Power and Economy in Suharto's Indonesia 9718639039

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Contents

Introduction: Understanding State and Capital

1

Part I: State and Class Chapter 1. Towards a Class Analysis of the Indonesian Military Bureaucratic State

9

Chapter 2. Class, Capital and the State in New Order Indonesia 32

Part II: Culture, Politics and Economy Chapter 3. Culture Politics and Economy in the Political History of the New Order

65

Chapter 4. Orientalism and Contemporary Writing in Soud7east Asian Politics

97

Part III: Structural Change, Industrialization and Politics

Chapter 5. After the Gold Rush: the Politics of Economic Restructuring in Indonesia in the 1980s

101

Chapter 6. Auth6n°tarian States, Capital-Owning Classes and the Politics of Newly Industrializing Countries: the Case of Indonesia

136

Chapter 7. Sirucmres of Power and the Industrialization Process in Southeast Asia

156

Part IV: Indonesia and Australia

Chapter 8. Explaining Indonesia's Response tithe Jenkins Article

Index

.

182 198

Lists of Tables

5.1 Indonesia's gross domestic product by industrial origin at current market prices, 1967-83, in Rp billion (and as a percentage of GDP) 129 5.2 Indonesia's balance of payments, 1973/74-1983/84, in USS million 130 5.3 Indonesia's exports by commodity 1975/76-1995/96, in US$ million (and as a percentage of total exports) 131 5.4 Indonesia's central government budget summary, 1973/74-1985/86, in Rp billion 1 , 5.5 Indonesia's central government receipts, 1973/74-1985/86, in Rp billion 133 5.6 Indonesia's gross domestic investment, 1974/75-1984/85, in Rp billion 134 5.7 Indonesia's disbursed and outstanding medium-and long-term debt in USS .billion at current prices 135 5.8 Indonesia's development expenditures, by sector (%) 135

Acknowledgements The papers .which appear in this volume have been written over a period of eleven. years and owe much to the support and encouragement of a large number of friends and colleagues in Australia and Indonesia. In particular I should mention my Murdoch University colleagues, Garry Rodan, Kevin Hewison, Richard Higgott and Tim Wright. My thanks also go to the various editors and referees who beat these articles into shape for the journals in which they were originally published and to Peter Limqueco who has organised the edition of this collection. I wish also to thank Elizabeth Horne of Murdoch University and Lualhati Gatchalian and Adelma Paguio of JCA who have invested so much dmc, care and skill into the preparation ofmanuscripts. Special thanks goes to Gordon Parmehter for compiling the index.

Richard Robison

--__*.-'

1

Introduction: Understanding State and Capital

In the decade or so following the emergence of President Suharto's New Order, the

regime was subjected to a veritable avalanche Of political analysis. Not the least of those concerned with explaining the New Order were its own ideologues, notably Generals Moertopo and Hoemardani.Predictab1y,they saw thestate astranscendifig vested interests, reflecting national aspirations and Indonesian cultural norms. In functional terms, the New Order was argued to be the instrument of economic modernization and the necessary precursor of democracy. . Nevertheless, the production of political analysis of the New Order was primarily carried out in the academic factories of the USA, Australia and, to a lesser extent in Indonesia itself, where such activity was severely constrained by political

controls. These scholarly analyses fell into several broad categories. a) Explanations heavily influenced by Weberian notions of the transition from patrimonial to legal and national forms of bureaucratic authority: Crouch, Feith. b) Studies influenced by cultural politics and modernization theory and Samuel Huntington' s critique of theseembodiedin his focus upon institutional building and political order: Emmerson, Liddle. c) Studiesiocused upon corporatist aspects of the New Order: Reeve.

d) Political histories of power struggles and conflicts which are not theorised in terms of their relationships to broader social and economic structure: Ienldns, Sundhaussen. " e) Studies Of powerand conflict informed by dependency notions of hierarchies of power and exploitation: Adisasono, Sritua Ariel, Dav am Rahardjo, Arief Budiman, Rex Mprtirner, Herbert Feith,`Ernst Utrecht. f) Studies focussing upon the historical continuity of the institution of state power: McVey, Anderson. g) Studies which focus on culture and ideology in the context of broader political and class analysis: Anderson. h) Analyses informed by cultural determination and cultural relativism, Jackson, May, Sievers.

However, with the excitement of thecoup/countevrevolution audits aftermath

2

removing high profile opponents from the scene following the 1974 Jakarta riots

state" has to be

government

nor is the pn

of governing made

state"?

ned by the social order within which it exists and is an expression of class relations, from whence power emanates." The problem with such definitions is that the

apparatus? Such definitionsalsopose problems for explaining the autonomyof state

The statemust be considered as more than the 'government.' It is the continuous administrative, legal, bureaucratic and coercive systems that attempt not only to structure relationships between civilsociety andpublic authority in a polity but alsop structure many crucial relationships within civil society as wc11.' .-

Skocpol continues: "In this perspective, the state certainly docs not become everything. Other organisations and agents also pattern social relationships and politics, and the analyst must explore the state's structure and activities in relation to them."5Nevertheless, in real situations, the boundaries between the state and civil

Vu.

Infroduclion 3

embodies power in itself and Lo what degree it is autonomous. The difficulties of possibility of a general theory of the state and toexamine thestate only in the context of specific historical situations ficials of the state

embedded within it. The most immediate manifestation of this :elated to the rural landowning 2?

.mm

f

'-

>

(914

5\'1¥w'o

property. While it can be argued that the New Order has shown little sympathyxu

increased productivity and income for mral producers

licences, connects and access to joint venture partnerships with foreign investors \

.--r

_

tly Chinese

former generals and of tic

with specific

no special signify

derivative in function

:he Rise of Capital, which 8lso

than a milch cow for state officials. While it is true that the Chinese capitalists are I

Introduction 5 L

from foreign capita] (which is often less politically acceptable to nationalist

of national economic strategy. However equity-holders

their position is clearly reliant uponpolitical patronage. However, to deny that they

establish these-

Chapterlhiec was originally written in 1981 as an attempt (unsuccessful) to

now begun to influence writing on Indonesia, although conveyed by anthropolo My crude level. The whole question of culture and ideology in Indonesian politics still requires

6

USA. In chapters five and six I consider the question of changes in economic policy and the structure of the regime. Beliedby the apparent stability on the surface, the increasing strength of Suharto and the extending control of the regime, important changes have taken place beneath the surface, deriving not from the expected sources, the students, the Muslims, or internal disputes in the military, but from a jolt to theregime'srevenue base and the country's main source of foreign earnings: QQ_i"°Qm-§i

lotion pr06Is in a way that could no longer be offset by oil money. For example fling of import find them

fruitions of between

In£;-0ld14£,-1.¢b,I |

1.

:11

democratisation, is perhaps the question of the nineties

n9m-1wnw; wees 0'906Z swzz L'£SLI

/973v74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 19821183 1983/84 /984185 1985/86

Actual

Table 2.4 Indonesia's central government budget summary, 1973l'74-1985i'86, in Rp billion

132 Structural Change, kxdustrializalion and Politics

Source: Adapted from World Bank (1985) p. 207, citing Ministry of Finance data.

(001)

(% of :mal xevenues)

967.7 (82.6)

9'1u I

Development Funds

1753.7 (88.3)

Z'§86I

(we)

(or) 6"éOZ

160.4

income and corporate tax,

IPEDA and other (% of domestic revenue)

including taxes on domestic consumption and inlematicmalirade (% of domestic revenue)

(16.1)

562.6

999

(uzv)

2241.9 (82.0)

(0011 QESLZ

0'zsz

(1.1 I)

Total domestic revenue (% of total revenues)

9' my

(0°sI)

VO!I

(0'9z)

6"clv

49.s

Tzuuse; 01

u

(19.0)

(001) (001) (001) (001) (001) 9'IZ6SI 8°0LL{i 6'LL08 91059

(viz)

&0"vZ)

VSSV

E

(08I)

ant

(000 (001) -:et--:.-:.-. VSIESI H921

(I1I)

9'sv I

(s'sz)

was

(s'91)

9`§SZ

g50§

9'W£

(9'5s)

(sis) VEL6

was I

Corpourate tax on oil (% of domestic revenue) Non-oil taxes, inchiéing

(001)

8`E6V[

(adz)

M61

(6't'Z)

6'0w.

(or)

(018)

(£~'sz)

`§"3I§

(!E`§I)

users

(or)

(res) revs I l,IZ6§ I

(sol)

(res)

revel

(8'SS) v'619t

z'/.zv

FW?

mi

(so) 0`60LI

)

9'L89

(Eros)

l)

( r ( s w

(16.0)

(15.9)

12968.3 ___... 10366.15 11159.7 (64.2) (59.7)

(16.1)

v.,1\r1.l 1.

(£u-1.8) (612) 0'LLZOI 89699

I

(1.18) r

mr

v

L`SI€

(9'0z)

r

V952 (v'9[)

r

(sw-I)

0189!

(am)

v

(sol)

6'SLLI

(911)

k

--1':!":*:*'!::

(598)

8`ZL6l

(Uzi)

D598

H w v r r r

(so

Luis!

o f !

(we)

surf

r

6'vs0z s'6£sI

(€'s9) (919) (is) 9'6IOL sreszv £8056

L`109Z

\II

vwsoz

(we)

vwzs

\

(5°I_z1

a..-nrvr

(8's/.)

v

(s"8L)

5

(018)

-

(0`6I)

92

I

§ p..

I

r'4

m

Actual

Badge!

1973/74 1974373 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 198/182 1982/83 1983/84 1984/85 1985/86

I l

Economic Resrrucluring 133

_

Table 2.5 Indonesia's central govwnmeot receipts, 1973/74-1985/86, in Rp billion -

3205

In21--1

(VIZ)

ZLSZ

(529)

I'S

(8'I€}

LGLT

Debtor Reporting System (World Rank, 1985b, p. 180).

Sources' Adapted from World Bank analysis of the public sector capital aocoum citing budge data, Bank Indonesia financial statistics and World Bank

r-_

'Preliminary figures "Government savings, new foreign savings and borrowings less transfers to public enterprises "Including transfer from Cernxd Government, imemal savings and domestic borrowing 'A residual figure' GDI minus total public investment

13056

11553

Q

ex

UOr

Notes:

(so)

601

6362

3901

\./

vs h11-

4671

6EEi

(76.6)

4914

f ' \

3826

1866

3987

4223 4143

3632 2730

Q qc

8

Gross domestic investment

(§'95)

(z's5)

1908

szlz

2093

(rzs)

(so)

750 1221

H)L9

ssvz

458 768

(229)

(6131)

investment"

s8v6

60S5

2. Public enterprise investment"

(685)

(up)

/988784 1984/85'

#859

1982/83

(so)

(re)

1. Direct government

198//82

(69£3

I6IS (rss)

9ZZI

/978379

0691*

IL6l

ozs sou

an vss

/97506

(I 1v9)

5615

sezz

9958

686

ZIP.

svzr

1068

ELL!

SZ/#561

oval

zzvi

Is9z I9LV

L4/9z6f

i

SZ,Mé6I

I!

096£61

I

I.wos>6f

Table 2.6 Indonesia's gross domestic investment, 1974U75-1984!'85, in Rp billion

134 Stnlctural Change, Indnslrialization and Politics

15.9 3.6

7.9 12.0 7.2

ZLL

Reps! HI' period of the :A ! 5-yearpfan (acluaf)

cricncc with Export-lcd Industrial Dew:lopm onl,"

World Deveiopmenf, 6 (3), lOi'S. Chalmers Johnson, "Political lnsiiiulions and Economic Pcdormancc: the Govcrnmcni-Iiusiricss Rclaiionship in Japan, South Korea and Taiwan," in F.

180 Struauiid Change, Industiializazion and Politics

Dao, (ed) 1987, pp. 136-164

12. Amsdcn, 1985. p. 90 13. 14. 15;

gs, 1987, p. 72. gs, l98T, pp. 68, 69

16. 1'7. MIT Press. 1987 18.

19. to, Kevin H

FEM. 25 .Tune 1987* 68-'f4

in R. Robison. lc

21. Henson, 1987, PP~ 54-5'7 22. 1987. p. 75 23. 24.- P. Bowring 25. HewiXon, 198'!,pp. 74, 75 26. 116.

'he Parts Begin to Fit," FEER, 5 May 1988, pp. 115 FEER, 11 August 1988

PP- 98-99

29.

Journal of

412 P. Sricha

FEER, 28 July 1983, PP- 52-59

30.

I-Iiggat, (eds) 1987, pp. 113-117 31. Nick Seaward, "Balancing the

32. R.S. MihBC pricy

Look East But Watch

33. for the Blcsmishes," FEER, 31 March 1983, PP- 70, '79

34. James Clad

February 1985, PP- se. 87

Private

FEER. 28

35.

1988, p.lll8 36.

37. 38.

1987,p. 129

39. 40. Bowie, 1988: 18-7.5. Richard F. Dancr,

41. 42. Bowie, -1988: 55 43. Donor, 1988~ 11, 18.

as

Structures of Power 181

44. 45. 46. 4'7. 48. 49.

Bowie, 1988: 26-29. Sieh Lee Mei Ling, 1986: 14, 17. Milne 1986* 1370. Crouch 1984: 36. Seaward, "Debating the NEP," FEER, 15 December 1988, PP- 102, 103. Seaward, 25 September 1986, pp. '78-82. Seaward," A Rethink ( H I RaLionalizati