May 6, 2010 3:00 am
A lengthy power struggle at the top of the Indonesian government took a surprising twist yesterday when Sri Mulyani Indrawati, the finance minister and reform champion, resigned to take a senior position at the World Bank in Washington.
The Indonesian stock market fell 3.8 per cent on the news, its biggest drop in a year, amid fears the departure of the wellregarded minister could have long-term consequences for the country's booming economy and anti-corruption drive .
"It's a big loss for our country. She's been one of the best finance ministers we've ever had," said Edwin Sinaga, CEO of PT Financorpindo Nusa, the Jakarta brokerage. "Right now, I don't think we have the candidate to replace her ."
Mrs Sri Mulyani, who has been in the cabinet since 2004, is widely credited with spearheading key macro-economic reforms that helped make Indonesia the world's third-best performing economy in 2009. She also led an anti-corruption drive.
Her appointment is also part of a drive by the World Bank and the International Monetary Fund, its sister institution, to increase female and Asian representation in senior positions.
In 2008, the World Bank named Justin Lin, previously an academic at Peking University, as its first Chinese chief economist. In February the IMF appointed Zhu Min, formerly deputy governor of the People's Bank of China, as a special adviser to the managing director.
The IMF, if not necessarily the World Bank, remains deeply unpopular in parts of Asia following the invasive policy changes it demanded in return for rescue loans during the Asian financial crisis of 1997-98.
Mrs Sri Mulyani's sudden departure is seen as a compromise to end a battle between technocrat ministers and influential legislators that has stymied reform efforts in recent months.
The tussle has been widely portrayed in the media as a battle between honest reformers trying to push Indonesia into the 21st century and corrupt, vested business interests from the era of Suharto, the late authoritarian president.
Government critics have spent months trying to orchestrate the ousting of the minister and Boediono, vice-president, for alleged errors in approving the 2008 bail-out of Bank Century, an ailing private lender.
While Susilo Bambang Yudhoyono, president, has publicly backed the two officials, sniping lawmakers in recent weeks have continued their attacks.
One of the chief political figures who called for Mrs Sri Mulyani's removal was Aburizal Bakrie, one of Indonesia's richest men and chairman of the powerful Golkar party.
Mr Bakrie and Mrs Sri Mulyani publicly sparred as ministers in Mr Yudhoyono's first cabinet. Mrs Sri Mulyani said last December that Golkar lawmakers wanted her out because they disagreed with her reform programme.
Mrs Sri Mulyani's sudden move to the World Bank has been suggested as the way in which Mr Yudhoyono has reached a compromise with Mr Bakrie and Golkar.
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