Reforms aimed at addressing the shortcomings of Indonesia's business environment will move forward in a stop-start manner, reflecting the conflicting views on reform within the ruling coalition. 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 politically infeasible. 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 has, however, submitted draft legislation to parliament on land acquisitions. If passed, the legislation would make it easier for the state to acquire land for development purposes, thus removing one of the major bottlenecks to much-needed infrastructure upgrades.

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 tighten policy by raising interest rates this year 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.