The Rise of Indonesian Conglomerates: Capital Expansion and Regional Alliance

Al-Fadhat, Faris

doi:10.1007/978-981-13-3191-6_6

Faris Al-Fadhat³

Part of the book series: Critical Studies of the Asia-Pacific ((CSAP))

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Abstract

This chapter focuses on the international expansion of Indonesian capitalists across the region as a way of understanding the social forces and their coalitions in conditioning the political support for the regional economic integration project. The chapter moves beyond the methodological nationalism of existing literature on Indonesian capitalist formation which tends to emphasize their position within domestic political and economic structures. The chapter argues that Indonesian capitalists have continued to emerge into international fractions of capital, which are linked to the circuits of capital beyond the nation-state. Such a transformation denotes a shift from capitalists which are only interested in protecting domestic markets, to those with an interest in the unrestricted regional economy, especially through the project of ASEAN economic integration. In this context, regional trade governance is viewed as a new spatial fix for economic regulatory coordination beyond state territories. It is noteworthy that the regionalization of these capitalists has been facilitated by the state, specifically through foreign economic policies that support regional economic initiative as well as economic liberalization packages.

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Notes

1.
Discussion on the 1997 Asian financial crisis and its chronologies has appeared extensively in scholarly literature. See, for example, Richard Higgott (1998), Hal Hill (1999), Pierre-Richard Agénor (1999), Richard Robison et al. (2000), and Stephan Haggard (2000).
2.
Interview with Sukardi Rinakit, Senior Researcher, Soegeng Sarjadi Syndicate, in Jakarta , 4 March 2015. Rinakit was also a campaign manager for Joko Widodo during a 2014 presidential election.
3.
In the issues dated 11 February 1991, 27 April 1992, and 3 May 1993, Warta Ekonomi ranked the 200 largest groups in Indonesia by size, which show the dominant position of these conglomerates . See Chua (2007), Habir (1999), and Sato (1993).
4.
Much detail of the Salim Group business expansion will be explained in Chap. 7.
5.
Most current Indonesian conglomerates are preparing for the succession to the next generation within the family. For example, take the case of William Soeryadjaya’s business. Soeryadjaya was the founder of Astra International; after the family lost Astra, the family business was recovered through Saratoga Capital, which was run by his son Edwin Soeryadjaya (co-founder with Sandiaga Uno). William Soeryadjaya’s grandson, Michael William Soeryadjaya, has already reached the top management level in the business. Similarly, Lippo Group of Mochtar Riady is in the hands of the second generation led by James Riady . The third generation, Mochtar Riady’s grandson, John Riady, is at the top level of the company’s management.
6.
Lippo Group also had a partnership with Malaysian tycoon Ananda Krishnan in the media business. Yet the two parted ways due to management disputes. The legal battle between them continues (see Suzuki, 2015).
7.
Interview in Jakarta, 20 March 2015.
8.
Interview with Lim Hong Hin in Jakarta , 6 March 2015; Interview with Rahmat Pramono, Indonesian Ambassador/Permanent Representative to ASEAN, in Jakarta, 23 March 2015.
9.
Interview with Riza Damanik, Executive Director of Indonesia for Global Justice (IGJ), in Jakarta, 3 June 2015.
10.
Interview in Jakarta, 28 May 2015.
11.
Interview in Jakarta, 17 March 2015.
12.
Interview in Jakarta, 18 May 2015.
13.
Interview with Nezar Patria, Vice Editor in Chief of CNN Indonesia, in Jakarta, 21 April 2015. Nezar Patria was told about this story by a senior staff in one of Hary Tanoesoedibjo’s media companies.
14.
Interview with Halida Miljani, Advisor to Indonesian Minister of Trade for International Cooperation (2002–2012), in Jakarta, 1 June 2015.
15.
Interview with Chris Kanter in Jakarta, 13 March 2015.
16.
Interview in Jakarta, 4 May 2015.
17.
Interview with A. Tony Prasetiantono, economist from Gadjah Mada University, in Jakarta 27 April 2015; Metta Dharmasaputra, Editor in Chief, KATADATA Business News and Research Portal, in Jakarta, 10 May 2015.
18.
Interview with Anton J. Supit, President Commissioner of Sierad Group, in Jakarta, 22 May 2015.

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Department of International Relations, Universitas Muhammadiyah Yogyakarta, Bantul, Yogyakarta, Indonesia
Faris Al-Fadhat

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Al-Fadhat, F. (2019). The Rise of Indonesian Conglomerates: Capital Expansion and Regional Alliance. In: The Rise of International Capital. Critical Studies of the Asia-Pacific. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-3191-6_6

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DOI: https://doi.org/10.1007/978-981-13-3191-6_6
Published: 10 January 2019
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