Business and Politics in Urban Indonesia: Patrimonialism, Oligarchy and the State in Two Towns

Studies of the Indonesian political economy suggest a transformation of government-business relationship from a “patrimonial administrative” state, in which bureaucrats are dominant, to a “patrimonial oligarchic” state dominated by business actors. We examine this proposition by analysing government-business relationship in two towns: a town in Sulawesi, dominated by trade, and a town with a strong industrial base in Java. In the first, politics still approximates that of a patrimonial administrative state with a weak business sector and a dominant bureaucracy. In the second, a local business dynasty has come to power, but without promoting regularisation of state-business relationship. Despite the differences, patronage politics are similarly dominant in both locations, which we illustrate by zeroing in on the construction sector and the distribution of infrastructure projects. We conclude by discussing the implications of our findings for the nature of urban politics in Indonesia, underscoring the significance of patronage across a range of settings.