State Corporatism, Infrastructure Development and Inward Looking Indonesian State Owned Enterprises Dayu Nirma Amurwanti, Lili Yulyadi Arnakim, Roseno Aji Affandi
Bina Nusantara University
Abstract
Being one of the largest economies in South East Asia, Indonesia strives hard to close its infrastructure gap. After his reelection in 2019, President Joko Widodo announced the ambitious US 412 billion infrastructure plan, where 40% is expected to the funded out of the state budget, 25% from State Owned Enterprises (SOEs) and the remaining from the private sector. SOEs have traditionally played important role in Indonesias development, particularly in infrastructure. The massive nationalization of Dutch companies immediately after Indonesias independence, granting of monopolistic privileges during the New Order in 1967 - 1997 had spurred growth and expansion of State Owned Enterprises (SOE) roles. While number of SOEs after the 1997 crisis have declined due to corporate consolidations, few infrastructure SOEs have experienced higher ratio of assets to Gross Domestic Product (GDP) along with a boost of investment in infrastructure. Despite the rise in investment, the SOEs financial performance, however has not improved, strengthening the belief that SOEs have been forced to deliver political promises without the ability to assert its own economic viability calculations. Subordination of enterprises under the control of the state is often called as state corporatism, which is not unique to Indonesia. There are views drawing parallel to Chinas state corporatism - where the state is the dominant force in propelling the nations impressive growth. This paper argues that the difference between Chinese infrastructure based SOEs and Indonesian SOEs lies with their domestic focus. Indonesian SOEs are inward looking.This is derived from comparing selected SOEs governance, financing, and political alignment with the government.
Keywords: indonesia, china, state corporatism, state owned enterprises
