Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 00074910902836213
Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Book reviews
Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet
Steele
To cite this article: Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet
Steele (2009) Book reviews, Bulletin of Indonesian Economic Studies, 45:1, 125-133, DOI:
10.1080/00074910902836213
To link to this article: http://dx.doi.org/10.1080/00074910902836213
Published online: 26 Mar 2009.
Submit your article to this journal
Article views: 51
View related articles
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=cbie20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 18 January 2016, At: 19:37
Bulletin of Indonesian Economic Studies, Vol. 45, No. 1, 2009: 125–33
BOOK REVIEWS
Downloaded by [Universitas Maritim Raja Ali Haji] at 19:37 18 January 2016
Jesus Felipe and Rana Hasan (eds) (2006) Labor Markets in Asia: Issues and
Perspectives, Palgrave Macmillan, Houndmills, Basingstoke, xxxvi + 694. £75.00.
This book, edited by Felipe and Hasan from the Asian Development Bank (ADB),
is a major work on labour in Asia. Beyond the lengthy chapter on Indonesia by
Guntur Sugiyanto, Mayling Oey-Gardiner and Ninasapti Triaswati, the book
should interest economists working on Indonesia for the appealing theoretical
and comparative perspectives, and for the comprehensive studies of other countries in the region.
The major research questions are raised in the context of poverty, especially
that facing the less developed countries in the region, and how poverty relates to
labour market processes, outcomes and policies. The authors see employment as
the ‘most important problem that policy makers in developing Asia will face in
the next decade’ (p. 1), and view market-oriented reforms as one—but certainly
not the only (or even the most important)—set of key policy changes needed to
provide better jobs for many of the poor in the region.
The book is unusual for the considerable attention it gives to broader theoretical
issues associated with globalisation and labour market change (raised throughout
the book as well as in a special chapter on the subject). While the authors are keen
to point out some of the shortcomings of a pure neo-classical approach to labour
issues, the treatment is generally (and sometimes frustratingly) eclectic, introducing the reader to Keynesian, Marxist and ‘heterodox’ approaches to the subject.
The editors challenge some conventional views on labour: the excessive focus on
unemployment; the superficial treatment of dualism and neglect of the heterogeneous nature of the informal sector; and the policy focus on school enrolments
rather than approaches that are more sensitive to labour market and human capital issues, and that give greater attention to the quality of schooling.
Of the book’s 10 chapters, four are of a comparative nature (three of these written by the editors, whose imprint on the book is deep). Five chapters are devoted to
case studies of India, China, Indonesia, the Philippines and Vietnam. The authors
are to be congratulated on bringing together empirical material from the case studies in well-structured summary chapters at the beginning and end of the book,
discussing patterns and trends in key labour indicators, and policy, respectively.
The case studies are substantial, each dealing with labour market trends (employment structure and change, unemployment, under-employment and wages);
labour market policies; and challenges. In general, they provide valuable insights
into similarities and contrasts in labour issues across countries, with similarities
given greater prominence. Both the India and China chapters and those on the
ISSN 0007-4918 print/ISSN 1472-7234 online/09/010125-9
DOI: 10.1080/00074910902836213
Downloaded by [Universitas Maritim Raja Ali Haji] at 19:37 18 January 2016
126
Book reviews
three Southeast Asian countries make interesting comparisons. Readers interested
mainly in Indonesia will find all of the country studies of interest, especially details
of labour policies, which are not easily accessible to the general reader.
My only reservations about the case studies are that they make very long book
chapters (some over 100 pages!), give too much empirical data in tables, and could
have been much more heavily edited. While selection of case studies is always
somewhat arbitrary, I was also slightly disappointed that they did not cover, for
comparative insights, one of the region’s more advanced economies (South Korea,
Taiwan or Singapore, or even Malaysia) that had already experienced a labour
market transition.
The Indonesia chapter provides detailed information on labour force characteristics; unemployment and under-employment; labour market policies narrowly
defined (minimum wages and severance pay); and broader issues related to job
creation. The focus to some extent reflects the discipline interests of several of
the authors in statistical and demographic analysis. While labour policies are
dealt with in some detail, I would have liked to see a less equivocal approach to
these policies, since they appear to be hurting the poor by limiting access to better
paying modern sector jobs. Some economists doubtless would have preferred a
deeper treatment of constraints in relation to labour demand and a more critical
approach to education and human capital issues. Nevertheless, overall, this is an
informative introduction to labour issues in Indonesia.
I recommend the book to specialists in labour economics in particular, and
to development economists interested in comparative experience in the Asian
region. Those wishing to dip more gently into the topic may prefer to start with
the special chapter on labour issues with the same coverage, which is included
in the ADB’s annual Key Indicators book in 2005. This was reproduced as a separate ADB publication entitled Labor Markets in Asia: Promoting Full, Productive, and
Decent Employment (Asian Development Bank, Manila, 2005). The ADB updated
some of the material in Asian Development Outlook 2008: Workers in Asia (Manila).
For an in-depth treatment, however, one needs to go to the book under review.
Chris Manning
ANU
© 2009 Chris Manning
Lex Rieffel and Jaleswari Pramodhawardani (2007)
Out of Business and on Budget: The Challenge of Military Financing in Indonesia,
United States–Indonesia Society (USINDO) and Brookings Institution Press, Washington DC, pp. 147. Paper: US$17.95; A$33.95.
This book is a policy-oriented review of the issues and options for relieving the
TNI (Indonesia’s armed forces) and the Department of Defence of their business
interests by 31 December 2009, as required by Indonesian Law 34/2004. Rieffel
is an economist and visiting fellow at the Brookings Institution and Pramodhawardani is a researcher at the Indonesian Institute of Sciences (LIPI).
According to the authors, the book is based on already available rather than new
information, but differs from previous studies in that it looks forward, focusing
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127
on 30 policy issues that must be addressed to wean the TNI off non-budget financing and have it fully dependent on government funding. The authors reach two
main conclusions: that full government funding of the TNI is improbable by 2009
but feasible by 2012–15; and that off-budget funding represented only 1.5–3.0% of
the government defence budget in 2006. The book was written before the current
global economic crisis, but that does not invalidate its discussion of the issues or
its conclusions.
The volume examines two principal issues: the nature of military cooperatives,
foundations and other legal and illicit economic activities, and how they might be
disposed of; and the increase in government funding required to compensate for
the loss of business income for operational and personnel purposes. The discussion assumes that this transition should be preceded by a much-needed defence
review.
The most contentious part of the book is the finding that military business
activity (licit and illicit) contributed only $42–91 million (or 1.5–3.0%) to the government defence budget for operational purposes. This is considerably less than
the estimated 60–70% figure assumed by various Indonesian and foreign officials
and scholars in past decades. However, it does not include a full accounting of
personal income derived from a variety of other sources.
The authors admit that the figure is a crude estimate, although it is based on an
analysis of the 2006 budget and the estimated net income of military businesses
and other activities. Nevertheless, they reach two conclusions from this estimate:
that it would be easy for the government to replace this relatively insignificant
contribution to operational funding; and that, given the declining rate of return
from military businesses since 1998, most of them will be bankrupt within a few
years—and even sooner if they are affected by the current global economic crisis.
The authors recommend the retention of the cooperatives but the disposal of
the businesses and foundations. They call for clarification of the policies the government will adopt on issues such as the provision of security services by the military (for example, at the Freeport mine in Papua); the commercialisation of state
land and assets controlled by the military; and military involvement in criminal
activities. The study also recommends greater public disclosure of TNI business
activities and of policies for their disposal.
The book then discusses the need for a ‘national defence and security strategy’
as the basis for calculating the funding requirements of a reformed military. While
this is highly desirable, and the government has indicated that it is working on a
security review, it should not be accepted as an essential prerequisite. Since the
government already has a de facto strategy, there is no necessary link between
complying with Law 34/2004 and developing a revised strategy. Nevertheless,
the authors discuss a range of issues that will have to be considered when the
government does undertake a strategic review.
The barrier to complying with Law 34/2004 is the vested interests that benefit
from the current arrangements. It is here that some original research would have
been most useful, because there are no existing data on the level, sources or distributional patterns of income of the military officer corps (serving and retired), and
on who would win and lose if the military’s funding arrangements were regularised. Given that gathering such data would be akin to researching the income
streams of the mafia, it is hardly surprising that it has not been undertaken.
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Book reviews
However, the linkages between nominally legitimate and illegal business arrangements need to be understood if vested interests are to be overcome.
The book does canvass the broader reform issues related to the nexus between
public service and military salaries (including allowances, housing, education,
health care and superannuation benefits); government-wide corruption of the
capital budget; and the lack of zero-based budgeting that would relate expenditure to capital acquisitions and maintenance and operational activities.
The authors explain that they have refrained from proposing specific policies
for winding down the TNI’s business activities because this involves broader
government policy beyond the defence ministry and the TNI; because powerful
vested interests prevent the acquisition of much of the detail needed to formulate
specific recommendations; and because the lack of reform to date indicates the
need for a stronger political and social consensus for change. They nevertheless
make a number of suggestions.
Overall, this is a useful compendium of the issues and some of the policy options
for getting the military out of business and crime. It is recommended reading for
anyone interested in security sector reform in Indonesia and in broader issues of
government reform.
Bob Lowry
Sutton NSW
© 2009 Bob Lowry
Greg Fealy and Sally White (eds) (2008) Expressing Islam: Religious Life
and Politics in Indonesia, Institute of Southeast Asian Studies, Singapore,
pp. xxii + 296. Paper: S$29.90/US$25.90; Cloth: S$49.90/US$42.90.
Expressing Islam is a collection of papers presented at the annual Indonesia Update
conference at the Australian National University on 7–8 September 2007, with
the addition of three papers commissioned to cover popular local pilgrimage in
Java, the rise and fall of the empire of televangelist Aa Gym, and micro-finance
aspects of sharia (Islamic law; Indonesian: syariah) banking. The volume offers a
welcome corrective to the emphasis on militant Islamic movements in publications on Islam in Indonesia that have appeared since the violent conflicts between
Muslims and Christians in 1999 and the Bali bombing of October 2002. The editors
of this volume aim to describe the diversity of the ways Indonesians express their
identity as Muslims, ranging from adopting Muslim dress and opening a sharia
bank account to cruising Islamic websites for an appropriate fatwa (pronouncement by a recognised Islamic religious authority).
The book is arranged in three parts, focused on (I) expressions of personal piety;
(II) political, social and legal expressions of Islam; and (III) the Islamic economy.
Part I includes essays on neo-modern Sufism among urban Indonesians; two
essays that reflect on the emergence of Islamic televangelism in Indonesia; the critique of dakwah proselytising by traditional dai (preachers) in rural communities
that has been mounted by modernising Islamic leaders; and commercial aspects
of popular pilgrimage in Java. Each of the essays is interesting and, in my view,
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129
highly recommended reading for all scholars of Indonesia. Especially valuable is
Greg Fealy’s introductory essay, ‘Consuming Islam: commodified religion and
aspirational pietism in contemporary Indonesia’, in which he argues that modernisation in Indonesia has been characterised by the commodification of Islamic
culture and a new emphasis on the individual as an active consumer of Islam.
This kind of individualism contrasts with Islamic identity formation and expression as moulded by traditional collective institutional channels such as Nahdlatul
Ulama and Muhammadiyah. While critics deplore this individualist development
as producing Muslims who are more concerned with looking Islamic than with
being Islamic, Fealy points out that levels of philanthropic activity by Muslims
have risen dramatically and it is the new ‘modern’ Muslims who are demanding higher public ethical standards and a government free from corruption. Fealy
concludes that ‘religious commodification has not greatly altered the moderate
nature of mainstream Indonesian Islam’ (p. 38), but includes a cautionary warning to scholars who would predict the future: ‘The sheer breadth and complexity
of Islamic economic activity and consumption in Indonesia make neat and comprehensive analysis almost impossible’ (p. 37).
In part II, M.C. Ricklefs provides a historical perspective on changes in Islam
in Indonesia from the ‘mystic synthesis’ that appears to have prevailed from the
14th through the 18th century. From 1830 Islamic reform movements that arose in
resistance to Dutch colonisation led to the development of two distinct forms of
Islamic expression, a modernising sharia-oriented Islam and a Sufi-oriented Islam
concerned with traditional forms of Islamic observance, such as local pilgrimage
and tarekat (Sufi orders) organised around traditionally educated ulama. Ricklefs
argues that today under the impact of globalisation there is a renewed polarisation
of Javanese society along lines of religious identity, as occurred between 1850 and
1965. The subsequent essays focus on (1) efforts to reform the discourse on gender
roles in Islam within Nahdlatul Ulama educational institutions; (2) an intriguing
account of the impact of on-line fatwa-shopping by internet-savvy Muslims; (3) a
finely tuned analysis of the proliferation of sharia-related by-laws (perda syariah)
that were promulgated by local governments between 2003 and 2006; (4) an account
of the rise of the Islamic Defenders Front (FPI) and the Betawi Brotherhood Forum
(FBR), Islamic gangs (preman) which have come to wield considerable power in the
last seven years; and (5) an assessment of the present status and prospects of Jemaah
Islamiyah (JI), the organisation founded by Abu Bakar Ba’asyir and Abdullah Sungkar that was responsible for the Bali bombing of 2002, and some of whose members
were involved in bombings of western targets in Indonesia between 2003 and 2005.
Taken together these essays present a dynamic collage of the diverse streams of
Islamic expression that vie for support in a democratising Indonesia today.
The final section of Expressing Islam is devoted to the new forms of Islamic
banking that have emerged since the establishment in 1991 of Indonesia’s first
sharia bank, Bank Muamalat Indonesia. The first essay, by Umar Juoro, Commissioner of Bank Internasional Indonesia and a Senior Fellow of the Habibie Center,
assesses the growth of Islamic banking services up to the passage of the Sharia
Banking Law in June 2008. He provides a list of Islamic bank offices in Indonesia
in 2007 and a description of the different types of contracts that are available in
Islamic banks. He argues that, if Bank Indonesia’s prediction of a 10–15% market
share for Islamic banking by 2015 is to be realised, public understanding of sharia
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Book reviews
finance must be improved and more flexible and innovative contracts and banking instruments must be developed.
The final articles concern Islamic banking and micro-finance loans. Muhammad
Syafii Antonio, who is a member of the Sharia Advisory Council on Banking and
sits on the board of directors of several major sharia banks, argues that Islamic
banks should play a more important role in the financing of small and mediumsized enterprises (SMEs) in Indonesia. He points out that the SME sector contributed 54.2% of Indonesian gross domestic product in 2005 and that the share of
SMEs in total employment has exceeded 90% (p. 251–2). Small and micro-finance
banks (baitul maal wat tamwil or BMT), developed by Muslim NGO activists beginning in the 1990s and now located in cities and regions across Indonesia, are positioned to support SMEs that have not been able to access funding in conventional
banks. Minako Sakai provides an account of the founding and expansion of BMT
banks. While one might wish for even more information on the phenomenon of
sharia finance that has evoked so much interest and hope among Islamic reformers, one must be grateful to Greg Fealy and Sally White for making this valuable
collection of essays available to scholars.
Elizabeth Collins
Ohio University, Athens OH
© 2009 Elizabeth Collins
Organisation for Economic Co-operation and Development (2008)
Indonesia: Economic Assessment 2008,
OECD Economic Surveys 2008/17, Paris, pp 127. €52; US$72; £37; ¥7,800.
For some years the Organisation for Economic Co-operation and Development
(OECD) has been working to strengthen cooperation with selected non-member developing countries. Plans have been announced to develop an ‘enhanced
engagement’ with five countries with an eye to possible future membership. Indonesia is one of these countries, along with Brazil, China, India and South Africa.
This report, the first detailed study on Indonesia by the OECD, is part of the
organisation’s program of enhanced engagement with Indonesia. The report provides (chapter 1) an overview of Indonesia’s growth and macroeconomic performance since the 1997–98 financial crisis, and then considers two topics in more
detail: the business and investment climate (chapter 2) and labour market issues
(chapter 3). The overall story is very supportive of the recent efforts of Indonesian
economic policy makers. In addition, as one would expect in a report from an
international agency such as the OECD, the document draws attention to a range
of policy areas in which improvements might be made.
In chapter 1, the OECD places great emphasis on the importance of long-term
growth. ‘Raising the economy’s growth potential’, the report argues, ‘and sustaining it over the longer term, is Indonesia’s foremost policy challenge’ [emphasis added]. Sustained and higher growth (an ambitious figure of around 8% per
annum, or slightly more, is implied) is seen to be needed over the period 2006–30
‘to lead to a sustained reduction in poverty and unemployment over the longer
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131
term’. It is argued that input accumulation, rather than productivity gains, has
been the main driver of growth in recent years, that the structural reforms of the
1980s helped enhance productivity, and that the main barriers to raising the economy’s growth potential are currently on the supply rather than the demand side
of the economy.
Chapter 2 focuses on the business and investment climate. There is considerable room, it is suggested, for improving supply-side performance by encouraging entrepreneurship and the private sector. The main policy measures needed
are seen to be improving the regulatory climate, tackling infrastructure shortages,
and enhancing governance in certain key areas (in the legal system, at the local
government level, and within some of the main state-owned enterprises, including the larger state-owned banks).
Chapter 3 considers labour market issues in some detail. The phenomenon
of slow job creation (or ‘jobless growth’, as the Asian Development Bank has
called it) is discussed. It is argued that a combination of policies to encourage
greater flexibility in the formal labour market and more effective social protection programs would help improve the operation of Indonesia’s labour markets.
Especially, the OECD survey is rather critical of the tightening of employment
protection legislation (EPL) in Indonesia in recent years. It suggests that the tightening of EPL has failed both to boost social protection and to promote economic
efficiency. In addition, the OECD argues, the introduction of a more restrictive
labour code during the last decade has provided greater protection to relatively
better-off workers in the formal sector at the expense of lower-paid workers in
the informal sector.
Not surprisingly perhaps, in certain respects the report reflects something of an
OECD approach to the world. In view of the OECD’s plan to develop an enhanced
engagement with some major developing countries, it may be worth mentioning
several ways in which this tendency to see things within a rich-country framework influences the presentation.
First, the report makes numerous references to the situation in OECD countries. The implication, apparently, is that rich OECD countries are an appropriate comparator for developing countries such as Indonesia. This hardly seems
appropriate. Income per capita in Indonesia is currently about $2,000 compared
with an average figure of around $40,000 in the main OECD countries. Given
this difference, many comparisons between OECD countries and Indonesia are of
limited relevance.
Second, there is little recognition in the survey that quite a few of the reforms
suggested would be expensive, or that the capacity of the Indonesian state to
finance them is very limited. Possible reforms mentioned include strengthening law enforcement, improving regulatory institutions and increasing spending on infrastructure. But there is a very large difference between the capacity
of OECD countries to pay for these things and that of developing countries. In
OECD countries, government spending per person in 2004 (IMF estimates) was
around $14,000 per year. The comparable figure in Indonesia was below $300. In
other words, for every $1 the Indonesian government had to spend on each citizen, western governments had over $40. Yet nowhere in the OECD report is any
careful consideration given to the implications for policy making in Indonesia of
these extreme resource constraints on government.
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Book reviews
Third, the report displays something of a preference for focusing on activities
in the formal sector. Various efforts to measure characteristics of the policy environment in Indonesia (such as restrictions on product markets) assume it is the
formal legal institutions that count. This is often not the case. Rather, it is often the
tacit institutional arrangements and informal agreements that determine the real
relationships between economic actors in countries such as Indonesia. Partly as a
result of this tendency, the report suggests that reforms are needed in the regulatory framework to make product markets more competitive. Presumably it is the
formal product markets that the OECD is focusing on. Many informal markets in
Indonesia are ferociously competitive, with many instances of quite harmful competition being reported.
But overall the OECD survey is a very useful summary of some of the key
economic issues that Indonesian policy makers face. The main policy issues,
along with up-to-date data, are presented in an accessible and readable way that
will perform the extremely helpful role of encouraging governments and other
observers in OECD countries to familiarise themselves with current events in
Indonesia. A good summary of the report can be found at .
Peter McCawley
ANU
© 2009 Peter McCawley
Craig L. LaMay (2007) Exporting Press Freedom,
Transaction Publishers, New Brunswick NJ,
pp. xxiii + 310. Cloth: $34.95; Paper $29.95.
Since the fall of Soeharto in 1998, Indonesia has been flooded with media assistance programs. Many of these programs have been funded by the US government
through either the US Agency for International Development (USAID) or one of
its partner NGOs. While these programs share the broad aim of promoting political transparency and accountability through the development of independent
media, they have focused in particular on journalism training, reform of the press
law, and an overall improvement in journalistic professionalism.
Craig LaMay unravels the assumptions behind these and other media assistance programs in the developing world, and offers a critical assessment of their
effectiveness. Chapter 2 focuses on the history of US and EU foreign aid programs
and ‘the democracy promotion industry’; chapter 3 provides an overview of the
NGOs working in the area of media assistance; and chapters 4 and 5 look at some
of the specifics of what LaMay calls ‘the financial/editorial dilemma’ of independent media in developing countries (p. xix).
Although the normative value of ‘strengthening civil society’ is fundamental to
the media assistance industry, LaMay argues that not only is the concept of civil
society so vague as to be almost meaningless, but its relationship to the development of independent media is problematic at best. One of the more interesting
sections of LaMay’s study is his analysis of how donors attempt to monitor and
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133
evaluate the success of assistance programs that somewhat grandly promise to
strengthen the independent media sector.
For LaMay, the fundamental reality is that media ‘are rooted not in political
or civil society, but in economic society’ (p. 4). The book under-scores a dilemma
that is central to media assistance programs: how can independent media become
financially self-sustaining while continuing to contribute to democratic processes
and consolidation? As the experience of media organisations in many developed
democracies suggests, having a strong revenue stream and promoting quality
journalism are often two entirely different things.
Chapter 6, which looks at the innovative New York and Prague based Media
Development Loan Fund (MDLF), will be of interest to many Indonesianists.
LaMay uses the case of the Radio 68H news network (based in Jakarta) and the
online news service Malaysiakini (based in Kuala Lumpur) to show how MDLF
combines below-market loans with program-related investments to help wean
quality news organisations from donor funds, while enabling them to become full
and competitive participants in their respective markets.
The success of Radio 68H and Malaysiakini suggest that this alternative kind
of media assistance can be highly effective—but that it requires both a long-term
interest in the programmatic and financial health of the recipient and a true sense
of partnership. Ironically, despite the millions of dollars that have been poured
into media assistance in developing countries, these two basic commodities have
been in very short supply.
Janet Steele
George Washington University, Washington DC
© 2009 Janet Steele
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Book reviews
Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet
Steele
To cite this article: Chris Manning , Bob Lowry , Elizabeth Collins , Peter McCawley & Janet
Steele (2009) Book reviews, Bulletin of Indonesian Economic Studies, 45:1, 125-133, DOI:
10.1080/00074910902836213
To link to this article: http://dx.doi.org/10.1080/00074910902836213
Published online: 26 Mar 2009.
Submit your article to this journal
Article views: 51
View related articles
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=cbie20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 18 January 2016, At: 19:37
Bulletin of Indonesian Economic Studies, Vol. 45, No. 1, 2009: 125–33
BOOK REVIEWS
Downloaded by [Universitas Maritim Raja Ali Haji] at 19:37 18 January 2016
Jesus Felipe and Rana Hasan (eds) (2006) Labor Markets in Asia: Issues and
Perspectives, Palgrave Macmillan, Houndmills, Basingstoke, xxxvi + 694. £75.00.
This book, edited by Felipe and Hasan from the Asian Development Bank (ADB),
is a major work on labour in Asia. Beyond the lengthy chapter on Indonesia by
Guntur Sugiyanto, Mayling Oey-Gardiner and Ninasapti Triaswati, the book
should interest economists working on Indonesia for the appealing theoretical
and comparative perspectives, and for the comprehensive studies of other countries in the region.
The major research questions are raised in the context of poverty, especially
that facing the less developed countries in the region, and how poverty relates to
labour market processes, outcomes and policies. The authors see employment as
the ‘most important problem that policy makers in developing Asia will face in
the next decade’ (p. 1), and view market-oriented reforms as one—but certainly
not the only (or even the most important)—set of key policy changes needed to
provide better jobs for many of the poor in the region.
The book is unusual for the considerable attention it gives to broader theoretical
issues associated with globalisation and labour market change (raised throughout
the book as well as in a special chapter on the subject). While the authors are keen
to point out some of the shortcomings of a pure neo-classical approach to labour
issues, the treatment is generally (and sometimes frustratingly) eclectic, introducing the reader to Keynesian, Marxist and ‘heterodox’ approaches to the subject.
The editors challenge some conventional views on labour: the excessive focus on
unemployment; the superficial treatment of dualism and neglect of the heterogeneous nature of the informal sector; and the policy focus on school enrolments
rather than approaches that are more sensitive to labour market and human capital issues, and that give greater attention to the quality of schooling.
Of the book’s 10 chapters, four are of a comparative nature (three of these written by the editors, whose imprint on the book is deep). Five chapters are devoted to
case studies of India, China, Indonesia, the Philippines and Vietnam. The authors
are to be congratulated on bringing together empirical material from the case studies in well-structured summary chapters at the beginning and end of the book,
discussing patterns and trends in key labour indicators, and policy, respectively.
The case studies are substantial, each dealing with labour market trends (employment structure and change, unemployment, under-employment and wages);
labour market policies; and challenges. In general, they provide valuable insights
into similarities and contrasts in labour issues across countries, with similarities
given greater prominence. Both the India and China chapters and those on the
ISSN 0007-4918 print/ISSN 1472-7234 online/09/010125-9
DOI: 10.1080/00074910902836213
Downloaded by [Universitas Maritim Raja Ali Haji] at 19:37 18 January 2016
126
Book reviews
three Southeast Asian countries make interesting comparisons. Readers interested
mainly in Indonesia will find all of the country studies of interest, especially details
of labour policies, which are not easily accessible to the general reader.
My only reservations about the case studies are that they make very long book
chapters (some over 100 pages!), give too much empirical data in tables, and could
have been much more heavily edited. While selection of case studies is always
somewhat arbitrary, I was also slightly disappointed that they did not cover, for
comparative insights, one of the region’s more advanced economies (South Korea,
Taiwan or Singapore, or even Malaysia) that had already experienced a labour
market transition.
The Indonesia chapter provides detailed information on labour force characteristics; unemployment and under-employment; labour market policies narrowly
defined (minimum wages and severance pay); and broader issues related to job
creation. The focus to some extent reflects the discipline interests of several of
the authors in statistical and demographic analysis. While labour policies are
dealt with in some detail, I would have liked to see a less equivocal approach to
these policies, since they appear to be hurting the poor by limiting access to better
paying modern sector jobs. Some economists doubtless would have preferred a
deeper treatment of constraints in relation to labour demand and a more critical
approach to education and human capital issues. Nevertheless, overall, this is an
informative introduction to labour issues in Indonesia.
I recommend the book to specialists in labour economics in particular, and
to development economists interested in comparative experience in the Asian
region. Those wishing to dip more gently into the topic may prefer to start with
the special chapter on labour issues with the same coverage, which is included
in the ADB’s annual Key Indicators book in 2005. This was reproduced as a separate ADB publication entitled Labor Markets in Asia: Promoting Full, Productive, and
Decent Employment (Asian Development Bank, Manila, 2005). The ADB updated
some of the material in Asian Development Outlook 2008: Workers in Asia (Manila).
For an in-depth treatment, however, one needs to go to the book under review.
Chris Manning
ANU
© 2009 Chris Manning
Lex Rieffel and Jaleswari Pramodhawardani (2007)
Out of Business and on Budget: The Challenge of Military Financing in Indonesia,
United States–Indonesia Society (USINDO) and Brookings Institution Press, Washington DC, pp. 147. Paper: US$17.95; A$33.95.
This book is a policy-oriented review of the issues and options for relieving the
TNI (Indonesia’s armed forces) and the Department of Defence of their business
interests by 31 December 2009, as required by Indonesian Law 34/2004. Rieffel
is an economist and visiting fellow at the Brookings Institution and Pramodhawardani is a researcher at the Indonesian Institute of Sciences (LIPI).
According to the authors, the book is based on already available rather than new
information, but differs from previous studies in that it looks forward, focusing
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on 30 policy issues that must be addressed to wean the TNI off non-budget financing and have it fully dependent on government funding. The authors reach two
main conclusions: that full government funding of the TNI is improbable by 2009
but feasible by 2012–15; and that off-budget funding represented only 1.5–3.0% of
the government defence budget in 2006. The book was written before the current
global economic crisis, but that does not invalidate its discussion of the issues or
its conclusions.
The volume examines two principal issues: the nature of military cooperatives,
foundations and other legal and illicit economic activities, and how they might be
disposed of; and the increase in government funding required to compensate for
the loss of business income for operational and personnel purposes. The discussion assumes that this transition should be preceded by a much-needed defence
review.
The most contentious part of the book is the finding that military business
activity (licit and illicit) contributed only $42–91 million (or 1.5–3.0%) to the government defence budget for operational purposes. This is considerably less than
the estimated 60–70% figure assumed by various Indonesian and foreign officials
and scholars in past decades. However, it does not include a full accounting of
personal income derived from a variety of other sources.
The authors admit that the figure is a crude estimate, although it is based on an
analysis of the 2006 budget and the estimated net income of military businesses
and other activities. Nevertheless, they reach two conclusions from this estimate:
that it would be easy for the government to replace this relatively insignificant
contribution to operational funding; and that, given the declining rate of return
from military businesses since 1998, most of them will be bankrupt within a few
years—and even sooner if they are affected by the current global economic crisis.
The authors recommend the retention of the cooperatives but the disposal of
the businesses and foundations. They call for clarification of the policies the government will adopt on issues such as the provision of security services by the military (for example, at the Freeport mine in Papua); the commercialisation of state
land and assets controlled by the military; and military involvement in criminal
activities. The study also recommends greater public disclosure of TNI business
activities and of policies for their disposal.
The book then discusses the need for a ‘national defence and security strategy’
as the basis for calculating the funding requirements of a reformed military. While
this is highly desirable, and the government has indicated that it is working on a
security review, it should not be accepted as an essential prerequisite. Since the
government already has a de facto strategy, there is no necessary link between
complying with Law 34/2004 and developing a revised strategy. Nevertheless,
the authors discuss a range of issues that will have to be considered when the
government does undertake a strategic review.
The barrier to complying with Law 34/2004 is the vested interests that benefit
from the current arrangements. It is here that some original research would have
been most useful, because there are no existing data on the level, sources or distributional patterns of income of the military officer corps (serving and retired), and
on who would win and lose if the military’s funding arrangements were regularised. Given that gathering such data would be akin to researching the income
streams of the mafia, it is hardly surprising that it has not been undertaken.
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However, the linkages between nominally legitimate and illegal business arrangements need to be understood if vested interests are to be overcome.
The book does canvass the broader reform issues related to the nexus between
public service and military salaries (including allowances, housing, education,
health care and superannuation benefits); government-wide corruption of the
capital budget; and the lack of zero-based budgeting that would relate expenditure to capital acquisitions and maintenance and operational activities.
The authors explain that they have refrained from proposing specific policies
for winding down the TNI’s business activities because this involves broader
government policy beyond the defence ministry and the TNI; because powerful
vested interests prevent the acquisition of much of the detail needed to formulate
specific recommendations; and because the lack of reform to date indicates the
need for a stronger political and social consensus for change. They nevertheless
make a number of suggestions.
Overall, this is a useful compendium of the issues and some of the policy options
for getting the military out of business and crime. It is recommended reading for
anyone interested in security sector reform in Indonesia and in broader issues of
government reform.
Bob Lowry
Sutton NSW
© 2009 Bob Lowry
Greg Fealy and Sally White (eds) (2008) Expressing Islam: Religious Life
and Politics in Indonesia, Institute of Southeast Asian Studies, Singapore,
pp. xxii + 296. Paper: S$29.90/US$25.90; Cloth: S$49.90/US$42.90.
Expressing Islam is a collection of papers presented at the annual Indonesia Update
conference at the Australian National University on 7–8 September 2007, with
the addition of three papers commissioned to cover popular local pilgrimage in
Java, the rise and fall of the empire of televangelist Aa Gym, and micro-finance
aspects of sharia (Islamic law; Indonesian: syariah) banking. The volume offers a
welcome corrective to the emphasis on militant Islamic movements in publications on Islam in Indonesia that have appeared since the violent conflicts between
Muslims and Christians in 1999 and the Bali bombing of October 2002. The editors
of this volume aim to describe the diversity of the ways Indonesians express their
identity as Muslims, ranging from adopting Muslim dress and opening a sharia
bank account to cruising Islamic websites for an appropriate fatwa (pronouncement by a recognised Islamic religious authority).
The book is arranged in three parts, focused on (I) expressions of personal piety;
(II) political, social and legal expressions of Islam; and (III) the Islamic economy.
Part I includes essays on neo-modern Sufism among urban Indonesians; two
essays that reflect on the emergence of Islamic televangelism in Indonesia; the critique of dakwah proselytising by traditional dai (preachers) in rural communities
that has been mounted by modernising Islamic leaders; and commercial aspects
of popular pilgrimage in Java. Each of the essays is interesting and, in my view,
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highly recommended reading for all scholars of Indonesia. Especially valuable is
Greg Fealy’s introductory essay, ‘Consuming Islam: commodified religion and
aspirational pietism in contemporary Indonesia’, in which he argues that modernisation in Indonesia has been characterised by the commodification of Islamic
culture and a new emphasis on the individual as an active consumer of Islam.
This kind of individualism contrasts with Islamic identity formation and expression as moulded by traditional collective institutional channels such as Nahdlatul
Ulama and Muhammadiyah. While critics deplore this individualist development
as producing Muslims who are more concerned with looking Islamic than with
being Islamic, Fealy points out that levels of philanthropic activity by Muslims
have risen dramatically and it is the new ‘modern’ Muslims who are demanding higher public ethical standards and a government free from corruption. Fealy
concludes that ‘religious commodification has not greatly altered the moderate
nature of mainstream Indonesian Islam’ (p. 38), but includes a cautionary warning to scholars who would predict the future: ‘The sheer breadth and complexity
of Islamic economic activity and consumption in Indonesia make neat and comprehensive analysis almost impossible’ (p. 37).
In part II, M.C. Ricklefs provides a historical perspective on changes in Islam
in Indonesia from the ‘mystic synthesis’ that appears to have prevailed from the
14th through the 18th century. From 1830 Islamic reform movements that arose in
resistance to Dutch colonisation led to the development of two distinct forms of
Islamic expression, a modernising sharia-oriented Islam and a Sufi-oriented Islam
concerned with traditional forms of Islamic observance, such as local pilgrimage
and tarekat (Sufi orders) organised around traditionally educated ulama. Ricklefs
argues that today under the impact of globalisation there is a renewed polarisation
of Javanese society along lines of religious identity, as occurred between 1850 and
1965. The subsequent essays focus on (1) efforts to reform the discourse on gender
roles in Islam within Nahdlatul Ulama educational institutions; (2) an intriguing
account of the impact of on-line fatwa-shopping by internet-savvy Muslims; (3) a
finely tuned analysis of the proliferation of sharia-related by-laws (perda syariah)
that were promulgated by local governments between 2003 and 2006; (4) an account
of the rise of the Islamic Defenders Front (FPI) and the Betawi Brotherhood Forum
(FBR), Islamic gangs (preman) which have come to wield considerable power in the
last seven years; and (5) an assessment of the present status and prospects of Jemaah
Islamiyah (JI), the organisation founded by Abu Bakar Ba’asyir and Abdullah Sungkar that was responsible for the Bali bombing of 2002, and some of whose members
were involved in bombings of western targets in Indonesia between 2003 and 2005.
Taken together these essays present a dynamic collage of the diverse streams of
Islamic expression that vie for support in a democratising Indonesia today.
The final section of Expressing Islam is devoted to the new forms of Islamic
banking that have emerged since the establishment in 1991 of Indonesia’s first
sharia bank, Bank Muamalat Indonesia. The first essay, by Umar Juoro, Commissioner of Bank Internasional Indonesia and a Senior Fellow of the Habibie Center,
assesses the growth of Islamic banking services up to the passage of the Sharia
Banking Law in June 2008. He provides a list of Islamic bank offices in Indonesia
in 2007 and a description of the different types of contracts that are available in
Islamic banks. He argues that, if Bank Indonesia’s prediction of a 10–15% market
share for Islamic banking by 2015 is to be realised, public understanding of sharia
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finance must be improved and more flexible and innovative contracts and banking instruments must be developed.
The final articles concern Islamic banking and micro-finance loans. Muhammad
Syafii Antonio, who is a member of the Sharia Advisory Council on Banking and
sits on the board of directors of several major sharia banks, argues that Islamic
banks should play a more important role in the financing of small and mediumsized enterprises (SMEs) in Indonesia. He points out that the SME sector contributed 54.2% of Indonesian gross domestic product in 2005 and that the share of
SMEs in total employment has exceeded 90% (p. 251–2). Small and micro-finance
banks (baitul maal wat tamwil or BMT), developed by Muslim NGO activists beginning in the 1990s and now located in cities and regions across Indonesia, are positioned to support SMEs that have not been able to access funding in conventional
banks. Minako Sakai provides an account of the founding and expansion of BMT
banks. While one might wish for even more information on the phenomenon of
sharia finance that has evoked so much interest and hope among Islamic reformers, one must be grateful to Greg Fealy and Sally White for making this valuable
collection of essays available to scholars.
Elizabeth Collins
Ohio University, Athens OH
© 2009 Elizabeth Collins
Organisation for Economic Co-operation and Development (2008)
Indonesia: Economic Assessment 2008,
OECD Economic Surveys 2008/17, Paris, pp 127. €52; US$72; £37; ¥7,800.
For some years the Organisation for Economic Co-operation and Development
(OECD) has been working to strengthen cooperation with selected non-member developing countries. Plans have been announced to develop an ‘enhanced
engagement’ with five countries with an eye to possible future membership. Indonesia is one of these countries, along with Brazil, China, India and South Africa.
This report, the first detailed study on Indonesia by the OECD, is part of the
organisation’s program of enhanced engagement with Indonesia. The report provides (chapter 1) an overview of Indonesia’s growth and macroeconomic performance since the 1997–98 financial crisis, and then considers two topics in more
detail: the business and investment climate (chapter 2) and labour market issues
(chapter 3). The overall story is very supportive of the recent efforts of Indonesian
economic policy makers. In addition, as one would expect in a report from an
international agency such as the OECD, the document draws attention to a range
of policy areas in which improvements might be made.
In chapter 1, the OECD places great emphasis on the importance of long-term
growth. ‘Raising the economy’s growth potential’, the report argues, ‘and sustaining it over the longer term, is Indonesia’s foremost policy challenge’ [emphasis added]. Sustained and higher growth (an ambitious figure of around 8% per
annum, or slightly more, is implied) is seen to be needed over the period 2006–30
‘to lead to a sustained reduction in poverty and unemployment over the longer
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term’. It is argued that input accumulation, rather than productivity gains, has
been the main driver of growth in recent years, that the structural reforms of the
1980s helped enhance productivity, and that the main barriers to raising the economy’s growth potential are currently on the supply rather than the demand side
of the economy.
Chapter 2 focuses on the business and investment climate. There is considerable room, it is suggested, for improving supply-side performance by encouraging entrepreneurship and the private sector. The main policy measures needed
are seen to be improving the regulatory climate, tackling infrastructure shortages,
and enhancing governance in certain key areas (in the legal system, at the local
government level, and within some of the main state-owned enterprises, including the larger state-owned banks).
Chapter 3 considers labour market issues in some detail. The phenomenon
of slow job creation (or ‘jobless growth’, as the Asian Development Bank has
called it) is discussed. It is argued that a combination of policies to encourage
greater flexibility in the formal labour market and more effective social protection programs would help improve the operation of Indonesia’s labour markets.
Especially, the OECD survey is rather critical of the tightening of employment
protection legislation (EPL) in Indonesia in recent years. It suggests that the tightening of EPL has failed both to boost social protection and to promote economic
efficiency. In addition, the OECD argues, the introduction of a more restrictive
labour code during the last decade has provided greater protection to relatively
better-off workers in the formal sector at the expense of lower-paid workers in
the informal sector.
Not surprisingly perhaps, in certain respects the report reflects something of an
OECD approach to the world. In view of the OECD’s plan to develop an enhanced
engagement with some major developing countries, it may be worth mentioning
several ways in which this tendency to see things within a rich-country framework influences the presentation.
First, the report makes numerous references to the situation in OECD countries. The implication, apparently, is that rich OECD countries are an appropriate comparator for developing countries such as Indonesia. This hardly seems
appropriate. Income per capita in Indonesia is currently about $2,000 compared
with an average figure of around $40,000 in the main OECD countries. Given
this difference, many comparisons between OECD countries and Indonesia are of
limited relevance.
Second, there is little recognition in the survey that quite a few of the reforms
suggested would be expensive, or that the capacity of the Indonesian state to
finance them is very limited. Possible reforms mentioned include strengthening law enforcement, improving regulatory institutions and increasing spending on infrastructure. But there is a very large difference between the capacity
of OECD countries to pay for these things and that of developing countries. In
OECD countries, government spending per person in 2004 (IMF estimates) was
around $14,000 per year. The comparable figure in Indonesia was below $300. In
other words, for every $1 the Indonesian government had to spend on each citizen, western governments had over $40. Yet nowhere in the OECD report is any
careful consideration given to the implications for policy making in Indonesia of
these extreme resource constraints on government.
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Third, the report displays something of a preference for focusing on activities
in the formal sector. Various efforts to measure characteristics of the policy environment in Indonesia (such as restrictions on product markets) assume it is the
formal legal institutions that count. This is often not the case. Rather, it is often the
tacit institutional arrangements and informal agreements that determine the real
relationships between economic actors in countries such as Indonesia. Partly as a
result of this tendency, the report suggests that reforms are needed in the regulatory framework to make product markets more competitive. Presumably it is the
formal product markets that the OECD is focusing on. Many informal markets in
Indonesia are ferociously competitive, with many instances of quite harmful competition being reported.
But overall the OECD survey is a very useful summary of some of the key
economic issues that Indonesian policy makers face. The main policy issues,
along with up-to-date data, are presented in an accessible and readable way that
will perform the extremely helpful role of encouraging governments and other
observers in OECD countries to familiarise themselves with current events in
Indonesia. A good summary of the report can be found at .
Peter McCawley
ANU
© 2009 Peter McCawley
Craig L. LaMay (2007) Exporting Press Freedom,
Transaction Publishers, New Brunswick NJ,
pp. xxiii + 310. Cloth: $34.95; Paper $29.95.
Since the fall of Soeharto in 1998, Indonesia has been flooded with media assistance programs. Many of these programs have been funded by the US government
through either the US Agency for International Development (USAID) or one of
its partner NGOs. While these programs share the broad aim of promoting political transparency and accountability through the development of independent
media, they have focused in particular on journalism training, reform of the press
law, and an overall improvement in journalistic professionalism.
Craig LaMay unravels the assumptions behind these and other media assistance programs in the developing world, and offers a critical assessment of their
effectiveness. Chapter 2 focuses on the history of US and EU foreign aid programs
and ‘the democracy promotion industry’; chapter 3 provides an overview of the
NGOs working in the area of media assistance; and chapters 4 and 5 look at some
of the specifics of what LaMay calls ‘the financial/editorial dilemma’ of independent media in developing countries (p. xix).
Although the normative value of ‘strengthening civil society’ is fundamental to
the media assistance industry, LaMay argues that not only is the concept of civil
society so vague as to be almost meaningless, but its relationship to the development of independent media is problematic at best. One of the more interesting
sections of LaMay’s study is his analysis of how donors attempt to monitor and
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evaluate the success of assistance programs that somewhat grandly promise to
strengthen the independent media sector.
For LaMay, the fundamental reality is that media ‘are rooted not in political
or civil society, but in economic society’ (p. 4). The book under-scores a dilemma
that is central to media assistance programs: how can independent media become
financially self-sustaining while continuing to contribute to democratic processes
and consolidation? As the experience of media organisations in many developed
democracies suggests, having a strong revenue stream and promoting quality
journalism are often two entirely different things.
Chapter 6, which looks at the innovative New York and Prague based Media
Development Loan Fund (MDLF), will be of interest to many Indonesianists.
LaMay uses the case of the Radio 68H news network (based in Jakarta) and the
online news service Malaysiakini (based in Kuala Lumpur) to show how MDLF
combines below-market loans with program-related investments to help wean
quality news organisations from donor funds, while enabling them to become full
and competitive participants in their respective markets.
The success of Radio 68H and Malaysiakini suggest that this alternative kind
of media assistance can be highly effective—but that it requires both a long-term
interest in the programmatic and financial health of the recipient and a true sense
of partnership. Ironically, despite the millions of dollars that have been poured
into media assistance in developing countries, these two basic commodities have
been in very short supply.
Janet Steele
George Washington University, Washington DC
© 2009 Janet Steele