KEBIJAKAN EKONOMI ORBA (PART 1)

Summary

This transcript explores Indonesia's economic policies during the New Order regime under President Suharto, highlighting key developments like the implementation of the Five-Year Development Plans (Repelita). It discusses the challenges inherited from the previous regime, such as hyperinflation, and how Suharto's government worked to stabilize the economy. Topics like agricultural self-sufficiency, industrial growth, and foreign and domestic investments are covered. The session emphasizes significant achievements such as the Green Revolution, food self-sufficiency, and the policies that contributed to economic stability, providing a comprehensive overview of Indonesia's economic transformation during this period.

Takeaways

• 😀 The speaker introduces a discussion on economic policies during Indonesia's New Order period (Orde Baru), focusing on efforts to stabilize the economy after the 1965 G30S political turmoil.
• 😀 A key challenge faced by Indonesia during the early years of the New Order was hyperinflation, which reached 600-650%, inherited from the previous leadership.
• 😀 One of the first steps taken by President Suharto was to reduce inflation, which was accomplished within two years, bringing it down from 600% to below 15%.
• 😀 The Repelita (Five-Year Development Plan) was introduced as a major economic initiative, starting in 1969. The first plan focused on rehabilitating infrastructure, encouraging investments, and developing agriculture.
• 😀 The agricultural sector was prioritized during the early Repelita plans, with a focus on self-sufficiency in food, especially rice, which eventually led to Indonesia becoming self-sufficient and even exporting rice.
• 😀 Repelita plans were designed to be continuous, with each new plan building on the successes and goals of the previous one, such as strengthening agricultural and industrial sectors.
• 😀 The Green Revolution was a significant policy during this period, focusing on increasing agricultural productivity by introducing new farming techniques and expanding cultivation areas beyond Java.
• 😀 By the mid-1990s, Repelita plans shifted towards building industries that produced export goods and promoting technological advancement, including the development of heavy industries and manufacturing.
• 😀 The New Order's economic policies also involved controlling inflation through measures such as implementing the Law on Foreign Investment (PMA) and fostering local business growth through domestic investment (PMDN).
• 😀 The speaker reflects on how the economic conditions during Suharto's leadership, such as cheap food prices and economic stability, were favorable compared to more recent times, despite challenges like imports and changing global dynamics.

Q & A

What is the significance of the 'Repelita' in the New Order economic policy?

Repelita refers to the Five-Year Development Plans implemented during the New Order era under President Suharto. These plans were critical in guiding Indonesia's economic growth, with each Repelita focusing on different sectors such as agriculture, industry, and infrastructure development. Repelita served as the backbone of Indonesia's economic policy, ensuring continuity and strategic progress over several decades.

What was the major economic challenge faced by Indonesia at the beginning of the New Order period?

At the start of the New Order period in 1967, Indonesia faced massive economic challenges, including hyperinflation, which reached up to 600-650%. This was a result of the previous administration's policies and economic mismanagement, particularly after the downfall of President Sukarno's regime.

How did Suharto's administration address the issue of inflation in Indonesia?

Suharto's administration tackled inflation by implementing a series of economic reforms. Key measures included the enactment of laws encouraging foreign investment, such as the Investment Law of 1967, and the establishment of fiscal and monetary policies aimed at stabilizing the economy. These efforts successfully reduced inflation from over 600% to below 15% within two years.

What is the 'Trilogy of Development' that Suharto's administration focused on?

The Trilogy of Development during Suharto's regime centered on three key areas: economic stability, equitable distribution of development, and national economic growth. The primary focus was on agriculture, ensuring food self-sufficiency, and fostering industrial growth.

What was the focus of the first Repelita (1969-1974)?

The first Repelita focused on rehabilitating Indonesia's essential infrastructure, promoting investment climate improvements, and boosting the agricultural sector. A key initiative was to attract foreign investment, which was crucial for economic recovery.

How did Indonesia achieve food self-sufficiency during the New Order era?

Indonesia achieved food self-sufficiency, particularly in rice, by focusing on agricultural development through the Green Revolution (Revolusi Hijau). This involved the introduction of new farming techniques, improved seeds, and irrigation systems, which led to increased domestic production and reduced reliance on imports.

What role did industrialization play in Suharto's economic policy?

Industrialization was a central component of Suharto's economic policy. The government promoted the growth of both light and heavy industries, with a focus on export-oriented manufacturing. This strategy helped diversify the economy and reduce dependency on agriculture.

What was the impact of the 'Green Revolution' in Indonesia?

The Green Revolution in Indonesia led to significant improvements in agricultural productivity, especially in rice production. By introducing high-yielding seed varieties, modern farming techniques, and better irrigation, Indonesia became self-sufficient in food production, even exporting surplus rice.

Why did Suharto's regime emphasize the importance of foreign and domestic investment?

Suharto's regime recognized that both foreign and domestic investments were crucial for revitalizing Indonesia's economy, which had been severely weakened by inflation and political instability. Foreign investments brought capital and technology, while domestic investments helped build a robust local economy.

How did Indonesia's economy evolve after the implementation of the Repelita plans?

After the implementation of the Repelita plans, Indonesia's economy showed significant improvement. The country achieved notable progress in agricultural and industrial sectors, which contributed to increased national income, lower poverty rates, and more robust economic growth. However, challenges like income inequality and reliance on imported goods remained.