Indonesia's Prabowo Ousts Finance Minister After Clash With Ex-Army Customs Chief, Sources Say

By Stefanno Sulaiman

JAKARTA, Sept 16 (Reuters) - Indonesian President Prabowo Subianto sacked Finance Minister Purbaya Yudhi Sadewa after a dispute with a senior ministry official who once served on Prabowo's special forces team, three government sources said, in a shake-up that analysts and investors hope will steady policymaking in the $1.5 trillion G20 economy.

The removal of Purbaya, announced Monday while he was answering lawmakers' questions, followed months of concern about inconsistent economic policy. But the immediate trigger was bureaucratic infighting, according to people familiar with the matter.

The episode offers another glimpse into Prabowo's personal style of governance. The former special forces commander has tended to make decisions based on feedback from a trusted inner circle and loyalists, analysts say, sometimes sidelining professional experts and technocrats.

At the center of the clash was a reshuffle of hundreds of officials at the finance ministry, most of them in the tax and customs directorates. Purbaya ran afoul of customs and excise chief Djaka Budhi Utama and tax department head Bimo Wijayanto, who objected to the job rotation because they had not agreed to it, the three sources said. Djaka took his complaints directly to Prabowo.

Both officials report to the finance minister but were handpicked by Prabowo, according to one source. Djaka was a member of the president's special forces team during his military service. Media reports have said Djaka was found guilty in a military court of kidnapping and forcibly disappearing rights activists in the 1990s. The source said he enjoys unusually direct access to Prabowo, while Purbaya needed approval from the president's inner circle to secure meetings.

Analysts say the behind-the-scenes struggle illustrates how Prabowo's reliance on trusted allies, including former military figures in senior civilian posts, can override technocratic decision-making in Southeast Asia's largest economy.

Djaka denied on Tuesday that any conflict preceded the sacking. Bimo and the presidential office did not respond to requests for comment. Prabowo has previously said a successful leader must choose 'the best' people for the team, not because of family, friendship or crony ties.

'CONSEQUENCES'

The dispute peaked last Thursday at an inauguration ceremony for hundreds of senior and mid-level officials. Purbaya spoke at the event and said the rotation was based on professional assessments and consultations with relevant officials.

Two sources who heard about the matter later said Djaka objected to the plan and reported it directly to Prabowo on Friday, shortly before the president left for India to attend the BRICS summit. Prabowo returned to Jakarta early Monday. That same day, Purbaya was told he had been sacked in a call from the president's spokesperson while he was in the middle of answering lawmakers' questions at a hearing on Prabowo's 2027 budget plan, the first source said.

After handing over to successor Suahasil Nazara in a terse ceremony on Tuesday, Purbaya said an internal reshuffle had played a part in his dismissal but did not elaborate. He also said he was following Prabowo's policies.

The first source added that Bimo and Purbaya had differences over tax refunds. Bimo supported timely repayments, while Purbaya tended to delay refunds, often arguing that companies' claims should be closely scrutinized to prevent leaks in state revenue.

'NEW MINISTER WILL REVIEW THE ROTATION'

A third source close to Purbaya said the minister had justified the rotation to Prabowo as necessary to improve revenue collection by both the tax and customs agencies.

But when asked about the matter just after his appointment on Monday, Suahasil - a veteran technocrat promoted from deputy finance minister - told reporters he would review all the appointments.

In a WhatsApp message to senior ministry officials on Friday seen by Reuters, Suahasil said he had advised Purbaya to postpone the ceremony until the concerns of the tax and customs chiefs were addressed. Suahasil did not respond to a Reuters request for comment.

The customs office said Tuesday it was awaiting direction from the new finance minister on the appointments.

While the falling-out with Djaka proved decisive, it was not Purbaya's only fractious relationship with top officials. He clashed with Bank Indonesia's previous governor, Perry Warjiyo, over his policy of placing government cash in state-owned lenders to support credit. Purbaya was also at odds with Danantara chief Rosan Roeslani after saying the sovereign wealth fund would transfer 120 trillion rupiah ($6.8 billion) of its profits to help meet this year's fiscal deficit target. Rosan later said no such plan had been discussed.

'DEFENDING POLITICAL ALLIES'

Prabowo has appointed close allies and several former and active soldiers to top government posts, including Defense Minister Sjafrie Sjamsoeddin and cabinet secretary Teddy Indra Wijaya, who manages the president's agenda. Other key appointments have gone to former soldiers, including the head of national airline Garuda Indonesia.

Wijayanto Samirin, an economist at Paramadina University, said Prabowo places a high value on loyalty, an emphasis he described as understandable given Prabowo's long period outside government - but warned it could come at the expense of a merit-based system.

'For a country to succeed, its political system must be sound and technocratic, and its bureaucracy must be based on meritocracy,' he said.

($1 = 17,640.0000 rupiah)

(Reporting by Stefanno Sulaiman; Editing by Gibran Peshimam and Lincoln Feast.)