Significantly, SOEs will act as a powerbroker for Jokowi as he moves to reach a political settlement between himself and large sections of the population, giving him a distinct advantage over challenger Prabowo Subianto.

Indeed SOEs have significant holding power, defined as their ability to absorb costs and enable a consistent set of economic benefits to be created and allocated, primarily through providing employment and under Jokowi mobilize resources to drive a massive infrastructure program. Emblematic projects such as the MRT in Jakarta, which opened just before the election, have boosted the incumbent’s image as a competent economic manager.

SOEs also mobilize ideologies and symbols of legitimacy, particularly through their historical presence in the economy. During independence, the government nationalized 700 Dutch companies as SOEs and they became symbols of sovereignty.

Unsurprisingly, when state-owned mining holding company Inalum acquired a majority stake in PT Freeport Indonesia, the operator of the Grasberg gold and copper mine, from United States-based Freeport McMoran and Anglo-Australian multinational Rio Tinto, Jokowi’s rhetoric around the deal mobilized ideologies of reclaiming resource sovereignty.

The role of SOEs as agents of development combined with their symbolism means their large presence in the economy has historically faced low opposition, which has allowed patron-client relationships among them to be self-sustaining.

In turn, this dynamic has allowed both SOEs and the state as economic coordinator to take a long-term, growth focused stance, as opposed to descending into short termism and predation by rival factions.

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