Democratization and Rent Seeking in Indonesia

As President Suharto was forced to resign from his office in 1998, the event marked the beginning of a process that would lead up to democracy in Indonesia. Previous studies have analyzed the significant value of political capital for Indonesian firms. However, there is as of yet no study that analyzes the transition from military dictatorship to democracy and how political connections have developed after 1998.

 

The aim of this project is to analyze the changes in Indonesia’s political landscape and to shed light on how these changes have affected the ability for firms to utilize political connections in order to obtain rent-seeking opportunities. Using earlier studies on the Suharto regime as a starting point, we will trace and identify today’s ties between politicians and the private sector. A goal of this study is to answer the questions of how firms previously related to Suharto or his family are performing today and whether firms previously discriminated against by the regime are performing better now. As recent events have shown, there are strong signs that President Yudhoyono is depending on a group of elites in Jakarta. This dependency is most likely creating opportunities for new political connections to emerge and be exploited by certain firms.

 

Project manager: Dr. Anders C. Johansson

Funding: Ragnar Söderberg's Foundation