• Indonesian's Widodo's first 100 days in office is punctuated by reforms.

    Joko Widodo's First 100 Days in Office

    Distinguishing the first 100 days of President Joko Widodo (Jokowi) and his government are historic reforms to fuel subsidies, social assistance to the poor, streamlined investment licensing and virtually no new restrictive regulations on foreign trade. Fuel subsidy reform has given the government fiscal space for infrastructure development. However, if Indonesia is to attract greater foreign investment, there is still scope to promote openness and regional integration in what is a critical year for Indonesia’s involvement in international trade agreements.

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  • Indonesia's government needs a pragmatic response to a slowing economy.

    How Significant is Indonesia's Economic Slowdown?

    The slowdown in Indonesian growth to 4.7 percent for the first quarter of 2015 follows a steady quarterly slowdown since the 6.8 percent peak just over four years ago. Is this slowdown simply a post-commodity boom cyclical downturn, or is it the beginning of an extended period of weakness?

    The answer to this question will be determined by whether the Indonesian government adopts a pragmatic response, or doubles down on an economic course that diverges sharply from the successful path adopted in the post-Asian crisis period.

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  • Jokowi continues to act as his own foreign minister.

    Indonesia's Nationalistic Economic Agenda Contradicts the Need for Foreign Investment

    On 29 April, Indonesia executed seven foreigners and one Indonesian for drug offences. The refusal of President Joko Widodo (Jokowi) to offer clemency despite pleas from foreign leaders has been analysed in a number of ways. Most have interpreted Jokowi’s decision as that of a contested head of state in a fragile democracy heeding public opinion, which seems to overwhelmingly (86 percent in a recent poll) support the death penalty for drug trafficking. But was his decision instead a deliberate act of public diplomacy, designed to send signals to those missing the Sukarno era?

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  • Indonesia's risky financial sector is in transition and modernizing.

    Modernizing Indonesia's Financial Sector

    Reforms of the financial sector in Indonesia since 1997 have mitigated the key risk factors that caused the economic crisis of 1997. The first of these was structural weaknesses in the financial sector, particularly the banking system. The second was heavy borrowing by both the banking system and the corporate sector from foreign sources.  Indonesia's Central Bank had warned that the risk of losses due to the currency exchange rate of private and state-owned companies' foreign debts are still high and continue to haunt throughout 2015.

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  • Former President Suharto began Indonesia's economic stabilization.

    Indonesia Strives to Reach its Economic Potential

    Indonesia has come a long way since former president Suharto adopted a new economic stabilisation policy in 1996. However, the country must take steps to improve infrastructure and enhance data measurement if it is to realise its economic potential.

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  • Indonesia surprises with a rate cut, but it has sound backing.

    Factors Surrounding Indonesia's Interest Rate Cut

    Bank Indonesia (BI) surprised everyone when it eased monetary policy at its February meeting. Moving into line with global trends, it cut the policy interest rate by 25 basis points to 7.5 percent, even though analysts had predicted no change. While the change is surprising, it has a sound rationale but is not without risk.

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  • Indonesia's Jokowi Heads Overseas and Leaves Domestic Tensions Behind.

    Indonesia's Jokowi Heads Overseas and Leaves Domestic Tensions Behind

    Indonesian President, Joko Widodo’s (Jokowi) decision to embark on his first official overseas visit has been overshadowed by domestic controversy. The planned meet-and-greet with the leaders of Malaysia, Brunei and the Philippines seemed to be a way of escaping the domestic tensions between two of the country’s key law-enforcement institutions: the police (Polri) and the anti-corruption commission (KPK).

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  • Greater reforms are need in Indonesia to stem the rising inequality tide.

    Indonesia's Poverty Reduction Strides During Decentralization were Offset by Rising Inequality

    How effective was Indonesia in addressing poverty and inequality in the decentralisation period?

    In the first decade of the decentralisation period, from 2001–10, Indonesia’s GDP grew at an average annual rate of only 5.4 percent. This was significantly slower than during 1990–96, prior to the Asian financial crisis, when Indonesia’s GDP grew at an average rate of more than 7 percent per year.

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  • Indonesia's Widodo seeks big rewards with big risks.

    Jokowi's High Risk, High Reward Strategy for Indonesia

    No more ‘business-as-usual’ is the Jokowi government’s message in the 2015 budget. Cut fuel subsidies, ramped up infrastructure spending, and rising revenues. These three steps deliver a 1.9 percent fiscal deficit, down from 2.2 percent in 2014. This leaves space for a fiscal response in case the global economy turns less friendly. The success of this bold strategy depends on whether the dash for immediate results risks delaying or possibly even sacrificing medium-term gains.

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