Business-Politics Relations in Indonesia: The Oligarchisation of Democracy

Iqbal Damanik, Arie Rompas, Zulfa Nadia, Ward Berenschot and Eve Warburton

Bulletin of Indonesian Economic Studies, 2025, vol. 61, issue 1, 39-60

Abstract: This article employs official company profiles to study the nature and frequency of linkages between politicians and private business in contemporary Indonesia. We find that a large and an increasing number of Indonesia’s parliamentarians and cabinet members have direct ties to companies, thus providing further evidence of the oligarchisation of Indonesia’s democracy. On the basis of these data, we argue that democratic reforms have shifted the balance of power between politicians, bureaucrats and business actors. Whereas during the New Order, business actors seldom directly acquired political power, Indonesia’s democratic era has led to the proliferation of politico-capitalists, a term we use to describe individuals who fuse economic and political power. We attribute the dominance of politico-capitalists to the high costs of election campaigns and the centrality of rent-rich and state-dependent industries to Indonesia’s economy. We also illustrate how the growing presence of politico-capitalists and the related conflict-of-interest problems distort policy-making in favour of business interests.

Date: 2025
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DOI: 10.1080/00074918.2024.2442417

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