Indonesia president appoints technocrats to top economic posts

Indonesian President Joko Widodo presents members of his cabinet at the presidential palace in Jakarta on October 26, 2014.
Adem Salvarcioglu | Anadolu Agency | Getty Images
Indonesian President Joko Widodo presents members of his cabinet at the presidential palace in Jakarta on October 26, 2014.

Indonesia's new president on Sunday named professional technocrats to lead the top economic ministries and implement much-needed reforms that address costly fuel subsidies, cooling investment and creaky infrastructure in Southeast Asia's biggest economy.

President Joko Widodo named a 34-member cabinet in which 18 were seen as technocrats. The rest of the cabinet jobs went to members of the four political parties supporting him, and included the appointment of the daughter of former President Megawati Sukarnoputri to a senior position.

Widodo, who was sworn in last Monday, appointed former state-owned enterprises minister Sofyan Djalil as coordinating minister for economics and vice minister Bambang Brodjonegoro, who was promoted to head the finance ministry.

"(Djalil) is an expert of economic strategy and finance and I trust him to be the captain at the helm of economic teams," Widodo told reporters at a news conference where he announced his cabinet.

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Economists welcomed the appointments of the two and markets could find some support when they open Monday.

"They know the problems and have high integrity and track records," said Destry Damayanti, chief economist at Bank Mandiri. "I expect them to lead structural and fiscal reform in Indonesia to accelerate economic growth."

Baradita Katoppo, Indonesian country head of Fitch Ratings, said he had "high hopes" for the two ministers, both of whom served under Widodo's predecessor, President Susilo Bambang Yudhoyono.

Djalil and Brodjonegoro take the helm at a time when Indonesia faces strong economic headwinds. Gross domestic product grew by 5.1 percent on an annual basis in the second quarter, the slowest pace for five years.

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Indonesia's inadequate roads, ports, electricity and other basic services, along with its corruption and daunting bureaucracy, have begun to disenchant foreign investors, who are essential for the resource-based economy to grow.

At the same time, Indonesia's commodity-dominated exports have slumped and high interest rates are weighing on domestic consumption and investment.

One of the first decisions facing Widodo and his cabinet is whether to press ahead with politically-sensitive rises in fuel prices, needed to slash costly subsidies.

The president named the chief executive of state-owned defense firm PT Pindad, Sudirman Said, as energy and mineral resources minister, and a former head of auto-assembler PT Astra International Rini Soemarno Soewandi as state-owned enterprises minister.

Vetting of choices

Retno Marsudi, the current ambassador to the Netherlands, becomes the first woman to be Indonesia's foreign minister.

Puan Maharani, Megawati's daughter, was named coordinating minister for human development and culture. Megawati is the head of the Indonesian Democratic Party-Struggle, of which Widodo is a member.

The cabinet will be sworn-in and hold their first meeting on Monday.

Widodo, elected president in July after a stunning rise through the ranks of local government, is popular for his clean image in a country that has consistently scored low marks among investors for widespread corruption. He sought to ensure the credibility of his cabinet by taking the unprecedented step of having the country's main anti-graft agency vet each candidate.

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The Corruption Eradication Commission last week rejected eight of Widodo's initial cabinet due to graft concerns, forcing the president to delay his announcement and find last-minute replacements.

"The process of defining the ministers were done carefully and cautiously as this is a priority," Widodo said.

"The cabinet will be working for five years and we want to get the clean ones ... because we want to be accurate and right," he said.

Not all appointments though were welcomed.

Read MoreReform-minded outsider Widodo takes over as Indonesia's president

Widodo, known popularly as Jokowi, appointed Ryamizard Ryacudu as defense minister, despite concerns over human rights abuses when he was in charge of the military when martial law was declared in Aceh during Megawati's administration.

"It shows that Jokowi and (Vice President) Jusuf Kalla have no sensitivity with the human rights situation at the moment in Indonesia," said Haris Azhar, coordinator for Jakarta-based Commission for Missing Persons and Victims of Violence.