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15200 results in ISEAS-Yusof Ishak Institute

Page 196 of 760

  • 8 - The Opposition's Breakthrough: The Leap from 2004 to 2008

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 187-218

  • Summary

    The decline of Mahathir's political leadership appeared to have come as a consequence of the Anwar Ibrahim saga. Although Mahathir was able to lead the Barisan Nasional (BN) to an electoral victory in November 1999, a legitimacy crisis occurred during his tenure. The Anwar saga exposed the dangers and deleterious consequences of party capitalism. Moreover, the emergence of the BA, the alternative coalition, and a host of civil society organizations banding around the reformasi banner and calling for his scalp, clearly left a mortal scar on the Malay leader (Hwang 2003, p. 331). As I have suggested in the previous chapter, UMNO may in fact have lost the Malay vote in 1999; the fact was there was a precipitous slippage to PAS. In September 2000 Mahathir experienced his first international snub when the Islamic Society of North America withdrew its invitation to him to be the keynote speaker at one of its meetings (Maznah 2001, p. 219). On the domestic front another electoral blow came in the Lunas by-election of 29 November 2000. Although this was a mixed constituency in Mahathir's home state, Kedah, it was a People's Justice Party (PKR) candidate who defeated the BN man by 530 votes, showing that UMNO had still not recovered from the poor showing of the last election (Maznah 2001, p. 220). Some relief came to Mahathir only in September 2001 when it became evident that the DAP was in an unhappy marriage with the PAS in the alternative front and quit participating in it.

    The woes of party capitalism were far from over, even though Mahathir had apparently steered Malaysia to economic recovery. I have already alluded to the bailouts of Malay businessmen such as Mirzan Mahathir and Tajuddin Ramli. The governmental buyback of Malaysian Airlines, headed by Tajuddin, further eroded Mahathir's credibility. So too did the bailout of alleged UMNO proxy (and Daim's protégé) Halim Saad's Timedotcom by the use of state pension funds (Salazar 2004, p. 288). In fact, Halim's loss-laden flagship, the Renong conglomerate, which had debts totalling RM13 billion, was subjected to a restructuring that saw the removal of its chairman. By June 2001 Daim Zainuddin had resigned from the government, indicating there was a rift among UMNO elites in how to deal with fallen Malay corporate figures.

  • 6 - Mediating Communalism through Party Capitalism: The Elections of 1982, 1985, 1990 and 1995

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 131-158

  • Summary

    Following a coronary bypass in February 1981, Hussein Onn resigned as prime minister, after serving only four years in the job. From then on Malaysia's longest-serving premier till date, Mahathir Mohamad, stepped into the breach. In July 1981 the new team of Mahathir and Musa, or the “2-M”, took the helm of UMNO and the reins of the government of Malaysia. These same two people were earlier considered by Tunku Abdul Rahman to be “ultras”, or extremists within UMNO, and were expelled from the party for a time. Much has been written about Mahathir, including books by himself, which this chapter will draw on as may be relevant to electoral politics under his long tenure of twenty-two years as premier. Although Mahathir's premiership lasted from 1982 till 2003, this chapter will only cover four general elections held under his term. The last general election during the Mahathir years was in 1999 — a pivotal election deserving of a more extensive treatment. Thus, following this chapter I will devote the next to the Reformasi Movement and the 1999 election, thought by many to be a transformative moment of Malaysian history.

    MAHATHIR AT THE HELM

    From the outset I would like to stress that while it is hard to avoid the fact that Mahathir dominated and to a great extent “personalized” UMNO and Malaysian politics (Hwang 2003), this politics was embedded within the discursive and institutional constraints that we have already foregrounded in this book. These constraints are the electoral system and the consociational imperatives of power sharing politics in a multi-ethnic society, overlaid with the often unforgiving constraints of Malay and Islamic politics, which any leader of Malaysia could only eschew at his peril. Furthermore, as we will show in political economy terms, Mahathir was also functioning within the parameters of the country's interventionist developmental state and capitalist system, which he cleverly turned to UMNO's advantage through the practice of “party capitalism”. However, this same factor of party capitalism, with its corollary of corruption and pork-barrel politics, has become UMNO's bane and the potential source of its political decline. We will return to these points in fuller fashion; the analysis in this chapter will cover the first four elections of Mahathir's tenure.

  • 2 - The Electoral System: Origin, Rationale and Critique

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 28-58

  • Summary

    This chapter will examine the origin of Malaysia's first-past-thepost (FPTP) system and the manner in which elections have been conducted. Malaysia, with its unique distribution of ethnic political parties, has a generic FPTP single-member constituency system, which was originally implemented by the British in 1955 at the national level under self-government. After Independence in 1957, following the recommendations of the Reid Constitutional Commission, a federal form of government and elections, based on Westminster-styled institutions, was implemented.

    The electoral system is broadly anchored to elements of procedural democracy such as transparent and autonomous electoral institutions and procedures, freedom of political association and campaigning and the like, guaranteed by law and constitutional provisions which devolve duties of conducting elections to an independent Election Commission (EC). By and large the system introduced at Independence in terms of broad procedure and institutions has remained intact. The erosion of some of these constitutional guarantees owing to political developments along with changes and amendments to some of these procedures and the introduction of new elements will be discussed in this chapter.

    Malaysia's electoral system as its stands today harks back to the report by the Constituency Delineation Commission for the Federation of Malaya of 1954, headed by Lord Merthyr (hereinafter, Merthyr Commission), which recommended the delimitation of the fifty-two constituencies in Malaya's first federal election of 1955. The report goes into considerable detail in making its recommendations, including the reasons for the adoption of the FPTP single-member constituency model and the reasons for the appropriate system of electoral representation that should be adopted in the then Malayan Federation. The issues of apportionment or distribution of voters and rural weightage and its rationale along with the role and powers given to the EC were arguably the most crucial matters taken up by the Reid Commission. The Reid Commission, which crafted the Malayan Constitution, recommended an electoral system based on that proposed by the 1954 Merthyr Commission, but it was no doubt also influenced by the conduct of the First Election of the Members of the Legislative Council of the Federation of Malaya and the detailed report submitted on it (hereinafter, the Smith Report).

  • 10 - Transitions of Coalition Politics circa 2016

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 243-266

  • Summary

    Malaysia's electoral history, if one cared to examine it more minutely, has been strewn with liminal shifts of coalition politics from the 1950s onwards, as I have tried to show in preceding chapters of this book. That said, one major ruling coalition, the Alliance, dominated politics in the 1960s and its successor, the Barisan Nasional, from the 1970s till today. This two-stage movement of UMNO-crafted politics created a path dependence of electoral success that has been difficult to displace. On the other side of the ledger, oppositional coalitions since the 1950s have evinced poor sustenance owing to failures in crafting coalition strategies, particularly with the view to establishing an effective form of mediated communalism for electoral success. Importantly, in the 1960s the leftist coalition of the Socialist Front mounted a veritable challenge and then self-destructed, not without considerable help from repressive actions by the government. Minor electoral pacts followed, but it was only in the 1990s that one saw the formation of fairly well institutionalized opposition coalitions. One such attempt was the parallel formation of Angkatan Perpaduan Ummah and Gagasan Rakyat for the 1990 election, bringing together Muslim and non-Muslim political parties into one electoral pact. A much more formalized coalition in the form of Barisan Alternatif (BA) was cobbled together for the 1999 election and, in 2008 and 2013, the most institutionalized opposition alliance, Pakatan Rakyat (PR), was formulated and remarkably held firm until 2015. This chapter delves into the events that brought an end to Pakatan and touches on how it reconstituted itself as events were unfolding up to early 2016. While the BN was also facing considerable internal strife and intraparty conflicts, there was still no suggestion at the point of writing that it would implode.

    POLITICAL DEVELOPMENTS IN 2015

    Much occurred on the political stage after the May 2013 general election. As tensions and politicking within the PR reached a crescendo in the middle of June 2015, this led to its formal disbandment. However, some reformulation of the opposition alliance was immediately manifest and its state-run governments appeared intact through coalitional adjustments. I will deal with this development further below, but let me first provide a brief narrative of the seven by-elections that took place after the 13th general election.

  • 11 - Conclusion: The Desiderata of Ethnic Power Sharing

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 267-286

  • Summary

    This book has presented readers with narratives on Malaysia's electoral politics spanning some sixty years. It has also attempted to explain why one major ruling coalition of parties has dominated elections since Independence. The book suggests that the ethnic power sharing model of the ruling coalition, the Barisan Nasional (BN) — and its predecessor, the Alliance — has been the main reason for such electoral successes for these six decades. Most importantly, the ruling coalition has been able to deploy a strategy of mediated communalism to achieve its electoral success. As noted in the introduction, there have been three phases in the employment of this dynamic strategy of mediated communalism, which is anchored on the consociational pact of a grand coalition of ethnic groups and centripetal stratagems of moderating extremist politics. The three periods are:

    1. 1. Emergent Mediated Communalism: 1950s to 1960s;

    2. 2. Corporatized Mediated Communalism: 1970s to late 1990s;

    3. 3. Contested Mediated Communalism: Late 1990s to 2013.

    The book traces the beginnings of the Malaysian electoral system in Chapter 2, which contextualizes how mediated communalism found its salience through the institutionalization of electoral structures within a plural and ethnically divided society. In Chapter 3 the book explored the idea of the onset of an emergent strategy of mediated communalism from the 1950s to the late 1960s and showed how moderate policies of ethnic accommodation bestowed success to the Alliance in elections. Chapters 4 and 5 postulated the entrenchment of a new kind of mediated communalism via Malay primacy and party capitalism from the 1970s till the late 1990s. I have termed this the corporatized phase because of the extensive use of money politics dovetailing with the involvement of BN parties in business. While this particular phase of corporatized politics is clearly identifiable and represented its initial surfacing, there is little doubt that such a form continues to the present day. As noted in the previous chapter, the UMNO crisis of 2015 was partly the result of the use of massive sums of money in the 2013 general election, sourced through a complex web of local and international business entities established by the prime minister and UMNO president. Despite Malay dominance, corporatized politics was a highly successful strategy for the distribution of spoils to all BN parties, and the accommodation of non-Malay interests by the mid-1990s gave the BN its celebrated landslide electoral victory of 1995.

  • 7 - Reformasi and New Politics: Constituting an Alternative Coalition in the 1999 General Election

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 159-186

  • Summary

    By the time of Malaysia's 10th general election of 1999, there had been two major ruptures in the hegemonic Malay bloc led by UMNO, which I have already discussed in previous chapters. The first was the Tunku's departure from politics after the 13 May riots and the rise of UMNO's young second echelon of leaders who counted among them the irrepressible Mahathir Mohamad, while the second was the 1987 crisis causing the UMNO split and the formation of two new parties, a New UMNO party (UMNO Baru) and the Spirit of 46 party (Semangat 46). This chapter will deal with the third rupture of the Malay bloc caused by the imbroglio around Anwar Ibrahim that erupted in 1998 after his removal from UMNO and as deputy premier. It is interesting to note that all three of these ruptures involved Mahathir. There was great anticipation after this third major rupture, especially in intellectual circles, that such a major crack in the hegemonic edifice of UMNO would augur a real change in Malaysian politics, and much hope was thus placed on a regime change of sorts to be brought about after the 1999 general election. Malaysia had arrived, as it were, at a crucial political crossroads with the eruption of the Reformasi Movement after Anwar's sacking and what many saw as his unjust incarceration on the charge of sodomy. In terms of the larger framing of Malaysian politics, it also seemed an opportune time for social activists to work towards debunking the debilitating model of ethnically overdetermined politics. Indeed, as noted in the previous chapter, the New Economic Policy (NEP, 1971–90) had been brought to a close with the implementation of the National Development Policy (NDP, 1990–2000). The latter, along with the Vision 2020 policy, generated much anticipation that multi-ethnic new politics would take centre stage, especially when the government's stated principal goal was the creation of a Bangsa Malaysia (Malaysian nation).

    However, as also noted in the previous chapter, the BN's electoral strategy remained one of mediated communalism, allowing for path dependent success in the elections of 1990 and 1995 in spite of the major split within the UMNO ruling bloc in 1987.

  • 3 - Consociation and the Electoral Process, 1952–55

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 59-78

  • Summary

    This chapter traces the birth of the Alliance and the establishment of its unique sharing model in the two early pre-Independence elections of 1952 and 1955. In so doing, it will be shown how the Alliance was able to overcome its opponents, particularly the professedly noncommunal forces represented by the Independent Malaya Party (IMP), later Party Negara (PN), and the Islamic and the left-leaning parties. These two early elections paved the way for the Alliance to develop a path-dependent success based on its model of ethnic consociation in subsequent elections after “Merdeka” (Independence) was attained in 1957. In this period of emergent consociational politics, the Alliance was able to establish a first “grand coalition” of the major ethnic groups premised on its basic form of mediated communalism.

    In the previous chapter, I sought to establish that Malaysia's electoral system is unique, with its distribution of ethnic political parties and first-past-the-post (FPTP), single-member constituency system. Despite obvious flaws, electoral politics has been broadly anchored to elements of procedural democracy such as transparent and autonomous electoral institutions and procedures, freedom of political association and campaigning, guaranteed by law based on the Constitution. By and large, electoral politics and competition with the oversight of an Election Commission had remained relatively free and fair until the late 1960s. It was only after the 1969 general election, which saw the eruption of racial riots in Kuala Lumpur, that a host of restrictions and constraints were placed on electoral processes and a more authoritarian state structure was instituted. The evaluation of the electoral system by a notable group of Malaysia specialists seems to confirm this broad view:

    The general conclusion reached in this assessment of the current state of Malaysia's electoral system is that Malaysian elections cannot be considered reasonably free and fair because they do not fulfill the functions required of them in formal democratic theory — or at least that our elections have become, over the years since the 1960s, rather less free and fair than they once were, and that they now are much less free and fair than they might or should be. (Puthucheary and Othman 2005, p. 14)

  • 9 - Electoral Impasse of Dual-Coalition Politics in 2013

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 219-242

  • Summary

    The 13th general election could be seen as failure for both grand coalitions of the BN and the PR. The BN failed to win as many seats as it did in 2008, indicating that its previously highly successful coalition politics and its strategy of mediated communalism was finally being seriously contested. For the PR, its failure to win the election in spite of its spectacular success in overtaking the BN for the share of the popular vote (of 51 per cent) was an indication that its consociational model was still unable to surpass that of the BN. In a sense, for the first time in Malaysia's history, there was an almost perfect competition between the two rival coalitions, leading to a sort of impasse in terms of electoral outcome.

    For some the 13th general election could be interpreted as a “victory” of the people and civil society in that citizens’ political efficacy had never been greater. There were record voter turnouts and civic engagement had surged to its most impressive level, even surpassing that prior to the previous general election. For the BN it was a pyrrhic exercise, given the massive resources expended and the less-than-satisfactory overall returns. Notably, a skewed electoral system, manipulation of voter rolls, unethical electoral practices and outright fraud continue to stymie the movement towards a critical break for a change in the electoral system. It could, however, be hypothesized that the progressive change in electoral dynamics, while affecting ethnic relations marginally, seems to have broken new ground, symbolized by a shift in the national popular vote to the PR for the first time. Against this is the resurgence of the deeply embedded political discourse of Malay supremacy, which is reflexively reinforced by a pivotal Islamic discourse and practice among the Muslim population.

    What was evident was that the path dependence of the twincoalition system of the BN and PR was affirmed as the system remained firmly on track. More remarkably, no third parties won any seats at the parliamentary level.

  • 1 - The Imperative of Mediated Communalism

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 1-27

  • Summary

    At 3 p.m. on 10 February 2015, Anwar Ibrahim, the leader of the Malaysian Opposition Front, Pakatan Rakyat (PR), was driven in an unmarked vehicle from the Malaysian Federal Court at the Palace of Justice in Putrajaya to the Sungai Buloh prison to be jailed for the second time in his political career. Five federal justices led by Chief Justice Arifin Zakaria unanimously rejected his appeal against a prison sentence of five years for sodomy. The case was a virtual facsimile of his earlier conviction of 1998 when he was sentenced to six years jail but released in 2004 after a federal court overturned the earlier decision. Anwar's incarceration the second time around — indeed, he was detained in 1975 as a social activist too — shows not just the occupational hazard of being a politician in Malaysia but also the extremely high stakes of political contests and outcomes. Malaysia's electoral politics over six decades has seen the tumultuous struggles of political figures, none more prominent than Anwar, to change and drive the country in a more democratic and accountable direction. It has been a politics of repressive tolerance dominated by the ruling coalition of the Alliance and then the Barisan Nasional (BN) after. At the point of writing, the opposition alliance of the Pakatan Rakyat (PR) had twice denied the BN its customary two-thirds command of parliamentary seats and, most spectacularly, won more than 50 per cent of the popular vote in the 2013 election.

    This study examines the manner in which Malaysia's multicultural, largely democratic politics have manifested through elections and the factors that drive electoral success and failure. So far there have been thirteen general elections, along with an accompanying number of state elections. The most recent and much anticipated general election was held on 5 May 2013. These elections, the preceding political campaigns and the post-electoral ramifications provide a rich source of materials for the study of procedural and electoral democracy in Malaysia. These two concepts have found their way into the political science literature; the former referring to a process of incorporating technical, transparent electoral procedures while the latter connotes a notion of popular or voter sovereignty.

  • Preface

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp ix-xiv

  • Summary

    This is a book I had always wanted to write but had to keep on hold for one reason or another. Arguably, as a “work in progress”, it has been coterminous with my career as, first, a journalist, then as a lecturer and professor, as a senior research fellow and finally as an independent scholar.

    Majoring in political science at the University of Singapore in the mid-1960s predisposed me to the intricacies of Malaysian politics and its discontents. Then working as a young journalist in the New Straits Times around the time of the May 1969 riots confirmed my belief that studying politics was a vocation I could not elude, which in turn no doubt spurred my desire to pursue graduate studies in political science at the University of British Columbia (UBC), Vancouver from 1970 to 1976. However, at UBC I was drawn to develop my main field of interest in international relations and to write my doctoral thesis on Malaysia's foreign policy. Thus my interest in electoral politics remained on the back burner, but, in truth, it never waned. Malaysian political developments seemingly climaxed during my years as a lecturer at Universiti Sains Malaysia (Penang) and, with my colleague Francis Loh, I put together a book on the emergence of new politics during the 1999 general election. The term, new politics, a corollary of the Reformasi Movement, has now earned considerable currency in the Malaysian studies literature. It has been associated with the wave of democratization in Malaysia that saw the salutary engagement of ordinary citizens in the electoral process alongside an unprecedented level of political activism.

    New politics in no small way brought about the outcome of the landmark 2008 general election which saw the ruling coalition lose for the first time its two-thirds majority of seats in Parliament. During my second year at the Institute of Southeast Asian Studies (now known as the ISEAS – Yusof Ishak Institute), I analysed the outcome of this election together with Ooi Kee Beng and Lee Hock Guan in a book published that same year, and wrote many op eds and several articles about its impact.

  • 5 - The National Front's Rise in the Elections of 1974 and 1978

  • Johan Saravanamuttu
  • Book:
    Power Sharing in a Divided Nation
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    20 May 2017
    Print publication:
    26 September 2016, pp 111-130

  • Summary

    In hindsight, the 13 May 1969 racial riots were a predictable outcome of stark inter-communal conflicts born out of anxieties over what the nation-state could hold by way of benefits for the Malay/bumiputera majority on the one hand and for the non-bumiputera minorities on the other. Without doubt the Alliance's model of mediating communalism had failed in a very real sense with the occurrence of the 13 May tragedy. However, in path-dependence terms the 1969 crisis was only a temporary setback in how communalism had been poorly mediated or managed through the consociational arrangements of the Alliance. This was so because, the situation was one which had no reasonable alternative or counter-coalition to the failing Alliance. Much was lost, but not everything for the ruling coalition. What was needed was not a replacement of the consociation; rather, its reconstitution. In the end this was achieved in a heavy-handed fashion through the establishment of a new ruling coalition. In the words of Von Vorys, the outbreak of the riots led to a “democracy without consensus” that structured this next phase of politics. Thus, investment in political arrangements swung to the other extreme. Indeed, the structuring of politics moved in the direction of non-democratic political engineering, executed by the second Malaysian prime minister Tun Abdul Razak.

    In this second phase of Malaysian politics, one saw how Malay supremacy became both the discursive trope and the primary institutional tool of the dominant Malay political party. UMNO refurbished its role by patently dominating wide aspects of Malaysian political life through the implementation of its New Economic Policy (NEP) which would be designed to raise the socio-economic status of Malays and other bumiputera and by so doing ensure Malay primacy in electoral politics. Basically, this reconstitution meant that UMNO had to wrest back some Malay votes from PAS, while its non-Malay partners had to win back support lost to the new “non-communal” parties; primarily the DAP and Gerakan. The challenge for UMNO, after having assumed leadership, primus inter pares, was to reconstitute a new coalition, one which would have a bigger partnership base, which was to be inclusive, not just ethnically but also regionally.

  • Is a New Entrepreneurial Generation Emerging in Indonesia?

  • Gwenael Njoto-Feillard, Kathleen Azali
  • Book:
    Is a New Entrepreneurial Generation Emerging in Indonesia?
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    19 September 2016, pp vii-viii

  • Summary

    EXECUTIVE SUMMARY

  • • The main actors in Indonesia's business landscape have long been assumed to be the country's Chinese minority. However, in the last decade, there has been a more visible, growing culture of entrepreneurship amongst the pribumi — “native” Indonesians.

  • • Democratic reforms, decentralization and the deregulation of certain sectors of the economy, facilitated by new information technology, have enabled a new generation of entrepreneurs to emerge outside the traditional system of political patronage.

  • • New forms of networking are taking shape within local and national business associations, networking forums, and the marketing and business media.

  • • While civil servant positions are still highly sought after, the idea of entrepreneurship and business as careers is becoming more and more popular, especially among young Indonesians.

  • • The challenge that the Joko Widodo administration faces is to encourage this new social dynamic without falling into the trap of constructing artificial support programmes. These showed themselves to be counter-productive in the past.

  • Is a New Entrepreneurial Generation Emerging in Indonesia?

  • Gwenael Njoto-Feillard, Kathleen Azali
  • Book:
    Is a New Entrepreneurial Generation Emerging in Indonesia?
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    19 September 2016, pp 1-30

  • Summary

    Indonesia has come a long way since the 1997 Asian economic crisis and the ensuing riots that saw the downfall of President Soeharto the following year. Its rate of growth has slowed down, no doubt, but on average, it stayed above 5 per cent per annum over the past decade. As the fourth most populated country, third largest democracy in the world and largest market in Southeast Asia, it is now positioned as the world's sixteenth largest economy in terms of GDP, and some projections see it becoming the seventh largest economy by 2030. Its impressive growth has been fostered by vast natural resources, a stable political environment promoted by a successful democratization process, and a rapidly growing consumer class within a young population.

    However, the country is also notorious for a number of persistent problems when it comes to setting up and running businesses. The most commonly cited ones are underdeveloped infrastructure, convoluted bureaucracies, frequent project delays or breakdowns, and large skill gaps in human resources. It is lacking in skilled and semi-skilled workers, as well as entrepreneurs who can scale up their businesses. Data from the Ministry of Cooperatives and Small and Medium Enterprises (2012– 13) show that there were 57,896,721 micro, small, and medium-sized enterprises (MSMEs, or usaha mikro, kecil, menengah, UMKM), making up about 99.99 per cent of the total business units, while big enterprises totalled only 5,066 (0.01 per cent). As pointed out by Finance Minister Sri Mulyani on 2 August 2016, more than 107.6 million Indonesians are working in MSMEs, a segment which contributes to 60.6 per cent of the country's GDP.

    In short, Indonesia has a very large pool of “self-employed” entrepreneurs. However, most of them have questionable or no formal training or qualifications, particularly in dealing with non-Indonesians. Other factors hampering these businesses are the dominance of natural resource extraction (such as mining and agriculture) in the economy, convoluted bureaucratic procedures, difficulty for small businesses to access capital, and the generally low level of education.

    It has long been assumed that Indonesian Chinese (who make up between 1 to 3 per cent of the population) form the bulk of the business class (Chua 2008), and that this economic imbalance has been the source of recurrent tensions (Wanandi 1999). But with the Indonesian economy rapidly globalizing, this may be changing.

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