TO PIN HOPE ON THE NEW FINANCE MINISTER

Head of the Coordinating Board on Investment [BKPM] Chatib Basri had been appointed by President SBY as the new Minister of Finance. The President gave him four assignments as Finance Minister:

Firstly, the Minister was directed to exercise prudent fiscal policy, i.e. to score balance of budget and macro stability because the growth target was set at 6.2%.

Secondly, about investment. According to President SBY, fiscal prudence was needed, but investment was also important as propeller of development beside household consumption and Government’s expenditure. So it was necessary to set up a fiscal policy or fiscal incentive which matched with future investment need so investment growth would be high and economic growth could be maintained.

Thirdly, investment must also consider labor-intensive sectors or create employment opportunities. This was rated as important because investment without labor opportunities would not bring welfare to the people, so the benefits of investment would not be fully felt.

Fourthly or lastly was to finalize RAPBN-P Stated Budget 2013. Before the first semester was over the RAPBN-P 2013 should have been agreed upon with House so it might serve as guideline for execution by the Government. Furthermore also to bring certainty to players of economy.

In RAPBN-P 2013 the Government revised economic growth target from 6.8%. The revision would smoothen plan to increase price of subsidized oil from Rp4, 500 to Rp6, 000 – Rp6, 500 per litre. So was the budget deficit which would increase from 1.65% to 2.5% of GDP.

It was noteworthy that beside the four assignments above, the new Finance Minister also promised to continue building of the Sunda Straits Bridge [JSS]. Word was out that before being appointed as Finance Minister, Chatib Basri was assigned to accomplish field to study of JSS. To make sure that the project development would run smoothly, the Finance Minister promised to trim bureaucracy to ensure efficiency.

Among businessplayers, response was positive to the newly appointed Finance Minister. They expected the new Finance Minister would be able to drive investment growth which was important in jacking up national economy. However, they also underscored that the hardest test for the new finance minister was the plan to increase price of subsidized oil because it was related to finance allocations in the APBN State Budget.

The problem was if the Finance Minister was unable in increase oil price, deficit of State Budget might swell to 2 percent, so price adjustment of subsidized oil became indispensable. So far the case was still not accomplished, because if the price of subsidized oil was increased, new problem would arise: the Government had to allocate compensation fund for the poor like the BLTS. Hard response would burst out from the non-coalition parties.

Meanwhile there were recommendations that compensation fund would be addressed to labor-intensive projects. In this context, many circles expected that the Finance Minister could convince House about the compensation plan related to oil price increase.

Money Authorities or Regulators welcomed the appointment of Chatib Basri as Minister of Finance. For example Chairman of the Financial Service Authority Commission [OJK] Muliaman Hadad was certain that Chatib Basri would be able to run his office well and collaborate well with OJK. Moreover these ex Deputy Governor of BI admitted he knew Chatib Basri well and communicate constantly with him whether in times when he was Chairman of BKPM or member of the National Economic Committee [KEN] or as Economic Observer.

The Chairman of OJK was expecting that the Minister of Finance could collaborate well and would encounter no difficulty. Moreover the objective pursued by the Ministry of Finance and OJK was more or less the same, i.e. to stabilize and better financial system in Indonesia in the future.

In tune with the above, the Director of the Indonesia Security Exchange [BEI] Ito Warsito expected that Minister of Finance Chatib Basri could observe and support the Amendment Plan for the Law of the Capital Market. He expected the amendment of the capital market be finalized soonest. This was homework for the new Finance Minister. As known, while having good command of monetary affairs, Chatib was also well versed with fiscal and state financial problems.

Most of the economists also responded positively the appointment of Basri Basri; he was rated as a clean figure and non party who was experienced in macro economy and investment affairs. Basri had wide linkages at home and abroad. It was not surprising that Chatib’s appointment as the number one person at the Banteng Square [where the Ministry Building is located] was acclaimed with positive sentiment at the Stockmarket building.

Chatib’s CV was supportive to his position as Minister of Finance. His career in the Government started when he was appointed as Special Staff of the Ministry of Finance [2006-2010], member of the Committee of Capital Investment in Economy at the BKPM [2007-2008], Sherpa Indonesia for the G-20 [2006-2010]. Chatib was also Vice Chairman of KEN. His name was included in the cabinet when President SBY appointed him as head of BKPM.

From the above picture, all parties may be rest assured that fiscal management in the hands of the new Finance Minister would be safeguarded due to all the attributes, experience and references the Minister was entitled to. Congratulations, Mr Chatib. (SS)

               

 Business News - May 29, 2013