Challenges to national unity

Challenges to national unity

The following article is based on a paper presented by Juwono Sudarsono, Vice Governor of the National Resilience Institute Defense College, at the Indonesian Executive Circle on March 29, 1995. This is the first of two articles.

JAKARTA (JP): The challenges facing our national leaders in maintaining Indonesia's unity during the next 10-15 years will be in factoring an archipelagic outlook and national resilience in a comprehensive and balanced manner. The judicious implementation of these collective performances will be compelling as pressures build up for change and reform, arising from the very success of widespread social and economic transformation across the country over the past 25 years.

Externally, the advantages that Indonesia enjoyed throughout 1969-1994, its strategic importance in maritime Southeast Asia, its vast pool of natural resources and its striking potential as a vigorous market, have declined in relative terms as the major economies of North America, Europe and Japan look to other big emerging markets. Competition for investments, trade opportunities, market access and development finance come from Mexico, Argentina, Brazil, China, India, Vietnam.

Despite Indonesia's past success at controlling population growth at an annual average of 1.8 percent (an increase of three million Indonesians every year) a keen sense of urgency must be maintained, especially in Java and Bali, where 65 percent of the population resides. Recent estimates put the breakdown of population distribution at: Sumatra 41 million, Java 110 million, Kalimantan 11 million, Sulawesi 13 million, Nusa Tenggara 11.5 million, Maluku 11.9 million and Irian Jaya 1.6 million.

Nation-wide, total fertility has declined by 40 percent since family planning was instituted 25 years ago, although growth rates in Riau, Kalimantan, Southeast Sulawesi and Irian Jaya remain at above three percent per annum.

The government estimates that by the year 2020 the growth rate will plateau at 250 million Indonesians, at an average of 3.1 for the desired family size (compared to 6.6 twenty years ago); even that seems overly optimistic.

The tension levels which periodically occur in Java, particularly over land ownership and never-ending labor disputes, are clear manifestations of enduring population pressures. For the rest of the 1990s, roughly 85 million Indonesians will be in the work force, of whom 15 percent do not have any education and about 50 percent achieve primarily school level only. Over one- third comprise the socially volatile 15-29 age group. By 2005, more than 35 percent of Indonesia's population will congregate in industrial-urban centers.

Our greatest challenge in the economic field will be to maintain real growth above the rate of population increase and to control inflation at a manageable level. In the past, growth relied heavily on the oil and gas sectors, which contributed more than 70 percent of government revenue during the crucial 1966-75 period of consolidation. Over the past decade, impressive annual growth rates of 12 percent in the export of manufactured goods have been sustained, surpassing oil-gas earnings since 1986.

Nevertheless, if we are to achieve measurable improvement in our material well-being, Indonesia will have to uphold an annual growth rate of at least 5.6 percent well beyond the year 2000 when the Gross Domestic Product per capita is expected to reach US$1000. By 2010, the Indonesian economy is expected to comprise 45 percent in industry and manufacturing, 24 percent in services and 12 percent in agriculture.

Until the 1980s, the problem of balanced growth had been defined in the dichotomy between Java and the outer islands. The dangers of economic disintegration now and in the future emanate from the wide disparity in the scope of activity and the strikingly different growth rates between the western and the eastern provinces.

These disparities are made more acute by the pattern of Indonesia's international exports and flow of investments.

Japan and the Asian Newly Industrialized Economies (NIEs) constitute 40-60 percent of export destinations, the combined U.S.-Europe about 20 percent and intra-ASEAN another 15 percent. More than 70 percent of these exports originate from Sumatra, Java and Kalimantan. Sixty percent of Japanese and Asian NIEs investments are concentrated in Java, Sumatra and Kalimantan, where the infrastructure is relatively advanced.

The challenge to maintain economic resilience will be to provide impetus so that the industrial growth poles facilitate higher levels of integration with the eastern half of the archipelago. The race to match rhetoric with performance will be demanding.

Maintaining the inter-provincial balance constitutes another imperative. The more prosperous areas are in the west-central regions of the country: Greater Jakarta (Jabotabek), Java, East and Central Kalimantan, Aceh, Riau and South Sumatra. Aceh, Riau and East Kalimantan are richest in oil and gas, currently contributing 54 percent of the revenue, with substantial non-oil export products. Because of proximity to consumer markets and superior infrastructure, West and East Java showed a 40 percent increase of value-added manufacturing exports in the 1986-1992 period. Prime cities such as Medan, Pekanbaru, Palembang, Pontianak, Banjarmasin, Balikpapan and Samarinda will have to function more effectively as crucial points in a network of exchanges of goods, services as well as managerial personnel.

Clearly the links between the growth poles in the west, Singapore-Johore-Riau, the Indonesia-Malaysia-Thailand growth triangle, and the East ASEAN Growth Area must show more tangible progress in the critical decade ahead.

Some estimates project, that by 2005, Indonesia will cease to be a net energy exporter. Though coal and gas will continue to be important sources of revenue, there will be even more urgent needs for tighter management, improved efficiency and expanded export diversification in the non-oil sectors. The ASEAN Free Trade Area 2003, Asia Pacific Economic Cooperation 2020 and World Trade Organization rules will be never ending issues of hard bargaining and tough negotiation.

Internally, Indonesia's leaders will have to undertake even more serious steps to overcome imbalances between powerful groupings of the 22 conglomerates and the vast majority who remain below the poverty line. A major transformation of the credit structure must be instituted through concerted government political will and action.

Small scale and medium enterprises -- largely indigenous, and often imbued with strong Islamic values -- must be nurtured to develop skills and build effective economic institutions. Unless tackled with seriousness and consistency the economic disparities between the rich and the poor will continue to be marked by periodic social dissatisfaction and political agitation, magnified by dangerous cleavages along racial, ethnic and religious lines.

Politically, the rise of the Indonesian middle-class, currently estimated at 14 million, has led to incessant demands for broader political participation not only in the urban centers of Java, Sumatra, Kalimantan and Sulawesi, but also in the three outlying and politically sensitive areas of Aceh, Irian Jaya and East Timor.

Public administration, specifically local government, will have to bear heavier burdens of delivering the basics such as food, public order and low-cost public housing. Without discernible progress in the provision of these essentials of "social overhead", there are dangers that overzealousness in the inculcation of Pancasila as the national ideology will breed apathy, cynicism and even outright rejection, especially among the young and the unemployed.