Indonesia ́s Economy

For several years, students of the Indonesian economy, both Indonesian and foreign, have been debadng the impact on the country's development prospects of declining world oil prices. From the late 1960s to 1981, receipts from exports of crude petroleum, refined products and natural gas rose steadily until in 1981 they amounted to over USS20 billion. In 1982 they fell by over USS2 billion; in that year there was also a dramatic slump in economic growth with real gross domestic product (GDP) rising by only 2 per cent, the lowest annual growth rate since 1967. There was widespread concern that the high growth rates of the 1970s were past history and could not be sustained in the much harsher international environment of the 1980s1. When Repelita IV (the Fourth Five-Year Plan which began in April 1984 and runs to March 1989) announced an annual GDP growth target of 5.0 per cent, many considered that this would be difficult to achieve, even though the average annual rate of GDP growth in the 1970s had been close to 8 per cent. In particular, scepticism was expressed about the ambitious annual growth target for the industrial sector of 9.5 per cent, given the slow growth in that sector since 1981. Not surprisingly, the faltering pace of economic progress in Indonesia since 1981, combined with the more uncertain international environment, has given rise to considerable debate over economic policy. Both the younger generation of university academics and veterans such as former Finance and Trade Minister Professor Sumitro Djojohadikusumo have had much to say over the past two years on the appropriate role of government in the economy, especially in such crucial areas as industrial regulation and the foreign trade regime. Many of the arguments they have been putting forward have in turn been much influenced by international thinking on development issues, especially in the international development agencies such as the World Bank. But before looking at these policy debates in greater detail, it will be useful to highlight the nature of the economic transition which took place in Indonesia in the momentous years from the late 1960s to the early 1980s

Business · Economic policy · Economics · Economy · International trade · Political science · Asian Studies and History

• Wiping the Slate Clean

  Open Access•Findlay Stark•Modern Law Review•2013

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