Indonesia today is a different Indonesia compared to when it first proclaimed its independence in 1945, when it started a new economic paradigm in 1966, and even when it began its democratic reform in 1998. Today, Indonesia exists in a vastly different social, economical, and political environments. This book, Indonesian Economy: Entereing a New Era, has been prepared with this “new era” in mind.
Indonesia and the rest of the world have entered a new era of challenges and approaches. The new global and local eras necessitate different approaches as economic policies are not made in social and political vacuum. This book aims to examine what happened during the current Indonesia, in the new era. It focuses on the events during the reform period, while also discussing the events since the beginning of the New Order. It also presents some policy recommendations for the current government of Indonesia, in the context of a search for a new world development paradigm.
The book is expected to be very useful for both beginners and experts on Indonesian economy. However, the book does not cover all economic issues in Indonesia during the new era. It focuses on three macro issues examined in three parts, apart from the introduction. Part I introduces the book and provides a brief history of Indonesian economy since the beginning of the New Order (1966-1998). Part II, consisting of four chapters, covers the monetary and fiscal issues, which are the core tools in macro-economic policies that have been important sources of boom and bust in the economies. Recognizing the importance of Indonesia’s large population with the rising income and aspiration, Part III, consisting of three chapters, examines the domestic market. Focusing on the domestic market is a recognition that Indonesia should be less dependent on export promotion and financial liberalization. Had Indonesia been very successful in its drive for export promotion and financial liberalization, the impact of the 2008-2009 global crisis on Indonesian economy would have been much greater. Part III also indicates the need for a change of development paradigm in Indonesia’s economic development, by providing more weights to domestic economy.
The search for new development paradigms have also been going on in all over the world. The main focus of the Part IV, which comprises three chapters, is to further discuss new world development paradigms from an Indonesian perspective.
The book is a result a collaboration between Institute of Southeast Asian Studies (ISEAS) in Singapore and Bank Indonesia (BI) in Jakarta. It is to be published by ISEAS in the middle of 2011. Hal Hill (Australian National University) provides the foreword for the book. The authors in the book consist of both scholars and practioners. The editors are Aris Ananta, Senior Research Fellow, Institute of Southeast Asian Studies; Muljana Soekarni, Director, Indonesian Banking Development Institute, Jakarta; and Sjamsul Arifin, Senior Advisor to Board of Governors on International Relations, Bank Indonesia, Jakarta.
PART I. INTRODUCTION
1. Economic Challenges in a New Era
Aris Ananta, Muljana Soekarni, and Sjamsul Arifin
2. Government Economic Policies since the Beginning of New Order Era
Muljana Soekarni and Ferry Syarifuddin
PART II. MONETARY AND FISCAL POLICIES
3 The Dynamics of Monetary Policy
4 The Financial System: Balancing Stability and Growth
Suhaedi and Pungky P. Wibowo
5 Economic Crisis and Fiscal Policy Management
Silvia Mila Arlini and Yohanes Eko Riyanto
6 Understanding the Roles of Fiscal Stimulus in Maintaining Economic Resilience
Iskandar Simorangkir and Haris Munandar
PART III: DOMESTIC ECONOMY
7. Regional Heterogeneity of the Large Market and Production Base
Evi Nurvidya Arifin
8. Industrial Relation in the Democratizing Era
9. Decentralisation and Domestic Trade Interdependence
Siti Astiyah, Salomo P. Matondang, and Guruh Suryani R.
PART IV: SEARCH FOR NEW PARADIGMS
10. Embracing ASEAN Economic Integration 2015: A Quest for ASEAN Business Cycle- Indonesian point of view
Yati Kurniati and Aida S. Budiman
11. Governance and Economic Performance
Muljana Soekarni and Sjamsul Arifin
12. A Search for a World Development Paradigm: with specific recommendations for Indonesia
Inquiries about the book should be directed to Publication Unit, Institute of Southeast Asian Studies. (*)