(Updates with details, quotes)
* Finmin is sole candidate to replace cbank gov
* Finmin respected for solid economy, low debt
* Finmin has come under political pressure over mine deal
By Adriana Nina Kusuma
JAKARTA, Feb 22 Indonesia's president has
unexpectedly nominated Finance Minister Agus Martowardojo as the
sole candidate to be the next central bank governor of Southeast
Asia's largest economy, a parliament official told Reuters on
President Susilo Bambang Yudhoyono had been expected to
re-nominate incumbent governor Darmin Nasution to do a second
term at the helm of Bank Indonesia (BI) after his current tenure
ends in May, or to nominate one of his deputies as an
Martowardojo, a former banker respected internationally for
guiding the G20 economy's continued strong economic growth and
falling debt levels that won the country an investment grade
rating just over a year ago, will face a "fit and proper" test
by parliament, said Speaker of the House Marzuki Alie.
"Investors don't need to worry, as he has experience in
fiscal management," said Eric A. Sugandi, economist at Standard
Chartered in Jakarta. "In terms of monetary policy, it will be
quite alike. But with rising inflationary pressure, we will need
to see BI policy under his leadership."
Bank Indonesia, seen as pro-growth under Nasution, has kept
interest rates at a record low for a year as it seeks to support
economic growth at above six percent in the face of faltering
exports during the global downturn.
The central bank shows few signs of considering a rate
change, though some economists expect it to be forced into rate
rises this year to bolster a rupiah weakened by worries
over a current account deficit.
The central bank and Martowardojo were not available for
The decision may also have implications for Singapore DBS
Group's efforts to complete a $7 billion takeover of
local PT Bank Danamon, which appears to have stalled
after nationalist Indonesian politicians pushed for greater
access to Singapore's banking industry in return.
The central bank, following the DBS acquisition attempt,
last year tightened the rules for bank ownership in Indonesia,
limiting financial institutions to holding a 40 percent stake in
banks, down from 99 percent previously.
Martowardojo has himself come under pressure from lawmakers
over his efforts to buy the government a remaining stake up for
grabs in Indonesia's second largest copper and gold mine, run by
Newmont Corp. He once said he would resign if the
government could not get the stake, a deal also yet to be
Given Martowardojo's past clashes with lawmakers and the
political sensitivity of the DBS deal, it is possible the
parliament could reject him after questioning and ask Yudhoyono
for other candidates, though this would be unusual.
Yudhoyono's government is reeling after a string of
corruption scandals for his Democrat Party and so the move to
switch Martowardojo could be an effort to shake up his cabinet
or political manoeuvring ahead of national elections next year.
"Martowardojo has done a pretty good job as the finance
minister. He's a respected banker which may bode well in terms
of boosting the capability of local banks," said Gundy Cahyadi,
economist at OCBC in Singapore. "What's interesting is who is
going to be the new finance minister."
(Additional reporting by Rieka Rahadiana and Andjarsari
Paramaditha; Writing by Neil Chatterjee; Editing by)