VILLAGE GOVERNMENT AND RURAL DEVELOPMENT IN INDONESIA: THE NEW DEMOCRATIC FRAMEWORK

The political reforms that began in Indonesia in 1998 have created new opportunities for a revised relationship between state and community, replacing the New Order's centralistic and uniform framework with local-level institutions that are strong and responsive. This paper presents the new legal framework for the democratisation of local-level politics and village institutions. Representative councils have been elected in all Indonesian villages, and the village head is no longer the sole authority in the community. Village governments are provided with far-reaching autonomy and do not need the approval of higher authorities to take decisions and implement policies. However, decentralisation and democratisation are necessary but not sufficient preconditions for developing the countryside and alleviating poverty. An active government and civil society engagement must ensure that regulations are not distorted during implementation, and that ordinary people are included in public policy making and local governance.     

FIFTY YEARS OF TRADE POLICY IN INDONESIA: NEW WORLD TRADE,OLD TREATMENTS

Indonesia's trade policy has evolved over the last 50 years. It has been influenced by the country's level of development and the conflict between openness and protectionism; external developments, such as commodity booms and busts and increased competition; and international commitments, whether multilateral or regional. As a result, trade policy has often been ambivalent and ineffective. Given that Indonesia has undergone various transformations and that the world is a different place from what it was in 1965, the country needs to take a more pragmatic and forward-looking stance. Trade policy needs to be part of a comprehensive strategy to improve competitiveness and diversify exports. If Indonesia is to be part of the new paradigm, where the production of goods and services is based on production networks and global value chains, its policy focus will need to shift from protecting and favouring sectors to promoting trade and industrial policies that encourage the flow of goods, services, and people.     

RATIONING, SPILLOVER, AND INTERLINKING IN CREDIT MARKETS: THE CASE OF RURAL PUNJAB

A parallel market structure may exhibit extensive rationingin the regulated segment, and hence spillover of unsatisfieddemand into the unregulated segment of the market. In the lattersegment, the borrower can choose to bundle loan contracts withoutput marketing through the lender. Using data on Punjabi cultivators,econometric estimation of such a structure yields three principalfindings: (i) most borrowers and non-borrowers were rationedin the regulated market; (ii) demand for credit was fairly inelasticwith respect to the interest rate; (iii) a contractual provisiontying credit to output marketing made informal lenders willingto advance much bigger loans. One pana and a quarter is the lawful rate of interest per monthon one hundred panas, five panas for purposes of trade, tenpanas for those going through forests, twenty panas for thosegoing by sea. For one charging or making another charge a ratebeyond that, the punishment shall be the lowest fine for violence,for witnesses, each one of them, half the fine. If, however,the King is unable to ensure protection, the Qudge) should takeinto consideration the usual practice among creditors and debtors.The Kautiliya Arthasastra (a fourth century BC work on kingshipand statecraft).     

TAX REFORMS IN EAST ASIAN DEVELOPING COUNTRIES: Motivations, directions, and implications

This first presents an overview of the level and structure of taxation in Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. It then briefly reviews the available literature on tax reform, country by country. It finally gives a comparative analysis, focusing primarily on tax mix and tax structure, and the importance attached to tax administration.     

CREDIBILITY AND MULTIPLE EQUILIBRIA IN POLICY GAMES: A REPLY TO IRWIN

In this note we respond to Irwin's comment on Andersen and Risager(1991).     

CORPORATE TAX RATES IN THE SADC REGION: DETERMINANTS AND POLICY IMPLICATIONS

Since the 1990s the SADC region has closely followed declining trends that occurred in the industrialised world in terms of corporate tax rates. The main purpose of this paper is to find appropriate explanations behind these trends as experienced in the SADC region. A cross‐section panel, including the so‐called Seemingly Unrelated Regression (SUR), is applied to uncover the main determinants of corporate tax rates in the region. The main findings of the paper acknowledge the vulnerability of corporate tax rates to global influence. The presence‐of‐trade variable relating to openness and international pressure takes precedence in the determination of corporate tax rates. The results indicate that higher trade ratios mean lower statutory corporate rates as international influence intensifies. It also tends to confirm the region's dependency on trade for tax revenues, but also its ability to still attract tax revenues from capital flows. Some evidence exists in terms of an association between the government expenditure‐GDP ratio and the statutory and average corporate tax rates, although this is not definitive. The paper re‐emphasises the importance of international pressure in terms of future tax policy‐making in the SADC region but also opens an avenue for further tax co‐operation efforts.