Peter McCawley

The Asian Tsunami

The 2004 Asian tsunami was the greatest natural disaster in recent times. Almost 230 000 people died. In response, governments in Asia and the broader international community announced large aid programs. The resulting assistance effort was one of the largest humanitarian programs ever organized in the developing world. This book discusses the lessons of the aid effort for disaster protection policy in developing countries.

Hal Hill Steps Down—and up. Head of the Indonesia Project, ANU, 1986–98 Editor of BIES, 1990–98

Hal Hill is known as an eminent authority on the Indonesian economy. He is an astonishingly productive scholar. He continues as an imaginative and highly successful head of the ANUs Indonesia Project and Editor of its journal. He is constantly sought after abroad as Visiting Professor, participant in conferences and contributor to research projects (June 1997).

Infrastructure Policy in Asian Developing Countries

The urgent need for very large increases in investment in infrastructure in most developing countries in Asia is very clear. This paper surveys the challenges facing policymakers in the region. Nearly all of the main concerns for policymakers in Asia in addressing the global infrastructure imbalance are on the supply side. In particular, there are seven related supply-side issues that are of high priority for policymakers: selection and preparation of appropriate projects, finance, pricing, access, governance and management, policy and regulatory policies, and climate change. Governments and utilities need to improve their policies and performance to build confidence among stakeholders. Access to infrastructure services needs to be improved so that consumers will support realistic pricing policies, and investors will be encouraged to provide finance for infrastructure sectors.

Widjojo Nitisastro and Indonesian development

Abstract Widjojo Nitisastro (2010) Pengalaman Pembangunan Indonesia: Kumpulan Tulisan dan Uraian Widjojo Nitisastro [The Experience of Development in Indonesia: A Collection of the Writings of Widjojo Nitisastro], Penerbit Buku Kompas [Kompas Book Publishing], Jakarta. Widjojo Nitisastro is one of Indonesias best-known economic policy makers. Much has been written by others about his role as a top adviser over more than three decades. This collection of his own essays helps fill out the picture. Seven main policy themes may be identified: the role of economic growth in helping overcome mass poverty; the need for economic policy makers to pay close attention to risk management and be constantly ready to respond to economic shocks; the importance of strong leadership and discipline in government; the need to scrutinise investment programs closely; the high priority to be given to borrowing programs and debt management; the role of the price mechanism; and the management of Indonesias relations with the international community. Strong messages about growth, leadership and stability permeate the essays. The collection is a valuable contribution to the literature on economic policy making in developing countries.

INFRASTRUCTURE POLICY IN INDONESIA, 1965–2015: A SURVEY

This survey, first, provides an overview of the main developments in the infrastructure sector in Indonesia during the past five decades and, second, considers what the main policy and management bottlenecks in infrastructure appear to be. The overview of main developments indicates that, in broad terms, most parts of the sector have expanded considerably but that the needs remain acute for further expansion and for attention to the maintenance of existing facilities. Demand for infrastructure is high, especially since the regulated prices set for infrastructure services are often low. Access is often difficult, however, because of shortages of infrastructure, and quality is often unsatisfactory because of poor maintenance and indifferent management. These problems of access are exacerbated by the regulation of prices. This overview also points to the markedly different performances of industries in which pro-competitive policies have been applied and those in which more traditional policies of close regulation have restricted the operation of markets.

Heinz Arndt: An Appreciation

This appreciation was compiled on behalf of the Editorial Board of the Bulletin of Indonesian Economic Studies (BIES) by Peter McCawley, one of the first of Heinz Arndts graduate students to work on Indonesia, and later head of the Indonesia Project (1981-85) and joint editor of the BIES (1983-86). Heinz was the founding editor of the BIES (1965-82), and a member of its Editorial Board for the remainder of his life.

Some Suggestions for Aid to Indonesian Untversities

* The author would like to thank Masri Singarimbun. Mubyarto and Siswanto for comments on an earlier draft.

The Sum Is Greater Than the Parts: Doubling Shared Prosperity in Indonesia through Local and Global Integration

vi Executive Summary vii CHAPTER ONE 1 Indonesia’s Development Challenge: Doubling Shared Prosperity by Accelerating Sustainable, Inclusive Growth Cukup Baik Tidak Cukup – Good Enough is Not Enough 1 How fast has Indonesia grown? 3 How competitive is Indonesia’s growth? 12 How fairly has Indonesia grown? 16 Comparative Growth Performance 18 Study Context and Organization 24 CHAPTER TWO 27 Strategy for Accelerating Sustainable, Inclusive Growth: Local and Global Economic Integration The Binding Constraint in Accelerating Sustainable, Inclusive Growth 27 Local Economic Fragmentation 27 Global Economic Marginalization 31 Local and Global Economic Integration 33 CHAPTER THREE 39 Improving Hard and Soft Infrastructure: Reducing the Costs of Logistics and Transactions Indonesia’s High Cost Economy 39 The Context of Logistics and Transactions Costs 41 Indonesia’s Hard Infrastructure Deficit: Logistics Costs and Efficiency 44 Indonesia’s Soft Infrastructure Deficit: Transaction Costs and Productivity 53 Lessons and Policy Prescriptions 73

In memoriam: Widjojo Nitisastro, 1927--2012

Widjojo Nitisastro was one of Indonesia’s best known and most respected economic policy makers. He died quietly in Jakarta on 9 March 2012 at the age of 84. Later in the day, after a ceremony attended by President Susilo Bambang Yudhoyono and numerous other friends and colleagues, he was buried at the Kalibata Heroes Cemetery in South Jakarta at a ceremony led by Vice President Boediono. Widjojo was for many years Indonesia’s most influential economic policy maker and economist within the government and the academic community. This was particularly the case during the early years of the Soeharto era (1967–83), although the president continued to consult him frequently until losing office in 1998. Overseas, he was universally respected as a highly effective and reliable leader of Indonesian delegations at international meetings. One of his main achievements was to secure a firm position for highly qualified economic technocrats within the cabinet who could play a key role in arguing the case for sound economic policy. In this respect, his influence continues to be felt to the present day.

Indonesia: the first two years after the tsunami

Indonesia, the country worst hit by the December 2004 tsunami, is located in the ‘Ring of Fire’ which consists of volcanic arcs and oceanic trenches partly encircling the Pacifi c Basin. The Basin sits between the IndoAustralian and Eurasian plates, making it a zone of frequent volcanic eruptions and earthquakes. Historically, several of the natural disasters that have occurred in Indonesia have been among the worst in the world. The Tambora and Krakatoa eruptions in 1815 and 1883 were among the largest eruptions in history. Further, the contour and climate of the archipelago increase the likelihood of other deadly natural disasters such as cyclones, droughts, and fl oods. From 1907 to mid2006 there were 338 natural disasters in Indonesia – an average of around three to four disasters per year.2 On average, approximately 700 people died, 1200 were injured, 5200 became homeless, and 64 000 people were aff ected per event.3 Indonesia is considered to be among the fi ve countries that most frequently experience deadly natural disasters – the others being the US, the People’s Republic of China, India, and the Philippines. Recent data suggests that the frequency of these deadly events may be increasing in these countries (Figure 4.1). In terms of human fatalities the tsunami on 26 December 2004 was the worst natural disaster in Indonesian history. Most people in Aceh and North Sumatra and other nearby parts of Indonesia felt the tremor caused by a massive earthquake measuring 9.0 on the Richter scale that occurred beneath the seabed about 300 kilometres off the west of Sumatra around 8 am local time. Shortly after, a great tsunami hit the northern and western parts of Aceh and North Sumatra as well as other smaller islands such as Nias and Simeulue. Twentymetre waves struck Banda Aceh, the provincial capital city of the province of Aceh, at a tremendous speed of around 800 kilometres per hour. In some places waves swept over seven kilometres inland. Waves as high as 12 metres hit the towns of Meulaboh, Calang, and Lamno in western Aceh and in some places up to about 10 kilometres from the coastline were submerged (Soehaimi et al. 2005). The offi cial