Indonesia Economy

Question 1

Under Sukarno 1957 -1966

Answer 1

Strategy: Focus on Nationalism
Redistributed control of FOPs away from immigrants to indigenous elite
Nationalised Dutch assets like Royal Dutch Shell Oil -> Pertamina

Effects:
1000% inflation, GNP declined

Question 2

Agriculture Under Suharto 1960 - 70s

Answer 2

Strategy: Agriculture Development
BIMAS - package of Agro inputs, improved rural infrastructure
Repelita 1 - 23% of budget on irrigation
BULOG - price ceiling and floor for crops
Green Revolution - HYV(High Yielding crops) cultivating 41% of rice planting area

Effects:
1/3 GDP and 2/3 Employment
Self sufficiency in rice

Question 3

Oil under Suharto 70s - 80s

Answer 3

Oil increased from 19% - 70% of Govt revenue by 80s
Increased form 20 - 30% of export earnings bY 1980
Oil petrodollars in 1979 used to invest in ISI

Question 4

Industrialisation under Suharton 70s - 80s

Answer 4

Strategy: ISI and focus on manufacturing
Liberalisation in imports, encouragement of foreign investment to stimulate manufacturing

Effects:
Manufacturing 9% of GDP 1975
But still inefficient

Question 5

Industrialisation Under Suharto in 1980s

Answer 5

Strategy: Promote Foreign investments & Export Industries
1967 Foreign Investment law; tax concessions and provisions for foreign assets
Repelita 4: Targetted 9.5% growth of industrial sector
Heavy Govt investing in steel, petrol crucial for EOI (41 Billion to 592 Billion RP)
Protection of MNC assets from nationalisation

Effects:
Manufacturing exports leaped to 1/3 all exports
Favoured by IMF and World Bank and further western economic aid
BUT accumulation of foreign debt
Income per capital reached $600

Question 6

Finance under Suharto in 80s

Answer 6

Strategy: State control of finance sector
Commercial banking dominated by state banks; provided 80% of commercial credit

Effects:
Due to control on IR, lack of incentives to attract borrowers or creditors
Weakened Indonesian credit in LT

Question 7

Finance under Suharto in 80s

Answer 7

Strategy: State control of finance sector
Commercial banking dominated by state banks; provided 80% of commercial credit

Effects:
Due to control on IR, lack of incentives to attract borrowers or creditors
Weakened Indonesian credit in LT

Question 8

Chinese Minority under Suharto

Answer 8

Strategy: Equity between Chinese and Indonesian
Pribumi Laws to stipulate certain percentage (75%) of pribumi investment required for Govt contracts
Suharto relations with Cukong (50 business elites) to help with Govt infrastructure projects

Effects:
Led to Ali-Baba companies; indigenous businessman frontman for Chinese business
75% of assets controlled by 3% of the population by 90s
Created new economic upper class of really rich Chinese

Question 9

Flaws of Suharto Rule

Answer 9

Nationalism: 70% of capital assets owned by 3% of foreign population (Chinese)
Equity: Rampant corruption (concentration of wealth in political elite)
~uneven wealth distribution between Central islands of Java and outer islands, outer islands exploited for resources