THE INFLUENCE OF STATE AND MARKET ON THE DEVELOPMENT OF INDUSTRIAL ZONE IN MALAYSIA AND INDONESIA

Abstract

The objective of the paper is to compare the influence of state and market on the existence of industrial zone in Malaysia and Indonesia. Specifically, the research, (i) identify the roles of state and market in the administration and governance of industrial zone in Pulau Pinang also known as Penang, Malaysia and Pulau Batam, Indonesia; and, (ii) assess how state and market influence the implementation of rules and regulation in those areas. Based on eclectically approach, the theory of political economy and political law has been merged as a theoretical framework. Data were collected from various relevance documents and analysed descriptively. The study revealed that in Pulau Batam which market was based on capitalism, controlled the administrator and groups of people affiliated with the state. As a result, the existence of Pulau Batam as a Free Trade Zone was unclear by ad-hoc decision. In addition, the implementation of rules and regulations became uncertain. Compared to Penang, the roles of state and market on the administration and governing of the Free Trade Zone was very transparent. Reformation of political system of rule by amending Constitution (UUD 1945) caused conflict and created dualism in decision making between the local government and the governing Otorita Batam. In comparison, even though there was no constitutional reform in Malaysia, the governance of industrial zones in Penang was very clear and according to the enacted law

Keywords

• State Power, Market, Industrial Zone

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