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REFORMASI WEEKLY REVIEW
SUMMARY OVERVIEW
21 November 2014

Politics: Parliamentary criticism of the fuel price hike seems unlikely to trouble the president, who may have hastened the hike to occur while parliament remains incapacitated by infighting (Page 2). Parliament’s sparring alliances took a step towards reconciliation by convening a general assembly session, but pro Widodo parties insist upon revising the Legislative Assemblies (MD3) Law before resuming routine functions. This provides the president with a window for governing without distractions from the legislature (p. 24). In the approach to a Golkar congress in the first week of December, few signs indicate that regional chapters will oppose the re election bid of the incumbent chair. And no formidable challenger is emerging (p. 3).

Policy News: A Rp2,000 per liter hike has brought petrol and diesel prices to near parity with international market prices. Consequences include a 25 basis point interest rate hike and expectations of two additional percentage points of inflation, but the government has commenced payments of compensation for 15.6 million households. The adjustment restores fiscal health – freeing up perhaps as much as Rp140 trillion in resources in 2015 – while helping to curb the current account deficit and thereby protect the currency. The move also helps build investor confidence in the new administration (p. 5). The president issued orders to destroy foreign vessels fishing illegally (p. 7). Officials disclosed plans for upgrading ferry fleets. Such logistics fixes could eventually bring down costs and expand consumer purchasing power (p. 8). The land minister pledged to “impose order” on land owned surreptitiously by foreigners (p. 9).

Appointments: Widodo’s choice of attorney general drew criticism – a career prosecutor affiliated with the National Democrat (Nasdem) Party (p. 9). Two figures with strong governance credentials take over key roles in the energy sector: former Anti-Corruption Commission (KPK) member Amin Sunaryadi as head of the Upstream Regulatory Task Force (SKK Migas), and the principled economist Faisal Basri as head of a new Energy Sector Reform Commission. Changes in importing are an immediate target (p. 11).

Outlook: The president’s approach to institutional reform entails risks (p. 13).

Reformasi Weekly Review provides timely, relevant and independent analysis on Indonesian political and policy news. Delivered electronically every Friday, Reformasi Weekly is written by Kevin O’Rourke, author of the book Reformasi. For subscription information please contact. Reformasi Weekly is a product of PT Reformasi Info Sastra.
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