Index

Agriculture, 17 Basic Law on Forestry, Act No. 6 of agribusiness, 134 1967, 103 productivity improvement, 15, 57 BAT, see British American Tobacco Allende, 216 Company Andean Group, 5 Bata shoes, 196 Antifraud provision of corporate Bayer , 172, 196 laws, 182, 188 Bearer certificates, 187 Argentina, 228 Belgium, 127 Arun, 87-8 Bhopal, 1 BKPM, see Indonesian Investment Badak, 87-8 Coordinating Board Badan Koordinasi Penanaman Mo­ Bond market, 57, 69, 171, 179, 202, dal (BKPM), see Indonesian 223, 227 Investment Coordinating Board Brazil, 31,33-4, 153, 167, 170, 177-8, Badan Pelaksana Pasar Modal, see 186, 228 Indonesian Capital Market Exe­ Britain, 170 cutive Agency British American Tobacco Company Balance of payments, 4, 11, 75 (BAT), 156, 192, 196, 199 Bank Bumi Daya, 42 Brokerage licence, 188 Bank Central Asia, 42 Bank Dagang Negara, 36, 42 Caltex, 77-8, 81 Bank Ekspor Impor Indonesia, 42, 44 Canada, 170 Bank Industri Negara, 55 Capital controls, 30, 146 Bank Mergers, 50--1 Capital Investment Coordinating Bank Negara Indonesia, 36, 42 Board, see Indonesian Invest­ Bank of Indonesia, 35-6, 41, 51, 55, ment Coordinating Board 192-3,203 (see also Central Bank) Capital markets, 125, 147, 162, 170 Bank of , 35 Capital Market Policy Council, 187 Bank Pembangunan Indonesia, 36, 55 Capital market regulations, 180 Bank Perdania, 52 Central Bank, 37-9, 54, 64, 203 Bank Rakyat Indonesia, 44 discount facilities, 41, 44, 47, 51, Bank reform laws of 1967-8, 41, 55 55, 62, 70 Banking Central Java, 192 credits, 39, 41, 44, 51-2, 136 Certificates of Indebtedness, 202 branch offices, 50, 64 Chile, 90, 106, 170, 216, 228, 230 licences, 50--3, 221 China, 21, 124, 230 interbank, 49, 52-3, 57, 203 Chinese in Indonesia, 7, 20--l, 50, 53, lending, 5, 13, 47, 53, 147, 217, 225 99, 124--5, 134--5, 145, 160, 205 Banking structure, 34--5 Christian-Nationalist Indonesian Banks,22,28, 140,204 Democratic Party (PDI), 18 Bapepam, see Indonesian Capital Citibank, 34, 42 Market Executive Agency Coca- Company, 142, 146 Bapindo, see Bank Pembangunan Collateral security, 202 Indonesia Collection practices, 143

235 236 Index

Commercial lending Dutch Heineken, 196 banks, 8, 13, 30, 37 during late 1970s, 4 Economic autonomy, 6, 121, 163, Commissions, 153 217, 222--4 Common stocks, 184 Economic pragmatism, 7, 18, 124 Company Law, 184--8, 227 Economic Stabilization Council, 41 Concession agreements, 22, 77, 219 Emerging Markets Growth Fund, Continuity, 163 167 Contracts of work, see Work con­ Energy, 10 tracts Equador, 228 Currency swaps, 53, 64 Equity market, 23, 140, 151, 179, 199, Customs, 131, 231 222 Equity securities, 57 Daiwa Bank, see Japan Equity sharing, 82, 90-4, 136, 162, Danareksa, 62, 139, 141, 150-4, 161, 206 171, 180--3, 186-9, 198-9, 208 disincentives, 142, 146 pilot promotional projects, 192, incentives, 140 193 (see also National unit trust) policy, 23, 122-3, 127, 137, 141, Debt 161, 222 long term, 150, 176, 179 Euro-credits, 13 short term, 176 Exchange controls, 93, 183 Debt-equity swaps, 228-9 Export quotas, 99 Debt structures Export trade credits, 47 external debt, ll, 134, 167,218,228 Exports, 124--5, 131-3 debt servicing, l1, 13 non-oil, 10, 14, 47, 219 Demand for equities, 150, 170, 173, oil, see Oil industry 183, 193, 195 Expropriation, 136-7, 156, 162, 220 Devaluations, 183, 186, 196 Extractive sector, 17, 22, 74, 121, 217, result of OPEC price policies, 10 221' 226, 230 Development Finance Company, 56 Directorate of Taxation, 196 Ferrosteel payments, 81 Disclosure, 145-6, 177-8, 180, 185-6, Financial assets, 30, 39, 51, 53, 57, 62, 193, 195, 226 65 trading transaction exemption, 182 Financial deepening, 29, 31-3, 168, Discounting, 155-6, 176, 203 204 Distribution of wealth, 122, 135, 139, Financial sector, 22, 28, 65, 124, 220, 161, 223 230 Diversification, 160 Five Year Plans, 16, 55 of ownership, 168, 219 Replita I, 16 Dividends, 93, 150-4, 176, 183, 192, Replita II, 17 200--2, 207-9 Replita III, 17, 198 Domestic financial resources, 30 Replita IV, 14--17, 131 Domestic housing industry, 56 Foreign Bank Law of 1968, 39 Domestic Investment Law of 1968, Foreign branch banks, 52 124 Foreign direct investment, l-6, II, Domestic savings, 11, 33, 37, 41, 167- 18, 122, 125, 162, 225-6 8,224--6 Foreign investment, 3, 90, 127 intermediation of, 123, 140, 169 applications, 130--1, 144 alternative uses of savings, 177, 208 dependence on, 31, 56 Index 237

government regulation of, 2, 56, Agency, 152-3, 187, 195, 201, 104, 134 208 in Third World, 1 Indonesian Investment Coordinating motives and benefits, 1, 206 Board (BKPM), 8, 124, 131 needs, 21 Foreign Investment Priority List, priority investment categories, 126 126 working capital, 47 Indonesian trade balance, 14 Foreign Investment Law of 1967, 8, Industrial sector, 125, 133, 202 103, 124, 133, 136 (see also Bank Industrialization, 11, 183, 199, 221 reform laws of 1967-8) Inflation, 6-7, 33, 49, 83-4, 127, 155, Foreign Investment Law of 1976, 131 183, 184, 218, 229 Foreign-owned companies, 121 Informal market financial system, 28 and local involvement, 121-2, 142 Infrastructure, 224-6 policy success factors, 163 Insurance companies, 62 share offerings, 164, 171 Interest, 30, 51-3, 63-4, 93, 177, 183, Forest management, 99 202-4 Forestry, 97, 126, 163 rate controls, 47 concessions, 100 rate subsidies, 44 France, 170 Inter-Governmental Group on Indo­ Freeport Indonesia, 22, 91, 220 nesia, 13, 16 Internal Revenue Service, 83 Gas sector, 10, 124 International Center for Settlement of exports, 131 (see also liquid natural Investment Disputes (ICSID), gas (LNG), LNG trains) 136 General Agreement on Tariffs and International Finance Corporation, Trade (GATT), 54 167 General Ibnu Sutowo, 8 International Monetary Fund, 8, 225 Golkar (Golangan Karya), 18 International Standard of the Princi- Goodyear Indonesia, 139, 150--1, 160, ples of Accounting, 186 189, 196 Investment Finance Company, 56 Government objectives, 3, 141, 180, Investors Overseas Services, 183 188, 206, 217, 221, 223 Iran, 19, 154, 195 Governor of Bank Indonesia, 187 Graft and corruption, 21, 218 , 36, 52, 70,192,205,221 Grey market financial system, see In­ 1974 rioting, 125 formal market financial system Jakarta Stock Exchange, 23, 63, 125, Guided democracy, 6, 124 132, 140, 144, 147, 152, 161, 179, Guided economy, 36 182, 185-8, 198-9, 206 Japan,52,80,87,98, 100--3,124,127, Hong Kong, 28, 98, 127, 150, 176, 131, 154, 169-70, 179 177, 179, 184, 221, 224 Japanese consortium agreement with Pertamina, 85 IBM, 142, 147 Java, 20, 98 (see also Population) Imports, 131 Java Bank, 36 non-oil, 10 Joint operating agreements, 85 oil, see Oil industry Joint ventures, 57, 65, 70, 80, 103, Income distribution, 21, 177, 224-5 156, 163 India, 142, 160, 176,201 local ownership and, 122-5, 131-4, Indonesian Capital Market Executive 162, 219 238 Index

Joint ventures cont. Ministry of Agriculture local partners, 139 Act No. 5 of 1967, 99 NBFis and, 56, 211 Ministry of Finance, 62-3, 193, 205, Judicial system, 222 221 Mobil Oil, 77, 83 Kalimantan, 87, 97-8 Monetary policy, 11, 14, 33 Kennecott, 91 reforms of 1983, 202 Korea, l 02, 139 stimulative policies, 33 Korea Electric Company, 170 Multinational companies (MNCs), 23 Kuwait, 178 effects of foreign investment, l transfer of ownership, 22, 62 Labour, 86, 101, 155, 224-5 employment and job creation, 6, National Insurance Savings Scheme, 14, 16, 90, 101, 121,217 47 intensive projects, 14, 16-17, 81, National Investment Trust, see 125, 217, 225 Danareksa Leasing companies, 64, 204-5, 221 National private banks, 50 Libya, 19 National unit trust, 23, 187, 192 Licences, 160, 218 Nationalization, 78, 121, 136, 155 Licencing agreements, 156 Natomas, 156 Liquid Natural Gas (LNG) Natural Gas, 77-8, 87-9, 225 (see also LNG trains, 87 liquid natural gas) Locally owned private companies, Netherlands, 127 171,205 Netherlands Trading Society, 36 London Inter-Bank Offer Rate New stock issues, 152, 199 (LIBOR), 64 New Order Government, 134, 163, 216, 219-20, 231 Malaysia, 98-9, 103, 134, 145, 147, New Order (Indonesia), 35, 37, 55, 91, 161, 167, 170, 172, 176, 188, 193 99, 103, 124 Management contracts, 137, 156 Nigeria, 121, 123, 167, 206 Manila and Makati Stock Exchanges, Non-bank financial institutions 171 (NBFis), 55-7, 62, 64, 68, 125, Manufacturing sector, 22, 74, 127, 153-4, 187-9, 192, 203-4, 221 217-21, 224-6, 230 (see also Joint ventures) Merck, 147, 196 Non-financial service sector, 22 Mexico, 30-l, 33-4, 121, 123, 141-2, North , 77 153, 167, 170-l, 217,224,228 Mineral contracts, 94 Offshore loans, 49 first generation contracts, 91 Offshore market, 151 Presidential Regulation No. 21 of Oil law of 1960, 78-9 1976, 93 Oil sector, 21, 75, 124, 219, 223 second generation contracts, 92 domestic involvement and, 10, 82, third generation contracts, 92 220 Mineral sector, 163 exports, l 0, 131 Mining, 17, 21, 89, 93, 96, 127, 220 in Indonesia's economy, 9, 75-7, Mining contracts, 121 86,202,225 Minister of Finance, 63, 187, 198 oil prices and, 49, 75, 229 Minister of Small-scale Industry, 134 refineries, 87 Minister of Trade and Industry, 187 revenues, 13, 17, 134, 222, 227 Index 239

world oil demand, I 0, 85-6 Richardson Vicks, 147, 196 OPEC, 5, 10, 75, 85, 220, 226 Royal Dutch Shell, 77 Operating control, 161 Orthodox Muslims, 7, 19, 124 Saudi Arabia, 21 Savings rates, 57, 217 (see also Pakistan, 167 Domestic savings) Pension funds, 39, 56, 65, 103, 180, SBI, see Certificates of Indebtedness 198-200 Secondary market, 62, 138-40, 152, Per capita income, 176 173, 176-8, 182, 188-9, 193, 203, Pertamina, 8, 21, 77-80, 84, 87, 130, 207-8 220, 223 Securities market, 57, 123, 135, 150, Pfizer, 147, 196 154, 160, 162, 167-70, 183, 188, Philippines, 30, 96, 98-9, 103, 123, 192, 196, 199, 220, 223, 226 134, 143, 171-2, 218, 228 protection for outside investors, Plywood industry, 101 184 price competition and, 102 trading process, 193 Population, 77 trading volume, 189 growth and family planning, 3, 15, Semen Cibinong, 153, 186, 196 85 Service sectors, 133, 221 pay scales, I 06 Share prices, 96, 151, 188, 192 standard of living, 7, 17, 37, 217, Shareholder rights, 185 225 Sime Darby, 161, 193 Preferred stock issues, 172, 183, 184 Singapore, 7, 28, 47, 150, 167, 176, Pribumi 179,221 economic well-being, 53 Singapore Inter-Bank Rate (SIBOR), equity ownership, 14, 22, 125 64 Primary securities market, 138, 153, Small business, 134 170, 173, 176, 192 Small investors, 177-8, 189, 208 Private placements, 182 Societe Generale de Surveillance Privatization, 14, 170, 230 (SGS), see Customs Production sharing agreements, 21, South Korea, 7, 28, 31, 33-4, 87, 103, 79-82, 84, 220 143, 153, 167, 171, 176, 178-9, Public offerings, 141-2, 150--l, 156, 184, 188, 195, 201, 206, 224 161, 179, 189,222 South Korean Securities Investment decision not to go public, 173 Trust Business Law, 178 going public, 173, 187, 205-6, 224 Soviet Union, 124 Public ownership, 134 Spain, 170 Squibb, 147, 196 State enterprise Qadhafi, 19 state banks, 37, 39, 45, 50--2, 140, 151, 154, 188, 192-3, 198 Registration of stocks, 180--2, 186, state-owned enterprises, 121 188 Stock markets, 167 Repatriation of capital, 124, 229 Stock ownership, 122, 163, 199 Return on equity Stockholders, 139 in banking, 53 Subcontracting, 121 other, 202 Subsidies, 30--1, 41, 45, 50, 54, 189, Return on Capital Employed 225 (ROCE), 154--6 reduction of domestic oil and, 85 240 Index

Suharto, Dr, 18, 81, 124-5, 127, 179, Timber industry, 10, 123, 225 200, 218 government policy, 99, 121-2, 223 New Order, see New Order (Indo­ Time deposits, 37, 70, 140, 150, 154, nesia) 176,180,184,189,202,208,221- Sukarno,99, 184 3 nationalization of foreign compa­ with deposit money banks (DMBs), nies, 21, 35, 90, 103 44-5,64 see also Guided democracy; Transfer payments, 146 Guided economy Transfer pricing, 5, 93 Sulawesi, 192 Turkey, 170 Sumatra, 20, 87, 97-8, 125, 192 Supply of shares, 170 Underwriting, 57, 152-3, 187-8, 192, 195, 220 see also Danareksa Taiwan, 7, 28, 52, 102, 152-3, 167, Unilever, 151, 196 176-7, 184,201,224 United Nations Taska, see also National Insurance United Nations Group of Seventy Savings Scheme Seven, 5 Tax disincentives, 123, 143 United States, 81, 83, 98, 102, 127, incentives, 23, 51, 198, 200, 209, 131, 168-9, 179-80, 185-6 226 US Securities and Exchange Commis­ law change effects in economy, 18, sion, 187 140, 231 US Tax Ruling of 1976, 83 legislation, 63, 95, 144, 180 policy, 96 Value added tax, 18 revisions of 1984, 64, 198, 202 Venture capital, 18 withholding, 53, 180, 199, 223 Village banks, 39 Technical assistance contracts, 84 Voting rights, 161, 193, 201 Telefonos de Mexico, SA, 170 Texas Instruments, 141 West Germany, 127, 169, 170 Thailand, 31, 33-4, 134, 167, 172, West Iran, 91 176, 201 Work contracts, 21, 78, 80, 82, 220 Third World Working control, 160 Centre on Transnational Corpora­ World Bank, 218, 225, 228 tions, 6, 216 see also Inter-Governmental Group intermediating financial resources, on Indonesia; agriculture; Inter­ 167 national Finance Corporation