Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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).
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Indonesia’s Changing Political Economy Governing the Roads Jamie S. Davidson National University of Singapore
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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.
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
For Sam, my biker, and Amihan, my ballerina, with boundless love and affection
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Frontispiece: Map of Indonesia
Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Contents
List of figures List of maps List of tables Acknowledgments Note on currency and lengths Abbreviations and glossary Introduction 1
page viii ix x xi xiii xiv 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 Bibliography Index
243 247 277
vii
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Figures
2.1 2.2 2.3 2.4 2.5 4.1 4.2 5.1 6.1 6.2 6.3 6.4 6.5
President Soeharto the toll-payer The building of the Jagorawi’s toll plazas Malari’s smoldering cars Construction of the Jakarta–Cikampek Tollway Tutut Length of toll roads (in km) per annum and accumulatively Lapindo mud flow Demolition of houses The deagrarianization of Central Java The “legalistic” graffiti of FKJT Construction of the hilly Semarang-Solo Turnpike The Banyumanik Toll Plaza A puzzled, elderly woman looking at a tollway marker
page 53 55 57 59 66 121 124 193 207 209 213 214 224
viii
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Maps
Frontispiece: Map of Indonesia 2.1 Jakarta Area Toll Roads 2.2 The Trans-Java Expressway 4.1 Greater Surabaya Toll Roads 4.2 Surabaya Toll Roads 5.1 Central Java Toll Roads 6.1 Semarang Toll Roads 6.2 Central Java Toll Roads
page vi 62 76 125 126 175 208 218
ix
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Tables
1.1 Hierarchy of Indonesian laws 2.1 Opened toll roads, 1983–88 5.1 Jasa Marga ownership
page 39 58 187
x
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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 considerably 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
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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’t imagine 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
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
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. Regarding the distances of toll roads, turnpikes, sections, links, expressways, and similar structures referred to in this book, a word of caution is in order. The writing of this book would have been far easier if all sources agreed on the same length for each road, but they do not. Part of the problem is that some roads get extended over time, so newer sources clash with older ones. Another is that some sources take into account access roads, while others do not. Nor can we discount faulty reporting. Despite my best efforts, all lengths of roads reported in this book should be taken with a grain of salt.
xiii
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Abbreviations and glossary
ABRI ADB ATI BAL BCA BLU BNI BOT BPJT BPMigas BPN BRI BTR BUMD bupati BUS CBMP CGMN Cipularang CLP CMNP
Angkatan Bersenjata Republik Indonesia (Indonesian Armed Forces) Asian Development Bank Asosiasi Jalan Tol Indonesia (Indonesian Toll-Road Operators Association) Basic Agrarian Law Bank Central Asia Badan Layanan Umum (Land Acquisition Funds; literally, General Service Board) Bank Nasional Indonesia (Indonesian National Bank) build–operate–transfer Badan Pengatur Jalan Tol (Toll-Road Regulatory Agency) Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi(Upstream Oil and Gas Regulatory Agency) Badan Pertanahan Nasional (National Land Agency) Bank Rakyat Indonesia (Indonesian Peoples’ Bank) Bakrie Toll Road Badan Umum Milik Daerah (Regional Government Owned Enterprise) district executive Bhaskara Utama Sedaya (a Trans-Java Expressway consortium) Citra Bhakti Margatama Persada (a former JORR concessionaire) Citra Ganesha Marga Nusantara (former concessionaire of the Cipularang Turnpike) Cikampek-Purwakarta-Padalarang (Turnpike) Citra Lamtorogung Persada (Tutut’s conglomerate) Citra Marga Nusaphala Persada (CLP’s toll-road unit)
xiv
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Abbreviations and glossary
CMSP CPI DRB-Hicom FKJT FKPPPJT
GDP Golkar IBRA IFI IGGI IMF IMI IPO IRA Jagorawi JARNS JICA JIRR JLJ JORR JTD Kadin KKN KKSK Kostrad KSI LMS Malari
xv
Citra Mataram Satriamarga Persada (a former JORR concessionaire) consumer price index Diversified Resources Berhad-Heavy Industries Corporation Holdings Berhad Forum Komunikasi Jalan Tol (Toll-Road Communication Forum) Forum Komunikasi Penandatangan Perjanjian Pengusahaan Jalan Tol (Communication Forum of Toll-Road Agreement Signatories) gross domestic product Golongan Karya Indonesian Banking Restructuring Agency international financial institutions Intergovernmental Group on Indonesia International Monetary Fund Infrastructure Management International initial public offering Independent Regulatory Agency Jakarta-Bogor-Ciawi (Tollway) Java Arterial Road Network Study Japanese International Cooperation Agency Jakarta Inner Ring Road Jalantol Lingkar Jakarta (a JORR concessionaire) Jakarta Outer Ring Road Jakarta Toll-Road Development Kamar Dagang Indonesia (Indonesian Chamber of Commerce and Industry) Korupsi, kolusi, nepotisme (Corruption, collusion, nepotism) Komite Kebijakan Sektor Keuangan (Committee on Fiscal Policy Sector) Komando Cadangan Strategis Angkatan Darat (Army Strategic Reserve Command) Karsa Semesta Indah (a former Trans-Java Expressway concessionaire) Lintas Marga Sedaya (a Trans-Java Expressway concessionaire) Malapetaka Januari (the January Disaster; 1974 Jakarta riots)
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xvi
Abbreviations and glossary
MCB MMS MNA MNB MNC MoU MP3EI
musyarawah NGO NIE NIMBY NJOP OECD PAN pansus PD PDI-P PKB PKS PLUS PPJT PPP pribumi PT PU P2T Rp.
Mataram Citra Binangun (a former JORR concessionaire) Marga Mandala Sakti (Tommy Soeharto’s former toll-road corporation) Marga Nujyasumo Agung (a Trans-Java Expressway concessonaire) Marga Nurindo Bhakti (a former JORR concessionaire) Media Nusantara Citra (a media holding company of Hary Tanosoedibjo) Memorandum of Understanding Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia (Master Plan for the Acceleration and Expansion of Economic Development in Indonesia) (collaborative) deliberation non-governmental organization New Institutional Economics not in my backyard Nilai Jual Obyek Pajak (sale’s value as a tax object) Organization of European Cooperation and Development Partai Amanat Nasional (National Mandate Party) panitia khusus (inter-commission [parliamentary] committee) Partai Demokrat (Democrat Party) Partai Demokrat Indonesia-Perjuangan (Indonesian Democratic Party of Struggle) Partai Kebangkitan Bangsa (National Awakening Party) Partai Keadilan Sejahtera (Justice and Welfare Party) Projek Lebuhraya Utara-Selatan (North-South Expressway Project) Perjanjian Pengusahaan Jalan Tol (toll-road contract) public–private partnership native, indigenous, non-Chinese Perusahaan Terbatas (Limited Corporation) Pekerjaan Umum (Public Works) Panitia Pengadaan Tanah (Land Purchasing Committee) rupiah (the Indonesian currency)
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Cambridge University Press 978-1-107-08688-3 - Indonesia’s Changing Political Economy: Governing the Roads Jamie S. Davidson Frontmatter More information
Abbreviations and glossary
RTRW SMJ SMR SOE SPJT SPV Tipikor TMJ TPT UEM UK undang-undang US USAID YDPK
xvii
Rencana Tata Ruang Wilayah (Regional Spatial Planning) Sumber Mitra Jaya (a former Trans-Java Expressway concessionaire) Semesta Marga Raya (Bakrie’s former Trans-Java Expressway consortium) state-owned enterprise Sarana Pembagunan Jawa Tengah (a holding company of the Central Java provincial government) special purpose vehicle Pengadilan Khusus Tindak Pidana Korupsi (Special Corruption Court) Trans Marga Jateng (a Trans-Java Expressway concessionaire) Tim Pengadaan Tanah (Land Acquisition Team) United Engineers Malaysia United Kingdom parliamentary law United States United States Agency for International Development Yayasan Dharma Putra Kostrad (Foundation of the Sons of the Army Strategic Reserve Command)
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