A BRIEF HISTORY OF ECONOMIC INDONESIA
Indonesia is located in the geographical position between Asia and Europe and the Pacific and Indian oceans, a strategic position in the commercial shipping lanes between continents. One of the silk road, the marine silk road, is from China and Indonesia, through the Strait of Malacca to India. From here there are to the Persian Gulf, through Syria to the Mediterranean, the Red Sea to anyone through Egypt and until well into the Mediterranean (Van Leur). Sea trade between India, China, and Indonesia began in the first century AD, as well as relations between Indonesia and areas in the Western (Roman Empire). Trading in the traditional monarchies called by Van Leur have the nature of political capitalism, where the influence of the kings in the very large trade. For example, in the Srivijaya, while international trade from East Asia to West Asia and Europe, reached its golden age. Kings and nobles acquired it from a variety of tributes and taxes. There is no protection against certain types of products, because they actually benefited by the many ships that "stopping".
The use of money in the form of gold coins and silver coins has been known in the past, but the use of the money was not recognized in the Islamic kingdoms, such picis made of tin in Cirebon. However, the use of money is limited, because a lot of barter trade takes place in the international trade system. Therefore, there is no surplus or deficit that must be balanced with the export or import of precious metals.
The triumph of a land assessed on the extent of the area, income per year, and the bustling pelabuhan.Hal it caused, the power and wealth of kingdoms in Sumatra from commerce, whereas in Java, the second it comes from agriculture and commerce. In the pre-colonial, merchant marine who tend to be more dominant. However, it can be said that in Indonesia as a whole, agriculture and commerce are very influential in the development of the Indonesian economy, even to this day.
After the period of Islamic kingdoms, pembabakan trip Indonesian economy can be divided into four periods, namely the period before independence, the old order, the new order, and the reform period.
BEFORE INDEPENDENCE
Before independence, Indonesia suffered the colonial period is divided into several periods. There are four countries that once occupied Indonesia, namely Portuguese, Dutch, English, and Japanese. The Portuguese did not leave a deep imprint in Indonesia because he was expelled by the Dutch, but the Dutch who then ruled for about 350 years, has been implementing a variety of systems that remains to this day. To analyze the history of the Indonesian economy, it was necessary to divide the Dutch occupation into several periods, based on the policy changes which they are enacted in the Dutch East Indies (Indonesia's current term for it).
Vereenigde Oost-Indische Compagnie (VOC)
Dutch when it adopts Merchantilist really put the nails in the Dutch East Indies. Dutch delegate its authority to regulate the VOC Dutch East Indies (Oost-Indische Compagnie Vereenigde), a company established for the purpose of avoiding competition among Dutch traders, as well as to compete with other imperialist companies like EIC (UK).
To facilitate action in the Dutch East Indies, VOC given Octrooi rights, which include the following:
1. The right to print money
2. The right to appoint and dismiss employees
3. The right to declare war and peace
4. The right to make their own armed forces
5. The right to make treaties with the kings
Rights that seemed to legalize the presence of VOCs as a "ruler" Dutch East Indies. But nevertheless, does not mean that the entire economy archipelago has mastered the VOC.
In fact, since 1620, the VOC controls only export commodities market demand in Europe, namely spices. The cities of trade and shipping lanes under their control are to ensure a monopoly on the commodity. VOCs are also not building supply system needs of the indigenous population lives. The regulations set out the VOC as verplichte leverentie (obligation to surrender crops on VOC) and contingenten (taxes crops) is designed to support the monopoly. In addition, VOC also keep prices remain high spices, among others, with the holding of restrictions on the number of spices which may be planted population, cruise Hongi and right extirpatie (destruction of crops in excess regulation). All rules that are generally only applied in Maluku who had been isolated by the VOC from commercial shipping patterns of the Indian Ocean.
With monopolize the spice, is expected to add the contents of the cash VOC Dutch country, and thus will increase the prestige and wealth Netherlands. Besides, it is also applied Preangerstelstel, namely the obligation to plant coffee for residents Priangan. Even coffee exports in the period reached 85.3 thousand metric tons, exceeding exports cloves Only 1,050 metric tons.
However, in contrast to the French mercantilism policy that prohibits the export of precious metals, silver exports to the Netherlands precisely the Indies in exchange for crops. Because as long as there is no European production that can be offered as a counterweight commodities, exports of silver was still needs to be done. Silver is still used in large quantities as a means of balancing the balance of payments until the 1870s.
In 1795, the VOC disbanded for failing to explore the wealth of the Dutch East Indies. Failing that appear in VOC cash deficit, which is partly due to:
a. Continuous warfare conducted by the VOC and costly, especially Diponegoro war.
b. The use of mercenaries costly.
c. Corruption by employees of the VOC itself.
d. Distribution of dividends to shareholders, although the cash deficit.
Thus, the VOC was taken over (replaced) by the republic Bataaf (Bataafsche Republiek).
Bataaf Republic faced with a financial system that is chaotic. In addition to the war was raging in Europe (Continental stelstel by Napoleon), dilapidation monetary affairs had reached its peak as a result of dependence on imports of silver from the Netherlands in the VOC is now hampered by the British blockade in Europe.
Before republic Bataaf slowly taking shape, the British took over the government in the Dutch East Indies.
British occupation (1811-1816)
UK seeks to change the way tax cash crops have nearly two centuries applied by the Dutch, by applying Landrent (land tax). This system has been successful in India, and Thomas Stamford Raffles think this system will work as well in the Dutch East Indies. In addition, with landrent, the natives will have the money to buy British products or imported from India. This is the modern imperialism that made the colonies not only to explore its natural wealth, but also a product marketing area of the former colonial power. In accordance with the theories of the classical school, who was growing in Europe, among others:
a. Adam Smith's opinion that productive labor is labor that produces concrete objects and can be assessed market, while labor is not productive of services which do not support the achievement of economic growth. In this case, the British wanted colony also increased prosperity, in order to buy the products in the UK and India has a surplus (exceeds demand).
b. Adam Smith's opinion that one role is expanding export markets for products produced (by the British) and the role of population in absorbing production.
c.The quantity theory of money that an increase or decrease in the price level is influenced by the amount of money in circulation.
However, a fairly fundamental change in this difficult economy, and even failure at the end of British rule that's just the rest of the corn in the Dutch East Indies. Causes include:
a. Dutch East Indies society generally illiterate and less familiar with money, let alone to calculate the area of land that is taxable.
b. Employees of the UK's own land measuring the amount is too little.
c. This policy is less supported kings and nobles, because the British did not want to acknowledge the succession of hereditary office.
Cultuurstelstel
Cultuurstelstel (forced cultivation system) came into effect in 1836 at the initiative of Van Den Bosch. The goal is to produce a variety of existing commodity demand in the world market. Since then, ordered the cultivation of products in addition to coffee and spices, namely sugar, indigo, tobacco, tea, quinine, rubber, palm oil, etc. This system clearly suppress the indigenous population, but it is very beneficial for the Netherlands, especially combined with a consignment system (export monopoly). After the second application of this system, all of the losses due to the war with Napoleon in the Netherlands immediately replaced many times.
This system is a replacement landrent system in order to introduce the use of money in indigenous communities. Communities are required to plant export commodities and sell their products to warehouses and then paid by the government for a price that is determined by the government. Cultuurstelstel involves the nobles in which it was collected, such as by utilizing the Mataram-political order that is the obligation of the people to perform various tasks with not being rewarded-and motivate the Dutch authorities with cultuurprocenten (remuneration to be received according to the incoming production warehouse).
For indigenous peoples, of course cultuurstelstel very sweat and their blood, especially forced labor rules still apply. But the bright side is, they began to know the procedures for export commodity crops are generally not native to Indonesia, and the influx of money in the rural economy which triggered the rising standard of living. For the Dutch government, this means that the community has been able to absorb the imported goods that they bring to the Dutch East Indies. And it also changed the way of life of rural communities become more commercial, reflected in an increasing number of economically active population nonagraris.
Clearly, by applying cultuurstelstel, the Dutch government to prove the theory of land rent from the classical school, namely that the ground rent arising from the limitations of soil fertility. But here, the Dutch government only receives the rent alone, without the need to pay for the work on the ground that get bigger and bigger. An increasingly large costs that increase the suffering of the people, according to the theory value (Karl Marx), that value is to improve the welfare Dutch Leih as capitalist.
Open Door Economic System (Liberal)
The insistence of the Dutch Humanist who want to change the fate of indigenous people for the better, encourages the Dutch government to change its economic policies. Regulations made new agrarian, which among other things regulates the leasing of land to private parties for a period of 75 years, and the rules of the land be leased and which should not. It seems also still not free from the theories of classical schools, among others look at:
a. The existence of the Dutch government as a landlord, private firms managing private estates as the capitalist class, and the indigenous peoples as a serf labor.
b. The principle of absolute advantage: When in a spot price of goods is above the cost of labor required, the employer obtain great profits and encourage the flow of factors of production to the place.
c.Laissez faire laissez passer, the economy is left to the private sector, although obviously, the Dutch government still plays an important role as a real invaders.
In the end, this system instead of improving the welfare of indigenous peoples, but instead add to the misery, especially for contract laborers who are generally not treated feasible.
Japanese occupation (1942-1945) ÿ
Japanese military government implemented a policy of economic resource mobilization to support the advance of the Japanese forces in the Pacific war. As a result, there was a massive overhaul in the economic structure of society. Welfare of the people have fallen sharply and disaster food shortages, because the production of foodstuffs for the supply of military forces and the production of castor oil for lubricating fighter top priority. Import and export traffic, resulting in scarcity textiles previously obtained with the import.
As this was an army-style socialist system Dai Nippon. Everything is governed by the center in order to achieve common prosperity are expected to be achieved after winning the Pacific war.
OLD ORDER
Post-Independence Period (1945-1950)
Financial economic situation in the early days of independence is very bad, among others caused by:
Inflation is very high, due to the release of more than one currency uncontrollably. At that time, for a time the Indonesian government declared three currencies in force in the territory of Indonesia, which is the currency De Javasche Bank, the Dutch government currency, and the Japanese occupation currency. Then on March 6, 1946, Commander AFNEI (Allied Forces for the Netherlands East Indies / allied forces) announced the entry into force of the NICA money in areas controlled by the allies. In October 1946, the Indonesian government also issued new banknotes, which ORI (Oeang Republic of Indonesia) as a replacement for the Japanese currency. Based on monetary theory, the amount of money supply affects the price level increase.
The existence of the economic blockade by the Netherlands since November 1945 to close the door foreign trade RI.
Empty state coffers.
Massive exploitation during the colonial period.
Attempts were made to overcome economic difficulties, among others:
National Loan Program implemented by the finance minister with the consent Ir.Ø Surachman BP-KNIP, conducted in July 1946.
Attempt to break the blockade by diplomacy rice to India, mangadakanØ contact with Corporate America, and blockade the Dutch in Sumatra, with the aim to Singapore and Malaysia.
Economic Conference in February 1946 with the aim to memperolehØ unanimous agreement in tackling economic problems are urgent, namely: the problem of production and distribution of food, clothing issues, as well as the status and administration of estates.
Formation Planning Board (Board Designer Economics) January 19 1947Ø
Reconstruction and Rationalization of the Armed Forces (Rera) 1948Ø >> divert the former army personnel into productive fields.
Kasimo Plan which essentially about food self-sufficiency efforts denganØ some practical implementation guidelines. With self-sufficiency, it is expected the economy will improve (Sect Fisiokrat: agricultural sector is a source of wealth).
Liberal Democracy period (1950-1957)
This period is called the liberal period, due to the political and economic systems using liberal principles. Submitted on the appropriate market economy theories stating classical school of laissez faire laissez passer. Whereas indigenous entrepreneurs are still weak and can not compete with non-indigenous businessmen, especially Chinese businessmen. At the end of this system only worsen the economic condition of the newly independent Indonesia.
Efforts are being made to address the economic problems, among others:
a) Scissors Syarifuddin, which cuts the value of money (sanering) March 20, 1950, to reduce the amount of money in circulation in order to level the price drops.
b) Program Fortress (Cabinet Natsir), which attempts menunbuhkan indigenous entrepreneurs and encourage national importers in order to compete with foreign imports by restricting the import of certain goods and import licensing only on indigenous importers and give credit to indigenous firms to potentially participate in the development of the national economy. However, this attempt failed, due to the nature of indigenous entrepreneurs who tend to be consumptive and can not compete with the non-indigenous entrepreneurs.
c) Nationalization De Javasche Bank to Bank Indonesia on December 15, 1951 through Law no.24 th 1951 to function as the central bank and the bank circulation.
d) The economic system of Ali-Baba (cabinet Ali Sastroamijoyo I) who initiated Mr. Isaac Cokrohadisuryo, namely raising cooperation between Chinese entrepreneurs and indigenous entrepreneurs. Employers are required to provide a non-indigenous practices on indigenous entrepreneurs, and government to provide credit and licenses to private businesses nationwide. This program is not running well, because indigenous entrepreneurs are less experienced, so it is only a tool to obtain credit assistance from the government.
e) unilateral cancellation of the results of the RTC, including the dissolution of the Netherlands-Indonesian Union.
As a result many Dutch entrepreneurs who sold his company while indigenous entrepreneurs have not been able to take over these companies.
Guided Democracy period (1959-1967)
As a result of the presidential decree July 5, 1959, the Indonesian run guided democracy system and the structure of the Indonesian economy leads to etatisme system (everything is set by the government). With this system, expected to lead to shared prosperity and equality in social, political, and economic (Sect Socialism). However, economic policies taken by the government in this period have not been able to improve the economic situation in Indonesia, among others:
a) The devaluation was announced on August 25, 1959 lowered the value of money as follows: Money bills Rp 500 to Rp 50, bills Rp 1,000 to Rp 100, and all bank deposits in excess of 25,000 frozen.
b) Formation of the Economic Declaration (Dekon) to reach the stage of socialist Indonesian economy by means of guided. In practice it resulted in stagnation for the Indonesian economy. Even at 1961-1962 prices of Baranga rose 400%.
c) Devaluation is done on December 13, 1965 to make money at Rp 1,000 to Rp 1. So the new rupiah 1000-fold properly appreciated rupiah old, but in a new community rupiah appreciated 10-fold higher. So the government action to suppress inflation rate is even increase the rate of inflation.
Failures in various monetary measures were compounded because the government does not save money-spending. At this time many lighthouse projects of the government, and also as a result of the politics of confrontation with Malaysia and Western countries. Again, this is also one of the main consequences of the choice of using a system of guided democracy which could mean that Indonesia is oriented to the East (socialist) either in politics, seems the economic, as well as other fields.
THE NEW ORDER
At the beginning of the new order, economic stability and political stability a top priority. Business-oriented government programs to control inflation, the country's financial rescue and security of people's basic needs. Inflation control is absolutely necessary, because at the beginning of 1966 the inflation rate of approximately 650% per year.
After looking at the experience of the past, where the liberal economic system turns indigenous entrepreneurs compete with non-indigenous businessmen and etatisme system does not improve the situation, the chosen system of mixed economy within the framework of the economic system of Pancasila democracy. This is one of the main practice of Keynes's theory of government intervention in the economy is limited. Thus, under the conditions and specific problems, the market is not allowed to decide for themselves. For example, in the determination of the minimum wage and expansion of employment opportunities. This is the beginning of the era of Keynes in Indonesia. Government policies began oriented Keynesian theories.
Economic policies directed at the development in all fields, reflected in the 8 lane equity: basic needs, education and health, distribution of income, employment, business opportunities, participation of women and youth, the spread of development, and justice. All this is done with the implementation of the general pattern of development of the long term (25-30 years) five-yearly periodical called Pelita (Development five years).
The result, in 1984 Indonesia succeeded rice self-sufficiency, poverty reduction, improvement of people's welfare indicators such as enrollment rates and a decrease in infant mortality, and the rapidly increasing industrialization. The government also succeeded in promoting preventive checks to reduce the number of births through family planning and setting the minimum age to be married.
However, the negative impact is the destruction and pollution of the environment and natural resources, economic differences between regions, inter-group and inter-group work in the community felt increasingly sharp, and the accumulation of foreign debt. Besides, the construction raises laden conglomerate and business corruption, collusion and nepotism. Development only prioritizes economic growth without balanced political, economic, and social justice. So that though successful in increasing
economic growth, but it is fundamentally very fragile national development. As a result, when the crisis is the impact of the global economy, Indonesia felt the worst effects. Prices rose drastically, the rupiah weakened quickly, and cause chaos in all fields, especially economics.
ORDER REFORM
BJ.Habibie presidential administration that started the reform period has not been maneuvering sharp enough in the economic field. Preferred policies to control the political stability. During the reign of President Abdurrahman Wahid was, there has been no meaningful action to save the country from the downturn. In fact, there are a variety of economic problems inherited from the new order must be addressed, among others, the problem of corruption (Corruption, Collusion and Nepotism), economic recovery, the performance of SOEs, inflation control, and maintain the exchange rate. In fact, the president of scandal Bruneigate which dropped its credibility in the eyes of society. As a result, his position was replaced by President Megawati.
The leadership of Megawati Sukarnoputri
Urgent problems to be solved is the economic recovery and enforcement. Policies adopted to address the economic issues, among others:
a) Request delay debt payments of US $ 5.8 billion at the Paris Club meeting on the 3rd and allocate foreign debt payments amounting to Rp 116.3 trillion.
b) the privatization policy. Privatization is selling state companies in the period of crisis with the aim of protecting the state enterprise of the intervention of political forces and reduce the burden on the state. Proceeds successfully raised Indonesia's economic growth to 4.1%. However, this policy sparked a lot of controversy, because of the privatized SOEs sold to foreign companies.
In this period also realized the establishment of the Commission (KPK), but there is no concrete breakthrough in the fight against corruption. Whereas the existence of corruption makes many investors think twice to invest in Indonesia, and disrupt national development.
Future Leadership Susilo Bambang Yudhoyono
President Yudhoyono's first controversial policy is to cut fuel subsidies, or in other words to increase fuel prices. This policy is triggered by the rise in world oil prices. Budget subsidies diverted to subsidize the education and health sectors, as well as areas that support the improvement of public welfare.
The first controversial policy that raises the controversial policy, namely direct cash assistance (BLT) for the poor. Most BLT did not get into the hands of the recipients, and distribution cause various social problems.
Policies adopted to increase the per capita income is relying on bulk infrastructure development to stimulate economic growth and inviting foreign investors with the promise of improving the investment climate. One is holding Indonesian Infrastructure Summit in November 2006, which brought together investors with regional heads.
According to Keynes, the investment is a key factor to determine the employment. This might underlie government policy has always aimed to provide convenience to investors, especially foreign investors, which one of them is the revision of labor laws. If more and more foreign investment in Indonesia, the expected number of job opportunities will also increase.
In mid-October 2006, Indonesia settle all remaining debt to the IMF amounted to 3.2 billion dollars. With this, it is expected that Indonesia does not follow the agenda of the IMF in determining policy in the country. However discourse to owe more on overseas again emerged, after the release of the report that the economic gap between rich and poor narrowed, and the number of poor increased from 35.10 soul in February 2005 to 39.05 million in March 2006. This This is due to several things, among others, due to the disbursement of bank credit to the real sector is still lacking (banks prefer to keep funds in SBI), so that the performance of the real sector and the lack of impact on the decline in investment. In addition, the government bureaucracy is too thick, causing little expenditure of State and absorption, due to the inefficiencies of budget management. So, on the one hand the government is attempting to invite investors from outside the country, but on the other hand, domestic conditions are still unfavorable.
SOURCE:
Indonesian Economy-book
-Book Indonesian Economic History
: Http://www.binhakim.com/.../sekilas-history-economy-indo...
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