Indonesian president's nephew appointed to central bank, raising independence concerns

JAKARTA, Jan 27 (Reuters) - Indonesia's parliament on Tuesday appointed President Prabowo Subianto's nephew, Thomas Djiwandono, as a deputy governor of the central bank, in spite of some concerns his installation will undermine the institution's operational independence.

The decision was unanimously agreed during the House's plenary session on Tuesday, said ?Saan Mustopa, the House's deputy speaker.

On Monday, a parliamentary commission overseeing finance had endorsed Thomas as the new ?deputy governor for Bank Indonesia, eliminating two other career central bankers.

"Hopefully this mandate can ?be carried out with integrity and wisdom and to also ?give a significant contribution ?in strengthening monetary policy, maintaining financial stability, and supporting sustainable economic growth," Mustopa said.

After the appointment, Thomas will ?be formally sworn in by the Supreme ?Court, though the timing is still unclear.

Thomas' nomination has sparked some investor concerns about the independence of Bank Indonesia, driving the rupiah to ?a record low of 16,985 per U.S. ?dollar last ?week. It later recovered after BI kept rates unchanged in an effort to shore up the currency.

The rupiah was unchanged on Tuesday after the vote ?at 16,770 to the U.S. dollar.

Speaking to reporters after the appointment, Thomas said he would keep Bank Indonesia's independence, local media CNBC Indonesia reported.

"I would like to reiterate my commitment to maintain the central bank's independence as I said during my fit and proper test yesterday, aligning fiscal and monetary policies," he said.

When asked about ?the market's ?concerns during his competency test on Monday, Thomas said he can only be judged on his work, adding that he had already resigned from ?Prabowo's Gerindra party in December.

He also emphasised the importance of "synergy" between the central bank, fiscal policymakers and other authorities in supporting the country's economic growth. But he stressed that nothing should compromise the central bank's independence.

"The law (which regulates) Bank Indonesia's independence is very strong," he said. "Second, I went through all the processes required by the law."

Mukhamad Misbakhun, the head of the parliamentary commission ?overseeing finance, said on Monday that Thomas was approved because he was seen as a figure who "can be accepted by all parties" and has the vision to create synergy between fiscal and monetary policies.

(Reporting ?by Ananda Teresia and Fransiska Nangoy; Editing by Thomas Derpinghaus, David Stanway and Christian Schmollinger)