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Banking

Indonesia’s central question

Touted as the next Bric country, Indonesia has avoided the worst of the financial crisis and its economy is powering ahead – but is that despite or because of a vacancy at the head of the country’s central bank? Eric Ellis investigates.

IN 1939, THE UK’s leader, Winston Churchill described Russia as "a riddle, wrapped in a mystery, inside an enigma". If the canny old warhorse was around today, he might have offered a similar description of modern-day Indonesia.

This is a sprawling economy on the verge of joining the coveted Bric club of developing powerhouses – Brazil, Russia, India and China. Indeed, there is a growing body of economic opinion that the acronym should be Biic, bouncing the enigmatic Russia from the group, at least in population terms (Indonesia’s tally of 230 million people is 1.5 times that of Russia).

Some 12 years of wobbly reformasi after the 1998 fall of the kleptomaniac dictator Suharto and his family, an increasingly self-confident Indonesia seems set on securing its status – and moral authority – as Islam’s biggest democracy. Susilo Bambang Yudhoyono, known as SBY, was the country’s fifth president in six years when he took over in 2004; now he has been in office for six years, democratically elected twice. The economy is ticking over at 6% to 7% annual growth, and seems likely to do so for the foreseeable future. Rating agencies now smile approvingly at Jakarta, and its bankers just got away one of the world’s biggest sovereign sukuks.

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