Indonesia Project News no. 14, July – December 2012

2012 Indonesia Update Conference - The State of Education. Tom Kompas opened the Conference

by Trish van der Hoek

A Highlight on the Indonesia Project calendar for the period July–December 2012 was the 30th annual Indonesia Update Conference on the topic The State of Education, held on 21–22 September 2012 at the ANU. Convened by Daniel Suryadarma (Indonesia Project, ANU) and Gavin Jones (NUS, Singapore), the conference attracted approximately 300 participants from academia, government, NGOs and the business community, including many from Indonesia.

Dr Suryadarma stressed the education theme of the conference is timely given the massive transformation the sector has gone through over the past decade. He added that although enrollment rates at all levels continue to increase, quality remains low and has not improved, and in addition, the tertiary education sector continues to be dogged by unsatisfactory performance and blurred lines of authority between institutions and government.

Richard Woolcott, former Australian Ambassador to Indonesia, opened the Update’s proceedings for the third time with a commentary on the status of Australia-Indonesia relations.

Neil McCulloch giving presentation during the Economic Update


The traditional economic and political updates followed. This year Paul Burke and Budy Resosudarmo of ANU’s Arndt Corden Division of Economics presented the economic update. They reviewed the mining and palm oil booms and its impact on living standards, as well as the underdeveloped (outside of Bali) tourism sector. The political update was given by Sandra Hamid of The Asia Foundation who explored the interconnected issues of elections, accountability and corruption.  She argued that despite largely free and fair elections at both the national and local levels, coalition politics has meant less transparency and accountability.  After these regular updates, the state of Indonesia’s education was addressed. Fasli Jalal, former Indonesian vice minister for education, presented the keynote address on policy directions to improve the quality of education and its linkages with the labour market.

The remainder of the program covered four broad education topics: teaching assessment, tertiary education, Islamic education and non-governmental efforts to improve learning, and case studies in education policies.

The climax of the Update was a lively panel discussion on how the quality of education can be improved, with Daniel Suryadarma, Fasli Jalal, Thee Kian Wie and Christopher Bjork, chaired by Ariane Utomo (ADSRI, ANU), which stimulated thought provoking questions.

Colum Graham from Development Policy Centre has written a detailed post on the Update on the Development Policy blog. An article on the conference by Tim Colebatch, the Sydney Morning Herald economic editor, can also be read here. CMS Radio Indonesia Program interviewed Daniel Suryadarma, Ninasapti Triaswati, Sandra Hamid and Anies Baswedan regarding the state of education in Indonesia. An excerpt from Bruce Chapman’s presentation on comparative analysis of higher education financing mechanism is also available here. Podcasts and powerpoint presentations from the conference are available for download from the Update page. Selected videos from the Update are now available for viewing on the ANU Indonesia Project Channel.


As a follow-up to the successful Mini Update and Launch of the 2011 Update book, Indonesia Rising: The Repositioning of Asia’s Third Giant (edited by Anthony Reid, published by ISEAS, 2012) held in Indonesia at the end of June, the book was also launched in Canberra in early July by Hugh White (Professor of Strategic Studies, School of International, Political & Strategic Studies, ANU)

Another recent highlight was a Public Lecture delivered by Gita Wirjawan, the current Indonesian Trade Minister, on Indonesia’s economic profile and opportunity for cooperation. The Lecture, on 12 October 2012 at the ANU, was attended by approximately 100 participants. Ian Young, ANU Vice Chancellor, paid tribute to Indonesian studies at the ANU in his opening speech. He mentioned the Indonesia Project’s success in promoting studies on the Indonesian economy and politics, producing the BIES and holding the annual Indonesia Update, noting the most recent Update on the State of Education in Indonesia. Andrew MacIntyre, Dean of CAP, chaired the Lecture.

Mr Wirjawan gave a glowing report of Indonesia’s economic performance under SBY. Various consulting companies predict a bright economic future for Indonesia, which is now one of the top 15 economies. He pointed out that there has been increased investment outside Java. On a less enthusiastic note, he also admitted that Indonesia cannot yet compete with China and India in the education sector. A Q&A session followed. Mr Wirjawan met with Indonesian students studying in Canberra after the Lecture.

APEC Indonesia 2013 Roundtable: DFAT in collaboration with the Indonesia Project organised a roundtable discussion at the ANU’s Crawford School of Public Policy on Friday 23 November 2012 on the opportunities for Australia arising from Indonesia’s role as chair of APEC in 2013.

The roundtable brought together a select group of around 20 academic experts and senior government officials to exchange views on how we can best use Indonesia’s APEC host year to strengthen the bilateral relationship, support Indonesia’s economic development and advance Australia’s interests.  The discussion covered Indonesia’s trade, economic and regional foreign policy objectives and how they are likely to shape its approach to APEC in 2013, synergies between Indonesia’s interests in ASEAN and the G20 and its APEC objectives, and possible ideas for Australian initiatives that could support Indonesia’s APEC host year priorities.

A facilitator was provided by the Indonesia Project in the Crawford School to guide the discussion, and the Indonesia Project prepared a short synopsis after the discussion for circulation to participants.

For a full account of the proceedings, see the article on the Indonesia Project Blog.

High Level Policy Dialogue 2013 – Preparatory Meeting: On 23 November 2012 the Indonesia Project welcomed the team from the Fiscal Policy Office of Ministry of Finance, RI (BKF) led by its head, Professor Bambang Brodjonegoro. This was a preparatory meeting for the upcoming 2013 High Level Policy Dialogue (HLPD) in Jakarta (scheduled March). The event was chaired by Professor Hal Hill with Associate Professor Budy Resosudarmo and Dr Paul Burke as the leading discussants.

For a full report of this meeting, see the article by Arianto Patunru on the Indonesia Project Blog.

Indonesia's current Ambassador to Australia, H. E. Nadjib Riphat Kesoema, during the HLPD



Our regular Core Activities include the Bulletin of Indonesian Economic Studies (BIES) the Indonesia Study Group seminars and the Jakarta Seminar Series. For previews of the August and December issues of the BIES, click on the following links: August and December. They are also available online.

Bulletin of Indonesian Economic Studies

Following the retirement of Ross McLeod as editor of the BIES, the Indonesia Project is very fortunate to have Pierre van der Eng as his successor. The December issue is the first one under Pierre’s editorship. This is the last of 72 issues of BIES edited by Liz Drysdale, our Associate Editor since 1988. Liz retires at the end of 2012, and her close colleagues at the Indonesia Project express their appreciation for her contribution to quality and innovation in the journal’s production over 25 years.

The August 2012 issue of the Bulletin of Indonesian Economic Studies is a special issue in honour of Ross McLeod and Chris Manning. It is guest edited by Hal Hill and Budy P. Resosudarmo, and comprises essays by some of the closest colleagues and friends of Chris and Ross. The foreword is written by Boediono, Indonesia’s Vice President, who has known them both well. He pays tribute to their ‘seminal contributions to Indonesian research in their respective fields’ and notes: ‘For over a decade from the late 1990s, they were key figures in consolidating the reputation of the ANU’s Indonesia Project as the premier centre for work on Indonesia outside the country … Their work has been influential for senior levels of government, for universities and think tanks, and for all students of Indonesian economic development, both inside the country and internationally.’

This issue’s ‘Survey of recent developments’ by Susan Olivia and Chikako Yamauchi, cites evidence that President Susilo Bambang Yudhoyono and the party he leads are becoming increasingly unpopular. They add that economic growth slowed moderately in the first quarter of 2012 as export and import growth decelerated, but the overall economic growth rate nevertheless remained robust at 6.3%. Inflation has risen since February but is still within Bank Indonesia’s target range. Macroeconomic indicators suggest that the economy is in good shape, but recent policy initiatives could deter investment and curb economic growth. Expenditure on fuel subsidies is likely to come at the expense of other compelling public expenditure items such as social assistance and health.

M. Chatib Basri and Arianto A. Patunru explore the ups and downs of trade protectionism in Indonesia since the Asian financial crisis of 1997-98 in their paper ‘How to keep trade policy open: the case of Indonesia’. Asep Suryahadi, Gracia Hadiwidjaja and Sudarno Sumarto discussEconomic growth and poverty reduction in Indonesia before and after the Asian financial crisis’. Their findings suggest the need to formulate an effective strategy to promote sectoral growth in order to speed up the pace of poverty reduction.

Hal Hill and Thee Kian Wie evaluate the rapid changes in Indonesia’s higher education system in ‘Indonesian universities in transition: catching up and opening up’. Three key themes in this paper are: rapid growth, overcoming the historical backlog, and the need for further fundamental reform. Tim Lindsey’s ‘Monopolising Islam: The Indonesian Ulama Council and state regulation of the ‘Islamic economy’ describes how regulatory changes since 1998 have expanded the formal role of the Council in the state system for the administration of Islamic legal traditions and, in particular, the ‘syariah economy’.

George Fane’s ‘Allocating and taxing rights to state-owned minerals’ questions whether Indonesia is using the most effective possible strategies to derive revenue from its mineral resources. Peter McCawley and Thee Kian Wie contribute a tribute to one of the key figures in Indonesian economic policy making since the late-1960s in ‘In memoriam: Widjojo Nitisastro, 1927-2012’.

The December 2012 issue of the Bulletin of Indonesian Economic Studies contains the latest ‘Survey of recent developments’ by Paul Burke and Budy Resosudarmo. The survey reports that Indonesia’s economy is weathering global and regional economic uncertainties thanks to sustained high growth of domestic demand. Inflation has stayed within Bank Indonesia’s target range despite a recent increase in food prices. Fiscal policy remains conservative, even though government efforts to reduce growing electricity and fuel subsidies have so far been ineffective. The survey highlights new divestment and domestic processing requirements that may reduce investor interest in Indonesia, particularly in mining.

The authors focus on three key current themes. (1) The contrast between President Yudhoyono’s passion for ‘green growth’ and policies that appear to thwart its effects, such as continued loss of natural forests. (2) The tension, evident in the commodity boom in coal and palm oil, between high economic growth and environmental goals. (3) The scope for increasing international tourism through infrastructure improvements and a renewed focus on the conservation of natural resources.

The other papers in this issue cover a range of other topics. Sandra Hamid discusses recent political trends, highlighting flaws in Indonesia’s democracy. Emmanuel Skoufias, Roy Katayama and B. Essama-Nssah investigate the welfare impact of delayed rainfall and rain shortfalls on rice farming households in rural Java. Cut Dian Agustina, Wolfgang Fengler and Günther Schulze use data for 2009 and 2010 to analyse the regional impact of Indonesia’s fuel policies. Anu Rammohan and Elisabetta Magnani investigate whether the need to care for ill or elderly parents influences migration decisions of working-age adults in Indonesia.

This issue sadly notes the passing of two former colleagues who made outstanding behind-the-scenes contributions to the early development of BIES and the Indonesia Project Anne Booth and colleagues pay tribute to Ruth Daroesman, a scholar of Indonesia who worked closely with the journal’s founding editor, the late Professor Heinz Arndt, as Assistant Editor between 1967 and 1983. Hal Hill recalls Margaret Easton’s pivotal role in supporting the work of Heinz Arndt from 1951 to 1980.

The abstracts of recently completed PhD dissertations on Indonesia comprise the economic impact of tax policy reform; the effect of state restructuring on regional economic convergence; liquidity risk management in Islamic banking; and determinants of export performance. Two PhD studies of global production networks examine what determines participation and why Indonesia lags behind neighbouring countries, and what role global and domestic value chains play in technological upgrading.

Indonesia Study Group (ISG)

The Indonesia Study Group (ISG) program remains a dynamic on-campus activity with an increased number of people attending ISG seminars in 2012 compared with 2011, averaging 30 people per seminar, compared with 20 per seminar last year. The ratio of women to men attending remains the same, but there has been an increase in student attendance due to making ISG seminar announcements through the Indonesian students’ mailing list.

The highest attendance for the period July-December was on 8 August 2012 when Bill Liddle, recently retired political scientist on Indonesia from Ohio University, gave a talk on Indonesian Democracy: from Transition to Consolidation. 73 people attended the seminar, including senior government officials from DFAT, ONA and AusAID, and academics and students. This seminar was recorded, and the podcast and Bill Liddle’s powerpoint presentation can be found on the ISG page.

Participants during one of ISG Seminars

While sessions tend to focus on political and economic issues, a wide range of other topics were covered in the July–December 2012 period, including People’s Voices: Media, Popular Culture and Democratization Process in Post-Reformasi Indonesia; From Rhizome to Banyan (the unexpected collaborations of two Papuan activists in West Papua’s independence movement); State and Economy in Indonesia’s Transition to Sovereignty: A Comparison with the Philippines, Singapore, South Korea and Taiwan; What Can Wikileaks Tell Us about Indonesia?; Survey of Recent Developments in Indonesia; Poverty Alleviation Policy in Indonesia under SBY: Challenges and Reforms; Green, Local, and Political: Indonesian Traditionalist Islamic Groups beyond NU; Early Childhood Development in Indonesia; Indonesian Democracy: From Transition to Consolidation; Indonesia’s International Economic Interests; Surprise Result in Jakarta Governor’s Election: What Does It Mean for Local and National Politics in Indonesia?; Mending an Imaginary Wall: Understanding Border Incidents in Indonesia and Proposals for Solution; Indonesia at the Center of the Coral Triangle: Mere Posturing or an Opportunity for Action?

The last three ISG addresses for 2012 were:

  • Harun Harun (Tadulako University, Palu, Indonesia) on Obstacles to Public Sector Accounting Reform as an Anti-Corruption Measure
  • Chris Manning (ACDE, ANU) on Increased Labour Activism in 2011-12: Wage, Employment and Equity Issues
  • Jacqui Baker (Centre for Transnational Crime Prevention, University of Wollongong): The Parman Economy

Podcasts are available for most of the talks.

See the Indonesia Project website for further details.

Jakarta Seminar Series (FKP)

The Jakarta Seminar Series, Forum Kajian Pembangunan, is run by a consortium consisting of various institutions in Indonesia, in collaboration with the Indonesia Project. Institutions in the consortium take turns on a monthly basis to host research based policy forums to discuss research outcomes related to topical policy issues in Indonesia.

In the July-December period, five institutions hosted the Forum for a month each. The Center of Economic and Development Studies (CEDS) of Padjajaran University hosted the FKP in July in Jakarta. The first speaker was Daniel Suryadarma, on the topic of ‘The Consequences of Child Market Work on the Growth of Human Capital’. Another ANU researcher, Iwu Dwisetyani Utomo (Australian Demographic and Social Research Institute) followed with ‘The 2010 Greater Jakarta Transition to Adulthood Survey: Results and Policy Implications’. At the end of July, Martin D Siyaranamual  from CEDS talked about ‘Social Interaction and Public Goods Provision: A Case of Waste Management in Bandung, Indonesia’.

Kementerian Kelautan dan Perikanan, Republik Indonesia, hosted two presenters in August, namely Günther G. Schulze (Professor, Freiburg University, Germany) who talked about ‘What Determines Firms’ Decision to Formalize? Evidence from Rural Indonesia’ and Catur Sugiyanto (Professor, Universitas Gadjah Mada, Yogyakarta) who discussed ‘Livelihood Recovery after Natural Disasters: The Case of Yogyakarta Earthquake (2006) and Merapi Eruption (2010)’, which was relatively well attended. Apart from Bappenas and the Bank of Indonesia, this is the only other FKP to have been hosted by an Indonesian government agency for a whole month.

Matthew Wai-Poi from World Bank giving an Forum Kajian Pembangunan seminar


In September, Kajian Pengembangan Perkotaan UI hosted four talks: Randy Wrihatnolo (KeMenko Perekonomian) and Komara Djaja (Kajian Pengembangan Perkotaan UI) presented on ‘Kebijakan dan Implemantasinya: Setahun Pelaksanaan MP3EI’, with a record eighty people attending the event, mostly from the KeMenko Perekonomian; Andy Simarmata (Kajian Pengembangan Perkotaan UI) gave a talk on ‘A Resilient City’; Taimur Samad (The World Bank) talked about ‘Urban Development and Growth’ and Vivi Alatas, Ririn Purnamasaari and Matthew Waipoi (The World Bank) gave a presentation on ‘Poverty Targeting in the Urban Setting’ to close the month’s presentations.

USAID – SEADI hosted presenters in October, with two of the meetings having two presenters. Anwar Nasution (Fakultas Ekonomi UI & USAID – SEADI) spoke about the ‘Impact of the European crisis on Indonesia: What should Indonesia do?’ and Timothy Buehrer (Chief of Party, USAID-SEADI) discussed ‘Current trade issues in Indonesian policy’. Budy Resosudarmo (Indonesia Project, ANU) also took the opportunity to present the most recent Survey of Recent Developments (to be published in the last BIES Issue of 2012), focusing on a subset of the Survey, i.e. ‘Commodity Booms and Green Growth in Indonesia’. Finally, Thee Kian Wie (Economic Research Centre, P2E-LIPI) presented on ‘The Indonesian economy after the global financial crisis (GFC)’ and Moekti P. Soejachmoen (USAID-SEADI) on ‘Globalization and the electronics Industry: Is Indonesia missing out?’ in the last FKP session hosted by SEADI.

The Bank of Indonesia hosted three presentations in November. Sugeng (Head of Monetary Policy Group, DKP, Bank Indonesia) talked about ‘Current Regional Economy in the Midst of Global Economic Slowdown’; Ben Bingham (Senior Resident Representative for Indonesia, International Monetary Fund) presented on ‘Indonesia: Medium Term Prospects and Challenges’; and Edimon Ginting (Senior Economist, Asian Development Bank (ADB) Indonesia Resident Mission) gave a talk on ‘Indonesia’s Connectivity Policies: A Brief Assessment’.

December’s FKP was hosted by the Indonesia Project on 4 December, with Peter Warr of ANU speaking on Agricultural Research and Productivity in Indonesia.  The Faculty of Economics and Business of Gadjah Mada University hosted the FKP on 14 December, which featured a panel of three — Tony Prasetiantono, Elan Satriawan, and Arti Adji — speaking about illegal customs fees.

Overall, nineteen Forum events were held in the second half of the year, with an average of 26 attendees (the lowest level of attendance being 11 and highest 80), and an equal number of male and female attendees. Staff members of universities and government and non-government research institutions tend to make up most of the audience: 50 percent of the total attendees are from universities and 25 percent from government agencies. The other group of attendees are from donor agencies (AUSAID, World Bank) and donor-funded projects (e.g. SEADI). We also see attendance of this event by journalists, and we hope to see more media representation at future FKP meetings.

Detailed agenda of these group discussions are available on the website as well as the full seminar paper for most of them. From May onwards, the FKP presentations have been visually recorded, and videos are available for viewing on the Indonesia Project YouTube FKP channel.

Times and venues of the forums are on the website and they are free and open to the public. If you would like to subscribe to the email list, please send your contact details (including email address) to

Other Seminars

A workshop organised by the Indonesian Regional Science Association and the Faculty of Economics, Lambung Mangkurat University, was held in Kalimantan on 13–14 November in preparation for writing the book Development, Environment and the People of Kalimantan.

During IRSA Workshop in Kalimantan

The aim of the Workshop was to present and discuss the broad contents of each chapter of the book, and obtain feedback from authors and from key stakeholders in Kalimantan who were invited to attend the Workshop.

A detailed agenda of the Workshop is available on the Indonesia project website.

In brief, opening remarks were delivered by the President of the IRSA, the Rector of Lambung Mangkurat University and the organising committee. Topics covered in five sessions were: The Economy, Social Development and Health; Cultural Diversity and Conflicts; Natural Resource Management; Biodiversity Conservation; and Global Changes and Local Resilience.

The Indonesia Project supported this event by funding the attendance of Budy P. Resosudarmo and Edward Aspinall (ANU) and Petra Mahy (Monash University).



The Project hosted eight academic visitors in the second half of 2012. Lydia Napitupulu, from the Faculty of Economics, University of Indonesia, Depok, visited for a week in July and in her role as Indonesia Liaison Officer for the Project  discussed future Indonesia Project activities in Indonesia with Project staff. In addition, she presented an ISG talk, Indonesia at the Centre of the Coral Triangle: Mere Posturing or an Opportunity for Action?

Elan Satriawan (Gadjah Mada Univeristy, Yogyakarta) visited the Project for four weeks in August and September. He presented an ISG on Poverty Alleviation Policy in Indonesia under SBY: Challenges and Reforms and worked on a paper with Daniel Suryadarma, Program Nasional Pemberdayaan Masyarakat.

Wardis Girsang (Facultas Pertanian, Universitas Pattimura) visited for six weeks in August and September to complete his book on Maluku province Kemiskinan Multidimensional di Palau-Palau Kecil (Multidimensional poverty in small islands), and to complete an article about poverty in transmigration (resettlement) and non transmigration villages on Seram Island, Maluku province. His goal was also to exchange ideas with researchers at the ANU on the issue of poverty alleviation.

Li Wannan (The Institute of Southeast Asian Studies, Jiang University) was with the Project from 21st June to 21st August to research her topic, Study on Economic Relations between Indonesia and Australia from a Chinese Perspective.

Thee Kian Wie (LIPI, Jakarta) visited the Project from17th to 30th September. He presented an ISG on State and Economy in Indonesia’s Transition to Sovereignty: A Comparison with the Philippines, Singapore, South Korea and Taiwan. He also presented at the Indonesia Update Conference with Hal Hill on Indonesian Universities: Rapid Growth, Major Challenges.

Haryo Aswicahyono (CSIS, Jakarta) and Dionisius Narjoko (Economic Research Institute for ASEAN and East Asia, Jakarta) visited from 19th September to 30th September to conduct research on Indonesian industrialisation dynamics, competitiveness and structural change, jointly with Hal Hill.

Harun Harun (Lecturer, Accounting Department, Faculty of Economics, Tadulako University, Palu, Central Sulawesi) visited the Project for four weeks in November. He presented and ISG on Obstacles to Public Sector Accounting Reform as an Anti-Corruption Measure. He recently completed his PhD at the University of Waikato in New Zealand, on the topic ‘Public Sector Reforms in the Indonesian Post Suharto Era’. His particular interest is in public sector accounting, and while visiting ANU he was finalising a paper on public sector accounting reform in Indonesia, based on a small research project he undertook recently with Ross McLeod. He was also working on other articles for publication on the internationalisation of accrual accounting, focusing on local governments in Indonesia, based on his PhD research.



Indonesia Update 2013: Regional Dynamics in a Decentralized Indonesia: Hal Hill will be the convenor of the next Update, to be held on 20–21 September 2013.

With its 17,000 islands, Indonesia is the world’s largest archipelagic state, featuring great economic, social, cultural, ecological and demographic diversity. This diversity is also reflected in its evolving sub-national administrative organization, featuring over 500 provinces, districts and municipalities, with their own elected leaders and assemblies. It will soon be 14 years since the nation embarked on a rapid transition from authoritarian to democratic rule, and 12 years since it introduced a ‘big bang’ decentralization. These reforms have had transformative effects on the country’s socio-economic development and its political economy.

More than a decade on, this Update will look forward and backwards to examine Indonesia’s regional diversity and dynamics in the wake of these reforms. Through a mixture of broad thematic analysis and focused case studies, the conference and resulting book volume will address the following questions:

Which have been the dynamic and lagging regions, and why?

What has happened to inter-regional inequality?

How rapid is the process of urbanization and emerging mega cities?

How have local-level politics and governance responded to the greater democratic space and resource flows?

In what respects have the decentralization reforms worked well, and what are the remaining challenges?

How has decentralization affected environmental management?

What has happened to poverty and social progress at the regional level?

How may the special challenges of lagging and post-conflict regions be addressed?

How have migration patterns and the demographic mosaic changed over this period?

Sadli Lecture: Vikram Nehru, a senior associate in the Asia Program and Bakrie Chair in Southeast Asian Studies at the Carnegie Endowment, will deliver the 2013 Sadli Lecture on the topic, India and Indonesia: Why Manufacturing is Important and How Supporting Policies Compare. It will take place at the Borobudur Hotel on 24 April.

Hadi Soesastro Policy Forum in June with CSIS: This will be the new format for the Mini Update & Book Launch held in previous years. This will be a bigger conference inviting a prominent speaker, and will be followed by the launch of the Update book from the 2012 conference, a panel discussion and lunch.

A new BIES Forum to be conducted with CSIS in 2013: CSIS will invite a paper from BIES to be presented at the Forum, one to be held at CSIS with another presentation outside Java.



Following an extensive review of the Indonesia Project in 2011, a new contract was drawn up between the ANU and AusAID for AusAID’s continued financial support of the Indonesia Project for the four year period from July 2, 2012 through to June 30, 2016. We are very grateful to AusAID for this funding that is integral to the Project’s activities.

The Indonesia Project would also like to thank the ANU for core support for staff and facilities.



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