Millennials or Generation Y—those born between 1981 and 1996—represent the population cohort who are moving into the prime of their careers and lives. It is this generation that is being groomed to take up leadership roles in various sectors of society. How millennials mature and develop, the values they hold and the capabilities they acquire will be crucial determinants of the outlook for a nation going forward. Millennials may not be digital natives, but they have grown up amid what is known as the Fourth Industrial Revolution—the current era where virtually every industry is being transformed by the exponential pace of technological change and digitalization. Unprecedented technological changes and what is known as hyper-globalization have caused disruptions to cultural and societal norms. The values and work ethics of millennials are shaped by their exposure to digital social media (Smith and Nichols 2015; Tulgan 2016). These characteristics—their exposure to technology and their world views, among others—place a huge gap between millennials and previous generations. As Hoffman (2017) and Tulgan (2016) have noted, millennials are the most misunderstood among the generations, particularly by their parents’ and grandparents’ generations, the Generation X and baby boomers.

In Indonesia, those from the millennial generation are slated to take up positions as leaders in various important spheres of society—from the political, economic and business spheres to the education, arts and culture sectors. Experiencing the prime of their lives amid the Fourth Industrial Revolution and the COVID-19 pandemic, millennials have acutely experienced disruptions to their family and working lives as well as ways of doing business.

Indonesia's demographic changes call for understanding the intergenerational gap that is at the core of the so-called millennial disruptions. The gap is a complex one—it exists not only between different generations but also between the millennials living in rural areas and those living in urban areas, as well as between rich and poor millennials. Several phenomena might indicate where to look in order to understand what has changed and how such change has disrupted our lives. Firstly, technology has created closer relationships between those separated by distance while making strangers of those living in close proximity to one another. Consequently, family and people-to-people relations have changed to the extent that the well-known solidarity of the Indonesian people, gotong-royong, has been completely redefined by the millennials. Millennials use different tools to empower and help each other.

INTRODUCTION

Food policy goes far beyond simple agricultural production, encompassing issues such as food and nutrition security, poverty alleviation, women's participation, structural transformation and value addition. Food policy also has a macroeconomic dimension, as it has implications for inflation, fiscal policy, and affects the trade balance. Failure to manage food policy has the potential to disrupt politico-socio-economic stability.

This chapter discusses whether Indonesian food policy has failed, mainly focusing on rice policy, but also looking at cocoa, sugar and salt policies as an illustration. The same shortcomings and challenges apply to many other food commodities and hence some of the policy recommendations can be generalized, with minor adjustments depending on the food commodity.

While significant long-standing food policy challenges remain, such as striking a balance between consumer and producer welfare, in recent years many changes have been introduced. They are (i) the omnipresent use of enforcement officials (both military and civilian) to “discipline” the market (including “food mafias” or hoarders); (ii) the extensification of agricultural production by opening new rice fields outside Java and increasing the crop plantation index to increase production; (iii) putting a binding cap on retail prices of some food commodities to counter high prices; and (iv) the crowding-out of private investment by state-owned enterprises and the lack of market competition. While there have been significant improvements in some aspects of food policy, such as the development and rehabilitation of irrigation systems and dams (Kompas 2018b) and the use of Area Sampling Frames methodology to more accurately produce rice production statistics according to international best practices, these seem to be overshadowed by the continuing shortcomings.

This chapter discusses four main topics: (i) food policy goals; (ii) the performance of these goals; (iii) why they may have failed or succeeded; and (iv) policy recommendations.

FOOD POLICY GOALS

At the highest strategic level, the Nawacita — the vision and mission of President Joko Widodo and Vice-President Jusuf Kalla for their 2014–19 term — mandates that “food sovereignty” should be the ultimate goal of food policy in Indonesia. A passage in the Nawacita explains how to achieve food sovereignty. First is increasing on-farm production by improving irrigation systems, opening new rice fields and restoring soil fertility. Second is providing financial and capital access to farmers and micro, small and medium enterprises (MSMEs). Third is increasing the value-added of farmers’ products through post-harvest technology and capturing longer value chains.

After the Reformasi era, Indonesia underwent a historic political transition, culminating in the peaceful direct presidential election of 2004 in which Susilo Bambang Yudhoyono, popularly known as “SBY”, was elected as the sixth president of Indonesia. Under President SBY, Indonesia managed to regain its economic footing. The country was the hardest hit by the 1997 Asian financial crisis, which caused its real gross domestic product (GDP) to fall by thirteen per cent in 1998. It was during the SBY presidency that Indonesia managed to rebuild its economy and achieve a respectable level of growth of around six per cent, close to the pre-crisis levels.

As the country had just recovered from the financial crisis, Indonesia faced many economic challenges during SBY's term, including crumbling infrastructure, an unstable financial market, high unemployment, and an increase in the poverty rate. Given these challenges, SBY and his economic team had arguably succeeded in putting Indonesia back on the investors’ radar. It is debatable, however, whether Indonesia's strong economic growth during SBY's administration was due to good management or merely good luck (Basri 2012). As a resource-rich country, Indonesia benefited from the commodity boom, which happened during the SBY presidency.

Regardless of the cause, Indonesia's relatively stable domestic politics and improved macroeconomic conditions to some extent set the foundation for Indonesia's regional and international economic engagement of “a million friends and zero enemies”. The slogan was seen as SBY's hallmark foreign policy to thrust Indonesia into a new global limelight as an unlikely star (Soesastro 2009). “A million friends and zero enemies” was a vision introduced by SBY in his effort to gain as much support as possible for Indonesia's national development and to advance its reputation in the region and the world. In fact, Indonesia during SBY's presidency tried to exploit several regional and international platforms to promote its vision of international economic cooperation.

The 2008 global financial crisis (GFC), along with a rising tide of protectionism around the world, however, represented a turning point in SBY's stance towards open regionalism and globalization. In spite of the changing political and economic dynamics at home, SBY's administration still managed to secure a foothold for Indonesia in many regional and global forums through its strategic contributions.

Financial integration challenges in ASEAN beyond 2015 can be grouped into two broad classes. The first class of challenges are the regulatory and infrastructure challenges of financial market integration itself. The second pertains to monetary and fiscal policy regimes and how they are impacted by as well as how they impact on an integrated financial market in the region.

ABOUT ABIF

As a part of the AEC Blueprint, ASEAN Central Bank Governors endorsed the ASEAN Banking Integration Framework (ABIF) on April 7, 2011. Against that background, as the ASEAN financial sector is generally bank-dominated, the banking sector is a key driver in the financial integration process.

The initiative for ASEAN financial integration could be traced back to the Roadmap for Monetary and Financial of ASEAN (RIA-Fin) established in 2003. As stated in RIA-Fin, financial integration in

ASEAN is facilitated through the following initiatives:

1. • Financial Services Liberalization (FSB), i.e. progressive liberalization on financial services;

2. • Capital Account Liberalization (CAL), i.e. removal of capital controls and restrictions to facilitate freer flow of capital;

3. • Capital Market Development (CMD), i.e. building capacity and laying the long-term infrastructure for development of ASEAN capital markets.

In April 2011, ASEAN Central Bank Gover-nors accepted the results of the commissioned study by the team of consultants led by Professor Yung Chul Park as a reference for the ASEAN financial integration process. Central Bank Governors also endorsed the ASEAN Financial Integration Framework (AFIF) which is based on the agreed Broad Thrusts (i.e. three dimensions of FSL namely equal treatment, access and environment, milestones for ASEAN5 and BCLMV, clear set of preconditions and safeguards, financial stability, capital account liberalization, capacity building and shared responsibility, and integrated payments and settlements).

Currently, ABIF is based on four guiding principles: bringing economic benefits and financial stability for individual countries and the region, allowing flexibilities by adopting a double-track implementation for ASEAN5 and BCLMV, and achieving multilateral liberalization by 2020 (e.g. measured by the number of ASEAN commercial banks presence in ASEAN).

To ensure a successful implementation of ABIF, four pre-conditions have been agreed upon. The first is harmonization of principles of prudential regulations. The second is building financial stability infrastructure. The third is providing capacity building for BCLMV. The fourth is setting up agreed criteria for ASEAN Qualified Banks (QAB) to operate in any ASEAN country with a single ‘passport’.

INTRODUCTION

Amid the global financial turbulence, the economy of Indonesia posted an annual average growth of above 6 per cent between 2008 and 2012, except in 2009. This was arguably among the most stable growth performance among the regional economies of East and Southeast Asia. The strength of domestic demand has indeed been a primary driver of the stable growth performance. In contrast to the major ASEAN (Association of Southeast Asian Nations) economies, exports of Indonesia amounted to less than 25 per cent of its GDP, compared to Malaysia at more than 80 per cent and Thailand at more than 60 per cent in recent years. Private consumption contributed between 44 and 49 per cent of the quarterly year-on-year GDP growth in 2012 (see Figure 2.1). Indonesia has also seen investment pick up in recent years, and the country's resilient growth in 2008–12 can also be attributed to high commodity prices and capital inflow surges.

Despite the large domestic demand base, the uncertainties with the advanced economies, particularly the United States and the European Union, had negatively affected and exposed a number of apparent weaknesses with the Indonesian economy. A couple of these vulnerabilities are worth highlighting as they are arguably structural in nature. First is the country's banking sector's exposure to cross-border bank-lending activities. Like the rest of the ASEAN economies, the banking sector assumes a vital role in overall financing activity in the local economy. Among the major ASEAN economies, Indonesia arguably adopts the most open banking sector regulation. Majority foreign ownership, as high as 100 per cent, has long been adopted following the 1997 East Asian crisis. Furthermore, foreign banks are allowed to enter the local industry both as a branch or a subsidiary. The high interconnectedness of the local banking sector to the global banks exposed the local economy to increasingly volatile cross-border bank-lending flows as evident during the deleveraging of the European banks in 2011.

The second is current account weaknesses. The persistent current account deficits in recent years have raised concerns over macroeconomic stability, causing depreciation pressures on the local currency. The root cause of the current account deficit has been attributed to costly long-standing energy subsidies and the heavy reliance on commodity exports.