The Indonesian Quarterly Vol. XX No. 4 Fourth Quarter 1992

129 Pages·1992·6.3 MB·English

by  CSIS Indonesia

VOL. XX, NO. 4
Embarking on
Indonesia:
a
Take-off Stage
Current Event? • The Indonesian Strategy in
Indonesia's PoHtical Development in 1992 the Field of Agriculture
Indonesia in a Changing Regional and
International Environment • The Structural Change of Employment,
Indonesia and the South China Sea: and Education in Indonesia
Interests and Policies A
• Comparative Study of Education in
The Years of Living Dangerously:
Latin America and Indonesia
The Impacts of Financial Sector Policy
Reforms and Increasing Private Sector • Book Reviews
External Indebtedness in Indonesia,
1983-1992
Centre for Strategic and International Studies
The Quarterly
TheIndonesian Quarterlyisajournalofpolicyoriented studies published bytheCentre
for Strategic and International Studies (CSIS), Jalan Tanah Abang III/23-27, Jakarta
10160. It isamedium for research findings, evaluationsandviewsofscholars, statesmen
and thinkers on the Indonesian situation and its problems. It is also a medium for
Indonesian views on regional and global problems. The opinions expressed in The
Indonesian Quarterly are those of their authors and do not necessarily reflect the
opinion ofthe CSIS.
The Logo
To better represent the underlying ideas that gave birth to the CSIS
in 1971 the Centre uses as of 1989 the logo that figures on the front
coverofthisjournal. Theoriginal, inbronze, designed byG. Sidhar-
ta, it consists ofadiscwithanengravingthatdepictstheglobewhich
serves as a background to a naked man with an open book laid on
a cloth over his lap, his left hand pointing into the book, his right
hand raised upwards. Altogether it simbolises the Centre's nature as an institution
where people think, learn and communicate their knowledge to whoever are interested,
to share it with them, mankind the world over being their concern and the globe their
horizon. The nakedness symbolises the open-mindedness, the absence of prejudice, in
the attitude ofthe scholars who work ,with the Centre, just as it is with scholars every-
where. The inscription reads "Nalar Ajar Terusan Budi," which in the Javanese
language essentially means that to think and to share knowledge are only the natural
consequence ofan enlightened mind. It is asuryasengkala, that is chandrasengkala, a
Javanese traditional way to symbolise a commemorable year in the lunar calendar,
adapted to the solar calendar system. It consists in using words that express the per-
ceived meaning of the commemorated year while marking the year at the same time,
each word having a numerical value. Thus, the inscription, in reverse order, represents
the year the CSIS was established: 1971.
Editor Daniel Setyawan
Secretary Al. Baroto
Advisory Board J. Soedjati Djiwandono, Kadjat Hartojo, Daoed Joesoef, Clara Joewono,
ofEditors Rufinus Lahur, A.M.W. Pranarka, Pande R. Silalahi, Djisman S. Simandjuntak,
Hadi Soesastro, Harry Tjan Silalahi, Jusuf Wanandi.
TheIndonesian Quarterly is published in January, April, July and October.
SIT 01381/SK/Dirjen PG/SIT/72
ISSN 0304-2170
From the Editor 360 • The Years of Living Dangerously:
The Impacts of Financial Sector
Current Events Policy Reforms and Increasing
Private Sector External Indebtedness
• The Need for Equitable Distribution in Indonesia, 1983-1992
Syahrir 362 AnwarNasution 405
• The Tenth Summit Meeting of
• The Indonesian Strategy
the Non-Aligned Movement
in the Field of Agriculture
J. SoedjatiDjiwandono 364
H.S. Dillon 438
The Structural Change of
Articles
Employment, and Education
Indonesia's Political Development in Indonesia
in 1992 IKomangGdeBendesa 447
JusufWanandi 369 A Comparative Study of Education
in Latin America and Indonesia
Indonesia in a Changing Regional
AnneGreene 461
and International Environment
DewiFortunaAnwar 376
Book Review
Indonesia and the South China Sea:
Interests and Policies The Singapore Connection
R,izalSukma 395 SuryonoDarusman 482
From
the Editor
THE
yearnineteenninety fourmarks thebeginning ofthe Sixth Five-yearDevelopment
Plan (Repelita VI) and Indonesia's Second Twenty-five Year Long-term Develoi>-
ment Programme (PJPT II) known as the take-off stage for the attainment of its
national development goals. Consequently, members of the People's Consultative Assembly
(MPR) are now working on the Guidelines of State Policy (GBHN) for the next five.year
period. The 1,000 members of the MPR, which also include members of the House of
Representatives (DPR) for the 1992-1977 term were sworn in recently on the first ofOctober
1992.
The MPR is made up of500 members of the DPR, 100 of whom are appointed military
officers and 500, who are representatives from the provinces, the military, political parties
MPR
and members ofprofessional and religious organisations. The immediate task ofthe is
to evaluate and adopt the 1993-1998 policy guidehnes during the General Sessions of the
Assembly next year.
It was a break from the past, when MPR's mandatary, the President delivered the draft
materials on the policy guidelines to the political groups, the Armed Forces (ABRI) and
representatives of the provinces for discussion. Historically, the draft of the policy guide-
lines, formulated by the National Defence Council at the President's behest, was not submit-
MPR
ted to for perusal until just before the general sessions of the Assembly.
The Indonesian government, which will embark on Repelita VI based on the Guidelines
of State Policy, will face challenges which will not be easy to surmount. It has to secure the
welfare ofapproximately a quarter ofa billion Indonesians and the hardest challenge will be
to achieve a sufficiently high growth rate and equitable distribution of the development
results.
In his state address before parliament on 15 August 1992, the President pointed out the
need for a dynamic and equitable distribution of the development results. According to Pre-
sident Soeharto, it is imperative not only to cut the "cake" in equal parts, but also to divide
the increasingly larger "cake" more evenly. To accomplish this goal, the nation has to
prepare a strong foundation, not only in the economic sector, but in other sectors as well.
FROM THE EDITOR
361
How has the Indonesian nation fared in laying a solid foundation for the take-offstage?
To provide our readers with some facts concerning Indonesia's efforts in laying a solid foun-
dation for the second long-term development programme, this edition of the Indonesian
Quarterly contains articles on Indonesia's current demarches in the economic, political, and
educational fields. As usual the Current Events section in this journal features Indonesia's
domestic and foreign policy to keep our readers abreast of the current state of affairs.
Daniel Setyawan
Current Events
The Need
for Equitable Distribution*
Syahrir
THE
state address of President Soe- blems. The 1991 growth rate involved sec-
harto before the DPR's (House of toral growth, which was not always "har-
Representatives) plenary session on monious".
August 15, pointed out various economic
data and new ideas. Those economic data in- The growth rate ofthe manufacturing in-
cluded the official rate of economic growth dustry sector was 9.8 per cent, whereas that
and several macro-economic figures such as of the agricultural sector was only 1.3 per
the rate of inflation, the current account cent. Both sectors accounted for about 40
GDP
deficit, the rate of growth of the money sup- per cent of and their shares respectively
ply, some export and import data, and also were almost equal to that of the industrial
the rate of sectoral economic growth. sector. The share ofthe industrial sector was
slightly higher than 20 per cent of the GDP.
In addition, worth noting are his remarks
concerning equity. He said, "Equity should
The industrial sector, which recorded an
be promoted in a dynamic manner, that is, average growth rate ofmore than 10 per cent
not only the same 'cake' but also the ever
annually within the last three years, for the
growing 'cake' should be distributed more
first time became the biggest sector (of its
equitably." Hence, it might be a good idea share in GDP), surpassing that of agricul-
to analyse the macro-economic figures men-
ture, which used to be the biggest sector.
tioned in this reflective state address. With a
This structural shift ofthe agricultural sector
7.4 per cent growth rate in 1989 and 1990,
was also reflected in non-oil/gas export
Indonesia's growth rate exceeded 7 per cent
(non-tnigas) figures. In the 1991-1992 fiscal
for the last three years. This high growth rate year, non-migas exports increased by more
was not achieved smoothly nor without pro-
than 23 per cent compared to those of the
*This article is translated from Tempo, 22 August previous fiscal year, i.e. from US$15.38 bil-
1992, by Threesye O. Mariman. lion to US$19 billion.
CURRENT EVENTS 363
A historic change also occurred in the that the income of more than half of the In-
structure ofcommodity exports. For the first donesian labour force has decreased. This is
time, exports of textiles and garments a serious problem in a structural transforma-
ranked first; their value amounted to tion.
US$3.89 billion, which was 40.8 per cent
above their value in the previous fiscal year. The problem is, that the transformation
in the production structure works much
Export of plywood, which has always been
in the leading position (excluding oil and gas faster than transformation in the labour
force structure. The agricultural sector,
exports), ranked second, and is valued at
which now account for only 18 per cent of
US$2,868 billion.
GDP
the but has absorbed 52 per cent of
The emergence of new first rank sector total labour force, has experienced many
and commodities (manufacturing and textile problems in productivity and efficiency. The
and garment export) is a logical consequence agricultural sector, which received an award
of the transformation of production or ex- from FAO in 1984 for rice self-sufficiency,
ports, especially during the last decade. The has a much wider scope than just rice pro-
above suggests the need to reconsider the duction. This sector includes horticulture,
part of the President's speech on the need livestock breeding, fisheries and com-
"to distribute more equitably not only the modities like palm oil, an important ingre-
same 'cake' but also the increasinglygrowing dient for the production of cooking oil.
'cake'."
It turns out that in the agricultural sec-
The President's remarks remind us of a tor, in both large estates and small-holdings,
big debate about development strategy in the there are still many regulations and "decree
1970s. At that time there was a question as to based markets", which prevent efficient
whether the "trickle down" strategy of de- allocation of production factors. They result
velopment was the best way to alleviate in non-optimal production levels. Aside
structural poverty. The question of "stra- from the famine and pests in 1991, which
tegy and distribution of economic growth" really affected successful rice harvests, the
seemed to be at least as important as the eco- role of various obstacles and "decree based
nomic "growth rate" itself. This is clearly markets" is significant in explaining the low
reflected in the 1991 growth rate figures. production level in the agricultural sector.
Even though the 1991 growth rate, which
stood at 6.6 per cent, was less than that of The President's speech also called for in-
1990, which was 7.4 per cent, there was no trospection. Not only did he point out the
drastic decline in the growth rate of the non- successes ofdevelopment, such as the decline
agricultural sector. of the number of people living in absolute
poverty (based on the criterion of the Cen-
The agricultural sector, which only grew tral Bureau of Statistics), but he also added
at 1.3 per cent, implies a negative growth. that there are still tens of million of people
Given the 1.8 per cent growth rate of the living only slightly above the poverty line
population, there was a decline of 0.5 per who may drop below it any time. They have
cent growth rate in a sector absorbing 52 per no savings nor insurance to save them from
cent of the total labour force. This means potential misfortunes.
364 THE INDONESIAN QUARTERLY. XX/4
With a US$570 per capita income, it is marked-up prices of projects. Now is the
important to identify the growth strategy time for economic efficiency, so as to in-
that is able to sustain national integration. crease tax revenues and to distribute them to
The first priority of attaining a more equi- various welfare programmes. What is more,
table and consistently high growth rate is to those programmes have increasingly become
abolish various oligopolies, monopolies, expensive due to lack of social solidarity for
"decree based market" regulations, and the poor on the part of the rich.
The Tenth Summit Meeting
of the Non-Aligned Movement
/. Soedjati Djiwandono
THE
10th summit meeting of the Non- coming three years. What seems to have
Aligned Movement held in Jakarta been overlooked is the fact the nonaligned
throughout the first week of Septem- movement has not been entirely a product of
ber 1992 was definitely unique in that it was the Cold War. This is not to deny the contri-
the first of its kind to be convened in the bution of the Cold War to the birth of the
post-Cold War era. To the extent that at that movement, in the sense that its birth was ac-
meeting the nonaligned nations sought to re- celerated and further justified by the moun-
define the identity, role, and relevance ofthe ting tension between East and West or the in-
movement in the light of current develop- creasing intensity ofthe Cold War in the ear-
ments in world politics marked by rapid and ly part of the 1960s. This was indicated by
revolutionary changes, the 10th nonaligned such developments ofthe period as the abor-
summit was at least as important as the first tive summit meeting between President
held in Belgrade over three decades before. Eisenhower of the United States and Mr. Ni-
kita Khrushchev of the Soviet Union to have
Indeed, for some time before the
been held in Paris in 1960 because ofthe U-2
meeting, questions had been raised by acade-
incident; the building of the Berlin Wall; and
mics, political analysts and observers in In-
the tension between Cuba and the United
donesia on the relevance and role ofthe non-
States culminating in the Bay of Pigs inva-
aligned movement after the end of the Cold
sion.
War, and hence the interest of Indonesia in
hosting the 10th summit and assuming the Nonalignment as a form of foreign
chairmanship of the movement for the policy pursued by many countries of the de-
CURRENT EVENTS 365
veloping world, particularly those that have either the United States or the Soviet Union.
obtained independence only since the end of
Perhaps it is more accurate to say that
World War II, is essentially an expression of the Bandung Conference inspired the non-
their desire or aspirations to continue to be
aligned movement. It is important to note in
free and independent from foreign inter-
this connection that the chief initiator of the
ference and, worse still, foreign domination.
movement was President Joseph Bros Tito
It is in that sense an expression of national-
of Yugoslavia. Having been expelled from
ism that grew out of their colonial expe-
the Cominform in 1948, yet still communist,
rience. This nationalism, therefore, at least
Yugoslavia could not possibly be an ally of
at its initial stage, has taken the form
the West. It wanted to pursue an indepen-
especially of anti-colonialism and anti-
dent foreign policy. In its particularly unique
imperialism.
position, however, Yugoslavia could not
In fact, it is that kind of nationalism that possibly identify itself with the AfroAsian
was the underlying foundation or spirit of group of nations. President Tito, therefore,
the Bandung Conference or the Afro-Asian proposed a community of nations bound by
Conference held in Bandung, Indonesia, in a common political commitment rather than
1955. Although it is often believed that the geographical boundaries that would exclude
Bandung Conference was the start of the Yugoslavia. In this he found support from
nonalignment movement, it had little to India, Egypt, Ghana, and if reluctantly, In-
do with the Cold War. It is to be noted that donesia under President Soekarno, who pre-
some countries taking part in the Bandung ferred the holding of the second Bandung
Conference were pro-Western, while others Conference, later to be expanded even to
were pro-Eastern in their foreign policy Latin America. Thus began the nonaligned
orientation. This should serve to explain why movement.
those attending the Bandung Conference in
fact disagreed on the meaning of "imperial- To return to the question of relevance,
ism". For some, imperialism meant Western therefore, it may be said that to the extent
imperialism, for others it meant commun- that the nonaligned movement has been a
ism. product of the Cold War, or at least to the
extent it relates to the Cold War, then it
Thus it may be true that Bandung was the seems inaccurate to say that the nonaligned
seed of the nonaligned movement in the movement continues to be relevant in the
sense that just as the Bandung Conference, post-Cold War era. Yet it may be said that
the nonaligned movement has been essen-
it is still relevant, if so wished, as an ex-
tially an expression of nationaHsm, namely,
pression or manifestation of the aspirations
the desire to be free and independent from
to pursue an independent foreign policy, if
external ppwers, particularly the great not from East or West, then from any exter-
powers. But in the context of the Cold War,
nal (particularly great) powers.
these great powers were, of course, particu-
larly the United States and the Soviet Union. To be sure, with the East and Western
•
Bandung was not, nevertheless, the begin- blocs now gone, one may well raise the issue
ning of the nonaligned movement in that of the name of the movement. But more im-
particular sense, that is, nonaligned against portant than the question of name, of
366 THE INDONESIAN QUARTERLY, XX/4
course, is the possible role that the move- mutual fear of destruction on the part of
ment may play in world politics now that the both East and West.
Cold War has ended. For whatever its name,
and in spite of its possibly decreasing rele- The first and probably the most impor-
vance, the member nations of the move- tant challenge to the nonaligned move-
ment, now numbering 109, representing ment, therefore, will be'how to create and
about two thirds of the United Nations maintain peace within itself, that is to say,
membership and a great majority of the how its member states can solve their own
humankind, have been linked and more or conflicts; how they can manage their con-
less united in some kind of a loose associa- flicts of interest in a peaceful way so as to
tion. What are they going to do as a group? avoid further violent conflicts in the future.
In other words, the nonaligned countries
Despite their differences in many should first of all put their own houses in
respects, the nonaligned nations do share a order before they can speak of their role in
number of common problems, and this the maintenance of world peace. Only then
alone should serve to justify some common will the nonaligned movement acquire its
approach. The majority ofthem are definite- credibility in the eyes of the rest of the world
ly developing nations,- some facing even the and hope to play a proper role in world poli-
problem of under-development and back- tics, particularly in the maintenance ofworld
wardness. Many of them share a common peace.
problem of foreign debts and various degrees
Focusing their attention on economic de-
of dependency on the industrialized coun-
velopment and thus on economic coopera-
tries of the West.
tion among the nonaligned countries forms
First and foremost will be the question of an important part of the endeavour to put
the contribution the nonaligned movement their own houses in order. So far, the at-
may possibly make to world peace, a pri- tention of the nonaligned countries has
mary preoccupation of its member nations been concentrated on political issues. This is
from the very beginning of the movement. If not to suggest that political issues are not im-
any lesson may be learned from past expe- portant. The movement itself was motivated
rience, it seems worth remembering that the above all by political considerations. But as
nonaligned movement has hardly been able it has turned out throughout the history of
even to create and maintain peace within the movement, political issues have been
and among its own ranks. It has been un- most divisive because of the differences in
able even to solve conflicts between its own political orientation among the member
member countries such as the war between states. This accounts for the fact that most
Iran and Iraq or that between India and Pa- resolutions adopted by the previous non-
kistan, not to speak of domestic conflicts in aligned summits have been mostly in the
many individual member states of the non- nature of political generalities, while eco-
aligned movement. Indeed, the fact that the nomic cooperation has probably been found
world was saved from the nuclear catastro- unfeasible among so many nations of dif-
phy ofa Third World War had nothing to do ferent potentialities and stages of economic
with the nonaligned movement. It was due development. Yet it is in the economic field
to the logic of the Cold War itself, to the that at present a large majority of the non-