Infrastructure Investment in Indonesia: A Focus on Ports by Colin Duffield, Felix Kin Peng Hui, Felix Kin Peng and Sally Wilson

1. Infrastructure Investment
in Indonesia—The Economic
Context
C. F. Duffield, R. Duffield, and S. Wilson
1.0 Introduction to Indonesia
Located in South-East Asia between the Indian and Pacific Oceans,
Indonesia represents the world’s largest archipelagic country. Its
17,000 equatorial islands, of which only 6,000 are inhabited, experience
a tropical climate characterised by high rainfall, humidity and
temperatures. The country is rich in natural resources including coal,
minerals, gold, copper, nickel, oil, gas and fertile land (giving rise to
agricultural products). It is also prone to natural disasters and home
to the most volcanoes of any country in the world, with more than
75% of the population living within 100 km of a Holocene volcano
(active within the last 11,700 years) (Smithsonian Institution 2015). For
example, in early August 2018 a series of earthquakes and aftershocks
hit the island of Lombok displacing an estimated 20,000 people

Indonesia shares land borders with Malaysia, East Timor and Papua
New Guinea and is closely neighboured by Australia, Singapore and
the Philippines. Also of note is its proximity to China and India, the
two largest and fastest growing economies in the world, and its position
along major sea lanes which link the Indian Ocean to the South China
Sea and the Pacific Ocean. This central location, in combination with
other factors such as its rich resources and demographic composition,
make Indonesia an attractive location for foreign trade, investment and
political and business affairs.
1.1 Government
1.1.1 National
President Suharto’s long-standing dictatorship fell in 1998 and Indonesia
has since operated as an independent democratic republic. The political
system consists of three branches: the legislative; the executive; and the
judicial branch.
The People’s Consultative Assembly (MPR) forms the legislative
branch and comprises the House of Representatives (DPR) and the
Council of Regional Representatives (DPD). The MPR is responsible
for drawing up and passing laws, providing policy guidance and
overseeing the performance of the President and government agencies.
The executive branch consists of the President and Vice-President, as
elected by the Indonesian electorate, as well as the cabinet, as appointed
by the President. The President is the Chief Executive, the Head of
State and Commander-in-Chief of the Armed Forces. The most recent
elections in 2014 saw the appointment of a new Government, headed by
President Joko Widodo (Jokowi).
The Judiciary is based on the Supreme Court, with most legal cases
being dealt with by the public, military, religious and administrative courts.
1.1.2 Regional
Indonesia is divided administratively into thirty-four provinces and
hundreds of districts and municipalities. These are headed by Governors
and Regents, with elected provincial and council assemblies. In 1999,
most government control and tax-raising powers were decentralised 

Infrastructure Investment in Indonesia: A Focus on Ports by Colin Duffield, Felix Kin Peng Hui, Felix Kin Peng and Sally Wilson