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1. How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold

Author:
Angela Tritto
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Development, Industrial Policy, Belt and Road Initiative (BRI), Investment, and Innovation
Political Geography:
China, Indonesia, and Asia

2. Ten Years On, How is the Belt and Road Initiative Faring in Indonesia?

Author:
William Yuen Yee
Publication Date:
03-2023
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
“It is not merely talk, but it is about actually building something. From airports to railways, these are industries we can see and touch. This is exactly the sort of courage and real action the world needs right now.” So said Indonesian President Joko “Jokowi” Widodo about China’s Belt and Road Initiative (BRI) at the inaugural Belt and Road Forum for International Cooperation (BRF) in 2017 (BRF, May 14, 2017; Jakarta Globe, May 16, 2017). This year marks the tenth anniversary of this ambitious, globe-spanning infrastructure development project. Today, 151 countries and 32 international organizations have joined the initiative, which Foreign Minister Qin Gang recently described as a “global enterprise to build a belt of prosperity and a road to happiness” (Ministry of Foreign Affairs of the People’s Republic of China [PRC], January 20). A decade ago, Chinese President Xi Jinping launched the BRI with a series of speeches in Kazakhstan and Indonesia calling for a “Silk Road Economic Belt” and a “Maritime Silk Road,” respectively (Consulate General of the PRC in Toronto, September 7, 2013; China Daily, October 4, 2013). The following year, China announced the creation of a $40 billion Silk Road fund at the Asia-Pacific Economic Cooperation (APEC) summit in Beijing and a $20 billion Maritime Silk Road fund in Indonesia (China Daily, November 9, 2014). From the BRI’s inception, it has been clear that Southeast Asia and its largest economy— Indonesia—are intended to serve as a centerpiece of the megaproject (Global Times, November 16, 2022). Roughly two-thirds of all people of ethnic Chinese ancestry outside of China are in Southeast Asia. [1] The 142-kilometer (88 mile) Jakarta-Bandung high-speed railway (HSR) is one of the BRI’s flagship projects (China Brief, December 22, 2022). Indonesia also hosts nearly half of the eight overseas industrial parks that China has established across the Association of Southeast Asian Nations (ASEAN) member states: the China-Indonesia Economic and Trade Cooperation Zone, the China-Indonesia Morowali Industrial Park, and the China-Indonesia JuLong Agricultural Industry Cooperation Zone (China Development Institute, June 26, 2019). While Beijing has pulled back its overseas BRI lending—and Xi has exhibited some notable reticence toward hosting a third Belt and Road Forum—Indonesia challenges the broader narrative that the BRI is somehow fading away (Green Finance & Development Center, July 24, 2022). In the world’s fourth-most populous country, Chinese investment has continued apace, and both governments continue to champion the BRI’s ability to deliver “mutual benefit” and “win-win results.” Still, understanding Indonesia’s experience with the BRI requires closer examination of the history behind China-Indonesia infrastructure cooperation, major projects beyond the oft-discussed Jakarta-Bandung HSR and their impacts on the Indonesian public, and the extent of economic engagement between Jakarta and Beijing.
Topic:
Development, Infrastructure, Economy, and Belt and Road Initiative (BRI)
Political Geography:
China, Indonesia, Asia, and Southeast Asia

3. The Link Between Global Value Chain Activity and Local Human Capital: Evidence from Indonesia’s Manufacturing Sector

Author:
Rashesh Shrestha and Deborah Winkler
Publication Date:
02-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
For developing countries, participation in global value chains (GVCs) provides an opportunity to expand domestic human capital. Since GVC firms require qualified workers to meet high production standards, they have an incentive to invest directly in their workers’ skills or to raise the demand for skilled workers, which indirectly creates an incentive for workers to enrol in vocational education. This paper explores the relationship between GVC activity and workers’ skills in Indonesia. It combines National Labor Force Survey (SAKERNAS) data with the Large/Medium Industry Survey (IBS) to construct a pooled cross-sectional data set of Indonesian manufacturing workers which takes into account measures of GVC activity at the district-sector-year level. The findings suggest that higher GVC activity in a worker’s district-sector-year is linked to a higher likelihood of vocational education of individual workers. A separate panel data analysis at the district level confirms the positive relationship between GVC activity and human capital. Finally, the results indicate that the wage premium for vocational education is higher in districts with greater intensity of GVC activity.
Topic:
Development, Education, Training, Manufacturing, Industry, and Global Value Chains
Political Geography:
Indonesia, Asia, and Southeast Asia

4. Binding Constraints on Digital Financial Inclusion in Indonesia: An Analysis Using the Decision Tree Approach

Author:
Firman Witoelar, Teguh Yudo Wicaksono, and Carlos Mangunsong
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Despite the concerted efforts of the Indonesian government to increase financial inclusion and the e-commerce–led growth of digital payment services, a large proportion of the country’s population remains financially excluded. Much of the growth and innovation has mainly benefited those already financially included. To understand this outcome, we use the decision tree approach developed by Claessens and Rojas-Suárez (2020), focusing on one of the products with the largest potential to increase financial inclusion in the country: e-money. Our analysis finds that a crucial binding constraint on the expansion of e-money services is a regulatory framework that creates an unlevel playing field between banks and nonbank providers of digital financial services. Regulatory restrictions applied to nonbanks on cashout services, agent recruitment, and know-your-customer processes are at the core of the problem. In addition, a perception of low benefits from the usage of formal financial services results in a lack of the critical mass of customers necessary to ensure the profitability of agents, particularly in remote and rural areas, and thus the expansion of e-money services. We also find other constraints that are not binding at the national level but are binding for some specific groups. The low provision of digital infrastructure in rural areas outside Java is one of them. In addition, constraints such as low trust in providers, though not binding, should be addressed in order to maximize the gains that could be obtained from relaxing the binding constraints.
Topic:
Development, Finance, Digitalization, and Digital Finance
Political Geography:
Indonesia and Oceania

5. Foreign Direct Investment and Labour Market Dynamics in a Developing Country: Evidence from Indonesian Plant-Level Data

Author:
Toshiyuki Matsuura and Hisamitsu Saito
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study examines the impact of inward foreign direct investment on the wages and employment of skilled and unskilled workers in Indonesian manufacturing plants. Entry of multinational enterprises affects local labour markets through spillovers as well as labour and product market competition. Our results show that spillovers increase the labour demand of local plants for unskilled workers, but increased wages due to severe labour market competition reduce the demand for skilled workers. We also find that product market competition causes resource reallocation from low- to high-productivity plants. Thus, attracting inward foreign direct investment effectively enhances aggregate productivity growth, but may retard the transition to skill-intensive production in Indonesian manufacturing.
Topic:
Development, Foreign Direct Investment, Manufacturing, and Labor Market
Political Geography:
Indonesia and Asia

6. Women, Peace and Security in ASEAN: New Issues

Author:
Noeleen Heyzer
Publication Date:
11-2020
Content Type:
Commentary and Analysis
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
With Vietnam, the ASEAN Chair, and Indonesia in the UN Security Council, the Women, Peace and Security Agenda has advanced in ASEAN. However, new issues need to be addressed in its implementation given the changing peace, security and development landscape.
Topic:
Security, Development, United Nations, Peace, UN Security Council, and ASEAN
Political Geography:
Indonesia, Vietnam, and Southeast Asia

7. Developing Countries Can Help Restore the WTO's Dispute Settlement System

Author:
Ana González and Euijin Jung
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
By refusing to fill vacancies in the World Trade Organization’s (WTO) Appellate Body—the top body that hears appeals and rules on trade disputes—the Trump administration has paralyzed the key component of the dispute settlement system. No nation or group of nations has more at stake in salvaging this system than the world’s big emerging-market economies: Brazil, China, India, Indonesia, Korea, Mexico, and Thailand, among others. These countries have actively and successfully used the dispute settlement system to defend their commercial interests abroad and resolve inevitable trade conflicts. The authors suggest that even though the developing countries did not create the Appellate Body crisis, they may hold a key to unlock it. The Trump administration has also focused its ire on a longstanding WTO practice of giving these economies latitude to seek “special and differential treatment” in trade negotiations because of their developing-country status. The largest developing economies, which have a significant stake in preserving a two-step, rules-based mechanism for resolving trade disputes, could play a role in driving a potential bargain to save the appeals mechanism. They could unite to give up that special status in return for a US commitment to end its boycott of the nomination of Appellate Body members.
Topic:
Development, Government, World Trade Organization, Developing World, and Donald Trump
Political Geography:
China, Indonesia, India, South Korea, Brazil, North America, Mexico, Thailand, and United States of America

8. Unequal Ventures: Results from an Endline Study of Gender and Entrepreneurship in East Java, Indonesia

Author:
Mayra Buvinic, Erika Deserranno, Hillary C. Johnson, James C. Knowles, Gianmarco Leon, and Firman Witoelar
Publication Date:
07-2019
Content Type:
Special Report
Institution:
Center for Global Development
Abstract:
This report presents the endline results of a randomized controlled trial in East Java, Indonesia, of demand- and supply-side interventions to increase the use of saving and other branchless banking services by women business owners.
Topic:
Development, Gender Issues, Women, Entrepreneurship, Business, Demand, Supply, Banking, and Business Management
Political Geography:
Indonesia and Asia

9. Midcourse Manoeuvres: An overview of community strategies and remedies for natural resource conflicts in India, Indonesia & Myanmar

Author:
Manju Menon
Publication Date:
06-2018
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
Land transformation has been at the centre of economic growth of post-colonial, Asian nation-states. While their political reforms and economic policies have focused on land governance, the outcomes have resulted in promoting privatisation and speculative business interest in ecologically sensitive landscapes that are also under diverse forms of common use by resource-dependent communities. A three-year study undertaken to understand community-level responses to land use transformation in India, Indonesia and Myanmar shows that the current scale and approach of land–intensive development in these large democracies is facilitated by fast-paced, top down policy changes. These policies are ‘stacked’ (when multiple layers of current and revoked laws are simultaneously in use) rather than integrated and their implementation is the responsibility of various authorities and agencies that overlap. Growing private investments in land that has remained within varying degrees of state control have changed the way land is managed. Land has become increasingly securitised and ‘out of bounds’ for small farmers and other land-users with or without recognised forms of ownership and use rights. Land conflicts are caused due to coercive acquisition processes or land grabs, unlawful operations of projects and long pending remedies to social and environmental impacts. In many instances, these conflicts begin even before the final decisions on projects are taken and persist for years. Highly capitalised land use change brings powerful investors and corporations, governments and local communities in unequal and precarious arrangements of negotiation and confrontation. Citizens and communities affected by land use change, use varied strategies such as administrative complaints, protests, litigation, media campaigns and political advocacy, and engage in improving project design and implementation, increase compensations, restore community access to resources and get a review on the operations of harmful projects. These are done under conditions of political intransigence and criminalisation of those who speak up. While all three countries have recognised land conflicts and their impact on development plans and proposals, they are yet to give affected people a formal and effective role in land and natural resource governance. This is the overview of the study's methodology and findings.
Topic:
Development, Privatization, Natural Resources, Business, Economic Growth, Land Law, Conflict, and Land Rights
Political Geography:
Indonesia, India, Asia, Southeast Asia, and Myanmar

10. Midcourse Manoeuvres: Community strategies and remedies for natural resource conflicts in Indonesia

Author:
Meenakshi Kapoor, Manju Menon, and Vidya Viswanathan
Publication Date:
06-2018
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
Land transformation has been at the centre of economic growth of post-colonial, Asian nation-states. While their political reforms and economic policies have focused on land governance, the outcomes have resulted in promoting privatisation and speculative business interest in ecologically sensitive landscapes that are also under diverse forms of common use by resource-dependent communities. A three-year study undertaken to understand community-level responses to land use transformation in India, Indonesia and Myanmar shows that the current scale and approach of land–intensive development in these large democracies is facilitated by fast-paced, top down policy changes. These policies are ‘stacked’ (when multiple layers of current and revoked laws are simultaneously in use) rather than integrated and their implementation is the responsibility of various authorities and agencies that overlap. Growing private investments in land that has remained within varying degrees of state control have changed the way land is managed. Land has become increasingly securitised and ‘out of bounds’ for small farmers and other land-users with or without recognised forms of ownership and use rights. Land conflicts are caused due to coercive acquisition processes or land grabs, unlawful operations of projects and long pending remedies to social and environmental impacts. In many instances, these conflicts begin even before the final decisions on projects are taken and persist for years. Highly capitalised land use change brings powerful investors and corporations, governments and local communities in unequal and precarious arrangements of negotiation and confrontation. Citizens and communities affected by land use change, use varied strategies such as administrative complaints, protests, litigation, media campaigns and political advocacy, and engage in improving project design and implementation, increase compensations, restore community access to resources and get a review on the operations of harmful projects. These are done under conditions of political intransigence and criminalisation of those who speak up. While all three countries have recognised land conflicts and their impact on development plans and proposals, they are yet to give affected people a formal and effective role in land and natural resource governance. This is the study report on Indonesia.
Topic:
Development, Privatization, Natural Resources, Business, Land Law, Conflict, and Land Rights
Political Geography:
Indonesia, Asia, and Southeast Asia

11. ICTs in Humanitarian Response: A learning review of a three-year, five-country programme

Author:
Amy O'Donnell
Publication Date:
04-2017
Content Type:
Special Report
Institution:
Oxfam Publishing
Abstract:
The Scaling Humanitarian ICTs Network (SHINE) funded by Sida, set out with the theory of change that the quality and efficiency of humanitarian aid can be improved in a variety of contexts through the adoption of Information Communications Technologies (ICTs). With applications in Ethiopia, DRC, Mali, Indonesia and Iraq, ICTs were introduced to enable digital registrations, mobile data collection, cash/voucher programming and systems for accountability. While ICTs hold promise for saving time, money and improving accuracy, this learning report sets out to unpack these benefits and identify the conditions that need to be in place in order for ICTs to significantly add value to humanitarian response.
Topic:
Development, Science and Technology, Accountability, Humanitarian Crisis, and Data
Political Geography:
Africa, Iraq, Indonesia, Middle East, Asia, Ethiopia, Mali, and Democratic Republic of Congo

12. Paving the Way for Investment in Geothermal Power Deployment in Developing Countries

Author:
Thomas Adisorn
Publication Date:
05-2016
Content Type:
Working Paper
Institution:
Institute for Development and Peace
Abstract:
Geothermal power represents a unique source of electricity, for instance due to its low-carbon and base-load character. Some developing countries have a great potential for deploying geothermal power and, thus, for providing climate-friendly electricity to their economies and people. However, in order to reap the benefits of geothermal power substantial barriers must be overcome. By having screened the relevant literature, important hurdles to geothermal power deployment were defined: financing barriers, institutional barriers and uncertainty, lack of human resources, information barriers and social opposition. Through desk research carried out for Indonesia and Kenya, both of which are frontrunners in terms of installed geothermal power capacity, this study identifies options that contribute to overcoming aforementioned barriers. Hence, it offers recommendations primarily to developing countries in order to realize geothermal power production and, thus, to contribute to climate change mitigation.
Topic:
Climate Change, Development, Energy Policy, and Renewable Energy
Political Geography:
Kenya, Africa, Indonesia, and Asia-Pacific

13. Energy security and green growth in Indonesia

Author:
Xander van Tilburg, Gustya Indriani, and Santiago Villaveces-Izquierdo
Publication Date:
11-2016
Content Type:
Policy Brief
Abstract:
Still a long way to go - Energy security and green growth in Indonesia This policy brief addresses the opportunities and impediments of green growth and energy security in Indonesia. Over the past 20 years, Indonesia has witnessed substantial economic growth along with a process of democratisation and decentralisation. This has resulted in a rapidly rising energy demand, which is expected to triple by 2030. Responses so far have mostly focussed on tapping into the nation’s large fossil fuel reserves while also increasing energy imports. There are opportunities for Indonesia to couple energy security with green growth objectives. For instance by exploiting its enormous geothermal energy potential and by coupling financial and efficiency gains to green growth implementation. However, as this policy brief outlines, major challenges need to be overcome if Indonesia is to embark on a green growth trajectory. This policy brief is part of a two-year research project on energy security and green growth in middle income countries by means of political economy analysis. Other project outputs can be found here.
Topic:
Development, Energy Policy, and Environment
Political Geography:
Indonesia

14. Papua's Insecurity: State Failure in the Indonesian Periphery

Author:
Bobby Anderson
Publication Date:
03-2016
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
West Papua is the most violent area of Indonesia. Indonesian security forces battle the country's last active separatist insurgency there. The majority of Indonesia's political prisoners are Papuans, and support for independence is widespread. But military repression and indigenous resistance are only one part of a complex topography of insecurity in Papua: vigilantism, clan conflict, and other forms of horizontal violence produce more casualties than the vertical conflict that is often the exclusive focus of international accounts of contemporary Papua. Similarly, Papua's coerced incorporation into Indonesia in 1969 is not unique; it mirrors a pattern of long-term annexation found in other remote and highland areas of South and Southeast Asia. What distinguishes Papua is the near-total absence of the state in indigenous areas. This is the consequence of a morass of policy dysfunction over time that compounds the insecurity that ordinary Papuans face. The author illuminates the diverse and local sources of insecurity that indicate too little state as opposed to too much, challenges common perceptions of insecurity in Papua, and offers a prescription of policy initiatives. These include the reform of a violent and unaccountable security sector as a part of a broader reconciliation process and the urgent need for a comprehensive indigenous-centered development policy.
Topic:
Conflict Resolution, Security, Political Violence, Development, and Politics
Political Geography:
Indonesia

15. The Road to 2014: Corruption, the Media and Parties' Electability

Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
Corruption has become a perennial issue that has shackled political parties to a groundswell of unpopularity in Indonesia. In the run up towards the 2014 General Elections, it is envisaged that such an issue may jeopardise the electability of certain political parties. This report explores the influence of corruption cases on the elections by first highlighting the current status of competing political parties in the 2014 elections. The report then looks at the notable corruption cases that have an adverse effect on the political parties. The report concludes with four points. First, how utilising the "corruption-card" has become the new weapon of choice among political parties. Second, how the acute problem of corruption signifies that Indonesia's democratic consolidation process is far from over. Third, how shadowy affairs between political parties, their elites and the media can and should be constantly monitored. Lastly, the need to strengthen and continuous evaluation of the Corruption Eradication Committee (KPK) to prevent unnecessary interventions by political parties in the future.
Topic:
Corruption, Democratization, Development, Political Economy, and Governance
Political Geography:
Indonesia and Asia