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Bulletin of Indonesian Economic Studies

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To cite this article: (2007) BOOK REVIEWS, Bulletin of Indonesian Economic Studies, 43:2, 265-278, DOI: 10.1080/00074910701408099

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BOOK REVIEWS

Eric D. Ramstetter and Fredrik Sjöholm (eds) (2006) Multinational Corporations in Indonesia and Thailand: Wages, Productivity and Exports,

Palgrave Macmillan, Basingstoke, pp. 248. Cloth: £55.00.

In only 229 pages, this volume packs an abundance of information on multina-tional activity in Indonesia and Thailand. Drawing together essays from several experts, the book carefully analyses establishment-level data from manufactur-ing surveys in both countries to address three main questions. First, do multi-nationals pay higher wages than their host-economy counterparts and does multinational entry raise wages for all workers? Second, do multinationals have higher productivity and does their presence affect the productivity of domestic ﬁ_{rms? And, third, are multinationals more prone to export than host-economy} ﬁ_{rms? The answers are all broadly yes. Although caveats apply and the results} are not without contradictions, the overall evidence that foreign direct invest-ment (FDI) has been good for Indonesia and Thailand, at least for the outcomes studied, is compelling.

The discussion of the questions will interest two groups of readers even before they get to the answers. First, those with a particular interest in Southeast Asia will ﬁ_{nd a rich description of the policy and institutional changes affecting FDI} in the region. This context overview is accompanied by detailed descriptive sta-tistics that characterise FDI patterns in the 1990s. Second, those with an interest in FDI more generally will appreciate the discussion of theory that motivates the analysis in each chapter. The editors’ introductory chapter is especially useful in thoroughly yet succinctly laying out the theoretical issues, the conﬂ_{icting points} of view and the policy implications of the questions.

Putting aside one exception discussed below, the book follows a simple organi-sation. After an introduction by the editors, two chapters discuss each of the three questions mentioned above, ﬁ_{rst for Indonesia and then for Thailand. Although} written by a variety of authors, the essays all have a common feel and order. Each outlines the relevant theory, introduces the institutional context for Indonesia or Thailand, reviews and discusses the data and then presents results. The essays all share a common heritage as part of a coordinated project sponsored by Japan’s International Centre for the Study of East Asian Development, which hosted sev-eral conferences that brought the authors together. This arrangement is probably what produced the frequent cross-referencing between chapters, a welcome change from many edited collections. When results from one essay differ from or concur with those of another, the authors mention this and discuss possible explanations.

The editors write in the foreword that the book is accessible to academics, policy makers and business leaders, and the essays indeed make good on this

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claim. The analysis is careful to control for confounding factors that might pro-duce misleading results. Further, the discussion takes care to distinguish causa-tion from correlacausa-tion to the extent possible. Despite this analytical thoroughness that will please academics, the book is devoid of even a single equation and mentions no econometric terms other than regression. Instead, the book empha-sises the intuition behind the equations and econometric robustness checks. Academics working in the ﬁ_{eld will connect the discussion to the econometric} tools used, even where they are not explicitly codiﬁ_{ed, and policy makers and} business leaders will understand the bottom-line implications. Owing to better data quality, the results from Indonesia are generally more convincing. That said, the chapters on Thailand are forthcoming in noting the limitations of their data.

Despite the book’s accessibility to business leaders, its main audience will prob-ably be academics and policy makers. The sheer dizzying volume of data—nearly 60 tables of descriptive statistics and regression results—may be too great to cap-ture the focus of busy executives. However, they would be well advised to ask their research departments to summarise the results relevant to their ﬁ_rm.

An essay notably different from the others is a short case study of the automo-bile industry in both countries. This chapter is especially useful because it shows examples of the mechanisms by which multinationals interact with the host econ-omy. By depicting the details of one industry, the chapter provides some insight into the context underlying the broader analysis in the other chapters.

Because of their increasing FDI ﬂ_{ows and their establishment-level} manufac-turing data, Indonesia and Thailand are the subject of a growing literature on multinational activity. By pulling together many of the key results in a single vol-ume accessible to a wide audience, the editors have created a public good for anyone with an interest in these economies in particular, or in FDI in general. Further, by including copious endnotes referencing academic journal articles and primary sources, the volume is a terriﬁ_{c starting point for those wishing to dive} into this literature.

Garrick Blalock

Cornell University, Ithaca NY

John F. McCarthy (2006) The Fourth Circle: A Political Ecology of Sumatra’s Rainforest Frontier, Stanford University Press, Stanford, pp. xxx + 353. Paper: US$27.95; Cloth: US$70.00.

This book analyses the political, legal and economic dynamics shaping forest-related environmental outcomes in southern Aceh, an area with substantial remaining tropical rainforest. It examines how adat (traditional law) practices, district authority and the state together create the particular institutional arrange-ments that govern resource use at three sites. The central theme is that the area’s ecological decline can be understood in terms of the institutional patterns operat-ing at the district level.

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To analyse these complex institutional arrangements, the author draws on sev-eral theoretical perspectives—institutional economics, political science, political ecology and legal anthropology. As the title suggests, the research attempts to understand an ecological problem from a political ecology perspective. It exam-ines how local agro-ecological systems and adat regimes have adjusted to politi-cal and economic change and uncertainty at the three sites. It looks at the effects of various project and policy approaches to environmental problems, including reforming the state apparatus, incorporating local communities in resource gov-ernance and revitalising adat. The study observes two areas where high-proﬁ_le biodiversity conservation projects exist alongside widespread illegal logging activities, examining both the dynamics driving resource degradation in rural areas and the complex challenges facing biodiversity conservation projects. The book has six chapters: an introduction, three substantive chapters, a conclusion and an epilogue.

Chapter 2 focuses on how adat arrangements concerning forests and agricul-ture in the Sama Dua area have adapted to successive political circumstances from colonial times to the present. Despite the different character of state and adat

institutional arrangements, there have been mutual adjustments between them. The adat regime in Sama Dua has not been inimical to commercial and economic development, and has not necessarily supported sustainable forest use.

Chapter 3 describes the rapid and continuous transformation of the landscape and local patterns of resource use in Menggamat, with its many actors all pur-suing their own interests. Illegal logging has involved a system of accommoda-tion and exchange of gifts and favours among a multitude of state and non-state actors—entrepreneurs, forestry staff, army personnel, district-level bureaucrats,

adatﬁ_{gures and village heads. Actors must conform to this system to remain in the} logging business. The pattern of exchange accommodates adat and ofﬁ_cial author-ity structures, and the locus of control over access to and use of forest resources has shifted from village and adat leaders to bureaucrats formally responsible for implementing regulations.

This chapter also discusses the challenges faced by an NGO-led, community-based conservation project, the World Wide Fund for Nature – Leuser Project (WWF–LP), in attempting to combine community development and generating activities, and to build upon forest-related features of adat. Reiterating Eghenter (2000), who warned against simplifying adat’s role in the conservation of forests in East Kalimantan, the author shows that to assume a direct correspond-ence between adat and sustainable management in southern Aceh is to misread

adat: patterns of unsustainable resource use are complex and multi-dimensional, and the scale of change needed to alter the dynamics driving them is beyond the reach of community-based intervention.

Chapter 4 analyses the emergence of shifting, unstable institutional arrange-ments governing access to and use of natural resources in Badar in the Alas valley, in the Leuser National Park region. It traces the process of environmental regime formation from the colonial administration to the post-independent state, describ-ing the parallel evolution of village institutional order and adat rules as the lat-ter were changed, renegotiated, and inﬂ_{uenced by social and economic forces. It} analyses the interactions of timber entrepreneurs and brokers, village ﬁ_gures, pio-neer agriculturalists and local state agents. As in chapter 3, these actors entered

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into exchanges and reached accommodations that established the institutional arrangements determining access to and use of forest resources.

This chapter also illustrates the problems encountered by another inter-nationally led conservation project, the Leuser Development Program. Applying the Integrated Conservation and Development Program (ICDP) approach, the program encountered problems similar to those found in the WWF–LP inter-vention in Menggamat: the initiatives could not provide stable livelihoods and viable alternatives to logging. The outcome was a continuing struggle over for-est resource access and use. The lack of any clear authority structures that could consistently govern access and use, and the intertwining of local government,

adat, state forestry institutions and international conservationist agencies, created a complex and dynamic situation with no clear winners.

The author concludes (chapter 5) that adat institutional arrangements in south-ern Aceh have adapted to local agro-ecological and socio-economic circumstances, and have been signiﬁ_{cantly affected by state attempts to remake local institutions.} The pattern of exchange and accommodation among various actors at the district level has established the institutional patterns driving unsustainable resource extraction. Over time, the author says, actors can interpret these parallel norma-tive systems differently. In situations where competing and overlapping arrange-ments exist, a new institutional order will tend to emerge. Where the interests of actors working across these parallel arrangements pertain to resource extraction, this emergent order will lead to resource depletion.

In the epilogue (chapter 6), McCarthy presents alternative policy models for natural resource management. He outlines ways to improve the interventions of the two conservation approaches operating in the research area at the time, the Community-based Natural Resource Management (CBNRM) and ICDP approaches. He then summarises the possibilities offered by decentralisation meas-ures introduced after completion of the ﬁ_{eldwork on which the study was based.}

This is an important book for those interested in institutions, resource govern-ance and forestry issues. Its contribution lies in its rich detail on the local dynam-ics of the three study areas, in the use of various analytical approaches, and in the ways the analysis links theoretical perspectives with empirical observations. While the author’s warning against taking the role of adat in conservation at face value is not new, the meticulous documentation of the features of adat pertaining to natural resources in southern Aceh and their evolution is itself a valuable con-tribution. Moreover, the account of events derived from 12 months of visits during 1996–99 provides a valuable insight into local dynamics in a period of important political, social and economic change that has affected patterns of resource use and outcomes in the area.

Ida Aju Pradnja Resosudarmo

Center for International Forestry Research, Bogor, and ANU

References

Eghenter, C. (2000) ‘What is Tana Ulen good for? Considerations on indigenous forest management, conservation, and research in the interior of Indonesian Borneo’, Human Ecology 28 (3): 331–57.

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Yasuyuki Matsumoto (2006) Financial Fragility and Instability in Indonesia, Routledge, London and New York, pp. xxv + 258. Cloth: £65.00.

This book, based on the author’s PhD thesis, attempts to explain Indonesia’s fi nan-cial meltdown in 1997–98 using Hyman Minsky’s model, in which fi_rms experi-encing good times become over-confi_{dent and increase their levels of investment} rapidly, largely on the basis of borrowed funds. Institutions lend heavily to seem-ingly successful fi_{rms, ignoring the probability that their current performance} will not be able to be sustained. When the boom evaporates, lenders demand repayment rather than making new loans; fi_{rms then try to conserve cash by} lay-ing off workers and reduclay-ing purchases. Thus capitalist economies are doomed to repeated booms and busts, with a resulting need for preventive and corrective action by governments.

Minsky’s published work on this topic seems to have dried up in the mid-1980s, and his model has not made a lasting impression on the literature—perhaps because it implies that fi_{nancial institutions never learn from past experience. Economists} prefer to assume that human beings are rational—especially those making deci-sions about the deployment of billions of dollars worth of savings—which may explain why none of the working papers from the early 1990s referred to in this book was published before Minsky died in 1996. Yet we still hear warnings about ‘irrational exuberance’ from prominent central bankers, and the ‘dot com’ crash is still fairly fresh in the memory. Banks paid dearly for rapidly expanding their exposure to Latin America in the 1980s, only to do so again in the early 1990s, and the huge fl_{ow of private capital into East Asia in the mid-1990s—and to Indonesia} in particular—does seem to fi_{t the Minsky model rather well.}

Matsumoto writes with the beneﬁ_{t of inside experience, having worked for a} foreign joint-venture bank in Indonesia during the mid-1990s. He presents a set of case studies dealing with four of the biggest conglomerates in Indonesia at the time the crisis broke: the Salim, Sinar Mas, Gajah Tunggal and Lippo groups. In each instance these family-owned conglomerates tapped heavily into the foreign and domestic ﬁ_{nancial community, and the author describes how global} institu-tions, besotted with the so-called ‘emerging markets’, rushed to provide them with new equity and loans, although less so with Lippo. The fact that foreign institutions regarded Lippo as being too risky meant that this group suffered much less during the crisis—and somewhat weakens the empirical support for the Minsky model. Aside from this, however, Matsumoto’s revelation of the ease with which the conglomerates manipulated ‘irrational exuberance’ to their own advantage truly makes these institutions look like babies in charge of a candy jar.

Nearly all of the analysis presented in the case studies is in terms of ﬁ_nancial ratios such as debt relative to equity and debt repayments relative to cash inﬂ_ows. No indicators of exchange rate risk are presented, however, despite the important role claimed for such exposure. The proportions of foreign and domestic debt and of foreign currency and domestic currency debt of the corporate sector as a whole are presented but, although the foreign components increased relatively during the period in question in both cases, the increases were actually moderate. Thus the author’s emphasis on his extension of Minsky’s model to an open economy seems somewhat over-sold.

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Other than for the Lippo group, most of the fi_{nancial ratios deteriorated} sig-nifi_{cantly through 1996—without raising too much concern in the}fi_nancial com-munity—but the author makes no attempt to measure the growth rate of total assets of each group. Surely, however, it is the fact that fi_{rms grow too rapidly} that typically leads them to disaster. Inevitably they fi_{nd themselves trying to do} things they have not done before and, even if imprudent and gullible lenders and investors enable them greatly to expand their balance sheets, they cannot expand their management capacity commensurately. In this sense, it is not high leverage that brings the enterprise undone, since a huge increase in assets fi_{nanced with} equity would be likely to end in failure as well.

The author portrays the collapse of the economy as being generated in the pri-vate sector, from which he argues for the imposition of controls on capital fl_{ows by} governments. It can be argued, however, that the government itself contributed strongly to Indonesia’s crisis. One aspect of this is the poor quality of Indonesia’s accounting practices and legal system, which left overseas capital, in particular, highly vulnerable (p. 102). More important, the central bank encouraged heavy exposure of the private sector to exchange rate risk through its own policies before the crisis, under which it purchased dollars at artifi_{cially high prices (to prevent} rupiah appreciation) and borrowed domestically at artifi_{cially high interest rates} to fi_{nance these purchases (to prevent in}fl_{ation). As a result, the aggregate balance} sheet of all other entities combined, domestic and foreign, became unnecessarily exposed to the rupiah; it was precisely this exposure that the author and others have blamed for its strong contribution to the crisis. But if Bank Indonesia’s poli-cies were counter-productive in the period to mid-1997, they were disastrous after the crisis struck. The exchange rate was abandoned as the nominal anchor for monetary stability, but nothing was put in its place. The lender of last resort facil-ity championed by Minsky was then so ineptly handled that the money supply, the exchange rate and infl_{ation all surged out of control for about nine months} before stability could be re-established under incoming President Habibie.

In summary, this book is useful for the evidence it presents on the role played by irrational exuberance in Indonesia’s crisis of the late 1990s, but it misleadingly ignores the contribution of government policy to the collapse. Moreover, the story could have been told much more simply and concisely in terms of a number of large business empires trying to grow much too rapidly, and the failure of global ﬁ_{nancial institutions to check this growth by withholding the funding necessary} for expansion. The endless mentions of the Minsky hypothesis (about 250!), and the over-use of terms such as ‘aggressive’ (134 instances) and ‘enthusiastic’ (39) to describe the behaviour of the conglomerates and the global ﬁ_{nancial community} make the book a somewhat tedious read. It is a pity that the publisher did not adopt a tougher stance during the editing process, for the case studies that form the core of the book are of considerable interest and importance.

Ross H. McLeod

ANU

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Tulus T.H. Tambunan (2006), Development of Small and Medium Enterprises in Indonesia from the Asia-Paciﬁ c Perspective, Lembaga Penerbit Fakul-tas Ekonomi UniversiFakul-tas Trisakti [Publications Institute of the Faculty of

Economics, Trisakti University], Jakarta, pp. 311. Paper: US$30.00.

This book compares the role of small and medium enterprises (SMEs) in employ-ment creation, industrial developemploy-ment and manufactured export promotion in Indonesia and other Asia Paciﬁ_{c countries. SME entities range from} self-employed businesses in Indonesia to electronics manufacturers with hundreds of employees.

The fi_{rst two chapters warn of the ever-changing de}fi_{nition of SMEs in countries} such as the Philippines and Korea, and discuss theoretical considerations in SME development. Chapter 3 compares the contributions to Indonesia’s development of SMEs and larger fi_{rms, and chapter 4 assesses SME performance in selected} Asia Pacifi_{c countries. While useful, much of the information is out-dated: 2001 is} the latest year of Indonesian data; data for other countries in the region reach only to 1997, not covering the impact of the Asian fi_{nancial crisis.}

The remaining chapters cover strategic development issues for SMEs. Chapter 5 compares SME cluster development in Indonesia and countries such as Japan, Can-ada, Thailand and Malaysia. Indonesia’s successful cluster development is due partly to government intervention—a necessary though not sufﬁ_{cient condition.} Among other factors are the role of trading houses in brokering and organising exports. Success stories include SME wood furniture cluster development in Jepara and a wooden, rattan and metal furniture cluster in Sukoharjo near Surabaya.

In some cases, government support is unnecessary: two large leather goods and traditional handicraft SME clusters near Yogyakarta are driven by tourist demand. Other examples, in East Jakarta and Ceper, rely on sub-contracting link-ages to urban machinery industries in Jakarta and Surabaya. Market diversiﬁ -cation, sub-contracting linkages and the increasing trend towards marketing of products by buyers contribute to cluster development.

Discussion of cluster failures balances the picture, as does evidence from around the region. However, the comparative discussion emphasises Japanese case studies, with scant discussion of others. The chapter concludes that inter-country differences in cluster development are related to degree of overall development in industry, technology, ﬁ_{nancial resources, human capital and government regulation.}

Chapter 6 offers comparative perspectives on Indonesian SMEs’ export poten-tial and ability to penetrate export markets. SME exports just before the crisis rep-resented under 10% of Indonesia’s exports, a share believed to have changed little, and to be low relative to other countries in the region. Despite the wealth of data, this chapter’s analysis is somewhat incoherent and does not provide a clear picture of factors contributing to success and failure in SME export development.

The last chapter cites considerable literature on the strategic alliance relation-ships of SMEs—ﬁ_{nancing, marketing, technology acquisition and production} alli-ances with more developed companies. The evidence for Indonesia draws heavily on the author’s Asia Foundation-funded 1997 survey. There is scant discussion of the information’s current relevance, and this chapter has little comparative infor-mation for the Asia Paciﬁ_{c region.}

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Many of the data for the book come from two studies, one published in 2000 when Indonesia’s economy was still reeling from the effects of the crisis, the other published in 1994 and based on even older (1992) data. The author should at least have explored whether either source reﬂ_{ects Indonesian SMEs’ export} potential and challenges 15 years later. Despite these problems, students of SME development should appreciate the wealth of information on the role of SMEs in employment creation, industrial development and manufactured export growth in Indonesia, and the Asia Paciﬁ_{c comparative perspective.}

Armida S. Alisjahbana

Padjadjaran University, Bandung

Peter Coleman, Selwyn Cornish and Peter Drake (2007)

Arndt’s Story: The Life of an Australian Economist, Australian National University (ANU) E-Press and

Asia Paciﬁ_{c Press, ANU, Canberra, and Institute of Southeast Asian} Studies (ISEAS), Singapore, pp. xviii + 338. Paper: A$45.00. Available for download or order from <http://epress.anu.edu.au/arndt_citation.html>.

For somebody who has known Professor Heinz Arndt well, this book makes delightful and informative reading. It contains 316 well written pages of text, 22 chapters, many photographs and a long list of references. The fi_{rst two parts of} the book, by Peter Coleman and Selwyn Cornish, tell of Arndt’s youth in Europe, his study and early academic work in the United Kingdom, and his move to Aus-tralia with his wife, Ruth, and their fi_{rst child, to teach university economics}fi_rst in Sydney and then in Canberra.

For those interested mainly in Indonesia and in Arndt’s work in development economics, part 3 by Peter Drake may be of most relevance: chapter 17, ‘Economic development in practice: it all began in Jakarta’, is actually about his time in India; chapter 18, ‘The Department of Economics, RSPS, 1963–1980‘, relates how his work on Indonesia’s economy began; and chapters 19, ‘Sukarno’s Indonesia’, and 20, ‘Suharto’s Indonesia’, continue the story.

Two things are revealed in these chapters: the work of a little group of gov-ernment economists led by Professor Widjojo Nitisastro, and Professor Arndt’s endeavours on the Indonesian economy.

The new regime [i.e. Soeharto’s] promptly made two remarkable policy decisions: economic development must have priority over all else, and civilian experts (rather than the military) would be put in charge of this goal. Indonesian academic econo-mists thus attained great inﬂ_{uence with, and indeed within, the Soeharto} govern-ment (p. 265).

This group had a profound and far-reaching inﬂ_{uence. Indonesia’s remarkable} eco-nomic growth under Soeharto owed a great deal to the group’s development pri-orities and policy of liberalisation. Heinz Arndt was lavish in praising its members: ‘their record of day-to-day co-operation, practical wisdom, technical competence and personal integrity, over a period of ﬁ_{fteen years, without a power base other}

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than the conﬁ_{dence of the President and in circumstances, particularly in the early} years, of appalling difﬁ_{culty, has few if any parallels’ (Arndt 1985: 55, cited p. 265).}

The views and priorities of these ‘economic technocrats’ quite closely matched Arndt’s own at that stage of his life. ‘As he grew older, Heinz’s economic phi-losophy moved from Fabian socialist beginnings, through Keynesianism, to the Friedmanite position of ”free to choose”. In the 1980s, Heinz declared, in express-ing enthusiasm for Henri Lepage’s Tomorrow, Capitalism (1982), “I am now a lib-eral if not indeed a libertarian”. This philosophic shift coincided with the Suharto administration’s gradual acceptance of comparable advice from American free marketeers. Heinz found this acceptance increasingly congenial, and he had little difﬁ_{culty in commending the Suharto era’s economic policies’ (p. 265).}

As head of the economics department in the Research School of Paciﬁ_{c Studies} at the Australian National University (ANU), Heinz established a major research project on the Indonesian economy, a central part of which was the Bulletin of Indo-nesian Economic Studies. From the mid-1960s, he built up ANU interest in East and Southeast Asia, and made frequent and extensive trips to the region. Indonesia seemed to have a special place in his heart, because he always stopped there when going abroad. Peter Drake relates: ‘the work of Heinz and the project in Indonesia was aligned with that going on in Canberra. From that base, staff and research stu-dents pursued empirical studies of the Indonesian economy, which were of analyti-cal interest and were relevant to policy formation. No other centre in the world was doing this kind of work, intended for publication, on Indonesia’ (p. 270–1). Heinz ‘never gave up on the country’ (p. 273): ‘[he] found himself a prominent defender of Suharto’s regime in Indonesia, but by no means an uncritical one; he always acknowledged that corruption and authoritarianism existed in Indonesia’ (p. 271).

The group of economists working for Soeharto must at times have had their own doubts and uncertainties. They also came from a liberal background but had to work within a military-dominated regime. On the other hand, such an envi-ronment made an effective working place to implement reform. Nowadays, in a much more democratic political climate, the economic ministers under Presi-dent Susilo Bambang Yudhoyono can barely achieve 6% economic growth, while under Soeharto an average of 7% per year was attained for three decades.

Heinz Arndt, through his frequent visits to Jakarta, did not have direct inﬂ u-ence on national policy making. The Widjojo group had great self-conﬁ_{dence, but} regarded Heinz as a congenial intellectual sparring partner. Heinz made frequent trips to provincial cities and often held seminars in local universities. He thus had a considerable impact on the quality of economic thinking among the faculty of those regional universities which, in turn, produced the local professional elite. Through these visits, through his training of experts on the Indonesian economy and through his own research and collaboration with Indonesian researchers, Heinz Arndt made a large contribution to economic thinking and policy in Indonesia. This account of his life and work helps us to understand how this came about.

Mohammad Sadli

Jakarta

Reference

Arndt, H.W. (1985) A Course through Life: Memoirs of an Australian Economist, National Cen-tre for Development Studies, Australian National University, Canberra.

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Rodd McGibbon (2006) Pitfalls of Papua: Understanding the Conﬂ ict and Its Place in Australia–Indonesia Relations, Lowy Institute Paper 13,

Lowy Institute for International Policy, Sydney, pp. xvii + 152. Available for order or download from <http://www.lowyinstitute.org/>.

Since the Dutch left in 1963, reliable information on political, social and economic developments in Papua (often referred to as ‘West’ Papua in international dis-cussions)1_{has been very limited. Self-serving Indonesian government reports}

provide little information on state-directed conﬂ_{ict, social tensions or economic} backwardness. International literature has been dominated by journalists and some academics with limited knowledge of Indonesia, disturbed by human rights abuse in the province and wedded to the cause of Papuan independence. Not sur-prisingly, little of this gives attention to presenting the ‘facts’ on subjects central to welfare in Papua: the number of deaths due to armed conﬂ_{ict; human rights} abuse; in-migration; and the role of Papuans and non-Papuans in government, politics and the economy.

For McGibbon, several myths have arisen about Papua that are accepted by many international observers: ‘genocide’; Papua–East Timor parallels; and the impossibility of Melanesian Christians and Muslim Malay–Polynesian peoples coexisting peacefully. His book sets out to dispel these myths. It is the most informed and balanced recent account, for the general reader, of the complicated politics of Papua and its relations with Jakarta, Canberra and the world. While not purporting to be an ‘academic’ treatment, it is well researched and written.2

It should be standard reading for students and observers of Indonesia, the Paciﬁ_c and Australia’s relations with the region, and especially for Australian ofﬁ_cials handling our complicated relations with Papua, which impinge on broader Australia–Indonesia relations.

The book has six chapters, an executive summary and a set of recommenda-tions. Chapters 1–2 provide a backdrop to developments after the granting of special autonomy in 2001, offering a brief look at the Dutch colonial period, incor-poration into Indonesia in 1963, the Act of ‘Free’ Choice in 1969, and the period of centralised rule under Soeharto through to 1998, including the problematic ‘man-agement’ of the huge Freeport copper and gold mine. While it covers all the major

1 The naming of this region, colonised as part of the Dutch East Indies and incorporated into Indonesia in 1963, is complicated. Ofﬁ_{cially named Irian Jaya under Soeharto, it was} renamed Papua by Abdurrahman Wahid’s government in 2000 and divided in 2004 into two provinces: Papua with its capital in Jayapura and Irian Jaya Barat with its capital in Manokwari. The latter was recently renamed Papua Barat, the English equivalent of which (West Papua) outsiders often use for the entire former Dutch colony. Here the designation ‘Papua’ is adopted to cover the region once called Irian Jaya, and the term‘West’ Papua is used for references to the region in international contexts.

2 Richard Chauvel (Constructing Papuan Nationalism: History, Ethnicity and Adaptation, Policy Studies 14, East-West Center, Washington DC, 2005) provides a more academic and historical treatment of the Papuan nationalist movement in recent times. McGibbon has written a valuable complementary account of recent demographic and economic change (Plural Society in Peril: Migration, Economic Change and the Papua Conﬂ ict, Policy Studies 13, East-West Center, Washington DC, 2004).

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events, for this reviewer the background treatment could have provided deeper insights into present-day challenges, through reference to the unique dilemmas for government and economic and social change posed by ‘Melanesian’ patterns of fragmented human settlement and the daunting physical environment. In par-ticular, more attention might have been given to fundamental ﬁ_{ssures between} the northern and western coastal regions (with long historical links to Eastern Indonesia), and the highland and southern areas isolated from major centres of contemporary Papuan political authority and economic opportunity.

Chapters 3–4, perhaps the most interesting part of the book, give a readable account of debates over the special autonomy law under Megawati, and relations between Papua and Jakarta under President Yudhoyono through to mid-2006. McGibbon discusses the election of Bas Suebo as governor of Papua and Abra-ham Atururi as governor of Papua Barat. While painting a complex picture of the opportunity for independent and creative Papuan solutions, he also emphasises the potential for conﬂ_{ict as a result of ‘resentment’, and recent (2006)} unorgan-ised and sporadic violent opposition, which could lead to a ‘… cycle of rebellion and repression [such as] marked the early years of Indonesian rule in the terri-tory’ (p. 70).

However, implicit in McGibbon’s story are rather different, more startling conclusions, requiring reassessment of the dynamics of the relationship between Indonesia, Papua and Australia. Despite considerable challenges of governance, two seemingly viable provinces have recently been formed with popularly elected provincial leaders and district heads. Following years of tension and political horse-trading, this may offer Papuan peoples their best chance yet for improved development and human rights outcomes. The relationship between political leaders and the populace is now potentially closer than at any time in the modern history of ‘external’ control of Papua.

Further, the notion of a ‘West’ Papuan–Indonesian confl_{ict no longer accurately} characterises emerging political relationships. The possibility of an independent ‘West’ Papuan state, alive for over 40 years, seems all but dead. Instead, the con-fl_{icts that McGibbon discusses are increasingly likely to involve leaders and peoples} with political affi_{liations and economic attachment to smaller administrative units,} both new provinces and cashed-up districts. Local rather than ‘Papuan’ forces will fi_{nd themselves in con}fl_{ict with economic interests and security forces from Jakarta.} Such confl_{icts are likely to represent power struggles largely unrelated to issues of} sovereignty—increasingly indistinguishable qualitatively from those in other areas of Indonesia, such as Poso in Central Sulawesi or Ambon in Maluku.

This has implications for Australia’s relationship with Indonesia and Papua— themes dealt with in the ﬁ_{nal two chapters (which also cover the ‘West’ Papuan} constituency in Australia). Three topics are emphasised: the ambivalent Austral-ian government attitude to Papua’s incorporation within Indonesia; the wide-spread acceptance in some political and intellectual circles internationally (and especially within Australia) of the possibility of an independent ‘West’ Papuan state; and, in contrast, the idea of an independent ‘West’ Papua as fundamen-tally out of step with almost all of Australia’s other international interests. The developments outlined in the book suggest that the Australian government and knowledgeable voices on the bilateral relationship need to bring the Australian public and political ﬁ_{gures up to date with the fundamentally different set of}

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political relationships emerging in Papua within the democratic polity of Indo-nesia in recent years.

Finally, a point on presentation. In this reviewer’s opinion, the dot-point exec-utive summary and policy recommendations are out of step with the otherwise nuanced discussion in this book. Eye-catching yet simplistic summaries under headings such as ‘A complex long-term challenge’ and ‘Indonesian democracy offers new opportunities’ (pp. x–xii) detract from the treatment of complex, inter-related issues elsewhere in the book. A conventional introduction and conclusion highlighting challenges, opportunities and policy options would have sufﬁ_ced. But in this age of pre-packaged information, perhaps this is too much to wish for.

Chris Manning

ANU

Daniel Dhakidae (2003) Cendekiawan dan Kekuasaan dalam Negara Orde Baru [Intellectuals and Power in the New Order State], Gra-media Pustaka Utama, Jakarta, pp. 828. Rp 150,000; US$17.50.

This study of Indonesia’s emergent intellectual class is based largely on the author’s experience with Prisma, Indonesia’s most inﬂ_{uential social science} jour-nal for over a quarter-century. As editor for a decade from the late 1970s (and an active contributor both before and after), Dhakidae oversaw the journal’s evolu-tion into an inﬂ_{uential forum for policy debate. (For a number of years}_Prisma_’s publishers also marketed a local reprint of BIES). In its heyday Prisma was read by much of the political public; such was its popularity that even street cigarette stalls sold it (p. xiv).

This book gives us a special insight into the critical culture (budaya wacana kritis) established during the period of Prisma’s inﬂ_{uence. The author comes from that} small but inﬂ_{uential group of thinkers educated in the Catholic seminaries of} Flores; he later studied political science at Gajah Mada and Cornell universities. And he has drawn upon both European and Indonesian intellectual traditions to produce a sophisticated historical analysis.

In chapter 1 he draws on Foucault’s Archaeology of Knowledge to relate Indo-nesia’s intellectual history to its changing social context. Asking why the New Order survived so long despite growing public distaste for the regime, Dhakidae suggests that the answer must be found in the power relations that sustained it. He highlights two critical problems faced by Indonesia’s intellectual class: its lack of awareness of itself as an independent entity, and its inability to break free of the state in open political discourse.

The following six chapters apply this approach to different aspects of Indonesia’s intellectual discourse, in roughly chronological order. Chapter 2 describes how many contemporary themes originated in the colonial period. For example, the Eth-ical Policy implemented from the end of the 19th century unwittingly created con-ditions that allowed a nationalist discourse to ﬂ_{ourish. And in chapter 3 the author} suggests that colonial controls were extended by the authoritarian New Order state into the management of ideas, creating a form of ‘military neo-fascism’.

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Chapter 4 moves to an analysis of the speciﬁ_{c intellectual traditions that} legiti-mised the power of the regime. Under the New Order, state-supported academic organisations such as ISEI (for economists) and HIPPIS (for the humanities) served to channel and constrain public discourse. Chapter 5 turns to the media and the socio-linguistics of power. Dhakidae suggests that control of the media allowed the New Order to inﬂ_{uence everyday language greatly, thereby limiting} the means by which public protest was possible.

For this reviewer, the most interesting and challenging chapter is the long chap-ter 6, focusing on the politics of religion and exposing a major inchap-ternal contradic-tion in the state attempt to control social organisacontradic-tions. Before the de- politicisacontradic-tion of religion in the 1980s, important intellectual changes were taking place in various religious communities. Within Indonesian Islam, a vigorous debate had arisen in the 1970s about the separation of religion and politics, and by the 1980s new ideas led to the alliances with leftist social activists that have become so evident today. Similarly, Indonesian Catholicism was deeply inﬂ_{uenced in the 1970s and 1980s} by liberation theology and feminist politics. By the 1990s religious ideas were thus evolving beyond the purview of state control, and Dhakidae provides a fascinat-ing example to illustrate the limits to state power. Detailfascinat-ing policy debates and processes within the Ministry of Religion, he describes how the state eventually decided not to forbid students to wear the veil and other explicitly Muslim items of clothing, thereby giving tacit recognition to the autonomy of religious thought and behaviour. By the late 1990s it was thus society rather than the state that shaped political discourse. The concluding chapter shows how state attempts to coopt intellectuals and religious ﬁ_{gures to support the regime further weakened} its legitimacy and actually hastened its demise.

Dhakidae has produced a provocative and challenging work, one that will be a valuable historical resource; a good index lists names of individuals, organisa-tions and important topics. Some may quibble with the choice of subject matter. For example, the analysis would have been strengthened if it had described the Centre for Strategic and International Studies (CSIS) not only as an instrument of the New Order but also as an institution that gradually became more critical of the regime. Others may feel that the New Order era has now passed, and that we need to develop fresh analytical approaches. Yet a particular strength of this book is that its historical approach makes it relevant to the post-Soeharto era. With the end of the New Order, Indonesia’s intellectuals must come to terms with the same historical dilemma that has so constrained their inﬂ_{uence. ‘Intellectuals and the} critical culture that they have nurtured can never again be neutral, for they will be tossed back and forth between autonomy and manipulation: being manipulated before seizing autonomy, becoming autonomous so as to be manipulated once more’ (p. 741).

Ian Chalmers

Curtin University, Perth, Western Australia

Note

Ian Chalmers served as editor of the English version of Prisma from 1989 to 1991. The trans-lation in the text is his.

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BRIEFLY NOTED

Ernani Lubis, Anwar Bey Pane, Yeyen Kurniawan, Jean Chaussade, Christine Lamberts and Patrick Pottier (2005) Atlas Perikanan Tangkap

dan Pelabuhan Perikanan di Pulau Jawa: Suatu Pendekatan Geograﬁ Perikanan Tangkap Indonesia [Atlas of Fisheries and Fishing Ports in Java:

A Geographical Approach to Indonesian Fisheries], PK2PTM LP-IPB Bogor, and Géolittomer - LETG UMR 6554 CNRS, Nantes, pp. 120. €50.

This publication describes marine capture fi_{shing activities in Indonesia, and the} activities of several major fi_{shing ports in Java. Although the emphasis is on} pro-viding a solid picture of fi_{sh production and international and domestic}fi_shery trading, the book also presents data on fi_{sh consumption and on}fi_shing tech-nology and culture in Indonesia. The fi_{rst part of the volume (chapters 1 and 2)} describes Indonesia’s fi_{sheries sector, and the second part (chapters 3 and 4)} con-cerns fi_{sheries in Java. The book ends with conclusions and recommendations} on the future path of fi_{sheries development. Its main strength is its} comprehen-sive data on Indonesia’s fi_{sh production and trade, presented through colourful} graphics. Two minor weaknesses were noted, however. First, the book does not cover the institutional aspects of the fi_{sheries sector. Second, in several cases the} sources of the data are not very clear: for example, the fi_{gure on page 22 gives the} source as ‘Direktorat Jenderal Perikanan, 2000 (Directorate General of Fisheries)’, but by 2000 this body no longer existed; it had been divided into several direc-torates general under the Ministry of Marine Affairs and Fisheries. Despite these minor fl_{aws, those working on Indonesia’s natural resources and environment} should welcome this book as one of the few good resources on the Indonesian fi_{sheries sector.}

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