Global expansion of emerging market multinational corporations: international political economy perspective—case study: PT Semen Indonesia

Until relatively recently, multinational corporations from emerging markets (EMMNCs) were minor contributors to the global stock of foreign direct investment (FDI). This research seeks to understand the significant expansion of EMMNCs in the past two decades, using PT Semen Indonesia as a case study. This research is particularly important in highlighting the developmental state model's persistence in Southeast Asia. The state continues to play a directive role in the design of structure, strategies and targets by adjusting to new global and regional economic challenges and opportunities for Indonesia's state-owned enterprises (SOEs). The political economy of Indonesia's industrial policy reflects the efforts of successive presidents and their advisors to encourage national economic development by finding a workable formula to balance often-competing economic pressures-from global institutions and economic powers to domestic business and political constituencies. A qualitative case study was the methodology used to examine the trends and tensions of PT Semen Indonesia's growth and its internationalisation. As a case study, PT Semen Indonesia was analysed from an international, political and economic perspective. Research findings indicate that the expansion of PT Semen Indonesia reflects key aspects of the developmental state model. The expansion was influenced by national priorities, and the institutional arrangements between the Indonesian state and PT Semen reveal the strategic importance of the cement industry for the state, which retains a decisive shareholding in the company. This thesis contends that the intricate relationship between the Indonesian state and PT Semen exemplifies the persistence of various elements of the developmental state, despite the adoption of a privatisation agenda in the wake of the 1998 Asian Financial Crisis. However, this thesis concludes that the internationalisation of PT Semen, as the first Indonesian multinational corporation (MNC) SOE, was primarily driven by commercial pragmatism that reached the government target on infrastructure and good economic factors, such as rapid economic growth and the ASEAN Economic Community. The company's growth and maturation correspond to the dominant model of EMMNCs in terms of ownership, weak institutionalisation, business capacity, market seeking motivation and preference for horizontal FDI. The latter preference is exemplified by PT Semen's acquisition of Thang Long Cement in Vietnam.