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i I declare that this thesis is the product of my own original research, and contains no material which has been accepted as part of the requirements of any other degree at any other university, or any material previously published or written by another person except where due reference is made. Faris Al-Fadhat i Since the end of the Cold War, the forms, instruments and mechanisms of regional economic institution in many parts of the globe have increasingly become a matter of scholarly debate. The prominent accounts emerging from International Relations (IR) theory draw attention to the functional process of such regional project. The problem with this perspective lies in the static notion of the state that separates it from the underlying processes of social forces and political coalitions. The political economy literature, on the contrary, with its focus on domestic politics places more analytical weight on the capitalist class and its position/s with respect to regional governance. Yet, even this literature is limited by its focus on the role of ‘national capital’. This obscures the role of internationalization process in constituting transnational or regionalized capitalist interests and forces. In contrast, this thesis develops a new social and class relations approach for explaining the structure and the possible trajectories of regional economic governance. Through the case study of economic integration project of ASEAN, this thesis is concerned with analysing the social forces and political coalitions driving regional integration projects of Asian states. It asks which social forces, within the domestic political economy of Asian states, are driving governments to seek regional arrangements for economic governance. In particular the thesis asks how the emergence, reorganization, and expansion of capitalist class have conditioned political support for regional economic integration. By addressing these issues, this study emphasizes that the wellspring of regional economic institution projects stem from transformations in the nature, spaces, and forms of capital accumulation and the social forces it has unleashed. This thesis argues that regional economic governance has been shaped as part of, and systematically affected by, the broader context of the internationalization of capital, where the profit-making activities operate beyond territorial boundaries. In this sense, such project has crucially provided foundations for the vast expansion of ii capital across the region; specifically through regionalization of trade flows, production networks, and capital investment. It is noteworthy that the most internationalized fraction of capitalist has become the motor-force of this process, notably through its alliance with state apparatuses and other social and political forces which manifests in the form of economic policies that support the projects of regional integration. The key insight of this study is to bring the role of capital back into the analysis of regional trade governance. iii Abstract ii Contents iv List of Table and Figures vi List of Abbreviations vii Acknowledgements xi 1 Introduction 1 The study 1 Methodology and case study selection 6 Data collection 11 Thesis structure 13 2 Frameworks to Economic Regionalism and Their Limitations: Towards a New Approach 18 Introduction 18 The politics of the evolution of regional governance 21 Competing theorization for economic regionalism 29 Liberal approach 30 Realist approach 35 Political economy approach 39 Regional governance and the internationalization of capital: towards a social relations approach 45 Conclusion 49 3 Regional Economic Governance and the Internationalization of Capital: Theoretical Issue 51 Introduction 51 The internationalization of capital and regional economic governance 54 Regional economic governance, internationalized bourgeoisie and the state 62 Fractions of capital and the internationalization of the state 68 Conclusion 75 4 State Restructuring and the Internationalization of Capital in Southeast Asia 78 Introduction 78 State restructuring, international fractions of capital and foreign economic policy 80 Singapore 83 iv Malaysia 88 Thailand 96 Internationalization of capital and contestation 103 Conclusion 109 5 ASEAN Regional Economic Integration and the Internationalization of Capital 112 Introduction 112 ASEAN economic cooperation: historical trajectory 115 The post-cold war, class formation and AFTA 121 The ASEAN Economic Community and internationalization of capital 125 Regionalization of capital: integration, alliances and joint ventures 135 Conclusion 144 6 The Politics of Indonesian Conglomerates: Capital Expansion and Regional Alliance 147 Introduction 147 The emergence of internationalized capital in the post-Asian crisis 150 The internationalized big business: regional expansion and global ambition 160 Conglomerates and the state: economic projects and internationalized fractions of capital 177 From bureaucrats to politico-business 178 The influence of business association 187 Conclusion 192 7 The Social Relations of Capital Expansion: The Case of the Salim Group 194 Introduction 194 The Salim Group: the genesis of conglomerate 197 Political and economic alliance 199 Business expansion at domestic market 202 Salim’s internationalization of capital 207 Early movement and economic crisis disruption 208 Deepening internationalization and regional economic governance 213 The state and the political role of the Salim Group 227 Conclusion 236 8 Conclusion 238 Appendix: list of interviewees 249 Bibliography 254 v Table 3.1. AEC Four Pillars and Core Elements 131 Table 6.1. 30 Largest Business Groups in the Post-Crisis Period (2015) 165 Table 6.2. Indonesian Trade by Trading Partners, 2010-2014 175 Table 7.1. Salim Group Companies in the early 1980s 204 Figure 3.2. ASEAN’s intra-regional trade share from 1998-2014 133 Figure 6.1. Indonesia’s Outward FDI Flow from 2004-2014 168 Figure 7.1. Number of Salim Group Companies from 1957-1993 205 Figure 7.2. Salim Group Compositions of Sales According to Origin 1995- 1996 210 Figure 7.3. First Pacific Corporate Structure 2015 215 vi ABIF ASEAN Banking Integration Framework ACIA ASEAN Comprehensive Investment Agreement ADM Archer Daniels Midland Company ACIA ASEAN Comprehensive Investment Agreement AEC ASEAN Economic Community AFAS ASEAN Framework Agreement on Services AFTA ASEAN Free Trade Area AIA ASEAN Investment Area AIC ASEAN Industrial Complementation AIIB Asian Infrastructure Investment Bank AIJV ASEAN Industrial Joint Ventures APBN National budget (Anggaran Pendapatan dan Belanja Negara) APEC Asia-Pacific Economic Cooperation APINDO Indonesian Employers Association (Asosiasi Pengusaha Indonesia) APRIL Asia Pacific Resources International Holdings APSC ASEAN Political Security Community ASCC ASEAN Socio-Cultural Community ASEAN Association of Southeast Asian Nations ASEAN-BAC ASEAN Business Adversary Council ASEAN-BIS ASEAN Business and Investment Summit ASEAN-CCI ASEAN Chambers of Commerce and Industry ASEAN-SAM ASEAN Single Aviation Market ASC ASEAN Security Community ASCC ASEAN Socio-Cultural Community ASW ASEAN Single Window ATIGA ASEAN Trade in Goods Agreement BCA Bank Central Asia BCIC Bumiputera Commercial and Industrial Community BKPM Investment Coordinating Board (Badan Koordinasi Penanaman Modal) BIAC Business and Industry Advisory Committee Bupati Regent or district chief CAPA Centre for Aviation CEP Comprehensive Economic Partnership CEPT Common Effective Preferential Tariff CIS Commonwealth of Independent States CLMV Cambodia, Laos, Myanmar, and Vietnam CPF Charoen Pokphand Foods vii CPO Crude palm oil CRG China Resource Group CSCE Commission on Security and Cooperation in Europe CSIS Centre for Strategic and International Studies DNI Negative investment list (Daftar Negatif Investasi) DPR House of Representatives or National Parliament (Dewan Perwakilan Rakyat) EAEC East Asia Economic Caucus EAGCC Economic Agreement between the Gulf Cooperation Council States EC European Commission EC European Community ECSC European Coal and Steel Community EDB Economic and Development Board EEC European Economic Community EMU Economic and Monetary Union EOI Export-oriented industrialization EPU European Payments Union ERT European Round Table EU European Union FDI Foreign direct investment FTA Free trade agreements GAPKI Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) GATT General Agreement on Tariffs and Trade GCC Gulf Cooperation Council GDP Gross Domestic Product GIC Government of Singapore Investment Corporation GLC Government-linked company Gerindra Greater Indonesia Movement Party (Partai Gerakan Indonesia Raya) Golkar Functional Groups Party (Partai Golongan Karya) Hanura The People’s Conscience Party (Partai Hati Nurani Rakyat) HICOM Heavy Industries Corporation of Malaysia IBRA Indonesian Bank Restructuring Agency (Badan Penyehatan Perbankan Nasional) IDR Indonesian rupiah IMF International Monetary Fund Inpres Presidential Instruction (Instruksi Presiden) IPE International Political Economy IR International Relations ISI Import oriented industrialization KADIN Indonesian Chamber of Commerce viii KEIN National Economic and Industrial Committee (Komite Ekonomi dan Industri Nasional) KEN National Economic Committee (Komite Ekonomi Nasional) Keppres Presidential Decree (Keputusan Presiden) Maybank Malayan Banking Berhad MERCOSUR Southern Cone Common Market (Mercado Común del Sur) MITI Ministry of International Trade and Industry, Japan MNC Multinational