Episode 100      18 min 10 sec
Indonesia: Pathways to a Future

Historian Max Lane spies Indonesia's possible futures through the lens of its recent history and current political and economic climate. With host Jennifer Cook.

"I think Indonesia's going to become the hub of ideas." -- Dr Max Lane




           



Dr Max Lane
Dr Max Lane

Dr Max Lane is Honorary Fellow at the Asia Institute. Dr Lane is a writer and lecturer on Indonesian politics, history and literature and Southeast Asian  affairs. He has published (in both English and Indonesian) a high-profile text on modern Indonesia (Unfinished Nation: Indonesia before and after Suharto, Verso, 2008). Max has also translated the works of Indonesia’s most important writer (Pramoedya Ananta Toer) and its most important dramatist (W.S.Rendra) , and lectured in university courses at universities in the region, including the University of Sydney and Gadjah Madah University in Jogjakarta, Indonesia.

Credits

Host: Jennifer Cook
Producers: Kelvin Param, Eric van Bemmel
Series Creators: Eric van Bemmel and Kelvin Param
Audio Engineer: Gavin Nebauer
Voiceover: Nerissa Hannink

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Indonesia: Pathways to a Future

VOICEOVER
Welcome to Up Close, the research, opinion and analysis podcast from the University of Melbourne, Australia.

JENNIFER COOK
Thanks for joining us.  I'm Jennifer Cook.  Indonesia's motto is “Bhinneka Tunggal Ika”, or “Unity  in diversity”; fitting for a nation made up of more than 17,000 islands, and home to 230 million people from many distinct religious, social and political groups.  Economists like to point to Indonesia's expanding manufacturing industry as a powerful sign of growing strength, but today's guest says that is nothing more than a thin veneer of stability, hiding a nation dangerously close to collapse.  
Dr Max Lane, an honorary fellow at Melbourne University's Asia Institute, and the author of catastrophe in Indonesia, urges us to look deeper at a people who earn an average annual income of $2000 USD, and whose numbers are swelling by five million a year.  In this episode we'll be discussing how economic realities are impacting upon a rich and varied culture, and have contributed to growing social, political and religious turmoil.  So what is the future for the fourth most populous nation in the world, and what does this mean for the rest of the global community?  Max, thank you so much for joining us.

MAX LANE
My pleasure.

JENNIFER COOK
I'd like to begin by asking you, if I could, to paint a picture for us of Indonesia's current economic situation, and just how has it been able to present this facade of stability?

MAX LANE
Well Indonesia is now 10 years out of what was called the Krismon, or the monetary crisis; that is the Asian financial crisis of 1997/1998 when the currency collapsed, and where a great deal of what manufacturing there was departed from Indonesia.  So it was a very big blow to the Indonesian economy at the time.  A lot of economists and commentators were focused on what's happened since then.  Some say there's a slow improvement.  I think the majority opinion would be that it's pretty much kept about the level that it was back in 1997/1998.  
What I think a lot of commentators miss is that even the growth that occurred during the Suharto period - the period from 1965 until 1998 when General Suharto was forced from power - even the economic growth that took place during that period, which looks good statistically - four per cent, five per cent, six per cent - is four, or five, or six per cent on top of an economy left by 300 years of colonialism, which basically had nothing.  They had not a single significant factory in the whole of the country in the middle of the 20th Century.  That's what the Dutch left: nothing.  The only factories they had were primitive ones processing tobacco leaves and sugar cane, and a few small factories doing things like light bulbs or bicycle tyres.  Nor, for that matter, did the Dutch leave, for example, even a single fully fledged university for the whole country.  

JENNIFER COOK
And so what are the ramifications of that?

MAX LANE
Well the immediate ramification after independence was a long struggle as to what path to pursue to get out of this, to try and rebuild the country.  Of course the country polarised along those who wanted to integrate into the economic West, and try and develop the country through free-market, capitalist type approach.  On the other side, a very huge socialist and communist movement developed, and of course the clash between those two climaxed in 1965, which is when General Suharto came to power and established his 33 year long dictatorship.  
And he chose integration with the economic West, and it was during that period that the good statistics emerged.  To me, the symbolic thing is that Suharto, despite 33 years of a lot of money coming in from oil and gas, cutting down Indonesia's forests and so on, he did not build a single steel plant.  The only steel plant that Indonesia has was built during the previous period of President Sukarno, who was president from 1945 until 1965.  So you just don't have any heavy industry, any medium industry at all, even now in the beginning of the 21st Century.

JENNIFER COOK
You've said that if you want a nation to have similar living standards to, say, a nation like Australia, it stands to reason that they need the same level of science, technology and manufacturing infrastructure as that country.  What kind of hurdles are we facing in Indonesia?

MAX LANE
Well there are two big hurdles that Indonesia face.  One is the way the whole world itself is structured, with capital - and along with that science, technology, and education - concentrated in North America, Western Europe, Japan and Australia.  Indonesia has no significant capital, if you work out their economy, in terms of the value of what's produced each year.  It's $2000 per head.  To catch up to $35,000 per head, which is what Australia or the United States has, when you have no significant capital to start with, you're really stymied from the start.  
So a real solution will require a massive transfer of wealth from the rich countries to countries like Indonesia, recognising that that transfer of wealth is not going to take place in the short term. What can be done in the meantime  The main thing here is the issue of how to maximise what resources Indonesia does have.  At the moment there's massive, massive waste, because of high levels of corruption, and because what investment takes place is basically orientated towards very short term, quick profit investments.  That's why no steel plant has been built.  You know, that requires a huge investment.  You don't get all your billions of dollars back until 10, or 20, or 30 years.  
Most of the friends of former President Suharto - his cronies and colleagues who still dominate the economy - they want their money back next year.  So it's wheeling and dealing that dominates the economy, not long term planning for the needs of the population.  If the population does grow at five million a year, which is the estimate from the current head of the family planning board of Indonesia, then it's going to need a massive increase in production, which is not feasible.  Therefore, second best choice - it's not the best choice, it's the second best choice - is a massive improvement in the efficiency and welfare orientation in the use of the resources they do have.  

JENNIFER COOK
So this climate of a low manufacturing base, a poor population, a lack of basic infrastructure, is it leaving Indonesia vulnerable to entrepreneurs who can just come in and plunder?  Make a quick buck and get out?  

MAX LANE
There's enormous plundering of Indonesia's natural resources taking place.  Of course, there's oil and gas - I mean the corporations involved in gas are either Japanese or from the United States; they're the dominant groups - the forests are being cut down, so that's another major export, and then there's fisheries from the oceans.  So there are a lot of things being gouged out and sold off quickly.  There is significantly more manufacturing in Indonesia today than there was 30 years ago, but it now constitutes maybe between 40 to 50 per cent of the gross domestic product.  That's only 50 per cent of a small base, though, and most of it doesn't include very much heavy or medium industry, so it's a low productivity kind of manufacturing.  Incorporated in that, too, is a lot of wastage, because the productivity of the Indonesian worker is quite low.  

JENNIFER COOK
I'm Jennifer Cook, and on Up Close this episode, we're speaking with Max Lane about Indonesia.  Max, just how does that kind of low level economy contribute to the political, social and religious turmoil that we're beginning to see?

MAX LANE
Of course the main thing that it creates is a huge gap.  The biggest thing is a growing sense of frustration amongst ordinary people, that this situation, 60/70 years after independence, has not changed.  Yes, the economy's grown.  Yes, there are more factories.  Yes, there are more cars.  Yes, there are more buildings.  But the rich/poor gap has stayed the same.  If you fall sick and you need to go to hospital, or if you want books for your children, or there are things you know the rest of the world i.e. the rich world have, then the frustrations are very deep.  So I think there's a time bomb ticking in terms of social explosion.  The early signs are there.  The first signs, of course, are the small pockets here and there of religious extremism, which are a reaction not simply to the poverty as such, but the humiliation of the majority of the population being condemned to poverty.  

JENNIFER COOK
Let's just talk about that extremism.  In Aceh some by-laws were passed at the end of 2009 saying that it was legal to be stoned for adultery, and 100 lashes for homosexuality.  We also have films being banned, books being banned, and yet we have a rich and diverse culture.

MAX LANE
Here you have to sort of try and imagine a situation where you had a dictatorship for 33 years, under General Suharto, from 1965 to 1998.  That's more than half of the existence of Indonesia as an independent country.  He left very much, in the corridors of the bureaucracy, in national and provincial governments, and even in other institutions like universities and so on, he left a very conservative authoritarian mentality.  Even 10 years on, the natural inclination is to ban, especially anything that's connected to any of the taboos that were strong during the 33 years of General Suharto's rule.  
Don't talk about how he came to power, the massacre of one million people, the imprisonment of 100s of 1000s of others, or the banning of more than half of the political spectrum of Indonesian society.  Don't talk about that.  You're only allowed to say that it was all due to the fault of the Indonesian Communist Party, which was also banned.  That's one taboo.  You're also not allowed to talk about no one religion being better than another.  There's an unspoken taboo that you must acknowledge the superiority of Islam over other religions.  It's not a formal thing, but some of the books recently banned were those promoting a pluralistic outlook towards the Islamic religion.  So there's still that inclination.  
On the other hand, the fall of General Suharto at the hands of a mass protest movement led by student activists has created amongst young people - and really in society generally - the opposite inclination.  They want to speak out, to experiment, and to try new things.  Certainly, I think, we're just at the beginning, now, of what's going to be quite a renaissance in Indonesian cultural and political life.  But, I'm also sure that that renaissance will come into conflict with the institutions and outlooks that the 33 years of dictatorship created, and which are still strong within state power, and within state apparatus.  

JENNIFER COOK
I'm Jennifer Cook, and on Up Close this episode we're speaking with Max Lane about Indonesia.  Max, going back to this younger generation, what is your feeling about their plans for the future, and the direction of their country?  Do you think there does need to be this generational shift to take the country forward?

MAX LANE
One of the interesting things about Indonesian history, even while it was a colony from the beginning of the 20th Century - Indonesia got its independence in 1925. One of the interesting features of that whole history up until today is that it's been very marked by sharp generational shifts.  I think this has happened more than in most countries in the world.  In fact, everyone in Indonesia talks about it.  They talk about the 45 generation, the 66 generation, the 78 generation, and now they're talking about the 90s generation, or the 98 generation, the activists who led the movement which pushed Suharto from power.  
And often what you see is that 99 per cent of the people who are the forefront of a particular wave of change, very quickly fade away, it seems, in this course of Indonesian history.  There is one exception, and that is those who actually fought for independence, who were held aground for a long time.  But others very quickly fade away.  So I think there is a process, now, of a new generation being created.  Because of the way the population is increasing, 60 to 70 per cent of the population are young people.  What different competing plans emerge amongst them, at the moment, will be very interesting to see.  
You can get a hint of it by looking at what models around the world they are looking to.  Venezuela is one example that they look to a lot.  There are a lot of books being published and translated from Spanish or English into Indonesian about Venezuela; biographies of Hugo Chavez, books about the women's movement in Venezuela, or cultural life, or economic policy and so on.  So I think that's one direction that a section of the young people will be moving in.  There's some interest, too, in the politcal leadership, contemporary political leadership of Iran, for example.  That's more amongst the Islamic people, though, with an Islamic orientation but more political rather than doctrinal.
Even if within the next 10 years either of those models becomes the basis for a small political movement, it will certainly be challenging.  I think the Venezuela model, adapted to Indonesian conditions, probably is a good thing to think about because in third world countries that have very little access to capital, in the end the main resource they have in abundance is human beings.  The current economic outlook that says, you know, we have to get capital investment, investment, investment, tends on the other side of the coin to view the 200, soon to be 300 million people as nothing more, really, than mouths to feed.  
The calculations are yes, 10 per cent of them will do productive work in modern factories, the rest will be minimally productive but we have to feed them.  There isn't the mentality - these are 200 million people who could be productive and produce things useful to society.  I think that's one of the things that people looking at Venezuela like.  They see all these missions - what they call them in Venezuela - where people who weren't previously doing much because of the high levels of unemployment, are now actually producing things as a result of organising themselves, with the support of the government, to do so.  And that's appealing because there are just millions, and millions, and millions, and millions of people in Indonesia who either don't produce anything at all because of unemployment, or do produce something but it's too little.  

JENNIFER COOK
What about the impact on ASEAN, which we know is the Association of South East Asian Nations, the economic organisation of 10 countries in the region?

MAX LANE
Well of course tensions between Indonesia, Singapore, Malaysia, Thailand and the Philippines in the economics field really make ASEAN a bit of a - well I won't say a joke.  And anyone who looks at the actual internal machinations of relations between those countries in the economics sphere, you know, can see that competition, unfortunately competition and rivalry is the key feature, rather than cooperation.  I think one of the most interesting developments that we'll see will be the emergence of Indonesia as a hub.  
Singapore is the one that claims to be a hub so far, and I think it will retain its position as a hub for containers, and a hub for financial services industry equivalent of containers.  I think Indonesia's going to become the hub of ideas.  You can see one very early sign of how that happens - I think it's a negative manifestation in the first instance, but I think other more positive manifestations will follow - that is the whole ideology of Jihadism is now region wide.  They're Indonesia, Singapore, Malaysia, Philippine's networks.  The borders have become more fluid between those countries.  There is more exchange of people and ideas, as well as goods and services.  
I think that particular variant of religious thinking is the one that's been able to move quickly, but I think other social, cultural and political ideas that will be generated out of the cauldron that is Indonesia, will also start to have an impact in Singapore and Malaysia first.

JENNIFER COOK
Max, thank you so much for your time today.  

MAX LANE
No worries.  Thank you very much.

JENNIFER COOK
You've been listening to Up Close, and we've been speaking with Dr Max Lane about the economic prospects of Indonesia.  Relevant links, a full transcript, and more info on this episode can be found at our website at upclose.unimelb.edu.au.  Up Close is brought to you by marketing and communications of the University of Melbourne, Australia.  Our producers for this episode were Kelvin Param and Eric van Bemmel.  Audio engineering is by Gavin Nebauer, and Up Close is created by Eric van Bemmel and Kelvin Param.  I'm Jennifer Cook.  Until next time, good bye.  

VOICEOVER:
You’ve been listening to Up Close. For more information visit upclose.unimelb.edu.au. Copyright 2010, the University of Melbourne.


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