The markets reacted positively to the cabinet reshuffle carried out by President Joko “Jokowi” Widodo on July 27. The new team has clearly been judged to be good for Indonesia and for the nation’s currency.
Market participants bought in and this sent the currency on a strong upward trend: the rupiah climbed to Rp 13,137 per US dollar, or 0.29 per cent. The next day, the rupiah continued its rise to Rp 13,068 per US dollar, or 0.3 per cent.
Resti Afiadinie, a treasury analyst at the state-owned Bank BNI, said the main catalyst was the announcement of the cabinet reshuffle, which lifted optimism about the country’s future economic development.
The Jakarta Composite Index (JCI) ended the trading session on July 27 with a 1 per cent increase, or 49.96 points, to 5,274.36, in response to the cabinet reshuffle that saw Sri Mulyani Indrawati, former Managing Director of the World Bank, moved to the finance minister position.
The next day, the bourse opened with the index rising to 5,278.50 and it closed 0.47 per cent higher at 5,299.21, while the LQ45 index surged 2.93 points (0.32 per cent) to 913.70. President Director of the Indonesia Stock Exchange (BEI) Tito Sulistio believed that the second cabinet reshuffle conducted by the president would boost confidence among market participants.
On July 29, even though the JCI weakened 83.22 points or 1.57 per cent to 5,215, records from closing time showed that foreign capital continued to flow in incessantly. Trade transactions amounted to Rp 11.77 trillion, almost double the daily average.
“Ín the last few days,” said Vice President Director of BCA Eugene Keith Galbraith at the time, “there’s extensive dynamics with a positive impact on the Indonesian economy.”
There was a small but significant change in the macroeconomic sector with the placing of Sri Mulyani in the new position. Other ministers are alumni of the Faculty of Economics, Universitas Indonesia, one of the leading higher-education institutions in in the country.
Besides the 1986-graduating Sri Mulyani, there is also the 1976 graduate Darmin Nasution as Coordinating Minister of the Economy and 1990 graduate Bambang Brodjonegoro as Minister of National Development Planning/Head of the National Development Planning Agency.
Small but noteworthy changes will also occur in closely related sectors with new faces in charge of the portfolios of trade, industry, and transportation. Minister of Trade Enggartiasto Lukita is an old hand in business and politics. He served in parliament for two terms: 1997-1999 and 2004-2009 under the Golkar party. Meanwhile, in the 2014 election he gained a seat for the Nasdem party.
Lukita’s achievements in real estate and property also saw him named as the Chairman of Real Estate Indonesia (REI) from 1992-1995 and Vice President of the International Real Estate Federation (FIABCI) from 1992-1995. With his inspiring track record, there are high hopes that Enggartiasto will be able to curb rising food prices.
With the appointment of Airlangga Hartanto as Minister of Industry, the Industrial Estate Association of Indonesia (HKI) hopes that this will set a new chapter in the development of industrial estates as one of the pillars to enhance economic growth.
“As a politician-cum-businessman, he really understands the industrial world,” said HKI Chairman Sanny Iskandar. The University of Pennsylvania 1993 graduate admitted that the challenges are tough. “We have to be optimistic that we can cope with it,” said Airlangga, at the Ministry of Industry in Jakarta.
At the same time, the Indonesian National Shipowners ' Association (INSA) expressed its eagerness to work together with Minister of Communications Budi Karya Sumadi to promote the maritime sector. The association is impressed by his track record while at the helm of Real Estate Management and Development PT Jakarta Propertindo and the state-airport services arm PT Angkasa Pura II.
“We hope that [his appointment] will convey a new and positive energy to Indonesia, especially in the shipping industry,” said INSA chairperson Carmelita Hartoto.
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