Reducing Poverty as Personal Vocation Part III
Impacts of Indonesia’s Independence, New Order Regime, and 1998 Economic Crisis on Poverty
Leonard Winardi

The Independence

Freedom is hard to obtain but even harder to maintain. Our forefathers fought and died for more than three centuries to obtain freedom which culminated in the declaration of independence. Declaration of independence in 1945 is a proclamation that Indonesians are free and sovereign. Since then, Indonesians are unwilling to surrender their fate to anybody and are willingly responsible for actions toward Indonesian kinsmen and other nationals. We as Indonesians want to be free in determining our own fate and the future of the nation in our hand. It is our responsibility to maintain and cultivate this hard earned freedom for the betterment of all Indonesians and the nation.

Freedom can be maintained through equality. When freedom operates in chaos, the freedom will bare both negative and positive valuations. Freedom will be good only for the people that gain their own freedom by limiting others'. Respectively, it will be bad for the oppressed and the poor or those who have very limited freedom. Equality gives freedom a standard and boundary. This standards need to be defined, formulated, structured, and applied within the scope of a nation.

Like freedom, equality needs to be obtained and maintained. In other words, after the independence the focus of our fight has been: to achieve equality for maintaining our freedom as a nation and as individuals.

New Order Regime

Before the 1998 economic crisis, the new order regime had successfully reduced poverty. The number of people living under poverty decreased dramatically from 50 millions to below 10 millions people between the year of 1976 to 1996 1). To grasp the significant of this achievement, one needs to understand that within only 20 years the percentage of Indonesians living below the poverty line decreased from 40% to only 10%. The human development index also increased significantly from about 0.465 to 0.682 during this period. Higher human development index indicates higher life expectancy, better health and nutrition, and higher education level and literacy. The life expectance was only 41 in 1976 and it was raised to 66 years in 1996. UNDP (2003) 2) reported that 87% of Indonesians are literate.

New order regime has showed us that poverty can be reduced along with significant increase in the quality of life through policies that focused on providing the poor equal access to basic social needs such as: health, education, and access to economic activity. The regime provided free clinics specifically to increase mother and children nutrition, gave consultation to pregnant woman through KB program (planned family), and served basic health need to everybody. The regime also sought out labor intensive investment and provided easy access especially for the poor to get land, capital, specific skills, and infrastructure 3).

The poor were the early focus of the new order regime and they were identified as people living below certain income and nutrition levels. Because of these limitations, the poor are unable to gain equal access to the basic social needs. Without outside help, the poor will be trapped in poverty for generations. By focusing on providing job and basic social needs, the new order regime practically gave the poor households a social security. When a household has a social security through long term employment and good health, the household no longer dwells in poverty. The household now can focus on obtaining good education, increasing income, and generating saving for future needs. Overtime, the poor will be able to stand by their own foot, to fight for equal access by themselves, and to determine their own fate or freedom.

1998 Economic Crisis

The economic crisis has rapidly undone the new regime successful record on poverty. Overnight, the people living below the poverty line increased to the same number as pre-1970. There are more than 50 millions people living below the poverty line and this number will increase with the soaring prices of the basic staple needs 4). The economic crisis led to the collapse of the Indonesian financial, political, and social institutions. Although the situation is getting better, the impacts still can be felt and Indonesians still must work hard to restore and strengthen all these institutions.

The economic crisis revealed the failures of the new regime to respond to the credibility crisis and the limited extend of the regime development programs. The regime credibility crisis was sparked by shameful and selfish acts by Soeharto. For example, November 1, 1998 the regime announced to close 16 banks. However, a bank owned by Soeharto's son was still allowed to operate under a different name. 15 major projects under contract with companies owned by Soeharto's son were still funded while all other major government projects were halted. His daughter and cronies were included in the government economic reformed efforts although they are unbelievably incompetent and corrupt. Soeharto selfish actions diminished the credibility of government commitment to economic reform and in the end led to the evaporation of most foreign and liquid domestic capitals from Indonesia. Indonesians suffered to this very day because of his unbelievably selfish act.

The economic crisis also exposed the limited extend of the regime development programs. The facts that economic crisis hit the poor the most should validate the unequal development performed by the regime. Labor compensation can be singled out for having the largest set back. The labor wage decreased by almost 40% in 1998 and has seen very sluggish recovery since. The labor wage is still lower than the pre-crisis wage. Both education and health services to the poor have also experienced a major set back and have yet to recover to pre-crisis conditions.

The unequal development programs carried out by the regime can be clearly seen by the increase in percentage of poor people as the region is further away from the capital city. Less than 5% of Jakarta population is living under poverty, while more than 45% of Papua population is poor. Similarly, there is also a significant contrast in poverty level between the villages and cities. In general, more villagers are living under poverty line than those living in the city.

The limited reach of the development carried out by the new order regime was due to a more centralistic hold of power. The poor which concentrated in regions further away from the capital city did not able to voice their concerns neither in local nor in national arena due to limited access to the political process. Government legislation no. 5 1974 and the following legislation no. 45 1992 showed the unwillingness of the central government to divulge political power. The central government not only limited the political power but also circumvented massive administrative headache to the local government. On top of that, the central government vacuumed all local resources both their natural (oil and mines) and physical (land and tax) resources.

Comparing with its legislative predecessors, government legislation no. 22 1999 can be considered a breakthrough. Although the legislation still contains few administrative holes such as the role of governors and central government, the legislation divulges political power along with financial and administrative resources to the local government in county level (kabupaten). This legislation, when properly carried out, can really increase local participation in the political process and create more equal access to power, financial resources, and public services. More importantly this legislation can in fact build a more free and civil society through out the entire nation in the long run.

Lessons Learned

Looking back at the success and the failure of the new order regime in combating poverty, one can deduce three important lessons. First, the poverty can be dramatically reduced when right policies that focus on the poor are implemented. The new order regime in its early years was very dedicated in combating poverty by using two strategies. The regime first strategy was to utilize the main asset of the poor, which is their labor, by creating incentives for labor intensive businesses. The second strategy was to provide equal access to health, education, and economic systems. These two strategies were successful in reducing poverty.

Second, the new order regime basically set a standard definition of equality at least for the Indonesians. Equality means equal access to political power, health and education services, and economic systems. By giving equal access to power and basic public services, the social security is guaranteed and the poverty will be diminishing. Unfortunately, the new order regime did not hold true to its promises at the end. This betrayal caused the nation dearly and in 1998 pushed us to the lowest point of Indonesian history since 1966.

Third, without equality freedom will not be attainable. The centralistic policies carried out by the new order regime resulted in the limited access to people residing in region further away from the capital. This policy became more apparent during the last years of the regime. The segmentation of access was not only based on region but also based on race, religions, and relationship by Soeharto. Economic development and political aspirations of majority of the people were tightly controlled. The freedom was limited to the Soeharto's selected few.

Renewed Call

Soeharto ran the country with iron fist but he successfully maintained order, carried out economic liberalization, and secularized the country by oppressing the right wing (Islamic) movement. Not one national leader post Soeharto was able to match his accomplishments and to lay out a vision to lead Indonesia out from this slump. This is very alarming. People will reminisce the old days and would welcome a dictator and trade away their freedom. The dictator can come in many forms; let it be in the form of charismatic leader or extreme belief systems originated in radical Islamic movement.

Radical ideas breed faster especially among poor people. They are the ones who feel the urgency and want changes the most. With almost one-third of the population living below poverty line or in danger of poverty, radical ideas spread like fire in a field full of dry bushes. The situation is very urgent and alarming to this very republic, to our livelihood, and to our nation. Almost 30% of the country's parliamentarians (DPR members) describe themselves as Islamic politicians. This tidal wave of Islamic movement will threaten the secular character and breed other movements that will produce horizontal conflicts and promote disunity.

This alarm goes out to all Indonesians. Specifically for Indonesians Christians, we have a responsibility to spread out freedom through creating equal access for the weakest and least of us. Access creation requires not only sound public policies and infrastructures, but also personal empowerment and development, which require heavy personal engagement and sacrifices. Please let us ponder how God can use you and me to help the poor in Indonesia. Let us be the agents of God to answer this urgent need.

Leonard Winardi is a PhD candidate in Metallurgical Engineering in University of Alabama- Birmingham. He is also interested in understanding government's role in poverty reduction, particularly in 'Kecamatan'. (Sub-district level government).