Round Two against Tax Dodgers for Indonesia’s New Finance Chief

By Gayatri Suroyo and Eveline Danubrata

JAKARTA – Six years after stepping back from a contentious effort to compel Indonesia’s wealthy business figures to pay their taxes, Finance Minister Sri Mulyani Indrawati has returned to complete the task, now receiving strong support from reformist President Joko Widodo.

During her previous tenure under former President Susilo Bambang Yudhoyono, Indrawati helped navigate the Indonesian economy through the global financial crisis and earned respect from financial markets while pursuing anti-corruption initiatives.

However, Indrawati faced a formidable political rival in tycoon and politician Aburizal Bakrie, who was then the chairman of Golkar, Indonesia’s second-largest political party. Bakrie’s coal company was featured on a list of the country’s top tax evaders, which Indrawati’s tax authority released in early 2010 to pressure the elite into compliance.

Their relationship had already soured before the publication of the list. Bakrie once remarked in an interview that Indrawati lacked understanding of the "real sector," adding, "as a cashier she is good."

Shortly after the tax dodgers were publicly named, Indrawati resigned amid criticism following allegations of causing state losses during a bank bailout, which she has denied. Following her resignation, she joined the World Bank as managing director and chief operating officer.

Fast forward six years, a lot has shifted. Widodo took office in 2014, coming to power on a reformist agenda aimed at replacing the established political order. He eventually offered Indrawati a ministerial position, which she initially declined due to Golkar’s opposition status and Bakrie’s continued leadership.

However, in the intervening years, Bakrie stepped down as Golkar chairman amid internal strife, with the party aligning itself with Widodo’s coalition. This shift helped persuade Indrawati to accept the finance minister role.

Upon her inauguration, she described her new position as "a noble task," but refrained from elaborating further.

Bakrie acknowledged Indrawati’s economic acumen, stating there was no conflict between them, and underscored her suitability for the role.

Widodo personally sought approval from the World Bank’s president for Indrawati’s return to Indonesia as finance minister. The return of a respected figure like Indrawati is expected to boost confidence in the country’s economic reforms.

Indrawati has already inspired enthusiasm among the tax office staff, receiving a warm welcome during her first appearance at a presidential briefing. A former finance minister praised her straightforwardness and care for her team.

The president’s agenda now hinges on Indrawati’s expertise, especially with the launch of a tax amnesty program aimed at repatriating billions of dollars held overseas to stimulate the sluggish economy. She has instructed the tax office to prepare diligently for the initial phase of this initiative.

Indrawati emphasized that rebuilding credibility in the state budget is critical and underlined the need for clarity regarding government policy to foster economic activity.

Growth in Indonesia’s economy is anticipated to rise slightly to 5.2 percent this year, marking an increase from 4.79 percent in 2015, which was the slowest growth rate in six years.

Indrawati’s participation in what analysts call an economic "dream team" has been positively received by investors and is viewed as a strategic win for Widodo. One economist noted her as a determined, clear-thinking reformer adept at navigating the complexities of both Indonesian politics and global economics.

Overall, it appears that the tumultuous events from the past have been largely set aside as the country looks forward to a new era of leadership under Indrawati.