Remembering the Economy during the New Order era
Fokus Pos. The Chairman of the Board of Trustees of the Titiek Working Party Soeharto brought up the New Order era in his campaign. He said, if Prabowo won the Presidential Election, the New Order programs would be continued.
Then what exactly is the condition of the Indonesian economy during the New Order period?
The economy in the New Order era had several important events. It began when Soeharto was installed as President to replace Soekarno in 1967.
At that time it was mentioned as a period of economic recovery. Before the transition of the leadership stick, there was indeed an economic turmoil.
The Old Order government could not overcome the economic crisis that occurred in the late 1950s. As a result, inflation has increased (hyperinflation) which reached 635% in 1966.
With various economic policies, the New Order government was able to reduce the hyper inflation. Franciscus Xaverius Seda (Minister of Finance 1966-1968) became the main actor in an effort to reduce inflation to 112%.
Frans overcame economic problems at that time by applying a balanced model of the revenue and expenditure budget. This was to reduce the impact of the previous government's policies that were diligent in printing money.
Efforts made by the New Order government were fairly successful at that time. The Indonesian economy is stabilizing.
One of the vitamins from the recovery of the economy when the Republic of Indonesia under the leadership of Suharto rejoined the world lending institution, aka the International Monetary Fund (IMF) in 1967. Previously President Soekarno had revoked Indonesia's membership in the IMF in 1965 due to political problems.
The era of the New Order government in Indonesia became an IMF member since it experienced another important point during the oil boom in the period 1974-1982. The high price of oil in the international market made the New Order government get a substantial income.
In 1977 Indonesia produced so much oil to reach 1.68 million barrels per day, while the consumption of Indonesian fuel oil was only around 300,000 barrels per day. This is what causes Indonesia to become part of the Organization of the Petroleum Exporting Countries (OPEC).
The amount of state income from the oil sector has made the new order government have ammunition to carry out development. Development carried out when leading to social goals.
According to historical data recorded by Bank Indonesia (BI), the condition allows the government to spur economic development activities and implement development equalization programs through the provision of liquidity loans, including the provision of credit to encourage weak economic activities.
However, the heavy disbursement of bank credit resulted in a significant increase in the money supply. As a result, the rate of inflation in 1973/74 surged sharply through 47%.
The New Order government reorganized itself by carrying out a stabilization program. In 1974/75 inflation also fell to 21%.
This gave the Government the opportunity to reduce deposit rates and short-term loans, especially exports and domestic trade in December 1974 to encourage economic growth.
However, the easing actually caused inflationary pressure which resulted in the weak competitiveness of Indonesian products abroad because the value of the rupiah became over valued.
On November 15, 1978 the government adopted a policy known as KNOP 15 which devalued the Rupiah value by 33.6% from Rp. 415 per US $ to Rp. 625 per US $. Since then the exchange rate system has been transformed into a controlled floating exchange rate system by linking the Rupiah with a basket of currencies of the main trading partners.
The Indonesian economy was also shaken when the drop in world oil prices occurred in the 1980s due to the flood of world oil supplies. The price of crude oil from US $ 35 per barrel dropped to less than US $ 10 in 1986.
"The economic crisis in the early 1980s went bankrupt because oil prices fell below US $ 10 per barrel. Pertamina went bankrupt and the country went bankrupt because 80% of state revenue came from oil," Indef economist Didik J Rachbini told detikFinance.
At that time Pertamina suffered a loss of up to US $ 10.5 billion. Ibnu Sutowo, who at that time was Pertamina's Managing Director, was accused of corruption and was the cause of Pertamina's bankruptcy.
At that time, said Didik, the government resolved economic disputes with strategies and outward looking economic policies, namely raising exports and national competitiveness.
"From this policy, our exports grow from only US $ 20-30 billion to more than US $ 100 billion," he added.
It was also often referred to as the period of liberalization. The New Order government liberalized the industrial, agricultural and food sectors.
By utilizing cheap labor costs, the New Order government tried to attract foreign investors. Foreign investors also enter the agricultural sector by producing chemical fertilizers and pesticides.
Skip to the end of the New Order government began to show signs of an economic crisis since 1997. The wave began from Thailand, even though Indonesia at that time had not seen the symptoms of the crisis.
But at that time many of the national companies had debts abroad. The rupiah began to weaken in August 1997.
Entering mid-1997 Indonesia left the exchange rate system under control. The reason is that Indonesia's foreign exchange reserves fell because it kept maintaining the US dollar to survive at Rp. 2,000-2,500.
After using the floating exchange rate, the US dollar slowly began to crawl to Rp. 4,000 in late 1997, continuing to Rp. 6,000 in early 1998.
After reaching Rp. 13,000, the US dollar tamed a little and returned to touch Rp. 8,000 in April 1998. But in May 1998, Indonesia entered a dark period. Student shootings, mass riots, and the fall of the New Order made the rupiah 'sprawl' again.
Until finally the US dollar touched an all-time high at Rp. 16,650 in June 1998. This condition caused chaos in Indonesia. Until finally the New Order collapsed and replaced the Reformation in May 1998.
Then what exactly is the condition of the Indonesian economy during the New Order period?
The economy in the New Order era had several important events. It began when Soeharto was installed as President to replace Soekarno in 1967.
At that time it was mentioned as a period of economic recovery. Before the transition of the leadership stick, there was indeed an economic turmoil.
The Old Order government could not overcome the economic crisis that occurred in the late 1950s. As a result, inflation has increased (hyperinflation) which reached 635% in 1966.
With various economic policies, the New Order government was able to reduce the hyper inflation. Franciscus Xaverius Seda (Minister of Finance 1966-1968) became the main actor in an effort to reduce inflation to 112%.
Frans overcame economic problems at that time by applying a balanced model of the revenue and expenditure budget. This was to reduce the impact of the previous government's policies that were diligent in printing money.
Efforts made by the New Order government were fairly successful at that time. The Indonesian economy is stabilizing.
One of the vitamins from the recovery of the economy when the Republic of Indonesia under the leadership of Suharto rejoined the world lending institution, aka the International Monetary Fund (IMF) in 1967. Previously President Soekarno had revoked Indonesia's membership in the IMF in 1965 due to political problems.
The era of the New Order government in Indonesia became an IMF member since it experienced another important point during the oil boom in the period 1974-1982. The high price of oil in the international market made the New Order government get a substantial income.
In 1977 Indonesia produced so much oil to reach 1.68 million barrels per day, while the consumption of Indonesian fuel oil was only around 300,000 barrels per day. This is what causes Indonesia to become part of the Organization of the Petroleum Exporting Countries (OPEC).
The amount of state income from the oil sector has made the new order government have ammunition to carry out development. Development carried out when leading to social goals.
According to historical data recorded by Bank Indonesia (BI), the condition allows the government to spur economic development activities and implement development equalization programs through the provision of liquidity loans, including the provision of credit to encourage weak economic activities.
However, the heavy disbursement of bank credit resulted in a significant increase in the money supply. As a result, the rate of inflation in 1973/74 surged sharply through 47%.
The New Order government reorganized itself by carrying out a stabilization program. In 1974/75 inflation also fell to 21%.
This gave the Government the opportunity to reduce deposit rates and short-term loans, especially exports and domestic trade in December 1974 to encourage economic growth.
However, the easing actually caused inflationary pressure which resulted in the weak competitiveness of Indonesian products abroad because the value of the rupiah became over valued.
On November 15, 1978 the government adopted a policy known as KNOP 15 which devalued the Rupiah value by 33.6% from Rp. 415 per US $ to Rp. 625 per US $. Since then the exchange rate system has been transformed into a controlled floating exchange rate system by linking the Rupiah with a basket of currencies of the main trading partners.
The Indonesian economy was also shaken when the drop in world oil prices occurred in the 1980s due to the flood of world oil supplies. The price of crude oil from US $ 35 per barrel dropped to less than US $ 10 in 1986.
"The economic crisis in the early 1980s went bankrupt because oil prices fell below US $ 10 per barrel. Pertamina went bankrupt and the country went bankrupt because 80% of state revenue came from oil," Indef economist Didik J Rachbini told detikFinance.
At that time Pertamina suffered a loss of up to US $ 10.5 billion. Ibnu Sutowo, who at that time was Pertamina's Managing Director, was accused of corruption and was the cause of Pertamina's bankruptcy.
At that time, said Didik, the government resolved economic disputes with strategies and outward looking economic policies, namely raising exports and national competitiveness.
"From this policy, our exports grow from only US $ 20-30 billion to more than US $ 100 billion," he added.
It was also often referred to as the period of liberalization. The New Order government liberalized the industrial, agricultural and food sectors.
By utilizing cheap labor costs, the New Order government tried to attract foreign investors. Foreign investors also enter the agricultural sector by producing chemical fertilizers and pesticides.
Skip to the end of the New Order government began to show signs of an economic crisis since 1997. The wave began from Thailand, even though Indonesia at that time had not seen the symptoms of the crisis.
But at that time many of the national companies had debts abroad. The rupiah began to weaken in August 1997.
Entering mid-1997 Indonesia left the exchange rate system under control. The reason is that Indonesia's foreign exchange reserves fell because it kept maintaining the US dollar to survive at Rp. 2,000-2,500.
After using the floating exchange rate, the US dollar slowly began to crawl to Rp. 4,000 in late 1997, continuing to Rp. 6,000 in early 1998.
After reaching Rp. 13,000, the US dollar tamed a little and returned to touch Rp. 8,000 in April 1998. But in May 1998, Indonesia entered a dark period. Student shootings, mass riots, and the fall of the New Order made the rupiah 'sprawl' again.
Until finally the US dollar touched an all-time high at Rp. 16,650 in June 1998. This condition caused chaos in Indonesia. Until finally the New Order collapsed and replaced the Reformation in May 1998.
Comments
Post a Comment