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Survey of recent developments

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  • Ross Mcleod

Abstract

The new government of Susilo Bambang Yudhoyono (SBY) has been performing well relative to the standards of recent governments. The confidence of the business community in Indonesia's near-term future continues to improve, resulting in rapid growth of investment activity, steady gains on the stock market, and a return of private capital inflow. City skylines are again decorated with cranes for the construction of apartment buildings, shopping malls and the like, while expenditure on cars and motorcycles, cell phones and air travel is growing rapidly. The rate of economic growth is now not far below that typically achieved in the Soeharto era. Macroeconomic management is broadly on the right track. The budget deficit is small enough not to pose a problem of fiscal sustainability and, although the monetary authority continues to make things difficult for itself by pursuing conflicting targets, prices remain reasonably stable. At the microeconomic level, how-ever, there are still plenty of causes for concern, the most serious of which, perhaps, is the dissipation of Indonesia's current oil price windfall in wasteful and extraordinarily costly subsidies to domestic consumption, notwithstanding the recent increase in domestic fuel prices. Little has been achieved in relation to privatisation, and the government has scant enthusiasm for it. Paradoxically, it is encouraging heavy private sector involvement in infrastructure, which would otherwise be provided by state enterprises. Such involvement will be difficult to achieve, partly for the same reasons that privatisation has been hindered, but not least because the government has yet to come to grips with the implications for pricing of infrastructure services if such activities are to be made profitable—a prerequisite for private sector involvement. Problems with infrastructure as they manifest themselves at lower levels of government are illustrated and analysed in this Survey by a short case study of West Java province and its capital city, Bandung. There has been a great deal of anti-corruption activity, resulting in several high profile arrests. But this falls far short of what is required to achieve significant improvement in the performance of the public sector, broadly defined, on which healthy and sustained growth of the economy depends heavily. The government has been slow to appoint new people to the top levels of the bureaucracy, and reformist ministers have also been frustrated by civil service rules and regulations that make it exceedingly difficult to appoint the best available individuals to these and other important positions.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Bulletin of Indonesian Economic Studies.

Volume (Year): 41 (2005)
Issue (Month): 2 ()
Pages: 133-157

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Handle: RePEc:taf:bindes:v:41:y:2005:i:2:p:133-157

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Cited by:
  1. McLeod, Ross, 2002. "Privatisation Failures in Indonesia," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2002-06, The Australian National University, Arndt-Corden Department of Economics.
  2. Ross Mcleod, 2005. "The struggle to regain effective government under democracy in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(3), pages 367-386.
  3. Kunal Sen & Liesbet Steer, 2005. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(3), pages 279-304.
  4. Tubagus Feridhanusetyawan, 1997. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(2), pages 3-39.
  5. Inoue, Takeshi & Toyoshima, Yuki & Hamori, Shigeyuki, 2012. "Inflation targeting in Korea, Indonesia, Thailand, and the Philippines : the impact on business cycle synchronization between each country and the world," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 328, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  6. Henderson, J. Vernon & Kuncoro, Ari, 2011. "Corruption and local democratization in Indonesia: The role of Islamic parties," Journal of Development Economics, Elsevier, vol. 94(2), pages 164-180, March.
  7. Thee Kian Wie, 2010. "Technology and Indonesia’s Industrial Competitiveness," Working Papers id:3295, eSocialSciences.
  8. R. William Liddle, 2005. "Year one of the Yudhoyono-Kalla duumvirate," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(3), pages 325-340.
  9. Ross H McLeod, 2003. "Equilibrium is good: Comments on Athukorala and Rajapatirana," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2003-12, The Australian National University, Arndt-Corden Department of Economics.
  10. Lloyd Kenward, 1999. "Assessing Vulnerability to Financial Crisis: Evidence from Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 35(3), pages 71-95.
  11. Ross McLeod, 1997. "Postscript to the Survey of Recent Developments: On Causes and Cures for the Rupiah Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(3), pages 35-52.
  12. Anne Booth, 2005. "The evolving role of the central government in economic planning and policy making in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(2), pages 197-219.
  13. Eric Ramstetter, 2000. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(3), pages 3-47.
  14. Ross H Mcledo, 2008. "The Soeharto Era: From Beginning to End," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2008-03, The Australian National University, Arndt-Corden Department of Economics.
  15. Ross Mcleod, 2006. "Indonesia's new deposit guarantee law," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 42(1), pages 59-78.
  16. Ross McLeod, 2000. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(2), pages 5-41.
  17. M. Chatib Basri & Arianto Patunru, 2006. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 42(3), pages 295-319.
  18. J. Thomas Lindblad, 1997. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(3), pages 3-33.
  19. Halim Alamsyah & Charles Joseph & Juda Agung & Doddy Zulverdy, 2001. "Towards Implementation Of Inflation Targeting In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(3), pages 309-324.

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