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This study empirically examines how a reduction in input tariffs changes firms' choices between domestic and foreign inputs. In order to do so, we employ Indonesian manufacturing surveys from 2002 to 2010 and compute the share of imported inputs among total inputs at the firm‐product level. With this dataset, we examine the effect of preferential tariffs for ASEAN countries—that is, ASEAN Free Trade Area (AFTA) tariffs. Our findings can be summarized as follows: First, we found that a reduction in AFTA tariffs in Indonesia encouraged plants to raise their share of foreign inputs. Second, such an effect of AFTA tariffs was observed only for indigenous plants, or those whose primary sales market is the domestic market. Third, we found that the more productive plants experienced a greater impact of AFTA tariffs on foreign inputs. In short, the reduction in AFTA tariffs encouraged input reallocation, at least in some specific firms in Indonesia. [ABSTRACT FROM AUTHOR]

Infrastructure Investment in Indonesia: A Focus on Ports, edited by Colin Duffield, Felix Kin Peng Hui, and Sally Wilson. Cambridge: Open Book Publishers, 2019. Pp. 396. The book Infrastructure Investment [...]

This article examines Indonesia's progress in reducing poverty during President Joko Widodo's tenure. The poverty rate decreased from 17.8% in 2006 to 9.4% in 2019, but the COVID-19 pandemic caused a temporary increase in poverty rates, particularly among women and young workers. The government implemented social assistance programs to support the poor, but poverty remains a significant challenge. The article discusses key programs and strategies for poverty eradication, as well as challenges in implementing these programs effectively. It concludes by discussing the prospects of Indonesia's goal to eradicate extreme poverty and the need for targeted social protection programs. [Extracted from the article]

In recent years, China has been catching-up with other advanced economies and become one of the "leading geese" in the Asian economy. China not only plays a leading role in regional production network but also in various regional economic cooperation. Indonesia, being one of the following geese, needs to adjust its position to benefit from this change in global and regional order. While other more advanced economies have less to offer, Indonesia has gradually moved closer toward China in terms of economic cooperation. Using the flying geese model, this paper argues that China's BRI might change trade and investment trends in Indonesia. China BRI might complement the role of Japan as a catalyst for economic development in the Asian region in general and in Indonesia in particular. There is no official BRI project agreed by Indonesia so far. However, there are a number completed and ongoing China–Indonesia projects, which arguably might pave the way for future BRI investment. Currently, apart from the Jakarta–Bandung High speed railways, most of the projects are concentrated in resource-exploitation needed by China and the fulfilment of Indonesian development needs, such as power generation, mineral smelters and industrial parks. From the Beijing's perspective, these projects are perceived as part of BRI. Since these so-called BRI projects have not been completed, it is therefore impossible to assess their impacts on Indonesia's industrialization at this point. However, we can still argue that BRI might have initiated a new type of investment that might in turn change the industrial trends, structure and performance in Indonesia. If this change leads to improvement in products quality or value added, industrial upgrading, technological transfer and export boost, then one may argue that BRI has brought promised benefits to the host economy (i.e., Indonesia). Otherwise, the benefits would be negligible. [ABSTRACT FROM AUTHOR]

President Joko Widodo was inaugurated for his second term with a vision to make Indonesia a $7 trillion economy by 2045, seven times its current value. This Survey examines recent developments in Indonesia, with a focus on the challenges of laying the foundations for Jokowi's vision. It discusses issues surrounding the new cabinet composition in relation to economic targets and asks whether the cabinet can push through the reforms needed to achieve the required rate of economic growth. While the annual growth rate has steadied at 5%, we argue that this rate will be insufficient for realising the president's 2045 vision. A higher growth rate is needed in the next five years but will be difficult to achieve given the external and domestic challenges. The government's plans to push for productivity improvements and promote investment in value-added manufacturing are laudable. To realise these plans, the government should invest in creating a healthy and competitive investment climate. Policies to promote such a climate should be implemented with the support of capable institutions to expedite the process. [ABSTRACT FROM AUTHOR]

Once an island of high-tech production and turbocharged growth, Batam has seen its economic fortunes decline of late. Traditional pillars of the manufacturing sector such as electrical goods, electronics and shipbuilding have contracted. Investment levels have fallen, the island's growth rate is below the national average and unemployment has increased sharply. In response, policymakers are promoting the development of new sectors in order to diversify the island's economic base, and are debating changing Batam's status from a free trade zone (FTZ) to a new, more expansive regulatory regime in order to attract more investment. In two ways, this article contributes to the debate on how to revitalise the island's economy. First, using data from the Manufacturing Survey of Large and Medium-sized Firms, it analyses the growth and performance of Batam's three largest manufacturing sectors—electronics, electrical goods and shipbuilding—over 2004–15. These results are then compared with those from firms in the same sectors in other major industrial locations in Indonesia to establish which activities in Batam remain competitive. Second, the article carries out an econometric exercise to determine whether the island's FTZ status is related to improved levels of output, exports, employment and efficiency. The results of these exercises are used to evaluate the policy choices available to Batam. [ABSTRACT FROM AUTHOR]