INDONESIA'S INVESTMENT CLIMATE, extract from the Survey of Recent Developments in the Bulletin of Indonesian Economic Studies, Vol. 43, No. 1, 2007: 7-33

by J. Thomas Lindblad, University of Leiden and Thee Kian Wie, Indonesian Institute of Sciences (LIPI), Jakarta

Indonesia’s recent growth performance is better described as respectable rather than impressive. National income accounts released in February estimated the year-on-year growth in GDP to the December quarter of 2006 at 6.1 per cent, a significant increase from the 5.5 per cent growth rate reported for the third quarter.

Economics coordinating minister Boediono warned in late 2006, however, that these rates are not sufficient to solve the country’s main economic problems, especially unemployment and poverty. Therefore, the government’s focus in 2007 must be on sustaining a growth rate above the 6 per cent level.

Surprisingly, growth was driven mainly by investment in the December quarter — a stark contrast with the previous four quarters. This boost in investment reflects ongoing buoyancy in the construction sector, which accounted for about three quarters of total investment spending. On the other hand, the continued decline of investment in machinery and equipment is a matter for serious concern since it signals little prospect of growth in jobs in the modern sectors, a strong contributor in the past to large reductions in poverty.

Moreover, Indonesia’s investment climate remains poor in comparison with its neighbours. A report published by the Japan Bank for International Cooperation in 2006 found that Indonesia’s rank as a promising host for Japanese direct investment (the largest group of investors in Indonesia’s non-oil and gas sectors) in the medium term had declined from fourth in 2002 to ninth in 2006.

Firms from China, Singapore and Malaysia are showing more interest in investing in Indonesia. One recent example was an offer by the China Railways Corporation to build a seven-kilometre bridge connecting the islands of Batam and Bintan, with an initial outlay of about $350 million.

Interest on the part of foreign firms also extends to the acquisition of distressed private companies and banks in Indonesia, as well as to state-owned enterprises.

Since early 2006 the Indonesian government has put high priority on reforms to improve the investment climate. By December, 35 out of 85 envisaged measures were reported to have been completed although the draft law on investment had not yet been enacted. That draft includes ‘national treatment’ of foreign investors (putting them on an equal footing with domestic firms); a revised ‘negative list’ (of sectors closed to foreign investment); and streamlined procedures for obtaining investment approvals – all sensitive political issues since anti-foreign business views are held widely among the general public. In addition, the poor quality of the bureaucracy, significant deficiencies in physical infrastructure and other legal insecurity deter foreign investors.

Uncertainties about fresh investment in Indonesia are well illustrated in the oil and mining sectors. Now well below Indonesia’s OPEC quota, crude oil production in Indonesia fell from 1.95 per cent of world output in 2000 to 1.4 per cent in 2004. The decline is attributed to the increasing difficulty of extraction as reserves are depleted and to significantly reduced investment in exploration and development after the late 1990s economic crisis. While spending on exploration has recovered considerably there have been no significant discoveries in the western part of the archipelago in the last decade and little exploration yet in eastern Indonesia.

Mining operations typically have been highly profitable in recent years, thanks to huge demand from China and India. Yet the climate for new investment is poor. Exploration has been declining over the past decade, because of political instability and regulatory duplication and inconsistency.

In addition bans on mining in protected forests have been introduced in response to pressure from environmental groups in the new democratic environment, but with little attempt to compare the social benefits of leaving minerals in the ground with those of digging them up.

As in so many other areas of the Indonesian economy, action in turning resolve into legal certainty for investors will be an essential component in meeting Boediono's goal of sustaining growth rates of more than six per cent.

[Ed. Those other areas: macro-economic trends, the fiscal environment, infrastructure development and poverty reduction are covered in the full survey.]

Links:

• http://rspas.anu.edu.au/
  economics/bies/

• The Bulletin of Indonesian Economic Studies (BIES) is a refereed journal published by the Taylor & Francis Group under its Routledge imprint, now located on the new Taylor & Francis informaworld online platform at www.informaworld.com/smpp/
  title~content=1472-7234.

• The Centre for Strategic and International Studies in Jakarta (www.csis.or.id) publishes BIES for distribution in Indonesia.

RESEARCHING TERRORISM

by Francesca Beddie, Editor, Asian Currents

The Australian’s foreign editor, Greg Sheridan, wrote in a column (http://www.theaustralian.news.
com.au/story/0,20867,21940055
-25377,00.html) on Thursday 21 June, that ‘The media and governments get the terror threat. Too bad our academics and think tanks don't’. That assertion deserves further investigation.

In discussing the arrest of Jemaah Islamiah terrorists, Sheridan observed that the Australian media's response to this event was dominated by commentary from three international researchers: Sidney Jones of the International Crisis Group, Rohan Gunaratna, an academic based in Singapore, and US academic Zachary Abuza. He went on to ask ‘Doesn't it strike you as bizarre that there is not a single Australian researcher on Southeast Asian terrorism of international repute?’ While then acknowledging that Australian universities and the think tanks have produced some good work on terrorism, he said this has been done mainly by area experts, analysing terrorists as part of the societies they study. Sheridan conceded that this was valuable but went on to declare that Southeast Asian Islamist extremism deserves ‘at least a few bodies actually working on it full time’.

What a pity Sheridan did not check his facts before voicing his opinion. Australian academics are studying the terrorist threat. This is a burgeoning field, one being supported by Australian Government research funds and contributing to policy development as well as to international understanding of the contemporary challenges terrorism poses.

One of Australia’s leading academics, internationally recognised for his scholarship on international relations and Southeast Asia, addressed the very issues raised by Sheridan at the Terrorism History Conference on 14 June. The conference, held by the Research Network for A Secure Australia, was open to the public. It was attended by scholars,

Links:

• For a list of some of Carl Thayer’s recent writings on terrorism in Southeast Asia see http://www.unsw.adfa.edu.au/
  hass/staff/thayer.html

• Voices of Islam in Southeast Asia: A Contemporary Sourcebook http://asianstudies.anu.edu.au
  /weblog/index.php?/archives/
  60-recently-published-Voices
  -of-Islam-in-Southeast-Asia.html
  
  

• The April 2007 edition of the journal South Asia, produced for 35 years by Australian scholars of South Asia, is a special issue titled ‘South Asia: the spectre of terrorism’. The issues examines the multiple factors that have led to the growth of terrorism across South Asia, from the militancy in Kashmir and ethnic conflict in Sri Lanka, to the turmoil in India’s north-eastern states and the sectarian violence in the streets of Pakistan. See http://www.tandf.co.uk/
  journals/spissue/csas-si.asp
  
  

• See http://www.homelandsecurity.
  org.au/past_events.html for details about the conference on Terrorism History conference and
  
  

• The Research Network for a Secure Australia (RNSA) is a multi-disciplinary collaboration established to strengthen Australia's research capacity for protecting critical infrastructure (CIP) from natural or human caused disasters including terrorist acts. http://www.secureaustralia.org
  

Q: When did you become interested in studying Asia and why?
A: A. I first travelled through Asia more than thirty years ago, and have been a regular visitor for the last two decades. I have been particularly interested in Afghanistan since the late 1970s, at which time I was considering doing a PhD on Soviet politics. The Soviet Union’s invasion of Afghanistan in December 1979 brought these two interests together.

Q: What are your current preoccupations?
A: I continue to write extensively on Afghanistan’s domestic politics and international relations, most recently in a book entitled Rescuing Afghanistan (London; Hurst & Co., 2006). I also visit Afghanistan frequently. I was there in April 2007 to review the curriculum of the Institute of Diplomacy in the Ministry of Foreign Affairs on behalf of the UN Development Programme.

However, as Director of the Asia-Pacific College of Diplomacy, I have interests in many different parts of Asia, and in the second half of 2007 will be involved in running training programmes in Timor Leste under the auspices of AusAID’s Public Sector Linkages Program. I also have a longstanding interest in the rise of India as an Asian power, and try to pay regular visits to India.

Q: How do these fit into the contemporary scene?
A: Afghanistan has a nasty habit of capturing world attention at the very times when many policymakers would happily see it consigned to oblivion. This is in large measure because it offers an almost paradigmatic projection of the problems associated with severe state disruption. Timor Leste also illustrates some of these problems, although the path by which it arrived at them is very different from that which Afghanistan has trodden. In each case, there are interesting historical lessons to be learned, but also benefits from seeking to think conceptually about what has occurred. There is a pressing need in such countries to find ways of effectively designing, constructing and legitimating new institutions, but it is only by a fruitful melding of history and theory that past experience can be fruitfully exploited.

Q: What are your hopes for Asian studies in Australia?
A: First, to survive. This may sound alarmist, but without further investment to sustain language teaching in Australian universities, there is a real risk that the cutting edge which Australia has enjoyed in the study of key parts of Asia will be permanently lost. Beyond this, I hope that Asian studies will succeed in embracing the offerings of scholarship in social science. My own inclination is decidedly eclectic; I am much more interested in whether an approach is illuminating than whether it emanates from one discipline or another. Finally, I hope young students can experience some of the excitement of studying other parts of the world. In times when a Pauline Hanson can go on national radio to assure us that she has ‘no problems’ with ‘Christian Muslims’, it is pretty clear that we continue to need Asian studies in a big way!

With an Australian diplomat father and Thai mother, Sumalee Milne had the opportunity to live in many Southeast Asian countries and to be exposed to different cultures, languages and ways of life while growing up. It seemed only natural to do a Bachelor of Asian Studies, majoring in Thai language, at the Australian National University. Upon graduation, having a desire to return to Southeast Asia and get involved in development work, Sumalee applied for a posting with Australian Volunteers International and was sent to Northern Thailand, where she has been living and working for the last 10 years. Two years ago, she successfully applied for Thai citizenship.

During this time, she has worked for several grassroots non-government organisations that assist the hilltribe people living along the mountainous border area between Burma and Thailand. Her role in these NGOs usually involved translating and proposal writing, as well as training staff in development work.

Due to the demand, she became a freelance translator, mostly for NGOs, and also interpreted for several documentaries, including ‘Trafficked’, screened on SBS last year.

Looking for full-time work again, Sumalee started her teaching career and has been teaching primary school for the last three years. In 2006, she also took on the position of director of a hilltribe children's hostel. This led to Sumalee fulfilling a dream to set up her own foundation and hostel. The Ayui Foundation was established in April this year to provide housing and educational and peer support to 11 hilltribe teenagers. Sumalee can be contacted at ayui.foundation@gmail.com if anyone is interested in helping.

www.asmasiapacific.org

Is the host for the Artisanal and Small-Scale Mining (ASM) Asia-Pacific Learning Forum, whose mandate is to promote knowledge about ASM in the region, especially as it applies to poor people’s livelihoods, best practices in environmental care, in policies that work for people as well as for the environment, in creating new approaches that are inclusive, and to promote fellowship and cooperation among those persons and groups interested in poverty eradication and sustainable development.

Voyage of Hope: Vietnamese Australian Women's Narratives (Common Ground Publishing, 2005) by ASAA member, Nathalie Huynh Chau Nguyen, was shortlisted for the prestigious 2007 New South Wales Premier's Literary Award. The judges concluded that this is a work of important cultural and social history, containing amazing, often terrifying, life-stories…that never lapse into cultural clichés or sentimentality. http://www.australian.unimelb.edu.au/research/publications/voyageofhope.html

CHINESE STUDIES ASSOCIATION OF AUSTRALIA, 10th Biennial Conference, 27-29 June 2007, Brisbane. Griffith University will be hosting the conference at Southbank in Brisbane. Watch the website for details: http://www.csaa.org.au/news.html

THE 2ND ASIAN AUSTRALIAN IDENTITIES CONFERENCE, 28-30 June, Melbourne. The "AAI 2" conference focuses on the significant momentum of Asian Australian Studies since the inaugural 1999 conference. Invited speakers include filmmakers, academics, politicians, artists and writers. To register, please visit http://www.asianaustralianstudies.org/
AAI2/registration.html

CHINA: EAST ASIA MEDIA/NEW MEDIA CONFERENCE, 5-6 July, Brisbane. With the Beijing Olympics moving closer China is mounting a claim for a leading role in the global and regional cultural economy, drawing on its long tradition as the centre of East Asian culture. Will this be vision ever be achieved? The conference will be hosted by the Australian Research Council Centre of Excellence for Creative Industries and Innovation http://www.cci.edu.au

AUSTRALIAN SOCIETY OF INDONESIAN LANGUAGE EDUCATORS (ASILE) Conference, 5-8 July, Caloundra. The 9th ASILE conference at the University of the Sunshine Coast will provide opportunities for Indonesian educators and students to network with one another and hear the latest news on education developments in Australia. Rydges Oasis Resort, Caloundra. See http://intranet.usc.edu.au/wacana/ASILE/index.html

GLOBAL FORCES 2007 5 - 7 July, Canberra The Australian Security Policy Institute is holding its 3rd International Conference 'Global Forces'. The conference will focus on the bigger geopolitical issues shaping Australia's strategic landscape. Sessions will study the global context and major influences, security instruments and arrangements, Asia-Pacific regional and security issues, and consider Australian policy responses. Hyatt Hotel, Commonwealth Avenue, Yarralumla, ACT 2600 See http://www.aspi.org.au for details.

IN SEARCH OF RECONCILIATION AND PEACE IN INDONESIA, workshop 19 and 20 July 2007, Singapore. The Indonesia Study Group, Asia Research Institute, National University of Singapore is holding an interdisciplinary workshop to examine approaches to reconciliation and peace in Indonesia. Its aim is to provide insights into ways forward not only for Indonesia, but for conflict situations much more broadly. http://www.ari.nus.edu.sg or contact the convenor, Dr Birgit Bräuchler aribb@nus.edu.sg.

GREAT LEAP FORUM: Asialink Arts Annual Forum 19 July 2007, Brisbane. This is an opportunity for Brisbane arts practitioners to attend a cross-media forum about Australian and Asian arts practice. Specialists from Asia will give examples of their international experience as Australians set the national and local scene. These presentations will be followed by discussions from expert panels articulating challenges and ways forward. 9.00 am - 5.00 pm, Brisbane Powerhouse. For more details contact: a.carroll@asialink.unimelb.edu.au

APEC ECONOMIC LEADERS MEETING, 8-9 September, Sydney. The main event of the APEC year brings together the 21 APEC Member Economy leaders, thousands of delegates, support personnel and the international media. See http://www.apec2007.org

CHINA: CONFERENCE ON MIGRATION AND SOCIAL PROTECTION, 25 to 26 September, Beijing. Monash University's Asian Business and Economics Research Unit together with the Institute of Population and Labour Economics at the Chinese Academy of Social Sciences and the Renmin-Monash Advanced Centre for Economic Studies are staging an international conference to explore issues such as: labour market integration and social protection, migrant participation in social security schemes, migrant alternatives to state-sponsored social protection, migrant working conditions, salaries and wage arrears, and responsibilities of government in the provision of social protection. See
www.buseco.monash.edu.au/units/aberu/Conference2007/
index.php or contact Dr Ingrid Nielsen Ingrid.Nielsen@buseco.monash.edu.au

DESPOTS, DEMOCRATS AND DISCONTENTS: Democratic Prospects and International Policy Responses in the Middle East and South Asia, 2 October Sydney. The Sydney Democracy Forum and the Lowy Institute for International Policy are hosting this event, with the following speakers: Anthony Bubalo (Lowy Institute for International Policy), Professor Niraja Gopal Jayal (Jawaharlal Nehru University) and Professor John Keane (Westminster University/University of Sydney)
2 to 5 pm at the Lowy Institute for International Policy, 31 Bligh Street, Sydney

RSVP: r.mueller@econ.usyd.edu.au by 25 September.

SIXTY YEARS OF INDIAN DEMOCRACY: Achievements and Prospects 2 October, Sydney. The Sydney Democracy Forum, with Sydney Ideas, presents a lecture by Professor Niraja Gopal Jayal (Jawaharlal Nehru University) at the Seymour Centre, corner of City Road and Cleveland Street, University of Sydney, 7pm.

Bookings are essential: phone (02) 9351 7940.

ASPIRE: WATER AND SANITATION IN THE ASIA-PACIFIC REGION: Opportunities, Challenges and Technology, Perth, 28 October - 1 November 2007. The Australian Water Association, in conjunction with the International Water Association is organising this conference, which will focus on design, operation, maintenance and management of water and wastewater systems. Innovations in the field, case studies on safe and reliable systems for removal of nutrients, water reuse, and methods of better operation will also be discussed at the conference. There will be specific emphasis on issues facing the Asia-Pacific Region. Perth Convention & Exhibition Centre. See http://www.awa.asn.au/AM/Template.cfm?Section=ASPIRE_
2007&Template=/CM/ContentDisplay.cfm&ContentID=4883

ASIA PACIFIC REGION: SOCIETIES IN TRANSFORMATION conference, Georgetown (Penang) Malaysia, 19-22 November, 2007. The region is seemingly now more integrated, with unprecedented levels of tourism, migration, and economic and cultural linkages. But, are the nations of the region, and their populations, more divided, united or are they fundamentally unchanged over the past two decades? These are questions to be raised in a conference co-sponsored by the School of Social Sciences, Universiti Sains Malaysia (USM) and the Centre for Asia Pacific Social Transformation Studies (CAPSTRANS), University of Wollongong, Australia The conference website link is at:
http://www.capstrans.edu.au/resources/conferences
/2007/conferences-2007-apsa.html Submission of abstracts to Dr Tim Scrase: tims@uow.edu.au by 30 June 2007

17th NEW ZEALAND ASIAN STUDIES SOCIETY (NZASIA) CONFERENCE, Otago, 22-25 November 2007. This will be an open, multidisciplinary conference. Participants are invited to submit panel or paper proposals presenting original research on any Asian-related topic. Proposals for panels are welcome. Paper abstracts, single-spaced and no longer than 200 words, must be submitted before 1 June 2007 to nzasia.conference@stonebow.otago.ac.nz Full conference details can be found at http://www.nzasia.org.nz