indonesian economic decolonization in regional and ... - kitlv

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4 J. Thomas Lindblad and Peter Post documented in Thee Kian Wie’s opening account of economic policy-making during the 1950s. Thee provides an overview of the most important policy measures in the 1950s aiming at the transformation from a colonial into a national economy. The logical point of departure is the Finec (Financieele en Economische Overeenkomst, Financial and Economic Agreement), attached to the Round Table Conference (RTC) Agreement, which in November 1949 laid down the conditions under which the Dutch government was prepared to acknowledge Indonesia’s Independence. These provisions severely curtailed the scope for economic policy-making and were deeply resented by the Indonesian delegation attending the conference. Dutch refusal to surrender the western part of New Guinea (later Irian Jaya, now Papua) and the provisions guaranteeing unhindered operations by Dutch firms provoked the most discontent on the Indonesian side. This continued to exert a negative impact on the transfer of Dutch-owned assets into Indonesian hands. Pragmatic politicians like Vice President Hatta, president of the central bank Sjafruddin Prawiranegara and Cabinet Ministers Sumitro Djojohadikusumo and Djuanda realized that top priority had to be given to economic stabilization and rehabilitation and were willing to make compromises. Nevertheless, various measures were taken to curb Dutch economic control. Early nationalization with financial compensation affected the central bank, the national carrier, public transport (railways) and public utilities (gas and electricity). It can be argued that the moderate cabinets of the so-called ‘Masjumi’ period achieved more by peaceful means and negotiations than the later, more aggressive cabinets. Economic nationalism was on the rise in the 1950s, not only in Indonesia but also in other former colonies. It is commonly defined as ‘the national aspiration to having property owned by nationals and economic functions performed by nationals’ (Johnson 1972:26). This target was to be achieved through the so-called Benteng programme, best described as a policy of positive discrimination favouring Indonesian nationals to counter the predominance of private Dutch firms in trading. As Thee argues, the programme had the auxiliary aim of reducing the role of ethnic Chinese in the Indonesian economy. Chinese dominance of important sectors of the economy had caused much resentment among the indigenous population and in the late 1950s several measures were taken to transfer some of these sectors to the indigenous business class. However, most of these measures caused considerable economic disruption, and although many ethnic Chinese businessmen experienced great difficulties during the 1950s, their economic position was not seriously weakened. The ultimate act of economic nationalism was the takeover and nationalization of virtually all remaining private Dutch firms in the late 1950s.
Indonesian economic decolonization in regional and international perspective 5 Significantly, the concept of a ‘national economy’ was only shortly afterwards officially linked to Indonesian national identity. In his annual report about 1959, the central bank president wrote: ‘An Indonesian economy can only be truly called “national” if based on the Indonesian spiritual and material identity’ (Bank Indonesia 1960:2). Such a statement served as legitimization of the nationalization of Dutch firms only one year before, possibly also in defence of the far-reaching discriminatory measures taken against ethnic Chinese merely months earlier. Nationalist sentiments were increasingly intermingled with the political ideologies of the Cold War. There was traditionally a tendency among leading Indonesian economists to favour co-operatives and active participation by the state in economic life above unrestrained scope for private capital. The populace’s trust in private entrepreneurship was severely damaged when the Benteng programme became a public scandal in the mid-1950s. The role of the state as a major player in the economy was greatly enhanced when the Dutch firms were formally nationalized and became the property of the Indonesian nation. This was reinforced by Sukarno’s introduction of the doctrines ‘Guided Economy’ and ‘socialism à la Indonesia’ in 1958-1960, which met with strikingly little dissent from leading Indonesian economists (Mackie 1971:51). The economic system envisaged in the new nation-state in the late 1950s and early 1960s was one in which the ‘people’s welfare’ was the core principle, an aim which, according to accepted ideology at the time, was not to be achieved by the system of private capitalism that the one-time colonial masters had bequeathed to Indonesia (Robison 1986:37-8). A uniquely Indonesian feature of the nation-state in an entrepreneurial capacity was the heavy involvement of the military in economic life. Different from previous writers, Bambang Purwanto traces the origins of military-controlled business right to the very beginning of the Indonesian Revolution in 1945. He argues that the link between economic decolonization and increasing military business was established in the late 1940s and successively strengthened in the course of the 1950s. Decolonization placed the military in a key position that was reinforced by the apparent inability of the civilian government to manage the nation’s economic resources. This nurtured the interest of soldiers and officers in conducting business, both as a group and as individuals. By the late 1950s, military officers had slotted themselves into a dependence on business activities. They were reaping large profits, not only economically, but also socially and politically. As an institution, the army in particular grew dependent on financial proceeds from its business deals. By the time that economic decolonization was nearing its end, conducting business and being in the military had become two sides of the same coin.
Page 1 and 2: indonesian economic decolonization
Page 3 and 4: VERHANDELINGEN VAN HET KONINKLIJK I
Page 5 and 6: Contents Abbreviations vii J. Thoma
Page 7 and 8: Abbreviations ALS ANRI AVROS BANAS
Page 9: Abbreviations ix SOEIMEX SPA STII S
Page 12 and 13: 2 J. Thomas Lindblad and Peter Post
Page 20 and 21: 10 J. Thomas Lindblad and Peter Pos

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