Indonesia is a fairly large country made up of thousands of islands, and viable air transport is absolutely ESSENTIAL for the country. Any interferance with the viability of the incumbent Indonesian operators is not just a threat to their viability, but a threat to the development of a struggling country which desparately needs to maintain these services. The government's attitude is first, provide a service, and, it's quite OK if you make a profit whilst you are providing a service. Such service implies scheduled operations to destinations of low/poor financial returns, but bolstered (subsidised) by profitable destinations on the key routes. Kill the few profitable destinations for the Indonesian incumbents, and you've detroyed the entire country's airline system.
If Jetstar et al want to do their bit, and provide a SERVICE to the hundreds of other far less economically attractive destinations, then good! But then, it's not about SERVICE is it, it's all about making a quick greedy buck from the few profitable destinations in an otherwise poor country.
You can call the Indonesian government whatever you want, corrupt, inefficient, ineffective, anything you want, and some of it will probably be correct. The one very effective thing that they've done in the National interest is to keep the looters out.
For the record, I am not Indonesian, and have absolutely no ties with Indonesia whatsoever. In fact, Garuda is one of our competitors.
Old Smokey