Reports

OECD Investment Policy Reviews: Indonesia charts Indonesia’s progress in developing an effective policy framework to promote investment for development. It focuses on policies towards investment, competition, infrastructure, finance and other areas of the business environment and suggests ways the climate for both domestic and foreign investment might be further improved. It finds that Indonesia has undertaken a decade of political and economic reform, under very difficult circumstances. Democracy is now firmly established, and the economy is growing at a steady pace in spite of the global financial crisis. Reforms over the past decade have done much to improve the resilience of the Indonesian economy, and the government has made substantial progress in creating a better climate for investment. New laws have been enacted in almost all sectors, and new institutions have been created to advise the government, implement and enforce laws, regulate newly liberalised sectors and settle disputes. Foreign investors have taken notice. Foreign direct investment in Indonesia in the past five years has exceeded the earlier peak achieved in 1996, before the Asian financial crisis in 1997-98 brought economic contraction and net outflows of foreign investment. This investment is also becoming increasingly diversified by sector and by country of investor.

OECD countries still dominate the world economy, but their share of world trade dropped from 73% in 1992 to 64% in 2005, and some of the world’s most important economies are not members of the OECD. Foremost among these are the so-called BRIICS: Brazil, Russia, India, Indonesia, China and South Africa. This book analyses key elements of the trade performance of the BRIICS in relation to the rest of the world, focusing on trade and other policies influencing that performance. Developments in global trade policy are reviewed, notably the impact of preferential trade agreements on the multilateral system and patterns of world trade are described using both indices that reveal networks of trading relations and more standard modeling results. As well as the global analysis, the book also presents a separate chapter for each of the BRIICS, examining the key development and trade issues in each of the six countries over the past few years.

This comprehensive review offers an analysis of Indonesia’s energy sector, with findings and recommendations that draw on experience in IEA member countries. Six areas are suggested for priority attention, including progressive reduction in fuel and electricity subsidies, better implementation of policy, improving clarity of the investment framework, helping the energy regulators do their job more effectively, and harnessing a sustainable development agenda particularly renewable energy and energy efficiency.