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2010 OECD Economic Surveys: Indonesia 2010

image of OECD Economic Surveys: Indonesia 2010

This 2010 edition of OECD's periodic survey of the Indonesian economy includes chapters covering achieving sustainable and inclusive growth, phasing out energy subsidies, tackling the infrastructure challenge, and enhancing the effectiveness of social policies. It finds that Indonesia's economy withstood the recent global crisis very well, thanks to appropriate stabilisation policies and increased economic and financial resilience.  Nevertheless, a number of institutional reforms and policy changes will be needed to deal with the several cross-cutting challenges of decentralisation, capacity-building at the local level, and improved economic governance.

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Tackling the infrastructure challenge

Indonesia’s infrastructure is in poor shape, having suffered from protracted underinvestment since the Asian financial crisis of the late 1990s, and constraints growth potential. This chapter focuses on the current state of the regulatory framework and discusses different options for improvement in order to attract needed private investment. It recognises the ambitious reforms undertaken by the government thus far, but suggests that further efforts are needed. The authorities should establish a simple regulatory environment based on effective regulatory agencies resulting in lower regulatory uncertainty and realign prices to cost-recovery levels.

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