Who is he?
Agus Martowardojo has served as Indonesia’s minister of finance since May 2010, succeeding current World Bank managing director Sri Mulyani Indrawati. The reform-minded Martowardojo is known for his strong technical background and fiscal conservatism. He has called for reducing costly fuel subsidies to reduce government spending and ensure a manageable fiscal deficit. He has also strictly applied laws for tax collection, making him unpopular with some conglomerates.
Martowardojo previously served as CEO of Bank Mandiri, Indonesia’s largest lender, where he was credited with improving efficiency. Previously, he was president director of Bank Bumiputera and Indonesia’s Export-Import Bank from 1995-1998 and 1998-1999, respectively.
Why is he in the news?
President Susilo Bambang Yudhoyono unexpectedly nominated Martowardojo on February 23 to replace current Bank Indonesia governor Darmin Nasution, whose term ends on May 23. The nomination drew criticism from civil society and Indonesians who are disappointed to see another strong technocrat being removed from the important finance portfolio. Martowardojo’s predecessor Sri Mulyani was forced out and left the country to work in Washington.
Agus’ approval to become Indonesia’s central banker is not guaranteed. Some members of the legislature question his lack of experience in monetary and macroeconmic policy. The parliament rejected Martowardojo’s bid for the same position in 2008 for similar reasons.
The surprise nomination suggests that Yudhoyono may be reshuffling a politically sensitive position ahead of the 2014 presidential and legislative elections, and shunting aside Martowardojo who has irked some ruling party supporters in his drive for fiscal discipline. Analysts have long warned that a change in the finance portfolio from a technocrat to someone more willing to be an enabler of businesses aligned with special interests would be a clarion warning sign for Indonesia’s economy.
What can we expect from him?
Martowardojo said on February 25 that he would focus on controlling inflation, maintaining a healthy monetary policy, and pushing fiscal reforms in the face of a weakening rupiah. But his ability to achieve these goals rests on political backing from lawmakers distracted by political jockeying ahead of the 2014 elections. The Parliament’s rejection of a government proposal in late 2012 to raise the price of subsidized fuels suggests that Martowardojo’s approval Bank Indonesia governor could face an uphill battle.
Rumors of possible successors to Agus include the current Minister of Trade Gita Wirjawan, a former investment banker and current vice minister of finance Mahendra Siregar, a technocrat with a strong record and support within the ministry.