Government and Multinationals: Conflict over Economic Resources in East Kalimantan, 1998-2003

Abstract

The present study focuses on the changes in Indonesia after the fall of Soeharto in 1998. The dispute involving the central government and the provincial government and Kaltim Prima Coal (KPC), a multinational company, based in East Kalimantan, over the process of divestment of KPC will exemplify that after the democratization and decentralization, a new pattern of politics has been in the making in Indonesia. The governor of East Kalimantan Suwarna has managed to set up political alliances with powerful local and national politicians. Such a political network initiated from the provincial level was a novelty that did not exist within the New Order state. Eventually Suwarna was challenging the policy decided by the central government, and directly created a climate inhospitable to foreign investors.