Piye? Enak Jamanku, Toh? (Tapi, Pak Harto…) | Narasi Explains

Summary

This video explores Indonesia's economic transformation under President Soeharto from 1967 to 1998. It highlights the country’s recovery from the chaos of the Soekarno era, marked by hyperinflation and economic collapse, to the rapid growth spurred by oil revenue and foreign investment. However, despite early successes, Soeharto’s regime was marred by crony capitalism, corruption, and political monopolies. The script delves into the deep-rooted systemic issues and the eventual economic collapse in 1998, driven by a financial crisis exacerbated by mismanagement, inequality, and a lack of structural reforms.

Takeaways

• 😀 Soeharto's rise to power in 1967 marked the end of Indonesia's political and economic crisis caused by Soekarno's presidency.
• 😀 Soeharto's economic team, led by Wijoyo Nitisastro, implemented reforms that stabilized Indonesia's economy, controlling inflation and reducing budget deficits.
• 😀 In the early 1970s, Indonesia's economy benefited from the global oil boom, with oil revenues contributing significantly to infrastructure development.
• 😀 The economic growth under Soeharto's regime was fueled by foreign investments, deregulation, and strategic debt renegotiations.
• 😀 Crony capitalism and corruption became widespread, with close allies of Soeharto and his family monopolizing key industries and benefiting from state policies.
• 😀 Indonesia's oil wealth was mismanaged in the late 1970s and early 1980s, particularly by Pertamina's director Ibnu Sutowo, leading to massive debts and a near-collapse of the state-owned oil company.
• 😀 The 1980s oil price collapse and global recession forced Soeharto to diversify the economy, leading to growth in non-oil sectors such as manufacturing.
• 😀 From 1986 to 1996, Indonesia experienced significant growth in the non-oil economy, with manufacturing growing at an impressive rate of 11.4%.
• 😀 Despite economic growth, the system of political and economic patronage led to massive inequality, with wealth concentrated in the hands of a few politically connected individuals.
• 😀 The Asian Financial Crisis of 1997 exposed the vulnerabilities of Indonesia's economy, with the banking sector particularly affected by poor regulations and high levels of debt, ultimately leading to Soeharto's resignation.

Q & A

What caused the economic crisis in Indonesia during Soekarno's reign?

The economic crisis in Indonesia during Soekarno's reign was caused by several factors, including massive military spending (such as in Papua), printing money to cover budget deficits, and declining exports due to the nationalization of Dutch companies. By 1966, inflation reached over 1000% and the economy contracted severely.

How did Soeharto's regime manage to stabilize Indonesia's economy after 1967?

After Soeharto took power in 1967, he appointed a team of economic experts, including Wijoyo Nitisastro, Emil Salim, and others, to help stabilize the economy. They implemented measures like opening up to foreign investment, deregulating the banking sector, negotiating foreign debt, and tightening fiscal policies, which successfully reduced inflation from over 1000% to 100%.

What was the role of the Repelita programs in Indonesia's economic development under the New Order?

The Repelita programs, which started in 1969 and continued until 1974, were five-year development plans focusing on macroeconomic stability. Their goal was to increase national income through industrialization, especially in sectors like import substitution and resource extraction. The programs placed a significant emphasis on the government's role in managing the economy and directed investments to critical areas like infrastructure and energy.

What factors contributed to Indonesia's economic growth in the 1970s?

Indonesia's economic growth in the 1970s was fueled by the global oil boom. Oil prices soared from $2.9 per barrel in 1972 to over $10 in 1974, significantly increasing Indonesia's oil revenue. Additionally, Indonesia capitalized on the 1973 Arab oil embargo, leveraging its oil reserves to strengthen the economy and finance large-scale infrastructure projects and education programs.

What challenges did Indonesia face with Pertamina during the 1970s and early 1980s?

Pertamina, under the leadership of Ibnu Sutowo, faced significant mismanagement during the 1970s. The company expanded aggressively but failed to manage its projects effectively, leading to a massive debt crisis. By 1975, Pertamina owed $10 billion and was unable to meet its obligations, causing the government to renegotiate its debts and eventually replace Sutowo.

How did the 1980s economic strategy shift under the New Order government?

In the 1980s, as global oil prices declined and Indonesia faced a global recession, the New Order government shifted its strategy towards deregulation, focusing on attracting non-oil investment. This included reforms in banking, taxation, and trade, making it easier for foreign and local businesses to invest in Indonesia, which contributed to the growth of the non-oil sector.

What were the economic successes in Indonesia between 1986 and 1996?

Between 1986 and 1996, Indonesia experienced impressive economic growth, with an average growth rate of 8.4%, and the manufacturing sector growing at 11.4%. During this period, poverty rates declined significantly, reaching a low of 11.3% in 1996. The economy was relatively stable, and Indonesia gained recognition for its remarkable growth.

What role did the 'cronies' of Soeharto play in the Indonesian economy?

Soeharto's cronies, which included his close associates, military officers, and family members, had significant control over various economic sectors. These individuals received preferential treatment, including access to government contracts, business opportunities, and loans, leading to a system of corruption, nepotism, and crony capitalism that entrenched economic inequality.

What were the underlying causes of the 1997 Asian Financial Crisis in Indonesia?

The 1997 Asian Financial Crisis was exacerbated by weak banking reforms, excessive credit expansion, and the collapse of asset prices, particularly in real estate and stocks. The banking sector, which had been liberalized without adequate supervision, suffered when bad debts accumulated. The crisis highlighted the vulnerabilities in the economy, especially the effects of corruption and cronyism during the New Order period.

What was the impact of the 1997 financial crisis on Soeharto's regime?

The 1997 financial crisis severely undermined Soeharto's regime. Public trust in his leadership plummeted due to the corruption and economic mismanagement associated with his rule. The crisis led to widespread social unrest, culminating in the resignation of Soeharto in May 1998, ending his 32-year rule.