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31. Jokowi’s second term: economic challenges and outlook

Author:
Siwage Dharma Negara
Publication Date:
07-2019
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute
Abstract:
After winning the 2019 election, President Joko ‘Jokowi’ Widodo’s has a great opportunity to bring the Indonesian economy into a stronger footing. Jokowi’s economic policies achieved mixed outcomes in his first term (2014–2019). He hasn’t delivered a promised 7% economic growth, but steady 5% growth is perceived as a commendable achievement, given slowing global growth, rising uncertainties, and low commodity prices. Macroeconomic stability has been well maintained, and Indonesia’s creditworthiness has improved during this first term.
Topic:
Politics, Economy, Economic growth, and Macroeconomics
Political Geography:
Indonesia, Asia, and Southeast Asia

32. China’s Future Naval Base in Cambodia and the Implications for India

Author:
John Foulkes and Howard Wang
Publication Date:
08-2019
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Recent media reports have indicated that Cambodia signed a “secret agreement” giving the PRC use of Ream, where it may station military servicemen and warships, for 30 years (WSJ, July 22). Although Cambodian and Chinese officials vehemently deny the existence of this agreement, gaining access to Ream is broadly consistent with Chinese foreign policy. The PRC appears to be employing Belt and Road Initiative (BRI) funding to further strategic cooperation with Cambodia through the construction of potential dual-use infrastructure. Ream naval base is the latest in a network of regional security projects—including Cambodia’s Dara Sakor investment zone and Thailand’s Kra Canal—which, taken together, significantly improve Chinese power projection into the Indian Ocean Region (IOR). News of the Ream agreement raises the specter of increasing Chinese maritime militarization at a time of intense unease in Southeast Asia. Conspicuously silent in this latest controversy is India, which has significant economic and military interests in Southeast Asia. This article will discuss the security infrastructure China is building in Cambodia and its implications for Indian interests in the region.
Topic:
Security, Military Strategy, Military Affairs, and Navy
Political Geography:
China, Indonesia, India, Asia, Cambodia, and Southeast Asia

33. Good Governance of the Security Sector in Southeast Asia: What Role for Parliament?

Author:
Mario Joyo Aguja, Hans Born, Pou Sothirak, Paul Chambers, Iis Gindarsah, Rastam Mohd Isa, Nurul Izzati Kamrulbahri, Mohd Syahir Naufal Mahmud Fauzi, Yin Myo Thu, and Aries A. Arugay
Publication Date:
09-2019
Content Type:
Case Study
Institution:
Geneva Centre for Security Sector Governance (DCAF)
Abstract:
The publication "€Good Governance of the Security Sector in Southeast Asia: What Role for Parliament?" is a compilation of contributions submitted at the 10th Anniversary Workshop of the Inter-Parliamentary Forum on Security Sector Governance in Southeast Asia (IPF-SSG) in Siem Reap on 15-16 September 2016. The publication consists of country case studies of Cambodia, Indonesia, Malaysia, Myanmar and the Philippines.
Topic:
Security, Governance, Law Enforcement, and Rule of Law
Political Geography:
Geneva, Indonesia, Malaysia, Asia, Philippines, Cambodia, Southeast Asia, and Myanmar

34. The Challenges of Universal Health Insurance in Developing Countries: Evidence from a Large-scale Randomized Experiment in Indonesia

Author:
Abhijit Banerjee, Amy Finkelstein, Rema Hanna, Benjamin A. Olken, Arianna Ornaghi, and Sudarno Sumarto
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
To assess ways to achieve widespread health insurance coverage with financial solvency in developing countries, we designed a randomized experiment involving almost 6,000 households in Indonesia who are subject to a nationally mandated government health insurance program. We assessed several interventions that simple theory and prior evidence suggest could increase coverage and reduce adverse selection: substantial temporary price subsidies (which had to be activated within a limited time window and lasted for only a year), assisted registration, and information. Both temporary subsidies and assisted registration increased initial enrollment. Temporary subsidies attracted lower-cost enrollees, in part by eliminating the practice observed in the no subsidy group of strategically timing coverage for a few months during health emergencies. As a result, while subsidies were in effect, they increased coverage more than eightfold, at no higher unit cost; even after the subsidies ended, coverage remained twice as high, again at no higher unit cost. However, the most intensive (and effective) intervention – assisted registration and a full one-year subsidy – resulted in only a 30 percent initial enrollment rate, underscoring the challenges to achieving widespread coverage.
Topic:
Government, Health, Health Care Policy, and Economy
Political Geography:
Indonesia and Southeast Asia

35. Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia

Author:
M. Chatib Basri, Mayara Felix, Rema Hanna, and Benjamin A. Olken
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Developing countries collect a far lower share of GDP in taxes than richer countries. This paper asks whether changes in tax administration and tax rates can nevertheless raise substantial additional revenue – and if so, which approach is most effective. We study corporate taxation in Indonesia, where the government implemented two reforms that differentially affected firms. First, we show that increasing tax administration intensity by moving the top firms in each region into “Medium-Sized Taxpayer Offices,” with much higher staff-to-taxpayer ratios, more than doubled tax revenue from affected firms over six years, with increasing impacts over time. Second, using non-linear changes to the corporate income tax schedule, we estimate an elasticity of taxable income of 0.59, which implies that the revenue-maximizing rate is almost double the current rate. The increased revenue from improvements in tax administration is equivalent to raising the marginal corporate tax rate on affected firms by about 23 percentage points. We suggest one reason improved tax administration was so effective was that it flattened the relationship between firm size and enforcement, removing the additional “enforcement tax” on large firms. On net, our results suggest that improving tax administration can have significant returns for developing country governments.
Topic:
Governance, Developing World, Reform, Business, and Tax Systems
Political Geography:
Indonesia and Southeast Asia

36. Can Transparency and Accountability Programs Improve Health? Experimental Evidence from Indonesia and Tanzania

Author:
Jean Arkedis, Jessica Creighton, Archon Fung, Stephen Kosack, Dan Levy, and Courtney Tolmie
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We assess the impact of a transparency and accountability program designed to improve maternal and newborn health (MNH) outcomes in Indonesia and Tanzania. Co-designed with local partner organizations to be community-led and non-prescriptive, the program sought to encourage community participation to address local barriers in access to high quality care for pregnant women and infants. We evaluate the impact of this program through randomized controlled trials (RCTs), involving 100 treatment and 100 control communities in each country. We find that on average, this program did not have a statistically significant impact on the use or content of maternal and newborn health services, nor the sense of civic efficacy or civic participation among recent mothers in the communities who were offered it. These findings hold in both countries and in a set of prespecified subgroups. To identify reasons for the lack of impacts, we use a mixed-method approach combining interviews, observations, surveys, focus groups, and ethnographic studies that together provide an in-depth assessment of the complex causal paths linking participation in the program to improvements in MNH outcomes. Although participation in program meetings was substantial and sustained in most communities, and most attempted at least some of what they had planned, only a minority achieved tangible improvements and fewer still saw more than one such success. Our assessment is that the main explanation for the lack of impact is that few communities were able to traverse the complex causal paths from planning actions to accomplishing tangible improvements in their access to quality health care.
Topic:
Health, Health Care Policy, Children, and Randomized Controlled Trials
Political Geography:
Africa, Indonesia, Tanzania, and Southeast Asia

37. The Case for Publishing Indonesian Mining Agreements

Author:
Robert Pitman and Rani Febrianti
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The disclosure of contracts and licenses in the extractive industries is a rapidly growing global norm. There are now over 44 countries that have disclosed at least some extractive industry contracts or licenses, and the new EITI Standard makes it a requirement for all implementing countries to publish contracts and licenses that are granted, entered into or amended after 1 January 2021. This reflects a growing recognition among governments, the private sector and civil society organizations that disclosure of these documents helps to improve governance of natural resources and contributes to a more stable investment climate. In Indonesia, long-standing advocacy by civil society has resulted in notable advances. In 2011, a decision by the Central Information Commission declared that mining contracts are open documents and a 2016 decision by the Supreme Court declared that IUP licenses are also open documents. Together with a new EITI requirement for the publication of contracts and licenses, these decisions provide the groundwork for the government of Indonesia to develop disclosure practices that will position the country at the forefront of a global trend. This brief explains why Indonesia should proactively publish these important documents, gives an overview of the documents that it should make public, and suggests a path for making publication a reality.
Topic:
Treaties and Agreements, Mining, and Transparency
Political Geography:
Indonesia and Southeast Asia

38. Indonesia’s Oil and Gas Revenues: Using Payments to Governments Data for Accountability

Author:
Alexander Malden and Fikri Zaki Muhammadi
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Under mandatory disclosure laws in the European Union, Canada and Norway, companies listed or incorporated in these countries must disclose the payments they make to government entities for their extractive activities. Under these laws, seventeen international oil and gas companies have reported over $15 billion in payments to Indonesian government entities since 2014. This report explores some of the ways this timely source of payment data can be used as an accountability tool. Civil society organizations, media outlets, government officials, parties to Indonesia’s Extractive Industries Transparency Initiative (EITI) and oversight actors can use payment data in combination with other data sources to: Verify the size and recipient of oil and gas project signature bonuses Estimate and verify the revenue that local and regional government entities should receive from an oil and gas project that operates in their region Estimate and verify the government’s share of production from a project under the new gross split production-sharing contract (PSC) model
Topic:
Government, Oil, Gas, Accountability, and Data
Political Geography:
Indonesia and Southeast Asia

39. Domestic Value Added, Exports, and Employment: An Input-Output Analysis of Indonesian Manufacturing

Author:
Arianto A. Patunru
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The paper is motivated by the current emphasis on the share of domestic value added in exports (SVEX) as a policy criterion for export development strategy in developing countries. Our hypothesis is that the policy emphasis on SVEX, which harks back to the import substitution era, is inconsistent with the objectives of achieving economic growth with employment generation in this era of economic globalisation. We test this hypothesis by examining the relationship of the SVEX with both export-induced employment and the total domestic value added, or the contribution of exports to gross domestic product, by applying the standard input–output methodology to data from Indonesian manufacturing. Our findings do not support the view, widely held in policy circles, that industries characterised by a higher SVEX have the potential to make a greater contribution to employment generation and total domestic value added. The policy inference is that, in this era of economic globalisation, policy makers should focus on the export potential of industries in designing export development policy, rather than on the SVEX.
Topic:
Globalization, Labor Issues, Trade, and Global Value Chains
Political Geography:
Indonesia and Indo-Pacific

40. Midline Effects of a Randomized Controlled Trial to Increase the Utilization of Financial Services by Women Business Owners in Rural Indonesia

Author:
James C. Knowles
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This is the report of a midline evaluation of a randomized controlled trial to increase the utilization of saving and other financial services by women business owners in Indonesia. The trial was motivated by a recent law in Indonesia supporting the development of branchless banking services for a large unbanked rural population and by the results of several studies suggesting that it is possible to stimulate savings and improve a range of downstream outcomes with suitable interventions targeted to under-banked rural populations. The trial was conducted in 400 purposively selected rural and semi-urban villages in five districts of East Java province in which branchless banking services (including basic savings accounts accessible through mobile phones) were available. The randomized interventions supported by this trial include both supply-side treatments (higher agent incentives) and demand-side treatments (training and mentoring of female business owners). The data analyzed include both baseline and midline survey data on female and male business owners and branchless banking agents. Implementation of the trial was delayed due to difficulties in recruiting suitable agents in all 400 trial villages. Numerous supply-side problems, both technical and logistical, were also reported in the monitoring data. However, the midline results indicate that the interventions were successfully delivered, resulting in significant positive effects on key intermediate outcomes, including knowledge and use of mobile banking services and initial take up of a mobile basic savings account. Downstream effects indicate that the supply- and demand-side interventions, particularly in combination, increased women business owners’ savings, empowerment, self-confidence, and economic welfare.
Topic:
Women, Finance, Rural, and Financial Services
Political Geography:
Indonesia and Indo-Pacific