Democratisation, Business Activism, and the New Dynamics of Corruption and Clientism in Indonesia
This paper investigates the relationship between state and business in the context of structural and institutional transformations in Indonesia following the collapse of the New Order regime in 1998. Since 1998, Indonesia has embarked on a shift from an authoritarian to democratic polity and from a centralised to a decentralised system of governance, transforming the country into the third largest democracy and one of the most decentralised states in the world. This paper examines whether the transformation of the Indonesian state has altered the pattern of state and business relations with focus on clientism and corruption as the key dependent variable, and probes how/to what extent this has changed as a result of the transformation and the ensuring shifts in business and state relations. Based on interviews with key government and business actors as well as prominent scholars in Indonesia, it is found that since the demise of the New Order, business associations in Indonesia have become more independent of state control and more influential in public decision-making whereas the government has become more responsive of business concerns and more committed to combat corruption and clientism. However, these changes have not necessarily rendered business people completely leave individualclientelistic relationship with the government, and simply pursue wider sectoral and business-wide collectivism as an alternative way of channelling their aspirations, which is expected to help reduce corruption and clientism in Indonesia. This paper concludes that democratisation and a more open politics may have helped reduce corruption and clientism in Indonesia through changes in government. However, it is still difficult to imply that such political transformation has fostered business collective action and a broader, more encompassing pattern of business lobbying and activism, which is expected to help reduce corruption and clientism.
[1] Basri, Faisal (7 June 2011), Senior economist and observer of business
associations in Indonesia, Indonesia Research and Strategic Analysis
(IRSA) (Interviewee).
[2] Chua, Christian, 2009, ÔÇÿCapitalist consolidation, consolidated capitalists:
Indonesia-s conglomerates between authoritarian and democracy-. In
Marco Bunte and Andreas Ufen (Ed), Democratization in Post-Suharto
Indonesia. Routledge Contemporary Southeast Asia Series, London and
New York.
[3] Commentator 1 (17 February 2011), Corruption Eradication Commission
(KPK) (Interviewee).
[4] Commentator 2 (2 April 2011), Association of Indonesian Procurement
and Distribution Partners (ARDIN), CE Natural Resources Group, PT
Bosowa Resources (Interviewee).
[5] Commentator 3 (2 April 2011), Indonesian Young Entrepreneurs
Association (HIPMI) (Interviewee).
[6] Commentator 4 (8 April 2011), Sub-directorate for Science, Technology
and Industry, Ministry of Development Planning (Bappenas)
(Interviewee).
[7] Coordinating Ministry of Economic Affairs, the Republic of Indonesia,
2011, Master Plan for the Acceleration and Expansion of Indonesia
Economic Development 2011 - 2025.
[8] Corruption Eradication Commission Annual Report, 2010, Corruption
Eradication Commission.
[9] Detiknews.com, 25 April 2008, Politisi PD Ancam Bubarkan KPK.
<http://us.news.detik.com/read/2008/04/25/133033/929433/10/politisipd-
ancam-bubarkan-kpk>
[10] Dhume, Sadanand, 2004, ÔÇÿA new political economy?" politics, ethnicity
and business in Indonesia-, In Basri and van der Eng (Ed.), Business in
Indonesia: New Challenges, Old Problems. Institute of Southeast Asian
Studies, Singapore.
[11] Djani, Luky (6 July 2012), Deputy Chairman of Indonesia Corruption
Watch and Deputy Secretary General of Transparency International
Indonesia (Interviewee).
[12] Eklof, Stefan, 2002, ÔÇÿPolitics, business, and democratization in
Indonesia. In Gomez, Edmund T. (Ed.), Political Business in East Asia.
Routledge, London and New York.
[13] Gammeltoft, Peter, 1997, State, Business and Hegemonic Rule in New
Order Indonesia. Working Paper 5. International Development Studies,
Roskilde. <http://home14.inet.tele.dk/petergt/me/phd/norfa.pdf>
[14] Gong, Ting, & Wu, Alfred M., 2012, ÔÇÿDoes Increased Civil Service Pay
Deter Corruption? Evidence from China-. Review of Public Personnel
Administration, 32(2), 192-204.
[15] Hamilton-Hart, Natasha, 2006, ÔÇÿGovernment and private business: rents,
representation and collective action-, In McLeod, Ross H., and
MacIntyre, Andrew (Eds.), Indonesia: Democracy and the Promise of
Good Governance. Institute of Southeast Asian Studies, Singapore.
[16] Hartono, Adelbertus Irawan Justiniarto, 2011, ÔÇÿState-Business relations
in Post-1998 Indonesia: The Role of Kadin-, Theses in Economics and
Business, University of Groningen, Groningen.
[17] Kadin Indonesia, 2010, Asosiasi/Himpunan, Webindo, 23 February
2012.
[18] Kompas, 25 June 2009, Berbahaya kekuasaan Terlalu besar dan Tanpa
Kontrol.
[19] MacIntyre, Andrew, 1991, Business and Politics in Indonesia. Asian
Studies Association of Australia in association with Allen & Unwin,
North Sydney, N.S.W.
[20] RIMAnews.com, 25 November 2010, Umar Hamdani: Edy Baskoro
Masih Bau Kencur Jadi Wakil Ketua Umum Kadin. Ini Pasti Ada
Intervensi SBY!!! <http://rimanews.com/read/20101125/7099/umarhamdani-
edy-baskoro-masih-bau-kencur-jadi-wakil-ketua-umum-kadinini-
pasti>
[21] Samego, Indria, 2004, ÔÇÿKadin dan pembangunan nasional-. Profil
Indonesia. Cides Annual Journal No.1/1994, pp.145-156.
[22] Samego, Indria (5 July 2012), Political Analyst from the Indonesian
Institute of Sciences (LIPI) (Interviewee).
[23] Saparini, Hendri (16 February 2011), Economist - ECONIT Advisory
(Interviewee).
[24] Schutte, Sofie Arjon, 2009, ÔÇÿGovernment policies and civil society
initiatives against corruption-. In Marco Bunte and Andreas Ufen (Ed),
Democratization in Post-Suharto Indonesia. Routledge Contemporary
Southeast Asia Series, London and New York.
[25] Sekretariat Negara Republik Indonesia, 2007, Pola Pemberantasan
Korupsi Sistemik Melalui Pencegahan dan Penindakan. Viewed 28
February 2012.
<http://www.setneg.go.id/index.php?Itemid=219&id=2259&option=co
m_content&task=view>
[26] Tamara, Nasir, 2009, Indonesia Rising: Islam Democracy and the Rise
of Indonesia as a Major Power. Select Publishing, Singapore.
[27] Tempo Online, 6 July 2009, Cicak kok mau melawan buaya.
<http://majalah.tempointeraktif.com/id/arsip/2009/07/06/LU/mbm.20090
706.LU130792.id.html>
[28] The JakartaGlobe, 12 March 2008, KPK backlog reaches more than
16,000 cases. < http://www.thejakartapost.com/news/2008/12/03/kpkbacklog-
reaches-more-16000-cases.html>
[29] The JakartaGlobe, 30 October 2009, KPK's Chandra, Bibit Arrested. <
http://www.thejakartaglobe.com/home/kpks-chandra-bibitarrested/
338541>
[30] The JakartaGlobe, 21 June 2011, New Bumi Coal Venture Lists Fraud,
Graft Allegations Among IPO Risks.
<http://www.thejakartaglobe.com/business/new-bumi-coal-venture-listsfraud-
graft-allegations-among-ipo-risks/448240#Scene_1>
[31] The JakartaGlobe, 14 March 2012, Indonesian graft saps 17% of
investment: Report. <http://www.thejakartaglobe.com/home/indonesiangraft-
saps-17-of-investmentreport/
504590?utm_source=newsletter&utm_medium=email&utm_camp
aign=jgnewsletter>
[32] The JakartaGlobe, 7 April 2012, Indonesia Tops Asean Investment
Survey. < http://www.thejakartaglobe.com/home/indonesia-tops-aseaninvestmentsurvey/
509737?utm_source=newsletter&utm_medium=email&utm_cam
paign=jgnewsletter>
[33] The Jakarta Post, 10 January 2010, Suryo Bambang Sulisto: The father
of wisdom. <http://www.thejakartapost.com/news/2010/10/01/suryobambang-
sulisto-the-father-wisdom.html>
[34] The Jakarta Post, 28 May 2011, Master plan to make RI a top-10 world
economy unveiled.
<http://www.thejakartapost.com/news/2011/05/28/master-plan-make-ria-
top-10-world-economy-unveiled.html>
[35] The Jakarta Post, 19 July 2007, Kadin unveils road map to industrial
growth. <http://www.thejakartapost.com/news/2007/07/19/kadinunveils-
road-map-industrial-growth.html>
[36] The Jakarta Post, 7 November 2009, Taking a closer look into Kadin-s
economic road map.
<http://www.thejakartapost.com/news/2009/11/07/taking-a-closer-lookkadin039s-
economic-road-map.html>
[37] The Jakarta Post, 5 December 2009, President ready to issue a decree
reinstating Chandra and Bibit to KPK.
<http://www.thejakartaglobe.com/home/president-ready-to-issue-adecree-
reinstating-chandra-and-bibit-to-kpk/345660>
[38] Transparency International, 2012, Surveys and indices.
<http://www.transparency.org/policy_research/surveys_indices/cpi>
[1] Basri, Faisal (7 June 2011), Senior economist and observer of business
associations in Indonesia, Indonesia Research and Strategic Analysis
(IRSA) (Interviewee).
[2] Chua, Christian, 2009, ÔÇÿCapitalist consolidation, consolidated capitalists:
Indonesia-s conglomerates between authoritarian and democracy-. In
Marco Bunte and Andreas Ufen (Ed), Democratization in Post-Suharto
Indonesia. Routledge Contemporary Southeast Asia Series, London and
New York.
[3] Commentator 1 (17 February 2011), Corruption Eradication Commission
(KPK) (Interviewee).
[4] Commentator 2 (2 April 2011), Association of Indonesian Procurement
and Distribution Partners (ARDIN), CE Natural Resources Group, PT
Bosowa Resources (Interviewee).
[5] Commentator 3 (2 April 2011), Indonesian Young Entrepreneurs
Association (HIPMI) (Interviewee).
[6] Commentator 4 (8 April 2011), Sub-directorate for Science, Technology
and Industry, Ministry of Development Planning (Bappenas)
(Interviewee).
[7] Coordinating Ministry of Economic Affairs, the Republic of Indonesia,
2011, Master Plan for the Acceleration and Expansion of Indonesia
Economic Development 2011 - 2025.
[8] Corruption Eradication Commission Annual Report, 2010, Corruption
Eradication Commission.
[9] Detiknews.com, 25 April 2008, Politisi PD Ancam Bubarkan KPK.
<http://us.news.detik.com/read/2008/04/25/133033/929433/10/politisipd-
ancam-bubarkan-kpk>
[10] Dhume, Sadanand, 2004, ÔÇÿA new political economy?" politics, ethnicity
and business in Indonesia-, In Basri and van der Eng (Ed.), Business in
Indonesia: New Challenges, Old Problems. Institute of Southeast Asian
Studies, Singapore.
[11] Djani, Luky (6 July 2012), Deputy Chairman of Indonesia Corruption
Watch and Deputy Secretary General of Transparency International
Indonesia (Interviewee).
[12] Eklof, Stefan, 2002, ÔÇÿPolitics, business, and democratization in
Indonesia. In Gomez, Edmund T. (Ed.), Political Business in East Asia.
Routledge, London and New York.
[13] Gammeltoft, Peter, 1997, State, Business and Hegemonic Rule in New
Order Indonesia. Working Paper 5. International Development Studies,
Roskilde. <http://home14.inet.tele.dk/petergt/me/phd/norfa.pdf>
[14] Gong, Ting, & Wu, Alfred M., 2012, ÔÇÿDoes Increased Civil Service Pay
Deter Corruption? Evidence from China-. Review of Public Personnel
Administration, 32(2), 192-204.
[15] Hamilton-Hart, Natasha, 2006, ÔÇÿGovernment and private business: rents,
representation and collective action-, In McLeod, Ross H., and
MacIntyre, Andrew (Eds.), Indonesia: Democracy and the Promise of
Good Governance. Institute of Southeast Asian Studies, Singapore.
[16] Hartono, Adelbertus Irawan Justiniarto, 2011, ÔÇÿState-Business relations
in Post-1998 Indonesia: The Role of Kadin-, Theses in Economics and
Business, University of Groningen, Groningen.
[17] Kadin Indonesia, 2010, Asosiasi/Himpunan, Webindo, 23 February
2012.
[18] Kompas, 25 June 2009, Berbahaya kekuasaan Terlalu besar dan Tanpa
Kontrol.
[19] MacIntyre, Andrew, 1991, Business and Politics in Indonesia. Asian
Studies Association of Australia in association with Allen & Unwin,
North Sydney, N.S.W.
[20] RIMAnews.com, 25 November 2010, Umar Hamdani: Edy Baskoro
Masih Bau Kencur Jadi Wakil Ketua Umum Kadin. Ini Pasti Ada
Intervensi SBY!!! <http://rimanews.com/read/20101125/7099/umarhamdani-
edy-baskoro-masih-bau-kencur-jadi-wakil-ketua-umum-kadinini-
pasti>
[21] Samego, Indria, 2004, ÔÇÿKadin dan pembangunan nasional-. Profil
Indonesia. Cides Annual Journal No.1/1994, pp.145-156.
[22] Samego, Indria (5 July 2012), Political Analyst from the Indonesian
Institute of Sciences (LIPI) (Interviewee).
[23] Saparini, Hendri (16 February 2011), Economist - ECONIT Advisory
(Interviewee).
[24] Schutte, Sofie Arjon, 2009, ÔÇÿGovernment policies and civil society
initiatives against corruption-. In Marco Bunte and Andreas Ufen (Ed),
Democratization in Post-Suharto Indonesia. Routledge Contemporary
Southeast Asia Series, London and New York.
[25] Sekretariat Negara Republik Indonesia, 2007, Pola Pemberantasan
Korupsi Sistemik Melalui Pencegahan dan Penindakan. Viewed 28
February 2012.
<http://www.setneg.go.id/index.php?Itemid=219&id=2259&option=co
m_content&task=view>
[26] Tamara, Nasir, 2009, Indonesia Rising: Islam Democracy and the Rise
of Indonesia as a Major Power. Select Publishing, Singapore.
[27] Tempo Online, 6 July 2009, Cicak kok mau melawan buaya.
<http://majalah.tempointeraktif.com/id/arsip/2009/07/06/LU/mbm.20090
706.LU130792.id.html>
[28] The JakartaGlobe, 12 March 2008, KPK backlog reaches more than
16,000 cases. < http://www.thejakartapost.com/news/2008/12/03/kpkbacklog-
reaches-more-16000-cases.html>
[29] The JakartaGlobe, 30 October 2009, KPK's Chandra, Bibit Arrested. <
http://www.thejakartaglobe.com/home/kpks-chandra-bibitarrested/
338541>
[30] The JakartaGlobe, 21 June 2011, New Bumi Coal Venture Lists Fraud,
Graft Allegations Among IPO Risks.
<http://www.thejakartaglobe.com/business/new-bumi-coal-venture-listsfraud-
graft-allegations-among-ipo-risks/448240#Scene_1>
[31] The JakartaGlobe, 14 March 2012, Indonesian graft saps 17% of
investment: Report. <http://www.thejakartaglobe.com/home/indonesiangraft-
saps-17-of-investmentreport/
504590?utm_source=newsletter&utm_medium=email&utm_camp
aign=jgnewsletter>
[32] The JakartaGlobe, 7 April 2012, Indonesia Tops Asean Investment
Survey. < http://www.thejakartaglobe.com/home/indonesia-tops-aseaninvestmentsurvey/
509737?utm_source=newsletter&utm_medium=email&utm_cam
paign=jgnewsletter>
[33] The Jakarta Post, 10 January 2010, Suryo Bambang Sulisto: The father
of wisdom. <http://www.thejakartapost.com/news/2010/10/01/suryobambang-
sulisto-the-father-wisdom.html>
[34] The Jakarta Post, 28 May 2011, Master plan to make RI a top-10 world
economy unveiled.
<http://www.thejakartapost.com/news/2011/05/28/master-plan-make-ria-
top-10-world-economy-unveiled.html>
[35] The Jakarta Post, 19 July 2007, Kadin unveils road map to industrial
growth. <http://www.thejakartapost.com/news/2007/07/19/kadinunveils-
road-map-industrial-growth.html>
[36] The Jakarta Post, 7 November 2009, Taking a closer look into Kadin-s
economic road map.
<http://www.thejakartapost.com/news/2009/11/07/taking-a-closer-lookkadin039s-
economic-road-map.html>
[37] The Jakarta Post, 5 December 2009, President ready to issue a decree
reinstating Chandra and Bibit to KPK.
<http://www.thejakartaglobe.com/home/president-ready-to-issue-adecree-
reinstating-chandra-and-bibit-to-kpk/345660>
[38] Transparency International, 2012, Surveys and indices.
<http://www.transparency.org/policy_research/surveys_indices/cpi>
@article{"International Journal of Business, Human and Social Sciences:57897", author = "Mohammad Faisal", title = "Democratisation, Business Activism, and the New Dynamics of Corruption and Clientism in Indonesia", abstract = "This paper investigates the relationship between state and business in the context of structural and institutional transformations in Indonesia following the collapse of the New Order regime in 1998. Since 1998, Indonesia has embarked on a shift from an authoritarian to democratic polity and from a centralised to a decentralised system of governance, transforming the country into the third largest democracy and one of the most decentralised states in the world. This paper examines whether the transformation of the Indonesian state has altered the pattern of state and business relations with focus on clientism and corruption as the key dependent variable, and probes how/to what extent this has changed as a result of the transformation and the ensuring shifts in business and state relations. Based on interviews with key government and business actors as well as prominent scholars in Indonesia, it is found that since the demise of the New Order, business associations in Indonesia have become more independent of state control and more influential in public decision-making whereas the government has become more responsive of business concerns and more committed to combat corruption and clientism. However, these changes have not necessarily rendered business people completely leave individualclientelistic relationship with the government, and simply pursue wider sectoral and business-wide collectivism as an alternative way of channelling their aspirations, which is expected to help reduce corruption and clientism in Indonesia. This paper concludes that democratisation and a more open politics may have helped reduce corruption and clientism in Indonesia through changes in government. However, it is still difficult to imply that such political transformation has fostered business collective action and a broader, more encompassing pattern of business lobbying and activism, which is expected to help reduce corruption and clientism.
", keywords = "Business activism, business power, democratisation,
clientism, corruption.", volume = "7", number = "3", pages = "738-10", }
