* MP question integrity of c.bank chief nominee
* Finance minister calls for reciprocity if to approve
DBS-Danamon Bank takeover
* Speculation president wants finance minister out of the
(Updates with finance minister's comments)
By Rieka Rahadiana and Adriana Nino Kusuma
JAKARTA, Feb 25 The Indonesian president's
candidate to become the next central bank chief ran into
opposition on Monday, as two members of a parliamentary panel
that decides on the selection questioned his suitability for the
Late on Friday, President Susilo Bambang Yudhoyono
unexpectedly nominated Finance Minister Agus Martowardojo to
replace Darmin Nasution, whose term as Bank Indonesia (BI)
governor ends in May.
In his first public comments since being nominated, and
which may rattle foreign investors, Martowardojo made clear that
neighbouring Singapore would have to open up to Indonesian banks
if it expected to go ahead with the major purchase of a local
bank -- a deal that needs central bank approval.
The president has given no reason for pushing out the
current governor, generally seen as having kept a firm hold on
monetary policy, with inflation under control, though the rupiah
currency has weakened sharply during his tenure.
"For the BI governor nomination, we don't only look at
technical capability. We also look at integrity and national
interest. Agus Martowardojo's involvement in the Hambalang
(graft) case makes us doubt his integrity," said Dolfi OFP, a
member of the parliamentary commission on financial affairs. The
commission has the final say in the selection.
The member of the opposition Indonesia Democratic
Party-Struggle (PDI-P) was referring to a corruption scandal
surrounding the construction of the Hambalang sports complex.
The controversy has already toppled one minister and the
chairman of Yudhoyono's ruling, but increasingly unpopular,
Martowardojo was questioned last week by Indonesia's
anti-corruption agency as a witness in relation to the case.
The announcement has had little impact on local financial
markets, with one trader noting uncertainty over whether the
nomination would be approved by parliament. The rupiah has
fallen 0.8 percent since the beginning of the year and was
emerging Asia's worst performing currency last year.
It is the second time Yudhoyono has nominated the career
banker to head the central bank. Martowardojo was rejected in
2008, along with another candidate proposed by the president,
though that was seen more as an attempt by parliament to flex
its political muscle than any particular dislike of Agus.
The Dutch-born Martowardojo, 57, took over as finance
minister in 2010 from the reformist Sri Mulyani Indrawati, who
fell foul of members of the business and political elite with
her anti-corruption drive.
Before that, he was credited with turning around the
fortunes of the main state bank, Bank Mandiri.
Some media reports suggested that the commission might go
back to the president and demand another candidate.
"Agus's understanding of macroeconomics is insufficient,
which is important for a BI governor," Kontan daily quoted
commission member Harry Azhar Azis as saying. Azis belongs to
the ruling coalition member Golkar Party.
The appointment could become the latest hurdle to a
complicated $7.2 billion takeover proposal by Southeast Asia's
biggest bank, DBS Group Holdings, which has been
postponed for almost a year.
Martowardojo voiced his concern over the deal when it was
announced last year and repeated his concerns on Monday.
"We believe that reciprocity is important as the main
benchmark," he told reporters when asked his view of the deal,
delayed for almost a year.
Indonesia's central bank and government have been pushing
for equal treatment from Singapore's regulator for their banks
to be allowed to operate in the city-state.
DBS, part-owned by Singapore sovereign investment arm
Temasek Holdings, said last April it had agreed to take
over Bank Danamon in a cash-and-shares transaction
that would rank as Asia's fourth-largest banking deal.
It would make Singapore-based DBS the fifth-biggest lender
in Indonesia, one of southeast Asia's hottest markets, where
bank penetration is low.
Already politicised, the deal faces being left in limbo as
the country faces general and presidential elections next year.
The change at the central bank comes at an especially
sensitive time in the run-up to next year's elections when
Yudhoyono comes to the end of his second, and under the
constitution, final term.
There is no clear front-runner to replace him.
There was media speculation that the reshuffle had as much
to do with pushing Martowardojo out of the cabinet because of
his very public opposition to two major issues involving
There has been no word on who might be the new finance
minister, if Martowardojo's appointment to the central bank goes
through. Some speculation has focused on Deputy Finance Minister
Anny Ratnawati, Trade Minister Gita Wirjawan, and investment
chief Chatib Basri, all seen as close to Yudhoyono.
(Additional reporting Jakarta Bureau, Writing by Jonathan
Thatcher; Editing by Ron Popeski)