Archive for the ‘Indonesia’ Category

Easter viewing

March 25, 2016

I have meant for some time to recommend Joshua Oppenheimer’s two documentaries about the deaths of more than 1 million people in Indonesia in 1965-6, at the time when Suharto came to power. It wasn’t a genocide, I think, because lots of different racial groups were targeted (though ethnic Chinese suffered greatly). Rather, it was a ‘politicide’, if such a word exists, an attack on all those deemed to be enemies of the new regime, including anyone deemed to be a communist.

If you have not seen these films, you should. They can be rented cheaply from Amazon. Here is the download from for the first documentary (£3.49 to rent), The Act of Killing, and here is the download from for the second documentary, The Look of Silence.

The Act of Killing received rave reviews partly because of Oppenheimer’s extraordinary methodology. He showed up in Sumatra saying he was interested in learning about the 1965-6 killings, and a bunch of semi-retired preman (gang members/thugs) said: ‘Hey, that’s us. How can we help?’ He then convinced them to act out their memories of murder for his movie. This makes for some very weird and utterly compelling footage.


Personally, however, I like The Look of Silence more. In this second documentary, Oppenheimer follows one of the victim families, as a surviving brother gently begins to confront the murderers who butchered his sibling and chucked his body in the local river. The Look of Silence gets much closer to the political and social story underlying the politicide. It is not so visually freakish, but it makes you think more. I note that on Amazon, individual viewers rank it higher than The Act of Killing, so other people may have had the same reaction as me. Really, tho, you need to watch both docs.


Finally, here are Werner Herzog and Errol Morris talking about The Act of Killing, just in case the trailer hasn’t convinced you to watch it:




Jokowi, thankfully

July 27, 2014

This week’s confirmation that Jokowi won the Indonesian presidential election is a relief. The alternative was an administration under Prabowo and his band of western-educated, elitist carpet-baggers.

Indonesia avoided the negative outcome. But it cannot be said that Jokowi guarantees a fundamental change of direction, as many foreign journalists would like to believe. Jokowi is beholden to the PDI-Struggle party of Sukarno’s daughter Megawati, and to the network of Vice President Jusuf Kalla, themselves different stripes of the Indonesian establishment.

Nor does Jokowi have a policy agenda. He stood as an ordinary person who is not corrupt. But a government that rules relatively cleanly and a little more efficiently will be nothing more than a reprise of SBY’s first term, before the ex-general’s team was consumed by corruption-as-usual.

The real game changer in Indonesia would be a manufacturing strategy that creates more semi-skilled employment opportunities and develops indigenous technological skills. An infrastructure build-out would complement this by creating demand for domestically-manufactured inputs. But such a policy shift is probably too much to expect. Since the Asian crisis and IMF intervention Indonesia has settled on a consumer-focused banking system and a proto-colonial raw material export economy. There are lots of vested interests that surround this arrangement. It would be a very big surprise if Jokowi were to upset the IMF’s apple cart.

Is Indonesia different?

August 2, 2013

Below is a critique of How Asia Works with specific reference to Indonesia. Indeed there is a second part of the critique that you can track down via the Lowy site. I am just posting the first part and, underneath it, rejoinders to the main points it makes.


Indonesia’s development formula

by Stephen Grenville – 25 July 2013 11:10AM

I share Sam Roggeveen’s enthusiasm for the iconoclastic approach of Joe Studwell’s How Asia Works (his previous book on Asian Godfathers was a great read too). I also share Studwell’s scepticism about the ‘magic of the market’, his views on the IMF, and his admiration for the achievements of the South Koreans.

But I’m unconvinced by Studwell’s three-step development prescription, not because it is intrinsically wrong but because it is too hard to implement successfully.

The Koreans might have done so, but the strategy requires a level of sustained administrative competence, single-minded toughness and luck which are rare. Just as important, there are alternative development strategies, less demanding of skilled policy-making and administrative competence. The growth outcome won’t match Korea’s, but will be more feasible for countries like Indonesia (which Studwell sees as a development failure).

Let’s go through the three elements of the Studwell strategy. The first stage requires land reform and a boost to agricultural productivity.

It’s an old and sensible idea that agriculture has to provide the investable surplus which will propel the rest of the economy along the path of development. Fifty years ago, Clifford Geertz (Agricultural Involution) despaired about Indonesia’s failure to follow the example of Japan, which shifted surplus agricultural labour into factory work to create a modern urban/manufacturing sector. This failure would lead the excess population to atrophy, farming progressively more Lilliputian plots.

But things turned out better. With the average size of farms on Java around half a hectare, the opportunity for land reform couldn’t play the key role that Studwell advocates. But Soeharto, with his roots in agriculture, gave rice production high priority (extension services, high-yield seeds, fertilizer, pesticides and attractive terms-of-trade between agriculture and urban consumers via an active price stabilisation authority). Not very free-market, but big yield increases and self-sufficiency were speedily achieved.

What about a vigorous industry policy, the second Studwell requirement? Despite inheriting the usual disaster story of failed prestige projects from Sukarno, Soeharto was ready to have a go at ‘picking winners’.

Cement, fertilizer, textiles, paper production, food processing and petroleum refining all fitted Indonesia’s comparative advantage and made sense. Others were less defensible: Krakatau Steel,Tommy Soeharto’s national car and Ibnu Sutowo’s tankers. Habibie‘s IPTN aeroplane fits the Studwell strategy and might have succeeded if it hadn’t been stopped by the Asian crisis: ex-aeronautical engineer Habibie was well-qualified to lead this project, plane construction is quite labour-intensive (all those rivets) and the Indonesian archipelago needs lots of them (one airline recently ordered several hundred in one hit).

Whether IPTN would have succeeded is not the issue here: the point is that Indonesia, for better or worse, did try the sort of hot-house industrialisation Studwell advocates, and the IMF wasn’t able to stop this, at least until the 1997 crisis. Planning retained a central role, just as Studwell wants, and state-owned enterprises did the government’s bidding. Where Indonesia had comparative advantage, this often worked out well, and where the industry didn’t suit Indonesia’s attributes, generally it was a failure.

Indonesia’s development experience doesn’t fit the Studwell formula. Java’s rice production has done well without relying on his key element of land reform, and industry policy based on domestic entrepreneurship has been tried without much success.

Governments attempting to steer the process of development need effective administrative capacity; in a follow-up post, I’ll expand on the idea that market failure is common enough, but so too is government failure.

Joe Studwell’s response:

1. I doubt, contra Mr Grenville, that there is some arbitrary minimum land holding that makes land reform unworkable. If this were the case, then the micro-plots of a few tens of square metres championed by groups like Landesa would make no sense, when historical evidence around the world shows that privately-held micro-plots produce very high yields.

I am presently up my hill in Italy, and using a very slow Internet connection, and so cannot readily check the average Javan landholding. I assume Mr Grenville means that the average Javan landholding is half a hectare now, and would therefore be less after land reform. (The average land holding in most parts of China, Japan, ROK, and Taiwan after land reform was roughly half a hectare.) If my understanding is correct, my response is that Java has some of the best soil and climate conditions in the whole of east Asia, and so even smaller plots should be more than viable — if indeed size matters at all in a downward direction, a question which I think deserves real scrutiny.

Mr Grenville is correct that yields on Java are high by south-east Asian standards. The rice yield is over five tonnes per hectare. However this is still less than the average in north-east Asia. Given its soil and climate, it would not surprise me if north-east Asian style household farming could produce as much as 9 tonnes per hectare on Java — about as high as has been managed anywhere, because the growing conditions are so favourable.

Mr Grenville is correct that Suharto invested heavily (if patchily) in agricultural extension services and (eventually) used minimum price guarantees to promote higher yields. However he is wrong to say that self-sufficiency was achieved ‘quickly’. Rice self-sufficiency was not achieved until the mid-1980s, 40 years after independence, and wheat self-sufficiency never was. So I maintain my position that Indonesia is a real relative failure in agriculture.

2. On industry, much of my criticism of policy in south-east Asia focuses on politicians’ efforts to ‘pick winners’ rather than run industrial policy that periodically culls losers. I also talk at length about the need for ‘export discipline’ to anchor industrial policy. And I avoid traditional discussions of what is or is not a society’s comparative advantage because, to my mind, development is about changing (within reason) your comparative advantage. Economic development is about investing in a learning process in order to reap higher future returns.

Mr Grenville’s points about industry in Indonesia therefore seem to me to be based on a misreading, or mere scanning, of How Asia Works. He highlights industrial projects that were picked as ‘winners’, were not subjected to sufficient competition or pressure to export, and which consequently produced a poor return on industrial policy investment. His observations are essentially supportive of the policy requisites I highlight.

The one thing I think is truly misplaced in Mr Grenville’s comments is the argument in the third paragraph that, essentially, Indonesians are politically and administratively ‘not up to’ the task of accelerated economic development, particularly compared to people like the Koreans. Is this true? In 1945, South Korea was the rural backwater of a brutally colonised state in which Koreans had been allowed to play perhaps the most restricted administrative and economic role in any east Asian colony. I cannot see that the Koreans had much political, administrative or educational capital. Elite Indonesians, by contrast, held senior civil service positions under the Dutch, could win scholarships to study in Europe, and had much greater (formal) political, administrative and educational resources. The difference was not the endowments, but the change politicians wrought over 60 years of independent government.

Why was the peasant Park Chung Hee able to achieve so much more than the superbly educated Sukarno? Probably, I think, because Park focused on the basics and got them right.

Nakries, Bothschilds, torpor

February 22, 2013

Rothschild 1


Inbred Etonian titty Nat Rothschild takes on legendarily dodgy pribumi carpet baggers, the Bakrie brothers (led by Rothschild lookalike Aburizal). I guess the takeaway is that there is little to choose between the British aristocracy and a bunch of Third World wideboys when it comes to moral conduct. The Bakries have been coining in money in Indonesia ever since the Benteng programme of the 1950s was set up by Sukarno to support ‘downtrodden’ indigenous traders. They weren’t downtrodden then, and they aren’t now. The Bakries made a killing out of exclusive trading licences that did nothing to support Indonesian development. Nat ‘Mr Offshore’ Rothschild, meanwhile, showed how naturally at home he is in a south-east Asian, Latin American or Russian business environment by cutting a deal with the Bakries to ‘reverse list’ their coal assets in London. This is a favourite Third World tycoon game whereby you find a failed listed business and have it take over your real business, thereby avoiding the intrusive due diligence and transparency that can go with an Initial Public Offering. Nat then got in a terrible bait that having gone into business with some of the dodgiest characters in Indonesia they turned out to be dodgy. (His own efforts to ‘tool up’ by bringing in the likes of Hashim Djojohadikusumo, a B-grade tycoon and elder brother of former Indonesian special forces commander Prabowo Subianto, were a flop.) Meanwhile, despite the recent global financial crisis, British regulators let the entire sordid affair carry on, presumably on the assumption that British aristocrats who live in Switzerland can be trusted to keep their own moral counsel. What happened afterwards with the London-listed business is precisely the sort of shenanigans and fleecing of minority shareholders that happens in places like Indonesia. Quelle surprise!

The Guardian explains some of the background.

Here is the Bloomberg coverage.

Here is the FT coverage (subscription needed).

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