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Yudhoyono Needs Politically Neutral Finance Chief, Analysts Say

May 19 (Bloomberg) -- Indonesian President Susilo Bambang Yudhoyono should appoint a finance minister who won’t encounter as much resistance in implementing policies as the outgoing Sri Mulyani Indrawati, analysts said.

Yudhoyono, 60, said he will name a replacement tonight, after Sri Mulyani this month accepted a job as one of three managing directors at the World Bank. Her tenure was marred by an opposition campaign accusing her and Vice President Boediono of abusing their authority during the 6.7 trillion-rupiah ($730 million) bailout of PT Bank Century in 2008.

The president “needs someone who is expected to pursue economic programs without significant political resistance from the parliament and political parties,” said David E. Sumual, an economist at PT Bank Central Asia in Jakarta. “Political considerations weigh more than economic reasons.”

Indonesia’s stock index has fallen more than 7 percent since the World Bank announced Sri Mulyani’s appointment on May 4 in Washington. The next finance minister will need to support Yudhoyono’s efforts to improve corporate governance and sustain investor confidence in Southeast Asia’s largest economy, which has benefited from the most stable political climate since the dictator, Suharto, resigned under pressure in 1998.

Yudhoyono’s re-election to a second term last year has helped the rupiah to surge more than 8 percent since July. Inflation slowed to 3.91 percent in April this year from 18.4 percent in November 2005 and economic growth averaged 5.7 percent in the past five years.

Confidence Risk

Still, investor sentiment is at risk after the president left the central bank chief’s post vacant for a year, Adrianus Mooy, who was governor of Bank Indonesia from 1988 to 1993, said last month. The finance ministry’s efforts to improve governance and implement tax reforms have also been hampered by the opposition-led campaign against Sri Mulyani and Boediono, who headed the central bank until May 2009.

Sri Mulyani said this week her “contribution as a public official is no longer needed in the political system, in which the marriage of political interests is very dominant and visible,” Bisnis Indonesia reported today, citing the minister’s speech at a Jakarta hotel.

Yudhoyono has chosen a candidate who isn’t from a political party, state-owned news agency Antara reported May 12, citing the Coordinating Minister for the Economy Hatta Rajasa.

Bond Sale

“The president will consider someone with less political resistance,” Purbaya Yudhi Sadewa, an economist at PT Danareksa Sekuritas in Jakarta. “Political hindrance from parliament and political parties will drag on the economic programs of the government.”

Foreign holdings of Indonesian bonds fell to 145.4 trillion rupiah on May 14 from 148.03 trillion rupiah on May 4. The government delayed a planned sale of yen-denominated bonds until the second half of this year because of the finance minister’s departure, Rahmat Waluyanto, director general of the debt management office at the finance ministry, said May 6.

“The market needs assurance that there will be no fiscal profligacy,” said Helmi Arman, an economist at PT Bank Danamon Indonesia in Jakarta. “The minister should be willing to cut down unnecessary projects, have political will and strong political backing,” he said.

Potential choices cited by Indra Jaya Piliang, who heads the research unit of Golkar, the second-biggest party by number of seats in the governing coalition after Yudhoyono’s Democrats, include Agus Martowardojo, president director of PT Bank Mandiri, the country’s largest lender by assets. The Amsterdam-born banker, 54, holds a bachelor’s degree in economics from the University of Indonesia, according to Bank Mandiri’s website.

Best Executive

Martowardojo worked at the Jakarta branch of the then Bank of America and several local banks before joining Mandiri in 1999. Asiamoney magazine named him Indonesia’s best executive in 2009, crediting him with turning around Bank Mandiri and reducing bad debts at the lender.

He is known for being a “reformist” and hard-working executive who helped boost Bank Mandiri’s profits, Sumual said. While he has “leadership” qualities, Martowardojo lacks “knowledge on macroeconomic policy,” Danareksa’s Sadewa said.

Other possibilities include Armida Alisjahbana, the planning minister, Anny Ratnawati, the director general of budget affairs at the finance ministry, and Anggito Abimanyu, head of the fiscal policy agency at the finance ministry.

Less Pushy

Alisjahbana, 49, was the deputy dean of the economics faculty at Padjadjaran University, a state school in Bandung, West Java, before she became planning minister in October 2009, according to the university’s website. She has economics degrees from the University of Indonesia and Evanston, Illinois-based Northwestern University, and a doctorate in economics from the Seattle-based University of Washington.

Alisjahbana “isn’t as pushy as Sri Mulyani and she’s more low-profile and less aggressive, although both have similarly strong roots in academia,” said Umar Juoro, chairman of the Jakarta-based Center for Information and Development Studies.

“If we want breakthroughs, Armida isn’t the person but she has the ability to work with all elements in the market or in the parliament where Sri Mulyani faced resistance,” he said.

Abimanyu, 47, received a doctorate in economics from the University of Pennsylvania in 1993, according to Bloomberg data.

The less-known Ratnawati holds a doctorate from the Bogor Institute of Agriculture, according to information provided by the finance ministry. Yudhoyono got his doctorate in agricultural economics from the same institute in 2004, when Ratnawati was a lecturer there according to the institute’s website.

Another name that has been talked about within political circles include the central bank’s senior deputy governor, Darmin Nasution, Piliang said last week.

To contact the reporters on this story: Aloysius Unditu in Jakarta at; Achmad Sukarsono in Jakarta at

To contact the editors responsible for this story: Chris Anstey in Tokyo at

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