Emerging Markets has heard that, of the 71 specific reforms outlined by Indonesian president Susilo Bambang Yudhoyono earlier this year, 33 of them have finance minister Mulyani Indrawati’s name next to them as the minister responsible. Is that right? “Well,” she says, “actually it’s more than that. Some of them weren’t listed in the package.”
Meet our Asian finance minister of the year, and perhaps the busiest woman in Indonesia. When Indrawati, a former IMF executive director, stepped across from her role as national development planning minister to finance minister 10 months ago, she inherited surely the largest and most difficult portfolio in the Indonesian government, a place that specializes in the unwieldy and the challenging.
On her plate are the national budget, tax reform (both in levying and collection), customs reform, sorting out the banks, getting the capital markets on track, and revamping the ministry itself. A big ask. How does one prioritize in a portfolio like that?
“I have to strike a balance between a pragmatic approach in managing the fiscal policy daily, and the medium-term vision of strengthening the fiscal structure, budget structure and the institutional capacity of the ministry of finance,” she says.
Pragmatic is a word she uses often, highlighting the realities of effecting change in a country where barriers to reform are high. To complicate matters further, the MoF “is also assuming a huge responsibility on the revenue side”, with its role in the capital markets, she says, and is still laden with inherited problems stretching back a decade. “Since the crisis of 1997, we have found that the minister of finance becomes the only person who will absorb many of the consequences of the crisis,” she says. “It’s one of the realities we have to manage.”
There is plenty to do, but a lot has been done in 10 months. “The most important achievement is that we now have a quite healthy and robust budget structure, meaning there is a capacity to absorb some of the shocks and uncertainty coming from the [global and national economic] environment. Also, the feeling of making progress and change has been widely shared by many people in the ministry of finance; reform always has the support of the highest authority, the president and vice-president.”
Asked to identify the biggest challenges to come, she says it’s a big list, but she is approaching it energetically. “I have to be very pragmatic, but at the same time I’m not going to make myself less ambitious about what needs to be achieved.” —Chris Wright