minister for the economy. Hence, her nomination to be the new chief of the central bank by President Susilo Bambang Yudhoyono should be greatly welcomed.
Sri Mulyani, more than anyone else, is the best candidate for the post after Boediono, who took over the central bank's leadership in April last year, resigned recently due to his being selected as Yudhoyono's running mate for the July 8 presidential election.
Her knowledge and track record of experience - formerly as minister of national development planning and in her current key economic and financial role - is very appropriate, especially now that fiscal and monetary authorities have to strengthen their cooperation and coordination to cope with the fall out from the global financial crisis.
Her more fundamental asset is that she commands great authority due to her impeccable integrity and competence and is highly respected both in international - she was formerly an executive director of the International Monetary Fund - and domestic circles.
All this will significantly strengthen the integrity and credibility of the central bank which had been beset and beleaguered by several corruption cases.
Yet most importantly, she has built a robust reputation as a reformer, winning high praise for her courage and concerted campaigning to weed out ingrained corruption at the finance ministry, especially in the directorates general for tax and customs.
Her steadfastness in standing up against political pressures and interventions from vested-interests - she is known to have engaged in a number of bruising political battles to push reforms through - represents another pre-requisite asset for a Bank of Indonesia which should increasingly be projecting its political independence.
But, however welcome Sri Mulyani would be at Bank Indonesia, her nomination to the central bank would leave a big gap at the finance ministry which has yet to complete its sweeping reforms.
President Yudhoyono will face a tough job in selecting an equally capable person to lead the finance ministry.
The House of Representatives has yet to confirm Sri Mulyani's nomination, and in view of the July 8 presidential election and given the probability of a run off to select a new president, we don't think the other two presidential hopefuls would allow the incumbent president Yudhoyono to select the new central bank chief before the whole presidential election process is completed.
The central bank governor plays a very important role in macroeconomic management and a president always wants to have that position filled by someone he or she can count on to implement his or her economic framework as promoted during the election campaign.
Presidential aspirants Jusuf Kalla and Megawati Soekarnoputri, who command major factions at the House, would most likely block Yudhoyono's move to change the top management of the central bank at least until the whole process of the presidential election is completed and the new head of government is appointed.
Given the political uncertainty about the selection process, there is actually not any urgency at all to nominate a successor to Boediono at Bank Indonesia now.
After all, Darmin Nasution, another tough reformer and trusted aide of Sri Mulyani, who pulled off remarkable achievements in reforming the highly corrupt directorate general of taxation, will enter the central bank later next month as the new senior deputy governor to replace Miranda Goeltom.
Nasution, currently director general of taxation, and formerly chief of the stock market watchdog, will serve as acting governor of the central bank until the appointment of the new governor.
Darmin is expected to jumpstart preparations for the establishment of the Financial Service Authority which will take over the bank supervisory function from the central bank in early 2011, as mandated by the central bank law.
Given the acute shortage of tough reformers with impeccable reputation within the government bureaucracy, having both Nasution and Sri Mulyani simultaneously in the same institution would rather be a case of squandering severely limited high-caliber resources.
