History of Economic
Pre-Colonialism in Indonesia
The dynamics of the Economy in Indonesia during
pre-colonialism is in line with the life of the Indonesian nation at the time
of the existing kingdom in Indonesia.
Example :
1. At the time of the
Kingdom of Mataram
The people of Mataram in regulating its economy in the
agricultural sector.
2. At the time of
Singasari Kingdom
Singasari community in regulating its economy through
agriculture, shipping, and trading sectors.
3. At the time of
Majapahit Kingdom
The people of Majapahit manage their economy through
the Agriculture and Trade sector.
The VOC Monopoly System
that Takes Place in Indonesia
Dutch entered into Indonesia in 1602. Dutch
colonialism lasted approximately 350 years. The Dutch made Vereenigde Oost-indische
Compagnie (VOC). A policy in the field of economics by the Dutch at the time.
The purpose of VOC
formation :
1) Avoiding unfair trade
competition among fellow Dutch swords so that maximum profits can be obtained.
2) Strengthen the Dutch
position in the face of trade competition with other European nations.
3) Helping the Dutch
government's funds are struggling against the Spanish who still occupy the
Netherlands.
CULTURESTELSEL
(1830–1870)
Cultuurstelsel (literally: The Cultivation System or incorrectly translated
as the Cultivation System) which the Indonesian historian called the
Cultivation System, was a regulation issued by Governor-General Johannes van
den Bosch in 1830 which required every village to set aside some of its land
(20% ) to be planted with export commodities, especially coffee, sugar cane,
and tarum (tilapia). These crops will be sold to the colonial government at a
fixed price and the crops handed over to the colonial government. Landless
villagers have to work 75 days a year (20%) on state-owned gardens that are a
kind of tax.
In practice, the regulation can be said to be meaningless because the entire agricultural area must be planted with exportable crops and the results are left to the Dutch government. Areas used for the practice of cultuurstelstel were still taxed. People who do not have agricultural land are required to work for a full year on the farm.
In practice, the regulation can be said to be meaningless because the entire agricultural area must be planted with exportable crops and the results are left to the Dutch government. Areas used for the practice of cultuurstelstel were still taxed. People who do not have agricultural land are required to work for a full year on the farm.
Forced cultivation was the most exploitative era in Indies economic
practice. This system of forced cultivation is much more violent and cruel than
the VOC monopoly system because there is a target revenue of the state's
much-needed government. Farmers who in the days of the VOC were obliged to sell
certain commodities to the VOC, now had to plant certain crops and at the same
time sell them at a set price to the government. This forced planting asset
contributed greatly to the capital in the golden age of the Dutch East Indies
colonialists from 1835 to 1940. As a result of the prosperous and prosperous
system of the Netherlands, Van den Bosch was awarded the title of Graaf by the
Dutch king on 25 December 1839.
The Economic
System of Liberal Capitalism, As Well As The Purpose of The System is Established
The
liberal economic system is also referred to as a free market economy system, in
this economic system each individual is given the freedom to try and maximize
profits.The liberal economic system is based on the fact that every unit of
economic activity is given the freedom to carry out activities that benefit
them. So at the same time the community will be able to take part as well.
Therefore, in such an economic system everyone will be free to
compete with others in doing their economic activities.In his book "The
Wealth Of Nation" (1774) Adam Smith states that the freedom of business
possessed by everyone is driven by a factor of personal economic interest,
which is a powerful driver for the nation's prosperity.
The
victory of the liberal party in the Dutch parliament urges the Dutch government
to implement the liberal economic system in Indonesia.The goal is that the
Dutch entrepreneurs as supporters of the liberal party can invest their capital
in Indonesia.
Economyc History of The Occuption of Japan in Indonesia
The economy of war the period of japanese occuption. On the japanese
occuption the economic life og the scorched earth system of the Dutch East
Indies when it was defeated by Japan in March 1942. Since then the economic
life has become paralyzed and the economic situation has changed from the
people’s economy to the war economy. Japan’s first step is to rehabilitate
economic infrastructure such as bridges, transportation, and communication
equipment. Furthermore, japan seized all the enemy’s wealth and becaome the
property of Japan, such as plantations, bank, factories, companies,
telecommunications, and others. This is done because the Japanese troops in
carrying out attacks abroad do not carrying food supplies. The economic policy
of the japanese occuption governmentis prioritized for the benefit of war.
Coffe, tea, and tobacco plantations are regarded as a pleasure and
less usefull for the interest of war are replaced with food crops and plant
distance for lubricants. The economic pattern of war launched by Tokyo carried
out consistently in the territories occuiped by its army. Each regional environment
must carry out autary (standing on his own), tailored to the war situation. Java
is divided into 17 autarki environments, sumatra over 3 neighborhoods and
Mindeifu areas (the area ruled by the Japanes navy) divided into 3 autarki
environments. Due to the decentralized system then java is a part of “Environemnt
Prosperity Ties with East Asia” has two tasks, such as :
· Meet their own needs to stay afloat
· Cultivate the production of goods for the benefit of war
All of indonesia’s natural wealth is exploited by Japan for the
cost of war. Food material is collected from the people for daily Japanese army
supplies, even for long term war needs. Some Japanese actions in extracting
natural resources in the following ways :
· Farmers are required to deposit crops of rice and corn for the
Japanese military consumption. This resulted in the people suffering from
hunger.
· Massive deforestation for industrial purpose of war equipment, for
example teak wood to make a stalk of waepons. Destruction of this forest flood
and erosion resulting in flooding and eroison which is very lossed to farmers. In
addition, erosion can reduce soil fertility.
· Plantations that have nothing to do with war needs are annihilated,
such as tobacco plantations in Sumatra. Furthermore, farmes are required to
plant jatropha trees because jatropha seeds are used as aircraftt lubricant. As
a result farmers lost agricultural land and lost time working the rice fields. As
for the plantations of quinine, sugarcane, and rubber not annihilated
becausethis plant is helpful for the benefit of war.
Delivery of castle, buffalo and other for livestock owners. Then the
cattle were cut off massively for the neccessities consumption of Japanese
troops. This results in less animals being required for agriculture, that’s to
plow. With these thwo tasks, the wealth of Java island became the victim of the
Japanese government’s war economic system.
The corresponding means for the exertion of Romusha is by
persuassion, but not by force. To attract the sympathy of the population, the
Japanese say that tomusha is a respected worker hero or an economic warrior. The
ar portrayed as the person performing fulfill hiss sacred duty to win the
Greater East Asia War. While the organizer committee romusha called romukyokai.
In addition to the people, for the civil service and the lover officials also
perform volunteer work called Kinrohoshi. Indonesian leaders help the japanese
government in this romusha activity. Bung karno gave examples berkinrohonsi
(community servie), Bung Hatta led the assistant workers or romusha. Ali Sastromijoyo,
S.H. pioeered the dedication of people’s jewelery items to help the cost of the
japanese war.
As a result of this romusha the number of men in the villages is
getting thinning, many village jobs are abandoned, thousands of people do not
return to their village, beacuse of death or killed by the japanese. Try to
compare with the rodi in the dutch colonial era. To oversee the population over
the implementation of japanese movements there is a tonarigumi(neighborhood
association) to the remote part of the countryside. Thus the human resources of
the people of Indonesia, especially in Java are use cruelly for the benefit of
Japan. As a result of this political, economic, sosial, and cultural pressures,
the Indonesian nation has experienced fear and anxiety.
The Ideals of Free Economy
The independent Indonesian economy
will be based on the ideals of helping and mutual effort, which will be
gradually organized by developing cooperatives. At this moment in the economic
field, as a consequence of our non-sovereign politics, there is deprivation and
the overwhelming majority of our resources and national assets by foreign
capital. Almost all of our natural wealth, such as mines, forests, agriculture,
marine wealth, springs, and so on, are in foreign lands. In fact, Bung Karno
once reminded, a nation can not be said to be independent if its economic
policy to let the wealth of the earth's produce flow to the chests of wealth
giant capitalist companies of the world.
The People's
Economic System refers to the values of Pancasila as the Indonesian nation's
value system whose goal is to bring about social justice for all Indonesians
with one intrinsic element is Pancasila Economy (Mubyarto: 2002) with the
following basic values:
1.
Godhead, where "the wheels of
nation's economic activity are driven by economic, social and moral
stimuli"
2.
Humanity, namely: "Social
equity, ie there is a strong will of citizens to realize social equity, not
allowing the occurrence and development of economic inequality and social
inequality".
3.
National Interest (Economic
Nationalism), in which "economic nationalism; that in the era of
globalization more clearly the urgency of the realization of a strong,
resilient, and independent national economy.
4.
Many People's Interests (Economic
Democracy): "economic democracy based on popular and kinship; cooperatives
and cooperative efforts animating the economic behavior of individuals and
communities ".
5.
Social Justice, namely:
"harmonious, efficient and equitable balance between national planning
with economic decentralization and broad, free, and responsible autonomy
towards the realization of social justice for all Indonesian people".
How to realize
the ideals of an independent economy with the Indonesian socialist society, not
the Indonesian capitation community.
History of The Indonesian Economy in The Old Order, New
Orded, and Reformation
1) The
Old Order (1945 - 1966)
A. Post
Independence
At the
beginning of independence, the Indonesian economy was very chaotic due to:
-
The newly independent Indonesia has not good government, where
there is no special official assigned to handle the Indonesian economy.
-
As a new country Indonesia does not have a pattern and how to
manage a good financial economy
-
The
legacy of the Japanese occupation government where the current economic
occuption of Japan was already bad due to the expenditure of Japanese war
financing. Making the new Indonesian government a bit difficult to rise from
adversity.
-
The domestic security conditions themselves are unstable due to
frequent cabinet turnover, which in turn supports economic instability.
-
The prevailing financial policy in Indonesia was made in the
Netherlands to suppress Indonesia's economic growth event to destroy the
national economy.
Problems that
occured:
-
There is a very high inflation
The inflation may occur due to:
Ø The circulation
of Japanese currency in the community in an uncontrolled amount
Ø The Republic of
Indonesia does not have its own currency so the government can not declare that
the Japanese currency does not apply.
The government issued a policy for the time being stated that there
are 3 currencies applicable in RI territory, namely:
·
De
Javasche Bank currency
·
Dutch
Indies government currency
·
Japanese
currency
-
The existence of an economic blockade from the Netherlands
The blockade by
the Netherlands is done by closing (blocking) the entrance and exit of RI trade
mainly through sea lane and important ports.
With the blockade the following:
Ø RI export items are delivered late.
Ø Merchandise belonging to Indonesia can
not be exported even many of
Indonesia's export goods in the ground is scorched.
Ø Indonesia lacks imported goods
-
The state cash vacuum
State cash has
vacuum because taxes and other import duties are still temporary.
The government's income is only for agricultural production. Because it is
still awake, even though the economic situation is very bad.
The effort to undertaken the confusion of the economic is:
-
The National Loan Program is implemented by the Minister of Finance
of the Republic of Indonesia. Surachman in July 1946. One of them to the
richest province at that time was Aceh
-
Broke through a blockade of rice diplomacy to India, made contact
with an American private company, and broke through the Dutch blockade in
Sumatra for the purpose of Singapore and Malaysia.
-
Economic Conference in February 1946 with the aim of gaining
agreement on tackling urgent economic issues: food production and distribution,
clothing, and the status and administration of plantations.
-
Kasimo Plan, its about an effort on food self-sufficient with some
practical implementation guidelines.
B.
Liberal
Period
Economic
problems faced by the Indonesian are still the same as before. The undertaken
effort to overcome the economic problems, among others:
-
Fortress
Program (Natsir's Cabinet), it is an effort to grop indigene entrepreneurs and
encourage national importers to compete with foreign import companies by
restricting certain import of goods and granting import licenses only to
indigene importers and to provided credit to indigene companies so that taler
participate in national economic development. But this buseness failed, because
the nature of indigene businessmen who tend to consumptive and can not compete
with non-indigene busineseemen.
-
De
Javasche Bank Nationalization becomes Bank Indonesia with function as central
bank and bank circulation. (Sukiman's Cabinet)
-
Ali's
economic system (Ali Sastroamijoyo's cabinet) initiated by Mr. Iskak
Cokrohadisuryo, is a cooperative rallied between Chinese businessmen and
indigenous businessmen. Non-indigenous entrepreneurs are required to provide
training for indigenous entrepreneurs, and the government provides credits and
licenses for private national businesses. This program is not working well,
because indigenous businessmen are less experienced
-
Unilateral
cancellation of the results of the Round Table Conference, including the
dissolution of the Indonesian-Dutch Union. As a result many Dutch businessmen
are selling their companies whereas indigenous entrepreneurs have not been able
to take over those companies. (Burhanuddin Cabinet)
-
The
Five-Year Development Plan (RPLT)
-
Cut
Sharifuddin
Scissors
syarifuddin policy is cutting the value of money
C.
Guided
Democracy
The economic policy was taken by the government at this time have
not been able to improve the economic condition of Indonesia, among others:
-
Devaluations
that reduce the value of money are as follows: Rp. 500 denomination banknotes
to Rp. 50, Rp. 1000 denomination banknotes to Rp. 100, and all deposits in
banks exceeding Rp. 25.000 are frozen
-
The
establishment of the Economic Declaration (Dekon) to reach the socialist stage
of Indonesia's economy in a guided manner. In practice, it has resulted in
stagnation for the Indonesian economy. Even in 1961-1962 the price of goods
increased 400%.
-
Devaluations
made In December 13, 1965 that reduce the value of money Rp 1000 to Rp 1.
2) The
New Order (1966 - 1998)
-
Problems
that occurred in the New Order:
Ø Hyper inflation that reaches above 600 percent
Ø Low economic growth
Ø Deficit of APBN
Ø Foreign exchange reserves are zero and there are unpaid overseas
obligations
Ø Unstable political conditions, resulting from the G 30 / S and
demonstrations among students to disband the PKI, clean up the cabinet of the
PKI elements and improve the economy.
-
The
effort was taken by the government to undertaken the confusion of the economic
is:
Ø Stabilization and Economic Rehabilitation. economic stabilization
means controlling inflation to keep prices from rising. And economic
rehabilitation is the physical improvement of economic facilities and
infrastructure. The essence of this policy is the guidance of the economic system
of plans that ensure the ongoing economic democracy towards the realization of
a just and prosperous society based on Pancasila.
Ø Foreign Cooperation
Ø National Development
The
aim of national development is to create a just and prosperous society that is
equally material and spiritual based on Pancasila and the 1945 Constitution.
3) Reformation
(1998 - Now)
A. President BJ. Habibi
-
The
state of Indonesia's economic system during the transitional government has the
following characteristics:
Ø The shock to the rupiah
Ø The crisis of the rupiah eventually became more severe and became
economic crisis that then sparked the biggest political crisis throughout
Indonesia's history
-
What
Habibie did to improve Indonesia's economy:
Ø Recapitulate banks and apply Bank Indonesia's independence to focus
more on the economy.
Ø Increase in rupiah exchange rate
Ø Implementing the economic reforms implied by the IMF.
Ø Liquidate some troubled banks.
Liquidity
is the company's ability to meet its short-term obligations. Another
understanding is the ability of a person or company to fulfill obligations or
debts that must be paid immediately with the current wealth. The amount of debt
of private companies that are due and unable to pay for it and ultimately the
government takes over the troubled banks with the aim of maintaining Indonesia’s
fragile economic stability.
B.
President
Abdurahman Wahid
Compared to the previous year, Indonesa’s economic condition began
to lead to improvements, that is positive GDP growth, inflation rate and low interest
rates, so that domestic monetary conditions have also started to stabilize.
Government relations under the leadership of Abdurahman Wahid with
the IMF were also poor, due to problems, such as the Amendment of law No.23 of
1999 about Indonesian banks, the implementation of regional autonomy (regional
freedom to borrow money from abroad ) and the revised 2001 national budget
continue pending.
Politically and socially unstable is getting worse which makes
foreign investors becoming reluctant to invest in Indonesia.The more
complicated the economic problem is marked by the movement of Jakarta Composite
Index which tend to negative, even down to 300 points, because more sales
Activity than buying activity in domestic stock trading.
During the leadership of President Abdurrahman Wahid, there has
been no significant action to save the country from the downturn. In fact,
there are various economic problems inherited by the new order must be faced,
among others the problem of corruption, economic recovery, the performance of
state-owned corporation, controlling inflation, and maintaining the exchange
exchange rate.
C.
President
Megawati Soekarnoputri
Policies
to overcome economic problems include:
-
Requested
a postponement of debt payment of US $ 5.8 billion at the 3rd Paris Club
meeting and allocated foreign debt servicing of Rp 116.3 trillion.
-
In
this period also realized the establishment of KPK (Corruption Eradication
Commission), but there has been no concrete breakthrough in eradicating
corruption. Whereas the existence of corruption makes many investors think
twice to invest in Indonesia, and disrupt the course of national development.
-
State-owned
corporation
Privatization
policy. Privatization is to sell state enterprises in periods of crisis with
the aim of protecting state enterprises
from intervening political forces and reducing the burden of the state.
The results of that sale managed to increase the economic growth of Indonesia
to 4.1%. But this policy has sparked much controversy
D.
President
Susilo Bambang Yudhoyono
In the government of Susilo Bambang Yudhoyono (SBY) the policy is
to reduce the subsidy of the State of Indonesia or raise the price of Petroleum
Materials (BBM), the policy of direct cash aid to the poor, distribute BOS
funds to educational facilities in the State of Indonesia. However, in the
government of SBY in the Indonesia economy there are problems in the case of
Century Bank which untul now 93 billion to settle the case bank Century.
The condition of the economy during the SBY administration was
experienced a very good development. Indonesia's economic growth grew rapidly
in 2010 as the global economic recovery after the global crisis that occurred
during 2008 to 2009. Bank Indonesia (BI) estimates Indonesia's economic growth
could reach 5.5-6 percent in 2010 and increased to 6 - 6.5 percent in 2011.
Thus, Indonesia's economic prospects will be better than originally forecasted.
Meanwhile, the global economic recovery has a positive impact on the
development of the external sector of the Indonesian economy. Indonesia's
non-oil / non-gas export performance in querterly 2009 recorded high growth of
around 17 percent and continued in January 2010. reductions of state debt.
Other major problems still exist. First, rapid macroeconomic growth
has not touched the whole society as a whole. Although Jakarta is synonymous
with its high economic vitality and other big cities in Indonesia have rapid
economic growth, there are still many Indonesians living below the poverty
line.
Indonesia
Hyperinflation 1963 - 1965
Indonesia
Hyperinflation 1963-1965 is a hyperinflation that occurred in Indonesia during
the Old Order. Behind the ambition of the lighthouse project, Indonesian
President Sukarno printed the Rupiah until inflation at that time reached 600%
so that on December 13, 1965 the government cut the Rupiah from 1000 Rupiah to
1 Rupiah.
The Sukarno government published the Eight Year Plan
of 1960 as an attempt to make the country self-sufficient in food (especially
rice), clothing and basic needs within a 3-year period. Five years after it is
planned to become a period of independent growth.
In the 1960s, the Indonesian economy was quickly
crushed by debt and inflation, while exports declined. Foreign exchange
revenues from the plantation sector fell from US $ 442 million in 1958 to 330
million US dollars in 1966. The peak of inflation was above 100% in 1962-1965
because the government simply made money to pay off debts and fund projects
magnificent (like the construction of Monas). Indonesia's per capita income declined
significantly (especially in 1962-1963). Meanwhile, much-needed foreign aid
came to a halt after Sukarno rejected US aid and expelled Indonesia from the
United Nations membership due to the entry of Malaysia as a member of the
United Nations (Indonesia opposed to the establishment of Malaysia in 1963).
Sukarno, on the other hand, has a closer relationship with the People's
Republic of China and North Korea.
However, the Eightfold Plan of 1960 was abandoned in
1964 because of a declining economy and unachievable targets. In fact, the
economy falls freely because of hyperinflation, the reduction of tax sources,
and also its flight from financial assets to real assets. Politics Costly
confrontations against Malaysia also absorb a significant portion of government
spending.
However, hyperinflation remained unavoidable due to
continuous money printing, so on 13 December 1965 the government cut the value
of money from 1000 rupiah to 1 rupiah. This policy is a major blow to the
national banks, especially those who have deposited additional capital because
it is drastically eroded in an instant. Deposit funds of banking customers also
shrunk 1/1000. All these money-cutting business turns out to be unsuccessful in
suppressing inflation, and the price keeps rising so high it becomes
hyperinflation.
General Suharto succeeded in taking over power from
Sukarno in the period 1965-1967 (in 1967, Suharto was officially sworn in as
the Second President of Indonesia). One of Suharto's top priorities is to
improve Indonesia's economic condition. He relies on a team of trained
economists in the US to start a period of economic rehabilitation and recovery.
In 1966-1970, the government managed to control inflation, rebuild
international relations so that much-needed foreign aid could enter Indonesia,
start rehabilitating physical infrastructure, and introduce new regulations
that attract foreigners to invest in Indonesia. This will mark the beginning of
the New Order era.
Case
Analysis : The state of the Indonesian economy in the 1960s inflicted huge
inflation as the government easily made money to pay off debts and fund other
magnificent building projects, and one that made the financial worse the much
needed aid stopped flowing. Making money from the money of 1.000 rupiah to 1
rupiah which makes Indonesia's finance does not improve. Even Sukarno replaced
by Suharto who started memebangun economy Indonesia to be better again.
Source by :
http://www.gurusejarah.com/2015/01/ekonomi-perang-masa-pendudukan-jepang.html?m-1
http://www.slideshare.net/LRNurH/indonesia-pada-masa-orde-baru
http://www.slideshare.net/ismiayu/masa-pemerintahan-susilo-bambang-yudhoyono
http://www.slideshare.net/ismiayu/masa-pemerintahan-susilo-bambang-yudhoyono
