Indonesia's fiscal position is generally sound and policy making prudent. However, the country still faces important challenges in terms of economic and social development.
In 1998 Indonesia embarked on an ambitious course of decentralisation. Over a period of a few years, facilitated by financial transfers from the central government, responsibility for many public services and administrative tasks were devolved to local authorities.
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The performance of the Indonesian economy could be improved considerably by removing administrative and regulatory barriers to competition through a programme that reviews regulations.
Indonesia’s infrastructure is in poor shape, having suffered from protracted under-investment since the Asian financial crisis of the late 1990s, and constraints growth potential.
This paper uses the OECD’s Going for Growth framework, as well as other available evidence linking policies to economic performance, to identify key structural policy challenges in the BIICS for the years ahead.