Agus Martowardojo: A man for all seasons


Chris Wright
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As part of Euromoney's 50th anniversary coverage, we profile some of the biggest names that we interviewed for our May Asia focus.

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Nobody else in Indonesia’s history has been finance minister, central bank governor and a big bank chief executive. So, Agus Martowardojo, which was hardest?

Agus smiles. “If you ask me to compare, I think the ministry of finance was more challenging. To manage the state budget, you have to deal with the members of parliament, all the ministers and all of them would like to ask for additional budget. People have their own ideas and that is quite… interesting.”

Frustrating? “I think my response is: ‘a productive challenge’.”


Agus’s diplomacy and even temper has made him an ideal candidate for tough jobs. In 1998, as the Asian financial crisis was at its worst, he was asked to be chief executive of Bank Ekspor Impor Indonesia, one of four banks that would be merged into Mandiri, which he would then go on to run.

After Mandiri he entered public office. Was it something he wanted to do or a sense of duty? 

“I think I’m a professional,” he says. “If I become the finance minister I need to do the political part, but I remain a professional technocrat, I’m not a politician.” 

He speaks with pride about the economic growth during his spell as finance minister from 2010 to 2013, an average of 6% compared with around 5% over the following five years. 

Few are in a better position to assess the state of Indonesian banking than Agus. Although he considers it healthy – with a capital adequacy ratio of 23%, gross system non-performing loans at 2.7% and net NPLs 1.4% – he still thinks it is overbanked. 

“In 1997 we had 243 banks. After the Asia crisis, it has dropped to 120 banks. But I believe we need to continue the consolidation. Ideally we would have a maximum of 40.” 

He says liquidity is still a challenge, with a high loan-to-deposit ratio that needs to be improved. And in the longer term, financial markets need to be deepened, from rupiah money markets to foreign exchange, local bonds and equities, structured products and Shariah-compliant.

“Credit from banking relative to GDP in Indonesia was 45% in 2016. Malaysia, Thailand and Singapore were all above 100%.” 

Perennial challenge

Similarly, corporate bonds in Indonesia were worth 3% of GDP in Indonesia in 2016, compared with 45% in Malaysia and 30% in Singapore. The stock market capitalization lags peers too. Improving this would help with Indonesia’s perennial challenge, infrastructure development. 

“We are funding infrastructure with bank financing,” he says. “But that’s not ideal. Infrastructure has to be financed by the capital markets.”

He thinks that another kind of infrastructure – market infrastructure, including the prudential system – also needs to be improved. In particular, he wants better coordination among government agencies, including the finance ministry and the central bank. 

The thought occurs that since he has run both, as well as several banks, he is probably the best qualified person in the country do to it. 

Agus stepped down as central bank governor at the end of his term in May 2018 and at the time Euromoney meets him he has just ended six months of gardening leave. He can’t yet say what he will be doing. But surely this is the answer: pulling the disparate parts of the market together and making things happen. 

“We have already identified the mission,” he says. “The most difficult part is execution.”