The new Finance Minister : The right man for the job
The president has officially appointed M. Chatib Basri as the new finance minister replacing ad-interim official Hatta Rajasa. Though his term will be short, until 2014, tough challenges awaits him.
Well suited for the job. We think M. Chatib Basri has experience in the Ministry of Finance. He was the special staff for the late Minister of Finance Sri Mulyani while was also the Representative of the Ministry of Finance for the G-20 in 2006 – 2010. Moreover, Mr. Basri has extensive private sector working experience, as he was the commissioner for several companies such as Astra International, Semen Gresik, Astra Otoparts, and Indika Energy.
First priority: the nearby 2013 revised budget. Following his official inauguration, Mr. Basri will have to immediately prepare the 2013 revised state budget (RAPBN 2013) accommodating fuel price hike scenario. In our view his success in passing the hike will not rely only on his ability to clarify the importance to reduce subsidized fuel cost, which we believe he is capable of, but also depending on his ability to persuade the parliament about the need of a compensation scheme.
Fostering fiscal policy. His public sector experience in combination with credentials in academic world and the private sector should give him enhanced view about the type of fiscal policies required going forward. Thus, based on the president’s direction of a fiscal framework that supports investment, we believe the likelihood of any tax rates increase or other fiscal constraints will be small.
for Indonesia Market Summaries 21 May 2013
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