Indonesia: Democracy, Economic Development and the Media By Amir Effendi Siregar 1 Indonesia has, for the first time in its history, had three Presidents in the space of three years -- BJ Habibie until 1999, Abdurrahman Wahid until 2001 and Megawati Sukarnoputri since July 2001. These developments illustrate the turbulence of Indonesian political life, which has had its impact on the Indonesian economy, and vice versa. The economic crisis in 1997 led to a political crisis, forcing the six-term President Suharto to step down in May 1998, to be replaced by Habibie. Political instability prolonged the economic crisis. Today, Indonesia is in the initial stages of a new phase of democratic statehood. The challenge is to establish and maintain political stability, which will hopefully lead to economic security and a better investment climate that can help the country recover from the economic crisis. During the economic crisis, the gap between the have and have not, the number of poor people in Indonesia increased tremendously. Today, there is some respite from this situation, but most economic indicators show that the Indonesian economy still faces great difficulties with regard to foreign debt, unemployment, budget deficit, etc. At the same time, there is also a shortage of credible information. Freedom of information was denied to the people during the 30 years of authoritarianism, from 1965 to 1998, and this legacy has not entirely been discarded. Indonesia is attempting to establish a democratic information, media and communication system. Indonesia is trying to fight poverty not just in the economic sense but also in the field of information and communication. Political and Economic Challenges Indonesia is a country of about 210 million people, 6000 inhabited islands, 300 different ethnic groups and 25 different languages, of which Bahasa Indonesia is the national language. The population lives mostly in five major islands: Sumatra, Java, Kalimantan, Sulawesi and Irian Jaya. As a result of decades of centralized development 1 Amir Effendi Siregar is General Secretary of the Indonesian Newspaper Publishers Association. He has an academic background in mass communication, which he has taught at the university level in Indonesia. He has also served as Editor-in-Chief of the Warta Ekonomi Magazine. 1
policies and the nature of the political system, the majority of Indonesians, about 60%, live in Java, which is the smallest of the five major islands, containing a mere 9% of the country’ s total land area. Jakarta, the capital, is the centre of economic and political life in Indonesia. More than 60 per cent of the money in the country is circulated here and close to two-thirds of the readers of print media publications are to be found in this city of only 9 million people. This unequal development of Java, compared to the rest of Indonesia, existed in the early years of the republic, but in the last three decades, this has sharpened. There are also sharp differences between Jakarta and other parts of Java. From independence in 1950 to the mid-60s, Indonesia faced many political conflicts and suffered poor and disrupted economic growth. The political and economic system moved from “right” to “left” and back again, like a pendulum. The era of liberal democracy from 1950 to 1959 witnessed political instability and challenges to the Centre from political and religious movements in West Java, Aceh in North Sumatra, West and Central Sumatra. From 1959-1966, the Sukarno-led era of “guided democracy”, during which President Sukarno assumed all executive powers, was also turbulent, in terms of both internal and external conflicts, and economic hardship. It ended with a coup and a bloodbath in 1966. By then, the Indonesian economy had been destroyed with inflation running at about 330% annually. Under Suharto, the focus was on political stability and economic development rather than on ideology and mass mobilization, but the political system continued to be authoritarian and government was centralized. The agricultural sector was prioritized, to solve the country’ s food problems, and the BIMAS (Mass Guidance) programme was launched to develop intensive agricultural extension services providing important inputs such as seeds, fertilizer, insecticides and credit to peasants and farmers. Food production, especially rice production, increased tremendously, and in 1985 Indonesia achieved self- sufficiency in rice production. In general, from 1966 to 1997, the economy grew faster, with an average annual GDP growth rate of 6 to 7 %. Life expectancy, which was 41 years in 1960, increased to 54 years in 1981, and to 67 (female) and 63 (male) in 1997. But there was no significant change in land distribution and ownership. As the population increased, the number of landless citizens also increased. While rich farmers generated bigger surpluses as a result of the green revolution, the number of people living below the poverty line was still considerable. According to Statistic Central Body (BPS), in 1996, about 22.5 million people lived below the poverty line. Moreover, Indonesia, during this era, came to be classified as one of the most corrupt countries in the world. During the financial crisis of 1997, the rupiah fell from Rp. 2,500 to the US dollar in early 1997 to Rp. 15,000 in early 1998. Big business and banks were in deep trouble, as was the government, which could not deal with the financial crisis, followed by the economic crisis. This led to political change, and in 1999, a general election was conducted on democratic principles. Under the new president, Abdurrahman Wahid, Indonesian political life remained unstable, and full economic recovery did not take place. Eventually he came to be replaced by Megawati Sukarnoputri. 2
To be fair, Wahid and his then vice-president, Megawati, did attempt to stabilize the economy. Compared to 1998 -- food shortages, contraction of the economy by 13.4%, and 70% inflation – the Indonesian economy saw low inflation and about zero growth in 1999. In 2000, the budget deficit was 3.8%, as compared to an estimated 4.8%, inflation under control at 9.3%. In the first quarter of 2001, the Indonesian economy grew 4%, which was higher than the growth estimated for other Asian countries such as Malaysia, South Korea, Thailand and the Philippines. In the same quarter, inflation was 2.6% and foreign exchange reserves stood at US$ 28.7 billion, large enough to cover seven months of imports. The currency also became stronger, and today, it is about Rp.10,000 to 1 US$. However, even though the Indonesian economy shows signs of recovery in terms of macro-indicators, the country still faces a huge problem of poverty. According to the World Bank, the annual GNP per capita almost halved from US$ 1110 in 1997 to US$ 580 in 1999. In terms of the national poverty line, the number of poor increased greatly as a result of the crisis. According to BPS-Statistic Indonesia, using a 1996 standard of Rp.38, 246 monthly in urban areas, and Rp. 27, 413 in rural areas, the number of people living below the poverty line in 1996 was 22.5 million people. By the same standard, in 1998, the number of people living below the poverty line had increased to 34.5 million. However, by the revised December 1998 standard, which was Rp 96,959 for urban areas and Rp. 72,780 for rural areas, the number of people living below the poverty line was 49.5 million. If we measure poverty using an international standard of US$ 2 per day per capita, the situation is grimmer. In 1999, 15.2 per cent of the population earned less than US$ 1 per day per capita and 66.2 per cent earned less than US $2 per day per capita. By this reckoning, the number of poor people could be as high as 120 million. Challenges for the Media In a market economy, there is a reciprocal relationship between economic development and the development of the media. With greater economic development, the role of the media grows. The media, too, can s timulate the capacity of a society to improve its economic situation, and to progress. But there are certain safeguards that need to be in place. In a state-controlled economy or centrally-planned economy, the media is centrally controlled, and in the hands of a few. This is also the case in an orthodox free-market economy, which has a tendency towards monopoly ownership of the media, and thus, a control over the content of the media. That is why we need a democratic media set-up with a diversity of ownership and a diversity of content, in order to increase wealth, and to progress in a way that benefits society as a whole. In this regard, there must be a balance between the roles of the public, private and community media. The Indonesian press The Indonesian press is today dominated by the private sector, and is the most elite-oriented media in the country, compared to TV or Radio, because it serves the free 3
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