A Reformer who Walks the Talk

A Reformer who Walks the Talk
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In late October, when President Susilo Bambang Yudhoyono announced a long-awaited Cabinet reshuffle, many analysts derided the move as reflecting little more than a desire to shore up political support in Parliament rather than a serious attempt to initiate real change. They had a point. Many party hacks, including some who had been implicated in graft cases, were retained in the new line-up.

Since then, however, some observers have been pointing to Cabinet changes that could lead to important reforms. One of the most notable was the announcement that Dahlan Iskan, the former CEO of the Jawa Pos newspaper group, would be the new Minister of State Enterprise.

Indonesia's state enterprises have long had a poor reputation. Badly managed and often seen as cash cows for corrupt politicians, most have successfully resisted reform efforts for years. Dahlan replaces Mustafa Abubakar, who had been widely criticized over irregularities in the initial public offering of state-owned Krakatau Steel last year.

Having introduced wide-ranging reforms within state-electricity company Perusahaan Listrik Negara (PLN) since his appointment as president-director of the utility in 2009, Dahlan is widely known for his managerial ability. But this is not his only strength. The 60-year-old is already quite wealthy and does not appear to have any political ambitions. As a result, he is unlikely to be unduly influenced by corrupt politicians or businessmen. He also enjoys the potential support of one of the largest newspaper groups in the country when facing resistance to his reform efforts.

Dahlan's deep understanding of the newspaper business has made him very media savvy. Reports say he wept when the media asked for his reaction to his ministerial appointment: "I told the president that I am saddened to leave the PLN because my friends there are working hard." Such comments are not the sort of thing normally expected from newly appointed Indonesian Cabinet ministers.

Observers noted that after the swearing-in ceremony Dahlan drove himself and his wife to his new office rather than employ the services of a chauffeur. The newly installed vice-minister and his wife sat in the back seat.

Such unassuming behavior also characterized Dahlan's actions when he was in charge of the PLN. Unlike other ministers and senior government officials, Dahlan walked to the PLN office at Jakarta's block M every day. The habitual 30 minute stroll, together with his preference for sneakers rather than black leather shoes (even when attending meetings at the presidential palace), set him apart from other national figures.

Agung Wicaksono, a researcher in state-owned enterprises at the Institute of Technology at Bandung, notes that such images appeal to Indonesians fed up with the ostentatious lifestyles of the nation's current crop of politicians. "Dahlan walks the talk," he told me in Jakarta last week.

Dahlan's public statements since becoming Minister of State Enterprises suggest he will focus on streamlining his ministry's bureaucracy. One target involves reducing the number of meetings and reports delivered to his office by 50 percent by the end of the year: "What I want to do first is reduce ministerial intervention on state enterprises to give more freedom and authority to the CEOs to carry out corporate actions."

There is also a determination to cut through the bureaucratic inertia and political haggling. The long-delayed establishment of a holding company for state-owned plantation firms, for example, is to be completed by the end of this year.

Even so, Dahlan may not have everything his way. Unlike in the PLN, where he had wide-ranging authority, he must now cooperate with other ministers to achieve his goals. Asset sales and initial public offerings on the stock market, for example, require the assent of the Finance Ministry. Dealing with the state railways and oil-giant Pertamina also requires the cooperation of the Transport and Energy Ministries respectively.

Indeed, conflict with other government institutions could become an important obstacle if not carefully handled. Sources say that during his time at the PLN, Dahlan sometimes made quick decisions designed to achieve the goals of his own institution that did not always take into account the perspectives of other government agencies.

But ruffling a few feathers within Indonesia's moribund bureaucracy is not necessarily a bad thing. As Agung notes, many Indonesians may even support him 'if the targets are vested interests or insensible regulations'.

Under President Yudhoyono, Indonesia has become known for its macroeconomic stability, fiscal discipline and strong GDP growth. Long-term development, however, also depends on the extent to which the country is run by capable ministers who can deliver on promised reforms, improve bureaucratic efficiency and stamp out corruption.

For those who wish Indonesia well, Dahlan offers the hope of better things to come.

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.

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