2010 Indonesia Study Group
1 December. Chris Manning (ANU). A dramatic turnaround in Indonesia's job situation: what's going on?
People have speculated about the possible effect of new, quite tight labour regulations on jobs in the early years of reformasi. One hypothesis is that firms would be reluctant to fire labour, and would also cut back on new hires: young people would be disproportionately affected. An alternative proposition stresses a possible shift to more casual employment contracts, as firms dodged the more onerous regulations. I attempt a preliminary examination of these two hypotheses, looking at labour force and employment data over the period 2001-2009. The first hypothesis seems to be confirmed for the first half of the decade but not the second. From 2001-2006, Indonesia's unemployment rate rose sharply, especially among females and youth, suggesting ‘jobless growth’. More recently, however, employment has picked up and unemployment rates fallen. Significant gains were registered by casual workers, especially among females in manufacturing. Many firms seem to have got around the restrictive legislation, providing for greater flexibility. However there may be damaging effects for human capital, income distribution, and gender equity.
18 November. Teguh Surya (WALHI - Indonesian Environmental Forum (Friends of the Earth Indonesia)), S Muliadi (ARPAG - Aliansi Rakyat Pengelola Gambut (Alliance of Peatland Users)) & Arie Rompas (WALHI). Implications of Illegal Logging for Deforestation and Forest Degradation
For decades, Indonesian forests have been unsustainably logged, largely by illegal loggers aided by the military. Illegal logging is so serious an issue that President Susilo Bambang Yudhoyono (SBY) has assigned the country’s Mafia Eradication Task Force to tackle this problem. Despite SBY’s strong commitment and determination, illegal logging in Indonesia is still a major issue today.
Earlier this year, Norway pledged US$1 billion to help save Indonesia’s rainforests as part of its commitment to fast financing of projects to reduce emissions from deforestation and forest degradation (REDD+). Last year SBY said the country would cut emissions by 26 % from projected levels by 2020, and up to 41 % if industrialised countries contribute funds. More than 80 % of Indonesia’s emissions result from deforestation and degradation of carbon-rich ecosystems like peatlands.
Prior to Norway’s announcement, Australia funded two pilot REDD+ projects at A$30 million each in Indonesia under the Australia-Indonesia Forest Carbon Partnership with the aim to trial an innovative, market-oriented approach to financing and implementing measures for REDD in Central Kalimantan, Indonesia.
Teguh Surya, Head of Campaigns and Advocacy, WALHI (Indonesian Environmental Forum - Friends of the Earth Indonesia). WALHI is the largest and oldest environmental advocacy NGO in Indonesia with more than 450 local NGO members working on issues including conflict over access to natural resources, indigenous rights, pollution, deforestation/illegal logging, climate change, and biodiversity conservation.
SE Muliadi, Secretary General, ARPAG (Aliansi Rakyat Pengelola Gambut ’ Alliance of Peatland Users); established in 2007 comprising 7000 strong collective of farmers, fisher folks, rattan handcrafters and rubber collectors.
Arie Rompas is the Executive Director of WALHI in Central Kalimantan, working on environmental and social justice issues particularly in the ex-Mega Rice Project, site of the Australian funded REDD project.
10 November. Peter McCawley (Visiting Fellow, Indonesia Project, ANU). Next Steps for Aceh - What Happens When the Donors Go Home?
A considerable amount of aid was provided ’ by both the Indonesian Government as well as international donors – to tsunami-survivor communities in Aceh after the Boxing Day tsunami of December 2004. The immediate focus of aid work following the disaster was naturally on the urgent needs of survivors. But longer-term issues are relevant as well. In recent years, there has been a growing body of literature which considers the long-term impact of large-scale disaster aid. The central issue is: Does large scale disaster aid help promote development in the long term? Or, as a recent Swedish-supported study of tsunami aid in Asia asked, is aid just A ripple in development? Aceh provides a key case study for the consideration of these issues. Six year after the tsunami, where is Aceh going? Has aid made a lasting difference? And what are the lessons for other countries (Haiti after the earthquake, or Pakistan after the floods) from the experiences in Aceh?
27 October. Dennis Trewin (Statistical Consultant. Former Head of Australian Bureau of Statistics). Statistical development in Indonesia
With the assistance of a World Bank loan, the Indonesian Statistical System will go through a major upgrade commencing in 2011. I had been working with the World Bank and the Indonesian Statistical Office (BPS) on the preparations for this very significant project, known as CERDAS. The talk outlined the planned improvements in Indonesian statistics and the underlying strategies to enable this to happen. A project of this size provides major management challenges, both to ensure developments proceed satisfactorily and that the improvements are maintained during the production phase. The talk also discussed these management challenges and the changes BPS will need to make to address them.
13 October. Robert Cribb (School of Culture, Language and History, ANU). Digital Atlas of Indonesian History
29 September. Thee Kian Wie (Indonesian Institutes of Sciences, Jakarta). Personal Recollections of Indonesia's First Two Decades of Independence - The issue of Changing Identity
15 September. Anne Booth (The School of Oriental and African Studies, University of London). Varieties of Exploitation and Their Consequences: Indonesia and the Democratic Republic of the Congo Compared
Both the Belgian Congo (Zaire, now the Democratic Republic of the Congo) and the Netherlands Indies (Indonesia) had a troubled passage to independence, and the immediate post-independence era in both countries was marked by considerable political and economic turmoil. By the late 1960s, two strong leaders, Mobutu and Suharto, had emerged who appeared to have much in common. But while Indonesia’s economic growth since 1970 has been quite robust, the Congo has seen a growth collapse which is extraordinary even by African standards. The paper suggests some explanations for this divergence in terms of policies pursued by the Dutch and Belgian colonial regimes, and by post-independence governments in both countries.
8 September. Amrih Widodo (School of Culture, History and Language, ANU). Samin vs Semen: Media, Performance and Technology in Environmental and Peasant Movement in Central Java
After incessant confrontations with local peasant communities and environmental activists for more than two years, in mid-2009 Pati District government announced the cancellation of the construction of a new cement factory with a capacity of 2.5 million tons per year in South Pati, Central Java. Both the government and Semen Gresik, Indonesia’s biggest cement manufacturer, never expected that the small indigenous community with historical origin to Samin movement had the vision, organisation skills, resources and endurance to resist the plan. This paper will investigate the dynamics of the development of the movement from a small locally based indigenous community mostly concerned with issues regarding identity representation and leave-me-alone ideological position to a more complex new social movement tackling aggressively social, political, cultural and environmental problems. The discussion focused on the strategies that the movement has employed in their struggle, particularly in the ways they have embraced and utilized modern forms of cultural performance, media and communication technology while maintaining the simple and authentic images and nuances of an indigenous community. The paper will also draw some implications on local and national politics, highlighting the dynamics of power relations at the grass-root level in the context of the last national general election (Pemilu) in 2009 and the coming local election of district head (Pilkada) in 2011.
25 August. Kate Mcgregor (School of Historical Studies, University of Melbourne). Reflections on Efforts to Address the Violence of 1965-66 in Indonesia
In this paper I will reflect on the key findings of my research into efforts in the last twelve years to address the anti-communist violence of 1965-68 in Indonesia. I will survey the organisations and people involved in attempting to address this past such as YPKP, YPKP 65, LPKP, SEKBER 65, ELSAM, Kontras, the Syarikat/Lakpesdam Network, ISSI, Shoe for Peace, Putu Oka Sukanta, Abdurrahman Wahid, Ribka Tjiptaning Proletariyati and the National Commission for Human Rights. I will probe the different motives behind these efforts and canvass the varied approaches to addressing this past including legal advocacy, research into the violence, mass grave identification, new historical representations of this period in memoirs, films and other formats and efforts aimed at rapprochement between survivors of the violence and ‘implicated’ communities (Morris-Suzuki 2005). I will also assess what has been achieved and the broader responses to these efforts. Finally I will reflect on what comparative insights this case study offers us into how societies deal with traumatic pasts.
18 August. Iwu Utomo, Peter McDonald, Terence Hull, Ariane Utomo, Anna Reimondos (ADSRI, ANU). The 2009/2010 Greater Jakarta Transition to Adulthood Survey
Young adults are defined as those aged 20-34 years old. Ronald Rindfuss called this a ‘demographically dense phase’, because this is the time when a large number of crucial demographic actions occur. Young adults are faced with many decisions in their life regarding education, employment, relationship and marriage, sexual intimacy, family formation and family planning and living arrangements. The density of events during the young people years is even more dramatic during periods of rapid social change because ‘young people are typically the engines of social change’. Nevertheless young adults are often forgotten as Indonesian policy makers continue to see them as dependent children even as they reach ages traditionally associated with autonomy. In contrast, in developed countries, policy discussions have long been informed by studies on transition to adulthood including some based on sophisticated longitudinal surveys.
This study is the first comprehensive survey in Indonesia focusing at young adults’ life including their political and religious affiliations, their voting behaviours, gender aspiration, health and wellbeing and risky health behaviour. Parental background economic status as well as political and voting behaviour our also inclused in the survey. We named the survey ‘The 2009/2010 Greater Jakarta Transition to Adulthood Survey’ of 3006 representative samples collected through a multi stage PPS random sampling in Jakarta, Bekasi and Tanggerang. In this presentation, preliminary results on education, employment, gender norms, motherhood and fatherhood, exposure to media and political affiliation were presented.
4 August. Professor Terence Hull (Professor of Population, Health and Development, ADSRI) & John C. Caldwell (National Centre for Epidemiology and Population Health, ANU). Observations of the May-June 2010 Population Census of Indonesia: Be Prepared for Some Surprises
Young adults are defined as those aged 20-34 years old. Ronald Rindfuss called this a ‘demographically dense phase’, because this is the time when a large number of crucial demographic actions occur. Young adults are faced with many decisions in their life regarding education, employment, relationship and marriage, sexual intimacy, family formation and family planning and living arrangements. The density of events during the young people years is even more dramatic during periods of rapid social change because ‘young people are typically the engines of social change’. Nevertheless young adults are often forgotten as Indonesian policy makers continue to see them as dependent children even as they reach ages traditionally associated with autonomy. In contrast, in developed countries, policy discussions have long been informed by studies on transition to adulthood including some based on sophisticated longitudinal surveys.
This study is the first comprehensive survey in Indonesia focusing at young adults’ life including their political and religious affiliations, their voting behaviours, gender aspiration, health and wellbeing and risky health behaviour. Parental background economic status as well as political and voting behaviour our also inclused in the survey. We named the survey ‘The 2009/2010 Greater Jakarta Transition to Adulthood Survey’ of 3006 representative samples collected through a multi stage PPS random sampling in Jakarta, Bekasi and Tanggerang. In this presentation, preliminary results on education, employment, gender norms, motherhood and fatherhood, exposure to media and political affiliation were presented.
28 July. Maria Platt (Australian Research Centre in Sex Health and Society, La Trobe University). "Men behaving badly": Women's Responses to Men's Extramarital Relationships in Teduk, Lombok
In the village of Teduk, located on the eastern Indonesian island of Lombok, the term pacaran lagi is used to describe to men’s extramarital relationships. Pacaran lagi constitutes a frequent disruption to marital relationships in Teduk and is a common precursor to divorce. While previous studies of marriage in Lombok have noted the occurrence of men’s extramarital relationships, there has been little in-depth exploration of the phenomenon and its effect on families.
This paper, based on 15 months of fieldwork in Teduk, argues that pacaran lagi is widely tolerated by the community. The practice of polygamy, according to local Islam allows men to take up to four wives simultaneously. This in part legitimises pacaran lagi. In stark contrast, anything other than monogamy for women is condemned.
Aside from promoting a high degree of gender asymmetry and perpetuating sexual double standards, the practice causes a great deal of economic and emotional hardship for women and their families. As a result, women whose husbands engage in pacaran lagi regularly undertake additional work to support their families’ already meagre income. Ironically, while men often use religion to justify pacaran lagi, the practice frequently leads to a subversion of Islamically prescribed gender roles. These gender ideals tend to uphold men as key economic providers while women are responsible for child care and household management.
This paper highlights women’s experiences of pacaran lagi and demonstrates that women adopt a wide range of responses when negotiating this disturbance to their marriages.
21 July. Greg Fealy (Dept of Political and Social Change/School of Culture, History and Language). Front Stage with the Prosperous Justice Party: Making Sense of the PKS' June National Conference
The Prosperous Justice Party (PKS) held its five-yearly national conference (munas) in mid-June 2010. Numerous aspects of the munas attracted controversy. The venue was Jakarta’s most expensive hotel, the Ritz Carlton at Pacific Place, and the cost of the conference reportedly exceeded one million dollars. The US and Australian ambassadors were invited to address the 4000 delegates, as also were a number of non-Muslim Indonesian and foreign intellectuals. The main theme of the conference was PKS’ political openness. The party’s new slogan ‘PKS for All’ (seemingly lifted from the Malaysian Islamist party, PAS) was announced with great fanfare at a Hollywood-style closing ceremony.
Despite its slickly stage-managed format, the PKS munas abounded with contradictions. While the party expounded its openness, it also went to great lengths to maintain the secrecy of its internal dynamics and discussions. Indeed, of all the major party conferences held since last year’s elections, this was the most ‘closed’. The five-star setting of the munas and prominence of foriegn speakers sat oddly with the party’s professed ‘concern’ for ordinary Indonesians. In this seminar, I explored some of these contradictions and analyse the reasons for the disjunction between ‘front stage’ and ‘back stage’ PKS.
6 July. Siswo Pramono (Diplomat (Minister Counsellor), researcher at the Policy Planning Agency under the Foreign Ministry, Republic of Indonesia). Indonesian Foreign Policy, Democracy, and Religiousity
The purpose of the discussion is to reveal the underlying value of Indonesian soft power diplomacy. Soft power is the ability of a state to become ‘attractive’ so that it can ‘co-opt’ others. And the main resources of soft power are foreign policy, political culture, and values. Sept. 11 attacks intensified the ‘clash’ between the West and the Islamic world. Indonesia, with a large Muslim population, itself became the victim of terrorist attack and was dragged into the full fight against terrorism. Indonesian foreign policy can help mediate the ‘clash’ between the West and Islamic world, in the context of the domestic need for more comprehensive security, and the international expectations in regard to the newly democratic state. Its soft power diplomacy rests on two main resources. Its very young democracy, and Indonesia’s Islamic values within a multicultural state, striving for a pluralist society. These pose major challenges for the conduct of soft power diplomacy. One example is the emergence of Indonesia as the third largest democracy with the largest Muslim population, demonstrating that Islam can go hand in hand with democracy and modernity. How credible is this assertion? What should be the main ‘ingredients’, if not the values underlying Indonesia’s soft power diplomacy?
30 June. Edward Aspinall (Department of Political and Social Change, ANU). Democratization and the Weakening of Ethnic Politics in Indonesia
Democratization produced an image of Indonesia as a country afflicted by contentious and sometimes violent ethnic politics. After the resignation of President Suharto in 1998, Indonesia went from being a highly centralized polity that repressed ethnonationalist mobilization, to one that was highly decentralized and affected by severe communal and separatist violence in several provinces. Even in parts of the country where ethnic violence did not occur, there were various forms of ethnic political mobilization, for example movements aiming at the creation of new provinces or districts, or aiming at preferential economic treatment for locals. However, it increasingly appears that this new prominence of ethnic politics was a transitional phenomenon. With a new democratic system settling into place, ethnicity is losing political salience. In most of Indonesia, ethnic affiliation matters surprisingly little in everyday politics, and ethnic symbols are either rarely mobilized in the political domain, or are mobilized only weakly. Moreover, where ethnicity does feature, it is frequently used in crudely instrumentalist ways, with participants knowing that distribution of patronage is the glue that holds ethnic politics together. We see relatively little of the deep disputes about ethnohistory, language or cultural policy that feature prominently in more ethnicized polities. This presentation demonstrated this overall argument by way of proposing nine general theses about the nature of ethnic politics in contemporary Indonesia.
16 June. Adrian Hayes (Australian Demographic and Social Research Institute (ADSRI), ANU). What's Ailing the Health Sector in Indonesia? Public Health and Private Practice During Decentralization and Reformasi
Major investments in the health sector during the last 20 years have not resulted in the expected improvements in population health. To try and understand why, we looked at the changing roles of government, private sector and community in the delivery of health services. We identified a range of governance issues, few of which are receiving serious attention from policymakers in Jakarta.
10 June. Jusuf Kalla (former Vice President of the Republic of Indonesia). Making Good Economic and Social Policy in a Democratic Indonesia: An Insider's Perspective
9 June. Mark Baird. Recent Economic and Political Developments in Indonesia
Mark Baird is the joint author, with Monica Wihardja, of the forthcoming Survey of Recent Developments, to be published in the August issue of the Bulletin of Indonesian Economic Studies. He presented their preliminary findings in this meeting.
2 June. John McCarthy & Piers Gillespie. Understanding Oil Palm Problems in Indonesia: Policy Models, State-Regime Interests and Agribusiness Risk
The production of boom crops, such as oil palm, is associated with critical environmental and social problems across the developing world. Over recent years international policy approaches ’ such as the Roundtable on Sustainable Oil Palm and the Equator Principles ’ have emerged across several commodity export sectors in developing countries to provide the basis for addressing such problems. Nonetheless, in the last months, UNULLever, the world’s largest buyer of palm oil, blacklisted two major Indonesian members of the Roundtable on Sustainable Palm Oil (RSPO) for engaging in ‘unsustainable’ practices. Nestle, the world’s biggest food and beverage company, announced it would also withdraw from another key Indonesian supplier. Earlier, in response to complaints, the World Bank Group ordered a complete moratorium on investment in palm oil. Coverage of these controversies tends to focus on specific regulatory problems without systematically addressing deeper causal factors. In contrast, we discussed how particular policy and business models embedded in local socio-political and economic relations lead to the governmental patterns associated with these outcomes. Based on the analysis of oil palm developments in three sub-districts in Indonesia, we discussed the emergence of current state-society-agribusiness configurations in terms of the workings of state-regime interests and agribusiness attempts to handle risk, considering some of the policy options that might support better outcomes.
26 May. John Maxwell. From Academic Biography to Feature Film: Some Personal Reflections on the Making of the Indonesian Movie
In 1997 I completed a biography of Soe Hok-gie, a young Indonesian political activist and intellectual of the 1960s. In 2004 the Indonesian film company Miles Films released the movie ‘Gie’ based on the life of SHG. My talk drew some links between these two events and hopefully provide a few insights into an ‘industry’ that may be foreign territory for many people.
21 May. John Roembiak. Special Autonomy for Papua: Challenges Faced and Progress Achieved in Implementing Affirmative Action through Legal Intervention
It has been recognized that the administration and development of the Papua Province has not yet fulfilled the sense of justice, the minimum level of welfare, and the respect for Human Rights for the whole Papua people. As a result, a special policy is required within the Unitary State of the Republic of Indonesia. The Law number 21 of the Republic of Indonesia entitles Special Autonomy for the Province of Papua has been introduced since 2001 in order to minimize the gaps between the Papua Province and other regions in Indonesia, to improve the living standard of Papua people, and to give wider opportunities to the natives of the Papua Province. Nevertheless, the implementation of this law requires a substantial set of operating regulations such as Local Regulations at Provincial Level (Peraturan Daerah Propinsi or PERDASI) and Regulations for Special Regions (Peraturan Daerah Khusus or PERDASUS). For example, in February 2010, the Constitutional Court has passed an amendment of the Special Autonomy law to allocate 11 additional chairs in the Papua Legislative Council (DPRP) especially for Papua indigenous representatives. However, the appointment of those indigenous representatives needs to be stipulated by the Regulations for Special Regions (PERDASUS). Another set of PERDASI and PERDASUS are also required to execute the Special Autonomy Law for Papua in terms of protecting indigenous land rights.
Mr. John Roembiak, the Head of the Legal Bureau of the Papuan Provincial Government, defined to what extent the affirmative action (special policy) mandated by the Law 21 has been and will be implemented as concrete steps to promote the protection and fulfilment of the basic human rights of Papuans. He also described what kind of cooperation needed between the central government and Papuan provincial government in formulating PERDASI and PERDASUS; and who will be in charge of framing PERDASI and PERDASUS at the provincial level and delineate their mechanisms.
19 May. Ross McLeod (Indonesia Project, Economics Division, RSPAS, ANU). Economic and Political Perspectives on the Bank Century Case
In November 2008, a committee headed by the finance minister, Sri Mulyani Indrawati, and which also included the then governor of the central bank, Boediono, decided to bail out Bank Century, at what turned out to be far greater cost to the general public than first expected. This was a logical consequence of measures taken in the wake of the Asian financial crisis in the late 1990s, when scores of banks failed at a cost of about half of annual GDP. These measures were intended to prevent a recurrence of such an episode, but I argued that they were ill-designed. Soon after the re-election of SBY’who had chosen the former governor as his running mate, and whose former coordinating minister for peoples’ welfare, Aburizal Bakrie, had by now become chairman of the Golkar Party’Golkar and several other parties that were supposedly partners in the newly reconstituted rainbow coalition cabinet rediscovered this bailout, and sought to turn it against the president, the vice president and the minister of finance. In this presentation I addressed both economic and political aspects of the ensuing disruption to what had seemed a benign political environment.
12 May. John Roembiak and Hafid Abbas. Views on Human Rights and the Rule of Law in Papua
6 May. Muhammad Chatib Basri (Faculty of Economics, University of Indonesia (LEPMFEUI)). The Indonesian Economy amidst the Global Crisis - Good Policy and Good Luck
28 April. Julian Millie (Centre of Southeast Asian Studies and the School of Political Inquiry, Monash University). Generic Variation in Oral Dakwah: Preaching Styles and Difference in Bandung's Islamic Sphere
In his research about Islamic oratory in Bandung, Julian Millie has attempted to understand the variety of preaching styles found in that city, along with their broader social importance for its Islamic communities. In this presentation, he will approach generic variation as a key variable in two preaching contexts that are frequently created by Bandung’s Islamic constituencies. Generic variation manifests in the mobilisation by preachers of multiple voices, languages, language varieties, registers and performance genres. Julian Millie contrasted the generic variation appearing in two contexts: the performances of a highly popular preacher in constant demand for celebratory events such as weddings and circumcisions; and the routine preaching event known as Pengajian Jihad Ahad, which is held every Saturday morning at Bandung’s Viaduct mosque by the organisation Persatuan Islam (The Islamic Union). The former context is rich in generic variation, while the latter resists such strategies. This contrast enables an insight into the differing constructions of oral dakwah produced by Bandung’s Islamic publics and counter-publics.
13 April. Sidney Jones (International Crisis Group, Jakarta). Al-Qaedah in Aceh
12 April. Yon Machmudi (Lecturer in Arabic Studies, Faculty of Humanities, University of Indonesia). Intellectuals or Housemaids?
Islam was once seen as synonymous with Arabs and their culture, some 60% of Muslims now live in Asia and their religio-cultural expressions reflect local traditions. Southeast Asian Islam draws heavily on Malay cultural and religious influences. Arguably, Indonesia Islam is more representative of the interests of the broader Islamic world than Arab Muslims in the Middle East. Indonesian Muslim leaders want their country to play a larger role in the Muslim world, including helping to resolve conflicts in the Middle East. Recent Australian and US governments have also advocated a greater role for Indonesia.
Indonesia has not been recognized by its fellow Muslims in the Middle East as representing a major voice of Islam. This is because of negative perceptions that developed about Indonesia in the Arab world. Indonesia as the land of the housemaids, reflecting the fact that Indonesian foreign workers staff the houses of many well-to-do families in the Middle East. Thus, they have a low opinion of Indonesians and see them as incapable to contributing to global Islamic politics and diplomacy. he 18th century till the mid-20th century, Indonesian scholars were highly respected in the Holy Land and held senior teaching and clerical positions. They were acknowledged as eminent ulama rather than domestic laborers, as is the case now. In this seminar, I described the changing perceptions of Indonesians in the Middle East and analyze how this shapes Arab relations with Indonesia.
24 March. Douglas Miles (Anthropology, JCU, Australia; CIU, Ascona, Switzerland). Kaja Trumps Kelod: Hindu-Balinese Orientation in Defiance of Suharto's Indonesia on Independence Day during Ramadan (1978)
Douglas Miles explained Hindu-Balinese’s orientation in defiance of Suharto’s Indonesia by using Kaja versus Kelod.
10 March. Nicholas Parsons and Marcus Mietzner (School of Culture, History and Language, ANU). Sharia By-Laws in Indonesia: A Legal and Political Analysis
Nicholas Parsons and Marcus Mietzner explained about the sharia by-laws in Indonesia from the legal and political perspectives.
2 March. Susan Olivia (University of Melbourne). Spatial Autocorrelation and Household Choices in Rural Indonesia
Many household choices may be correlated with choices made by nearby households, especially in developing countries where residential location strongly affects economic activity. Such effects could reflect either spatial errors which arise because nearby locations have unobserved factors in common (e.g. infrastructure quality) or spatial lags because of interactions between households and their neighbours (e.g., learning about new technology, coordination problems when switching from farm to non-farm production). Survey data usually do not give precise measures of location so it is not possible to fully account for this spatial autocorrelation. In this paper we use data from Indonesia that allow exact distances between each household to be measured. These distances are used to estimate spatial effects in equations for the non-farm enterprise share of household incomes so that any bias and inferential errors from ignoring such effects can be assessed.
16 February. Maria Monica Wihardja (VF Indonesia Project & PhD graduate from Cornell). Endogenous Institutions in Indonesia
We study how endogeneity between welfare and institutions recommends the efficacy of subtle institutional reforms that must be exogenous. We use evidence from a field study conducted in five Indonesian districts, and build a model that illustrates how the initial socioeconomic conditions and quality of institutions generate certain institutional attributes, such as a particular level of local capture (that is, gaining of influence over institutions, and hence over policy, by local elites), local leadership and participation. By endogenising the degree of local capture, we show how cooperation between local leaders and local elites could affect welfare positively or negatively, depending on initial socio-economic conditions. These institutional attributes, which evolve with changing welfare, create self-reinforcing processes in the long run that could be vicious, virtuous or neutral. The policy question we investigate is how to break a vicious cycle between low welfare and low institutional quality.
We argue that institutional reform must be welfare based and context based to allow adjustments to different institutional complexes, including cultural beliefs, social norms and capacities for reform. Reform must be exogenous and multidimensional, requiring welfare and institutions to be mutually reinforcing. In the context of post-decentralisation Indonesia, any multi-dimensional institutional reform must include not only policies to strengthen local institutions, but also policies to increase welfare.
10 February. Arianto (Aco) Patunru (Institute for Economic and Social Research (LPEM), University of Indonesia). Recent Economic and Political Developments in Indonesia
Recent political developments cast dark shadows on public sector reforms. President Yudhoyono’s passive stance in the face of attacks on the Anti-Corruption Commission (KPK) and in relation to the Bank Century bailout debacle has played into the hands of opposition parties and anti-reform elites, calling into question the wisdom of his ‘Rainbow Coalition’ cabinet strategy. The long silence of SBY has weakened his approval rating and trust in his current reform agenda. Although the government claims to have successfully completed its ‘100-day action program’, there is little doubt that critical public sector reforms will require more decisive efforts than hitherto. SBY’s moves over the next few weeks will set the path for the upcoming administration: they will foreshadow whether the government is likely to? muddle through? or pursue a meaningful reform agenda.
Dr Patunru was in the process of preparing the Survey of Recent Developments for the April issue of the Bulletin of Indonesian Economic Studies, jointly with recent ANU PhD graduate Dr Christian von Luebke. He discussed recent economic developments against the backdrop of moves to weaken the anti-corruption effort and attacks on SBY’s two key reformers: Finance Minister Sri Mulyani and Vice President Boediono.