Japanese Investment in Indonesia: Problems and Prospects

The majority of Japanese investment in Indonesia is import-substitution orientated and located primarily in manufacturing. Declining Japanese investment in recent years is attributable partly to economic factors such as the drop in the price of oil and the higher cost of imports resulting from the devaluation of March 1983 But it is also due to Indonesian government policy. The author suggests a number of ways in which the Indonesian government could establish conditions more favourable to foreign investment.     

The External Debt Situation in Indonesia: Performance and Prospects

In interviews with bankers, government economists and academic observers, most of them attributed the absence of an Indonesian debt crisis during 1982–84 to the fact that a significant portion of external public debt, an average of 37 percent, was long-term concessionary loans from foreign governments and international agencies. Our analysis challenges this conventional explanation. We show that if Indonesia (1) had paid the same effective interest rate as Mexico, (2) had the same maturity structure as Mexican debt, and (3) had the same export-GNP ratio as Mexico, then its average 1980–82 total debt service-export ratio would have been 84.4% instead of the actual 30.1%. Our decomposition shows that concessional interest rates account for 5.8 percentage points of the gap, maturity structure for 17.7 percentage points and export orientation for 30.8 percentage points.
We have concluded that the major cause for the favorable 1982–84 outcome is competent management of the exchange rate. The absence of protracted exchange rate overvaluation from 1979 onward was fundamental in maintaining a strong nonoil tradeable sector. The nonoil tradeable sector was able to earn enough foreign exchange to service Indonesian debts when the external shock of high interest rates increased debt service payments and the recession in industrialized countries lowered the price of oil. The absence of extended exchange rate overvaluation also kept the external debt down and the maturity structure on the long side by not encouraging capital flight. We ascribe this use of the exchange rate to protect the tradeable sector as much to the existence of an influential political constituency consisting of neoclassical economists, Javanese peasants and Outer Island residents as to balance-of-payments considerations.
We recommend an aggressive exchange rate policy and two sets of supplementary measures to reduce the probability of a debt crisis in the medium run.     

Indonesia Update 2010 Employment,living standards and poverty in contemporary Indonesia

The Indonesia Update Conference, now in its 28th year, was held at the Australian National University on 24–25 September. Convened by Chris Manning (Indonesia Project, ANU) and Sudarno Sumarto (SMERU Research Institute, Jakarta), the conference attracted around 300 participants from academia, government, NGOs and the business community, including many from Indonesia. Apart from the traditional political and economic updates, both of which are published in this issue of BIES, six broad topics were covered: employment, migration and microenterprises; education and health; health care for the poor; trends in poverty and social protection; government interventions; and the politics of poverty.     

Employment Creation and Manufactured Exports in Indonesia, 1980–90

One of the most significant effects of the trade and regulatory policy reforms introduced in Indonesia since the mid 1980s has been the growth of manufactured exports, particularly labour-intensive manufactures. The growth of these sectors' exports has in turn generated substantial employment benefits, both directly and through backward linkages. In this paper we estimate the employment effects of the rapid growth in manufactured exports between 1980 and 1990, and compare two subperiods, 1980–85 and 1985–90. In the latter period, employment created by exports of light industries increased dramatically in absolute terms, far exceeding employment created by primary exports.     

Transitions from Welfare and the Employment Prospects of Low-Skill Workers

This study examines the effects that labor market conditions and welfare policy changes had on single mothers' welfare participation and economic outcomes using longitudinal, individual-level data from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). The study uses special versions of the SIPP panels that include state and county identifiers and links the individual information to county-specific measures of low-skill employment opportunities and state measures of welfare policies. It estimates transition models of program entry and exit and regression models of economic outcomes. The study finds that employment conditions and welfare benefit levels were significant determinants of single mothers' welfare participation and economic success over the period 1992-95. However, it does not find statistically distinguishable differences in participation and economic success between states that did and did not reform their welfare programs through waivers to the federal rules.     

Growth and the Subsectoral Pattern of the Manufacturing Sector in Indonesia - A Comparative Study of 16 Countries

There is a widely held and optimistic view that, based upon the successful implementation of the product-cycle theory and the technological ladder hypothesis, ASEAN countries, the so-called Asian near NICs, will follow the Asian NICs up the ladder and take off as the second tier of NICs in the near future. To realise this ambition, each of the near NICs needs to successfully achieve two take-offs: first, rapid quantitative expansion based upon existing comparative advantage and, second, the successful transformation of their industrial structures to create dynamic comparative advantages. The Indonesian manufacturing sector recorded an average growth rate of 12% in 1980-90, but the accompanying structural changes were not great. The ‘rapid growth’but ‘modest structural change’of the Indonesian manufacturing sector raises the important problem of cultivating new leading sectors in the future. Usually the machinery subsector plays a big role in other ASEAN and NIES economies, but it still needs more momentum for development in Indonesia. This implies a strong need for the institutional and physical infrastructures, and supporting industries for the machinery subsector, as well as further diversification of the industrial structure. The purpose of this paper is to describe the features of industrialization in Indonesia in the 1980s, to measure the capacity of the transformation of the Indonesian manufacturing sector, and to discuss some policy issues related to furthering industrialization in the future. Section I contains some introductory remarks. In Section II, we implement the comparative analysis based upon two aggregate indicators. In Section III, we further analyse the structural changes at a more disaggregate level of 16 subsectors. In Section IV we concentrate on the machinery subsector, and analyse the growth potential and the necessary industrial policy in the medium or long run. In Section V we analyse the possible long-run development of a specialization pattern in the Indonesia manufacturing sector. We present the summary and conclusions with some relevant policy discussions in Section VI.     

基于产业结构调整的新疆就业前景分析

经济理论揭示,就业结构的变动与产业结构变动密切相关。本文借助量化分析方法发现:根据目前产业发展对就业的拉动状况,今后新疆若只强调发展任何一个单纯的产业,都不能直接带来任何一个产业内部就业人数的增加,只有强调各产业之间的协调发展,才能带动全社会从业人员的增长;另外,量化分析结果折射出:第三产业如果只是第一层次的扩张发展,即交通运输、仓储和邮政业以及批发和零售业的发展,那么,第三产业的发展将不能带来全社会就业人数相对量的增加,甚至会出现抑制作用。     

Condition and Prospects of the Development of the Housing and Utilities Sphere in the Mari El Republic

The article has considered the conceptual foundations of business management in the housing and utilities sphere. The condition of housing stock in the Mari El Republic, as well as housing and the state of utility facilities and systems, has been monitored. A forecast for providing the Republic’s population with social housing and the priority regional project of the comfortable urban environment formation has been presented.     

Comparative Advantage and Protection in Indonesia 1

The comparative advantage of Indonesia's traded goods producing sectors is examined in this paper. Comparative advantage is studied by computing the domestic resource costs of foreign exchange earned or saved in each of the 138 such sectors defined in the 1985 input-output tables for Indonesia. The paper also computes measures of effective rates of protection. It is found that these two types of measures are highly correlated across industries. The paper also shows that between 1975 and 1987 the distortionary effects of Indonesia's trade policies declined markedly. Nevertheless, Indonesia's most highly protected industries continue to be those in which its comparative advantage is least.     

Competition policy in Indonesia: Conglomerates versus SMEs1

Since the currency crisis, Indonesia has undergone rapid economic and political changes. However, the IMF‐directed recovery program, such as decentralization, does not seem successful. Despite the improvised legal system, the implementation of the recovery program is very poor. Lack of consensus on the role of conglomerates and the direction of competition policy, has prevented Indonesia from recovery. Anti‐conglomerate sentiment of the post‐Suharto times has given rise to unbalanced competition law and inconsistency among related laws. Treatment of the banking sector including ownership is a critical factor in the recapitalization process. Due to the similarity between Indonesia and Korea, Korean experiences would help Indonesia to establish the principles on competition policy. The separation principle is strongly recommended for Indonesia at the current development stage, and it is urgent to establish a rule‐based, not a discretion‐based, economy. The problems of conglomerates should be resolved through comprehensive competition policies.     

A Long-run Analysis of Cooperative Housing Societies and Housing Construction in Victoria, Australia

Housing construction is an important component of economic development. The use of cooperative housing societies is one means of channelling scarce financial resources to housing construction. The aim of this paper is to explore the causes of the rapid growth and subsequent decline of the cooperative housing societies as a source of housing finance in the State of Victoria in Australia during the years 1947 to 1992. Significant evidence is established of a strong relationship between the availability of funding for the societies and the growth of their assets. Mixed results are presented for the impact on the general level of housing construction.     

养老社区纳入政府保障性住房建设体系研究

文章探讨了将养老社区建设纳入政府保障性住房建设体系的必要性,提出了加强以养老社区模式为代表的政府养老机构的建设是我国现阶段条件下较好的养老模式。通过政策引导,将养老保险基金投资保障房建设,解决养老保障房建设资金筹措和养老保险基金保值增值的难题,建立新型养老保障模式,达到推动和完善社会保障体系的目的。