Issue to Watch: Rupiah Hits 11,000: Time to Stimulate
Steep declines in the rupiah (it briefly passed 11,000 on Friday) stock index and overall confidence-echoing earlier drops-finally sent enough shivers within the government for the President and his economic team to say “enough is enough”. Bank Indonesia probably knew its interventions could not last for long against strong headwinds. After a hastily organized meeting […]
Energy Subdies Reduced
President Susilo Bambang Yudhoyono’s government has finally moved to to reduce the ballooning energy subsidies that have absorbed far too much of the State budget for years. In the form of a budget revision, the reduction was approved by Parliament with the President’s coalition (Golkar, PAN, PKB, PPP, PD) holding together except for the PKS […]
Return of Paternalist Capitalism
A commonly held view of Indonesia’s recent, more protectionist policy decisions (i.e. mineral export bans, beef and horticulture import restrictions, mining divestment rules) is that they are motivated by populist politics leading to the 2014 election. Followers of this view say that once the election is over, Indonesian policymaking will somehow shift back to […]
Political Parties and the Next President of Indonesia
Political Parties For many years I have been a member of Columbia University’s Southeast Asia seminar, a fantastic group of scholars, writers, and a few private sector representatives. We recently hosted a young scholar from the Australian National University, Marcus Mietzner, who has lived in Indonesia and closely follows the development of political parties. […]
Outlook for 2013
Indonesia heads into 2013 with continuing questions for foreign companies within an overall atmosphere of solid 6% -6.5% economic growth. The blemishes –if handled well–will not take away from the rosy complexion. Those looking for stimulative reforms that would smooth the path for foreign companies may have to wait until the next Administration or look […]
Heathcare Education For Sale
I recently read a disturbing report that indicates that training for nurses and doctors in Indonesia is for sale. Admitted medical students are reportedly paying up to $2500 above tuition to gain acceptance with students with low grades paying more. Once accepted under-performing students are paying to pass their exams. Other reports indicate that doctors, […]
New Indonesian Mining Divestment Rules
Is Mining Divestment Such a Benefit to Indonesia?Indonesia is following a worldwide trend of pushing out foreign ownership of mining assets. A March 8 Reuters story began “Indonesia will take more of the profits from its vast mineral resources by limiting foreign ownership of mines”. But, is that what necessarily happens when more of the […]
Prof. Widjojo Passes Away
One of Indonesia’s heroes has passed away. Professor Dr. Widjojo Nitisastro, leader of the “Berkely Mafia” (a group of young Indonesian economists educated at UC Berkely in the 1960’s under Ford Foundation aegis, became the economic architect of President Suharto’s New Order. Under his leadership Indonesia’s economy not only averaged 7% growth, but significant segments […]
Regions Demand More
Indonesia’s fourth President Abdurrahman Wahid, (“Gus Dur”) once told a small group in NY that federalism in Indonesia was a “dirty word” but that Indonesia would have to implement it under different name. Gus Dur was referring to the first few years of Indonesia’s independence when it was called the United States of Indonesia and […]
Changes to Capital Minimums/Moody’s Upgrades Indonesia
Background: An inquiry from a member currently in Indonesia exploring a joint venture revealed that the effective minimum capital requirements have recently jumped from $100,000 to $1 million (10 billion rupiah). The Investment Coordinating Board (BKPM) is now interpreting the 2008 Law on SME’s (micro, small and medium enterprises) to classify any foreign investment as […]