ANU Indonesia Project Crawford School of Public Policy Arndt-Corden Department of Economics ANU College of Asia and the Pacific

Transcription

1

2 The ANU Indonesia Project, a leading international centre of research and graduate training on the Indonesian economy and society, is housed in the Crawford School of Public Policy s Arndt-Corden Department of Economics. The Crawford School is part of ANU College of Asia and the Pacific at The Australian National University (ANU). Established in 1965 in response to profound changes in the Indonesian economic and political landscapes, the ANU Indonesia Project has grown from a small group of Indonesia-focused economists into an interdisciplinary research centre well known and respected across the world. Funded by ANU and the Australian Department of Foreign Affairs and Trade, the ANU Indonesia Project monitors and analyses recent developments in Indonesia; informs the Australian and Indonesian governments, business and the wider community about those developments and about future prospects; stimulates research on the Indonesian economy; and publishes the respected Bulletin of Indonesian Economic Studies. ANU College of Asia and the Pacific s Department of Political and Social Change focuses on domestic politics, social processes and state society relationships in Asia and the Pacific, and has a long-established interest in Indonesia. Together with the Department of Political and Social Change, the ANU Indonesia Project holds the annual Indonesia Update conference, which offers an overview of recent economic and political developments and devotes attention to a significant theme in Indonesia s development. The Bulletin of Indonesian Economic Studies publishes the conference s economic and political overviews, while the edited papers related to the conference theme are published in the Indonesia Update Series. The ISEAS Yusof Ishak Institute (formerly Institute of Southeast Asian Studies) was established as an autonomous organization in It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

3 Indonesia Update Series INDONESIA IN THE NEW WORLD Globalisation, Nationalism and Sovereignty EDITED BY ARIANTO A. PATUNRU MARI PANGESTU M. CHATIB BASRI

4 First published in Singapore in 2018 by ISEAS Publishing 30 Heng Mui Keng Terrace Singapore Website: All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the ISEAS Yusof Ishak Institute ISEAS Yusof Ishak Institute, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the Institute or its supporters. ISEAS Library Cataloguing-in-Publication Data Indonesia in the New World : Globalisation, Nationalism and Sovereignty edited by Arianto A. Patunru, Mari Pangestu and M Chatib Basri.... an outcome of the Indonesia Update Conference held in Canberra on September Globalization Economic aspects Indonesia. 2. Nationalism Indonesia. 3. Indonesia Foreign relations. 4. Sovereignty. I. Patunru, Arianto A., editor. II. Pangestu, Mari, editor. III. Basri, M. Chatib, editor. IV. Indonesia Update Conference (35th : 2017 : Australian National University) V. Title: Globalisation, Nationalism and Sovereignty. DS644.4 I ISBN (soft cover) ISBN (hard cover) ISBN (e-book, PDF) Cover photo: President Joko Widodo visits the remote Natuna Islands on board navy warship KRI Imam Bonjol 383 in June 2016, a few days after the same vessel was involved in an altercation with a Chinese fishing boat. Photo by Krishadiyanto. Reproduced with permission from Kantor Sekretariat Presiden, Republic of Indonesia. Edited and typeset by Beth Thomson, Japan Online, Canberra Indexed by Angela Grant, Sydney Printed in Singapore by Markono Print Media Pte Ltd

5 Contents Tables Figures Contributors Acknowledgments Glossary vii ix xi xiii xv 1 Challenges for Indonesia in the new world 1 Arianto A. Patunru, Mari E. Pangestu and M. Chatib Basri PART 1 GLOBALISATION, NATIONALISM AND SOVEREIGNTY: THE INDONESIAN EXPERIENCE 2 Challenging geography: asserting economic sovereignty in a porous archipelago 17 Anthony Reid 3 The new nationalism in Indonesia 35 Edward Aspinall 4 Nationalism, sovereignty and foreign policy: Indonesia and the disputes over the South China Sea 52 Shafiah F. Muhibat PART 2 NATIONALISM IN PRACTICE 5 Feeding the bangsa: food sovereignty and the state in Indonesia 73 Jeff Neilson 6 Nationalism, developmentalism and politics in Indonesia s mining sector 90 Eve Warburton v

6 vi Indonesia in the New World: Globalisation, Nationalism and Sovereignty 7 Who is afraid of economic openness? People s perceptions of globalisation in Indonesia 109 Yose Rizal Damuri and Mari Pangestu PART 3 IMPACT OF AND RESPONSE TO GLOBALISATION 8 Anti-globalisation, poverty and inequality in Indonesia 133 Arief Anshory Yusuf and Peter Warr 9 Gender, labour markets and trade liberalisation in Indonesia 157 Krisztina Kis-Katos, Janneke Pieters and Robert Sparrow 10 The good, the bad and the promise of globalisation: a private sector perspective 180 Manggi Habir PART 4 THE HUMAN FACE OF GLOBALISATION 11 Globalisation and labour: the Indonesian experience 201 T. Yudo Wicaksono and Chris Manning 12 Restoring the rights of Indonesian migrant workers through the Village of Care (Desbumi) program 225 Anis Hidayah 13 Globalisation, the role of the state and the rule of law: human trafficking in eastern Indonesia 243 Dominggus Elcid Li PART 5 NAVIGATING THE NEW GLOBALISATION 14 Indonesia and the global economy: missed opportunities? 267 Hal Hill and Deasy Pane 15 International cooperation and the management of globalisation: the Indonesian experience 294 Titik Anas and Dionisius Narjoko Index 317

7 Tables 7.1 Selected indicators of openness, Characteristics of the sample Summary of independent variables and the expected signs Marginal effect of statistically significant variables for the response 3 = beneficial Change in poverty incidence and inequality, , and Nominal rates of protection by sector, 2008 and Impact of global protectionism on output by sector Impact of Indonesia s protectionism on nominal return to factors of production Impact of Indonesia s protectionism on poverty incidence Impact of Indonesia s protectionism on inequality Labour force participation rate among people aged by gender, Summary statistics at the sectoral level, 2000 and Female labour intensity of international trade, 2000 and Service sector jobs in selected industries, Impact of technological change on employment Number of new Indonesian migrant workers, Number of cases of human rights violations experienced by Indonesian migrant workers, Major migration policies in Indonesia The three pillars of the Desbumi program 236 vii

8 viii Indonesia in the New World: Globalisation, Nationalism and Sovereignty 12.5 Location and funding of Desbumi projects in five provinces Summary of progress of Desbumi projects in villages Palm oil companies that have recruited East Nusa Tenggara workers without following proper procedures, Attitudes towards globalisation in selected countries, Comparative indicators of economic openness Global market shares in electronics, Global market shares in garments, Global market shares in footwear, Comparative rankings on Ease of Doing Business Index and Logistics Performance Index, Comparative performance on PISA maths and science tests, Comparative rankings on Corruption Perceptions Index, GDP by country group,

9 Figures 7.1 Survey results: perceptions of the impact of economic openness on the economy Survey results: perceptions of international economic cooperation and globalisation Poverty incidence, Gini coefficient of inequality, Growth in world trade and GDP, Trade-to-GDP ratio, Indonesia and the world, Trade restrictions in G20 countries since October Impact of global protectionism on real expenditure per capita Impact of global protectionism on real return to factors of production Impact of Indonesia s protectionism in the food sector on real expenditure per capita Impact of Indonesia s protectionism in the mineral sector on real expenditure per capita Impact of Indonesia s protectionism in the food and mineral sectors on real expenditure per capita Female labour force participation by age group, Female labour force participation by sector, Female share of workers and export share, Female share of workers and imported input share, Female share of workers and import penetration, ix

10 x Indonesia in the New World: Globalisation, Nationalism and Sovereignty 11.1 Share of jobs by major sector, and unemployment rate, Number of jobs in large and medium manufacturing firms by main industry group, Share of service sector employment by major subsector, Ratio of wages by firm ownership and trade orientation, Wage growth among production workers in selected industries by ownership and trade orientation, Share of firms using and websites in their daily operations by sector, 2009 and Share of firms undertaking automation or adopting new technology in the previous three years, by sector, Number of passengers using East Nusa Tenggara airports, Number and type of perpetrators of human trafficking in East Nusa Tenggara, Economic openness and inequality in Indonesia, MFN and applied tariff rates in Indonesia, Relationship between value of trade and applied tariff rates in Indonesia, Average tariff rates under Indonesia s MFN and FTA commitments, Indonesian exports using the FTA concession, Indonesian imports using the FTA concession, Indonesia s score on the Logistics Performance Index, Intra-ASEAN and extra-asean visitor arrivals in the ASEAN region and Indonesia,

11 Contributors Titik Anas, Founder of Presisi Indonesia; and Lecturer, Padjadjaran University, Bandung Edward Aspinall, Professor of Politics, Department of Political and Social Change, Coral Bell School of Asia Pacific Affairs, Australian National University, Canberra M. Chatib Basri, Senior Lecturer, Department of Economics, University of Indonesia, Jakarta; former Indonesian Minister of Finance ( ); and former Chair of the Investment Coordinating Board (BKPM) ( ) Yose Rizal Damuri, Head, Department of Economics, Center for Strategic and International Studies (CSIS), Jakarta Manggi Habir, Independent Commissioner, PT Bank Danamon Indonesia Tbk, Jakarta Hal Hill, HW Arndt Professor Emeritus of Southeast Asian Economies, Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Asia and the Pacific, Australian National University, Canberra Krisztina Kis-Katos, Professor of International Economic Policy, Department of Economics, University of Göttingen, Göttingen Chris Manning, Honorary Associate Professor, Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Asia and the Pacific, Australian National University, Canberra Shafiah F. Muhibat, Senior Researcher and Head of Department of International Relations, Centre for Strategic and International Studies (CSIS), Jakarta xi

12 xii Indonesia in the New World: Globalisation, Nationalism and Sovereignty Dionisius Narjoko, Senior Economist, Economic Research Institute for ASEAN and East Asia (ERIA), Jakarta Jeff Neilson, Senior Lecturer in Geography, School of Geosciences, University of Sydney, Sydney Deasy Pane, PhD Candidate, Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Asia and the Pacific, Australian National University, Canberra Mari Pangestu, Professor of International Economics, Faculty of Economics, University of Indonesia, Jakarta; former Indonesian Minister of Trade ( ); and former Indonesian Minister of Tourism and Creative Economy ( ) Arianto A. Patunru, Fellow, Arndt-Corden Department of Economics, and Policy Engagement Coordinator, ANU Indonesia Project, Crawford School of Public Policy, ANU College of Asia and the Pacific, Australian National University, Canberra Janneke Pieters, Assistant Professor, Development Economics Group, Department of Social Sciences, Wageningen University, Wageningen; and Research Fellow, Institute of Labor Economics (IZA), Bonn Anthony Reid, Former Professor of Southeast Asian History, Australian National University, Canberra; University of California, Los Angeles; and National University of Singapore, Singapore Robert Sparrow, Assistant Professor, Development Economics Group, Department of Social Sciences, Wageningen University, Wageningen; and Associate Professor, International Institute of Social Studies (ISS), Erasmus University Rotterdam Eve Warburton, PhD Candidate, Department of Political and Social Change, Coral Bell School of Asia Pacific Affairs, Australian National University, Canberra Peter Warr, John Crawford Professor of Agricultural Economics, Emeritus, and Director, Poverty Research Centre, Australian National University, Canberra T. Yudo Wicaksono, Lead Data Analyst, Palladium, Jakarta; and Research Associate, Presisi Indonesia, Jakarta Arief Anshory Yusuf, Professor of Economics, Department of Economics, Padjadjaran University, Bandung; Visiting Fellow, Australian National University, Canberra; and Visiting Professor, King s College London

13 Acknowledgments All the papers in this volume, except Chapter 11 by T. Yudo Wicaksono and Chris Manning, were presented during the thirty-fifth Indonesia Update Conference at the Australian National University (ANU), Canberra, on September Our greatest thanks go to the authors, without whom this book would not exist. The Indonesia Update Conference is organised jointly by the ANU Indonesia Project and the Department of Political and Social Change, and has been conducted annually since In preparing for the 2017 conference, we were greatly supported by Budy Resosudarmo, who was then the head of the ANU Indonesia Project. We thank both Budy and his successor, Blane Lewis, for their support and guidance. We also acknowledge the helpful suggestions and feedback from all Indonesianists at the ANU. We thank the core team of the 2017 Indonesia Update Conference for making the conference run smoothly: Nurkemala Muliani, Kate McLinton, Bayu Tegar Perkasa, Maxine McArthur and Thuy Thu Pham. We would also like to thank Rus an Nasrudin, Donny Pasaribu and all the student volunteers for their assistance during the conference, and the speakers, chairs and discussants for their valuable contributions. We are grateful to Liam Gammon and his team at New Mandala for helping to promote the event. We acknowledge the continuing support of the ANU College of Asia and the Pacific. The Australian Department of Foreign Affairs and Trade (DFAT), through its grant to the ANU Indonesia Project, has been a longterm supporter of the Update conferences and the associated series of books. We thank Allaster Cox from DFAT for his opening remarks to the conference. After the Update we held two follow-up events in Sydney and Adelaide (the Mini Updates ). For these, we thank the Lowy Institute (especially Aaron Connelly) in Sydney and the Institute for International Trade (especially Chris Findlay and Lisa Hunt) at the University of Adelaide. xiii

14 xiv Indonesia in the New World: Globalisation, Nationalism and Sovereignty The Indonesia Update series of books has been published since Once again, we would like to thank our publisher, ISEAS Yusof Ishak Institute, especially Ng Kok Kiong and Rahilah Yusuf, for their excellent work. We are indebted to Beth Thomson for her superb editorial work; she has been involved in the Update book series since We also thank Angela Grant for assistance with indexing, and Kantor Sekretariat Presiden, Republic of Indonesia, for giving us permission to use the photo on the cover of President Joko Widodo. Arianto A. Patunru, Mari Pangestu and M. Chatib Basri Canberra, April 2018

15 Glossary ABRI ADB AFAS AFTA AIFTA AIIB AIPEG AKAN Ampera ANI Antam APEC Apkasi APRIL ASEAN ATIGA ATM bangsa Bank Indonesia Banser banteng Bapindo Angkatan Bersenjata Republik Indonesia (Armed Forces of the Republic of Indonesia) Asian Development Bank ASEAN Framework Agreement on Services ASEAN Free Trade Area ASEAN India FTA Asian Infrastructure Investment Bank Australia Indonesia Partnership for Economic Governance Antar Kerja Antar Negara (International Labour Placement Program) Aliansi Melawan Perdagangan Orang (Alliance Against Human Trafficking) Asosiasi Nikel Indonesia (Indonesian Nickel Association) PT Aneka Tambang Asia-Pacific Economic Cooperation Asosiasi Pemerintah Kabupaten Seluruh Indonesia (Association of Indonesian District Governments) Asia Pacific Resources International Holdings Ltd Association of Southeast Asian Nations ASEAN Trade in Goods Agreement automated teller machine the nation Indonesia s central bank Barisan Ansor Serbaguna (Ansor Multipurpose Front), paramilitary organisation of Nahdlatul Ulama fortress program/policy Bank Pembangunan Indonesia (Indonesian Development Bank) xv

16 xvi Indonesia in the New World: Globalisation, Nationalism and Sovereignty Bareskrim berdikari Binapenta BNI BNI 1946 BNP2TKI BP3TKI BPJS BPS BRI Bulog CGE COO CoW CPTPP CSIS cultuurstelsel Darul Islam Desbumi Doi Moi DPD Badan Reserse Kriminal (Criminal Investigation Agency) berdiri di atas kaki sendiri ( to stand on one s own two feet ), a program of economic self-reliance during the Sukarno era Direktorat Jenderal Pembinaan Penempatan Tenaga Kerja dan Perluasan Kesempatan Kerja (Directorate General of Labour Force Placement and Expansion of Employment Opportunities) Bank Negara Indonesia (State Bank of Indonesia) Bank Negara Indonesia 1946 (State Bank of Indonesia 1946) Badan Nasional Penempatan dan Perlindungan Tenaga Kerja Indonesia (National Agency for the Placement and Protection of Indonesian Migrant Workers) Balai Pelayanan Penempatan dan Perlindungan Tenaga Kerja Indonesia (Service Centre for the Placement and Protection of Indonesian Migrant Workers) Badan Penyelenggara Jaminan Sosial (Social Security Administration Agency) Badan Pusat Statistik (Statistics Indonesia), the central statistics agency Bank Rakyat Indonesia (Indonesian People s Bank) Badan Urusan Logistik (the national food logistics agency) computable general equilibrium (model) certificate of origin Contract of Work Comprehensive and Progressive Agreement for Trans-Pacific Partnership Centre for Strategic and International Studies Cultivation System (a nineteenth-century Dutch colonial policy of forced crop deliveries) Abode of Islam (name of an Islamic-state movement that rebelled against the central government in the 1950s, and remains active in a largely non-violent form) Desa Peduli Buruh Migran (Village of Care for Migrant Workers) renovation, reconstruction ; program of political and economic reforms initiated in Vietnam in 1986 with the goal of creating a socialist market economy Dewan Perwakilan Daerah (Regional Representative Council)

17 Glossary xvii DPR Dewan Perwakilan Rakyat (People s Representative Council), Indonesia s parliament dwifungsi dual function (usually referring to the dual political and military functions of the Indonesian Armed Forces) e-ktp kartu tanda penduduk elektronik (electronic resident s identity card) ERP effective rate of protection FDI foreign direct investment fintech financial technology, and the businesses providing such technology FTA free trade agreement G7 Group of Seven large economies (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) GATS General Agreement on Trade in Services GATT General Agreement on Trade and Tariffs GDP gross domestic product Golkar Golongan Karya (the state political party under the New Order, and a major post-new Order party) Guided Democracy the Sukarno era ( ) haj annual pilgrimage to Mecca HKTI Himpunan Kerukunan Tani Indonesia (Indonesian Farmers Association) HSBC Hongkong and Shanghai Banking Corporation IJEPA Indonesia Japan Economic Partnership Agreement IMF International Monetary Fund IRGSC Institute of Resource Governance and Social Change ITA Information Technology Agreement IUP Izin Usaha Pertambangan (Mining Business Permit) Jokowi (President) Joko Widodo kedaulatan pangan food sovereignty ketahanan pangan food security Komnas Perempuan Komisi Nasional Anti Kekerasan Terhadap Perempuan (National Commission on Violence Against Women) Konfrontasi policy of confrontation against Malaysia during the Sukarno era KORUS Korea US Free Trade Agreement KPK Komisi Pemberantasan Korupsi (Corruption Eradication Commission) KPM Koninklijke Paketvaart Maatschappij (Royal Steam Packet Company) LNG liquefied natural gas

18 xviii Indonesia in the New World: Globalisation, Nationalism and Sovereignty LOI Letter of Intent Malari affair Malapetaka 15 Januari (15 January disaster), riots of 15 January 1974 against the visit of Japanese prime minister Kakuei Tanaka Maybank Malayan Banking Berhad MFA Multi Fibre Arrangement MP3EI Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia (Master Plan for the Acceleration and Expansion of Indonesia s Economic Development) musrenbang musyawarah perencanaan pembangunan (development planning meeting) NAFTA North American Free Trade Area (or Agreement) Nahdlatul Ulama traditionalist Islamic organisation founded in 1926 Nawacita nine-point policy statement issued by Joko Widodo and Jusuf Kalla during the presidential election campaign in 2014 NEFOs New Emerging Forces negara state New Order the Suharto era ( ) NHM Nederlandsche Handel-Maatschappij (Netherlands Trading Society) NISM Nederlandsch-Indische Stoomvaart Maatschappij (Netherlands Indies Steamship Company) NRP nominal rate of protection NTB non-tariff barrier OCBC Bank Oversea-Chinese Banking Corporation OJK Otoritas Jasa Keuangan (Financial Services Authority) OLDEFOs Old Established Forces OLS ordinary least squares Pancasila the five guiding principles of the Indonesian state (belief in God, humanitarianism, nationalism, democracy and social justice) PDI Partai Demokrasi Indonesia (Indonesian Democracy Party) PDIP Partai Demokrasi Indonesia-Perjuangan (Indonesian Democratic Party of Struggle) Pelni Pelayaran Nasional Indonesia (Indonesia s stateowned shipping company) peranakan descendants of fifteenth and sixteenth century Chinese immigrants to the Netherlands Indies, who adopted many local customs and were largely assimilated into local communities Permesta rebellion Perjuangan Semesta (uprising in Sulawesi in the late 1950s)

19 Glossary xix Pertamina PKS PPIT PPP pribumi PRRI RCEP reformasi Sakernas SAM SKA SOE SPI Susenas TKA TKI TNI totok TPP TRIMs umroh UNCTAD UOB VOC WTO Perusahaan Pertambangan Minyak dan Gas Bumi Negara (Indonesia s state-owned oil and gas company) Partai Keadilan Sejahtera (Prosperous Justice Party) Pusat Pelayanan Informasi Terpadu (Integrated Information Service Centre) Partai Persatuan Pembangunan (United Development Party) indigenous Indonesian, not of immigrant stock Pemerintah Revolusioner Republik Indonesia (rebel movement in Sumatra in the late 1950s) Regional Comprehensive Economic Partnership reform (used to characterise post-new Order Indonesian society and politics) Survei Angkatan Kerja Nasional (National Labour Force Survey) social accounting matrix Surat Keterangan Asal (certificate of origin) state-owned enterprise Serikat Petani Indonesia (Indonesian Peasants Union) Survei Sosio-Ekonomi Nasional (National Socio- Economic Survey) tenaga kerja asing (foreign workers) tenaga kerja Indonesia (Indonesian migrant worker) Tentara Nasional Indonesia (Indonesian National Army) China-born or pure Chinese in Indonesia, as distinct from locally born or culturally hybridised peranakan Trans-Pacific Partnership Trade-Related Investment Measures pilgrimage to Mecca that can be performed at any time of the year, other than the time specified for the haj United Nations Conference on Trade and Development United Overseas Bank (Singapore) Vereenigde Oost-Indische Compagnie (United East India Company/Dutch East India Company) World Trade Organization Currencies $ US dollar Rp Indonesian rupiah

20