Thee Kian Wie

The Surge of Asian NIC Investment into Indonesia 1

Since 1987 a dramatic increase in both domestic and foreign investment in Indonesia, most of it in export-oriented activities, has occurred in response to improvements in a previously unattractive investment climate and in the countrys trade regime. Most striking has been the rise in investment by Asias four ‘newly-industrialising countries’ (NICs): Korea, Taiwan, Hong Kong and Singapore. This paper analyses the factors contributing to this increase and the investment patterns of the four countries. It then focuses on investment in the manufacturing sector, where most of the NIC investments have taken place. The relative importance of each country as a source of investment in individual sectors and industries is examined. The paper concludes that this recent investment surge may yield net social benefits for Indonesia, provided the country continues to adhere to sound macroeconomic and export-promoting policies. 1 The author gratefully acknowledges the valuable comments of H.W. Arndt, Masaaki Horiguchi,...

Competition Policy in Indonesia and the New Anti-Monopoly and Fair Competition Law

This paper explores the role of competition policy in shaping a business environment that will encourage firms to improve their efficiency and competitiveness. After discussing the scope and objectives of competition policy, and whether a liberal trade and investment regime can substitute for, or should complement, a competition law, the paper offers an assessment of Indonesias new competition law. Its shortcomings include a serious lack of clarity about objectives and a confusion between objectives and the means to achieve them; a failure to distinguish between various kinds of monopoly; a tendency to prohibit certain activities and agreements between firms without a clear analysis of the underlying economics involved; unnecessary and counterproductive exemptions from the provisions of the law; and failure to confront the reality that the principal obstacle to competition in the past has been unwarranted government intervention in markets.

Indonesian universities in transition: catching up and opening up

Indonesias higher education system is changing rapidly: in 2010 there were about 5 million students, up from 2,000 in 1945. Effectively the tertiary system has four tiers, three of which are within the public sector. However, the system is increasingly private sector driven. The key themes of this paper on universities are rapid growth; overcoming the historical backlog; and the need for further fundamental reform. The quality of Indonesias tertiary institutions is highly variable. Governance structures and incentives regimes within the state universities are complex and obscure. The government both over-regulates and under-regulates. Major reforms are under way and increasing financial resources are available.

IN MEMORIAM: PROFESSOR SUMITRO DJOJOHADIKUSUMO, 1917-2001

ISSN 0007-4918 print/ISSN 1472-7234 online/01/020173-9

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.

Robert Charles Rice (1939–2009)

Robert Rice (Bob to his many friends), Honorary Associate in the Department of Economics at Melbourne’s Monash University and for many years a member of the International Advisory Board of the Bulletin of Indonesian Economic Studies (BIES), passed away peacefully on 24 February 2009 while travelling home by bus after attending a seminar at Monash by an Indonesian scholar. Bob was born in Ann Arbor, Michigan, on 17 November 1939, and had a happy childhood. In a letter to Bob’s three children after his death, his brother Phil reminisced about the summer vacations in which Bob, his parents and his two brothers took car trips together to various parts of America. After fi nishing senior high school, Bob studied economics at the University of Michigan, Ann Arbor, graduating in 1961. He subsequently went to Cornell University in Ithaca, New York, where he obtained an MA and a PhD in economics in 1969 and 1972 respectively. The title of his PhD dissertation was ‘Factors Affecting the Underutilisation of Capacity of Selected Private Indonesian Manufacturing Industries’. From 1971 to 1974 Bob taught economics at the University of Hawaii. He then moved to Australia, where from 1975 he taught in the Department of Economics at Monash University’s Clayton campus, fi rst as lecturer, then as senior lecturer, and fi nally as associate professor. He retired in December 2006, and was appointed Honorary Associate in the department. The courses Bob taught at Monash included principles of economics; economic development and economic growth; economic development of East Asia; and international economics and development. In the late 1980s he was instrumental with other colleagues in setting up the Institute for Contemporary Asian Studies, reconstituted in 1992 as the Monash Asia Institute.