Indonesia’s Jokowi Weighs Cabinet Shakeup

Indonesian President Joko Widodo, nearly 10 months into his presidency, is widely believed to be readying a cabinet shakeup as early as August as a way to get the ailing economy, hit by falling commodity prices and other issues, back on track and to try to dissolve a growing of indecisiveness on his part.

Analysts are also watching to see if a cabinet shakeup might try to reduce the power of bigwigs in his Indonesian Democratic Party of Struggle, or PDI-P, headed by Megawati Sukarnoputri, under whose banner he ran sponsored his run for the presidency in 2014. It is a long shot. Megawati doesn't buy into the narrative of the small-town mayor turned national reformer. She clearly wants the spoils. As she has said publicly, she strongly believes that Jokowi, as he is popularly known, should be subservient to the wishes of the party, which sometimes appear to run counter to the country’s best interests.

Without his own political base, his cabinet is heavily under the thumb of the PDI-P, which famously virtually ignored him during a party conclave in Bali in April. And, if anything, the party, filled with rent-seekers, wants more influence, not less. Ahmad Basarah, the PDI-P deputy secretary general, told the website kompas.com in April that one factor contributing to disappointment with Jokowi “is the Cabinet’s unsatisfactory performance and therefore a Cabinet reshuffle will be unavoidable.”

There are also other forces vying for influence including Vice President Jusuf Kalla and smaller political parties that supported Jokowi in 2014.

Kalla has also clashed with Jokowi on a number of issues including energy policy and police attempts to defang the beleaguered Corruption Eradication Commission. Cabinet ministers and other officials, many of whom were appointed at Megawati’s request, have also made contradictory statements on economic nationalism that seem to show outright hostility toward foreign investors.

The various conflicts have resulted in a feeling of drift at the top of the government that contributed to driving down the president's popularity, although it has begun to recover, partly because of his humble governing style.

Economy sliding

The economy remains a worry, with GDP growth projection lowered from 5.4 percent to 4.7 percent while inflation has been soaring upward, to 7.1 percent annually in June. The country’s trade balance is back in surplus, but for ominous reasons. Imports, a leading indicator of domestic demand, are off by more than 20 percent annually while exports have been contracting at double digit rates for most of 2015 and are likely to down another 15 percent annually according to the latest figures.

Overseas shipments have been falling continuously since August 2011 as domestic exporters have been hit by a continuing loss of competitiveness, a 2014 minerals export ban, slowing China demand and collapsing commodity prices.

Bank Indonesia, the country’s central bank, said consumer confidence fell in June on fears of shrinking job availability as well as declining income and business activity. The central bank’s Consumer Confidence Index fell 1.5 points to 111.3 as confidence has continued to sag, rising only in May this year.

One of the biggest problems with the economy is that despite a windfall from doing away with costly fuel subsidies shortly after he took office, reckoned to save nearly US$21 billion to be put to other uses, principally badly needed infrastructure. Indonesia’s inefficient planning process and various bureaucratic roadblocks have made spending slow and cumbersome. While some social programs have been put in place, they are far from fulfilling what he promised. Jokowi has pledged to speed up budget disbursement over the next six months, saying issues that have led to delays have been resolved.

Who goes?

Among positions thought to be vulnerable in the shakeup, expected sometime in August, are the trade minister, Rahmat Gobel, given the disastrous import-export figures, and Rini Soemarno, head of the Ministry of State-Owned Enterprises, a friend of Megawati's who may have fallen out with her. The president already sacked the head of the state food procurement agency in June, the first official to be replaced for failing to meet targets and with rice prices soaring.

Despite the economic problems, the popularity with foreign investors of Coordinating Minister for Economic Affairs Sofyan Djalil and Finance Minister Bambang Brojonegoro will likely keep them in their jobs at a time when much of the government displays outright hostility toward foreign investment.

Those headed for the block, however, may include transmigration minister Marwan Jafar. Administrative and Bureaucratic Reform Minister Yuddy Chrisnandi and National Development Planning Minister/Head of the National Development Planning Agency (Bappenas) Andrinof Chaniago.

Bureaucratic infighting also could claim energy and mines minister Sudirman Said, whose policies have been popular with foreign investors but who is close to Kalla and is at odds with powerful presidential Chief of Staff Luhut Panjaitan, a Jokowi ally who is building his own circle of influence.