1 THE CONTESTATION OF BUSINESS NETWORKS IN LIBERALISING ECONOMY AND POLITY: EVIDENCE FROM REGIONAL TEXTILE BUSINESS IN INDONESIA1

Abstract. The 1997 economic crisis followed by the step down of president Soeharto in 1998 changed the landscape of Indonesia’s economy and polity. It was the beginning of the International Monetary Fund (IMF) in cooperation with the Indonesia’s democratising state sailed to a new economic destination. Preaching market solution to social and economic problems become new medicines for healing Indonesia’s economy. This paper argues that the imposition of economic liberalisation without accounting for institutional contexts in which it operates have implications for business inequality. By situating Pekalongan region in Central Java as a case study and by using new institutional approach, this paper shows a process of depletion of various textile business networks. A process characterised by the lessening positions of actors in the textile market and it leads to deindustrialisation. A mechanism of decoupling rather than close coupling occurs in the process of managing textile crisis. In the political sphere, the rise of political parties and civic associations has opened public dialogue over the issues of textile deindustrialisation. Unfortunately, the issues seem to be kept floating on air. Recently, new and small movements seem to shed some lights in the tunnel. Young and uncorrupted politicians begin to win elections in several cities and regencies in the country. Much hope to recover textile industry will be determined by the results of the 2009 parliament and presidential elections