2015 Indonesia Study Group
9 December. Blane Lewis (ANU). Decentralizing to villages in Indonesia: money (and other) mistakes
Nearly 15 years after embarking on its large scale decentralisation program, Indonesia has decided to extend its efforts to the village level. Decentralising to villages is intended to improve service delivery performance at the lowest administrative tier and reduce social inequality and poverty. A number of potential difficulties with the design of Indonesia’s nascent village decentralisation initiative have already become apparent. Methods used to allocate funds to villages are particularly problematic. Oddly, funds distribution procedures insist to a large extent on equal per village allocations, despite the significant heterogeneity of villages. And they ignore other sources of revenue to which villages have access. In the event, village revenues will be very inequitably distributed: villages with high levels of poverty will receive less money than they need and villages with access to significant funding from oil and gas revenues will receive more than required. Also, village service responsibilities are unclearly defined, village financial management systems are inadequately prepared to handle large increases in funding, and mechanisms to monitor and control village spending are underdeveloped. These difficulties will severely constrain the achievement of official objectives and create further challenges for reformers in their attempts to combat corruption at the subnational level.
25 November. Ariane Utomo (ANU). Who marries whom: ethnicity and marriage pairing patterns in Indonesia
How individuals partner to form a family – a fundamental unit of society - reveals a great deal about social openness, mobility, gender relations, and future patterns of social stratification and inequality. All the more so in Indonesia; as a new democracy where modernisation competes with ethno-religious conservatism, marriage pairing is a prime but understudied measure of tolerance and inter-group boundaries. In this presentation, I outline results from my research on marriage pairing patterns in Indonesia. I use both qualitative data collected from preliminary fieldwork in 2015 on attitudes and practices to interethnic relationships in Jakarta, and marriage pairing data from over 47 million couples in prevailing marriages from the full enumeration of the 2010 Population Census. What are the ethno-regional dimensions of coupling trends? How can patterns in ethnic assortative mating provide insights on the coterminous nature of ethnicity and religion in Indonesia? What are the socio-demographic correlates of interethnic marriage? In what ways does pairing behaviour reflect societal attitudes towards class, ethnicity, religion, and identity in post-New Order Indonesia? These questions served as the outline of my presentation.
28 October. Aloysius Gunadi Brata (Atma Jaya Yogyakarta University). Shaking up the firm’s survival: evidence from Yogyakarta, Indonesia
One interpretation of Darwinian ‘natural selection’ in economy is that a shock will force out inefficient firms and free resources for the more productive ones, including new entrants. This is called ‘cleansing effect’. However, it is also possible that a young and promising firm must exit the market during a shock or crisis before it can fully learn about its own quality. Such exit reduces the proportion of good firms both in the present time and in the future. This is ‘scarring effect’. The overall impact of economic shocks on the allocation of resources depends on the relative magnitude of cleansing and scarring effects. We investigate these effects in relation to the Yogyakarta earthquake in 2006—one of the most recent large natural disasters in Indonesia—by using data on medium-sized and large manufacturing firms in the province. The impact of this earthquake on manufacturing firms in Yogyakarta province is still rarely studied. Our results confirm that firms with higher productivity prior to the earthquake were more likely to survive after the earthquake, which in turn confirms the cleansing effects of the natural selection. On the other hand, the new firms that entered the industry prior to the earthquake had a higher probability of survival than those entered following the earthquake. Therefore, the existence of scarring effects is rejected. These findings imply the importance of facilitating firms to increase their productivity, as it improves their ability to deal with natural disasters. But this should be accompanied with a policy that facilitates potential producers to enter a particular industry
21 October. Saiful Marbun (ADFA), Brigitta Scarfe (Monash University), David Duncan (ANU), Benjamin Djung (ANU). Presentations from Research Travel Grant’s recipients
The presentation was the result of the research travel grant recipients.
9 September. Greg Fealy (ANU). Politics, Islamic identity and the 33rd Nahdlatul Ulama Congress
The 33rd Nahdlatul Ulama (NU) congress was meant to be a celebration of the organisation’s 89-year history. It was held in early August in the East Java city of Jombang, the heartland of NU from which most of the organisation’s great religious leaders have come. Four of NU’s most famous Islamic boarding schools were venues and dormitories for the thousands of delegates and observers. The congress theme was ‘Parading Archipelagic Islam for Indonesia and the World’, as part of which NU planned to propound itself as the embodiment of a quintessentially Indonesian form of Islam.
But ultimately, this was a congress dominated, and in some ways tainted, by politics. The primary political player, and arguably the greatest beneficiary of the congress was the National Awakening Party (PKB). It controlled the congress organising committee, provided much of the funding, and ultimately engineered the election of NU leaders who were close to the party. This presentation examined the events surrounding the conference and analysed its impact on both NU and national politics.
Greg Fealy is associate professor of Indonesian Politics in the Department of Political and Social Change at ANU and his research focuses primarily on Islamic politics.
1 September. Budy Resosudarmo (ANU). Intra-village and inter-village conflict in rural coastal communities in Indonesia: the case of the Kei Islands
Using rural coastal communities in Indonesia as a case study, we examine the underlying factors that may potentially be associated with the incidence of conflicts among local marine resource users. Resolving local resource conflicts is important for the implementation of effective development policies and resource management systems. Intra-village and intervillage conflicts are examined separately. Binary regression models are estimated using data collected from small-scale fishing household survey in the Kei islands of southeast Maluku. We find that social relationships and individual perceptions of changes in fishery conditions are strongly associated with the incidence of both intra- and inter-village conflicts, but in a different way for each type of conflicts. Declining fish stocks is positively related with intervillage conflicts but not with intra-village conflicts. The association between the incidence of resource conflicts and social relationships are either positive or negative depending on whether the conflict occurs within or outside the village.
26 August. John Monfries (ANU) and Bayu Dardias (ANU). The Yogyakarta crisis of 2015
Sultan of Yogyakarta, Hamengku Buwono X, who is both Sultan and concurrently the only unelected Governor of a province in Indonesia, recently announced a King Decree (Sabda Raja) providing a path way for his eldest daughter to become his successor. This decree caused an unprecedented open split in the palace family. This presentation discussed the issues in dispute within the palace family and describe the position of various groups within the family and outsiders toward these issues and Sultan’s decision. This presentation also discussed how this on-going internal conflict within the Yogyakarta palace could affect the legitimacy of the unique Yogyakarta polity and the effectiveness of the Sultan in managing the province. Finally this presentation described several possible scenarios of what will happen in Yogyakarta palace in the near future and what are the possible outcomes of this conflict.
19 August. John McCarthy (ANU). Responding to food security and land questions: policy principles and policy choices in Kalimantan, Indonesia
While the Indonesian economy has recorded strong growth over the past few decades, the country still faces an ongoing battle with food poverty. Amidst fears of new vulnerabilities, planners have formulated policies that refer to the principles of ‘food self-sufficiency’, ‘food security’ and ‘food sovereignty’ and the green economy. This paper focuses on three policy agendas with substantial implications for land use and food poverty in Kalimantan. These include an extensification scheme to open new rice estates; a program that seeks to intensify production in existing areas; and policies that involve the rapid enclosure of upland agroforest areas and their transformation into large-scale, mono-crop oil palm concessions. The paper develops a framework for mapping the implications of these different choices. It considers the alignment of these choices with food and environmental policy principles and examines their contradictory effects on food poverty and inequality.
This paper is based on research funded by USAID for the Centre for International Forestry Research.
29 July. Mari Pangestu (University of Indonesia and former Indonesian Minister of Tourism and Creative Economy). Special Indonesia Study Group for ANU Indonesia Project 50th Anniversary
This ISG was held to celebrate the ANU Indonesia Project 50th anniversary.
22 July. Luke Swainson (ANU). Realizing a green economy: the opportunities and complexities of policy reform in Aceh
A green economy approach is touted as the next big thing for achieving sustainable development. But questions remain concerning its viability, especially in terms of the realities of translating its ideas and strategies into practice. This thesis addresses this knowledge gap through an analysis of the opportunities and complexities of green economy policy reform. A political economy lens has been chosen as the analytical framework through which to conduct the research. This framework stares the research towards an investigation of the role of institutions, actors and power dynamics across multiple scales to better understand green economy policy reform processes. An important aspect of this research is that it concentrates on a green economy orientated case study to gain real world experience of the incentives that key decision-makers face, the institutional context and the nature of the proposed policy changes that create these incentives, how and why various actors respond to these incentives, and how positions of power are used to enact or block change. The result is an historical and political analysis that goes beyond the many simplistic statements made in the literature concerning the importance of ‘green growth’ and the possibility of ‘win-win solutions’ to reveal the incentives, conflicts, trade-offs and compromises that decision-makers face in considering a fundamental restructuring of the economy, and the relations of power that ultimately determine which natural resource policies and strategies are chosen in practice.
The research concentrates on a case study in Aceh Province, Indonesia, and particularly ‘Aceh Green’, which was a provincial wide green economy initiative attempted between 2008 and 2012.
15 July. Peter Erben (International Foundation for Electoral System (IFES)). Lesson from the 2014 ‘narrow escape’: developing an electoral reform agenda for Indonesia
Surrounded by much drama and eventual relief, the 2014 legislative and presidential elections in Indonesia were seen by many as a highlight in the country’s recent democratic history. However, they constituted a narrow escape and could well have spiraled into a major political crisis. The competition was unusually combative, and political actors made a leap in sophistication in both legitimate and illegitimate campaign behaviors. This increasingly disquieting trajectory must be mitigated or eclipsed by an evolving political and electoral framework that can force democratic behaviors and better ensure a credible electoral process and outcome. Complacency following 2014 carries significant risk, not just for the electoral process, but in general for achievements made on democracy and development goals since 1998. This seminar examined which macro developments and reforms are necessary to protect the electoral process and outcome toward the 2019 combined election and beyond - and how this can be achieved leveraging the three major rounds of upcoming regional executive elections (2015-2018) and a comprehensive reconsideration of the legal and operational framework for the electoral process.
Peter Erben is one of the world’s leading electoral management experts - one of a few internationals ever called upon to direct national elections for other nations. He has previously been the Chief Electoral Officer and election commissioner of Kosovo and Afghanistan. He has directed large-scale out-of-country elections for Iraq and Afghanistan. During the past two decades, Peter led initiatives to Burma/Myanmar, Syria, Libya, Palestine, Bosnia and Herzegovina, Nepal, Lebanon, East Timor, Pakistan and a range of other countries. Today he is IFES’ Senior Global Electoral Advisor and works around the world based out of Indonesia, where he is also the Country Director.
1 July. Roby Arya Brata (Cabinet Secretary Office, Republic of Indonesia). Combating institutional corruption in a democratic transition state: the case of anticorruption reform in Indonesia
As shown by some governance indicators, the objectives of Indonesia anticorruption reform have so far not been achieved. But, what factors have contributed to the unsatisfactory attainment of those objectives? Why has anticorruption reform in Indonesia been diverted and distorted against its objectives? Why has combating systemic and endemic public sector corruption in Indonesia been ineffective? This study examines a case study of institutional (legal) corruption in the lawmaking of the House of Representatives/Dewan Perwakilan Rakyat (DPR) involving “dependence corruption” which has compromised the effectiveness and trustworthiness of the DPR. In particular, it investigates the role of institutional corruption in the weakening of the Corruption Eradication Commission (Komisi Pemberantasan Korupsi/KPK) to effectively combat systemic public sector corruption. The study argues that institutional corruption has a key role in distorting and failing the attainment of the anticorruption reform objectives in Indonesia. Further, it contends that defects in democratic governance and institutional designs are the primary causes of the institutional corruption, which in turn distorted the anticorruption reform of and weakened the performance and public trust in, the KPK and the DPR. Unlike conventional illegal form of corruption which has relatively an isolated effect, institutional corruption through corrupting policy and lawmaking processes and outcomes has a wide-ranging impact on democratic governance and the people at large, particularly in a country transforming from an authoritarian state to a democratic one such as Indonesia.
17 June. Ross McLeod (ANU). Indonesia’s policymakers’ chronic obsession with the current account deficit
In the mid-1990s Indonesia’s policymakers tried to cap the Current Account Deficit (CAD) at 2% of GDP, for fear that a ‘large’ CAD would result in foreign debt spiralling out of control, crushing the economy under the burden of debt service. The underlying analysis was incorrect, and the policies followed resulted in failure to maximise growth (and therefore to reduce poverty as quickly as possible), and continued failure to meet inflation targets. In the mid-2010s this obsession with the CAD has re-emerged, with policymakers now trying to cap the CAD at 3% of GDP. This time around, the fear is that foreign capital will be suddenly withdrawn if the CAD becomes too high, resulting in a repeat of the 1997-98 Asian financial crisis meltdown. For this reason they are prepared to deliberately sacrifice growth in order to avoid what they see as the threat of a much bigger decline in growth if they leave the CAD to find its own level. Since the primary aim of economic policy in developing countries is to maximise income growth, this is an extraordinary strategy. Again, the analysis is incorrect, and the policy choices are counterproductive. The presentation was designed for a non-economist audience.
10 June. Rachael Diprose (University of Melbourne). Narratives of communal violence: inequalities and ‘discourses of difference’ in Indonesia and Nigeria
This paper revisits communal violence during the early ‘reform’ years in Indonesia, with a particular focus on Central Sulawesi province. Using mixed research methods, it comparatively explores the patterns and drivers of violence (or their absence) in two districts in the province, also reflecting on research findings from Nigeria on patterns of communal violence during a similar period of reform. The paper discusses the interplay between historical and contemporary ‘discourses of difference’ and inter-group inequalities, which were particularly prevalent in the conflict areas in each country. In both countries, tensions grew as inequalities widened and particular group identities gained political salience. This was somewhat compounded by the splitting of administrative areas under decentralisation initiatives in both countries that, together with increasing levels of violence, saw the increasing spatial and political concentration of ethno-religious groups. Growing inter-group inequalities, a breakdown in power-sharing mechanisms, elite rent-seeking behaviours and an absence of effective interventions in some places created a situation ripe for conflict escalation at at time when democratisation opened up new opportunities for groups to realign power and interests. Supra-local networks and wider ideological linkages connected local issues in both countries with national and international discourse and tensions, which contributed to conflict escalation and gave Indonesia (and Nigeria’s) communal conflicts geopolitical significance.
27 May. Evan A. Laksmana (CSIS). Indonesia’s foreign policy and the South China sea
While not officially a claimant in the South China Sea dispute, Indonesia has played an active role in managing regional cooperation in the area since the 1990s. Recent pronouncements by the Indonesian military, however, seems to suggest that Indonesia is shifting its policy and may be gearing to confront China’s growing assertiveness. What are Indonesia’s key interests in the South China Sea? How has Jakarta’s foreign policy on the dispute evolved? Is President Joko Widodo’s ‘global maritime fulcrum’ a game changer when it comes to the South China Sea? What role can Indonesia play in the regional dispute amidst a growing US-China maritime rivalry? The presentation sought to address these questions and further explored the broader implications of the Widodo administration’s defense and foreign policy for regional stability.
20 May. Arie Damayanti (University of Indonesia), Yuri Sato (Institute of Developing Economies, Chiba). Survey of recent developments
This seminar was presented by the ANU Indonesia Project’s Bulletin of Indonesian Economic Studies (BIES).
Indonesia’s economy has continued to slow in recent months: in the first quarter of 2015, GDP grew at its slowest rate for five years. In this BIES survey we review the macroeconomic developments marking this slowdown. External factors aside, some causes of the slowdown are closely related to the start of the new government. Official documents show that the Jokowi administration intends to shift Indonesia’s development paradigm from land-centred to maritime-oriented development and from ‘development from above’ to ‘development from below’. We explore the prospects of investing in infrastructure to increase maritime connectivity, and of expanding the social-security system to improve the welfare of those in low-income brackets. These two medium-term agenda of the government could also affect macroeconomic and fiscal performance in the short term. A decline in export value is one of the major drivers of the slowdown; we examine the shift towards a revival of manufactured exports under these adverse conditions.
13 May. Sofian Effendi (Chairman of Indonesian Civil Service Commission). Reforming Indonesian civil service: policy making and implantation
About 10 months before his presidency ended, President S. B. Yudhoyono signed off Law Number 5 Year 2014, the Indonesian Civil Service Law. The legislation was probably one of the most important reforms of the country’s civil service after Indonesia embarked on a the road to democracy, decentralized governance, and open social economy 16 years ago. This law lays the foundation for Indonesia to form a high performance public service the country badly needed to become Asia’s third-biggest economy for the coming decade before turning it into a dynamic public service like in the more advanced neighbouring countries, Singapore and Malaysia.
The passage of the law signified the first step of the new government under President Joko Widodo’s long journey to reform Indonesian Civil Service. The first step was taken during President Suharto administration when a Law Number 8 Year 1976 was passed by the Parliament to consolidate the to politically intervened civil service. Following the “big bang” democracy and open economy after 1998 Reformation, President B.J. Habibie signed Law No 43/1999 to decentralized management of Indonesian civil service to ministries, non-ministrian agencies, and sub-national governments. The more decentralized management of Indonesian civil service continued until 2013, when President Yudhoyono approved an initiative of the Parliament to introduce an Indonesian Civil Service Act. Although the Law was signed by President Yudhoyono on January 15, 2014, its implementation would be recorded as the legacy of the newly appointed president.
In my presentation I delved in more detail theoretical assumptions of The Indonesian Civil Service Law of 2014, its salient objectives and the implementation of the legislation so far.
11 May. Robert Ian McEwin (University of Malaya). Designing competition law under financial crisis: Indonesia and Thailand compared
The 1997 the Asian Financial Crisis was the impetus for the introduction of competition law in both Indonesia and Thailand. The crisis upset cozy pre-existing government-business relations and led to the collapse of some financial empires. There was a belief in both countries that anticompetitive practices, sanctioned by government, contributed to the crisis and so this proved to be a catalyst for the introduction of competition law in 1999 in both Indonesia and Thailand. While the International Monetary Fund imposed, as a condition for financial support, a requirement that Indonesia introduce a competition law, it did not impose the same condition on Thailand despite the fact that, arguably, Thailand was in worse economic shape prior to the AFC than Indonesia.
However, despite the common causal factor, Indonesia and Thailand each designed different competition laws and institutions and both have quite different enforcement records. Why? This is a difficult question, but we presented several answers, leading to the realization that while the world has changed in Indonesia and competition is more important there now, the same cannot be said for Thailand-yet.
The recording can be listened to here.
29 April. Daniel Carney (University of Tasmania), Anna Strempel (Monash University), Edryan Ja’afar (La Trobe University). Presentations from Research Travel Grants recipients
Expatriates in the village: examining social spaces and boundaries in Watu Karung by Daniel Carney
Building a wealth of resentment: inequalities in the international aid and development sector by Anna Strempel
Primal Fire: animism and mysticism in 21st century Jogyakarta by Edryan Hilux
The recording can be listened to here.
15 April. Rimawan Pradiptyo (Gadjah Mada University). Better late than never: an assessment of court decisions of corruption cases in Indonesia
This study examines the length of judiciary process across level of courts for corruption cases in Indonesia during the period of 2001-2012. Data used in this study were based on the Supreme Court’s decisions and corruption cases tackled by Corruption Eradication Committee (KPK). Our model shows that every corruption case handled by KPK requires a shorter period of judiciary process than those of similar case handled by police or public prosecutor. Furthermore, the length of judiciary process across all courts has shortened significantly since the operation of KPK in 2005. This result provides a support to maintain the existence of KPK for combating corruption in Indonesia.
The recording can be listened to here.
18 March. Jennifer Lindsay (ANU). Musical travel of Indonesia’s Coconut Isles and the Socialist Popular
In 1944, the Indonesian composer Ismail Marzuki wrote ‘Rayuan Pulau Kelapa’ (Lure of the Coconut Isles) which became a beloved popular patriotic song. In the 1950s and early 60s, Rayuan Pulau Kelapa was sung abroad on cultural missions, and by Indonesians at the biennial World Festivals of Youth and Students organized by the World Federation of Democratic Youth. It was also given Russian lyrics, recorded and broadcast in the USSR, and became a popular Russian song. Using this example, I consider ways Cold War networks facilitated the creation and exchange of a socialist popular, and also influenced musical style in Indonesia.
Jennifer Lindsay studied in New Zealand, the United States, and Australia and has spent 25 years in Indonesia, as student, researcher, diplomat, and foundation program officer. She writes on cultural policy, cultural history, performance, media, and language in Southeast Asia and Indonesia, and regularly translates from Indonesian into English. She is contributing editor to Heirs to world culture: being Indonesian 1950-1965 (KITLV 2012), the volume produced from the international research project she co-led into Indonesia’s cultural history from 1950-1965. She also directed (2010) a documentary about the Indonesian national cultural missions (Presenting Indonesia: Cultural Missions Abroad 1952-1965). Currently she is researching Indonesia’s participation at the World Festivals of Youth and divides her time between Indonesia and Australia.?
12 March. Marcus Mietzner (ANU). Jokowi: from electoral sensation to presidential disappointment?
After riding on a wave of public euphoria in the 2014 campaign and preventing the neo-authoritarian populist Prabowo Subianto from claiming the presidency, Joko Widodo has rapidly arrived in the lowlands of day-to-day politics. Clearly, he has been unable to keep his promises of providing firmer leadership and making decisions free of oligarchic interventions. Indeed, he is engaged in constant struggles with the parties and figures that nominated him, frequently making him look despaired and disoriented. Very untypical for his populist character, he has also withdrawn into self-isolation in his Jakarta and Bogor palaces, avoiding open and unscripted discussions with citizens and supporters. In order to still appear decisive, he has opted for tough policies on executions of foreigners and sinking boats involved in illegal fishing. What explains this discrepancy between Jokowi, the mayor, governor and campaigner, on the one hand and Jokowi, the president, on the other? Is he losing control, or is he convinced that the low-income, uneducated and rural masses that voted for him will stick with him despite the turmoil in Jakarta?
In this seminar Dr Marcus Mietzner evaluated Jokowi’s first few months in office and tred to gauge what lies ahead.
12 March. Mari Elka Pangestu (University of Indonesia). The 2015 Harold Mitchell Development Policy Annual Lecture - The new economy and development: an Indonesian perspective
Development in most Asian countries has taken place through several conventional phases. Economies such as Indonesia have started with agriculture/resource based development; have moved to industrialisation first based on import substitution and then shifting towards export orientation as well as production networks; and have then started to transition towards a knowledge and information based as well as a more services oriented economy. The ‘new economy’ continues to evolve beyond knowledge and information based sectors; the fourth wave of change is known as the creative economy.
At the same time developing countries are facing external and globalisation challenges. Technology disruptions have led to greater interdependence and changing models of international business engagement. Just what can be transacted and exchanged between countries in today’s context is so vastly different from the situation just a decade ago.
How has a country like Indonesia developed over the course of these different phases of development? Has it been able to take advantage of the new economy? What are the important challenges, opportunities and policies ahead?
Dr Mari Elka Pangestu was the Minister of Trade of Indonesia from October 2004 to October 2011. She was appointed to the newly-created position of minister of Tourism and Creative Economy in October 2011. Dr Pangestu is currently Professor of International Economics at the University of Indonesia.
The Harold Mitchell Development Policy Annual Lecture Series, of which this is the third, has been created to provide a new forum at which the most pressing development issues can be addressed by the best minds and most influential practitioners of our time.
This lecture was presented by the Development Policy Centre at Crawford School of Public Policy at The Australian National University in collaboration with the ANU Indonesia Project and the Australian Indonesian Centre.
11 March. Sidney Jones and Solahudin (IPAC). Changing patterns of support for ISIS and al-Qaeda in Indonesia
The tiny extremist fringe in Indonesia that supports ISIS (now known as Islamic State) and the al-Qaeda-linked al-Nusra Front in Syria and Iraq now appears to be attracting wealthier, better educated adherents with no previous affiliation to radical groups. The availability of funding from these new recruits, some of them with businesses in the Muslim clothing or halal food industries, may be widening the pool of ISIS support and encouraging middle-class professionals to join the ranks, as well as underwriting training and travel. Jemaah Islamiyah is now actively recruiting on university campuses in Java and making a point of seeking engineers, technicians and linguists. Solahudin discussed the emergence and significance of these middle-class jihadis.
Sola and Sidney then looked at the challenges to effective policy-making with regard to ISIS and al-Nusra. Indonesia, like other countries in a similar situation, faces a dilemma: does it try to prevent would-be mujahidin from leaving, with the possibility that their frustrations will then take the form of violence at home, or do they let them go but take the chance that some will return with dangerous new skills? They argued that more than 12 years after the Bali bombing, Indonesia still lacks a national strategy on counter-terrorism.
28 January. Yose Rizal Damuri (CSIS) & Creina Day (ANU). Survey of recent developments
Amid global economic uncertainty and tumbling world oil prices, Indonesia’s economy faces pressures on its external balance and a continued growth slowdown. The Jokowi government has set an agenda of reform including simpler, faster investment licensing, cuts to fuel subsidies to generate fiscal savings and spending on infrastructure. We examined the impacts so far of these policy initiatives. While inflation accelerated following the November fuel-price hike, efforts have been made to contain inflationary expectations and to mitigate the impact on poverty through social-assistance programs. The removal of gasoline subsidies and introduction of a fixed subsidy policy for diesel in the revised 2015 budget reduces uncertainty about the fiscal position. Trade and investment policy is important in unlocking Indonesia’s growth potential. We examined improvements in investment procedures and regulation, as well as the role of Indonesia’s attitude toward trade agreements.