Indonesia’s economy is not doing very well:
As you can see in the chart, economic growth (GDP) is slowing. Some blame it on Jokowi (or more specifically his inept ministers) but it’s clear from the chart above that the malaise set in a few years ago when SBY was still president.
What’s quite evident now, though, is that the country’s economic policies have taken a sharp nationalistic turn. It’s not so much that PDIP’s Megawati is pulling the strings but that her father Sukarno is somehow directing the show from beyond the grave.
I’ve spoken to a few people who told me how damaging Sukarno’s policies really were but I never really looked into it any further. How bad could it really have been? What sorts of numbers are we looking at for things like inflation, GDP growth etc?
Well, apparently things got real bad.
Really, really bad.
Sukarno’s approach at the time was simple: confiscate Dutch companies and nationalize them. Boot out foreigners. He even made it illegal for Chinese Indonesians to undertake business in rural areas (they had to move into the cities).
Interestingly, a few Dutch companies managed to escape government seizure by transferring ownership to other countries. One of them was Heineken, and this canny move explains why we can still drink Bir Bintang today.
All in all, Indonesia seized around 1,000 companies. The effect of course was disastrous and previously well-managed companies were turned into loss-making unproductive ventures. The economy collapsed.
According to the data I managed to dig out, inflation reached 93%, 284%, 898% and 192% in the years 1964-67!
As for economic growth, there was none! More specifically the size of the economy FELL in the 10 years from 1957 to 1967.
The rupiah was decimated. Effectively turned into scrap paper (150 exchange rate in 1960 to 36,000 in 1965!!!!)
The present government will never go as far as Sukarno of course but the vestiges of Sukarno’s economic nationalism continue to leak out in today's policy making which has included, among other things: targeted executions of foreigner drug criminals, the dodgy conviction and imprisonment of an international school teacher, the banning of non-rupiah transactions, and most bizarrely the scapegoating of a foreigner for the murder of a child even though he was not alive at the time the murder took place.
Sukarno’s ardent nationalism didn’t stop him, however, from seeking another wife in a Japanese nightclub.
Let’s just hope Jokowi doesn’t go down that road too – or we really will be in trouble!