Abstract The rise of Asia in the international financial order, exemplified by China's emergence as a source of foreign capital, has fundamentally changed the dynamics of foreign direct investment (FDI) in emerging nations. In light of this transformation, these nations have gained greater agency to develop their own strategies for attracting foreign capital. This study analyses Indonesia's pursuit of foreign capital through hybrid state activism, a strategic blend of economic nationalism and liberal policies aimed at promoting domestic industrialization. The article argues that, through hybrid state activism, the Indonesian state has effectively directed transnational capital to support the downstreaming of its natural resources, a process commonly referred to in Indonesian as hilirisasi. This approach highlights Indonesia's ability to negotiate its own terms with international capital, thereby bolstering the political legitimacy of its elites. It also represents a form of developmentalism that explicitly favours the ongoing symbiotic relations between state and non-state corporate elites who are politically connected. However, the quest for Chinese investments reveals challenges, such as where the benefits from this hybrid state activism disproportionately favour both transnational and domestic elites, potentially harming the broader economic and social fabric of the host country. This argument is illustrated through the case of the downstreaming policy for nickel, as evidenced by the operations of the Indonesia Morowali Industrial Park.
Moch Faisal Karim (Wed,) studied this question.