The inward Foreign Direct Investment (FDI) and decentralized governance system in Indonesia

Indonesia has embarked upon a decentralized governance system after it was hit by economic crisis in 1997. This dissertation analyzes the way of inward FDI is managed since the introduction decentralization in Indonesia. The four empirical chapters examine the investment policies and the dynamic interactions between national-local government and multinational corporations (MNCs). Firstly, this study reveals the fact that the concept of sustainable development has been embodied in the investment policies gradually; nevertheless, the government lacks clear strategies to achieve that. Secondly, in the process of management of inward FDI, the central government remain takes dominant roles, however, the decentralized governance system increases the roles of sub-national governments so that collaboration between different levels of governments is crucial and inevitable. Thirdly, bargaining situation between local governments and MNCs are happened as under decentralized governance system, local leaders are forced by the constituent to ensure that communities' interests are being accommodated by MNCs. Lastly, the relationship between government and MNCs is cooperative, however, two-tier bargaining process involving multilevel governance actors happen in the interaction process. The first-tier bargaining process occurs between the host country government and home country government, which result in the investments agreements between countries. The second-tier bargaining process occurs between the host country government and individual MNCs involving local governments actors and the local community.