Mirror Images in Different Frames? Johor, the Riau Islands, and Competition for Investment from Singapore

摘要

Does decentralisation and fiscal federalism lead to a more open foreign investment policy and a more efficient market-driven economy? This monograph by Francis Hutchinson shows that, by comparing and contrasting the case of Johor State and Riau Islands Province in terms of their motivation or incentives to industrialise, the answer seems to be in the negative. In the early 1990s, Johor and Riau Islands undertook similar industrialisation processes. Both have sought to attract the same type of investment from Singapore, their closest and far more developed neighbour. During that period, both Malaysia and Indonesia were characterised by strong national governments as well as authoritarian political systems. This structure entailed a high degree of centralisation and relatively little space for non-central government initiatives (p. 9). After the 1997 Asian Financial Crisis (AFC), the two countries chose very different political directions, in which Malaysia proceeded with centralisation while Indonesia undertook a 'big-bang' decentralisation approach. The book shows the differing political and institutional transformations has resulted in divergent outcomes in terms of the sub-national government's drive to industrialise.