May 15, 2009 / 2:09 PM / 11 years ago

Indonesia president picks Boediono as VP candidate

BANDUNG, Indonesia (Reuters) - Indonesian President Susilo Bambang Yudhoyono confirmed on Friday central bank governor Boediono as his vice presidential running mate in a July election, a choice that has been broadly welcomed by markets.

Indonesia's central bank governor Boediono laughs during an interview in Yogyakarta August 30, 2008. REUTERS/Dwi Oblo/Files

Yudhoyono, who is heavily tipped to be re-elected, also said that his Democrat party would team up with a group of smaller parties, including the Islamist Prosperous Justice Party (PKS), to form a coalition in the next parliament.

“He (Boediono) will help me to overcome the economic crisis,” Yudhoyono told a ceremony in a respected university in West Java to announce his running mate.

He also described Boediono as a devout Muslim who would help him bring a “clean and responsible government”.

Boediono, 66, a respected technocrat who has held a number of high-profile jobs in the cabinet and central bank during Indonesia’s crisis years of the last 1990s and subsequent recovery.

His candidacy, which had been widely speculated at in recent days, has been seen as market-friendly and welcomed by analysts because of his clean image.

“Boediono is probably the cleanest out there,” said Anton Gunawan, chief economist at Danamon Bank. “Even when he was a minister he still lived in his own house and doesn’t like to have the official car. He catches the train.”

Earlier central bank sources had told Reuters that Boediono had submitted his resignation on Friday, news that prompted a stock market sell-off on concerns about the course of monetary policy.

The election outcome might not be decided until October if the vote goes to a second round, raising uncertainty in financial markets over when a replacement for Boediono might be found.

FINANCE MINISTER FOR CENTRAL BANK?

Boediono said he was “ready to start working from today” but did not refer to his position at the central bank.

There is speculation he may be replaced by Finance Minister Sri Mulyani Indrawati or one of Yudhoyono’s previous candidates for governor, Bank Mandiri president Agus Martowardojo.

In the last election, Yudhoyono picked businessman and Golkar Party politician Jusuf Kalla as his deputy. However, relations between the president and the outspoken Kalla soured, and Kalla plans to stand against Yudhoyono in the presidential race.

“Boediono could be expected to offer equally valuable advice on the economy. But he is likely to do so in a more measured fashion and away from the cameras, as he did for several years as the economics coordinating minister,” Chris Manning, an analyst at the Australian National University, said on the university’s website.

In last month’s parliamentary election, the Democrats won a fifth of the votes, giving the party the biggest share of seats, although Yudhoyono has wooed other parties to ensure the government would have enough support in parliament.

A recent opinon polls showed the Yudhoyono-Boediono pair was tipped to win with 70 percent of the vote.

The outcome of the presidential vote could affect the pace of Indonesian reforms that are critical for attracting foreign investment, creating jobs and driving economic growth which slowed in the first quarter of 2009 to its weakest in five years.

The registration of candidates runs until Saturday, with Kalla and former President Megawati Sukarnoputri of PDI-P both potentially set to run against Yudhoyono, backed by coalitions.

Additional Reporting by Sunanda Creagh

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