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Narasi Newsroom・8 minutes read
Indonesia underwent significant economic transformation under Soeharto's leadership in the New Order period through policies like foreign investment, debt renegotiation, and import-substitute industries. Despite initial success due to rising oil prices and deregulation efforts, the economy eventually faltered in the late 1990s due to banking imbalances, corruption, and the Asian financial crisis, leading to the downfall of the New Order regime.
Insights
- Soeharto's economic team, including Wijayanti Sastro, Emil Salim, Wardhana, Subroto, and Muhammad Sadli, played a pivotal role in transforming Indonesia's economy by opening up to foreign investment and renegotiating foreign debt, contributing significantly to the country's economic growth during the New Order period.
- The Asian financial crisis in 1996, triggered by a lack of balance in banking reforms and the rise of corruption, collusion, and nepotism, resulted in Indonesia's economic downfall and the eventual collapse of the New Order regime, highlighting the critical impact of governance and financial stability on a nation's economic trajectory.
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Recent questions
What caused Indonesia's economic downfall in 1996?
Lack of balance in banking reforms and corruption.
Who were the key figures in Indonesia's economic transformation?
Wijayanti Sastro, Emil Salim, Wardhana, Subroto, Muhammad Sadli.
What was the Repelita development scheme?
Focused on import-substitute goods and labor-intensive industries.
How did rising oil prices impact Indonesia's economy?
Oil income increased significantly, used for infrastructure and education.
What led to the debt crisis in Indonesia in 1975?
Pertamina's mismanagement under Ibnu Sutowo.
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Summary
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Indonesia's Economic Transformation Under Soeharto
- In 1965, Indonesia faced a political crisis leading to Soekarno's resignation and Soeharto's rise to power, marking the start of the New Order period.
- Soeharto's economic team, including Wijayanti Sastro, Emil Salim, Wardhana, Subroto, and Muhammad Sadli, transformed Indonesia's economy by opening to foreign investment and renegotiating foreign debt.
- The Repelita development scheme from 1969 to 1974 focused on generating foreign exchange through import-substitute goods and labor-intensive industries, leading to economic growth and controlled inflation.
- Indonesia's economy thrived in the early 1970s due to rising oil prices, with oil income increasing significantly and being used for infrastructure and education.
- Pertamina's mismanagement under Ibnu Sutowo led to a debt crisis in 1975, resolved after four years through debt renegotiation.
- The New Order deregulated banking, taxes, and trade from 1986 to 1996, boosting the non-oil and gas sector's growth and stabilizing economic growth and poverty rates.
- However, the lack of balance in banking reforms and rising corruption, collusion, and nepotism led to the Asian financial crisis in 1996, causing Indonesia's economic downfall and the fall of the New Order regime.
