Indonesia's Changing Political Economy
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Indonesia’s Changing Political Economy Indonesia is Southeast Asia’s largest economy and freest democracy, yet vested interests and local politics serve as formidable obstacles to infrastructure reform. In this critical analysis of the politics inhibiting infrastructure investment, Jamie S. Davidson utilizes evidence from his research, press reports, and rarely used consultancy studies to challenge mainstream explanations for low investment rates and the sluggish adoption of liberalizing reforms. He argues that obstacles have less to do with weak formal institutions and low fiscal capacities of the state than with entrenched rent-seeking interests, misaligned central–local government relations, and state–society struggles over land. Using a political-sociological approach, Davidson demonstrates that getting the politics right matters as much as getting the prices right or putting the proper institutional safeguards in place for infrastructure development. This innovative account and its conclusions will be of interest to students and scholars of Southeast Asia and policymakers for infrastructure investment and economic growth. jamie s. davidson received his Ph.D. in political science from the University of Washington and is currently Associate Professor of Political Science at the National University of Singapore. His previous books include From Rebellion to Riots: Collective Violence on Indonesian Borneo (2008) and The Revival of Tradition in Indonesian Politics: The Deployment of Adat from Colonialism to Indigenism (co-edited with David Henley, 2007). Indonesia’s Changing Political Economy Governing the Roads Jamie S. Davidson National University of Singapore University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107086883 © Jamie S. Davidson 2015 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2015 Printed in the United Kingdom by Clays, St Ives plc A catalog record for this publication is available from the British Library Library of Congress Cataloging in Publication data Davidson, Jamie Seth, 1971– Indonesia’s changing political economy : governing the roads / Jamie S. Davidson. pages cm ISBN 978-1-107-08688-3 (hardback) 1. Indonesia – Economic policy – 1997– 2. Indonesia – Politics and government – 1998– I. Title. HC447.D383 2014 338.9598–dc23 2014025721 ISBN 978-1-107-08688-3 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. For Sam, my biker, and Amihan, my ballerina, with boundless love and affection Frontispiece: Map of Indonesia Contents List of figures page viii List of maps ix List of tables x Acknowledgments xi Note on currency and lengths xiii Abbreviations and glossary xiv Introduction 1 1 Infrastructure investment and institutions: conceptual concerns and debate 19 2 Legacies of New Order governance 45 3 Raising rates, raising capital, losing control 90 4 Big push thwarted 120 5 Ownership 159 6 Local perspectives 198 Conclusion 229 Appendix 243 Bibliography 247 Index 277 vii Figures 2.1 President Soeharto the toll-payer page 53 2.2 The building of the Jagorawi’s toll plazas 55 2.3 Malari’s smoldering cars 57 2.4 Construction of the Jakarta–Cikampek Tollway 59 2.5 Tutut 66 4.1 Length of toll roads (in km) per annum and accumulatively 121 4.2 Lapindo mud flow 124 5.1 Demolition of houses 193 6.1 The deagrarianization of Central Java 207 6.2 The “legalistic” graffiti of FKJT 209 6.3 Construction of the hilly Semarang-Solo Turnpike 213 6.4 The Banyumanik Toll Plaza 214 6.5 A puzzled, elderly woman looking at a tollway marker 224 viii Maps Frontispiece: Map of Indonesia page vi 2.1 Jakarta Area Toll Roads 62 2.2 The Trans-Java Expressway 76 4.1 Greater Surabaya Toll Roads 125 4.2 Surabaya Toll Roads 126 5.1 Central Java Toll Roads 175 6.1 Semarang Toll Roads 208 6.2 Central Java Toll Roads 218 ix Tables 1.1 Hierarchy of Indonesian laws page 39 2.1 Opened toll roads, 1983–88 58 5.1 Jasa Marga ownership 187 x Acknowledgments I am the first to admit that I benefited from the lengthy delays behind the completion of Indonesia’s Trans-Java Expressway. While they scuttled plans for opening the book with an ethnographic account of traveling the entire length of the new expressway, the delays facilitated a leisurely pace of writing the manuscript, not unlike constructing the expressway itself. I also benefited from a number of smart people who helped me consid- erably in the making of this book. Adriaan Bedner, Andrew Conroe, Diego Fossati, Natasha Hamilton-Hart, Douglas Kammen, Jeremy Kingsley, Johan Lindquist, Ross McLeod, Jeremy Menchik, Michael Montesano, Rahul Mukherji, David Neidel, Gustaaf Reernik, Portia Reyes, and Randy Wood provided valuable feedback on parts of this manuscript in its different forms. So did some colleagues from my home department: Soo Yeon Kim, Terence Lee, Kevin McGahan, Erik Mobrand, Shyam Anand Singh, and Karen Winzoski. Departmental life can be at times trying but also rewarding when surrounded by some stimulating colleagues. Because of developments in my personal life (touched on below), I did not present conference papers based on the material contained in this book as widely as I would have anticipated, but papers were delivered (admittedly some time ago) in the US (at the Association of Asian Studies conference in Chicago and UC-Berkeley) and Australia (at the Indonesian Council Open Conference at Monash University). I thank participants for their useful suggestions. Billy Nessen (again) and Jeremy Gross attentively and skillfully edited the manuscript. Lee Li Keng (again) expertly prepared the book’s maps. I owe the book’s subtitle to Paul Hutchcroft. Reviewers for Cambridge University Press, later revealed to be John Sidel and Bill Liddle, read the manuscript with prodigious attention to empirical detail and conceptual clarity. The book only works (to the extent that it does) because of their input. I thank them profusely. Fleur Jones, Chloé Harries, and Puviarassy Kalieperumal guided the manuscript through the publication phase with aplomb. Lucy Rhymer of the Press has been an enthusiastic supporter (and great email communicator) from the moment I pitched the book to her xi xii Acknowledgments over tea at NUS’s Arts Canteen in early 2013. The Arts Canteen also provided the backdrop to countless afternoon chats with Doug Kammen, without which this book would not have happened. His soulful advice and encouragement meant a great deal. I express my gratitude to the National University of Singapore, which through its Academic Research Fund (grant # R-108-000-033-112) generously funded this project. A FASS Book Grant Scheme paid for some of the editing. Tempo and Kompas kindly granted me permission to reproduce some of the photos contained in this book. Portions of this book draw on material previously published as “How to Harness the Positive Potential of KKN: Explaining Variation in the Private Sector Provision of Public Goods in Indonesia,” Journal of Development Studies 46 (2010): 1729–48 and “Driving Growth: Regulatory Reform and Expressways in Indonesia,” Regulation and Governance 4(2010): 465–84. I thank the editors of these journals for granting me permission to use this material here. In this vein, I am not only appreciative of the reviewers of these journals for endorsing my articles for publication but also tip my cap to those who rejected submissions elsewhere. Their criticisms shed instructive light on the project’s limitations and provided a guide for improvement. All the people in Indonesia (and elsewhere) who graciously took time from their busy schedules to discuss with me all sorts of topics related to this project deserve a heartfelt thanks (many are named in the book’s Appendix). I wish Pak Sumaryanto Widayatin a full and speedy recovery, and acknowledge the heroic efforts of Pak Wawan Cholid of the CMNP toll-road corporation who faithfully uploaded daily press reports on Indonesia’s toll-road sector to the company’s website. I can’timagine where this project would be without these two individuals. My love for and deep admiration of the four people to whom I dedicated my first book remains steadfast. I still miss Dan terribly, my parents continue to be absolute bedrocks of support, and Portia remains a stunningly wonderful and gracious life partner. The great transformation, of course, has been the arrival of our beloved twins, Amihan and Samuel, which happened as this project took shape. Raising and watching them transform into real little, delightful people, stickering, drawing, visiting zoos, aquariums, bird parks, and grandma and grandpa’s and lola’s houses, and reading and answering incessant questions about princesses, superheroes, dinosaurs, and all sorts of animals and other characters has enriched this work, giving it meaning in ways that I am hapless to describe. For this and more, I lovingly dedicate this book to them. Singapore August 2014 Note on currency and lengths For the period that this book covers, roughly the mid-1960s to 2014, the value of the Indonesian currency (rupiah, Rp.) relative to the US dollar has varied considerably. I have striven to use its relative value at the time pertinent to the discussion in the text. For historical exchange rates, I relied on Hamilton-Hart’s(2002) useful Appendix. For more contemporary rates, I used such websites as oanda.com and xe.com.