Budi Arie Setiadi succeeds Johnny G Plate, who was arrested in May over accusations he demanded kickbacks related to a government telecommunications project to expand internet access.
Plate, who denies the allegations, is the fifth member of Widodo’s two administrations to be arrested in a graft scandal since 2014.
Investigators have said the telco project in question incurred eight trillion rupiah ($533 million) in state losses.
Plate faces life in prison if found guilty of multiple charges under Indonesia’s anti-corruption law.
Investigators have named seven other suspects in the case, including an employee of a local subsidiary of Chinese telecoms giant Huawei.
Widodo removed Plate from his post on Monday and tapped deputy villages minister Setiadi for the role, where he will carry on the project’s work building base transceiver stations (BTS) to bolster internet access across the archipelago nation.
“We respect the legal process, but the BTS (construction) should continue because it relates to public service, particularly for residents in remote regions,” Widodo told reporters.
Budi was the chairman of a volunteer group that supported Widodo’s presidential campaign in 2014.
As part of the cabinet shake-up, Widodo also inaugurated five other deputy ministers and two members of his presidential advisory board.
