Burden Swells, Hit by Inflation: Vice President Says Indonesians' Livelihoods Plummeted
The deteriorating economic conditions in the early years of Indonesia’s independence once provoked sharp criticism from the nation’s first Vice President, Mohammad Hatta, directed at President Soekarno. Hatta even assessed that the economic suffering experienced by the people at that time was more severe than when Indonesia was still under Dutch colonial rule or Japanese occupation.
The criticism was conveyed by Hatta in a letter to Soekarno on 17 June 1963. Although he had no longer served as vice president since 1956, Hatta continued to follow national economic developments and admitted to feeling anxious about the country’s trajectory.
‘As someone who has struggled for decades and sacrificed much to achieve an independent, united, sovereign, just, and prosperous Indonesia, I feel obliged to write this letter. My heart is anxious seeing the decline in various fields,’ Hatta wrote in his letter, cited from Hati Nurani Melawan Kezaliman: Surat-Surat Bung Hatta Kepada Presiden Sukarno 1957-1965 (1988).
Hatta’s anxiety was not without reason. According to Ricklefs’ account in A History of Modern Indonesia (1999), Indonesia faced severe economic pressures during that period. Inflation continued to rise, the prices of basic necessities soared, and people’s purchasing power declined. At the same time, the government continued to run various prestigious projects that absorbed large budgets.
As an economist who had been involved in formulating state policy since the early days of independence, Hatta viewed the situation as a very serious decline. He even stated that the living conditions of the people at that time were unprecedented in Indonesian history.
‘The decline in the people’s livelihood, which is unparalleled in Indonesian history, is more devastating than during the Dutch colonial period and the Japanese occupation,’ Hatta asserted.
According to Hatta, the root of the problem lay in misguided economic policies. Instead of realising the ideals of socialism that the government often campaigned for, the implemented policies actually made the people’s burden heavier.
‘The people’s income is increasingly squeezed, especially with the accelerated inflation policy, but the people’s burden is increasingly enlarged,’ the independence proclamator revealed.
Not only that, Hatta also highlighted the emergence of an elite group living in luxury amidst the people’s economic hardship. This condition, according to him, widened the gap between the rich and the poor.
‘The contrast between rich and poor is very striking, never as sharp as it is now,’ he wrote.
Hatta admitted to personally feeling the impact of the worsening economic conditions. From his pension, which amounted to only Rp5,762, about 70% had to be used to pay the electricity bill. This experience further strengthened his conviction that the direction of economic policy at the time had deviated from the goals proclaimed by the government.
Therefore, he posed a sharp question to Soekarno and his aides.
‘It is now a question for many people, perhaps also for all those who suffer and think: Is this the road to socialism? Is socialism not just lip service, as is also the case with Pancasila?’
The letter later became known as one of the harshest criticisms Hatta ever levelled at Soekarno. A few years later, the worsening economic crisis became one of the factors that weakened Soekarno’s political position until he eventually lost power.