Survey of recent developments

In the 15 years since the Asian financial crisis, the Indonesian economy has benefited from a stable macroeconomic policy framework and prudent macroeconomic policy settings. Economic growth has been solid, inflation has been contained and government finances have strengthened. Indonesia weathered the global financial crisis better than many countries, and it subsequently benefited from the low global interest rates resulting from highly stimulatory monetary conditions in many advanced economies, especially the US.

In the middle of 2013, however, speculation on when the US Federal Reserve would begin to unwind its program of quantitative easing saw global interest rates jump. Short-term capital flowed out of Indonesia, causing the stock market to fall, the currency to depreciate and interest rates to rise. On top of this, GDP growth appeared to be slowing, the trade balance worsening and inflation increasing. In late September and October, the failure of the US to raise its legislated debt ceiling led to speculation that it might fail to meet some of its debt obligations, which fuelled financial-market volatility.

It is yet to be seen whether the Indonesian economy and its financial markets are sufficiently flexible to make a smooth transition to the new external reality. The policy tools available to the government to deal with the short-term economic challenges are limited: it introduced an economic policy package in August, and Bank Indonesia (BI) raised official interest rates in August and September, following two increases earlier in the year.

These pressures from global financial markets have drawn attention to the need for further structural reforms in Indonesia, including those aimed at deepening financial markets, strengthening financial-sector supervision, freeing up trade and encouraging competition, and maintaining the government’s revenue base in the face of falling commodity prices. While some reforms, particularly in financial-sector supervision, are already in train, it may be difficult for Indonesia to make serious gains on longer-term economic reforms before the 2014 presidential elections.     

Survey of Recent Developments

As Indonesia heads to the polls in 2014, its economy is slowing. The end of the commodities boom and the global return to more normal monetary policy has exposed some weaknesses. Exchange-rate depreciation has absorbed some of the adjustment; but structural rigidities are still likely to limit the expansion of non-commodity sectors, and the increased fuel-subsidy bill for imported oil is putting pressure on the current account and the budget. The immediate focus is on demand-side consolidation to manage inflation and the currentaccount deficit.

For an economy like Indonesia’s to be overheating, and for monetary and fiscal authorities to be engineering a soft landing, when growth is below 6%, points to major structural problems. If Indonesia is to prevent the current rate of growth from becoming the new normal, there will need to be a substantial supply-side response to lift productivity, as well as a restructuring of the economy and the introduction of policies that make the economy more flexible in adjusting to shocks. The current economic slowdown has yet to trigger sweeping reforms; policy coordination remains problematic as Indonesia enters a big political year.

Compared with its neighbours, Indonesia is largely on the outside of the regional production networks, and its manufacturing sector does not play into factory Asia. Now, faced with lower commodity prices globally—and growth in non-resource sectors is critical— the lack of a large manufacturing base appears to be a weakness. Indonesia is attracting more foreign direct investment than ever and is climbing the global rankings of preferred economies in which to invest, but this is occurring without improvements to its investment environment or competitiveness. Indonesia can participate more fully in global supply chains and increase its potential for growth by upgrading its infrastructure, improving its investment environment, and using regional initiatives strategically to make strong commitments that reinforce its priorities for domestic reform.

In its hosting of APEC in 2013, Indonesia championed infrastructure investment where the lack of structural reform and macroeconomic constraints are inhibiting much-needed expansion, both in Indonesia and in the region. The positive outcome, albeit only a small step forward for the Doha Round, at the WTO Ministerial Conference in Bali, in December, also builds momentum for better regional and global cooperation. The priority now is for Indonesia to commit to, and show leadership in, the Regional Comprehensive Economic Partnership (RCEP) and the implementation of the ASEAN Economic Community.     

Survey of recent developments

The economy continues along the general trajectory described in recent Surveys. Growth is picking up, led by consumption but restrained by investment. Inflation has fallen well below Bank Indonesia's current target rate. Most interest rates have followed suit, including key lending rates. Bank lending has been expanding at around 20% p.a. for the past year or so, and international portfolio investors are again interested in Indonesia. But a scare in the mutual funds industry and scandals at two state banks remind that trouble still simmers just below the surface in the financial sector.

Fiscal policy continues its conservative stance. The government is likely to have achieved its 2003 deficit target, and the budget for 2004 envisages further narrowing of the deficit. Still, the deadline for achieving a modest budgetary surplus has slipped two years, to 2006. Draft amendments to the income tax law foreshadow a probable reduction in corporate tax rates, increases in personal rates, and removal of certain key exemptions. Proposed administrative changes would give tax officials significantly greater powers of investigation and prosecution; observers foresee increased scope for extortion by unscrupulous officials. Monetary policy has become increasingly expansionary, given the central bank's desire to support economic recovery and its success in driving inflation down. This is reflected in quite rapid base money growth and sharp falls in policy interest rates, notwithstanding some efforts by Bank Indonesia to slow their decline. Trade policy has been dominated by increasing signs of resurgent protectionism, including a shift away from a transparent tariff regime to rent-generating systems of licensing.

On the political front, opinion polls in advance of the national elections suggest a considerable shift in the parliament, away from PDI-P in favour of Golkar. The size of this shift will be critical in determining the choice of candidates for the subsequent presidential elections. At present, Megawati Sukarnoputri remains the front-runner, but almost any combination of major parties could still form a coalition and make a credible run at the presidency.

With elections looming, little further progress can be expected on the economic policy front in 2004. In these circumstances, the focus for progress shifts to a politically independent Bank Indonesia. With strong policies in its areas of responsi-bility—inflation, monetary policy and financial sector development—further progress is achievable even during an election year. This would lay a solid foundation for robust economic recovery, hopefully policy driven by the next administration.     

Book Reviews

Richard Higgott and Richard Robison (eds), Southeast Asia: Essays in the Political Economy of Structural Change, London: Routledge & Kegan Paul, 1985. £18.00 (cloth)

John Wong, The Political Economy of China's Changing Relations with Southeast Asia, London: Macmillan Press, 1984, pp. xvi + 246.

Sumitro Djojohadikusumo, Perdagangan dan Industri dalam Pembangunan [Trade and Industry in Development], Jakarta: LP3ES, 1985, pp. 133.Thee Kian Wie

Masyarakat Indonesia, 12(3), Jakarta: LIPI, December, 1985. Special issue edited by Thee Kian Wie, entitled 'Kaitan-Kaitan Vertikal Antar-perusahaan dan Pengembangan Sistem Subkontraktor di Indonesia: Beberapa Studi Kasus' [Vertical Linkages between Firms and the Development of the Subcontracting System in Indonesia: Several Case Studies].

D. B. G. Denoon, Devaluation under Pressure: India, Indonesia and Ghana, Cambridge, Mass: MIT Press, 1986, pp. xi + 260. US$28.75

John W. Mellor and Gunvant M. Desai (eds). Agricultural Change and Rural Poverty, Baltimore: The Johns Hopkins University Press, 1985, pp. xix + 233. US$27.45.

'Indonesia's Transmigration Programme: A Special Report', The Ecologist, Vol. 16, No. 2/3, 1986. £4.00     

Publications

Suhadi Mangkusuwondo, S. B. Joedono, Moh. Arsjad, (ed.), Prospek Perekonomian Indonesia 1972, Lembaga Penjelidikan Ekonomi dan Masjarakat, F.E.U.I., Djakarta (1972), pp. 284.

Nugroho, Indonesia Sekitar Tahun 2000 [Indonesia Around 2009 AD] Djakarta, 1972. Pp. vi + 247. Price not stated.

Ingrid Palmer, Textiles in Indonesia, Problems of Import Substitution. Praeger, Special Studies in International Economics and Development, New York, 1972. pp. 399. $19.50.     

Survey of recent developments

Despite a turbulent global economy and expectations that declining exports would cause an economic slowdown, the Indonesian economy grew at 6.5% in 2011. The growth rate was supported by high consumer confidence – the result of lower inflation of just 3.8% in 2011. Nevertheless, there were indications that the global financial crisis had had an impact on Indonesia in the last quarter of 2011, notably on the growth of exports and imports.

In October 2011, President Yudhoyono reshuffled his cabinet, citing a need to improve its performance in the administration's remaining three years. The reshuffle showed that the president is still subject to political party pressures. Moreover, the governing coalition of parties remains weak. Agreements made within coalition meetings are often broken in the parliament, and coalition parties are frequently distracted by media polemics. The case of former Democrat Party treasurer Nazaruddin, arrested in Colombia following a two-month manhunt, has revealed the magnitude of the money politics surrounding the Democrat Party, whose ratings are declining rapidly.

Indonesia enters 2012 bolstered by the restoration of its investment-grade credit rating. This will expose Indonesia to increased capital flows, since many funds are permitted to invest only in investment-grade countries. The effects on foreign direct investment (FDI) are not automatic, however. These investors evaluate the wider business climate and economic governance in making their investment decisions.

The fuel subsidy remains a challenge for Indonesia in 2011/12. Parliament rejected a proposal to limit fuel consumption from April 2012 over doubts about the government's readiness to handle the policy's technical complexity. Now the government is again considering a fuel price increase, and will have to seek parliamentary approval soon.

Indonesia faces a long-term problem of regional inequality. After four decades of economic development there is little variation in the shares of GDP across regions, but GDP per capita in some regions is slipping behind that of Java. Regional development policy needs to generate more economic activities in the outer islands, and to learn from the mistakes of past initiatives to promote economic development and growth centres in the regions. It is important to align policies with the current decentralisation arrangements.

The government is revising Law 33/2004 on Intergovernmental Finance with the aim of improving some dimensions of decentralisation in Indonesia. Revenue certainty is to be enhanced in part through changes to the general allocation grant (DAU) formula and the disbursement mechanism for intergovernmental transfers. The planned revision has not, however, addressed sufficiently the problem of inefficiency in regional spending. In fact, some of the proposed solutions may well create further spending inefficiency.

The main barrier to increased FDI is infrastructure development, whose progress has been slowed by land procurement problems. Unfortunately, Law 2/2012 on Land Procurement for Public Purposes seems unlikely to deliver a clear solution to the key problem of determining fair prices for land compensation. What is needed is the creation of more independent price-setting committees, with sufficient capacity to disentangle the problems of land acquisition.     

Publications

Economic Data for Investors in Indonesia. Bank Indonesia, Djakarta, 1968. Pp. xv + 220.

Report for the Years 1960-1965. Bank Indonesia, Djakarta, 1968. Pp. xii + 288 and appendices.

Ringkasun Hasil Survey2 Masalah 1965-1967 Dun Rentjunu Survey Masalah, 1968-1969 [Summary of Results of the Agro-Economic Survey 1965-67 and Plans for 1968-691. Survey Agro-Ekonomi Indonesia, Djakarta, 1968. Pp. x + 81.     

Publications

Wouter van Ginneken, Rural and Urban Income Inequalities in Indonesia, Mexico, Pakistan, Tanzania and Tunisia, (I. L. O. Geneva, 1976) Paperback, Swiss fr. 15 (also available in hardcover) pp. 67.

Prospects for Trade Between Indonesia and Australia, Report from the Standing Committee on Industry and Trade, Australian Government Publishing Service, 1975.

Abukasan Atmodirono and James Osborn, Services and Development in Five Indonesian Middle Cities, Center for Regional and Urban Studies, Institute of Technology, Bandung, June 1974. Pp vii + 285.

R. D. Montgomery and D. C. Sister, Labor Absorption in logjakarta, Indonesia: An Input-Output Study, Department of Agricultural Economics, Cornell University, Ithaca, New York March 1976,: pp. 85.

Peter F. McDonald and Alip Sontosudarmo, Reponse to Population Pressure: The Case of the Special Region of Yogyakarta, Gadjah Mada University Press, 1976, 103 pp.

Koentjaraningrat, Masyarakat Desa di Selatan Jakarta, Jakarta Lembaga Ilmu Pengetahuan Indonesia (LIPI), 1975, pp. 133.

Biro Pusat Statistik, Statistik Indonesia, Statistical Pocketbook, Indonesia, 1974/1975. Jakarta, Biro Pusat Statistik, 1975.     

Book Reviews

Hadi Soesastro and Man Pangestu (eds), Technological Challenge in the Asia-Pacific Economy, Sydney: Allen & Unwin, in Association with the Pacific Trade and Development Conference Secretariat at the Australian National University, 1990, pp. xiv + 371. A$34.95.

Jeffrey D. Sachs and Susan M. Collins (eds), Developing Country Debt and Economic Performance, Voi 3: Country Studies - Indonesia, Korea, Philippines, Turkey. Book I: Wing Thye Woo and Anwar Nasution, Indonesian Economic Policies and Their Relation to External Debt Management, Chicago and London: University of Chicago Press for the National Bureau of Economic Research, 1989, pp: x + 821 (Book I, pp. 17-149).

Yoon-Je Cho and Deena Khatkhate, Lessons of Financial Liberalization in Asia: A Comparative Study, Washington DC: The World Bank, 1989, pp. xviii + 228.

Nick Devas (with Brian Binder et al.), Financing Local Government in Indonesia, Monographs in International Studies, Southeast Asia Series, No, 84, Athens, OH: Ohio University Center for International Studies, 1989, pp. xvi + 344. US$14.00.

James Clad, Behind the Myth: Business, Money and Power in Southeast Asia, London: Unwin Hyman, 1989, pp. xii + 275. £14.95.

Lea Jellinek, The Wheel of Fortune: The History of a Poor Community in Jakarta, Asaa Southeast Asia Publications Series 18, 1991, pp. xxviii + 214. A$24.95.

Daniel Benoit, Patrice Levang, Marc Pain and Olivier Sevin, Transmigration et Migrations Spontanees en Indonesie [Transmigration and Spontaneous Migrations in Indonesia]: Propinsi Lampung, Paris and Jakarta: Orstom (Institut Francais de Recherche Scientifique pour le Developpement en Cooperation) and Department of Transmigration, 1989, bilingual text in French and English, pp. 444, large Size (21 × 30 cm), + 20 separate maps (50 × 56 cm) + wall map (100 × 118 Cm).

J. W. Taco Bottema, Hoky Siregar, Sahat M. Pasaribu, Govert Gijsbers and Rofik S. Basuki, Potato in Indonesia: Prospects for Medium Altitude Production, CGPRT No. 21, Bogor: CGPRT, 1989, pp. xxvi + 136.

CGPRT, Soybean Commodify System in Indonrsio. CGPRT No. 3, Bogor. CGPRT, 1988, pp. xvi + 83.

BRIEFLY NOTED: H.W. Arndt, Pembangunan Ekonomi Indonesia: Pandangan Seorang Tetangga [Indonesian Economic Development: As Seen by a Neighbour], Yogyakarta: Gadjah Mada University Press, 1991 [translation edited by Mubyarto], pp. xi + 286.

David Anderson (Ed.), Australia and Indonesia: A Partnership in the Marking, Sydney: Pacific Research Institute, 1991, pp. 63. A$5.00.     

Book Reviews

Moh Arsyad Anwar (ed.), Prospek dan Permasalahan Ekonomi Indonesia 1985/86 [The Indonesian Economy in 1985/86: Prospects and Problems], Jakarta: Sinar Harapan (for the Fakultas Ekonomi Universitas Indonesia), 1985, pp. 383.

Michael T. Skully (ed.), Financial Institutions and Markets in South-East Asia: A Study of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand, London: Macmillan, 1984, pp. xviii + 411. $72.00 (cloth).

Philip M. Hauser, Daniel B. Suits and Naohiro Ogawa (eds), Urbanization and Migration in ASEAN Development, Tokyo: National Institute for Research Advancement, 1985. $25.00 (paper).

John P. Lea and John M. Courtney (eds), Cities in Conflict: Studies in the Planning and Management of Asian Cities, Washington D.C.: The World Bank, 1985.

Gavin W. Jones (ed.), Women in the Urban and Industrial Workforce: Southeast and East Asia, Development Studies Centre Monograph No. 33. Canberra: The Australian National University, 1984, pp. xi + 435.

G. Chandler, Market Trade in Rural Java, Monash Papers on Southeast Asia No. 11, Centre of Southeast Asian Studies, Monash University, 1984, pp. xii + 198.

Jan Breman, Control of Land and Labour in Colonial Java, Verhandelingen van het Koninklijk Instituut voor Taal-, Land- en Volkenkunde No. 101, Dordrecht: Foris, 1983, pp. xi = 159. Dfl 40 (paper).     

Publications

Sajogyo, Usaha Perbaikan Gizi Keluarga (ANP Evaluation Study 1973), Lembaga Penelitian Sosiologi Pedesaan, Institut Pertanian Bogor, Bogor, 1975. Rp 1000 pp. xiii + 195.

Committee on Economics Teaching Material for Asian Universities (ed.), Economic Theory and Practice in the Asian Setting, Volume 1: Macroeconomics, pp. 172.

Economic Theory and Practice in the Asian Setting, Volume 2: Microeconomics, pp. 1970.

Economic Theory and Practice in the Asian Setting, Volume 3: The Economics of Agriculture, pp. 245.

Economic Theory and Practice in the Asian Setting. Volume 4: The Economics of Development, pp. 274.

New Delhi: Wiley Eastern Ltd., 1975 (Available through the Asia Office, The Agricultural Development Council, Inc. Tanglin P.O. Box 84, Singapore 10).

Seminar Hasil Penelitian Lapangan. Pusat Latihan Penelitian Ilmu² Ujung Pandang (Seminar on Results of Fieldwork, Social Science Research Training Centre, Ujung Pandang), 8–11 December 1976, Hasanuddin University and Social Science Research Training Centre.

Seminar Hasil Penelitian Lapangan 1976, Pusat Latihan Penelitian Ilmu² Sosial, Aceh (Seminar on Results of Fieldwork, Social Science Research Training Centre, Aceh), 6-9 December 1976, Syiah Kuala University and Social Science Research Training Centre.

Werner Rutz, Indonesien: Verkehrserschliessung seiner Ausseninseln (Transport Penetration of the Outer Islands), Paderborn, Germany, 1976. Pp. 182, 15 fold-in maps. DM58.00.

C.L.M. Penders (ed. & transl.), Indonesia: Selected Documents on Colonialism and Nationalism, 1830-1942. University of Queensland Press, St. Lucia, 1977, pp. 347 + glossary and index.

J. D. Legge, Indonesia. second edition, Prentice-Hall of Australia, Sydney, 1977.

Tax Inspection For Foreign Bodies and Aliens, Indonesian Tax Guide For Foreigners, Jakarta, April 1975, pp. 75.

Drs. B. Usman, Kumpulan Karangan Pajak Sinar Harapan 1973-5, PT Sinar Agape. Press, January 1977, pp. 211 Rp 2500.

Drs. B. Boediono, Pajak Penjualan, Direktorat Jenderal Pajak, Jakarta 1975, pp. 931.

Sritua Arief, Indonesia Growth, Income Disparity and Mass Poverty. Jakarta, Sritua Arief Associates (P.O. Box 2250, Jakarta), 1977.

Indonesian language version, pp. xviii + 150, Rp 5000.

English language version, pp. ii + 207, Price on application.

Kumpulan Bacaan Sosiologi Pedessaan (Readings on Rural Sociology), Lembaga Penelitian Sosiologi Pedesaan, Institut Pertanian, Bogor. 1975.

Direktorat Jenderal Industri Tekstil, Buku Petunjuk Industri Tekstil (A Guide-book to the Textile Industry), Jakarta, 1976. Pp. ix + 410. Rp 6750.

Brian Lynch. Indonesia: Problems and Prospects. Sorrett Publishing Company, Melbourne, 1977, pp. 183. Recommended price $A11.95.

Dr Ir Herman Soewardi. Respons Musyarakat Desa Terhadap Modernisasi Produksi Pertanian, Terutama Padi, Gadjah Mada University Press, 1976, pp. 175.

Douglas Miles, Cutlass and Crescent Moon. A Case Study of Social and Political Change in Outer Indonesia. Centre for Asian Studies, University of Sydney, 1976, pp. 160.     

Book Reviews

M. Arsjad Anwar, Thee Kian Wie, Iwan Jaya Azis, Pemikiran, Pdaksanaan, dan Perintisan Pembangunan Ekonomi[Concepts, Implementation, and Pioneering in Economic Development], Fakultas Ekonomi Universitas Indonesia and PT Gramedia Pustaka Utama, Jakarta, 1992, pp. xx + 700.

Adam Schwarz, A Nation in Waiting: Indonesia in the 1990s, Allen and Unwin, Sydney, and Westview, Boulder, 1994, pp. 370. Paper: A$24.95.

East Asia Analytical Unit, Expanding Horizons: Australia and Indonesia into the 22st Century,Department of Foreign Affairs and Trade, Canberra, 1994, pp. xviii + 346. A$34.95.

Sjahrir, Pikiran Politik[Political Ideas], LP3ES, Jakarta, 1994, pp. xiv + 191.

Sjahrir, Persoalan Ekonomi Indonesia: Moneter, Perkreditan dan Nenca Pembayaran[Problems of the Indonesian Economy: Money, Credit and the Balance of Payments], Pustaka Sinar Harapan, Jakarta, 1995, pp. xv + 205.

Sjahrir, Analisis Bursa Efek[Analysis of the Stock Exchange], PT Gramedia Pustaka Utama, Jakarta, 1995, pp. xiv + 169.

Sjahrir, Ekonomi Indonesia dalam Perspektif Bisnis[The Indonesian Economy in a Business Perspective], PT Jurnalindo Aksara Grafika, Jakarta, 1994, pp. xvi + 239.

Sjahrir, Kebijakan Negara Mengantisipasi Masa Depan[National Policy: Anticipating the Future], Yayasan Obor Indonesia, Jakarta, 1994, pp. xv + 251.

Sjahrir, Formasi Mikro-Makro Ekonomi Indonesia[Indonesia's Macro and Micro Economy], Penerbit Universitas Indonesia, Jakarta, 1995, pp. xii + 313

F.B.A. Bouman and Otto Hospes, Financial Landscapes Reconstructed: The Fine Art of Mapping Development,Westview, Boulder, 1994, pp. xi + 416. US$45.00

Robert Cribb (ed.), The Late Colonial State in Indonesia: Political and Economic foundations of the Netherlands Indies 1880–1942,Verhandelmgen van het Koninklijk Instituut voor Taal-, Land- en Volkenkunde 163, KITLV Press, Leiden, 1994, pp. xiii + 295.

Shinya Sugiyama and Milagros C. Guerrero (eds), International Commercial Rivalry in Southeast Asia in the Inierwar Period,Yale Southeast Asia Studies Monograph 39, Yale Center for International and Area Studies, New Haven, 1994, pp. ix + 222.

W.L. Korthals Altes, Changing Economy in Indonesia. Volume 15: Prices (Non-Rice) 1814–1940,Royal Tropical Institute, Amsterdam, 1994, pp. 175. Paper: Dfl. 48.00.     

Book Reviews

Howard Dick, The Indonesian Interisland Shipping Industry: An Analysis of Competition and Regulation, Singapore: Institute of Southeast Asian Studies, 1987, pp. 217. Paper: US$15.00; Cloth: US$23.00.

Anne Booth, Agricultural Development in Indonesia, Sydney, Wellington and London: Allen and Unwin, 1988, pp. 295 + iv.

Arthur van Schaik, Colonial Control and Peasant Resources in Java, Amsterdam; University of Amsterdam, Institute For Social Geography, 1986, pp. 210.

Joan Hardjono, Land, Labour and Livelihood in a West Java Village, Jogyakarta: Gadjah Mada University Press, 1987.

W. Röll and A. Leemann, Agrarprobleme auf Lombok: Untersuchungen zur Wirtschafts- und Sozialstruktur in Nusa Tenggara Barat, Indonesien (Agricultural Problems on Lombok: Studies of Economic and Social Structure in West Nusa Tenggara, Indonesia), Hamburg: Institut Für Asienkunde, 1987, pp. 300.

Hal Hill (ed.), Unity and Diversity: Regional Economic Development in Indonesia Since 1970, Singapore: Oxford University Press, 1989, pp. 610 + xxx. Cloth: A$65.00.

C. P. Timmer (ed.). The Corn Economy of Indonesia, Ithaca: Cornell University Press, 1987, pp. 302. Cloth: US$32.95.

Thee Kian Wie, Industrialisasi Indonesia: Analisa dan Catalan Kritis (Indonesian Industrialisation: Analysis and Critical Notes), Jakarta: Pustaka Sinar Harapan, 1988, pp. 276.

David Joel Steinberg (ed.), In Search of Southeast Asia: A Modern History, Honolulu: University of Hawaii Press, 2nd Ed., 1987, pp. 590 + xi.

Geoffrey B. Hainsworth, Innocents Abroad or Partners in Development? An Evaluation of Canada-Indonesia Aid, Trade and Investment Relations, Singapore: Institute of Southeast Asian Studies, Field Report Series No. 15, 1986, pp. 100

BRIEFLY NOTED: Ronald G. Petocz (Compiler), The Ecology of Irian Jaya: A Preliminary Bibliography, Halifax N.S., Canada: School For Resource and Environmental Studies, Dalhousie University, 1988.     

Publications

Sumitro Djojohadikusmo, Indonesia Dalam Perkembungan Dunia: Kini dan Masa Datang [Indonesia in world development: The Present And The Future], Jakarta, LP3ES, 1976, pp. 229.

Indonesia: Business Opportunities in a Resource-Rich Economy, A Business International Asian Research Report, Asian House, Hong Kong, October 1975.

J. Stephen Hoadley, The Military in the Politics of Southeast Asia. A Comparative Perspective, Cambridge, Mass., Schenkman Publishing Co., 1975.

Masashi Nishihara, The Japanese and Sukarno's Indonesia: Tokyo-Jakarta Relations, 1961–1966, Monograph of the Center for Southeast Asian Studies of Kyoto University, Honolulu, University of Hawaii Press, 1976, pp. 24.     

Publication

Laporan Tahun Pembukuan 1960-65 [Report for the Fiscal Years 1960-65]. Bank Indonesia, Djakarta, 1968. Pp. xii + 3O1 and appendices.

Masalah Ekonomi Beserta Pemetjahannja [Economic Problems and their Solution]. Symposium organised by the Central Presidium of KAMI, 1-6 June 1968. Student Senate, Faculty of Economics, University of Indonesia, Djakarta, 1968. Mimeographed, pp. 260.

Business Prospects in Indonesia Today. Published by the Committee for the 17th August Celebration and the Indonesian Community in Hong Kong, August 1968. Pp. 182.

Statistical Pocketbook of Indonesia, 1964-1967. Central Statistical Bureau, Djakarta, 1968. Pp. lii + 418.

Data-data Statistik Pokok Pembangunan Ekonomi [Basic Statistics for Economic Development]. Badan Perent janaan Pembangunan Nasional, Djakarta, 17 August, 1968. Mimeographed, pp. 50.

Report of the Singapore Technical Fact-Finding Mission on the Development of Tourism in Bali. Economic Development Division, Ministry of Finance, Republic of Singapore, June 1968. Pp. 79, Sp. $3.00

Bank Negara Indonesia Unit I, Bulletin of Economic and Financial Statistics, July 1968. Mimeographed, pp. 29.

Indonesian Economic Review vol. 1, no. 1-, May 1968-. Djakarta, Berdikari Ltd (monthly).

Iklantara, No. 1-, August, 1968-, Djakarta, Iklantara Advertising Agency (monthly).     

Survey of recent developments

There is a growing confidence in policy, business and finance circles about Indonesia's ability to withstand global economic and financial shocks, and a renewed belief in domestic sources of growth. Despite uncertainty in Europe and slower than expected recovery in the US, Indonesia is well placed for moderately high growth in the medium term, and economic stability in the shorter term. At the end of June 2011, foreign reserves were at a record high, inflation was down, annual growth was steady at 6.5%, and investment – especially foreign direct investment (FDI) – was up significantly.

Consumer price inflation had fallen to just below 5% by August, from double-digit levels earlier in the year. This was due partly to low food prices and success in sterilising the effects of capital inflows. However, turmoil in international markets led to a sharp fall in the Indonesia stock exchange index and a mild currency depreciation in August– September, prompting central bank intervention in the foreign exchange market. Fiscal policy has remained conservative, aiming for a balanced budget by 2014. However, the government has still not moved to reduce growing fuel and energy subsidies.

While the service sectors have continued to record high rates of growth, there has been a revival of manufacturing in 2011. This is partly underpinned by strong inflows of FDI, and is especially evident in the labour-intensive textiles, clothing and footwear industries after a decade of stagnation. Multinationals have announced plans to expand operations in Indonesia in the past six months to take advantage of new tax incentives. Overseas investors have also been attracted by Indonesia's growing middle class – a result partly of higher rural incomes driven by the commodity boom outside Java.

Some recent ministerial announcements about initiatives to promote domestic industry have a protectionist flavour. A cabinet reshuffle in October may signal a more dirigiste approach to industrial policy – especially the shifting of internationally respected economist Mari Pangestu from the trade portfolio to that of tourism and creative economy.

One important outcome of recent growth has been falling unemployment rates. However, youth unemployment remains a major problem, and efforts to overcome it have been fragmentary. A recent ban on overseas migration of domestic helpers (maids) seems certain to add to labour supply pressures among young people.

The government is now considering how to mobilise its large population base, abundant natural resources and strategic location to play a greater role in the world economy. These assets are central to the ambitious ‘Master Plan’ for longer-term development (2011–25), announced in May. It focuses on developing the resource-rich Outer Island regions, with massive investments in energy and ‘connectivity’ to link the major centres and islands with each other, and centres with their hinterlands. Funding (to come mainly from the private sector), implementation and coordination are all major challenges.     

Publications

H. S. Kartadjoemena, The Politics of External Economic Relations: Indonesia's Options, Institute of Southeast Asian Studies, Singapore, 1977(?), pp. 179, $S 12.00

Ingrid Palmer, The Indonesian Economy since 1965: A Case Study of Political Economy, London, Frank Cass, 1978, pp. ix, 196, £11.00.

Gadjah Mada University, Faculty of Economics, Graduate Program in Economics, Four Papers on Employment and Income Distribution in Indonesian Agriculture, Yogyakarta, pp. 118 + ii, mimeo.

U.S. Department of Commerce, Country Market Sectoral Survey, Indonesia: A Survey of U.S. Business Opportunities, U.S. Government Printing Office, May 1977, pp. 320.

Borrowing By Developing Countries on the Euro-currency Market P. A. Wellons, OECD, Paris 1977 $20, pp. 449.

Mayling Oey and Ketut Sudhana Astika, The Social and Economic Implications of Transmigration in Indonesia: A Policy-Oriented Review and Synopsis of Existing Research. L. P. E. M., Fakultas Ekonomi, Universitas Indonesia, 1978, pp. 228.

Paul A. Meyer and Colin MacAndrews, Transmigration in Indonesia. An Annotated Bibliography. Gadjah Mada University Press, 1978, 245 pages.

Fox, James J., Harvest of the Palm: Ecological Change in Eastern Indonesia. Harvard University Press, Cambridge, Massachusetts 1977.     

Publications

Brian May, The Indonesian Tragedy, Routledge & Kegan Paul, London, 1978, pp. xvii + 438. A$19.95.

Harold Crouch, The Army and Politics in Indonesia. Ithaca andLondon: Cornell University Press, 1978. 377 pp. ISBN 0-8014-1155-6.

International Rice Research Institute (1978). Changes in Rice Farminf in Selecred Areas of Asia. International Rice Research Institute. Los Banos, Laguna, Philippines.

Molster, H.C. (1978). Methods of Estimating Fertiliser Response with an Application 10 Urea Use to Rice in Jogjakarra, Indonesia. Centre for Amicultural Publishing and Documentation, Wageningen.     

Rice Marketing in Indonesia: Methodology and Results of A Research Study∗

This paper summarises the methodology, results and lessons of a research program undertaken between 1989 and 1991 on the private rice marketing system in Indonesia. A method of linked interviews, starting from farmers, gave results in the two main areas of seasonal volume flows and competition in rice marketing channels. Sample survey results were used to interpret seasonality in the aggregate rice market It is concluded that price stabilisation remains a valid policy objective in Indonesia, but that targeted interventions could substantially reduce the cost of achieving this goal.

     

Book Reviews

Colin Macandrews (Ed.), Central Government and Local Development in Indonesia, Singapore: Oxford University Press, East Asian Social Science Monographs, 1986, pp. 270, 36 Tables, 2 Figures, 4 Maps.

Himpunan Peraturan Perundang-undangan Republik Indonesia di Bidang Ketenaga-kerjaan [Labour Legislation in Indonesia], Vols I-III, Jakarta: P.T. Twins, 1986.

Michael A. Costello, Thomas R. Leinbach and Richard Ulack, with Marilou Palabrica-Costello and Bambang Suwarno, Mobility and Employment in Urban Southeast Asia: Examples From Indonesia and the Philippines, Boulder: Westview Press, 1987, pp. xvi + 191. $Us 26.50.

Susan Abeyasekere, Jakarta: A History, Singapore: Oxford U.P., 1987, pp. xvii + 280. Cloth: $45.00.

David P. Chandler and M.C. Ricklefs (Eds), Nineteenth and Twentieth Century Indonesia: Essays in Honour of Professor J.D. Legge, Clayton, Vic. : Monash University Centre of Southeast Asian Studies, 1986, pp. 281. $14.00.

Graeme J. Hugo, Terence H. Hull, Valerie J. Hull, Gavin W. Jones, The Demographic Dimension in Indonesian Development, Singapore: Oxford University Press, 1987, pp. xxv + 417. $50.00.

I Ketut Nehen and Ian R. Wills, Land Preparation in West Java: Benefits and Costs of Alternative Techniques, Agency For Agricultural Research and Development, Indonesia, and International Rice Research Institute, 1986, pp. xii + 159.

Michael Smith et al., Asia's New Industrial World, London: Methuen, 1985, pp. vi + 136. £2.95.

Australian Institute of Urban Studies, Review of Australian Assistance to the Indonesian Water Supply and Sanitation Sector, A Report for the Australian Development Assistance Bureau, 1986, pp. xxxiii + 305, $26.00 plus postage.