Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 00074910802001629

(1)

Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=cbie20

Download by: [Universitas Maritim Raja Ali Haji] Date: 18 January 2016, At: 19:55

Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

BOOK REVIEWS

To cite this article: (2008) BOOK REVIEWS, Bulletin of Indonesian Economic Studies, 44:1, 157-168, DOI: 10.1080/00074910802001629

To link to this article: http://dx.doi.org/10.1080/00074910802001629

Published online: 16 Jul 2008.

Submit your article to this journal

Article views: 52

(2)

BOOK REVIEWS

Louis T. Wells and Raﬁ_{q Ahmed (2006) Making Foreign Investment Safe:}

Property Rights and National Sovereignty, Oxford University Press, New York NY, pp. 378 + xi. US$49.95.

This ﬁ_{ne volume employs Indonesia as a case study of how developing}

coun-tries manage—or mismanage—foreign direct investment (FDI), especially in large infrastructure projects. The central analytical issue is how to make FDI in developing countries work for both parties. For foreign investors, this means a predictable and secure commercial environment in which to achieve a reasonable risk-adjusted return on investment. For host countries, it requires foreign inves-tors to play by agreed rules and to be ‘good corporate citizens’. When project and investor are small, the activity is located in a competitive, export-oriented sector, and no project-speciﬁ_cﬁ_{scal arrangements have to be negotiated, FDI is unlikely}

to be controversial. When the foreign investor is a US-based multi national enter-prise (MNE), investing large-scale in a non-tradable sector—part of the ‘com-manding heights’ of an economy in the view of some—with the requisite local partner a state-owned enterprise (SOE) or known for corrupt deals, and the regu-latory and fi_{scal regime ill de}fi_{ned, the possibility of con}fl_{ict between the foreign}

investor and the host government and local partners rises signiﬁ_cantly.

Wells and Ahmed address these questions through a close study of Indonesia’s sometimes unhappy history of foreign investment in large infrastructure projects, arguing persuasively for detailed business case studies to ﬂ_{esh out the issues.}

They choose a case from either end of the spectrum: the generally satisfactory and the awful.

In 1967 a young, commercially inexperienced Soeharto regime invited one of the world’s largest MNEs, ITT (International Telephone and Telegraph), to build Indonesia’s new international telecommunications satellite link—a high-risk investment for ITT that proved highly proﬁ_{table. In 1980, the government sought}

to nationalise the project in a low-key, negotiated arrangement that satisﬁ_{ed both}

parties. In their evaluation of this episode, the authors draw on their analytical framework, in particular the ‘obsolescing bargain’: Indonesia was able to acquire Indosat forcibly not only because of nationalist sentiment and its increased oil wealth by 1980, but also because the technology ITT had to offer had matured and there were more alternative suppliers in the market.

In the 1990s, the government negotiated 27 electricity-generation projects with a range of international investors pledging a total of $13–18 billion, under the super-vision of the vast, inefﬁ_{cient and ‘leaking’ state-owned electricity company, PLN.}

The backdrop to these agreements was global sentiment in the 1980s that favoured privatisation. The deals took the form of ‘power purchase agreements’, under which PLN would buy electricity from private generators at pre-determined prices.

BIESApr08.indb 157

BIESApr08.indb 157 29/2/08 9:49:55 PM29/2/08 9:49:55 PM

(3)

The most controversial of the projects was Paiton I, a huge electricity genera-tion facility in East Java, approved in principle by Soeharto in April 1990. PLN was to chair the supervisory board that oversaw technical and commercial details. But many other agencies and individuals became involved, all with their own domestic and international advisers. The project became embroiled in the broader policy tug-of-war between the technocrats and the ‘engineers’ and ‘nationalists’, and the Soeharto children were deeply involved.

Three issues dogged the project from the outset: high-level political interfer-ence and blatant corruption; pricing issues, for both power and inputs; and, par-ticularly for the Japanese investors, government guarantees beyond PLN’s shaky commitment. The ﬁ_{nal funding package, announced in July 1995, involved two}

coordinating banks, eight ‘lead arrangers’, 28 ‘arrangers’, nine ‘lead managers’, and four ‘agency lenders/guarantors/insurers’.

Although full commercial information was not available, the authors note that ‘everything was pricey’ about Paiton I, and poignantly comment that ‘manag-ers and lend‘manag-ers appeared to care little and to und‘manag-erstand even less’ about such obvious anomalies. Paiton I had not commenced production when the Asian economic crisis wrought havoc with all these agreements. Demand for electricity collapsed. PLN’s debts ballooned, with unhedged dollar debts mismatched with rupiah-denominated revenues and price caps. The freeze on major infrastructure projects from September 1997 further complicated outcomes. PLN was technically bankrupt, and could not meet its payment obligations. Paiton I seemed doomed, but political and administrative paralysis and the complexity of the project led the negotiations to drag on for ﬁ_{ve years before}ﬁ_{nal resolution.}

The experience of the other 26 power agreements varied considerably (for more detail see Wells 2007). The aggressive US partners of the Karaha Bodas Company opted for arbitration, and costly and bitter legal cases were fought around the world for almost a decade. CalEnergy, the foreign partner in another agreement, apparently chose arbitration because of the presence of the US government’s agency, the Overseas Private Investment Corporation (OPIC). Lengthy proceed-ings in various international settproceed-ings were complicated by ofﬁ_{cial US involvement}

in the case. On the other hand, Sumitomo, the Japanese partner in the Tanjung Jati B plant, knew Indonesia deeply, and the approach was always one of negotia-tion. The Japanese government did not insist on sanctity of contract, and eventu-ally intervened with a low-cost loan bailout. In surveying the dispute resolution processes, the authors note that if the foreign party was Japanese, had other sig-niﬁ_{cant interests in the country, or wanted to remain in the developing world}

power business, it was more likely to favour negotiation.

In the ﬁ_{nal chapter on ‘reforming for pro}ﬁ_{ts and development’, the authors}

distil some broader lessons, focusing on who should build and own infrastructure in emerging markets, and how to reform the international system of property rights. One conclusion is that ‘the fundamental assumption made by enthusiasts for privatisation [that governments should get out of infrastructure] was … dead wrong’. Most infrastructure involves some degree of natural monopoly, and gov-ernments must be present, if only as regulators.

The book points to deﬁ_{ciencies in the current international system of property}

rights, which satisﬁ_{es neither party. Developing countries argue that arbitration}

under the International Centre for the Settlement of Investment Disputes is too

BIESApr08.indb 158

(4)

legalistic, especially in light of recent economic crises. The process should not just rigidly enforce contractual provisions, but should consider the special cir-cumstances of creditor and debtor. Broader foreign policy issues also follow from Indonesia’s key strategic importance in the post-9/11 world.

The authors conclude by articulating some key elements of a ‘lasting system’ of dispute resolution, one that mixes law, economics and international relations. Their recommendations are persuasive: a less rigid and more economic view of property rights and contracts; and standards that consider national goals, encour-age negotiation, increase the symmetry of rights granted to foreign and domestic

ﬁ_{rms, and restrain home governments from aggressive intervention on behalf of}

individual investors. They note that ‘the wisest … foreign investors cannot rely entirely on external guarantees of property rights’.

This may well be ‘worst-case scenario analysis’. Crises like that of 1997–98 in Indonesia are rare occurrences. There are many successful privatisations involv-ing foreign investors, and projects with SOEs in non-tradable sectors are invari-ably the most complex. But this is a highly informative business case study, with special reference to public policy processes in Soeharto’s Indonesia, to the chal-lenges associated with foreign investors in large infrastructure projects, and to the impact of a deep economic and political crisis.

The authors combine high-level analytics with general accessibility. The vol-ume is comprehensively referenced and docvol-umented, with almost 1,000 footnotes extending over 60 pages. It is highly recommended for a diverse audience, rang-ing from Indonesia specialists to those in the overlapprang-ing ﬁ_{elds of international}

business, law and political economy in the developing world. Sadly, Oxford is not distributing this book in Indonesia, where it would be most useful.

Hal Hill ANU

Reference

Wells, Louis T. (2007) ‘Private power in Indonesia’, Bulletin of Indonesian Economic Studies 43 (3): 341–63.

World Bank (2006) Making the New Indonesia Work for the Poor, World Bank, Washington DC, pp. xxxvii + 318.*

The Asian economic crisis of 1997 brought the issue of poverty in Indonesia into sharper focus than ever before, resulting in considerable research and scholarly attention. This report, prepared by a team at the World Bank’s Jakarta ofﬁ_{ce and}

sup-ported by a large number of external advisers, has drawn on much of that work. As the title suggests, the report is directed at the policy debate about poverty within contemporary Indonesia. It comes at a critical moment in Indonesia’s his-tory when the establishment of a democratic system of government and a radical

* Available for download at

<http://siteresources.worldbank.org/INTINDONESIA/Resources/Publication/280016-1152870963030/2753486-1165385030085/MakingtheNewIndonesia.pdf>.

BIESApr08.indb 159

(5)

decentralisation of power and authority have dramatically changed the political landscape in potentially positive though still by no means certain directions.

The ﬁ_{rst substantial chapter, ‘A history of growth and poverty reduction’,}

draws out some lessons from Indonesia’s experience with reducing poverty dur-ing the New Order years, and gives an overview of the impact of the ﬁ_nancial

crisis and the post-crisis stabilisation measures. The following chapter, ‘Under-standing poverty in Indonesia’, offers an insightful analysis of the most signiﬁ_cant

elements of Indonesian poverty, and discusses its measurement and its causes. The World Bank claims that Indonesia has now rejoined the category of ‘emer-gent middle-income countries’ as a result of careful macroeconomic management following the crisis. However, this report demonstrates that even though pov-erty levels have returned to pre-crisis dimensions, over 35 million Indo nesians remain trapped in dire poverty and another 90 million people—or around 40% of the population—are in the vulnerable near-poor category. In addition, when a broader multi-dimensional deﬁ_{nition of poverty is used—as against a narrow}

income-based deﬁ_{nition—almost half the country’s population is touched by}

pov-erty of some kind. In this multi-dimensional sense, povpov-erty affects all Indonesians without access to essential government services such as health and education, and those unable to achieve acceptable human development outcomes as basic as adequate nutrition, clean water and sanitation. In addition, the study demon-strates how poverty in Indonesia exhibits considerable regional variation, with marked disparities in poverty levels across the archipelago.

The next four chapters address key areas for action if poverty is to be tackled systematically throughout the country. There is some evident overlap and repe-tition within the detailed analysis of these sections of the report, as many of the key themes that emerge are inter-related. The importance of maintaining growth through macroeconomic stability is emphasised, albeit growth that is also pro-poor. The report’s authors propose ﬁ_{nding pathways to help the poor take advantage}

of growth that will allow them to emerge from poverty with increased incomes, especially through greater agricultural productivity, improved education and voca-tional training, and access to ﬁ_{nancial services. Such growth patterns, the following}

chapter explains, should be reﬂ_{ected in reforms that will make public spending}

work for the poor, especially through investment in pro-poor education and health initiatives, and in long-neglected infrastructure sectors, particularly water and sani-tation services and a rural road improvement and maintenance program.

The report also suggests innovative ways to make social protection serve the interests of the poor, especially in minimising risks and vulnerability during peri-ods of unexpected shocks or further economic crises. Such social protection meas-ures should be based on better targeting and the application of poverty mapping, and should be delivered through direct conditional cash transfers and more effec-tive social and health insurance programs.

Finally, chapter 7 considers how the operations of government and public administration might be made to serve the interests of the poorest sections of the community. The speciﬁ_{c measures described include ways to ensure greater}

levels of accountability, a stronger voice for citizens and local communities, and closer and more effective monitoring and assessment of government and civil service performance, to minimise inefﬁ_{ciencies and ‘leakage’ and to achieve}

satis-factory outcomes for the poor.

BIESApr08.indb 160

(6)

In support of the report’s aim of contributing to the policy debate within Indo-nesia, the concluding section presents 16 speciﬁ_{c policy recommendations for}

immediate action. These items are further summarised and ranked as to their importance in an accompanying ‘poverty reduction matrix’ (pp. 270–7). Readers will draw their own conclusions about the relative merits of the items on this list, but several accorded the highest ranking strike me as especially important. These include measures to ensure continued macroeconomic stability; the removal of the ban on rice imports; investment in rural road construction, potable water sup-plies and adequate sanitation services; and the elimination of fuel subsidies in favour of targeted social protection. Steps to reduce maternal mortality rates and promote secondary school enrolment among the poor are also high on the list of suggested priorities.

The complete list of potential reforms is long and daunting. A careful reading of the four action chapters of the report demonstrates how little real progress has been made and how intractable the problems are. Admittedly, some speciﬁ_c

reforms have been carried out at the national level and in a small number of dis-tricts where there has been a willingness to tackle poverty. Examples of these innovations are described throughout the report. However, it remains to be seen whether progressive and reform-minded leaders will be able to marshal the polit-ical resources to overcome entrenched vested interests and navigate the shoals of Indonesia’s complex political system to achieve substantial progress. The issue of corruption is given some attention in the report, but not nearly as much as it war-rants. Technocratic solutions such as training programs in planning and budgeting seem unlikely to solve the problem of endemic corruption unless accompanied by powerful sanctions reinforced by a reliable and credible judicial system.

Despite the large team of contributing writers who worked on the report, the World Bank editors have managed to produce an attractive volume and a readable text. The main chapters are supplemented with short essays on relevant themes and with boxes and ‘focus’ and ‘spotlight’ sections on speciﬁ_{c issues. Charts, tables}

and illustrative photos appear throughout the text, with further supporting statis-tical material available in annexes, as well as a bibliography. Although there is no index, the detailed table of contents is a useful guide for those who want to dip into the book’s material. This report is an extremely useful tool for anyone inter-ested in understanding the nature of poverty in Indonesia and the approaches that might be taken to improve the lot of those below the ofﬁ_{cial poverty line, as}

well as those likely to fall into poverty whenever adverse circumstances emerge.

John Maxwell ANU

BIESApr08.indb 161

(7)

Michael Faure and Nicole Niessen (eds) (2006) Environmental Law in Development: Lessons from the Indonesian Experience, Edward Elgar

Press, Cheltenham, pp. 360. £75.00 (on-line discount £67.50).

This collection of 11 essays is a cooperative effort by Dutch and Indonesian legal scholars aimed at presenting ideas for the revision of Indonesia’s Environmen-tal Management Act (EMA) No. 23/1997. The EMA—Indonesia’s ‘framework’ environmental legislation—was originally enacted in 1982 and was subse-quently revised and re-enacted in 1997. Since then, it has been criticised for being inadequate, lacking in detail and overtaken by developments, particularly with the advent of Indonesia’s ‘regional autonomy’ or decentralisation movement in the late 1990s. The authors came together in a workshop held in 2004 to discuss the EMA’s reform, and this book is a collection of edited papers arising from that workshop.

The authors adopt what they term a ‘legal multi-disciplinary’ approach, com-bining perspectives from diverse areas such as constitutional law and human rights, environmental law, international law, administrative law and criminal law. A comparative approach is also used, with the Dutch contributors examining experiences from the Netherlands, in particular. The ﬁ_{rst substantive chapter is}

on human rights and how its general principles can be related to environmental law, as illustrated by cases from the European Court of Human Rights. This is fol-lowed by a chapter on the polluter-pays, preventive and precautionary principles of environmental law, and how these could be better reﬂ_{ected in the EMA. The}

next chapter emphasises the importance of transnational environmental issues for Indonesia, and proposes that important principles from several international environmental law conventions be reﬂ_{ected in a revised EMA.}

The next three chapters introduce the reader to the speciﬁ_{c details of}

environmental legislation in Indonesia, beginning with a chapter on the need for ‘integration’ in the environmental legislative framework. The next chapter discusses the prevailing problems with Indonesian environmental legislation and institutions, highlighting the excessively ’sectoral’ approach that currently exists and the lack of coherence among the various legislative instruments. A chapter on regional autonomy follows, providing an instructive snapshot of the problems that have arisen following the transfer of authority to district and city governments that have insufﬁ_{cient capacity or incentives for environmental management. At}

the same time, the inconsistencies between the EMA and the regional autonomy laws of 1999 are highlighted.1_Theﬁ_{nal chapters delve into the supervision and}

enforcement of the EMA, the criminalisation of environmental pollution and the suitability of economic instruments for environmental management in developing countries. A concluding chapter then summarises the discussion.

1 In October 2004, the regional autonomy laws were revised and re-enacted as Law 32/2004 on Regional Governance and Law 33/2004 on Fiscal Balancing. Observers gener-ally agree that the revised laws of 2004 effect some degree of re-centralisation of powers into the hands of the central government. How this is to be reconciled with environmental and natural resource management in the regions is not covered by this book, and is an important subject for future research.

BIESApr08.indb 162

(8)

Overall, the book is very useful in highlighting the problems of environmental law and management in Indonesia, and the need for an integrated approach to resolving these problems. It focuses heavily on pollution (‘brown’) issues, and much less on natural resource (‘green’) issues. Hence, there is lengthy discussion of licences for polluting activities, for instance, but little on forestry or protected area management. In the concluding chapter, the editors point out that ‘the enactment of distinct laws for brown and green issues [is] the most likely outcome’ for Indonesia, and that there are no compelling reasons to treat brown and green issues in a single law.

Be that as it may, it would have added to the depth of the book if it had considered the ‘green’ issues in greater detail, given that natural resource extraction concerns pertaining to the forestry, ﬁ_{shery and mining industries are highly controversial}

issues in contemporary Indonesia. In any event, an integrated approach would have required an analysis of how the laws and institutions governing ‘brown’ and ‘green’ issues intersect, even if the EMA should itself be limited to pollution. As the editors point out, it is important to put in place effective mechanisms for coordinating planning, licensing and enforcement between these two domains of the environment.

The chapters relating to criminal provisions and economic instruments are highly relevant, given that Indonesian environmental laws are lacking in detail in these respects. On criminalisation, discussion of the position taken by the courts would have been particularly instructive. In some cases involving the use of ﬁ_{re to clear}

land, for instance, the courts have been reluctant to use criminal law provisions against the perpetrators. In this regard, some analysis of the role of the Indonesian judiciary (and the frequent allegations of corruption made against them) would have been helpful in completing the picture on effective and integrated environ-mental management. Elsewhere, the analysis that the book provides of institutions such as the Ofﬁ_{ce of the State Minister for the Environment (and the serious}

chal-lenges it faces as a non-departmental agency) is particularly enlightening.

On the whole, one can conclude that this book is a valuable aid for all scholars of Indonesian environmental law.

Alan Khee-Jin Tan National University of Singapore

Ross H. McLeod and Andrew MacIntyre (eds) (2007) Indonesia: Democracy and the Promise of Good Governance, Institute of Southeast Asian Studies (ISEAS),

Singapore. pp. xvi + 208. Paper: S$29.90/US$19.90; Cloth: S$49.90/US$29.90.

In their introduction to this latest volume in the Australian National Universi-ty’s annual Indonesia Update series, the editors assert that analysts of Indonesian democratisation can make two distinctive contributions: ‘to help establish realis-tic expectations … and to highlight areas where governance arrangements are not working well …’ (p. 1). The context is a political science literature that is exces-sively pessimistic about the prospects for democracy in developing countries and an Indonesian politics literature that sets too high a standard for democratic

BIESApr08.indb 163

(9)

performance. The editors’ own claim is that the major threat to democratic stabil-ity is poor governance. Especially when people have become accustomed to rapid and sustained growth under a dictatorship like Soeharto’s New Order, discontent with slow growth under a democratic government can turn into opposition to democracy itself.

How well do the editors achieve their goals? Very well indeed. This is a col-lection of almost uniformly high-quality essays that speak directly to the issues. It should be required reading for policy practitioners and analysts. Three essays in particular impressed me in terms of the importance of the topic, the quality of analysis and the originality and value of the proffered solution. Natasha Hamilton-Hart makes a useful distinction between personal and collective business inﬂ

u-ence in politics. She argues that the latter is more likely to be compatible with the public interest in general and thus should be encouraged, but only in the context of governmental, including party and parliamentary, reform. Staffan Synnerstrom argues persuasively for a position-based civil service system and for implemen-tation of Law 17/2003 on State Finance to achieve budgetary reform. I hope that this chapter will give new life to Jakarta advocates of a special unit within the presidential ofﬁ_{ce to plan and implement further civil service reform. Simon Butt}

offers an original and balanced account of the Constitutional Court’s important 2006 decision, which preserved the independence of Supreme Court justices but simultaneously disappointed those who place a higher value on judicial account-ability. By implication, Butt points a way for future reformers. Indonesia’s judicial system now contains three institutions, the Judicial Commission, the Supreme Court and the Constitutional Court, with separate but intertwined interests, pow-ers and responsibilities. In given circumstances, reformpow-ers may choose to work through one institution rather than another, or alternatively to use one of them, particularly the Constitutional Court (which has the power to determine the con-stitutionality of legislation), as a means to gain leverage over the others.

The chapter by Ron Duncan and Ross McLeod provides a useful analytic frame in which to look at the speciﬁ_{cs of business politics, civil service reform and}

judi-cial reform. Drawing on an earlier article by McLeod (2005), they explain per-suasively how Soeharto’s political order, or ‘franchise’, though highly corrupt, nonetheless provided security to the dynamic modern sector of the Indonesian economy. This was the key to a sustained relatively high rate of economic growth for more than a quarter-century. The authors criticise reformers for focusing mainly on the presidency, Golkar, the parliament and the military, while largely neglecting the other crucially important institutions: the bureaucracy, the judici-ary and the state-owned enterprises.

Duncan and McLeod recommend a number of valuable institutional and policy reforms in each of these areas, including some like (carefully targeted) income redistribution and protection of the physical environment that are not normally associated with free-market economists. One of the biggest obstacles to instituting these reforms, they believe, is a ‘predominant belief system’ or political culture that remains strongly anti-market. While I agree that this is a major obstacle to reform, I am more optimistic than they that it can be overcome through political action. After all, it is not so long ago that many analysts blamed the prevailing anti-democratic political culture for Indonesia’s long history, under both Soekarno and Soeharto, of authoritarian politics.

BIESApr08.indb 164

(10)

The most disappointing chapter is Benjamin Reilly’s ‘Electoral and political party reform’. Reilly claims that politicians across East Asia have ‘sought to engi-neer more consolidated, aggregative and stable democratic systems ...’ (p. 42). He admits that despite reforms Indonesia’s party system fragmented further between 1999 and 2004, yet offers no analysis of why this happened or how to remedy it. If Indonesian politicians genuinely want a party system with a few large parties, why have they not shifted from proportional representation to a single-member plurality or a mixed system? Further, why have they not instituted a threshold for parliamentary seats, like Turkey or Germany, where only parties winning above a certain percentage of the national vote are represented in parliament? The current electoral threshold (under which parties that fail to reach a certain percentage of the vote may not compete under the same name in the next national election) has had a negligible effect on the number of parties in parliament.

Finally, the editors should be thanked for prevailing upon Andrew Ellis to write a summary essay on constitutional change. From the beginning of the reformasi era, Ellis has been the best informed and most insightful analyst of the 1999–2002 process that produced four packages of amendments to the 1945 con-stitution. What accounts for the success of these reforms, and are there lessons for today’s analysts and practitioners? Ellis highlights the agency of four leaders of Ad Hoc Committee No. I (PAH I) of the People’s Consultative Assembly (MPR), in particular its chair, Jakob Tobing. Despite partisan and other differences, the four developed early and maintained for over three years a substantive vision (a presidential constitution with full separation of powers) and a strong collective identity and loyalty. While their ideas were radical, their strategy was incorpora-tive and their style low-key—disarming, demobilising and in the end defeating their opponents. Ellis’s analysis reminds us that leadership, often disdained by social scientists as too idiosyncratic for systematic study, remains a critical vari-able in the study of political change.

R. William Liddle The Ohio State University, Columbus, Ohio

Reference

McLeod, Ross H. (2005) ‘The struggle to regain effective government under democracy in Indonesia’, Bulletin of Indonesian Economic Studies 41 (3): 367–86.

Institute of Southeast Asian Studies (2007) Energy Perspectives on Singapore and the Region, ISEAS Publishing, Singapore, pp. xxiii + 372. Cloth: S$59.90/US$39.90.

This useful book contains selected papers presented at the Institute of Southeast Asian Studies (ISEAS) ‘Energy Forum 2005/2006’. The book is divided into two sections, one on energy issues in Singapore and another on the international and regional context. There are 11 chapters on Singapore’s energy issues, while the remaining chapters relate to ASEAN, Australia, China, India, Japan, the Mid-dle East and Russia. Discussion focuses mainly on fossil fuels, and there is little mention of renewable energy sources or the environment. Given that 80% of the world’s energy needs are fulﬁ_{lled by fossil fuels, these are of greatest concern.}

BIESApr08.indb 165

(11)

The book begins with an overview of Singapore’s energy situation, before delving into speciﬁ_{c energy issues such as the oil rig industry. Despite its}

lim-ited resources, Singapore has become an important player in the energy market, mainly by acting as a hub for the oil trade and as the regional oil storage and reﬁ_{ning centre. Future concerns for Singapore include natural gas and alternative}

energy solutions such as fuel cell technology, although oil will remain its pre-dominant energy policy concern.

Of greater interest are the chapters on regional energy issues, most prominent of which is China’s insatiable demand for energy, particularly oil and natural gas. China’s and, to a lesser extent, India’s economic growth and structural reform are recognised as the main factors driving surging oil prices. This is exacerbated by the fact that global oil production capacity has been constrained by a lack of investment, further intensifying the competition to secure available energy.

Parts of the book address energy issues in Southeast Asia, although generalisa-tions about the region cannot be drawn from these. Brunei and Malaysia are likely to beneﬁ_{t from China’s growing demand for oil, while Myanmar and Thailand}

can beneﬁ_{t by building more infrastructure, particularly pipelines and tunnels, as}

China continues to explore alternative routes to import oil from the Middle East. As for Indonesia, historically, low energy demand and relatively abundant resources made it an important energy producer in the world. By the 1900s, oil was being produced in Sumatra and Borneo. In the 1970s, Indonesia became one of the world’s ﬁ_{rst exporters of lique}ﬁ_{ed natural gas (LNG), and by the late 1980s}

and early 1990s, a major exporter of coal. Nowadays, OPEC’s only member in Southeast Asia is at the crossroads: it stands to gain from coal and natural gas exports, but oil imports offset these gains. Since 2002, Indonesia has become a net oil importer, and imports are growing. Unless it can attract foreign investors to its sizable oil reserves in the eastern frontier and deep-sea areas, Indonesia’s energy outlook seems bleak. Regulatory improvements and infrastructure development are needed to solve this problem.

Overall, this book is a good starting point for gaining an overview of energy-related issues in the Asia Paciﬁ_{c region. Despite focusing heavily on fossil fuels}

and putting much less emphasis on renewable energy and the environment, the book provides a comprehensive ‘birds-eye’ view of regional energy issues. This reviewer recommends the book for its generality; however, for countries other than Singapore and China, additional reading is recommended for an under-standing of more country-speciﬁ_{c issues.}

Ditya Agung Nurdianto ANU

BIESApr08.indb 166

(12)

Caroline Brassard and Sarthi Acharya (eds) (2006) Labour Market Regulation and Deregulation in Asia: Experiences in Recent Decades, Academic

Foundation, New Delhi, pp. 229. Rs 595.00; US $39.95.

This useful collection of papers on labour markets in several Asian countries examines the world of work, earnings, social security, gender equity and work conditions. Each paper explicitly links labour market trends to local regulatory regimes, and discusses the impact of globalisation, the Asian ﬁ_{nancial crisis and}

deregulation. Most provide considerable country detail on recent regulatory changes resulting from these ‘megatrends’. Arising from a 2004 conference on ‘Regulation, Deregulation and Reregulation in Globalising Asia’ at the National University of Singapore, this readable and informative collection will become a valuable reference.

The book’s nine chapters fall into three sections: introductory overview; labour market regulation’s impact on employment, wages and economic growth; and the social impacts of labour regulation. The editors’ introduction discusses the recent history of deregulation and the rationale and theory underlying it. The evidence on links between economic growth, regulation and workers’ well-being is sum-marised, and judged insufﬁ_{cient to con}ﬁ_{rm a relationship between rapid growth,}

quick adjustment and a deregulated labour market. Labour is only one possible contributor to growth in speciﬁ_{c settings.}

Sean Cooney’s chapter 2 analyses regulation of employment relations and work conditions in the public and private sectors across Asia. He shows that the formal regulatory framework varies considerably with political and economic context, and is often ineffective. Moreover, the formal labour law framework affects few Asian workers. Cooney makes useful suggestions on what would make labour regulation in the region more effective.

Sarthi Acharya (chapter 3) examines the impact on India’s growth, labour and employment of gradual deregulation beginning in the 1980s. India has a substan-tial body of labour laws, which will require modiﬁ_{cation as the structure of}

indus-try changes and increasing labour ﬂ_{exibility is needed. The complex laws have}

hindered investment and employment, although employers have devised ways around them. Beginning with Vietnam’s 1986 transition from a centrally planned to a market economy, Caroline Brassard (chapter 4) examines how far wage and labour regulation can help reduce poverty. Using data from 120 rural communes on wage differences between sectors, she highlights important sectoral, regional (especially south–north) and gender differences that need to be considered in implementing wage regulation.

Chris Manning’s chapter identiﬁ_{es potential winners and losers from major}

labour regulation changes in Indonesia’s formal sector since Soeharto’s fall in 1998. He documents three laws that have massively changed labour standards and rights—areas neglected by the previous regime—and shows how the challenging effects of the ﬁ_{nancial crisis have mediated the impact of these changes. He points}

to the potential for conﬂ_{ict in Indonesia’s dual goals of creating employment}

and regulating workers’ security and survival rights. Though far-reaching and detailed, the new regulations inﬂ_{uence only a minority of Indonesian workers,}

and Manning stresses the need to provide basic social protection for the majority.

BIESApr08.indb 167

(13)

The ﬁ_{rst chapter on social aspects of labour regulation analyses severance}

pay policies in India and Sri Lanka. Mukul Asher and Pundarik Mukhopadhaya argue that both countries face a pressing need to realign labour market policies with economic growth strategies. Their severance pay policies are designed to provide short-term income support to retrenched workers, and to facilitate enterprise restructuring. The authors conclude that existing regulations neither protect workers adequately nor promote job creation. Moreover, ministries and organised labour are strongly resistant to change. Suzanne Jamieson (chapter 7) assesses health and safety regulation from a gender perspective, focusing on Australia, Singapore, Taiwan and Vietnam. Presenting a research agenda for this area, Jamieson argues that women workers have different needs from their male counterparts, and that the responses of legal cultures and policy makers have been inadequate.

Most chapters focus on the formal sector of Asia’s economies, yet a majority of people work in the informal sector and are reached by few elements of labour regulation. Chapter 8 by Lucita Lazo discusses the policy implications of labour regulation for the informal sector, and whether the state should regulate matters such as credit, training, technology and markets for informal sector workers and enterprises. The ﬁ_{nal chapter by Haruka Urata and Noriyuki Takayama details}

changes in pension regulation and deregulation in Japan.

Asian nations face a major labour market challenge: how to create a context in which good, sustainable jobs are generated, while preserving existing jobs and protecting workers. The case studies demonstrate that in some contexts labour market regulation hampers employment creation. However, all papers reﬂ_{ect a}

pressing need for effective regulation to protect workers’ welfare. The editors con-clude (p. 31) that the question is not whether there should be more or less regu-lation, but rather ‘what should be the forms of reguregu-lation, in which geographic context, what is the coverage, and what are the instruments of compliance?’.

Graeme Hugo University of Adelaide

BIESApr08.indb 168