Business and politics in provincial Indonesia: The batik and construction sector in Pekalongan, Central Java

After the fall of Soeharto in 1998, and an increased connection to the global world, politics at the local level in Indonesia have changed significantly. This has contributed to a change in how business is conducted in provincial towns. This thesis explores the changing relationship between the state and business after decentralization policy in 2001 followed by various technocratic approach in public sector. The study focuses on two business sectors: the batik and construction in Pekalongan, a provincial town in Central Java. ‘Informality’ is the approach used in this thesis to understand how state relates to business.
There four main findings of this research. First, the intertwining of business and politics has intensified at the local level in post-Soeharto Indonesia. Businesspeople have resorted to a greater variety of strategies to access business opportunities in the state arena. Second, the increased quality of liberal democracy does not diminish personal relations, clientelism, collaboration between businesspeople and state actors. Third, there are similarities and differences of practices of informality in the two business sectors. Both sectors are liberalized and informality becomes a strategy to protect their business from the negative consequences of neoliberal reforms. Practices of informality are different between the two sectors, which depend on the scale of business and type of business. The forth is on theoretical reflections: the difficulty to disentangle formal from informal practices in the state-business relations.