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Survey of recent developments

Damuri, Yose; Day, Creina

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Amid global economic uncertainty and tumbling world oil prices, Indonesia�s economy faces pressure on its external balance and a continued growth slowdown. The government of President Joko Widodo (widely known as Jokowi) has set an agenda of reform, including simpler, faster investment licensing, historic cuts to fuel subsidies to generate fiscal savings, and increased spending on infrastructure. On the political side, Jokowi has had to deal with several political issues coming not only...[Show more]

dc.contributor.authorDamuri, Yose
dc.contributor.authorDay, Creina
dc.date.accessioned2015-12-10T22:20:47Z
dc.identifier.issn0007-4918
dc.identifier.urihttp://hdl.handle.net/1885/52079
dc.description.abstractAmid global economic uncertainty and tumbling world oil prices, Indonesia�s economy faces pressure on its external balance and a continued growth slowdown. The government of President Joko Widodo (widely known as Jokowi) has set an agenda of reform, including simpler, faster investment licensing, historic cuts to fuel subsidies to generate fiscal savings, and increased spending on infrastructure. On the political side, Jokowi has had to deal with several political issues coming not only from parties in opposition but also from parties supporting his government, including during the formation of the new cabinet. We examine the consequences so far of the government�s policy initiatives and of the policymaking process. While some initiatives have been implemented with success, some seem to have been launched without enough preparation, consultation, or empirical evidence, and many have been poorly communicated. Although inflation accelerated after the November fuel-price rise, efforts have been made to contain inflationary expectations and to mitigate the effects on poverty through social-assistance programs. The government took steps to cushion the impending impacts of higher fuel prices on vulnerable households by giving cash handouts of Rp 200,000 per month to 15.5 million disadvantaged families who receive the lowest level of welfare, and by promoting publicly funded education and health care. The partial removal of gasoline subsidies and the introduction of a fixed-subsidy policy for diesel in the revised 2015 budget reduce uncertainty about the fiscal position, although increases in government spending in infrastructure development were announced at the same time. The revised budget for 2015 increases spending on infrastructure development by 63% from the 2014 budget, mostly on projects to improve connectivity on land and at sea�such as the development of toll roads, railways, and ports�and to increase the performance of the agricultural sector. However, the recent drop in international oil prices forced the government to increase its target for tax revenue by 30% on last year�s target, raising concerns about the effect of falling oil prices on the economy. Trade and investment policy reform is important in unlocking Indonesia�s growth potential and improving the country�s current external balance. Jokowi�s administration, however, has been sending mixed signals about its position towards more open policies. The country has yet to recommence several trade negotiations that were postponed in 2014 and is still struggling to meet its commitments under the ASEAN Economic Community. Although improvement in investment procedures and licensing is currently underway, Indonesia needs to adopt a more positive attitude if it is to attract more investment.
dc.description.sponsorshipCopyright Information: © 2014 Indonesia Project ANU
dc.description.sponsorshipCopyright Information: © 2012 Indonesia Project ANU
dc.publisherRoutledge, Taylor & Francis Group
dc.rightsCopyright Information: © 2014 Indonesia Project ANU
dc.rightsCopyright Information: © 2012 Indonesia Project ANU
dc.sourceBulletin of Indonesian Economic Studies
dc.titleSurvey of recent developments
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume51
dc.date.issued2015
local.identifier.absfor140210 - International Economics and International Finance
local.identifier.absfor140202 - Economic Development and Growth
local.identifier.absfor140212 - Macroeconomics (incl. Monetary and Fiscal Theory)
local.identifier.ariespublicationu4430637xPUB238
local.type.statusPublished Version
local.contributor.affiliationDamuri, Yose, Centre for Strategic and International Studies
local.contributor.affiliationDay, Creina, College of Asia and the Pacific, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.issue1
local.bibliographicCitation.startpage3
local.bibliographicCitation.lastpage27
local.identifier.doi10.1080/00074918.2015.1016565
local.identifier.absseo910106 - Income Distribution
local.identifier.absseo910105 - Fiscal Policy
local.identifier.absseo910303 - Trade Policy
dc.date.updated2020-12-27T07:31:25Z
local.identifier.scopusID2-s2.0-84961327214
local.identifier.thomsonID000351927900001
CollectionsANU Research Publications

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