Excellent moves

INDONESIA - Report 31 Oct 2019 by Cyrillus Harinowo

President Joko Widodo announced the line-up of the Indonesian cabinet for 2019-2024 just a few days after his inauguration as president. His selection of ministers truly reflects his courage and independence. From various angles, this new cabinet can be considered a "dream team" because the challenges faced by the Indonesian government are diverse. That is why the moves the President made in selecting this cabinet can be seen as "excellent moves".

The first move that was praised by many was the President's embrace of his opponent, General Prabowo, as his Minister of Defense. This move has significantly reduced the level of tension in Indonesian politics. In making this move, the President is localizing the radical group that used to be in the opposition by taking General Prabowo outside the group, while at the same time General Prabowo has been assigned to de-radicalize such groups in the military.

The second move was to retain Sri Mulyani Indrawati as Finance Minister, while at the same time changing several other economic ministers' positions. Many investors were interested in seeing Sri Mulyani maintain her position. The Mining Minister, Ignatius Jonan, was replaced by Arifin Tasrif, an individual very capable of handling that difficult position. He was successful in steering the Indonesian Fertilizer Holding Companies to become among the most profitable. Several other economic positions have been filled by individuals who will need to show their capacity in the coming months.

The third move was to fill the role of Religious Minister with a former General of the Special Forces, Fahrur Rozy. He was assigned to stem the rise of radical Islamic groups based on his long tenure in the military. At the same time, the Interior Ministry role was filled by former Police Chief Tito Karnavian. Tito has been successful in uprooting terrorist networks in Indonesia, significantly reducing their power. The assignment of Nadiem Makarim to the post of the Minister of Education was also seen as an excellent move since Nadiem is the founder of Gojek, the most successful start-up company in Indonesia.

On the economic side, the Central Board of Statistics reported that the trade balance in September 2019 registered a deficit. Exports for that month reached $14,097.7 million while imports were $14,258.2 million, leaving the trade balance for September at a deficit of $160.5 million. Cumulative exports from January to September 2019 reached $124,170.8 million while cumulative imports for the same period were $126,115.8 million. Therefore, the cumulative deficit for the first nine months of 2019 was $1,945 million.

The Central Board of Statistics also reported that the Consumer Price Index for September resulted in deflation of 0.27%. With that monthly deflation, year-over-year inflation in September 2019 reached 3.39%, a level still at the lower end of the inflation corridor. Given that level of year-over-year inflation, Bank Indonesia decided to slash the benchmark rate further, by 25 basis points to 5.00%, and is confident in the direction of its policy.

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