Indonesia has overcome substantial challenges to establish the governance institutions of a democratic market-based state

Regulatory reform can be viewed strategically, in both developed as well as developing countries, as one of the core instruments at the disposal of governments for managing the economy, influencing business behavior and implementing social policy. In the current global economic climate – challenged by continuing instability in financial markets on the one hand and the growing fiscal burden for providing key public services such as health, education and social insurance schemes on the other – the modern State will have to utilise its regulatory power wisely if it expects to be smarter if not smaller. In the case of Indonesia, regulatory reform is also part of the country’s ambitious attempt to consolidate democratic policy making, to sharply increase its economic growth to rival other large economies in the region as well as to deliver on key social welfare objectives.