Welcome to the 50th-anniversary issue of BIES. We reflect here on the journal's analysis of Indonesia's economic development, offering commemorative articles on three prominent themes—foreign direct investment (FDI), trade policy, and infrastructure policy—and their coverage in BIES since 1965. These articles are in addition to the latest instalments in our regular Survey of Recent Developments series and annual Indonesia in Comparative Perspective series, as well as an article on the political economy of the ASEAN–China Free Trade Agreement.
Yuri Sato and Arie Damayanti's survey looks at the challenges faced by the administration of President Joko Widodo (Jokowi) in the first half of 2015. The authors discuss Indonesia's recent sluggish growth and link it to China's economic slowdown, the depreciation of the rupiah, and internal political dynamics. They then examine two programs central to Jokowi's development strategy—one to reduce inequality and the other to establish Indonesia as a global maritime fulcrum—and note that both programs will probably encounter difficult financial conditions.
Ross Garnaut's comparative article analyses Indonesia's macroeconomic management of the resources boom and its aftermath. The author focuses on energy subsidies and mineral leasing, drawing comparisons between Indonesia and Australia as major suppliers of thermal coal to global markets in general and to China and Asia in particular. Garnaut suggests that the end of the boom could prompt a return to broad-based development in Indonesia, but only if policies are in place to improve productivity growth and economy-wide competitiveness.
In the first commemorative article, J. Thomas Lindblad reviews Indonesia's FDI record since the start of the New Order. He argues that there is little new in the current urge in Indonesia to control FDI inflows or in the need to augment domestic savings and facilitate technology transfers. According to the author, the relation between FDI and economic growth in Indonesia has been more complicated than in other Southeast Asian countries. He reveals, however, that the attitude of BIES towards FDI in Indonesia has consistently been positive over the past 50 years.
Mari Pangestu, Sjamsu Rahardja, and Lili Yan Ing, in the second commemorative article, focus on Indonesia's trade policy since 1965. They analyse the growth and structure of international trade in Indonesia, review the policies of different administrations, and discuss the global circumstances facing Indonesia and the evolving rules of many trade agreements. They find that Indonesia's trade policy has often been ambiguous and ineffective; in today's economy, they argue, the government must adopt a more pragmatic and progressive stance towards trade.
The third commemorative article, by Peter McCawley, surveys infrastructure policy in Indonesia from 1965 to 2015. The author provides a comprehensive overview of the main developments in the sector before assessing the main policy and management bottlenecks therein. He points out that Indonesia's infrastructure expansion has been considerable yet insufficient, and that the maintenance of existing facilities also needs attention. Although demand for infrastructure remains high, access is often restricted because of infrastructure shortages, poor quality, or ineffective pricing policies.
In the final article in this issue, Stephen V. Marks analyses the ASEAN–China Free Trade Agreement in the context of the political economy in Indonesia. He uses partial equilibrium modelling to estimate the direct impacts of the agreement on Indonesia and China. He finds that the agreement has contributed to a modest overall trade surplus for Indonesia, although, on a bilateral basis, it has led to a large deficit with China. Marks concludes that cutting regional import tariffs may lead to pressures for more complex and transparent trade policies.
Our abstracts of doctoral theses on the Indonesian economy feature a study of credit constraints, risk sharing, and household welfare. Our book reviews respond to publications on poverty and risk among the Madurese people in parts of East Java and East Kalimantan; developmental variations between the Riau Islands, in Indonesia, and Johor, in Malaysia; the institutionalisation of political parties in democratic Indonesia; food security during the New Order; and the Salim group and its founder's association with Soeharto.
This issue marks our first as the editors of BIES. We thank our predecessor Pierre van der Eng and managing editor Ben Wilson for their tremendous help during the transition. We look forward to working with future authors and referees, as well as with the members of the journal's editorial and international advisory boards. Selamat membaca!