Indonesia has been plundered since the Dutch collected nutmeg and cloves from the archipelago they called the East Indies 400 years ago. With treasures strung across 17,000 islands, it’s home to the world’s largest gold mine and exports the most power-station coal, palm oil and tin.
Indonesia’s identity was forged by a half-century of sometimes savage dictatorship that sold its riches overseas. Now the country wants to keep more of its wealth at home. The pull of protectionism has characterized the presidency of Joko Widodo, who came to power in October 2014 as the country’s second freely elected leader.
A rising tide of economic nationalism is threatening to undo the formula that for many years brought much-needed investment to the world’s fourth-most-populous nation and its 250 million people.
Widodo, better known as Jokowi, represents a new generation of Indonesian politicians: a self-made furniture seller and can-do bureaucrat focused on cutting graft and red tape. While he ran on a platform of concern for common people, his first year has been marked by a slowing economy, controversy over law enforcement and increasingly protectionist policies. These include trade restrictions, import tariffs and tighter visa requirements for foreign workers.
Jokowi is continuing his predecessor’s plans to renegotiate contracts with foreign mining companies and restrict overseas investment in the nation’s banks. In 2013, Indonesia banned the export of metal ores to encourage the construction of smelters, arguing that too much wealth was shifting to refineries overseas. The move led to mine closings and a global surge in nickel prices.
Newmont Mining’s permit to export copper ore is at risk, and depends on its progress in building a smelter together with Freeport-McMoRan. The government wants to reset the terms of mining deals struck in the 1980s and 1990s during the three-decade rule of former strongman Suharto.
For the rest of this article, click here: http://www.bloombergview.com/quicktake/indonesias-nationalism