'Sjafruddin's ideas are still relevant'

'Sjafruddin's ideas are still relevant'

JAKARTA (JP): The thought of the late Sjafruddin
Prawiranegara, a leading figure of modern Indonesian history,
remains relevant today, a seminar heard over the weekend.

Dawam Rahardjo, director of the post-graduate program of the
Muhammadiyah University in Malang, East Java, told a seminar here
on Saturday that, although Sjafruddin's thought was very
controversial in the 1950s, it is still relevant to economic
policy under the New Order.

Sjafruddin, who graduated from the law school of the
University of Indonesia in 1929, was minister of finance between
1949 and 1951 and was the first governor of the central bank,
Bank Indonesia, between 1951 and 1957.

In 1948, when the provisional Indonesian capital of Yogyakarta
was captured by the Dutch colonial troops and Indonesian leaders
were arrested and exiled, Sjafruddin set up an emergency
government in Bukittinggi, West Sumatra, to lead the nation's
guerrilla forces.

As finance minister in the cabinet of Mohammad Hatta in 1950,
Sjafruddin reorganized the Indonesian monetary system. His
decision to cut the value of the rupiah by 50 percent sent shock
waves through the young nation.

According to Dawam, Sjafruddin's ideas were similar to those
of the so-called "Berkeley Mafia," President Soeharto's first
team of economists, which was led by Dr. Widjojo Nitisastro.

As the group's pet name suggests, many members of the team
were graduates of the University of California in Berkeley.

Dawam told the seminar, which was sponsored by the Al Azhar
Islamic Youth Study Club, that "if Sjafruddin were alive today,
he would have supported the recent government policy of
deregulation and privatization and would be very enthusiastic
about the trend towards globalization."

Sjafruddin had spoken about globalization at the time of
glasnost and perestroika, in the former Soviet Union, and had
predicted that communism would be replaced by "the market
economic system," Dawam said.

Sjafruddin disagreed with the policy of providing protection
and subsidies to state-owned companies, he added.

"According to Sjafruddin, if state-owned companies could not
operate like private ones, they should be managed by the private
ones," he said.

Dawam said that Sjafruddin had emphasized that the basis of
economic growth was monetary stability.

"As governor of Bank Indonesia, he perceived that its main
task was to keep the inflation rate as low as possible and
maintained a strong rupiah exchange rate."

According to Dawam, Sjafruddin opposed deficit spending and
pushed the idea of a balanced budget. His ideas were similar to
the policies of the New Order government many years later.

Sjafruddin preferred foreign investment to foreign borrowing
as it put the risk on foreign companies.

Dawam said that, in some policies, Sjafruddin clashed with Dr.
Sumitro Djojohadikusmo, minister of trade and industry in
Mohammad Natsir's cabinet.

The two men were involved at one stage in a newspaper debate
about economic policy, including questions of inflation and
agricultural and industrial development.

"The debate was so excellent and historical," Dawam said,
adding that Sumitro had recently told him that he had valued
Sjafruddin's opinions.

"Sjafruddin was right in his concept then. It is impossible to
conduct industrialization without agricultural development as its
base," Dawam quoted Sumitro as saying.

The New Order government later implemented an
industrialization program together with an agricultural
development, Dawam said.

"The latter was the priority," he added.

Sjafruddin emphasized agricultural development as a means of
achieving two national targets: rice self-sufficiency and the
rehabilitation of cash crop plantations in order to increase
exports and foreign exchange earnings.

Sjafruddin did not favor the nationalization of foreign
companies as a path to industrialization.

As Bank Indonesia governor, Sjafruddin conducted a systematic
transfer of knowledge from the Dutch to the Indonesian personnel
of the central bank, he said.

"By that time Sjafruddin had already come to realize that the
main factor in Indonesian economic development was human
resources."

Meanwhile, Sjahrir, a professor of economics at the University
of Indonesia's School of Economics and a managing director of an
institute for economic and financial research, told the seminar
that Sjafruddin was opposed by his colleagues when he introduced
Indonesian banknotes to replace the Dutch currency.

"It was almost the same as the devaluation of the rupiah
against the U.S. dollar," Sjahrir said.

He said that, already in the 1950s, Sjafruddin had talked
about the role of Bank Indonesia as a commercial bank.

Sjafruddin, who was born in 1911, died in 1989 and was buried
at a public cemetery in Jakarta.

During president Sukarno's government he was arrested for
leading a revolutionary Indonesian government in Sumatra in the
late 1950s and early 1960s, even though the government of the
time had pardoned him and his colleagues.

The revolutionary government in question, known in Indonesian
by the acronym PRRI, opposed Sukarno's left-leaning democratic
policies. (05)