Ithaca: Southeast Asia Program Publications, an imprint of Cornell University Press, 2023. US$32.00, paper; US$21.00, ebook. ISBN 9781501771972.
Eve Warburton’s Resource Nationalism in Indonesia: Booms, Big Business, and the State offers an exceptionally insightful investigation into how resource nationalism has developed in Indonesia over the last few decades. The author defines resource nationalism as “a policy effort to expand local ownership over land and resource industries (localization) and to advance the economic position of the national group vis-à-vis foreign groups by leveraging land and natural resources for industrial achievement (industrialization)” (26). At its core, the book challenges the common thesis that resource nationalism is merely a cyclical phenomenon that flourishes in times of high commodity prices and recedes in times of crisis. Instead, the author convincingly shows that resource nationalism may persist even after the end of the global commodity boom, which she attributes in particular to the historically grown influence of domestic business and its direct links to politics. However, instead of viewing Indonesia as a monolithic entity, Warburton analyzes how different sectors—coal mining, palm oil plantations, and oil and gas—have experienced nationalism differently. Nationalist measures triumphed in mining, but largely failed in plantations and remained ambiguous in the oil and gas sector. The author attributes these differences not only to the characteristics of the individual sectors but mainly to the preferences, capabilities, and historical development of the domestic companies operating in these areas.
The book’s greatest contribution lies in the detailed and historically embedded analysis of these key actors. It relies on a rich collection of sources, including parliamentary records, court hearings, media reports, more than 160 semi-structured interviews with policymakers, business representatives, academics, and other experts, as well as a survey amongst Indonesian business elites measuring their attitudes towards resource nationalism and foreign investment. Empirical field research was conducted between 2014 and 2019 in Indonesia’s capital Jakarta, as well as in resource-producing regions.
The book is organized into eight parts. In the introductory chapter, Warburton presents the puzzles she addresses in her book, namely the persistence of nationalist policies in Indonesia after the resource boom, which appears to contradict common market-cycle explanations, and the sectoral variation of nationalist interventions. In chapter 1, Warburton critically reviews existing theories of resource nationalism and develops a new framework that emphasizes the role of domestic business in shaping resource nationalist policies, arguing that the preferences and power of domestic capital are central to understanding the variations we can observe in different sectors. Chapter 2 traces the histories of ownership in the three resource sectors from colonial times to the New Order (1966–1998), demonstrates the origins of the rise of domestic business, and thereby provides the foundation for understanding Indonesia’s current political economy. Chapter 3 focuses on the post-Suharto era and the 2000s commodities boom, describing how, in the minerals and coal mining sector, a slow nationalization was significantly pushed by domestic business actors, while the plantations sector remained open to foreign capital despite some nationalization attempts. For the oil and gas sector, Warburton observes a “state of nationalist ambiguity” based on the competition between state and private capital, and demonstrates a rise in influence of the state-owned oil and gas company Pertamina. Altogether, the chapter demonstrates in great detail how nationalist outcomes were uneven across sectors, thereby revealing the inadequacy of simple market-cycle explanations that commonly expect resource nationalist policies in times of commodity booms. Chapter 4 then turns to the rise of domestic business in the mining and palm oil sectors. While mining firms often supported nationalist measures, the internationally connected palm oil conglomerates preferred liberal, foreign investment-friendly policies. Chapter 5 examines the oil and gas sector, thereby exploring how Pertamina (re)gained significant influence, thereby limiting the overtaking of private business after the fall of Suharto. Chapter 6 mostly focuses on the aforementioned survey and firm-level data to demonstrate how ownership structures and degrees of internationalization shape whether domestic capital supports or resists nationalist policies. In the conclusion, the author reflects on the implications of her findings in the field of Indonesian political economy studies and the study’s findings beyond the Indonesian case, as well as the impacts of Indonesian resource politics on national development and civil society activism.
In sum, Warburton’s historically grounded examination of how the “structural” and “instrumental power” of economic actors influenced political outcomes provides an important contribution to a deeper understanding of Indonesian political economy and resource politics in general. In mining, domestic tycoons with close political ties successfully pushed through regulations that favoured local companies at the expense of foreign firms. In contrast, the palm oil sector, which has been historically dominated by internationally oriented, ethnic Chinese conglomerates, preferred a more liberal investment regime. In the oil and gas sector, the structural capabilities of the state through state-owned enterprises such as Pertamina enabled selective state-led nationalism.
While this aspect is discussed briefly in the conclusion, some readers might have liked to see more discussion about the implications of resource nationalism on the country as a whole, as well as in particular regarding different parts of society. As Warburton also mentions, the often-cited Article 33 of the Indonesian Constitution states that natural resources shall be organized by the state and used to the greatest benefit of the people. An analysis of the extent to which the various forms of resource nationalism identified in the study, controlled by state-owned companies or private actors, fulfill this promise or fail to do so would therefore have been a desirable addition to the discussion, also beyond the Indonesian case.
Nevertheless, Warburton’s book is clearly written, logically structured, and theoretically ambitious without sacrificing empirical richness. Based on a thorough review of often difficult-to-access information on Indonesia’s domestic capital, Warburton adeptly weaves historical context with present-day realities to provide a compelling and holistic perspective on sectoral differences and the specificities of the Indonesian context. Moreover, based on the Indonesian example, she develops a substantive research approach demonstrating the importance of a sound historical understanding of the regions under study for good political economy research. Ultimately, Resource Nationalism in Indonesia is a timely and significant scholarly contribution to understanding Indonesia’s political economy and should be read by anyone interested in resource governance in general, and, in particular, by those looking for a valuable guide through the often opaque jungle of Indonesian political economy.
Anna Fünfgeld
University of Hamburg and German Institute for Global and Area Studies, Hamburg