B e h i n d t h e H e a d l i n e s vol. xi no. 5 — julY 15, 2009 FROM THE EDITOR A legacy worth leaving INTELLIGENCE Names floated for Sri Mulyani’s replacement Can I get a witness! Campaign team rifts hampered Mega-Prabowo IN BRIEF A change to the House rules Public service law a step toward reform New investigations show KPK can still bite SPECIAL FEATURE A One Horse Race PresentatioN Paramadina University rector Anies Baswedan Van Zorge Report | The Executive Network PT Mitra Dinamika Abadi Sequis Center (S. Wijoyo Center) 8th & 10th fl | Jl. Jendral Sudirman Kav.71 | Jakarta 12190 - Indonesia Phone: (6221) 5290 3993 | Fax: (6221) 5290 3996 | Website: www.vzreport.com Van Zorge Report Editor-in-ChiefPublisher JamesJames VanVan ZorgeZorge DennisPublisher Heffernan Dennis Heffernan Managing Editor ManagingSam Polk Editor Sam Polk Senior Assistant Editor Assistant Editor WillowTiarma Osgood Siboro ContributingAssistant Editor Editor THE EXECUTIVE NETWORK Jean Baptiste Chauvin Business Solutions for Business Leaders Tiarma Siboro Contributing Editor Stephen Sherlock TheThe ExecutiveExecutive Network Network TheThe ExecutiveExecutive Network Network (TEN) (TEN) is anis anexclusive, exclusive, membership-based membership-based association association of national of national and and Michael Buehler multinationalmultinational corporate leaders.leaders. As a member of TEN, TEN, you you willwill rreceiveeceive prproductsoducts and and services services that thatprovide provide analysis analysis and insight and insight into the into contextual the contextual issues shapingissues shaping the Indonesian the Indonesian business business environment, environment, as well as access to the opinion leaders and government officials who shape it. as well as access to the opinion leaders and government officials who shape it. TEN members are TEN members are offered the chance to both understand and influence the factors affecting offered the chance to both understand and influence the factors affecting the business environment, the business environment, while building critical relationships with the key players. while building critical relationships with the key players. Products and Services TENProducts members and enjoy Services our interactive dialogues with opinionmakers, experts, and senior governmentTEN members officials, enjoy our our government interactive dialogues relations andwith lobbyin opinionmakers,g services, experts, and our and risk senior assessments, government conferencesofficials, our and government regular and relations ad-hoc printand lobbying publications. services, Within and the our TEN risk context,assessments, our consultingconferences and servicesregular andfocus ad-hoc on engaging print publications. influential officials Our interactive in the executive, dialogues legislative are private and and judicial informal branches gatherings ofthat government highlight developmentsto improve the that policy affect framework the business for investors community, in Indonesia. and are generally Our interactive held once or Office:Office: dialoguestwice times are aprivate month. and Some informal of our gatherings dialogues that are high heldlight in developmentsthe form of industry-specific that affect the business roundtable SequisSequis CenterCenter community,meetings, while and othersare generally have a broaderheld two appeal, or three and times include a m onth.topics Somesuch as of industrial our dialogues relations, are legal (S.(S. Widjojo), Widjojo), Lt Lt8 &8 10 held in the form of industry-specific roundtable meetings, while others have a broader appeal, reform or the consequences of the Bali bombings. Jl.Jl. JendralJendral Sudirman Sudirman Kav. #71 71 and include topics such as industrial relations, legal reform or the consequences of the Bali JakartaJakarta 1219012190 bombings. Phone (6221) 5290 3988 Join Us Phone (6221) 5290 3988 Stay on top of political and economic developments in the country, engage with the key players Fax (6221) 5290 3989 Join Us Fax (6221) 5290 3989 in the country’s economic and political spheres, and have a say in some of the policies that affect Stay on top of political and economic developments in the country, engage with the key players investment in Indonesia. Gain unique perspectives, build worthwhile relationships, and empower in the country’s economic and political spheres, and have a say in some of the policies that affect Website:Website: your business. Join us and our dynamic and influential group of members in our commitment to www.vanzorgereport.com investment in Indonesia. Gain unique perspectives, build worthwhile relationships, and empower www.vzreport.com Indonesia. your business. Join us and our dynamic and influential group of members in our commitment Send comments to: to Indonesia. If you’d like to set up an appointment to speak with one of our associates about this program, call us on [email protected] comments to: If(6221) you’d like 5290 to set 3993 up an and appointment let us know to that speak you’re with interestedone of our inassociates TEN. about this program, call us on [email protected] (6221) 5290 3988 and let us know that you’re interested in TEN. [email protected] FOR PRIVATE CIRCULATION ONLY: This document is intended only for subscribers to the Van Zorge Report and must not be distributed or reproduced in any form without express permission of the Van Zorge Report. The information contained in this document was gathered from sources that we believe to be reliable and correct. However, no warranty is made as the accuracy, completeness, or fairness of the information, opinions, or projections herein. Certain assertions made herein constitute forward- looking statements, which are by their nature subject to known and unknown risks, uncertainties, and other factors that may cause the actual outcome to be materially different. No liability whatsoever will be accepted for the fairness of the contents hereof by the Van Zorge Report, Van Zorge Heffernan & Associates, or any of their respective directors or employees. Van Zorge Report — July 15, 2009 Table of contents: FROM THE EDITOR................................................. 4 A legacy worth leaving INTELLIGENCE........................................................ 6 Names floated for Sri Mulyani’s replacement Can I get a witness! Campaign team rifts hampered Mega-Prabowo IN BRIEF................................................................. 10 A change to the House rules Public service law a step toward reform New investigations show KPK can still bite SPECIAL FEATURE.................................................... 18 A One Horse Race Presentation........................................................... 25 Paramadina University rector Anies Baswedan 3 Van Zorge Report — July 15, 2009 FROM THE EDITOR A legacy worth leaving resident Susilo Bambang Yudhoyono deserves once again be the case, half of the cabinet members the congratulations flowing in from foreign are politicians loyal more to their political parties and leaders, domestic rivals, and news commentators private interests than to the public good? How possible Pfor his decisive first-round reelection victory. At nearly is a successful effort to rebuild the country if top-flight every turn over the last three months, Yudhoyono reformers are sidelined for making waves? outperformed his rivals. The likely departure of both Finance Minister and Despite a few notable flaps by loose-lipped aides Coordinating Economic Minister Sri Mulyani and a tendency to be goaded into petty spats, the Indrawati and Tax Directorate chief Darmin Nasution campaign showed a remarkable degree of discipline, to Bank Indonesia does not augur well for tilting the sophistication, and responsiveness. In the debates, balance of power in the cabinet away from the Golkar Yudhoyono often came off as dull and a bit aloof. dinosaurs and the Islamist party representatives. But while his performances did not exactly make for scintillating entertainment, his willingness to speak in More concerning than Sri Mulyani’s likely move to the concrete terms about solving issues facing the country bank are the rumoured reasons behind the decision. compared favourably to the glibness of Jusuf Kalla, and Yudhoyono’s notorious concern with his image may the outright ignorance of Megawati Sukarnoputri. have driven him to reassign Sri Mulyani, rather than run the risk of her stealing the show. Next to Sri Mulyani More than the lack of a confidence-inspiring and her outspoken, hard-driving style, Yudhoyono challenger, however, Yudhoyono owes his reelection to may have feared looking like only a reluctant reformer a host of popular policies that led voters to support his forced by his staff to kerb cronyism in his cabinet. candidacy on the basis of their rational economic and political interests. Some commentators have derided The effort to clean up the bureaucracy, however, needs programs such as the direct cash assistance to the poor that hard-driving type of reform. Sri Mulyani will no and a well-publicised campaign to eliminate school doubt excel at the bank just as she has excelled at the fees as populism à la Thaksin Shinawatra, Thailand’s Ministry of Finance, but her move to the bank is a exiled former premier. But if the school fee initiative signal that there are limits to how hard reformers will is combined with real educational reform, and if the be allowed to push. cash assistance helps justify further efforts to reduce wasteful and counterproductive subsidies