This issue of BIES offers a diverse range of studies related to current issues in Indonesia’s economy. The ‘Survey of Recent Developments’, by Yose R. Damuri and Creina Day, takes stock of Indonesia’s first 100 days under President Joko Widodo (Jokowi) and finds a mix of successful reforms and good intentions, but also controversy. The historic cuts to fuel subsidies, for example, will shore up Indonesia’s fiscal position, but Jokowi’s visions of Indonesia as a ‘global maritime axis’ seem to be just that. Indeed, it was the minister of maritime affairs who joined the ministers of transportation and trade in introducing controversial policies that appear to have detracted from the broader reform agenda. The survey authors also assess Indonesia’s macro performance and report on the new government’s social-assistance programs and its inward trade and investment policy.
Trade policy also features in Joanne C. Gaskell’s article on palm-oil consumption. Gaskell points to the fast-growing domestic consumption of palm oil. She finds that Indonesia’s growing appetite for palm oil cannot be explained merely by increases in population and incomes. Rather, she points to a large-scale switch in consumption away from the previously ubiquitous coconut oil, as a consequence of government policies related to technology, pricing, distribution, and trade, as well as a rapid expansion of land under oil palm and a reduction in smallholder competitiveness in coconut production. Gaskell’s modelling suggests that Indonesia’s palm-oil consumption will more than double between 2010 and 2035.
Kaoru Natsuda, Kozo Otsuka, and John Thoburn consider the rapid rise in Indonesian motor-vehicle output and foreign direct investment in the automotive industry since the 1990s. Drawing on interviews with Japanese automotive firms and Indonesian trade associations and ministries, among others, they contrast the modest role of Indonesian-owned supplier companies with the situation in Thailand. Although foreign suppliers offer opportunities for local suppliers to upgrade their capabilities, the authors conclude that local producers often have little chance of becoming first-tier suppliers themselves. Despite general concerns about the competitiveness of Indonesian manufacturers, the authors find that Japanese automotive investors are optimistic about Indonesia’s export potential.
Looking at exports more broadly, Kym Anderson and Anna Strutt suggest that Indonesia could increase its share of world exports by 80% by 2030, depending, for one, on levels of economic growth in China and India. They conclude this by modelling Indonesia’s trade patterns to 2020 and 2030 under different trade and policy scenarios. Subsequently, they use their model to assess the potential impacts by 2020 of three policy issues. One is an increase in global rice exports, following the opening of Myanmar. This will impact only marginally on Indonesia, but its rice self-sufficiency is likely to decrease slightly. This could be significant at a time when the president has committed his administration to achieving rice self-sufficiency. The authors’ modelling predicts that the ban on unprocessed commodity exports will lower the value of Indonesia’s exports, and that the intention to achieve self-sufficiency in a range of food commodities through trade protection will have consequences that reduce GDP as well as household welfare and the consumption of farm products.
Kitae Sohn uses data from the 2007 round of the Indonesia Family Life Survey to analyse gender discrimination in earnings. He finds that women, whether in paid work or self-employment, earned about 30% less than men. Differences in factors that can be accounted for, such as educational attainment, types of jobs, and sectors of employment, explain only some of the income gap. The remainder could well be the result of discrimination against women. More specifically, Sohn suggests that the glass-ceiling effect is not strong in Indonesia, but rather that discrimination against women across the range of income earners is pervasive, more so for the self-employed than for paid employees.
In the final article in this issue, Richard W. Carney and Natasha Hamilton-Hart ask what happened to business groups and the high concentration of company ownership in Indonesia after Soeharto. They dissect patterns of corporate ownership in Indonesia in 1996 and 2008 and find that ownership patterns and business–government relations across these years exhibited continuities as well as notable changes. For example, family ownership remained prevalent, but the identities of several of the families changed. By 2008, state-owned enterprises were more prominent, and foreign governments owned a greater share of Indonesia’s largest corporations than they did in 1996.
Our abstracts of doctoral theses on the Indonesian economy include a study of the relation between public expenditure management and inequalities in health outcomes in Bengkulu province, and a study of regional income disparities, particularly the contribution of spatial inequality to overall inequality and to social and political stability. Our book reviews respond to an analysis of East Asian development between 1960 and 2010, a collaborative report on maternal and neonatal mortality in Indonesia, and a history of union organisation in urban Java in the 1920s and 1930s.
In 2015 we celebrate the fact that BIES has been published continuously for over 50 years—a feather in the cap of the Indonesia Project. At this high point I bid my farewell as editor of the journal. During the last three years, I have been proud of being involved in producing the Indonesia Project’s ‘four-monthly miracle’ (as founding editor Heinz Arndt often called it), which since 1965 has, without pause, brought readers some of the best and most robust independent analysis of Indonesia’s economy. As part of this year’s celebrations, the August 2015 issue, which will be edited by a new team of editors comprising Blane Lewis, Arianto Patunru, and Robert Sparrow, will reflect on the 50 years of analysis of key issues in Indonesia’s economic development. Selamat membaca!
Pierre van der Eng