Jokowi’s Industrial Legacy: A Critical Reflection on ‘Success’ in Indonesia’s Natural Resource Sector

In this episode of Southeast Asia Forum 2024 Series, Prof John Sidel talks with Dr. Eve Warburton from the Australian National University for a critical reflection on Indonesia's industrial policies under President Joko Widodo (Jokowi)

One of the principal economic legacies of Indonesian President Joko Widodo (Jokowi) is a (re)turn to resource-based industrialization. Over the course of his second and final term in office (2019-2024), state revenues have risen spectacularly on the back of the country’s mineral product exports, the result of a strict ban on the export of raw nickel ores that compelled domestic and foreign businesses to invest downstream. In the short term, added value from processed mineral exports improved the country’s balance of trade and helped Indonesia reach upper middle-income status in 2023—a major achievement for Jokowi in the twilight years of his presidency. A longer-term goal is for the nickel smelting sector to feed into a domestic electric vehicle (EV) battery industry that would place Indonesia at the economic centre of the region’s green energy transition. Thus, for the president and his ministers, downstream industrialisation is a major economic success story and source of nationalist pride.

This paper examines Jokowi’s industrial legacy in the resource sectors, asking how and for whom ‘success’ is measured. In doing so, the goal is to not only reflect critically on one of the president’s chief economic interventions, but also to bring into focus the nature of economic governance during his tenure. The paper points to four factors that help to explain the remarkable growth of Indonesia’s downstream industry since 2020, each of which is integral to the political economy of development under Jokowi more generally: the embrace of Chinese capital, the political rise and embeddedness of domestic extractive interests, recentralisation of economic governance, and the dismantling of accountability mechanisms to ensure unencumbered distribution of land and licenses. Then, having explained both the realisation of this downstream intervention, and the political economy conditions upon which it depended, the paper then reflects on what ‘success’ looks like for those at the periphery of Indonesia’s industrial boom, at sites of extraction and production. The paper suggests that Jokowi’s industrial legacy is an inequitable one. While major domestic firms are reaping the benefits of resource-based industrialization, downstream expansion has generated a predictable set of negative externalities—from human and labour rights abuses to land conflict and serious environmental damage.

This episode is part of LSE Southeast Asia Forum 2024, Please find out more by checking our website https://www.lse.ac.uk/SEAC and following us on Twitter, LinkedIn, Facebook and Instagram.

Thanks to Jonas from Pixabay for the intro music.