Liberalization In Indonesia Research Articles

ORIENTALISME, LIBERALISME ISLAM, DAN PENGEMBANGAN STUDI ISLAM DI IAIN

The recent development of Islamic Studies in IAIN (The State Institute for Islamic Studies) shows a trend to combine Islamic studies based on traditional approaches and methods with that employed in Western universities or orientalism. The trend is promoted by Indonesian scholar graduates from Western Universities, and results in the growth of Islamic liberalism. To some Islamic revivalism advocates, the trend is considered misleading, and IAIN with its lecturers pursuing studies in Western universities are accused to be agents of Islamic liberalism in Indonesia. Contrarily, some Islamic scholars see the trend as a bright future for development of Islamic studies in Indonesia. The situation puts IAIN in a dilemma either to keep on traditional approaches and methods or to adopt deliberately new ones coming from Western tradition. In my opinion, IAIN should apply them both and combine them to promote better future of Islamic studies in Indonesia.

After the Storm: Crisis, Recovery and Sustaining Development in Four Asian Economies

After the Storm: Crisis, Recovery and Sustaining Development in Four Asian Economies. Edited by K. S. Jomo. Singapore: Singapore University Press, 2004. Pp. 318. This volume brings together a set of papers written on selected themes of the 1997-98 Asian financial crisis, with emphasis on the four countries most adversely affected by the crisis - Indonesia, Malaysia, Thailand, and South Korea. Although much has been written about the Asian crisis, this book is unique in its attempt to analyse post-crisis policy-making in political and societal terms, going beyond the narrow confines of pure economic analysis. It also provides considerable new insights into the debate on the role in the recovery process of the standard Keynesian expansionary policies as against the structural adjustment policies advocated by the IMF. The volume opens with a comprehensive editorial introduction which traces the key policy trends during the pre-crisis era and economic adjustment following the onset of the crisis, followed by a preview of the ensuing chapters. Chapter 2 by Joseph Lim examines the role of premature financial sector liberalization and capital account opening in the making of the crisis against the backdrop of the conventional wisdom on sequencing of liberalization reform. It also takes a critical look at the policies recommended by the IMF in the aftermaths of the crisis and highlights the virtues of the Keynesian reflationary policies in the subsequent recovery. In Chapter 3, C.P. Chandrasekekhar, Jayati Ghosh, and Smitha Francis dwell on the silent features of the rapidly evolving global financial system and the need for an international framework for debt workouts with view to cushioning emerging market economies against the danger posed by unregulated capital flows. Andrew Rosser (Chapter 4) probes the political economy of financial sector liberalization in Indonesia in the 1980s and how the haphazard and partial nature of the reform process contributed to the vulnerability to the crisis. Jonathan R. Pincus and Rizal Ramli (Chapter 5) provide an analytical narrative of how capital flights, in combination with domestic financial fragility, set in train the corporate collapse in Indonesia, ultimately paving the way for state control over a larger share of the industrial and financial sectors. Pasuk Phongpaichit and Chris Baker (Chapter 6) examine crisis management and recovery in the Thai economy. Chapter 7 by K. S. Jomo is a synthesis of his previous work on the role of capital controls in crisis management in Malaysia. Chin Kok Fay (Chapter 8) studies Malaysia's bank restructuring and its role in the recovery process. Jang-Sup Shin (Chapter 9) analyses the role of Keynesian policies in the recovery process in South Korea against the backdrop of a critical assessment of the IMF-led structural adjustment reforms implemented in the aftermaths of the crisis. The final chapter by M. Mustafa Erdogdu examines the role of the capacity of the state, evolved over four decades during the pre-crisis era as part of the state-led industrialization strategy, in crisis management in South Korea. As is the case with most edited volumes, a major structural limitation of the book is its lack of cohesion. The introductory chapter raises the reader's expectation that the book, as a whole, would provide a careful examination of a number of important issues relating to the choice and formulation of crisis management policies, the recovery process and future growth trajectory of the economies under study. Unfortunately, the ensuing chapters do not live up to this expectation. The volume reads more like an ad hoc collection of papers written by the contributing authors at their own choice, rather than a systematic compilation of chapters of individual contributions commissioned with a central theme. Some of the key issues listed in the introductory chapter with a view to guiding the reader, in particular, the prospect for regaining pre-crisis growth dynamism by the crisis-affected countries and the implications of the crisis for the mainstream advocacy of the East Asian Miracle as a preferred model for emulation by other countries, are not mentioned even in passing, let alone analysing it systematically, in the ensuing chapters. …

Money demand and financial liberalization in Indonesia

This paper offers a new strategy to investigate the effects of financial liberalization on the demand for money. This strategy explicitly accounts for the impact of financial liberalization by including a proxy for this process in the money demand equation. The long-run demand for money is estimated using the procedure developed in [Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics 16, 289–326]. This procedure represents an alternative to standard cointegration tests, which we argue may be inappropriate in the presence of financial liberalization. Focusing on Indonesia, we find that financial liberalization plays a key role in determining money demand and its fluctuations.

Democratic Transition and Political Development in Post‑ Soeharto Indonesia

This article analyses the prospects for, and possible challenges to democracy and constitutional liberalism in Indonesia. A retreat or a diversion from this goal could be disastrous, economically and politically. The Asian financial crisis highlighted fundamental elements of the Indonesian system that needed to be changed. Religious, ethnic, regional and socio-economic tensions that engulf Indonesia today are the result of authoritarian governance under Soeharto's New Order. Democratic governance alone can correct that anomaly. Indonesia's transition to democracy at the moment is messy but democratization is a long, necessary and complex struggle.

Industrial Centralization in Indonesia

In certain situations, economic liberalization policies can increase the degree of spatial centralization of resources and spatial concentration of manufacturing in large metropolitan areas. In addition, historical patterns of location make it difficult to alter the degree of centralization. This article explores these issues by specifying and estimating a nested logit model of industrial location of manufacturing activity in Java, focusing on the unincorporated sector. The results indicate that plants strongly prefer locations with mature plants in related industries, which offer a built-up stock of local knowledge. In addition, the 1983 liberalization in Indonesia was associated with increased centralization of the unincorporated sector. Although the liberalization gave unincorporated firms better access to government and other centralized services, firms needed to centralize to take advantage of these opportunities because the bureaucratic process is centralized and communications are poor. The relative increased growth of the corporate sector following liberalization may also have helped to further draw unincorporated plants into centralized locations.

Effects of Financial Liberalization on Four Southeast Asian Financial Markets, 1973–94

This article measures the effects of international factors on domestic financial markets from financial liberalization in Indonesia, Malaysia, Singapore and Thailand over the last two decades. International factors significantly influenced financial markets in all these econo mies though at differing speeds and with varying degrees of openness depending on the ex tent of reforms. A brief summary of financial liberalization is provided to identify possible sources of the observed effects on financial markets. Our findings highlight the need to study the complementary role of current and capital account reforms that should accompany re forms in real sector and fiscal regimes in developing countries.

Financial Liberalization in Indonesia: Interest Rates, Money Market Instruments, and Bank Supervision

The financial liberalization that Indonesia has undergone since 1983 has resulted in some successes, among others in financial deepening (M2/GDP), the availability of credit, more effective open market operation, and the growth of private banking. It is suggested that financial liberalization may play an important role in attaining the high economic growth. By using the cointegration method, this article shows the significance of positive interest rates in increasing savings and credit availability. However, this study finds the problems of moral hazard and inadequate bank supervision have become serious obstacles for maintain ing that success. Also using the cointegration method, this study shows that the narrower spread leads to higher deposit rates.