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2 Jakarta row hampers infrastructure
plans By Bill Guerin
JAKARTA - A rumbling row between
Indonesian Vice President Jusuf Kalla and two top
technocrats charged with overseeing economic
policy is hampering the implementation of the
government's infrastructure spending drive and
generating high-level political tensions.
President Susilo Bambang Yudhoyono
reportedly came under extraordinary political
pressure from Kalla's camp to shake up his
economic team during a highly
anticipated cabinet reshuffle announced this week.
However, Coordinating Minister for the Economy
Boediono and Finance Minister Sri Mulyani
Indrawati, both US-trained economists who have
locked horns with Kalla in recent months, were
significantly left in their posts.
Both
ministers - neither of whom is directly affiliated
with any political party - have strongly argued
that economic policymaking should be insulated
from politics to ensure economic and financial
stability. Boediono currently oversees Indonesia's
economic and finance portfolios, while Mulyani, a
former executive director for the International
Monetary Fund overseeing 12 economies in Southeast
Asia, is responsible for the national budget and
macroeconomic policy.
The two technocrats
have over the past year driven a wedge between
Yudhoyono and Kalla, highlighting the two leaders'
sometimes divergent views on how best to guide the
national economy and combat endemic official
graft. Kalla has accused both technocrats of
restraining the economy, particularly through
their reluctance to disburse government funds for
spending programs.
Yudhoyono and Kalla had
earlier apparently agreed to a sort of division of
labor over the executive branch, where the
business-minded vice president would oversee broad
economic policy, and the more bureaucratically
oriented president would handle matters related to
politics, national security and broad national
strategies. As chairman of the military-affiliated
Golkar party - Indonesia's largest and most
powerful political organization - Kalla is known
to have strong negotiating leverage inside
Yudhoyono's government.
However, Kalla's
control over economic management was significantly
weakened in December 2005 when his close political
associates, Aburizal Bakrie and Jusuf Anwar, were
shuffled out of their respective cabinet positions
of coordinating minister for the economy and
finance minister. (Bakrie was maintained as
coordinating minister for welfare, a move viewed
by many political analysts as a Yudhoyono
concession to Kalla.)
Widely viewed as
Yudhoyono's proxies, Boediono and Indrawati have
openly clashed with Kalla and his business-minded
political associates. Boediono was reportedly
offered a seat in Yudhoyono's first cabinet formed
after his 2004 election victory, but declined the
offer because the business-linked Bakrie was also
tapped to be part of the president's economic
team.
Kalla, the former chief executive
officer of his family's sprawling NV Hadji Kalla
conglomerate, which has interests spanning hotels,
telecoms, construction, shipping, real estate,
transportation and agriculture, has as a
politician portrayed himself as a champion of
small business and the rural poor.
He has
earned praise from local business lobby groups,
particularly for his efforts to goad the country's
banks to pump their excess liquidity into the
local economy and stimulate economic growth, and
he is widely viewed as a possible presidential
candidate at the next general elections in 2009.
He has favored ramping up spending on new
infrastructure, including roads, railroads and
power plants.
Media criticism At the same time, Kalla and Bakrie have been
stung by media criticism of big state
infrastructure contracts that their respective
families' businesses have won through allegedly
opaque bidding procedures. Kalla's pat response to
allegations of a potential conflict of interest
between his public office and his family's private
interests is that he cannot prevent his relatives
from doing business.
One case stands out
in particular, which has brought him into direct
conflict with Boediono and Mulyani. Headed by
Kalla's younger brother, Achmad Kalla, PT Bukara
Teknik Utama, together with two small state-owned
enterprises and Germany's Siemens Technology Inc,
won a US$498 million contract to develop
supporting technology for the financially wobbly
Jakarta monorail project.
The project's
main developer, PT Jakarta Monorail, which
tendered the contract to Bukara, was directly
appointed by the government without a tender.
Critics contend that the deal is in violation of
several regulations on open bidding and
transparency that govern state infrastructure
construction and management projects. Kalla
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