It is difficult to deny that under the New Order significant economic progress has been made. A stated above, the New Order inherited from Soekarno an economic system characterized by spiralling inflation of up to 600 per cent in 1965 and a scarcity of goods and services. In the 1990s, however, Indonesia has experienced consistently high or at least moderate economic growth. Even in 1982, when Indonesia was hit by the step decline in international oil prices, its annual rate of economic growth was still above 2 per cent.
The New Order has also successfully reduced the incidence of poverty. In 1976, the proportion of poor throughout. Indonesia was 40.36 per cent of the total population, while in 1987 it was 17.44 per cent. According to the Central Bureau of Statistics, in 1990 it was further reduced to 14.33 per cent (Syahrir 1992, p. 26).
The increase of educational facilities and the growth in the number of students especially at the elementary school level has also been phenomenal. Facilities in public health have also improved. in every sub-district (kecamatan), the government has established a Community Health Centre (Puskesmas) led by a medical doctor under a programme called Inpres Doctor (under which a medical doctor must serve in sub-districts as compulsory public service for three years after graduation). In each village there is one Posyandu (Community Service Centre) which provides services, especially medical services, for villagers. The centre is led by village officials who, among other things, have the task of calling for a medical doctor from the sub-district.
The flow of information has also increased significantly under the New Order. There are now at least one or two newspapers in each province, and two or three private radio stations. In Jakarta itself, there are four television channels run by private companies, compared with two government television channels. In addition, the public is not prohibited from having parabola antennae to access world information network by satellite. Transportation has also connected villages and small towns and opened up remote areas. It is believed that many sub-district capitals that used to be small and isolated, have now become medium-sized towns with a relatively high rate of mobility for the population.
The Indonesian economy has been forced to adjust to international economic change. Rising global economic competition and difficulties in obtaining international loans have forced the government to change some of its economic policies. For example, in fiscal policy, the government has had to reschedule a number of large projects. Meanwhile, state-owned companies are now open to market competition, operating with smaller subsidies from the government. Foreign investors have been given more freedom to invest over longer time periods and without the need to have local partners. Even more significantly, the government has tried to mobilize tax revenues through a reformed tax law in the wake of a shortfall in oil revenues. Tax campaigns are often launched to ensure that liable companies and individuals pay tax. Every year, the government publishes lists of individuals and companies paying the largest amount of tax in order to encourage people to pay taxes.
Various changes have been made to monetary policy, one being to allow the private sector to establish banks. As a result, many private banks are now existence, many of them with connections to big businesses. International banking is also promoted in Indonesia. Similar changes have taken place in investment policy, where more openness to foreign investment has been initiated. Foreign investment previously faced several limitations, as enforced by so-called government regulation No. 20/1994. In 1994, however, the government allowed foreign companies to invest in Indonesia without time limitations. The changes in fiscal as well as monetary and investment policies have made the government more dependent on society which, in turn, means that the window to democratization is now opened.
(Continued on title : "The Politics of Openness")
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