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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 SPECIAL ISSUE
To cite this article: (2008) IN THIS SPECIAL ISSUE, Bulletin of Indonesian Economic Studies,
44:1, 5-6, DOI: 10.1080/00074910802001538
To link to this article: http://dx.doi.org/10.1080/00074910802001538
Published online: 16 Jul 2008.
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Bulletin of Indonesian Economic Studies, Vol. 44, No. 1, 2008: 5–6
ISSN 0007-4918 print/ISSN 1472-7234 online/08/010005-2 © 2008 Indonesia Project ANU DOI: 10.1080/00074910802001538
IN THIS SPECIAL ISSUE
Notes from the editor
In their new ‘Survey of recent developments’, Tao Kong and Arief Ramayandi report continued solid economic progress through 2007. Consumer spending was buoyant and investment spending accelerated noticeably in the second half, especially on machinery and equipment; this may signal a reversal of the steady decline of manufacturing output, but also may indicate that fi rms have decided to substitute capital for labour that has been made artifi cially expensive by regu-latory intervention. The 2008 budget fi nally agreed in November adopted a very low world oil price assumption in the face of a much higher, and increasing, actual price at that time. The impact of higher oil prices on the defi cit can easily be accommodated, but energy subsidies will be enormous unless there are signifi cant policy changes. This would represent a wasted opportunity to boost spending in high priority areas such as infrastructure, education and health. Stock market performance in 2007 was strong, but the stability of the rupiah in the second half contrasts with appreciation of other currencies against the dollar; this anomalous behaviour is attributed to the central bank’s large-scale accumulation of foreign exchange reserves. Infl ation in January 2008 was higher than expected, refl ecting rapid increases in world food and energy prices; this increases the probability that monetary policy will be tightened before long. In addition, widespread pre-dictions of a global economic slow-down in 2008 raise the probability of external factors having a negative impact on Indonesian growth.
Progress with democratisation, by contrast, seems less satisfactory, as indicated by the authors’ discussion of recent events involving two relatively new institu-tions, together with the quintessential democratic institution, the parliament. The Business Competition Supervisory Commission has brought down two fi ndings on the rapidly growing mobile telephone industry, both of which are likely to be harmful to consumers, and one of which raises even further doubts for foreign fi rms inclined to invest in Indonesia. The parliament has chosen fi ve new members for appointment to the Anti-Corruption Commission, but the process for select-ing these members—includselect-ing the new chairman—has aroused the concern that this institution is likely to be captured, and its work subverted, by the institutions it is supposed to help reform. Finally, in a case brought by the Anti- Corruption Commission against the governor and other high offi cials of the central bank, the people’s representatives in parliament have themselves been exposed as being susceptible to bribery by government agencies.
The bulk of this issue is devoted to a set of papers focusing on rice policy in Indo-nesia. This Special Issue, brought together by guest editors Neil McCulloch and Peter Timmer, could hardly be more timely. Rice policy is in a state of consider-able uncertainty because of the previous government’s policy of banning imports of rice, with the apparent intention of helping the poor. Following the editors’ overview, Neil McCulloch demonstrates the crucial weakness of the argument
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6 In this issue: notes from the editor
that banning imports would benefi t farmers by raising rice prices domestically: namely, that to equate this with helping the poor is to assume that the poor and rice farmers are one and the same. But many poor people are not rice farmers, and as consumers they lose rather than gain from higher prices—as do the many farm-ers who do not grow rice, or who grow less than they consume.
The policy of heavily restricting rice imports has therefore become controver-sial, although it has yet to be abandoned. One reason for this is that Indonesia was self-suffi cient in rice in the 1980s, albeit only temporarily; many still regard self-suffi ciency as inherently desirable, and see rice imports as confl icting with this objective. The other papers presented here confront these issues. Pantjar Simatupang and Peter Timmer look at the record of rice production in Indonesia over the last half-century, drawing attention to the rapid growth in the late 1970s and early 1980s that led briefl y to self-suffi ciency, but emphasising that this was made possible only by heavy subsidisation during a period when the government was fl ush with oil revenue. Peter Rosner and Neil McCulloch focus on the offi cial sources of data on rice production and consumption in Indonesia, pointing out that these are mutually inconsistent, and therefore cannot provide a reliable basis for decisions about the appropriate level of imports. Paul Dorosh discusses the experience with food price stabilisation and food security in four other countries, providing useful lessons for Indonesia. David Dawe looks into the global market for rice with a view to ascertaining whether Indonesia can rely on this market to supply the modest, but probably increasing, gap between domestic consump-tion and producconsump-tion in the future. Finally, George Fane and Peter Warr turn their attention to the political economy of agricultural protection policy in Indonesia in an attempt to explain the recent departure from the previous policy of keeping domestic prices fairly close to international prices.
It is with great sadness that we mark the passing of Professor Mohammad Sadli, in an obituary contributed by Hal Hill and Thee Kian Wie. Sadli was one of Indo-nesia’s leading intellectuals, who spent periods as an academic, a cabinet minister, a business adviser and an extraordinarily prolifi c commentator on economics and politics. He was part of the ‘Berkeley Mafi a’—the group of economists entrusted by Soeharto with restoring stability and growth to the chaotic economy he inher-ited from his predecessor—although he left the cabinet in 1978, before any of the others. Aside from his contributions to public debate on a wide range of topics, he also strove to nurture the younger generation of Indonesian economists, several of whom are now having a signifi cant impact on policy making.
The book review section deals with studies of Indonesia’s experience with for-eign investment in satellite communications and electricity generation; of how economic policies could be modifi ed so as to help the poor more effectively; of Indonesia’s experience with the way environmental law infl uences the develop-ment process; of the ongoing democratisation of the Indonesian polity; of energy issues in the Southeast Asian region; and fi nally, of recent experience with the regulation and deregulation of labour markets in Asia.
Selamat membaca!
Ross H. McLeod
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