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], [UNIVERSITAS MARITIM RAJA ALI HAJI
TANJUNGPINANG, KEPULAUAN RIAU] Date: 19 January 2016, At: 21:58
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: (2001) BOOK REVIEWS, Bulletin of Indonesian Economic Studies, 37:2, 265-268, DOI: 10.1080/00074910152390937
To link to this article: http://dx.doi.org/10.1080/00074910152390937
Published online: 17 Jun 2010.
Submit your article to this journal
Article views: 18
Thisbookcontains69articleswrittenby the author in the daily newspaper Kompasfrom1995toMay2000.This cov-ersthepre-crisisperiod, thecrisis and thefirstsixmonthsoftheGusDur gov-ernment.Dividedintoeightsections,the volume providesa contemporary his-toryofeconomicissuesanddebatesover acrucialperiodofIndonesia’s develop-ment,as seen through the perspective of a young and thoughtful economic commentator whocanbeconsideredan opinionleaderofhisgeneration.
There are many messages in the book; let me review just a few. The prevailingthemeofthefirstsectionis Indonesia’sreadinesstoopenup,and whatitshoulddotoanticipategreater competition,includingtheroleof for-eign investmentand the need to im-provethequalityofhumanresources. In a M arch 1997 article the author makes a prophetic point about the warning signals from Korea on the importance of combining economic withpoliticalliberalisation.
Inthetwo sectionsonthe pre-crisis period,thereare severalarticlesabout thegovernment’smanagementof infla-tionarypressuresandtherapidincrease in thecurrent account deficit. The au-thorremindsusthatatthetimemany, includingtheWorldBankandtheIMF, concludedthatthecurrentaccount defi-citwasmanageableaslongastherewas capital inflow, especially longer-term foreign dire ct investm ent. He also
warnedofthedangersofover-reliance onmonetarypolicytomanage inflation-arypressures,andtheequalimportance of ensuring thatdistortions inthereal sectorarenotcontributing toinflation. A pointthat should have been made, perhapsintheoverview,wasthe over-relianceonmacromeasures:theauthor, likemostothers,didnotanticipatethe vulnerabilities of the corporate and bankingsectors,whichbecamethemain problemduringthecrisis.
Asfortheonsetofthecrisis,itisclear thatitwasacombination offactors,and theinteraction ofeconomicand politi-calcrises,thatdamagedconfidence.The depreciation oftherupiahinthewake of contagionfrom Thailand inthefew monthsafter1July1997isdiscussedin several articles. The author questions whether the macro respo nses that focusedmainlyoneconomic fundamen-talsweresufficient. Heaskswhether,as in 1986, this crisis will generate the changeneededtoaddressthedistortions in the market—non-tariff barriers, monopolies, corruptionandnepotism— thus restoring an important condition for rupiah stability—the credibility of thegovernment. Withhindsight,sucha response in factdidnotoccur.Former PresidentSoehartobaulkedatthe pres-suretoundertakethesechangesaspart oftheIMFreforms, andthis ledtothe critical standoffs thatworsened confi-dence,prompting massivecapital out-flowsandtheplummetingoftherupiah.
BOOK
REVIEWS
BookReviews 266
In a series of artic les taking us throughthedepthsofthe crisis,orto the ‘bottom of the sea’to usethe au-thor’sterminology,thereisarepeated messageaboutgovernmentcredibility andmisguidedpolicy responses.The government’s responses, and those r ec o m m en d e d by th e I M F— th e budget,raisinginterestratestooverly high levels, and pumping liquidity creditsinto thebanks—wereinitially ineffectiveandunrealistic,andcould not getat therealproblems affecting rupiah stability or government cred-ibility: the continuedexternal conta-gion as the state of other EastAsian economiesworsened,andcapital out-flowscaused bycorporationshaving toserviceandpaytheirshort–term ex-ternaldebt.Theauthoremphasisesin an early 1998 article that the IM F should focus on facilitating the re-structuringofprivatesectordebtwith internationalcreditorsinordertostem capitaloutflows.
The book includesa critical evalua-tionoftheHabibiegovernment, essen-tially concluding that the apparently positive macro indications that the economy was bottoming out and the rupiah stabilising hadlittletodo with the government policies, but were a naturalreboundphenomenon. Thekeys torecovery—ensuringresumptionof in-vestment,managingexternaldebt, the massiveexerciseofrestructuring ofthe bankingsector,andmanagingthesocial costsofunemployment—sawlittle im-provement. The problem remains the credibilityofthegovernment,whichhas beenthoroughlydamagedbythedirect linksofthe then presidentand‘all the president’smen’withtheBankBali scan-dal,andtheinvolvementofthemain in-strumentofbankrestructuring,IBRA.
Aseriesofarticlesinthefinalsection dealswiththefirstsixmonthsoftheGus Durgovernmentandtheprospectsfor
anend tothecrisis.Itissomewhat dis-mayingthatthesamemessagesstillhold almost afullyearlater: thebook’s title, ‘EmergingfromtheCrisis’,mightbetter have ended witha questionmark.The mainmessageisthateconomicrecovery is still a fragile process,andmuch will depend on political stability,economic reformsandcontinuedinternational sup-portand,theauthoradds,quotingfrom theWorldBank,alotofgoodluck.
TheGus Durgovernmenthas expe-rienced waning international support, withdelaysinIMFdisbursementcaused byfailuretoimplementIMFtargets.This has,astheauthorputsit,beenvery frus-trating (menggemaskan). Herepeatedly recommends debt forgiveness to pro-vide the government with breathing space,butfailstoargueaboutthecosts. Thesoberingconclusionis,nevertheless, that there can be noprospect for debt forgiveness ifthegovernmentdoesnot havecredibility.Heidentifiesthesource ofthedelaysinIMFdisbursements:lack ofcoordinationbypoliticallyappointed economic ministersand continued po-litical interference, which has severely impededdecisionmaking;and lackof sanctions for debtors,especiallyinthe outcomesofdebtrestructuring andthe bankruptcycourts.
Inclosing,someminorcriticisms.Since datesareimportantinunderstandingthe contextofthearticles,itwouldhavebeen usefultohavethedateofeacharticleon itsfirstpage,ratherthancompiledatthe end of thebook. The overviews could havebenefitedfromamorethematic pres-entationoftheissues,includingwhatone cansaywithhindsight,andwhatthe im-portantfactorswereinthedevelopments discussed,evenifthesewerenotwritten upasoneoftheauthor’sopinionpieces atthetime.
TheDogisDeadSoThrowItintheRiver tellsanintriguingstoryofthepoliticsof pollution in a developing country. It focusesonwaterpollutionintheBrantas River in East Java, in particular inits lowerreachesasitflowsthrough Indo-nesia’s second largest city, Surabaya, withitsextensiveurban–industrial sat-ellites.Themonographworksthrough aseriesofquestions,includinghowthe issuebecamepolitical,theresponsesof politicians and bureaucratsat several levels of government, the response of industry,theinvolvement ofNGOs,the legalbattlesandthepubliccampaigns. Finallyit askswhy EastJava seemsto have been ‘relatively more successful than other provinces in Indonesia in tacklingwaterpollutionproblems’.
As the story progresses it graphi-cally illustrates the consequences of rapid industrial development with minimal initial attention to environ-ment protection, a sequence oft re-peated in the developing world. In thiscase,itissetagainsttherich back-gro u nd o f Jav an ese cu lture, w ith whichbothauthorsarefamiliar.
To conceive of the environmental stressontheBrantasRiverin Austral-ianterms,onemightthinkofa catch-mentarea aboutthe size of Sydney’s Hawkesbury–Nepean River, but car-ryinga population closer to Austral-ia’s than Sydney’s,with muchheavy industry and intensive agriculture. TheBrantasexperiencesfrequent de-oxygenationfromitsmiddletolower reaches—I recall seeing hardy fish (lele) gulping air from the surface to stayaliveintheSurabayastretch.
The citation of sources isthorough, the primary sources being predomi-nantly local press articles, interviews and NGO papers, with some official documents. There are valuable collec-tionsofsourcematerialsinthetablesof officialresponses,communityresponses andlegalactionsrelatingtowater pol-lution. Maps, photos, newspaper car-toons, a glossary and an extensive bibliography furtherenhancethe docu-ment.Itwouldmakeagoodsourcefor tutorialcasestudies.Theleadtitleofthe book is from a Javanese ditty that the provincial governorusedinopeninga campaigntoreducecommunity dump-ingofrubbishinrivers.
TheDogisDead followsthemodern styleoflettingthestoryspeakforitself. Interpretation bytheauthorsislargely held back until the end.This became ratherheavygoingafterabout40pages. At the risk of caricature, the repeat-ing plot seemed to be: ‘Good NGOs resist evil industry, provoking some public figures to respond nobly and somelessnobly’.Familiaritywiththe scene held myinterest,butthosenot familiar withSurabayaandEastJava may weary. Some interpretive inter-ludes alongthewaymightmay have ‘spicedup’the read.
BookReviews 268
obfuscationsofbureaucracy,thegeneral povertyofscientificandtechnical under-standingoftheissues,andtheinevitable frustrationsonfirsttakinglegalaction.
Butsocietiesmustmoveonfromthis phaseiftheyaretorealiseeffective en-vironmental management.‘Safaris’ of highofficialswiththepressintow mak-ingsurprisevisitstoembarrass recalci-trantfactoryownersmaybethestuffof gettingaprogramstarted,butsuch ac-tionis notsustainable. Iwonderif the authorshaveappreciated this.The sus-tainable gains are made by the hard grindofbuildingadetailedregulatory system, environmentalimpact assess-ment,licensingofindividual factories, routineagencyinspection, enforcement and prosecution. All this requiresasa foundation a scientifically,technically andlegallycompetentworkforceof en-vironmental specialists workingwitha real sense of professionalism in both government and industry. It also re-quiressustainedpubliceducation.The AusAID(AustralianAgencyfor Interna-tionalDevelopment) Pollution Control Implementation (PCI)Project,whichthe authorsdismiss inafootnote,wasone ofseveralprojectsinIndonesiadesigned toassistinbuildingsuchafoundation, albeit not a very glamorous or trail-blazingtask.
Afewminormatters.Sewage pollu-tion from the wholecatchmenthas an impact, notjustthat released immedi-atelyadjacenttotheriverbank.Also,I was intriguedby theconcern over the
environmental assessmentofa five-sto-rey private hospital in the suburb of Darmo Permai, when the impact of buildingseverallarge20-and30-storey apartmentblocksandhotelsinthesame vicinitypassedwithoutmention.
Finally,theexpositiondoesnotseem todemonstrate theauthors’conclusion thatwaterqualitymanagementhasbeen significantlybetterinEastJavathan else-where in Indonesia. There may have beenmoreassertiveofficial pronounce-mentsinEastJava,butbetter environ-mental outcomes have notreallybeen demonstratedhere.
MyfirstreactiononreadingTheDog is Dead was to regret that I did not have it in my hands five years ago, w h e n I jo i n ed th e P C I P ro je c t in Surabaya. It provid es a fascinating perspective of the environmental– politicalsceneinEastJavaover three decades, effectivelythroughthe eyes of the people of theprovince. On re-flection, I wondered about the audi-ence the authors had in view. In an Englishversionitwillbelargelyread by Australians: stud ents of A sian studies, professionals and business-people.Heretheywillencounteronly oneofseveralperspectives.Withthat caveat, I would recommendthe book to anyone interested in environmen-talmanagement indeveloping coun-tries,andinIndonesiainparticular.
