SURVEY OF RECENT DEVELOPMENTS

The 10^th anniversary of Soeharto's resignation was coloured by disappointment with the slowness of reform, and with the government's reluctance to confront blatant religious intolerance. Nevertheless, economic growth is strong and investment spending buoyant. Inflation has risen well above target, suggesting that a more effective approach to monetary policy is needed. The recent surge in global rice prices coincided with bountiful domestic harvests, putting the government under pressure to restrict rice exports rather than imports as it has in recent years. However, restricting exports has been recognised as a ‘starve thy neighbour policy’, and the ASEAN trade ministers have jointly agreed ‘to continue fair trade practices and to achieve an orderly regional rice trade’.

The government has at last increased domestic fuel prices significantly, mind-ful of the waste of valuable resources and the inequity involved in keeping such prices constant in the face of world price increases. It will implement a cash transfer program to compensate the poor for the resulting increase in living costs.

The Ministry of Finance is leading reform of the central government bureaucracy. Its most fundamental initiatives are in human resource management, where it is attempting to match remuneration to skill requirements and responsibilities, and to align the pay structure more closely with that in the private sector–with pay rates rising much more rapidly than hitherto as levels of responsibility increase. It is also encouraging competition to fill vacancies by advertising them internally, rather than continuing to rely on promotion by seniority. At local government level, a small number of heads of government have gained a reputation as pioneers of reform. Two interviewed for this survey are exemplars of precisely what it was hoped would result from bringing government closer to the people through decentralisation, and from the switch to direct election of heads of local government. Both have considerable experience in the private sector, and their success seems related to their more entrepreneurial (as distinct from bureaucratic) way of thinking.

‘Good corporate governance’ has now become the mantra for state-owned enterprises (SOEs). It is recognised that this depends heavily on choosing the right people to manage each firm and to oversee it on behalf of its owner. Accordingly, almost all directors and commissioners of the 11 SOEs indirectly studied here have been replaced in recent months, and there is now a willingness to appoint professionals from private companies and from academia in order to gain access to needed skills. In addition, the initial selection of candidates has been shifted outside the bureaucracy to professional recruitment agencies.     

SURVEY OF RECENT DEVELOPMENTS

Summary Political and economic stability prevailed in Indonesia to early June 2007. President Yudhoyono made some badly needed changes to his cabinet, but left the core economic team unchanged. This inspired further confidence in the government's economic policies, yet it still fails to satisfy public expectations. The Lapindo mudflow disaster continues to weigh on the government, with no clear strategy apparent.

The economy shows stable macroeconomic fundamentals. Growth remained at around 6% p.a., driven mainly by investment and exports. The exchange rate strengthened and the stock market continued its rise. The central bank lowered the policy interest rate further, but this is likely to have little effect on growth, and brings some macroeconomic risks. Increasing or even maintaining current growth rates could be a challenge, given that export growth depends strongly on the global commodity boom, and improvements in the investment climate remain uncertain.

The parliament passed the long-awaited new investment law, which promises a more open and friendly investment regime. Doubts surround the implementation of the law, however. There are concerns that the new negative list could be overly protective and that the continued role of the Investment Coordinating Board may cause coordination problems among agencies and with sub-national governments. Boosting growth in manufacturing could be the key to higher overall growth. Structural change in the manufacturing sector over recent years has seen labour-intensive industry decline in terms of both output and exports, mainly because of rigid labour policies.

Efforts to boost private sector investment in infrastructure still show limited success. Implementation of regulatory and bureaucratic reforms is ineffective, and domestic financing remains in short supply. Public provision of infrastructure needs to increase, but suffers from shortcomings in fiscal management and a mismatch between the often cross-district nature of infrastructure projects and the now strongly district-based budgetary authority. Electricity supply exemplifies how the lack of well-designed investment strategies limits Indonesia's growth potential. Power sector investment has stagnated despite strong growth in electricity demand, and current plans for coal-based capacity expansion lack thorough planning.

An emerging long-term challenge for policy makers is climate change. Ahead of the December UN climate change conference in Bali, recent reports have highlighted Indonesia's vulnerability to climate change and its contribution to global greenhouse gas emissions, predominantly from deforestation. Slowing or halting of deforestation is unlikely to occur without large-scale international financial flows.     

SURVEY OF RECENT DEVELOPMENTS

The second half of 2008 is proving to be a time of unprecedented global volatility, and the sound performance of the Indonesian economy over the first half will be difficult to maintain. With growth for the year projected to remain around 6%, Indonesia is relatively well placed to face the challenges of the unfolding global financial crisis, but the risks to the outlook are increasing. The crisis has begun to impact directly, with trading on the Indonesian stock market suspended on 8 October after an alarming one-day fall of 10% in share prices. Sustained pressure on the currency since mid-August has also seen Bank Indonesia running down its sizable foreign exchange reserves in attempting to support the rupiah. The authorities are taking steps to relieve liquidity pressures in the financial system, but will also need to address medium-term issues of stability, especially in relation to inflation; interest rate increases have so far done little to contain prices. Although exports have remained surprisingly strong, rapid import growth has resulted in a small current account deficit. Growth of exports is likely to decelerate as demand in developed economies slows, putting further pressure on the balance of payments and the currency.

The 2009 budget reflects the government's positive outlook, but the underlying assumptions about growth, inflation and interest rates seem rather optimistic. Tax revenue has been increasing strongly, allowing the government to allocate significant new spending to education, in particular; however the budget remains hostage to global oil prices, with energy subsidies still very large despite the unpopular recent increases in domestic fuel prices. Other issues likely to affect voting in the 2009 elections include scheduled electricity blackouts in Jakarta in response to demand continuing to outstrip supply; the government's apparent indifference to the fate of the victims of the Sidoarjo mud disaster; and its failure to make much impact on the level of poverty.

Despite asking major donors for additional loans for budget support, the government has unveiled a new strategy for managing development partnerships. This will encourage smaller donors to operate through multi-donor arrangements and larger donors to use government systems for more of their programs—a signal that the government intends to shape its relationships with donors despite the global crisis.     

SURVEY OF RECENT DEVELOPMENTS

Summary Apart from the peaceful December elections in Aceh, many major recent news stories from Indonesia have been about disasters of some kind: the sinking of an interisland ferry, the crash of a commercial plane, the continuing misery caused by a seemingly unstoppable mud flow in East Java, and severe flooding in and around Jakarta. The largely symbolic dissolution of the Consultative Group on Indonesia in January has helped neutralise economic nationalist criticism of the president.

The rate of output growth rose to 6.1% in the December quarter, driven by a sudden surge in investment spending. Inflation was modest, at 6.3% in the year to January 2007; the exchange rate has been steady; and the Jakarta Stock Exchange has been booming. The budget deficit is well under control, and public debt continues to decline relative to GDP. At the same time, it is a concern that exchange rate and monetary policies have increasingly come to resemble those in the months preceding the 1997–98 crisis.

Recent surveys confirm that Indonesia's investment climate remains poorer than those of its neighbours. The problem is exemplified by the uncertainty facing new investment in the oil and mining sectors: oil exploration has been sluggish, causing output to fall well below Indonesia's OPEC quota and, although mining operations have been highly profitable in recent years, spending on exploration and new mine development has declined steadily. Meanwhile, the government's hopes of improving infrastructure through public–private partnerships were met with a wait-and-see attitude by private sector participants attending a second infrastructure summit in November.

Non-oil manufacturing grew more slowly than GDP in 2006, reversing the outcome for 2005. Non-oil manufactured exports grew steadily over 2004–06, but there seems little prospect of a resumption of the double-digit growth of the late 1980s and early 1990s. Aside from the poor investment climate and infrastructure shortcomings, the constraints on manufactured export growth include strong competition from China and Vietnam and declining competitiveness resulting from big increases in regulation-driven labour costs.

In March 2006 the poverty rate stood at 17.8%, up from 16.0% in February 2005. A World Bank study has attributed this to the large increase in rice prices caused by the ban on rice imports. It argues that the Unconditional Cash Transfer program, which provided direct cash transfers to 19.2 million poor and near-poor households, more than offset the impact of the steep fuel price increases in 2005, although these findings have been the subject of vigorous debate.     

Social development and social protection: New opportunities and challenges

The growing interest in social protection in the interdisciplinary field of development studies presents new challenges and opportunities. However, to respond effectively, development scholars should be cognisant of the extensive research that has been undertaken over many years in the interdisciplinary field of social policy into what is known as ‘social security’. They have hitherto neglected this research, but it can make a significant contribution to their own work. At the same time, they have a rare opportunity to inform social policy research, which has historically relied on a Eurocentric ‘welfare state’ approach that is of limited relevance to the developing world. By forging closer links between these two fields, we can address the challenges facing social protection more effectively.     

江苏省出口不稳定性成因分析与对策探讨

20世纪90年代出口的增长对江苏的国民经济总量的发展和结构的提升都起到了十分重要的作用。本文采用江苏省20世纪90年代的时间序列资料,拟合出其指数型出口趋势线,据此衡量出各期的出口不稳定值,并以地理集中度、商品集中度、初级产品比率、纺织产品比率、机构设备产品比率为     

甘肃生态移民与社会保障协同建设研究

生态保护建设应统筹协调社会保障工程,整体推进生态保护对人的长远可持续保护和社会保障对人的现实保护。生态移民本身就是一种处在生态敏感度高的区域贫困人口向生态敏感度低的区域迁移活动,在生态保护—社会保障—人的福利待遇提高—可持续发展协同路径中,生态移民应是生态环境恶化与贫困户两个识别标准的结合,生态移民治理措施应是二者的有机结合,移民后应是生态恢复和脱贫致富效果的共同实现。