This weekend saw Indonesia’s finance minister Dr Sri Mulyani Indrawati involved in negotiations in Washington at the G20 summit. Indonesia was the sole representative of the Asean region at the meeting, and Mulyani faced the delicate task of balancing her country’s needs with those of the region. Her president announced on Sunday that Indonesia would not seek direct aid from the IMF, but did not rule out cooperation with the World Bank.
Speaking to Euromoney’s Lawrence White on Friday night, Mulyani addressed Indonesia’s currency troubles, the rumours that she tended her resignation over new developments in the Bakrie saga and the question of her own political ambitions.
As well as Indonesia’s economic woes, Mulyani has had to contend with a developing saga that has threatened her government’s credibility, the national economy and indeed her own career. Bakrie and Brothers is the holding company for a group that contains some of the country’s most prominent businesses, mainly in the energy, property and telecoms sectors, and it is in trouble. The firm was looking to raise around $1 billion to repay maturing debts and hit upon the solution of selling its stake in Bumi Resources, a coal-exporting firm, for $1.3 billion to a consortium headed by investment group Northstar. The collapse of the Bakrie group on failure to repay these debts would have exacerbated the effects of the financial crisis on Indonesia, so news of the sale came as relief to the administration as well as to the beleaguered company. But there is a snag: trading of Bumi’s shares was suspended on the country’s exchange after they plunged by the maximum daily limit of 10% for several consecutive days. This lead to an outcry in the local media that the company was receiving special treatment. Aburizal Bakrie – head of the clan although officially no longer chief of the holding company since he took up the role of minister for welfare – was a key financier of President Susilo Bambang Yudhoyono’s 2004 campaign.
Mulyani had moved earlier this month to lift the suspension of trading in Bumi Resources, only for the ruling to be overturned by an unnamed official in the government. A source quoted in the Jakarta Post said the official comes from a higher level in the administration than Mulyani. A spokesman for the president has said that SBY, as the president is often called, had no involvement. News today (Monday 17th) that Bumi plans to raise $600 million to fund a share buyback program failed to trigger a significant rally in the stock.
Euromoney: The Indonesian press has been full of outrage at the way the Bakrie group has been perceived as being bailed out again. There has been much speculation about disagreements between the head of that firm and yourself, one in favour of a government bailout of corporates and one of you not. What’s your comment on the situation?
Mulyani: I guess as a policymaker at the top level I fully understand that this global shock took many of our companies by surprise. These companies need to be very vigilant, to be responsible and accountable, especially if they are public companies. This is the theme we are trying to establish. I think in all countries in the world the role of interest groups from the private sector in the decision-making process is a factor. Without sacrificing our principles we’re trying to strike the right balance.
Euromoney: But when you talk about restoring credibility to the government, to regulation and control, isn’t that difficult when you have situations in which your stand-in [minister for State Enterprises Sofyan A. Djalil, acting finance minister while Mulyani was at G20] has admitted to previously undisclosed shareholdings in Bumi at a time when he’s overseeing companies that might want to join the consortium bidding for Bumi?
Mulyani: Well, this is an interesting case of testing the principle of a conflict of interest. The president is very keen on honouring good governance and avoiding conflicts of interest, but the political reality needs to be managed. I think that the government can overcome situations like this without sacrificing its principles. Remember that people in other countries face the realities of interest groups.
Euromoney: It’s been reported by some sources in Jakarta that you tendered your resignation to the president, when it appeared that you would be overruled on the decision to lift the suspension on the trading of shares in Bumi on the exchange. Is there any truth to those rumours?
Mulyani: Well, I can say that this government is working together nicely and we want to continue working together. I’m the minister of finance in charge of handling this crisis, and that’s my commitment.
Euromoney: Do you have any political ambitions of your own? At the stakeholders’ day in Jakarta at the end of Ocotber you said that you had only one year left as a finance minister. What happens next?
Mulyani: I am not affiliated to any political party. My statement was purely that the term of this government is five years so I will serve until the end of that term on October 24. Beyond that I am committed to my country in full. My duty is to manage the economy with my best efforts. I am what I am.
