ABSTRACT
This case study analyzes Indonesia’s information and communications technology (ICT) sector development and related industrial policies. It illustrates how Indonesia’s political economy of state-business relations is based on cronyism and rent-seeking behavior despite the country’s democratization in 1998. The chapter emphasizes the lack of facilitating state institutions and state capacity to stimulate sectoral economic development. This results in the relatively low development of Indonesia’s ICT sector (Aspinall, 2013). The most relevant problems of the domestic digital sector concern the technological dependence on multinational corporations and low-skilled human resources (Sigurdson and Palonka, 2005; Tijaja and Faisal, 2014). The chapter first presents an overview of Indonesia’s ICT sector and its development before it conducts an international comparison of Indonesia’s sectoral development. The chapter’s second part comprises an analysis of industrial policies toward the ICT sector that is divided into four phases. The chapter finally evaluates Indonesia’s ICT policies and its sectoral development.
