00074918.2011.585943

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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

Ross H. McLeod

To cite this article: Ross H. McLeod (2011) In this issue: notes from the editor, Bulletin of Indonesian Economic Studies, 47:2, 153-154, DOI: 10.1080/00074918.2011.585943 To link to this article: http://dx.doi.org/10.1080/00074918.2011.585943

Published online: 20 Jul 2011.

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Bulletin of Indonesian Economic Studies, Vol. 47, No. 2, 2011: 153–4

IN THIS ISSUE

Notes from the editor

Our latest ‘Survey of recent developments’, contributed by Daniel Suryadarma

and Sudarno Sumarto, emphasises increasing public cynicism towards the par-liament, because it has been both unproductive and tainted by corruption. The authors also note a resurgence of relatively small-scale terrorist bombings. Eco-nomic growth remains healthy, but there is now cause for concern about balance

of payments disequilibrium manifested in high capital inlow and rapid accumu -lation of reserves. Bank Indonesia’s capital is being rapidly depleted as a conse-quence of the negative interest margin between its assets and liabilities – and now also because of the declining value of its foreign assets as the rupiah appreciates. There is renewed concern about fuel subsidies as world oil prices continue to

rise, swelling the budget deicit and wasting vast sums that could be used for

vital investments in infrastructure, education and health. Unwilling to take the

politically dificult decision to raise petrol prices, the government has postponed indeinitely any action to reduce the subsidy, however.

Perhaps partly to hide the highly regressive incidence of its energy subsi-dies, the government is putting considerable emphasis on its efforts to reduce poverty and increase household resilience to shocks. A national team has been established under the guidance of the vice president to coordinate many of these efforts. One area in which much more needs to be done is the education sector: international mathematics, science and reading assessments show that Indonesia lags far behind its neighbours. Regrettably, the government’s attempt to address

educational quality through a teacher certiication system appears to hold little

promise, since it has backed away from any attempt to reward good performance on the part of individual teachers. The survey also describes two programs being implemented by non-government organisations to improve school quality.

With the passing of Jamie Mackie in April 2011 the intellectual and policy com-munity lost a scholar, mentor and advocate who contributed strongly for over half a century to our understanding of Indonesia, Southeast Asia and Australia’s relations with Asia. Chris Manning and John Maxwell describe howMackie pro-vided leadership and inspiration for the development of Indonesian and Asian studies in Australian universities. A long-standing member of the International Advisory Board of this journal, Mackie was also a founder of the Australian National University’s annual Indonesia Update conference in the 1980s.

In the irst of two papers in our economic legislation series, Stephen Magiera focuses on Indonesia’s new law on investment. Law 25/2007 provides a single legislative framework for domestic and foreign investment, and states that all

business sectors are open to investment unless speciied in a presidential regula -tion containing Indonesia’s Investment Negative List (DNI). The nominal pur-pose of the DNI is to provide certainty to investors by documenting restrictions

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154 In this issue: notes from the editor

in a single list – thereby eliminating the power of ministries to set their own rules.

But the author inds that considerable uncertainty remains in practice, arising

particularly from the law’s implementing regulations. Furthermore, various new

ministerial decrees and laws appear to bypass the list, and may relect a trend

towards greater restriction of foreign investment.

Indonesia is blessed with a wealth of natural resources. Kosim Gandataruna

and Kirsty Haymon note that although the Constitution requires that this national wealth should be controlled and used by the state for the greatest possible pros-perity of the people, reliance on it as a catalyst for development was not pursued

actively until 1967, when the incoming Soeharto regime supported signiicant expansion of the mining industry. The Asian inancial crisis and related political

turmoil in 1997–98 interrupted this process, and it was hoped that the new mining law of 2009 would re-invigorate the sector. The authors argue, however, that this

law is unlikely to result in a mining industry that will provide maximum beneit

to the Indonesian people.

The contribution of micro-entrepreneurship to development is taken up by Virginie Vial, whose paper investigates the impact of inancial, human and

social capital on households’ participation in micro-entrepreneurship. She inds that larger urban households with greater inancial and social capital, and whose members have beneited from elementary or secondary education, are more likely

to participate. Corruption at the local parliament and local government levels reduces the number of participants, while higher-quality formal institutions and infrastructure boost entrepreneurship. There was a rise in participation in 2000, but communities that had experienced a loss in well-being because of the Asian

inancial crisis participated less than those that had not.

The paper by Roland Rich examines the design of the Regional Representative Council (DPD) that Indonesia set up in 2002. The author argues that the design

of the DPD relects a compromise between the two then dominant parties and

their leaders. The Indonesian Democratic Party of Struggle wished to preserve the revered People’s Consultative Assembly structure, but without losing the power it then wielded by virtue of being the biggest party in the parliament. The other major party, Golkar, obtained the provincial chamber it sought, but was denied control of it when membership was closed to political parties. The public’s demand for greater electoral power was appeased through the method of election chosen for the DPD. The somewhat curious end result, however, is that the new chamber has been left with little inluence.

Our regular set of abstracts of recently completed PhD dissertations on Indo-nesia includes studies of the impact of decentralisation on health and education service delivery in Indonesia; of decentralisation and inequality in Indonesia and

Colombia; and of Indonesia’s Constitutional Court under its irst chief justice. The

book review section covers works on rural–urban migration in Indonesia and China; the history of a large Indonesian conglomerate; community access to and management of resources under decentralisation; efforts to measure the sustain-ability of economic development; factors driving competitiveness in ASEAN coun-tries and the role of free trade arrangements in ASEAN integration; and lessons from the experience of aid and reconstruction after the 2004 Asian tsunami.

Selamat membaca!

Ross H. McLeod