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Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Book reviews
Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet
Steele
To cite this article: Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet Steele (2009) Book reviews, Bulletin of Indonesian Economic Studies, 45:1, 125-133, DOI: 10.1080/00074910902836213
To link to this article: http://dx.doi.org/10.1080/00074910902836213
Published online: 26 Mar 2009.
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ISSN 0007-4918 print/ISSN 1472-7234 online/09/010125-9 DOI: 10.1080/00074910902836213
BOOK REVIEWS
Jesus Felipe and Rana Hasan (eds) (2006) Labor Markets in Asia: Issues and Perspectives, Palgrave Macmillan, Houndmills, Basingstoke, xxxvi + 694. £75.00.
This book, edited by Felipe and Hasan from the Asian Development Bank (ADB), is a major work on labour in Asia. Beyond the lengthy chapter on Indonesia by Guntur Sugiyanto, Mayling Oey-Gardiner and Ninasapti Triaswati, the book should interest economists working on Indonesia for the appealing theoretical and comparative perspectives, and for the comprehensive studies of other coun-tries in the region.
The major research questions are raised in the context of poverty, especially that facing the less developed countries in the region, and how poverty relates to labour market processes, outcomes and policies. The authors see employment as the ‘most important problem that policy makers in developing Asia will face in the next decade’ (p. 1), and view market-oriented reforms as one—but certainly not the only (or even the most important)—set of key policy changes needed to provide better jobs for many of the poor in the region.
The book is unusual for the considerable attention it gives to broader theoretical issues associated with globalisation and labour market change (raised throughout the book as well as in a special chapter on the subject). While the authors are keen to point out some of the shortcomings of a pure neo-classical approach to labour issues, the treatment is generally (and sometimes frustratingly) eclectic, introduc-ing the reader to Keynesian, Marxist and ‘heterodox’ approaches to the subject. The editors challenge some conventional views on labour: the excessive focus on unemployment; the superfi cial treatment of dualism and neglect of the
heteroge-neous nature of the informal sector; and the policy focus on school enrolments rather than approaches that are more sensitive to labour market and human capi-tal issues, and that give greater attention to the quality of schooling.
Of the book’s 10 chapters, four are of a comparative nature (three of these writ-ten by the editors, whose imprint on the book is deep). Five chapters are devoted to case studies of India, China, Indonesia, the Philippines and Vietnam. The authors are to be congratulated on bringing together empirical material from the case stud-ies in well-structured summary chapters at the beginning and end of the book, discussing patterns and trends in key labour indicators, and policy, respectively.
The case studies are substantial, each dealing with labour market trends (employ-ment structure and change, unemploy(employ-ment, under-employ(employ-ment and wages); labour market policies; and challenges. In general, they provide valuable insights into similarities and contrasts in labour issues across countries, with similarities given greater prominence. Both the India and China chapters and those on the
126 Book reviews
three Southeast Asian countries make interesting comparisons. Readers interested mainly in Indonesia will fi nd all of the country studies of interest, especially details
of labour policies, which are not easily accessible to the general reader.
My only reservations about the case studies are that they make very long book chapters (some over 100 pages!), give too much empirical data in tables, and could have been much more heavily edited. While selection of case studies is always somewhat arbitrary, I was also slightly disappointed that they did not cover, for comparative insights, one of the region’s more advanced economies (South Korea, Taiwan or Singapore, or even Malaysia) that had already experienced a labour market transition.
The Indonesia chapter provides detailed information on labour force character-istics; unemployment and under-employment; labour market policies narrowly defi ned (minimum wages and severance pay); and broader issues related to job
creation. The focus to some extent refl ects the discipline interests of several of
the authors in statistical and demographic analysis. While labour policies are dealt with in some detail, I would have liked to see a less equivocal approach to these policies, since they appear to be hurting the poor by limiting access to better paying modern sector jobs. Some economists doubtless would have preferred a deeper treatment of constraints in relation to labour demand and a more critical approach to education and human capital issues. Nevertheless, overall, this is an informative introduction to labour issues in Indonesia.
I recommend the book to specialists in labour economics in particular, and to development economists interested in comparative experience in the Asian region. Those wishing to dip more gently into the topic may prefer to start with the special chapter on labour issues with the same coverage, which is included in the ADB’s annual Key Indicators book in 2005. This was reproduced as a sepa-rate ADB publication entitled Labor Markets in Asia: Promoting Full, Productive, and Decent Employment (Asian Development Bank, Manila, 2005). The ADB updated some of the material in Asian Development Outlook 2008: Workers in Asia (Manila). For an in-depth treatment, however, one needs to go to the book under review.
Chris Manning ANU
© 2009 Chris Manning
Lex Rieffel and Jaleswari Pramodhawardani (2007)
Out of Business and on Budget: The Challenge of Military Financing in Indonesia, United States–Indonesia Society (USINDO) and Brookings
Institu-tion Press, Washington DC, pp. 147. Paper: US$17.95; A$33.95.
This book is a policy-oriented review of the issues and options for relieving the TNI (Indonesia’s armed forces) and the Department of Defence of their business interests by 31 December 2009, as required by Indonesian Law 34/2004. Rieffel is an economist and visiting fellow at the Brookings Institution and Pramodha-wardani is a researcher at the Indonesian Institute of Sciences (LIPI).
According to the authors, the book is based on already available rather than new information, but differs from previous studies in that it looks forward, focusing
on 30 policy issues that must be addressed to wean the TNI off non-budget fi
nanc-ing and have it fully dependent on government fundnanc-ing. The authors reach two main conclusions: that full government funding of the TNI is improbable by 2009 but feasible by 2012–15; and that off-budget funding represented only 1.5–3.0% of the government defence budget in 2006. The book was written before the current global economic crisis, but that does not invalidate its discussion of the issues or its conclusions.
The volume examines two principal issues: the nature of military cooperatives, foundations and other legal and illicit economic activities, and how they might be disposed of; and the increase in government funding required to compensate for the loss of business income for operational and personnel purposes. The discus-sion assumes that this transition should be preceded by a much-needed defence review.
The most contentious part of the book is the fi nding that military business
activity (licit and illicit) contributed only $42–91 million (or 1.5–3.0%) to the gov-ernment defence budget for operational purposes. This is considerably less than the estimated 60–70% fi gure assumed by various Indonesian and foreign offi cials
and scholars in past decades. However, it does not include a full accounting of personal income derived from a variety of other sources.
The authors admit that the fi gure is a crude estimate, although it is based on an
analysis of the 2006 budget and the estimated net income of military businesses and other activities. Nevertheless, they reach two conclusions from this estimate: that it would be easy for the government to replace this relatively insignifi cant
contribution to operational funding; and that, given the declining rate of return from military businesses since 1998, most of them will be bankrupt within a few years—and even sooner if they are affected by the current global economic crisis.
The authors recommend the retention of the cooperatives but the disposal of the businesses and foundations. They call for clarifi cation of the policies the
gov-ernment will adopt on issues such as the provision of security services by the mili-tary (for example, at the Freeport mine in Papua); the commercialisation of state land and assets controlled by the military; and military involvement in criminal activities. The study also recommends greater public disclosure of TNI business activities and of policies for their disposal.
The book then discusses the need for a ‘national defence and security strategy’ as the basis for calculating the funding requirements of a reformed military. While this is highly desirable, and the government has indicated that it is working on a security review, it should not be accepted as an essential prerequisite. Since the government already has a de facto strategy, there is no necessary link between complying with Law 34/2004 and developing a revised strategy. Nevertheless, the authors discuss a range of issues that will have to be considered when the government does undertake a strategic review.
The barrier to complying with Law 34/2004 is the vested interests that benefi t
from the current arrangements. It is here that some original research would have been most useful, because there are no existing data on the level, sources or distri-butional patterns of income of the military offi cer corps (serving and retired), and
on who would win and lose if the military’s funding arrangements were regu-larised. Given that gathering such data would be akin to researching the income streams of the mafi a, it is hardly surprising that it has not been undertaken.
128 Book reviews
However, the linkages between nominally legitimate and illegal business arrange-ments need to be understood if vested interests are to be overcome.
The book does canvass the broader reform issues related to the nexus between public service and military salaries (including allowances, housing, education, health care and superannuation benefi ts); government-wide corruption of the
capital budget; and the lack of zero-based budgeting that would relate expendi-ture to capital acquisitions and maintenance and operational activities.
The authors explain that they have refrained from proposing specifi c policies
for winding down the TNI’s business activities because this involves broader government policy beyond the defence ministry and the TNI; because powerful vested interests prevent the acquisition of much of the detail needed to formulate specifi c recommendations; and because the lack of reform to date indicates the
need for a stronger political and social consensus for change. They nevertheless make a number of suggestions.
Overall, this is a useful compendium of the issues and some of the policy options for getting the military out of business and crime. It is recommended reading for anyone interested in security sector reform in Indonesia and in broader issues of government reform.
Bob Lowry Sutton NSW
© 2009 Bob Lowry
Greg Fealy and Sally White (eds) (2008) Expressing Islam: Religious Life and Politics in Indonesia, Institute of Southeast Asian Studies, Singapore,
pp. xxii + 296. Paper: S$29.90/US$25.90; Cloth: S$49.90/US$42.90.
Expressing Islam is a collection of papers presented at the annual Indonesia Update conference at the Australian National University on 7–8 September 2007, with the addition of three papers commissioned to cover popular local pilgrimage in Java, the rise and fall of the empire of televangelist Aa Gym, and micro-fi nance
aspects of sharia (Islamic law; Indonesian: syariah) banking. The volume offers a welcome corrective to the emphasis on militant Islamic movements in publica-tions on Islam in Indonesia that have appeared since the violent confl icts between
Muslims and Christians in 1999 and the Bali bombing of October 2002. The editors of this volume aim to describe the diversity of the ways Indonesians express their identity as Muslims, ranging from adopting Muslim dress and opening a sharia bank account to cruising Islamic websites for an appropriate fatwa (pronounce-ment by a recognised Islamic religious authority).
The book is arranged in three parts, focused on (I) expressions of personal piety; (II) political, social and legal expressions of Islam; and (III) the Islamic economy. Part I includes essays on neo-modern Sufi sm among urban Indonesians; two
essays that refl ect on the emergence of Islamic televangelism in Indonesia; the
cri-tique of dakwah proselytising by traditional dai (preachers) in rural communities that has been mounted by modernising Islamic leaders; and commercial aspects of popular pilgrimage in Java. Each of the essays is interesting and, in my view,
highly recommended reading for all scholars of Indonesia. Especially valuable is Greg Fealy’s introductory essay, ‘Consuming Islam: commodifi ed religion and
aspirational pietism in contemporary Indonesia’, in which he argues that mod-ernisation in Indonesia has been characterised by the commodifi cation of Islamic
culture and a new emphasis on the individual as an active consumer of Islam. This kind of individualism contrasts with Islamic identity formation and expres-sion as moulded by traditional collective institutional channels such as Nahdlatul Ulama and Muhammadiyah. While critics deplore this individualist development as producing Muslims who are more concerned with looking Islamic than with being Islamic, Fealy points out that levels of philanthropic activity by Muslims have risen dramatically and it is the new ‘modern’ Muslims who are demand-ing higher public ethical standards and a government free from corruption. Fealy concludes that ‘religious commodifi cation has not greatly altered the moderate
nature of mainstream Indonesian Islam’ (p. 38), but includes a cautionary warn-ing to scholars who would predict the future: ‘The sheer breadth and complexity of Islamic economic activity and consumption in Indonesia make neat and com-prehensive analysis almost impossible’ (p. 37).
In part II, M.C. Ricklefs provides a historical perspective on changes in Islam in Indonesia from the ‘mystic synthesis’ that appears to have prevailed from the 14th through the 18th century. From 1830 Islamic reform movements that arose in resistance to Dutch colonisation led to the development of two distinct forms of Islamic expression, a modernising sharia-oriented Islam and a Sufi -oriented Islam
concerned with traditional forms of Islamic observance, such as local pilgrimage and tarekat (Sufi orders) organised around traditionally educated ulama. Ricklefs
argues that today under the impact of globalisation there is a renewed polarisation of Javanese society along lines of religious identity, as occurred between 1850 and 1965. The subsequent essays focus on (1) efforts to reform the discourse on gender roles in Islam within Nahdlatul Ulama educational institutions; (2) an intriguing account of the impact of on-line fatwa-shopping by internet-savvy Muslims; (3) a
fi nely tuned analysis of the proliferation of sharia-related by-laws (perda syariah)
that were promulgated by local governments between 2003 and 2006; (4) an account of the rise of the Islamic Defenders Front (FPI) and the Betawi Brotherhood Forum (FBR), Islamic gangs (preman) which have come to wield considerable power in the last seven years; and (5) an assessment of the present status and prospects of Jemaah Islamiyah (JI), the organisation founded by Abu Bakar Ba’asyir and Abdullah Sung-kar that was responsible for the Bali bombing of 2002, and some of whose members were involved in bombings of western targets in Indonesia between 2003 and 2005. Taken together these essays present a dynamic collage of the diverse streams of Islamic expression that vie for support in a democratising Indonesia today.
The fi nal section of Expressing Islam is devoted to the new forms of Islamic
banking that have emerged since the establishment in 1991 of Indonesia’s fi rst
sharia bank, Bank Muamalat Indonesia. The fi rst essay, by Umar Juoro,
Commis-sioner of Bank Internasional Indonesia and a Senior Fellow of the Habibie Center, assesses the growth of Islamic banking services up to the passage of the Sharia Banking Law in June 2008. He provides a list of Islamic bank offi ces in Indonesia
in 2007 and a description of the different types of contracts that are available in Islamic banks. He argues that, if Bank Indonesia’s prediction of a 10–15% market share for Islamic banking by 2015 is to be realised, public understanding of sharia
130 Book reviews
fi nance must be improved and more fl exible and innovative contracts and
bank-ing instruments must be developed.
The fi nal articles concern Islamic banking and micro-fi nance loans. Muhammad
Syafi i Antonio, who is a member of the Sharia Advisory Council on Banking and
sits on the board of directors of several major sharia banks, argues that Islamic banks should play a more important role in the fi nancing of small and
medium-sized enterprises (SMEs) in Indonesia. He points out that the SME sector contrib-uted 54.2% of Indonesian gross domestic product in 2005 and that the share of SMEs in total employment has exceeded 90% (p. 251–2). Small and micro-fi nance
banks (baitul maal wat tamwil or BMT), developed by Muslim NGO activists begin-ning in the 1990s and now located in cities and regions across Indonesia, are posi-tioned to support SMEs that have not been able to access funding in conventional banks. Minako Sakai provides an account of the founding and expansion of BMT banks. While one might wish for even more information on the phenomenon of sharia fi nance that has evoked so much interest and hope among Islamic
reform-ers, one must be grateful to Greg Fealy and Sally White for making this valuable collection of essays available to scholars.
Elizabeth Collins Ohio University, Athens OH
© 2009 Elizabeth Collins
Organisation for Economic Co-operation and Development (2008) Indonesia: Economic Assessment 2008,
OECD Economic Surveys 2008/17, Paris, pp 127. €52; US$72; £37; ¥7,800.
For some years the Organisation for Economic Co-operation and Development (OECD) has been working to strengthen cooperation with selected non-mem-ber developing countries. Plans have been announced to develop an ‘enhanced engagement’ with fi ve countries with an eye to possible future membership.
Indo-nesia is one of these countries, along with Brazil, China, India and South Africa. This report, the fi rst detailed study on Indonesia by the OECD, is part of the
organisation’s program of enhanced engagement with Indonesia. The report pro-vides (chapter 1) an overview of Indonesia’s growth and macroeconomic per-formance since the 1997–98 fi nancial crisis, and then considers two topics in more
detail: the business and investment climate (chapter 2) and labour market issues (chapter 3). The overall story is very supportive of the recent efforts of Indonesian economic policy makers. In addition, as one would expect in a report from an international agency such as the OECD, the document draws attention to a range of policy areas in which improvements might be made.
In chapter 1, the OECD places great emphasis on the importance of long-term growth. ‘Raising the economy’s growth potential’, the report argues, ‘and sus-taining it over the longer term, is Indonesia’s foremost policy challenge’ [empha-sis added]. Sustained and higher growth (an ambitious fi gure of around 8% per
annum, or slightly more, is implied) is seen to be needed over the period 2006–30 ‘to lead to a sustained reduction in poverty and unemployment over the longer
term’. It is argued that input accumulation, rather than productivity gains, has been the main driver of growth in recent years, that the structural reforms of the 1980s helped enhance productivity, and that the main barriers to raising the econ-omy’s growth potential are currently on the supply rather than the demand side of the economy.
Chapter 2 focuses on the business and investment climate. There is consider-able room, it is suggested, for improving supply-side performance by encourag-ing entrepreneurship and the private sector. The main policy measures needed are seen to be improving the regulatory climate, tackling infrastructure shortages, and enhancing governance in certain key areas (in the legal system, at the local government level, and within some of the main state-owned enterprises, includ-ing the larger state-owned banks).
Chapter 3 considers labour market issues in some detail. The phenomenon of slow job creation (or ‘jobless growth’, as the Asian Development Bank has called it) is discussed. It is argued that a combination of policies to encourage greater fl exibility in the formal labour market and more effective social
protec-tion programs would help improve the operaprotec-tion of Indonesia’s labour markets. Especially, the OECD survey is rather critical of the tightening of employment protection legislation (EPL) in Indonesia in recent years. It suggests that the tight-ening of EPL has failed both to boost social protection and to promote economic effi ciency. In addition, the OECD argues, the introduction of a more restrictive
labour code during the last decade has provided greater protection to relatively better-off workers in the formal sector at the expense of lower-paid workers in the informal sector.
Not surprisingly perhaps, in certain respects the report refl ects something of an
OECD approach to the world. In view of the OECD’s plan to develop an enhanced engagement with some major developing countries, it may be worth mentioning several ways in which this tendency to see things within a rich-country frame-work infl uences the presentation.
First, the report makes numerous references to the situation in OECD coun-tries. The implication, apparently, is that rich OECD countries are an appropri-ate comparator for developing countries such as Indonesia. This hardly seems appropriate. Income per capita in Indonesia is currently about $2,000 compared with an average fi gure of around $40,000 in the main OECD countries. Given
this difference, many comparisons between OECD countries and Indonesia are of limited relevance.
Second, there is little recognition in the survey that quite a few of the reforms suggested would be expensive, or that the capacity of the Indonesian state to
fi nance them is very limited. Possible reforms mentioned include
strengthen-ing law enforcement, improvstrengthen-ing regulatory institutions and increasstrengthen-ing spend-ing on infrastructure. But there is a very large difference between the capacity of OECD countries to pay for these things and that of developing countries. In OECD countries, government spending per person in 2004 (IMF estimates) was around $14,000 per year. The comparable fi gure in Indonesia was below $300. In
other words, for every $1 the Indonesian government had to spend on each citi-zen, western governments had over $40. Yet nowhere in the OECD report is any careful consideration given to the implications for policy making in Indonesia of these extreme resource constraints on government.
132 Book reviews
Third, the report displays something of a preference for focusing on activities in the formal sector. Various efforts to measure characteristics of the policy envi-ronment in Indonesia (such as restrictions on product markets) assume it is the formal legal institutions that count. This is often not the case. Rather, it is often the tacit institutional arrangements and informal agreements that determine the real relationships between economic actors in countries such as Indonesia. Partly as a result of this tendency, the report suggests that reforms are needed in the regula-tory framework to make product markets more competitive. Presumably it is the formal product markets that the OECD is focusing on. Many informal markets in Indonesia are ferociously competitive, with many instances of quite harmful com-petition being reported.
But overall the OECD survey is a very useful summary of some of the key economic issues that Indonesian policy makers face. The main policy issues, along with up-to-date data, are presented in an accessible and readable way that will perform the extremely helpful role of encouraging governments and other observers in OECD countries to familiarise themselves with current events in Indonesia. A good summary of the report can be found at <http://www.oecd. org/dataoecd/19/48/41011263.pdf>.
Peter McCawley ANU
© 2009 Peter McCawley
Craig L. LaMay (2007) Exporting Press Freedom, Transaction Publishers, New Brunswick NJ,
pp. xxiii + 310. Cloth: $34.95; Paper $29.95.
Since the fall of Soeharto in 1998, Indonesia has been fl ooded with media
assist-ance programs. Many of these programs have been funded by the US government through either the US Agency for International Development (USAID) or one of its partner NGOs. While these programs share the broad aim of promoting politi-cal transparency and accountability through the development of independent media, they have focused in particular on journalism training, reform of the press law, and an overall improvement in journalistic professionalism.
Craig LaMay unravels the assumptions behind these and other media assist-ance programs in the developing world, and offers a critical assessment of their effectiveness. Chapter 2 focuses on the history of US and EU foreign aid programs and ‘the democracy promotion industry’; chapter 3 provides an overview of the NGOs working in the area of media assistance; and chapters 4 and 5 look at some of the specifi cs of what LaMay calls ‘the fi nancial/editorial dilemma’ of
inde-pendent media in developing countries (p. xix).
Although the normative value of ‘strengthening civil society’ is fundamental to the media assistance industry, LaMay argues that not only is the concept of civil society so vague as to be almost meaningless, but its relationship to the develop-ment of independent media is problematic at best. One of the more interesting sections of LaMay’s study is his analysis of how donors attempt to monitor and
evaluate the success of assistance programs that somewhat grandly promise to strengthen the independent media sector.
For LaMay, the fundamental reality is that media ‘are rooted not in political or civil society, but in economic society’ (p. 4). The book under-scores a dilemma that is central to media assistance programs: how can independent media become
fi nancially self-sustaining while continuing to contribute to democratic processes
and consolidation? As the experience of media organisations in many developed democracies suggests, having a strong revenue stream and promoting quality journalism are often two entirely different things.
Chapter 6, which looks at the innovative New York and Prague based Media Development Loan Fund (MDLF), will be of interest to many Indonesianists. LaMay uses the case of the Radio 68H news network (based in Jakarta) and the online news service Malaysiakini (based in Kuala Lumpur) to show how MDLF combines below-market loans with program-related investments to help wean quality news organisations from donor funds, while enabling them to become full and competitive participants in their respective markets.
The success of Radio 68H and Malaysiakini suggest that this alternative kind of media assistance can be highly effective—but that it requires both a long-term interest in the programmatic and fi nancial health of the recipient and a true sense
of partnership. Ironically, despite the millions of dollars that have been poured into media assistance in developing countries, these two basic commodities have been in very short supply.
Janet Steele George Washington University, Washington DC
© 2009 Janet Steele
