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Deregulation Of Indonesia'S Interregional Agricultural Trade

Author

Listed:
  • Roger Montgomery
  • Sudarno Sumarto
  • Sulton Mawardi
  • Syaikhu Usman
  • Nina Toyamah
  • Vita Febriany
  • John Strain

Abstract

In January 1998 a significant policy reform deregulated agriculture in Indonesia. It sought to eliminate distorting local monopolies, monopsonies, trade restrictions, interisland maximum shipment quotas and other barriers that effectively lowered farmgate prices. Many of these had been constructed to benefit the Soeharto family and their business cronies. The reform also sought to lower local taxes and levies targeted at agriculture. This paper demonstrates that deregulation eliminated many of the distorting taxes and levies, and dismantled many (but not all) local monopolies, monopsonies and quotas. Farmers typically now receive a higher percentage of the destination market price. Many also receive significantly higher real prices for their products, although this differs dramatically across commodities. Local governments complained about local revenues lost through the reforms. Detailed budget analyses reveal that deregulation did not substantially harm local government budgets; instead, other factors caused a decline in the local-source revenue contribution to local budgets.

Suggested Citation

  • Roger Montgomery & Sudarno Sumarto & Sulton Mawardi & Syaikhu Usman & Nina Toyamah & Vita Febriany & John Strain, 2002. "Deregulation Of Indonesia'S Interregional Agricultural Trade," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(1), pages 93-117.
    • Handle: RePEc:taf:bindes:v:38:y:2002:i:1:p:93-117
    DOI: 10.1080/000749102753620301
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    References listed on IDEAS

    as
    1. Hadi Soesastro & M. Chatib Basri, 1998. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 3-54.
    2. Reza Siregar, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(3), pages 277-303.
    3. Blane Lewis, 2001. "The New Indonesian Equalisation Transfer," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(3), pages 325-343.
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    Cited by:

    1. Kelly Bird & Hal Hill & Sandy Cuthbertson, 2008. "Making Trade Policy in a New Democracy after a Deep Crisis: Indonesia," The World Economy, Wiley Blackwell, vol. 31(7), pages 947-968, July.
    2. Sudarno Sumarto & Asep Suryahadi & Alex Arifianto, "undated". "Governance and Poverty Reduction: Evidence from Newly Decentralized Indonesia," Working Papers 381, Publications Department.
    3. Aswicahyono, Haryo & Bird, Kelly & Hill, Hal, 2009. "Making Economic Policy in Weak, Democratic, Post-crisis States: An Indonesian Case Study," World Development, Elsevier, vol. 37(2), pages 354-370, February.
    4. Neilson, Jeff, 2008. "Global Private Regulation and Value-Chain Restructuring in Indonesian Smallholder Coffee Systems," World Development, Elsevier, vol. 36(9), pages 1607-1622, September.
    5. Reza Siregar, 2001. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(3), pages 277-303.

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