In Indonesia, are politics and other domestic issues getting in the way of real economic reform?
There is always such a risk not just in Indonesia. But in Indonesia, it is now less so than before because there is a new government that is considered by the majority to be legitimate and therefore, there is a new opportunity for this government to continue the restructuring and recovery process. But with all the problems the administration has with Aceh and concerns about the military, can the new leadership get anything done on the economic side? As long as there is social and political stability, the possibility is there to even accelerate the progress of rehabilitation of the Indonesian economy. What lessons should we get out of Malaysia and its apparent success with capital controls? The lesson I would personally draw is that exchange controls and capital controls played a minor role in the recovery process of Malaysia. They came late in the game anyway and then were watered down to a 10% withholding tax. Nevertheless, I think that countries should not necessarily jump to institu
