Coalitions, convergence and corporate governance reform in Indonesia

Abstract

This paper argues that Indonesia’s corporate governance system is unlikely to converge on the outsider model of corporate governance, at least in so far as this means an exact replication of this model. While the Indonesian government has introduced a range of corporate governance reforms aimed at bringing in key elements of the outsider model since the mid-1980s, and especially since the onset of the Asian crisis, there have been serious problems with the implementation and enforcement of these reforms. Underlying this outcome, it is argued, has been the structure of power and interest within Indonesia: the balance of power between the main coalitions of interest has been such that the political preconditions for the proper operation of the outsider model have not yet been established.