Survey of Recent Developments

Bibliographic Data

ID18949403
AuthorsYose Rizal Damuri (Center for Strategic and International Studies, corresponding author), Creina Day (0000-0002-6144-6597, Australian National University)
Year2015
Volume51
Issue1
Pages3-27
Publication date2015-01-02
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueBulletin of Indonesian Economic Studies (JOURNAL)
Journal identifiersISSN: 0007-4918 • E-ISSN: 1472-7234
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00074918.2015.1016565
OpenAlexW4238552507
LanguageEN
Citations received6
References cited11

Amid global economic uncertainty and tumbling world oil prices, Indonesia s economy \nfaces pressure on its external balance and a continued growth slowdown. The government \nof President Joko Widodo (widely known as Jokowi) has set an agenda of reform, including \nsimpler, faster investment licensing, historic cuts to fuel subsidies to generate fiscal \nsavings, and increased spending on infrastructure. On the political side, Jokowi has had to \ndeal with several political issues coming not only from parties in opposition but also from \nparties supporting his government, including during the formation of the new cabinet. We \nexamine the consequences so far of the government s policy initiatives and of the policymaking \nprocess. While some initiatives have been implemented with success, some seem to \nhave been launched without enough preparation, consultation, or empirical evidence, and \nmany have been poorly communicated. Although inflation accelerated after the November \nfuel-price rise, efforts have been made to contain inflationary expectations and to mitigate \nthe effects on poverty through social-assistance programs. The government took steps to \ncushion the impending impacts of higher fuel prices on vulnerable households by giving \ncash handouts of Rp 200,000 per month to 15.5 million disadvantaged families who receive \nthe lowest level of welfare, and by promoting publicly funded education and health care. \nThe partial removal of gasoline subsidies and the introduction of a fixed-subsidy policy \nfor diesel in the revised 2015 budget reduce uncertainty about the fiscal position, although \nincreases in government spending in infrastructure development were announced at the \nsame time. The revised budget for 2015 increases spending on infrastructure development \nby 63% from the 2014 budget, mostly on projects to improve connectivity on land and \nat sea such as the development of toll roads, railways, and ports and to increase the \nperformance of the agricultural sector. However, the recent drop in international oil prices \nforced the government to increase its target for tax revenue by 30% on last year s target, \nraising concerns about the effect of falling oil prices on the economy. Trade and investment \npolicy reform is important in unlocking Indonesia s growth potential and improving the \ncountry s current external balance. Jokowi s administration, however, has been sending \nmixed signals about its position towards more open policies. The country has yet to recommence \nseveral trade negotiations that were postponed in 2014 and is still struggling to \nmeet its commitments under the ASEAN Economic Community. Although improvement \nin investment procedures and licensing is currently underway, Indonesia needs to adopt a \nmore positive attitude if it is to attract more investment

Cabinet (room) · Disadvantaged · Economic growth · Economic policy · Economics · Government (linguistics) · Government spending · Market economy · Opposition (politics) · Political science · Politics · Public economics · Subsidy · Welfare · Energy, Environment, and Transportation Policies · Global trade and economics · Natural Resources and Economic Development

Tools

Open DOISci-HubOpen Access