Table of Contents

  • The OECD Review of Regulatory Reform in Indonesia is one of a series of country reports carried out under the Regulatory Reform Programme of the OECD, in response to the 1997 mandate by OECD Ministers.

  • English

    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.

  • English

    L’Indonésie a surmonté de sérieux défis pour se doter des institutions de gouvernance d’un État démocratique fondé sur le marché.

    La réforme de la réglementation peut être considérée, de façon stratégique, dans les pays développés comme dans les pays en développement, comme l’un des instruments essentiels à la disposition des gouvernements pour gérer l’économie, influer sur le comportement des entreprises et mettre en oeuvre la politique sociale. Dans le climat économique mondial actuel – marqué par la persistance de l’instabilité sur les marchés financiers, d’une part, et des contraintes budgétaires croissantes pour assurer les services publics clés tels que la santé, l’éducation et la protection sociale, d’autre part – l’État moderne devra utiliser son pouvoir réglementaire de façon judicieuse s’il entend être plus intelligent sinon plus petit. S’agissant de l’Indonésie, la réforme de la réglementation est aussi un aspect de l’effort ambitieux engagé par le pays pour consolider un processus décisionnel démocratique, stimuler vivement sa croissance économique de façon à rivaliser avec les autres grandes économies de la région et réaliser des objectifs majeurs sur le plan de la protection sociale.

  • This chapter sets out the social and economic context for the Review of Regulatory Reform in Indonesia. It describes the significant political and economic challenges faced by Indonesia over the past 15 years, including the impact of the Asian financial crisis, widespread growth in democracy and “big bang” decentralisation. It identifies that significant progress has been made but argues that Indonesia has to continue to commit to a path of institutional transformation to improve the performance of the public administration, consolidate the gains so far and address the regulatory complexities and overlaps resulting from a process of rapid transformation. Regulatory reform must be high on Indonesia's political agenda to ensure that it achieves the objective of building responsive and open regulatory systems that will support its economic and development goals to create competitive domestic markets and be competitive in the ASEAN region.

  • This chapter is a summary of the background report Government Capacity to Assure High Quality Regulation in Indonesia. It finds that the government of Indonesia should implement measures to adopt a whole-of-government approach in the development of regulations, including allocating clear responsibility for co-ordination and oversight of regulatory policy; assess the impact of new regulatory proposals and existing regulations; and apply the principles of transparency and public consultation in regulatory decision making.

  • This chapter is a summary of the background report Competition Law and Policy in Indonesia. It notes that Indonesia has made significant progress implementing the framework for competition policy and law enforcement over the past decade in the face of major challenges. However, it finds that the effectiveness of the Competition Agency is hampered by a number of residual problems with the legislative framework and that competition law and policy must be restored to a high priority on the government’s regulatory policy agenda. Better integration of the Competition Agency in the policy process and the application of competition assessment to the development of new regulatory proposals and existing legislation will realize economic gains through improved market performance right across the economy.

  • This chapter is a summary of the background report Market Openness in Indonesia. It identifies how enhancing Indonesia’s performance in trade and investment will be the key to achieving its goals for real economic growth and improvements to health, education and poverty reduction. It assesses the recent developments in trade and investment policy in Indonesia and recommends further measures that Indonesia should take to improve the regulatory process and link its internal domestic market, and its economy as a whole, to world markets. These focus on applying an economy-wide evaluation of policies and regulation, implementing systematic public consultation, streamlining licensing, and improving co-ordination of the regulatory powers of the central government and the regions.

  • This chapter is a summary of the background report Regulatory Settings for Ports, Rail and Shipping in Indonesia. It finds that recent changes to the law in Indonesia introduce important market disciplines and have the potential to stimulate a positive transformation of Indonesia’s rail and maritime industries. However, while the laws are fundamentally sound, some provisions are at odds with the broad strategic direction and policy goals of the Indonesian government. The chapter recommends specific measures to clarify a number of practical administrative arrangements that will ensure the effective separation of regulatory and operational functions, increase competition and encourage private sector participation in the ports, rail and shipping sectors.

  • This chapter is a summary of the background report Governance of Public-Private Partnerships (PPPs) in Indonesia. While the government of Indonesia has taken significant steps to define the legal and administrative framework for PPPs and identify a pipeline of projects, further measures are required if Indonesia is to meet its goals for private sector infrastructure investment. These include integrating the selection of PPP projects in the budget process, developing a public sector comparator for evaluating alternative bids, and strengthening the role of the Ministry of Finance to support government contracting agencies and act as a gateway on infrastructure investment decisions.