00074918.2013.809839

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Bulletin of Indonesian Economic Studies

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

In this issue: notes from the editor

Pierre van der Eng

To cite this article: Pierre van der Eng (2013) In this issue: notes from the editor, Bulletin of Indonesian Economic Studies, 49:2, 137-138, DOI: 10.1080/00074918.2013.809839

To link to this article: http://dx.doi.org/10.1080/00074918.2013.809839

Published online: 26 Jul 2013.

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Bulletin of Indonesian Economic Studies, Vol. 49, No. 2, 2013: 137–8

IN THIS ISSUE

notes from the editor

Vikram Nehru’s ‘Survey of recent developments’ draws attention to Indonesia’s

still luid political situation, in the lead-up to the parliamentary and presidential

elections in April 2014 and July 2014, respectively. It explains that the balance of power between key institutions in the young democracy remains unsettled, and that constitutional checks and balances continue to be tested.

Annualised economic growth exceeded 6%, in a challenging international envi-ronment, yet several developments call for caution about Indonesia’s near-term growth prospects. For example, investment growth continued to slow, and both

the current and the capital accounts of the balance of payments were in deicit,

putting depreciating pressure on the rupiah. Nehru points out that the recent rise

in global interest rates reversed the major capital inlow that Indonesia had expe -rienced up until May, which contributed to a stock-market correction and placed the rupiah under further pressure. Non-residents still have relatively large hold-ings of Indonesian stocks and bonds; the ratios of foreign debt relative to export

earnings and of short-term debt to reserves remain relatively high. With irms

bracing for a possible combination of rising interest and exchange rates, the sur-vey predicts that this pressure may persist for the foreseeable future.

The survey also notes mixed policy developments. The appointment of Chatib

Basri as inance minister, in May, and parliament’s approving the revised budget,

in June, may have reassured markets and investors. The revised budget is based on more realistic assumptions and, in particular, on an increase in the subsidised fuel price, which is likely to prevent a further blowout in the cost of fuel

subsi-dies. Nehru predicts that this achievement should encourage investor conidence

and also free up public funds for urgent infrastructure and social-assistance pro-grams. In contrast, he considers restrictions on imports of horticultural products and beef, and also the draft trade and industry laws, to be part of a new economic

nationalism in Indonesia. The survey concludes with a close look at the eficacy of

Indonesia’s social-assistance programs in the light of the fuel-price increase and the current government’s ambitious poverty-reduction target for 2014.

The three articles that follow Nehru’s survey discuss topical issues. First, Chris Manning and Devanto S. Pratomo ask, ‘Do migrants get stuck in the informal sector?’ – a pertinent question, given the growing numbers of migrant workers in Indonesia who move from rural to urban areas in search of better opportunities for themselves and their families. Using new empirical data from a tailor-made household survey, they test the often heard argument that most migrant workers

and their offspring face great dificulties moving from low-paid, casual jobs in

the informal sector to better-paid, continuing positions in the formal sector. The household survey enables the authors to go beyond the usual formal–informal

dichotomy of the National Labour Force Survey. Manning and Pratomo ind that

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138 In this issue: notes from the editor

long-term migrants tend to gravitate to jobs with regular wages in the small-business sector, whereas recent migrants are more likely to work in the infor-mal sector. The article also argues that distortionary labour-market regulations

appear to discourage formal employment and thus diminish the overall beneits

of migration.

Yogi Vidyattama contributes a signiicant study of a regular theme in BIES: regional inequality in Indonesia. He investigates one of the main challenges of analysing sub-national data: how to account for the possible ‘neighbourhood effect’ (or how one region’s development can encourage development in its neighbouring regions) on the speed of regional convergence. Vidyattama focuses on the period since the start of decentralisation, in 1999, and analyses data at the provincial and district levels for 1999, 2002, 2005 and 2008. Rather than using only regional GDP-per-capita data (which can suffer from distortion caused by large

mining ventures whose income beneits not only the regional economy, and from

not accounting for cross-border transactions between regions), Vidyattama also uses Human Development Index (HDI) numbers in his analysis. After accounting

for the neighbourhood effect, the article inds that the GDP-per-capita data reveal

a degree of divergence, especially because of the economic growth concentrated in Jakarta. The HDI data, in contrast, clearly identify convergence, although its rate decreased over time.

Losina Purnastuti, Paul W. Miller and Ruhul Salim investigate the returns to education, as Indonesia endeavours to reach the United Nations’ Millennium Development Goals as well as meet the national priority, as laid out in the 2010–14 National Medium-Term Development Plan, of improving access to and the qual-ity of schooling. Using income and educational-attainment data from two rounds of the Indonesia Family Life Survey, 1993 and 2007–08, this article investigates whether the rate of return to investment in education is likely to fall as the

coun-try’s education sector expands. The authors ind rates of return that are lower

than those of other studies for Indonesia in earlier years, and also lower than

those of other Asian countries. They also ind that the rates of return for the same

levels of education were generally marginally lower in 2007–08 than in 1993. The rates of return generally remained higher, however, in levels of education beyond junior secondary school, which suggests that investment in such forms of further education, in a growing economy, is likely to remain a paying proposition for young people and their families in Indonesia.

This issue’s collection of recent abstracts of doctoral theses on the Indone-sian economy includes studies of the country’s expanding electric power

sys-tem; informal gold, tin and coal mining; corporate governance, irm performance and irm bribery; and the effects of trade-discriminative arrangements on foreign

direct investment and foreign trade. Our book reviews discuss Indonesia’s eco-nomic history from 1800 to 2010; poverty and social protection; corporate gov-ernance in Indonesian organisations; the effect of the global crisis on East Asia; ASEAN regionalism; the politics of religious identities in Southeast Asia; and the international-relations policies that have shaped the region. Selamat membaca!

Pierre van der Eng