Indonesian foreign investment policy under oligarchic economy: striking balance between economic nationalism and liberalization

Abstract

This study examines the dynamics of foreign investment policies in Indonesia during President Jokowi’s first term, juxtaposing his administration’s liberalization against the backdrop of economic nationalism and the intricacies of oligarchic control. Despite Jokowi’s pronounced ambition to attract foreign investment, as evidenced by his active participation in international forums and public statements advocating for investment, this study reveals a nuanced approach characterized by selective protectionism in the mining sector. This sector’s is attributed to the interplay between an oligarchic economic and patron-client relationships among Indonesian elites, underscores a stance towards foreign investment. The research delves into the trends of Indonesia’s foreign direct investment (FDI) from 2014 to 2019, highlighting a notable decrease in the mining sector at the beginning of Jokowi’s presidency. The paper investigates the capital structure and patron-client dynamics within the Indonesian oligarchy, offering the complex interplay between political power, economic interests, and social forces that influence policy-making.