| Abstraksi Narasi |
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The peride under review was quite eventful both politically and economically.
As had been widely predicted, the coalition of `Functional Groups` (Golkar) backed by the government, won in the 3 July elections, the second ever held in independent Indonesia. What surprised most, including the government, was the decisive majority secured by Golkar. Two-thirds of all the votes cast went to it, the majorities ranging from 45 per cent in the Moluccas to 93 per cent in Southeast Sulawesi. Ninety-four per cent of eligible voters turned out to vote, as against around 80 per cent in the 1955 election.
Although Golkar`s membership includes labour unions, professional organisations, civil servants and other functional groups, it is mainly directed by a group of prominent military officers close to the president. Fears that the Golkar victory would mean a victory for the military and would reduce Indonesia`s commitment towards accelerated economic development were, however, dispelled by the dramatic announcement of a Cabinet reshuffle on 9 September which was responsible for the 1966-1969 economic reforms and stabilisation program. They are Prof. Widjojo Nitisastro, the head of the Planning Bureau (Bappenas) who was made State Minister of Planning, Professors Mohammad Sadli, Subroto and Emil Salim, who were made Minister of Manpower, Minister of Transmigration and Co-operatives, and Minister in Charge of Rehabilitating the State Apparatus respectively. These, along with Professor Ali Wardhana, who is already finance Minister and is also a member of the Presidential Advisory Group, and Professor sumitro Djojohadikusumo, the Minister of Trade, constitute a remarkably compact group, all economists, all from the University of Indonesia, and all commitedd to a similar approach to economic policy.
The appointment of the new ministers reflects the President`s increasing confidence in this group, justified by continued success in their efforts towards stabilisation and, in the last two years or more, rapid economic progress. Growth of rice output has exceeded the targets laid down in the Five Year Plan which, at the time of its launching, were considered too ambitious. Exports also rose rapidly during 1969 and 1970, though this trend has slowed down considerably in 1971. On the other hand, rapid growth fostered by accelerated investment expenditures has resulted in heavy pressures on foreign exchange reserves with rising import demand.
Now that the entire economic advisory group has been brought into the Cabinet, this group cannot afford even relatively slight mistakes which may be liable to reflect on the whole body of economists now in power. The devaluation of the Indonesian rupiah, which was announced on 23 August, aroused considerable controversy. Justified by the Government as necessary to counter the fall in international reserves, it was criticised by others on the grounds that the imbalance in the foreign sector is basically a structural problem which a mere change in the exchange rate cannot cure. The December 1970 unification of the DK (aid) and DU(general) exchange rates was acknowledged to have been premature, as sales of foreign exhange, especially from countries such as the United States, were lagging behind. Simultaneously with devaluation, concessionary rebates were announced, designed to bolster purchases of foreign exchange originating from export credits.
In the fiscal field, there have been further efforts to increase tax revenues, with the emphasis on the search for an ever widenning tax base rather than on higher rates or new taxes. Beginning with the current fiscal year, the salaries of all civil servants in the Finance Ministry were raised ninefold. Adequate incomes to employees in this vital revenue-producing ministry, it was thought, would increase their efficiency and decrease the incidence of irregularities. The drawback is that civil servants in other departments, who claim they are equally contributing towards economic development, demand similar substantial salary increases. Tax revenues have indeed increased during the current fiscal year but customs revenues continue to lag and irregularities at several ports have necessitated the dismissal of scores of officials, including several senior ones. This is a striking departure in Indonesia where dismissal of officials is not considered proper by many traditionalists.
Monetary stability continued to be maintained despite increased investment spending and economic activity which are evident in all sectors. Interest rates continued high rates of interest on deposits intended to attact savings and repatriation of capital held abroad. Yet even at these high rates, demand for medium term credits continues at a high level. High interest rates, however, have caused some difficulties in repayments and incidence of default seems to be rising, although no firm data are available. There is also much criticism of alleged favourable treatment given to foreign investors and those domestic investors who are already firmly entrenched at the expense of domestic, especially indigenous, small-cale businessmen who cannot compete with new and old giants.
Continued economic progress has led Indonesia and foreign experts to be more optimistic about prospects for the seventies and for the first time, projections for the economy for the next decade are being undertaken in earnest. Some earlier attempts were made in the sixties by ECAFE and by Japanese institutions, but the unreliability of data used and instability of political and economic conditions made them virtually worthless except as exercises. Based on main economic indicators for the last three years, and on assumption regarding key parameters such as investment and exports, a group of foreign experts have placed the rate of growth of Gross National Product during 1970-75 at between 7.1 and 7.5 per cent, accelerating to between 8.0 and 8.3 per cent during the remainder of the decade.
At a seminar held recently on Indonesia`s economic prospects in the seventies, several speakers took the view that the rate of growth of between 6 and 7 per cent experienced by Indonesia during the past three years could be maintained throughout the seventies. Another speaker, Professor Sarbini Sumawinata, however, argued that the current rate of growth is a result of rehabilitation projects being executed and that the rate will slow down to 5 per cent, event to 3 per cent, during the next decade. A higher rate of growth, he said, would require massive investment expenditures which Indonesia, as a developing country, will not be able to carry out.
Meanwhile, the population census is under way. It is being undertaken in two stages, the first stage, from 6-24 September, being a full census with questions on age and household size, and a sample census, from 20 September to 4 October, which enquires into citizenship, age, education, migration, labour force, and fertility. Information on income and wealth will however not be included in the census. |
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