The State, Infrastructure and Economic Growth in Jokowi's First Term
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This document is downloaded from DR‑NTU (https://dr.ntu.edu.sg) Nanyang Technological University, Singapore. The state, infrastructure and economic growth in Jokowi's first term Guild, James 2019 Guild, J. (2019). The state, infrastructure and economic growth in Jokowi's first term. Doctoral thesis, Nanyang Technological University, Singapore. https://hdl.handle.net/10356/141322 https://doi.org/10.32657/10356/141322 This work is licensed under a Creative Commons Attribution‑NonCommercial 4.0 International License (CC BY‑NC 4.0). Downloaded on 01 Oct 2021 06:18:59 SGT THE STATE, INFRASTRUCTURE AND ECONOMIC GROWTH IN JOKOWI’S FIRST TERM JAMES GUILD S. RAJARATNAM SCHOOL OF INTERNATIONAL STUDIES 2019 THE STATE, INFRASTRUCTURE AND ECONOMIC GROWTH IN JOKOWI’S FIRST TERM JAMES GUILD S. Rajaratnam School of International Studies A thesis submitted to the Nanyang Technological University in partial fulfilment of the requirement for the degree of Doctor of Philosophy 2019 Statement of Originality I hereby certify that the work embodied in this thesis is the result of original research, is free of plagiarised materials, and has not been submitted for a higher degree to any other University or Institution. July 23, 2019 . Date James Guild Supervisor Declaration Statement I have reviewed the content and presentation style of this thesis and declare it is free of plagiarism and of sufficient grammatical clarity to be examined. To the best of my knowledge, the research and writing are those of the candidate except as acknowledged in the Author Attribution Statement. I confirm that the investigations were conducted in accord with the ethics policies and integrity standards of Nanyang Technological University and that the research data are presented honestly and without prejudice. Date Prof Leonard C. Sebastian Authorship Attribution Statement Please select one of the following: (B) This thesis contains material from 1 paper that has been accepted for publication in the following peer-reviewed journal in which I am listed as the sole author. Chapter 7 is published, with some modifications, as James Guild. “The Politics of Renewable Energy in Indonesia and the Philippines.” Asia and the Pacific Policy Studies. Forthcoming 2019. The contribution of the author are as follows: I researched and wrote the article in its entirety including all data collection and analysis. July 23, 2019 . Date James Guild Acknowledgments When undertaking a project of this scope and scale, involving research in multiple countries and across multiple sectors, one ends up relying quite heavily on the kindness of strangers as well as friends and mentors. And truly this work could not have been completed if a lot of people who I didn’t know or only barely knew hadn’t stepped up and helped me out along the way, and if my mentors hadn’t been there for me every step of the way. First and foremost, this work would not have been possible without the support of my supervisors, Dr. Leonard Sebastian and Dr. Farish Noor at RSIS, who were pretty much the best supervisors one could ask for. They gave guidance and counsel when needed but never tried to impose their own ideas upon me, encouraging me at every turn to let my research go where I wanted it to. This is a rare and, I think, admirable quality in an academic supervisor and I was fortunate to find it in both of mine. This work also would not have been possible without the generous support of Philips Vermonte, director of CSIS in Jakarta who agreed to sponsor my research permit sight unseen. I am also deeply indebted to the help I received from friends and colleagues at Universitas Gajah Mada in Yogyakarta, the Purnomo Yusgiantoro Center in Jakarta, including Pak Pur himself who was very generous with his time and resources, Ms. Ayu at BPN, Ms. Erna in Yogya, Bu Linda and all the many other people who helped me get in touch with sources or pointed me in the right direction along the way. And of course I need to mention Mr. Ken in Jakarta, because without him my KITAS never would have been approved and my fieldwork in Indonesia would have been over before it started. I am indebted to RSIS, NTU and the government of Singapore for providing generous financial support throughout my candidature, and a pretty sweet learning environment. In Indonesia the thing I have probably missed the most about Singapore is the National Library, and I really cannot say enough good things about the quality of higher education and learning in Singapore. I am truly grateful for having had the opportunity to study and learn in this country. Lastly, my wife Laura, who I met while doing fieldwork for this dissertation and who has been pretty much the best thing that ever happened to me. Who knows if this thing would have ever been finished if she hadn’t patiently stood by me while I typed away madly in a corner for weeks on end muttering about legal reforms and occasionally shouting at the computer. If that isn’t love, then what are we living for? TABLE OF CONTENTS 1.1 Introduction…………………………………………………………………………………………………………..………….....…….1 1.2 Dissertation Structure…………………………………………………………………………………………………..………..…. 9 1.3 Research Puzzle and Significance……………………………………………………………………………………………….11 1.4 Single Country Study …………………………………………………………………………………………………………………13 1.5 Conceptual Framework………………………………………………………………………………………………………….... 16 1.6 Methodology……………………………………………………………………………………………………………………………. 20 1.7 Econometric Modelling…………………………………………………………………………………………………………….. 21 1.8 Case Selection…………………………………………………………………………………………………………………………… 22 1.9 Airport Projects………………………………………………………………………………………………………………………… 22 1.10 Energy Projects………………………………………………………………………………………………..................... 23 1.11 Process Tracing………………………………………………………………………………………………………………….. 24 1.12 Planning …………………………………………………………………………………………………………………………… 28 1.13 Financing…………………………………………………………………………………………………………………………… 28 1.14 Construction…………………………………………………………………………………………………………………….. 28 1.15 Due Process ………………………………………………………………………………………………………………..........29 1.16 Between Country Sectoral Comparison………………………………………………………………………….……29 1.17 Data Collection…………………………………………………………………………………………………………….……..30 Chapter 2. Literature Review 2.1 Introduction……………………………………………………………………………………………………………………………… 32 2.2 Development Economics………………………………………………………………………………………………………….. 33 2.3 The Developmental State…………………………………………………………………………………………………………..40 2.4 Governance, Infrastructure and Indonesia…………………………………………………………………………………47 2.5 The Link Between Democracy and Governance……………………………………………………………………….. 50 2.6 Area Studies and Economics…………………………………………………………………………………………………….. 53 Chapter 3. The Indonesian State 3.1 Introduction…………………………………………………………………………………………………………………………….…56 3.2 Independence…………………………………………………………………………………………………………………….........57 3.3 New Order……………………………………………………………………………………………………………………………….. 59 3.4 Reformasi…………………………………………………………………………………………………………………………………. 65 3.5 The Legal System in Indonesia….………………………………………………………………………………………………. 69 3.6 Land Law in Indonesia………………………………………………………………………………………………………………. 72 Chapter 4. Macroeconomic Overview 4.1 Introduction…………………………………………………………………………………………………………………………….. 77 4.2 SOEs and Infrastructure…………………………………………………………………………………………………………… 90 4.3 Financing SOE-Led Growth……………………………………………………………………………………………………..…98 4.4 Law No 2 of 2012 on Land Acquisition……………………………………………………………………………………. 105 4.5 Indonesia Infrastructure Guarantee Fund (IIGF)…….……………………………………………………..………...105 4.6 PT Sarana Multi Infrastruktur (PT SMI)….…………………………………………………………………..…………… 106 4.7 Indonesian Infrastructure Fund (IIF)………………………………………………………………………………..........108 4.8 State Capital Injections……………………………………………………………………………………………………………109 4.9 LMAN……………………………………………………………………………………………………………………………..........109 4.10 KPPIP…………………………………………………………………………………………………………………………………… 110 4.11 Regulatory Reforms…………………………………………………………………………………………………………….. 111 4.12 Policy Summary ……………………………………………………………………………………………………………………113 4.13 Measuring SOE Impact on Fixed Capital Formation……………………………………………………………… 114 4.14 How Not to Stop Capital Flight: Evidence from Indonesia and Brazil……………………………………. 117 4.15 Conclusion…………………………………………………………………………………………………………………………… 125 Chapter 5. Airport Development 5.1 Introduction…………………………………………………………………………………………………………………………… 128 5.2 Improved Connectivity and Economic Growth……………………………………………………………………….. 129 5.3 Angkasa Pura I and II……………………………………………………………………………………………………………... 131 5.4 AP I & II: Financing…………………………………………………………………………………………………………………. 131 5.5 Case Studies…………………………………………………………………………………………………………………………….136 5.6 Kualanamu International Airport (Medan)… ……………………………………………………………………………137 5.7 Lombok International Airport………………………………………………………………………………………............140 5.8 Kertajati International Airport (West Java)… …………………………………………………………………………. 145 5.9 New Yogyakarta International Airport……………………………………………………………………………………..154 5.10 Paku Alam Ground………………………………………………………………………………………………………..……….163 5.11 Conclusion……………………………………………………………………………………………………………………………..167 Chapter 6. Electricity Infrastructure Development in Indonesia 6.1 Introduction………………………………………………………………………………………………………………..…..……. 170 6.2 Electricity and Economic Growth…………………………………………………………………………………………… 171 6.3 Financing………………………………………………………………………………………………………………………………. 173 6.4 Planning………………………………………………………………………………………………………………………………… 180 6.5 The New Order – IPPs and Market Liberalization………………………………………………………………….. 185 6.6