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VOL. XXIV, NO. 3 THIRD QUARTER 1996 Indonesia the Face of in Globalisation Current Events • Economic Reform in Indonesia: The Transition from Resource Dependence Review of Political Development to International Competitiveness Articles: • Indonesia's Mineral Potential and the • Indonesian Foreign Policy at the Awakening ofIts Mineral Industry Advent ofthe 21st Century • Labour and Women in Java: ANew Historical Perspective • Coastal Management in an Enclosed • Internal Migration Between Java-Bali Sea Environment: An Indonesian Case and Eastern Indonesia in the Preservation ofCoastal Ecosystem Book Review Cei^e for Strategic and International Studies The Indonesian Quarterly is a journal ofpolicy oriented studies published by the Centre for Strategic and International Studies (CSIS), Jalan Tanah Abang 111/23-27, Jakarta 10160. It is a medium for research findings, evaluations and views of scholars, 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 of the CSIS. 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 fi-ont cover of this journal. The original, in bronze, designed by G. Sidharta, it consists of a disc with an engraving that depicts the globe which 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 of the scholars who work with the Centre, just as it is with scholars everywhere. 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 of an en- lightened mind. It is a surya sengkala, that is chandra sengkala, 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 perceived 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. Daniel Setyawan J. Soedjati Djiwandono, KadjatHartojo, Daoed Joesoef, Clara Joewono, Rufinus Lahur,A.M.W. Pranarka, PandeR. Silalahi, Djisman S. Simandjuntak, Hadi Soesastro, Harry Tjan Silalahi, JusufWanandi. TheIndonesian Quarterly is publishedin January, April, Julyand October. 01381/SKTDirjen PG/SIT/72 0304-2170 THE UAEMY INDOUESIAI VOL. XXIV,NO. 3, THIRD QUARTER, 1996 Contents Current Events EconomicReform in Indonesia: The TransitionfromResource • OnForeignInfluences: The Dependence to International Indonesian Case Competitiveness UmarKayam 214 AH Wardhana 257 • BankingRestructuring in the Indonesia's Mineral Potential and Era ofGlobalisation the Awakening ofIts Mineral J. SoedradjadDjiwandono 220 Industry SoetaryoSigit 273 Review ofPolitical Development Labour and Women in Java: • The Increasing Challenge of ANew HistoricalPerspective Regime's Legitimacy PeterJamesHancock 290 Sudibjo&DonniEdwin 226 Internal Migration Between Java- Bali andEastern Indonesia Articles Soewartoyo 303 • IndonesianForeignPolicy atthe Advent ofthe 21st Century HasjimDjalal 233 • Coastal Management in an Book Review Enclosed Sea Environment: An Indonesian Case in the • Analysis ofABRI's Dual Preservation ofCoastal Ecosystem Function R.M. Sunardi 248 M.Abriyanto 323 Current Events On Foreign Influences*: The Indonesian Case UmarKayam FOREIGN influences have been courage and the know-how to explore the penetrating Indonesia even as unknown worlds. long as the first century. Traders When from China, India, the Middle East and their religions were introduced much later from Europe came to the stra- to their trade partners in Southeast Asia tegically located archipelago to look for and later embraced by the natives, another spices, woods, forest product, rice, gold dimension of foreign influence developed. which were, at that time, abundant in the When Buddhism in 8th century Sriwijaya, islands which in turn were bartered with South Smnatra, became the religion of the silk, textiles, various kinds of crafts and kingdom, the kingdom did not only flour- ish as a powerful and prosperous em- other products from the mentioned countries. Trade contacts and contracts brought perium but developed itself as a great also other kinds of exchanges namely learning centre of Mahayana Buddhism in Southeast Asia where Buddhist monks and languages, which later became "market" languages, stories about their respective lajonen came over from various parts of countries, which later grew to exchanges Southeast Asian and South Indian regions. Buddhism was also embraced in the king- of other concepts of science, technology, literature and religion. In those days, dom of Mulawarman in East Kalimantan also in the 9th century in Mataram and China, India and the Middle East were in the 14th century was one of the most the superpowers since they mastered the sciences and technology and had the important religion, together with Hindu- ism, in the kingdom of Majapahit in East Java. Paper presented at International Seminar on the 50th Anniversary of Bank BNI, Jakarta, July 9, The most convincing influence and 1996. remnants of Buddhism in Indonesia are 215 CURRENTEVENTS among others the Borobudur and Mendut school system, and modern economy and temples in Central Java which were built monetary system. Twenty per cent of Indo- by King Sanjaya of Mataram in the 9th nesia's population embrace Christianity, century. Hinduism came later in the archi- Protestant as well as Catholic, and are pelago and flourished in several kingdoms scattered in the cities and regions in in Java with Majapahit from the 14th until Sumatra and Manado in North Sulawesi. the 16th century which was the greatest *** Hindu empire in the archipelago. Until this very day Hinduism is still embraced in the Long contacts with foreigners result- island of Bali. Islam came in the archipe- ed not only in casual or skindeep acquaint- lago through ist first penetration in the ances but also mutual deeper influences most northern tip of Sumatra, in Aceh, which later could grow into stronger roots. where later Islamic kingdoms were estab- Century long contacts with Buddhism and lished in the region. Smaller Islamic king- Hinduism through trade contacts had re- doms were also established in the 17th cen- sulted in changes in religious perceptions, tury at the northern coast of Java which worldviews and concepts about state and later reached its peak at the kingdom of statecrafts. Buddhist and Hindu kingdoms, Mataram (II) in southern Central Java small and great, flourished and vanished between the 17th to the 18th century. in Sumatra and Java, bringing new civiliza- Islamic kingdoms, were also established tions, concepts in organizing communities in Makasar and Bone, both in South Su- into more complex and intricate states and lawesi, and smaller kingdoms in Sumatra statecrafts, religious and state rituals, de- and Kalimantan. Today Islam is embraced veloping the concept of theatre states (to by about eighty per cent of the Indonesian use Clifford Geertz concept). Sanskrit be- population. came the court language, at the same time the Sumatrans and the Javanese adapted Christianity entered the Indonesian Old Malay and Old Javanese historical archipelago together with the European annals, inscriptions and literature. Bud- spice traders in the Moluccas and other dhist temples and Hindu puras were built eastern islands of the archipelago. The and developed along the adapted Java- waves of European traders, the Portuguese, nese and Balinese architecture inspired the Spanish, and the British, who came by the Indian classical concepts of archi- not only to trade but also to conquer the tecture. spice market and introduce Christianity came to an end after finally the Dutch took The same is also true with Indone- over the trade monopoly and later started sian Islamic mosques all over the country to colonize the archipelago in the 17th which were developed according to a century for about three hundred years. blend of indigenous architecture and for- When the Netherlands-Indies was estab- eign inspiration. Old Javanese literature lished and consolidated, the Dutch also was inspired by the Indian great epics established and introduced European of Ramayana and Mahabharata and Bud- modern sciences and technology, public dhist as well as Hindu tales and stories. 216 THE INDONESIAN QUARTERLY, XXIV/3 Banudt stahgeesJamvaandeesetheainrdoBwanliinnetseerpraeuttahtoirosn waaksinsghitfhtaetd wianstoathreeinvciaerwnattihoant otfhea kgiondg, and developed their own Old Javanese was a Kalifatullah, the messenger of God. literature. The two famous Indian epics The Javanese calendar is a curious blend also become important sources of re- of the Arabic lunar year and the Hindu pertoires in the Javanese wayang kulit, Saka year which was created by Sultan the shadow leather puppet show, and the Agung of Mataram in the 17th century. wayang wong, the human wayang theatre. As in literature the Javanese and Bali- The window which was meant to view nese puppeteers made their own inter- the western world, Europe, was only a pretation and recreation repertoires. The small window through the colonial ad- Javanese and Balinese music outgrow the ministration of the Netherlands-Indies. Indian and Southeast Asian influences The Dutch colonial administration did and have developed into indigenous Java- not open the window widely, but only nese and Balinese gamelan, a unique pen- barely open which was considered as good tatonic scale music that until today are enough to give the opportunity for the studied and admired and even played by natives to get basic education on the modem international scholars and musicians. sciences. The purpose of the policy was to maintain the number of the well Islam's influence did also leave her educated colonial bureaucrats at the min- imprint in the Indonesian culture. The imum level in the order not to encourage Islamic tradition of education system an increase of a large native intellectuals through pesantrens, boarding schools which which could pose a serious threat to the teach the reciting and studies of the Holy colonial hegemony. Quran, was introduced and practised ** throughout the villages all over the archipelago. In literature the influence of Sufi The influences that were exerted by the and Tareqat literature was also felt in Aceh old super-powers took place in a very long and Javanese literature. But again, as in span of time through trade and religion. the Buddhist and Hindu literature, the The process of adaptation of the foreign indigenous Muslim authors developed their influences and later on the indigenous- own style and interpretation of original ation of the adapted influences occurred texts. Indonesian Islamic music, despite by stages of adjustments and readjust- its strong influences from the Middle East, ments. The penetration of influences of has also its own indigenous characteristics. foreign cultures in the archipelago hap- The earlier Buddhistic and Hinduistic con- pened in a peaceful way albeit in a very cepts on state and statecraft were shifted long time. The French expression of the into the Islamic tradition and view. But process was "penetration pacifique" which the shifts of influence of the concept did was to be distinguished from the exer- not depart radically from the earlier con- tion of the foreign influences through cepts of state and statecraft. The basic war and conquest. The long and peace- view that accepted the king as a dewa-raja, ful process of influence gave the Indo- 217 CURRENTEVENTS nesians ample enough room to do ex- industrial revolution the world has seen many and endless findings and discoveries in perimental exercises after reflections pondering. How could we explain the real- field. Discoveries and findings made vari- isation of such beautiful monuments as ous kind of radical breakthroughs in Borobudur, Mendut and the Pura Besakih man's life. It is as if the miseries of the without considering the long time and long past dark ages which make life so difficult for man has reached its final peacefiil factor. hour. Machines after machines, tools after The European traders who penetrated tools, gadgets after gadgets, were being the archipelago were a different breed of invented and absorbed by markets all over traders. They were traders who were ag- the world changing so many life-styles of gressive and wanted to conquer the land people. One can only muse and chuckle which yield the products of the trade. in recollecting how life was like at the They wanted to establish themselves as iim of the 19th and 20th centuries when masters of the new lands. Thus were the they compare it with today's life with Portuguese, the Spanish, the British and all its comfort. It was as it were only the Dutch who later became colonial im- yesterday when we did not know radio, perialists. Their basic concept and approach gramophone, telephone, television, re- — was to earn a maximun profit from the frigerator, electric house appliances trade through conquest and then system- things that are so much part of our daily atically exploit the resources of the con- life today. And not to mention the pre- quered land. A kind of state organisation sence of motor cars, motor bikes, aero- and administration was established with planes and trains, transportation means the only purpose to plunder the colony that have changed our perception of time in a more efficient and modem way. With and are insepara,ble from our daily life. this kind of approach one could not pos- The twentieth century has been decisive sibly talk about "penetration pacifique", in shaping the latest idiom of modernity and in turn one could not speculate about in our life. creative adjustments of the colonialised people. How could one talk about creative But findings and discoveries in science adjustments of the colonialised people if and technology do not stand alone. They they were only programmed to serve the are but inseparable links within a system purpose of the colonial masters. The case that shape the totality of the modern of Indonesia was not different from the world. When science and technology get mentioned pattern. During the three hun- more complex they need, for instance, the dred years of colonisation by the Dutch helping hand of the economy and the there was no monumental creativity pro- financial world. Science and technology duced by Indonesians. need to be backed up with more funding, money, when researches in the two fields get more and more complex and very ex- The twentieth century has witnessed pensive. The economic system backs up man's spetacular achievements. Since the science and technology after it decided 218 THEINDONESIANQUARTERLY.XXIV/3 that science and technology could be ab- higher education or universities in the sorbed into the dynamics of the economy. archipelago. There were, of course, schools Thus the economy backs up science to train lower echelon bureaucrats, element- and technology which in turn transfer the ary and secondary schools, even one med- products into commercial commodities. ical, one engineering and one agricultural The capital system, from then on, takes over academies, which were not enough to meet the dynamics in spreading the industrial the need of the population. The way Indo- products to the markets. In spreading the nesians accomodate and adjust them- commodities which means selling and selves in a such rigid colonial policy was, peddling the products to the world, the of course, to comply with the sfrict pol- .capital system tries to persuade the market icies of the colonial administration. As to adopt the products as parts of their mentioned earlier during the three hun- life-style or life habit. In case persuasion dred years of colonialisation, aside from does not work, the capital system is ready a few mediocre achievements, no master- to do more arm-twisting by brutal force. pieces were produced. This is the other side of the picture of the *** capital system. And that is why the twentieth century has made progress in many When Indonesia finally managed to sectors of life and also produced two proclaim its independence and establish world wars, World War I and World War a nation state that is called "Indonesia" II, which were continued by many pro- which was built on the basis of diversities tracted wars in many parts of the world. of all cultures that sustain the archipelago, The Dutch started to colonize Indone- Indonesia inherited from the Netherlands- Indies and the short-lived Japanese occu- sia as a mercantile imperialist and through the three centmies by experimenting a co- pation all sorts of bureaucracies and infrastructures that were barely effective and lonial administration or a kind of colonial efficient to meet the demand of a modem statecraft that was ushered into the early years of modern capitalism. Administrative nation. Beside the two kinds of inherit- or bureaucratic infrastructures to back up ance Indonesia also inherits its traditional- cultural products of the dim past which the Netherlands-Indies were filled with ex- are apparently still deep rooted in the perienced people from the Dutch mother people's subconscious level. The credo country while the rest of personnel were filled with Indonesian natives who were of the new nation state is to build a new nation that is capable to determine her educated or trained civil servant graduating own way to the status of modernity. Soon from elementary or secondary schools. Indonesia embarked upon several political As stated earlier the Dutch colonial ad- and economic experiments. The people ministration did not intend to prepare have learned the hard way to fulfil the the Indonesian natives to occupy high credo but still manage to overcome many posts in the bureaucracy and therefore crises. They realise that being modern is they did not feel compelled to establish to have a power system that will be an 219 CURRENTEVENTS open and democratic power system with new and independent Indonesia they a functioning control mechanism. Indone- realised that the traditional worldviews sians also realise that the economic system were still very strong and deep-rooted in must be an open and competitive system the society, realising that modernity re- which is constantly protected by the law quires a different kind of ingredients. system. Modernity must also be able to When one takes a deep look in the con- develop an industry which is strong and temporary modern world to find new able to sustain a healthy economic growth. ideas and inspiration of modernity, one The education system in a modern society would find that modern world has should be able to guarantee and provide changed radically. The capitalist system education to all citizens. Arts in a mod- has developed into a global capitalist ern society should reflect the artistic and system, a system that is much more soph- creative expression of the people and guar- isticatecd in controlling the international anteed by the power system of her free- market. Findings and achievements in dom. Finally the belief system in a mod- science and technology, for instance, has ern society should guarantee the citizen's been developing into many more soph- preference to embrace any denomination isticated products backed up by giants and reflect the tolerance of the people. of capitals and industries. The system has growu into a global capitalist sytem *** with many long and strong tentacles Indonesia's traditional inheritance from persuading local markets to adjust and the past was a power system which was comply with the global system. Local eco- an absolute feudal system and an economic and even political system must nomic system based on a traditional agri- also adjust to global system or will other- culture. The root of both systems was wise perish. The world is getting more strong and has managed to create a world- competitive but always geared towards view among the people who were accomo- the global system.Science, technology, dative to the mentioned systems. The co- the educational system, banking system, lonial Netherlands-Indies which suppos- artistic expressions, are all oriented towards edly introduced western concepts and global system. The world has never be- worldview, as mentioned earlier, was not fore witness such a powerful system. It is successful in uprooting the traditional global because the capitalist system is worldview of an absolute feudal system. sustained by a global capital whereas the Instead, the Netherlands-Indies created previous capitalist system were capitals a status quo between the feudal and that were confined in separate countries. colonial worldviews and let the feudal The management of the system is also system and economy prevail. The colonial global, the sale and promotion infra-struc- policy and strategy in maintaining the tures are also globally organised. The two traditional systems in status quo were whole world drink coca-cola and eat meant to strengthen the colonial hege- McDonald hamburgers; men over the mony in the Netherlands-Indies. When world wear Levi's faded jeans and young- Indonesians stated a new credo for the sters sing after the Beatles. Hotels and 220 THEINDONESIANQUARTERLY, XXIV/3 tmhoedewlosrlodf oavpearrtamnedntsmolroeokantdhemosarmeereasl-l "antTih-tehesniast"ioonf stthaetecoolfonIianldoNneetshiearliasndasn- taurants throughout the world serve fast Indies. The goal is to achieve Indonesia's fmoeond.t Pfroolfleoswssiontahleissmamine bgulsionbeasls mmaannaaggee-- modernity with her own model and char- hmaevnet nseyvsetrem.beLeinfelosotkyilengansdo gflaombially. tOanstee ataecntndetraiecsfltfeiisccsio.enftBtughlteobrawulitthhlceapslistoanalglbseaiytsntdeemf,fsetcrhtoionvweg begins to wonder whether we are truly in could the credo and goal be achieved? the process of homogenising the world Among many pessimistic speculation and mwhaenre at last one can talk about one hu- even fear of failures due to the weak infi-a- global culture. structures one should consider and re- member Indonesia's long past experience *** in anticipating and accomodating the "penetration pacifique" of the then superpowers of China, India and the Middle But culture is a dynamic dialectic pro- East. Although done in a slow and step cess of system. New systems will be always by step fashion Indonesians did manage offered but counter-systems would also be to develop a great cultural synthesis of presented. There will be always constant- Buddhism, Hinduism and Islam. With our tug-of-wars between systems which finally, meager and lean experience with the West at particular moment at least, will arrive and Christianity the people did manage to at a synthesis. When the synthesis takes lay the basis of modernity. Considering all a more permanent shape and becomes a that Indonesia should not be pessimistic, new thesis it will be challenged again by despite global capitalism, in anticipating new concepts of systems. modernity. Banking Restructuring in the Era of Globalisation* J. SoedradjadDjiwandono Introduction ally these changes present banking in- AT dustry with both challenges and oppor- the turn of this century rapid tunities. In the occurrence of swift changes, economic, technological, and geo- political changes are the order of A Keynote speech delivered at International Se- the day. right mixture of these changes minar on the 50th Anniversary ofBank BNI, Jakarta, will certainly benefit all of us. But, basic- July9, 1996.