The problem of inequality will always arise: Emil

The problem of inequality will always arise: Emil

By Riyadi

JAKARTA (JP): Amid the flourishing business conglomerates in the country, many people have expressed concern over the economic fortunes of the common people.

Critics have blamed the so-called New Order government's economic policies, which allegedly emphasize growth instead of the distribution of wealth among people, for the backward economic state of the of the majority of the population.

But Emil Salim, one of the architects of the New Order economic policies, rejected accusations that the New Order government had failed to develop the economy of the common people.

"In a market economy, it is unavoidable that those who have the money will grow faster," Emil argued. "So we mustn't put a break on this group, but we should try to tie the small ones to this group through a number of partnership schemes."

A former long-serving minister himself, Emil contended that the development of the people's economy had been the focus of the New Order government, at least during its early years in power.

Emil served as state minister of administrative reforms from 1971 to 1973, minister of transportations from 1973 to 1978, state minister of development supervision and environment from 1978 to 1983 and state minister of population and environment from 1983 to 1993.

The main issue in the late 1960s was how to get out of continuous economic debacles, Emil said. In this respect, the control of inflation was given top first priority, while the rehabilitation program addressed the problems of food, clothing and infrastructure, especially in rural areas.

Soon after assuming power, the new government, under Soeharto, formed the National Logistics Agency (Bulog) in 1967 to stabilize food supplies, especially rice.

Rice was at the heart of Indonesian politics. It was the staple diet for most Indonesians and was the main produce of most Javanese villages and many areas outside Java like Bali, West Sumatra and South Sulawesi.

In the early 1970s, Indonesia was the biggest importer of rice in the world, buying 25 percent of world's rice exports. "That's a very dangerous situation," Emil said.

The government then took concerted measures to boost domestic rice production before embarking on a broader economic program.

"We decided to be self-sufficient in rice. So, when talking about the economy at our cabinet meetings, we always started by talking about rice, water, irrigation, fertilizers and so forth," Emil said.

As the New Order government came to power, a new rice hybrid was developed by the International Rice Research Institute (IRRI) at Los Banos in the Philippines. This new hybrid, the first in a series, was the beginning of what became known as the green revolution, and was snapped up by Indonesia.

To introduce the new hybrid, IR5, and other new rice varieties, massive fertilizer applications were required in order for the crop to be productive, but Indonesia had no fertilizer industry.

At the time of the rice crisis in the early 1970s, all the fertilizers used in the country were imported. The first domestic plant, financed by the World Bank and Japan, came on stream in 1975. A new plant started up each year thereafter until, by 1982, the country had seven fertilizer plants in operation, enough to satisfy domestic demand.

Fertilizers were distributed at subsidized prices by a state trading corporation. A government bank was assigned to extend rural credits. And Bulog was assigned to maintain the floor price to secure reasonable incomes for farmers.

Emil said the windfall from the steep rise in the international oil prices in the early 1970s enabled the government to pump huge funds to rural development.

The Six-Day War in the Middle East and the oil embargo it sparked off, increased the price of Indonesia's crude oil by 200 percent in the international markets between September, 1973 and January, 1974.

"Most of the revenues from the oil sector went to villages through a number of rural development programs mandated by Presidential Instructions," Emil said.

With fertilizers and capital both being pumped into the countryside at subsidized rates, and with high floor prices securing reasonable earnings for the rice growers, the farmers responded positively to the government program. Seeds of IRRI varieties, such as IR5, IR15, IR25, IR32 and IR64, swept across the country. Rice yields increased. And Indonesia finally attained self-sufficiency in rice in 1984.

"I respect our farmers; our peasants were very courageous in taking risks by accepting the new varieties. That's our quality," Emil said.

Emil explained that the government also carried out massive rural development programs because 78 percent of the country's population lived in the rural areas.

" The massive rural development increased the purchasing power of the people which in turn expanded our domestic market."

He warned, however, that when the rural sector is developing, and the market forces are ushered in, competition emerges.

"However, when competition emerges, the players are not on equal terms. Those with access to capital, technology, markets and information will move faster. And again the problem of inequality will arise," Emil said.