Soeharto's legacy leaves key lessons in agribusiness

Andi Haswidi, The Jakarta Post, Jakarta

Amid the threat of global increases in food prices, lessons from the earlier stage of Soeharto's rule over the economy have become more relevant than ever, business leaders said.

Indonesian Chamber of Commerce and Industry chairman, Mohammad Hidayat said after Soeharto saved the country from soaring inflation rates at the end of Sukarno's presidency, he kept the country's economic growth steady, at an average of seven percent annually until the mid 80s.

Hidayat said, "He was right to focus on the agriculture industry and it's supporting industries as the locomotive for the country's economic growth".

He said the world now faced a threat from food-driven global inflation due to the growing demand from the emergence of new economies such as China and India.

So the current government administration should look to Soeharto's successes, particularly in the agriculture sector, Hidayat said.

"There are things that must be viewed under the current perspective.

"Nevertheless, learning from his concepts and implementation on the agriculture sector has become more important than ever."

Despite his iron first, Soeharto was able to implement all policies needed to achieve the food self-sufficiency target, Hidayat said.

Soeharto had also provided the necessary supporting infrastructure including irrigation, the establishment of the State Logistics Agency as the rice price controller, and the effective distribution of subsidies.

"What was amazing was how he managed to encourage farmers to take a role in policy implementation through giving them intensive training, ensuring their competitiveness and improving their livelihood."

Hidayat said Soeharto's economic successes faded after he shifted focus from agriculture development to the high technology sector, including the establishment of the country's first airplane producer Nurtanio under B.J. Habibie.

"After this time, his policies began to show weaknesses," he said.

Indonesian Employers Association chairman Sofyan Wanandi also praised Soeharto's early focus on the agriculture sector and said there had been "solid team work in Soeharto's cabinet".

"He backed his ministries during the policy implementation process," Sofyan said.

"This gave them strong political support in carrying out their duties, unlike what happens now."

With a solid cabinet, Soeharto was able to secure most of the targets set for his five-year short-term development plans, particularly those in the agriculture sector and supporting industries, Sofyan said.

He said externally Soeharto was able to maintain Indonesia's economic credibility in the face of global lenders and donor countries.

"This credibility saw Indonesia able to borrow money at a low rate with a long tenor.

"Most of our loans were above the 30 year period, some even with 10 years grace period."

With manageable liability on loans, Soeharto enjoyed much ease in managing the state budget, giving subsidies for industries and to keep the economic fundamentals on the right track, Sofyan said.

As an owner of a manufacturing company, Sofyan said he had once enjoyed the oil subsidies during Soeharto's era -- something that most analysts later said was counter-productive due to over dependency.

"In the long run, oil subsidies were not healthy. Nevertheless, back then, it was crucial to support our industries, which were still at the infant stage," Sofyan said.