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The political economy of Japanese and Chinese infrastructure financing governance in Indonesia: Organising alliances, institutions, and ideology

Wijaya, Trissia (2022) The political economy of Japanese and Chinese infrastructure financing governance in Indonesia: Organising alliances, institutions, and ideology. PhD thesis, Murdoch University.

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In recent years, Chinese and Japanese infrastructure financing in Southeast Asia has taken different forms, ranging from Official Development Assistance (ODA), commercial loan, export credits, direct outward investment like business-to-business (B-to-B) and public private partnership (PPP). Much of the international relations literature on Chinese and Japanese infrastructure financing argues that these forms of financing are a kind of geoeconomic statecraft. For instance, skeptical accounts tend to identify Chinese infrastructure loans with ‘debt-trap’ phenomena while seeing Japanese loans as balancing Chinese influence. This thesis contests this outside-in perspective and argues that these different forms of infrastructure financing reflect wider power relationships among socio-political and economic groups that are bound together within ideological framework of risk and technical rules. From this perspective, I argue that forms of infrastructure are not a tool to gain leverage over host countries. Neither is it a functional toolkit as the scholarly literature argues. Rather, different forms of infrastructure financing are distinct regulatory strategies by which different social groups develop alliances and unevenly distribute material benefits among them. Therefore, these regulatory strategies are not a given. They are reproduced – materially and ideologically – within the host state over time.

To explain the process, the thesis introduces the term ‘regulatory complex’ which denotes an assemblage of institutions as well as ideological frameworks through which different social class forces negotiate compromises and formulate shared interests to sustain particular regulatory strategy. Essential conditions for project financing – the shifting formation of alliances, preferential policies, certain rules and mechanisms, and regulatory reforms – are reshaped through and within the regulatory complex. Regulatory organisations, financing institutions, as well as technocratic agents in infrastructure (or urban development) such as the master plan study team, ad-hoc committee, technical task forces and the like are important parts of this regulatory complex.

Using qualitative comparative analysis methods, the thesis traces the dynamics of alliances and the reproduction of Japanese and Chinese regulatory complexes in Indonesia. Supported by case studies, I show how the concept of the regulatory complex offers an understanding of how the social alliances underpinning Japanese and Chinese infrastructure are managed. Crucially, these alliances are undergirded by the broader ideological projects that further build legitimacy for given regulatory strategies. Key findings extend the geographic and comparative research of the current study. Infrastructure financing is inextricably conflict-ridden. Its variegated forms are embedded within complex realities of social and political power structures in host countries and enforced by regulatory complexes over time. Intrinsic to the regulatory complex is that there is a fine line between risk management and conflict management for which both may be locked in the same institutional frame within a given period of time. Within this institutional frame, negotiated compromises among forces take shape – who gets what, when, and how.

Item Type: Thesis (PhD)
Murdoch Affiliation(s): Asia Research Centre
Supervisor(s): Baker, Jacqui and Jayasuriya, Kanishka
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