Widjojo Nitisastro and Indonesian development

Abstract

Widjojo Nitisastro (2010) Pengalaman Pembangunan Indonesia: Kumpulan Tulisan dan Uraian Widjojo Nitisastro [The Experience of Development in Indonesia: A Collection of the Writings of Widjojo Nitisastro], Penerbit Buku Kompas [Kompas Book Publishing], Jakarta.

Widjojo Nitisastro is one of Indonesia's best-known economic policy makers. Much has been written by others about his role as a top adviser over more than three decades. This collection of his own essays helps fill out the picture. Seven main policy themes may be identified: the role of economic growth in helping overcome mass poverty; the need for economic policy makers to pay close attention to risk management and be constantly ready to respond to economic shocks; the importance of strong leadership and discipline in government; the need to scrutinise investment programs closely; the high priority to be given to borrowing programs and debt management; the role of the price mechanism; and the management of Indonesia's relations with the international community. Strong messages about growth, leadership and stability permeate the essays. The collection is a valuable contribution to the literature on economic policy making in developing countries.

Notes

¹Elson (2001: ch. 6) discusses the events of the period.

²Details of the early role played by the Berkeley Mafia group in 1966 are set out in the introduction to Arsjad Anwar, Thee and Azis (1992); see also Thee (2002: 195–6). The group is generally listed as consisting of Widjojo, Ali Wardhana, Mohammad Sadli, Emil Salim, and Subroto. They are also referred to as ‘economic technocrats’, and during the next few years other economic advisers to the government, such as Rachmat Saleh, Arifin Siregar, J.B. Sumarlin, Radius Prawiro and Sumitro Djojohadikusumo, became part of a wider ‘technocrat’ group (Prawiro 1998).

³A brief summary of Widjojo's career is given in Arsjad Anwar, Ananta and Kuncoro (2007b: xvii). Widjojo held ministerial rank in successive Indonesian cabinets for most of the 1970s and until 1983, when he chose not to sit as a minister in the Fourth Development Cabinet. He continued to be very influential as one of President Soeharto's closest advisers throughout the rest of the 1980s, and worked closely with the president until Soeharto resigned from office in 1998.

⁴Widjojo's book on population trends in Indonesia, published in 1970, was an important contribution to debate on the public policy issues the government faced at that time (Nitisastro 1970).

⁵Radius Prawiro, who was governor of Bank Indonesia from 1966 to 1973, notes that several of the technocrats who rose to prominence in the late 1960s remained in the high ranks of government for a long time. He observes that this continuity ‘was invaluable because it meant that many of the lessons of the early years of the New Order were not lost when new problems were faced in subsequent years’ (Prawiro 1998: 83).

⁶All main quotations from Indonesian are translations by the author of this review.

⁷Widjojo's colleague Emil Salim also emphasises Soeharto's willingness to take difficult and unpopular decisions (Salim 2003: 213).

⁸Sadli provides details of the way the crisis developed and the role of the economic advisers in responding to it, noting that ‘the Pertamina crisis was managed by Widjojo himself’ (Sadli 2003: 134). Sadli describes the problems of Pertamina as ‘the greatest crisis I faced as Minister for Mining’.

⁹B.J. Habibie, later president of Indonesia (1998–99), was responsible for a group of 10 state-owned firms operating in the airlines and aeronautical sector, one of the best known being IPTN (Industri Pesawat Terbang Nusantara, literally ‘[Indonesian] Archipelago Aircraft Industry’).

¹⁰The differences of view between the economic and the engineering advisers are reflected in a September 1976 interview I had with Ibnu Sutowo in Jakarta. Ibnu mentioned disagreements that had arisen between him and Widjojo several years earlier over plans for a large fertiliser project. Ibnu had proposed the construction of a fertiliser plant drawing on Pertamina resources. Widjojo was cautious and suggested that Indonesia seek to finance the project using low-interest soft loans rather than the more expensive funds that Pertamina was likely to draw on. Ibnu was disappointed about the delays these discussions led to in implementing the project. ‘That's the way these people [Widjojo and his colleagues] go about these things’, Ibnu said. ‘They hate me … . They have disliked me for years. We are different sorts of people. We do things in different ways.’

¹¹Among other projects, he mentions PT Krakatau Steel; LNG projects in Aceh; various fertiliser projects (including initiatives in Kalimantan and Cirebon, and others involving the state-owned Pusri fertiliser company); oil refinery activities in Cilacap; and a major petrochemicals project in Gresik.

¹²Sadli discusses the growing links between economists from the University of Indonesia and senior military leaders in the late 1950s and 1960s (Sadli 2003: 125–8). Prawiro (1998: 84) observes that it was ‘highly fortuitous’ that these economists became known and respected by the military leadership, including Soeharto, during the early 1960s.

¹³Further details of the Bandung seminar are given in the introduction to the essays in honour of Professor Sadli in Arsjad Anwar, Thee and Azis (1992). That discussion outlines the ‘cook book’ that was prepared at the seminar, and the role that the ‘cooks’ (listed as Widjojo, Ali Wardhana, Sadli, Subroto and Emil Salim) played during the conference; see also the introduction to Thee Kian Wie's edited volume of recollections of Indonesian economic policy makers (Thee 2003: 21–3).