There are indications that Mr Yudhoyono's efforts to improve the business environment are faltering in the face of resistance from vested interests. The departure of Ms Mulyani deprived the government of its most capable minister and has raised doubts about the president's commitment to reform. The anti-corruption drive will continue, but the Anti-Corruption Commission (KPK) will face constant opposition, as will other statutory bodies tasked with tackling graft. Several changes, including comprehensive reform of the country's restrictive labour laws and removal of energy subsidies, may prove unfeasible politically. Reform of the inefficient civil service, which was cited by the president as a priority for his second term, is making only slow progress. The government does, however, appear to be making progress on the preparation of legislation aimed at making it easier for the state to acquire private land for development. If such legislation is passed, one of the major obstacles to a series of much-needed infrastructure projects will be removed.

As a consequence of the inability of the civil service to spend fully the funds allocated to it, the government generally fails to operate an effective counter-cyclical fiscal policy, and macroeconomic management therefore has to be achieved primarily through monetary policy. Bank Indonesia (BI, the central bank) will begin raising interest rates in the first quarter 2011, in an attempt to contain the inflationary pressures generated by robust economic growth. In June 2010 BI introduced restrictions on foreign purchases of short-term central bank bonds, arguing that substantial short-term foreign investment inflows were putting the stability of Indonesia's currency, the rupiah, at risk because of the potential for a sudden reversal of investor sentiment. Although the authorities remain eager to attract long-term foreign investment, restrictions on short-term flows could be tightened.