Notes from the Field | Moira Moeliono, Tristam Moeliono, Maria Brockhaus, and Grace Wong, Indonesia Inc.: A brief history of entrepreneurship in the name of development
Introduction
Resource extraction and the moulding of people into the workings of a global commodity market has a long history in Indonesia. The colonial government first enabled and legitimised resource extraction at the expense of local people and their relational values to land and nature. Taking control over land and labour relations, the Dutch Colonial government, forced local people into harsh labour often on their own lands to produce colonial crops of addiction.[1] Colonialism was an economic project and its mission was to extract maximum benefits to the benefit of the homeland and to generate returns. The colonial regime created a path of territorializations, extractive institutions, concession practices employing law, political power and wealth to further economic interests of a powerful few. Subsequent narratives for reforms in Indonesia often engage in discussions on how to escape the violence of the colonial and, later, neo-colonial pasts. Yet, as we argue, most reforms appear to question who has the right to benefit, rather than challenging – and reforming – the ongoing burden put on nature and local people. Consequently, there is a risk that colonial rules of land control and production are reproduced, simply dressed in new terms and promises of efficiency.
To examine to which extent the risk of reproducing colonial extractivism is prevalent in current policies, in particular in the way how and which policy problems are ought to be solved, and who and what is problematised in the process, we examine the Job Creation Law (UUCK) issued by the Indonesian government in 2023. The Law aimed to generate economic growth by enabling investments, improving business efficiencies, and thereby creating employment for the Indonesian people. It is explicit in its concerns to establish and maintain access of selected domestic interests to land, capital and labour, while seemingly elevating the local as the entrepreneurs. This proposed path to (economic) development is based on the familiar logic of extraction and centralized control over the resources, promoted with the slogan ‘Indonesia Inc.’.
The UUCK: Improving the Ease of Doing Business
The UUCK is argued as a necessary measure to boost investment for economic development, mainly by simplifying the complicated business permit system of different sectors and thus provide ‘ease of doing business’. This includes measures to legalize the many illegalities and informalities that have haunted the extractive industry especially forestry, plantation and mining over the past decades. For example, plantation operators who have not or only partially fulfilled the administrative requirements re now provided a grace period of 3 years to obtain the proper permits, including the degazetting of the forest designation, while allowing them to carry on with operations.
The law appears to mostly benefit corporate actors. A post-structural read of the ‘problem’ represented in UUCK is the complicated laws and regulations that increase the costs and restrictions of doing business which in turn hampers economic growth and development.
Business and politics are difficult to distinguish these days. It is not uncommon globally that large businesses use their wealth to influence politics either directly through becoming politicians or indirectly through funding political parties and campaigns. In Indonesia some 63% of the members of parliament have businesses linked to the national budget and of the 500 members of the People’s Representative Council (DPR), 262 are business actors. Almost all the current high-level government officials are businessmen who have turned into bureaucrats, effectively creating ready-made political patronage networks.
Indonesia Inc.: All stakeholders are entrepreneurs
The UUCK’s rhetoric of business and equity is to treat small farmers, communities, small companies and large corporations equally. Equitable economic development is considered necessary because “boosting the purchasing power of the poor will drive demand for products from large companies, creating a mutually reinforcing economic cycle”.[2] One example is whereby social forestry is considered as a small-scale enterprise.Social forestry was much lauded when the program was initially framed as specifically aiming to overcome the unequal and unfair control over and access to land. Over time, the emphasis on economic development has shifted the SF strategy from empowerment and customary governance towards entrepreneurial development whereby SF evolved into a form of concession to manage forests given to social groups and evaluates success of a SF permit based on the economic value of the enterprise. This evolution of SF as a social enterprise has invisibilized local governance practices (Wong et al. 2020).
Thus, all social forestry communities or groups require the formal establishment of a business with formal articles of association and bylaws, a business plan, certificates from the drug and food agency and going through the process for certification of ‘halal’, for example in coffee production. This further complicates the already the long-convoluted value chain from growing coffee shrubs to the cup of coffee in a café in Jakarta or Amsterdam, with the many intermediate business actors reaping the larger parts of the benefit. Yet, profitability and entrepreneurship will be the measure of success or ‘good use’ for communities to gain their rights through social forestry and agrarian reform programs.
In this process, as during the colonial regime, the local was reduced to labour, and those resisting ‘modernisation’ will have to cope with changing society and forest and land relations where diverse relational values of forests are replaced with only economic value.
Silencing the social
Ownership of land is haunted by inequality as 68% of Indonesia’s land is controlled by the richest 1% of the citizens, largely through large corporations. The UUCK re-affirms the rights of the state to control how land is managed (GR 18, 2021), revives the colonial concept of ‘abandoned land’ (GR 20, 2021) and establishes a land bank (GR 64, 2021; Ady Thea, 2023; Hidayat, 2021; Rahangiar, 2022) to consolidate land areas.
The Land Bank Authority is one of the most controversial aspects of UUCK. It contradicts the Basic Agrarian Law of 1960 both in spirit and practice as it acts basically as a broker to provide land for projects of ‘national strategic importance’ and for private businesses. Although the Land Bank Authority is mandated to provide at least 30 percent of its inventory of land with status of other use rights (HPL) for agrarian reform, communities can only obtain usage rights for 10 years and will only be able to gain a Certificate of Ownership Rights (SHM) if the land have been ‘put to good use’, meaning the production of commercial crops reinforcing the colonial narrative to put ‘idle land’ into productive use. Except for some 3000 ha allocated for conservation and public infrastructure, these lands are advertised as for sale or rent to the private sector (Zakiul Fikri, 2024), who are then expected to drive a “just economy and economic equality”.
The decades-long fight for agrarian reform with wins such as the Decree of the People’s Consultative Assembly in 2001, recognition of communal and customary land rights in 2012, and various victories of land rights by peasant movements, has now lost the battle in the re-direction towards individual and corporatized land access and practices (Interview, NGO3, August 2023).
The Social Forestry program, meanwhile has gained increased visibility since it was explicitly included in the UUCK (Law 6, 2023, article 29a). Here the UUCK is framed as being important to solve the legacy of forest conflicts where local people and indigenous communities have been criminalized. While the law provides a legal basis allowing access to state protected and production forests for local communities, at the same time, UUCK also makes it easier for investors to utilize forest area for more profitable economic purposes (e.g. palm oil plantations, coal extraction) and/or national strategic programs such as food estates (GR19, 2021). This is likely to create conflicts and increase deforestation.
Conclusion
“…I will chase, I will control, I will check and I will beat [them] up if necessary! There should no longer be any obstructions to investment because this is the key to creating more jobs.”
Joko Widodo’s Presidential re-election speech, 14 July 2019 (Tehusijarana, 2019)
It is clear that government rationalities are intertwined with the political economy of the state, its historical path dependencies and power relations (Robet, 2023, Shore and Wright 1997). The UUCK can be seen as an expression of the government’s economic and territorial interests and the continuation of a neoliberal legality since colonial times.
Despite its promises, the UUCK has not led to more simplified bureaucracy nor streamlined regulations. Instead, it has strengthened the process of recentralization and thereby re-created the problems of Suharto’s New Order where all policies were decided at the national level with little understanding of how it was relevant to different contexts and how it was implemented at the local. Meanwhile, the silences that the UUCK produced are deafening: corruption, nepotism and clientelism and inequity simply do not exist within the context of the UUCK.
Our examination of the problem framing in the Omnibus Law illustrates that the governance of Indonesia is part of the larger political economic strategy to control resources, protect and reinforce vested interests and to anticipate the potential labour force to drive a specific ‘entrepreneurial’ rather than social form of development forward. In this process, the ideals of an equitable development have been sidelined, calls for social and environmental justice replaced with narratives of “entrepreneurship for all”, and visions of a climate-friendly and green development future have been silenced.
Notes
[1] Coined in Peluso and Lund (2011), such crops include tea, coffee and sugar in Indonesia.
[2] Prabowo Lepas Peserta Retret Kadin, Titip Pesan Indonesia Incorporated. www.cnbcindonesia.com/news/20250808220802-4-656518.
Moira Moeliono is senior associate at the Centre for International Forestry Research. Her most recent research is on forest governance policies related to climate change and social forestry, including how communities participate in the implementation.
Tristam Pascal Moeliono is currently an Associate Professor at the Faculty of Law, Parahyangan Catholic University-Bandung-Indonesia. He is responsible for managing courses for undergraduate and master classes on International Economic Law, Legal Philosophy and Comparative Law.
Maria Brockhaus is Professor of International Forest Policy at the University of Helsinki, Finland. In her research, she focusses on the political economy of deforestation in the Global South and underlying politics and power relations, mainly through analysing discourse and policy networks. Her current projects focus on forests & climate change and equity outcomes in rapidly changing forest and agriculture frontiers.
Grace Wong is Associate Professor at the Research Institute for Humanity and Nature in Japan. Her current research is on the politics and governance of forest and natural resources in dynamic systems, with particular focus on well-being, relational values and social-environmental justice.
To cite this essay, please use the bibliographic entry suggested below:
Moira Moeliono, Tristam Moeliono, Maria Brockhaus, and Grace Wong, “Indonesia Inc.: A brief history of entrepreneurship in the name of development,” criticalasianstudies.org Commentary Board, May 12, 2026; https://doi.org/10.52698/PLDP6272.