My Comments below.
Indonesia’s Return to State Power
Prabowo’s nationalist gambit
May 29
- plans to centralize exports of strategic commodities
- expand state-owned enterprises (GLCs)
- state will command development
- President Prabowo's economic nationalism
- state capitalism, patronage, opacity, rent-seeking
- about power, economic nationalism
- economic power centralized, wealth begins concentrating among elites
- state acts as regulator, financier, trader, industrial planner, welfare provider and guardian of national sovereignty.
- State-owned enterprises (GLCs) instruments of geopolitics
- Cooperatives become tools for "restructuring" economy
- Economists in Jakarta describe Prabowo’s “state capitalism”
- government dominant player in strategic sectors
- monopolies without transparency produce new centers of rent extraction
- The Return of Commodity Nationalism
- Prabowo to centralize exports of strategic commodities through GLC
- exports of palm oil, coal, ferro-alloys through “single-gate” system
- “single gate” recalls controversial monopolies of Soeharto era
- the Clove Support and Trading Board, or BPPC.
- BPPC defining symbol of centralized rent-seeking
- Farmers forced to sell cloves to BPPC
- Cigarette manufacturers (kretek) forced to buy from BPPC
- Cloves purchased cheaply from farmers
- resold at higher prices downstream
- Profits accumulated at BPPC
- Indonesian farmers absorbed the losses
- monopolies become mechanisms for elite enrichment
- BPPC closely associated with Soeharto’s son Tommy
- political favoritism masquerading as economic management.
- That historical memory now shadows Prabowo’s proposal.
- The Problem of Trust
- single entity gains authority over strategic exports
- immense influence over margins, contracts, market access and pricing
- centralized control creates new leakages
- Indonesia’s stock index fell sharply on May 19
- intervention risks undermining growth
- Questionable Pattern
- Several Prabowo flagship programs faced scrutiny
- Free Meals procurement oversight and budget management
- Merah Putih Village Cooperatives expensive procurement
- People’s School suspicions regarding inflated budgets.
- Indonesia state enterprises corrupt, political interference, inefficiency.
- procurement scandals, elite capture
- Controversy surround Danantara
- transparency and oversight
- Danantara yet to publish comprehensive public report
- Indon state enterprises long been corrupt, elite capture
- too much darkness exists between intentions and implementation.
- rent-seeking flourishes most easily in the dark.
My Comments:
These are old school, Soeharto era dinosaurs roaming around Indonesia again. Bisa diatur. There is too much wealth in Indonesia. Almost 300 million people and a GDP about US$1.6 Trillion. That is a huge economy.
But per capita GDP is around US$5500 (nominal). Global rank per capita GDP is around 120 out of 193 countries.
Meaning the vast majority of Indonesians are dirt poor. The very, very few elites are very, very rich. These are the Social Welfare Millionaires. Or Jutawan Dana Awam. They get rich by siphoning out taxpayers funds, siphoning out public wealth through monopolies, oligopolies, licenses, permits etc.
Does this sound familiar? Have you heard of Benua Asia Tenggalam?
