Category: Indonesia

Economic Reality Versus Optimism in Indonesia

A greater sense of optimism prevails in Indonesia about the economy in 2015 than a year ago, even though the reality is now more challenging. Growth is slowing, business costs are on the rise, and key economic vulnerabilities persist. In simple terms, the new government of President Joko Widodo (Jokowi) has been dealt a difficult hand of cards. At the same time, a revival of investor confidence is in prospect if the government can pursue a constructive reform path and there are positive signals in this regard.

Joko Widodo’s Great Opportunity for Indonesian Economic Policy Reform

Economic performance in post-Suharto Indonesia has been inferior to that achieved during the previous three decades, with economic growth slower and income inequality increasing. With the recent election of a new president, now is a good time to focus on improving the quality of economic policymaking.

Could a Hostile Parliament Be Good for Indonesia’s Jokowi?

There is good news and bad news about the recent string of victories of the ‘Red and White’ coalition in the Indonesian parliament. The good news is that unlike previous Indonesian presidents, President Joko Widodo — popularly known as Jokowi — will have to face a critical and probably hostile parliament. This is also the bad news.

Indonesia Fuel Subsidies’ Unintended Consequences

Despite having won the president and vice-president posts respectively, Joko Widodo and Jusuf Kalla will possess little control, if at all, on the formulation of the next Indonesian budget for fiscal year 2015–16. One particular issue that concerns the new administration is the large portion of funds for energy subsidies, particularly fuel subsidies.

Indonesia’s Jokowi Could be Plagued by the Red and White Coalition

Many commentators assumed following Indonesia’s 9 July presidential election that members of defeated candidate Prabowo Subianto’s six-party ‘Red and White’ coalition would not want to be locked out of government and would seek to realign themselves with president-elect Joko Widodo (‘Jokowi’). Nearly three months later, however, the losing coalition remains remarkably intact and Jokowi’s Indonesian Democratic Party of Struggle (PDI-P), which hasn’t governed nationally since 2004, has been quiet in the political horse-trading.

Can Indonesia’s manufacturing sector be helped with a new industrial policy?

The World Bank and Asian Development Bank have recently advocated the importance of Indonesia’s manufacturing sector. Manufacturing is considered a key sector for the advancement of the country’s overall economy and as an important source of formal employment. The reality on the ground since the 1997–98 economic crisis, though, reveals a troubling picture about the sector.

Indonesia Faces Difficult Decisions Regarding Debt

Indonesia’s next president will need significant funds to fulfil election promises. But both candidates Joko Widodo (Jokowi) and Prabowo Subianto have expressed caution about international borrowings.

So should Indonesia undertake the risks of borrowing from overseas? There is little consensus among Indonesian policymakers. The issue is a difficult and sensitive one, but what is the right course of action?

Can Indonesia Raise Incomes And Eradicate Poverty By 2030?

Several studies suggest that Indonesia is on track to end poverty and attain high-income country status in a decade or so, while others suggest that the economy could grow to be among the world’s top ten largest by 2030 if more investments are placed in manufacturing, infrastructure development and urbanisation. However, an honest look at long-run trends in inequality and historical growth rates indicate that 2040 or longer may be more likely.