High Level Policy Dialogue 2015 in Jakarta

High Level Policy Dialogue Indonesia Project Bambang Brodjonegoro Minister of Finance

The 2015 Indonesia-Australia High Level Policy Dialogue (HLPD) took place in Jakarta on March 25. Three key issues were discussed, namely regional fiscal transfers, social welfare policy, and global production networks. The Indonesia Project was represented by Professor Hal Hill, Professor Prema-chandra Athukorala, Associate Professor Blane Lewis, Dr Robert Sparrow, and Dr Arianto Patunru. The event also involved speakers from the Australian Treasury (Ms Natalie Horvat and Ms Georgina Prasad) and high level officials from Indonesia’s Ministry of Finance and Ministry of Industry, as well as representatives from the Indonesian business sector.

The HLPD was kicked off by Minister of Finance HE Bambang Brodjonegoro and Australian Ambassador to Indonesia HE  Paul Grigson. Prior to discussing the three topics, the Head of the Fiscal Policy Agency, Professor Suahasil Nazara, presented an update of the recent status of the Indonesian economy. Professor Hill discussed it in relation to international developments. Both agreed that the Indonesian economy was holding up well in a challenging environment – domestically and globally.

HLPD Jakarta Ministry of Finance Indonesia Project

The session on regional fiscal transfers focused on the issue of Indonesia’s village grants and how they might be distributed equitably and efficiently. The presentation on the Australian system of federal fiscal relations served as a reminder that, even old, well-established arrangements could be very complex.

The final session started with a discussion as to why, relatively speaking, Indonesia is lagging behind in the global production network. Causes identified were a sluggish industrial sector as a result of intensified competition from China, the ‘Dutch Disease’ effects of the commodity boom, cost pressures in the labour market, high logistics costs, and a certain ambivalence regarding the benefits of globalisation.

Professor Hal Hill reported the communique to Minister Bambang Brodjonegoro the next day (26/3) and the Minister said he was looking forward to the follow up both in terms of policy formulation within his ministry as well as the opportunity of future dialogue between Australia and Indonesia. The entire event ended with an evening cocktail reception at the Australian Ambassador’s residence.