The new government of Susilo Bambang Yudhoyono (SBY) has been performing well relative to the standards of recent governments. The confidence of the business community in Indonesia’s near-term future continues to improve, resulting in rapid growth of investment activity, steady gains on the...

The changes in grant allocation among regions have been less revolutionary than the 1999 decentralisation legislation envisaged because the resource-rich regions were able to force the government to modify the proposed fiscal gap formula for allocating general purpose grants so as to put more...