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Cabinet Reshuffle - Consolidating and Accelerating, 23 Dec 2020
Cabinet Reshuffle - Consolidating and Accelerating, 23 Dec 2020
Cabinet Reshuffle - Consolidating and Accelerating, 23 Dec 2020
On December 22nd, President Joko Widodo (Jokowi) impact. The choice of Budi, an accomplished corporate
announced a cabinet reshuffle, the first since his On- executive rather than a medical professional, might
ward Indonesia Cabinet was inaugurated in October seem odd to many Indonesians, but is perfectly
last year. The reshuffle involved six cabinet seats, two reasonable given that the the procurement and distri-
of which (Marine & Fisheries, Social Affairs) having bution of Covid-19 vaccines will be the main agenda in
been filled on interim bases after the respective 2021. The challenges here will largely be about logis-
ministers resigned amid suspected involvement in tics, budgeting, risk management, and building public
corruption scandals. trust, while the technical issues will be handled by the
Vice-Minister, Dante Saksono (a medical professional).
Much of the media coverage on the reshuffle focuses
on the selection of Sandiaga Uno, a successful busi- The enormity of the non-technical issues in the Min-
nessman and Jokowi’s vice-presidential opponent in istry of Health might be the reason behind the slug-
the 2019 Election. With the top half of that ticket, gish pace of healthcare budget utilization, as compar-
Prabowo Subianto, already in tow, the cabinet can be ed to several other components of the fiscal stimulus
said to resemble Lincoln’s famous “team of rivals” – (Chart 1). In contrast, social assistance saw full uti-
which is a testament to Jokowi’s coalition-building lization, but was apparently plagued by corruption
ability. Meanwhile, the choice of Yaqut Cholil Qoumas which results in sub-optimal welfare outcome. A new
as Minister of Religious Affairs also serves to strength- system of social assistance – centralized, computer-
en the support from Nahdlatul Ulama (NU), the largest ized, and in cash (rather than in kind) – under the
Islamic NGO in Indonesia. supervision of Risma may prove to be an improvement
over 2020, but care should be taken so that its cash-
Despite these moves, however, political consolidation
based nature does not lead to inflation – or instead to
is probably not the primary goal of this reshuffle –
slower velocity of money if it ends up not being spent.
unlike arguably the two big reshuffles (2015 and 2016)
during Jokowi’s first term. The President’s coalition is Finally, the re-appointment of Muhammad Lutfi as
already secure, and – despite its big-tent nature – has Minister of Trade (he held the position in 2014) could
been able to harness its political capital to score be seen as a move to expedite the implementation of
important reforms, most notably the Omnibus Law on the Omnibus Law in policies pertaining to trade. The
Job Creation. The pandemic, in all likelihood, does not first half of 2021 is expected to be a busy time for
diminish this political capital as it helps temper public economic ministries, as they will have to write new
expectations in the short-term, but it does create regulations, taking care of course that the regulations
tremendous economic and public health challenges agrees with the Law both in letters and in spirit –
for the remaining four years of the administration. which is to improve ease of doing business and labor
market flexibility. While the impact on investment and
It is with these challenges in mind that the reshuffle
productivity would not be felt overnight, we expect it
should instead be viewed. Two of the new ministers
to be one of the most important determinants of the
(Budi Gunadi Sadikin – Health, Tri Rismaharini (Risma)
country’s potential output after the pandemic recovery
– Social Affairs) will be at the forefront of the govern-
– which in turn will set the backdrop for the 2024
ment’s efforts to fight Covid-19 and its socioeconomic
Elections.
PT Bank Central Asia Tbk 20th Grand Indonesia, BCA Tower Jl. M.H Thamrin No. 1 Jakarta, Indonesia Ph : (62-21) 2358-8000
EARLY WARNING BRIEFING
Chart 1. Social assistance and SME support budgets have been well-
utilized in 2020, but health and agency spending will be at the forefront
in 2021
2
EARLY WARNING BRIEFING
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