 Right. Good evening. Welcome to the launch of Professor Ambu's book, Economic Change in Modern Indonesia Colonial and Post-Colonial Comparisons. My name is Satoshi Miyamura at the Economics Department here at SOAS, and it's my honor to welcome back Professor Ambu, who is our Emeritus Yes Professor. Never really have left us. So just briefly, Professor Ambu have worked in Various University in Singapore, Indonesia, Australia before joining SOAS in 1991. She has been the leading academic in the research in the modern economic history of Southeast Asia, with particular focus on the legacies of various colonial powers in the region, and their impact on post-colonial developments. Her recent work includes a comparative study of European and Japanese colonial legacies in Asia, and a study of trade and investment links between China and Southeast Asia. So tonight, Professor Ambu will speak for about 20 minutes about her new book, and that will leave us enough time to have a useful Q&A discussion. So I'd like to hand over to Professor Ambu for her presentation. Thanks very much, Satoshi, and thank you all for coming. There are still some flyers here. Please take one, or in fact take more than one, if you have friends with an interest in Indonesia who aren't able to come. I thought I'd talk a little bit about the book really, what it's about, why I wrote it. But as Satoshi said, I hope we've got some time at the end for some questions and answers. I know several of you are from Indonesia, or have lived in Indonesia, have a strong interest in the country. These days I know many people working on Indonesia, indeed Southeast Asia, certainly in this country, tend to feel we're a bit marginalised. Everybody's so interested in China. But I think the balance is perhaps changing a little bit, and certainly I think Indonesia is clearly an important country for a number of reasons, not least its size and its role in the ASEAN community. But it's still not very well understood. So what I do in the book to begin with is really talk about what I call Indonesia's three great watersheds in the latter part of the 20th century. The first, of course, was the transfer of power in 1949. Now of course all Indonesians learn at school, and many foreigners studying Indonesian. History learned that Sokano and Hata declared independence on the 17th of August 1945, and this is celebrated of course as Indonesia's national day. Two days after the Japanese surrender, a time of considerable confusion, indeed I think the evidence suggests Sokano and Hata were rather pushed into this declaration by some of the younger, the more aggressive nationalists who saw this as an opportunity, finally for Indonesia to assert its independence. But the colonial power did not recognize that declaration, and there was four years of really quite bitter struggle between the Dutch, who were of course determined to keep their huge Southeast Asian colony by far the most important colony the Dutch possessed. Why were the Dutch so intransigent? Of course it's worth remembering, 1946 the Americans had given the Philippines full independence, 1947 of course saw full independence being given to the British possessions in South Asia. Why were the Dutch so intransigent? Well I think the real reason was of course economic, and during the war some of you might have heard of what's become known as the Dirksen Tinbergen memorandum, Tinbergen of course a very well known Dutch economist. This was drawn up in the Netherlands, then of course occupied by the Germans. It really was a rather crude attempt, and as it turned out a quite inaccurate attempt, to estimate the loss to the Netherlands from Indonesian independence. And Dirksen and Tinbergen, indeed many other Dutch came to the conclusion that the loss of the Indies would be devastating for the Dutch economy, already of course severely weakened by the German occupation and so on. So I think really the reason the Dutch were so determined to keep that colony was economic. Of course many of you will know there was a long period of negotiations. To begin with the Americans were rather suspicious of the Indonesian nationalists. The Dutch of course thought Sukano and Hata were little more than Japanese collaborators. But gradually the Americans were won around, also the Australians came to the conclusion that these were nationalists, but they were not communists, and therefore the major Western powers should acknowledge the independence of Indonesia. And finally the Dutch were forced into conceding sovereignty. So that was the first watershed. The second of course was in 1965-66, there was an attempted coup which resulted the death of six generals. This triggered a violent backlash against particularly the Indonesian Communist Party. And in March 1966, Sahato and his allies in the military rested power from Sukano, of course the first president. This whole era is still surrounded by a lot of unanswered questions. And certainly it's still pretty unclear what motivated the coup who was really behind it. But quite obviously it was an opportunity finally for the army to rest power from Sukano and also of course to destroy the Communist Party. March 66 of course is the famous date when the so-called Super Sima was signed, which basically meant Sukano surrendered his power. Now Sahato at the time was not a particularly well known, generally even within Indonesia, let alone internationally. And to begin with I think he was seen as a rather weak transitional figure. But of course that turned out to be not the case. He was in fact in power for 32 years. Finally he was forced to resign in May 1988 after a catastrophic economic collapse, which in turn triggered massive riots, particularly in some of the larger towns across Java. Sahato resigned and quite constitutionally, he resigned in favour of his vice president Dr Habibi, the German trained aeronautics engineer who became president. But Habibi's term in power was short and then two further presidents succeeded in fairly quick succession before constitutional amendments, led of course to the first direct presidential elections in 2004, which led to the election of Cecilio Bambam and Iona, who served for 10 years. So these are the three watersheds that really the book works around. But I do spend a bit of time looking at the colonial legacies. As I said the Dutch were convinced that the loss of the Indies would mean economic devastation for the Netherlands. And indeed you can see really why they thought that. It was well known that the Netherlands economy had received large remittances through the 19th into the 20th century from Indonesia, first of all through the so-called culture system. At one point in the 1850s I think a substantial part of the Dutch budget was in fact being funded by remittances from the Indies. And then even when the so-called culture cell was brought to an end there were substantial remittances on private account from the state companies and of course from oil and mining companies. And these did have an important impact on the Dutch economy. What did the Dutch leave behind? Well the educational legacy was very meagre and certainly if we compare with what the Americans did in the Philippines. There was very limited access to secondary and tertiary education even in comparison with other colonies in Asia. Infrastructure was developed particularly in Java. In fact Java had a fairly good endowment of roads for our ways of irrigation. Compared with really just about anywhere else in the region except possibly Taiwan. But of course outside Java things were very different. In those parts of Sumatra came Montana where the states or large mines infrastructure was built but elsewhere particularly in eastern Indonesia was neglected. Living standards were low and again probably lower than other parts of colonial Southeast Asia. I argue they were certainly lower than the Philippines probably British Malaya and indeed Thailand which of course had managed to escape direct colonial control. Now many of you will know of course that in the early 20th century the Dutch actually did become rather concerned about what they saw as the problem of poverty or declining welfare particularly in Java. That led to a set of policies which became known as the ethical policy. More emphasis certainly on agricultural development and of course on moving Java surplus population to other parts of the country either as wage workers or indeed as agricultural settlers. There was also some modest improvement in education particularly at the primary level. Now these policies I think did influence particularly the Sahato government. I might come back to that my argument in the book is that the ethical policy did have quite long did have quite significant impact on post-colonial developments and particularly during the period when Sahato was empowering when the economy was doing well mainly as a result of increased oil revenues. But to very look very quickly first of all at the post-1949 period the book has a chapter looking at really the period from 49 the transfer of power through to 65 or 66 the end of the Sakano period. As I said negotiations with the Dutch were very difficult. Finally a financial and economic agreement was signed in 1949 it's usually called the FINEK. That left the Dutch with considerable control over the economy. In fact many nationalists were quite bitter and blamed Sakano and Harte in particular for really conceding too much to the Dutch. They said well we might have got political independence but the Dutch still have substantial control over the economy. Of course they still had significant interests. They owned large estates. They owned banks. They owned trading houses. They owned manufacturing industry and really the FINEK did more or less leave all these assets in the hands of the Dutch. That inevitably caused resentment. You had the growth. I talk about this in the book that through the 1950s the growth of economic nationalism people who really wanted more aggressive policies not just against the Dutch but also of course against the Chinese. The Chinese were a small minority certainly compared with British Malaya. They were a much smaller minority in Indonesia only about two percent of the population. But they did disproportionately control those parts of the economy that weren't in Dutch or indeed foreign hands. And that also began to cause resentment particularly in the middle part of the 1950s. Herbert Feese the Australian political scientist who wrote a classic book called The Decline of Constitutional Democracy in Indonesia which looks at the 1950s. He made this distinction between the administrators and what he termed the solidarity makers who were really the economic nationalists. The administrators were the people like for example Sumitro Diojo Hadikasumo, the father of the rather controversial general who contested the last election unsuccessfully. Sumitro was of course a Dutch-trained economist. He and Chafrutan Kralgaran Nagara who was a lawyer. They talked over key economic posts in the early cabinets. I think one was the Minister of Finance, the other was the Minister of Trade. They were both moderate nationalists and they both I think realised that Indonesia would need to continue. Well though they were unhappy with aspects of the phoenix they did realise Indonesia would need foreign investment and couldn't abruptly nationalise all the foreign-owned enterprises in Indonesia. But they largely lost power by 1957 and of course in 1959 Sakano signed the decree adopting the 1945 constitution which gave the President considerably more executive powers. At the same time there were aggressive policies to nationalise virtually all the Dutch-owned assets in Indonesia and of course many Dutch nationals at that point had to leave. I look in the book at the period from 1959 through to 1966. This is often seen I think correctly as a period of considerable economic decline, mounting inflation, almost certainly growing poverty. Sakano himself a very flamboyant nationalist. I like to talk about what he called Indonesian socialism. But in fact much of this period did see I argue that there was a weakening of central government control particularly over those parts of the outer islands that produced the exports. Indeed another well-known Australian political economist who's worked on Indonesia for many years, the late General Mackie, he talked about de facto federalism. He said really through the early and mid 1960s many of the export producing regions virtually seceded and they just conducted their own trade particularly of course with neighbouring Malaysia. We should bear in mind that per capita GDP was still well below the 1940 level in the late 1950s and there was very little growth at all between the late 50s and the late 60s. There was some improvements particularly in access to education but growing resentment as I said outside Java at the failure of the government in Jakarta to give export producing provinces what they saw as a fair share of their revenues. These feelings were particularly strong with Sumatra and indeed some politicians and military people outside Java were starting to say well you know the Javanese have just replaced the Dutch but their policies are equally exploitative and this resentment boiled over into rebellions in the late 50s. Most of these rebels did not want to secede. They didn't want Indonesia to break up but they wanted a federal state or at least a much more decentralized system which gave the resource rich regions outside Java more power over their resources and certainly over the exports. At the same time you had a sort of new class of political, no not political really government officials but often government officials working with key politicians. They became more powerful. You may know the well-known book by the Dutch scholar Wurtime Indonesia Society and Transition that came out in the mid 1950s and he argued that in fact even during the colonial period a small but significant number of Indonesians had been given jobs in the civil service and to a lesser extent in the state enterprises the railways for example and they had been moved up into more responsible jobs during the Japanese period and they of course took over most of the senior government jobs after 1949. At the same time you had large films in the private sectors I said mainly Chinese. Ironically the Chinese probably benefited from the nationalization of Dutch property. Many Chinese business people bought up Dutch enterprises when the Dutch were forced to leave and they were expelled in the late 50s. Well as I said the early 60s was a period of economic dislocation almost certainly living standards fell and there was mounting inflation. Sakano himself and I think most of his key ministers were really pretty much in denial. I mean a well-known biography of Sakano again by an Australian historian John Legge argues I think correctly the Sakano himself was never much interested in economics and didn't really think it was terribly important. He was a flamboyant nationalist he thought the Indonesian masses would follow him simply of course because he was the charismatic national leader. Well there was some truth in that but at the same time by the mid 1960s people realized or many people realized their living standards were falling and that there would have to be some kind of change. I said the change came dramatically and in a pretty bloody way really in 1955-66. Well Sahato and his military associates knew that foreign assistance would be essential to rehabilitate infrastructure. They were very aware of the fact that per capita GDP in Indonesia at that time mid 1960s was probably lower than it had been in the late Dutch period. They gave top priority to economic growth because they thought this was the only way to improve living standards but of course they realized that they would need certainly Sahato and his military associates realized that he would need Western trained economists to negotiate particularly with the donors. The World Bank of course came back to Indonesia and of course the foreign investors and at that point you have this famous group of economists based at the University of Indonesia that were known as the Berkeley Mafia. Most of them had been trained in America several at the University of California at Berkeley which is how that name how they earned that name. The key person was Wajahuniti Sastrum an extremely competent economist but also as he turned into a very highly skilled politician and he was able to deal both with Sahato and the military on the one hand and with the foreigners including of course powerful institutions like the World Bank that of course were telling Indonesia no uncertain terms what had to be done and Wajahuniti is the one who could say well look we realized that policies X, Y and Z have to be implemented but it will take time. I think it's very important I mean these days I know you hear foreigners and indeed some Indonesian saying that oh the Berkeley Mafia were you know exponents of neoliberalism that actually was not a term that was much in use in the late 1960s. My own view and I argue this in the book is that they were really cautious pragmatists who were very well aware of Indonesia's problems and also aware of the problems of implementing changes in policy not just Bajahuniti himself but others like Mohammad Sadli who was a key person in drawing up the new foreign investment law which was implemented in 1967. Sadli knew very well foreign investment was still deeply unpopular with many sections of Indonesian public opinion so they knew we you know Sadli would tell his Western friends of whom he had large number we have to proceed cautiously we have to proceed slowly I know you're telling us to make all these reforms as quickly as possible but we can't do it quickly because we've got some very powerful groups who are basically opposed to us and that indeed was true. In a way the immediate task were actually to bring down inflation and bring order to the public finances and also to provide proper incentives to export producers so they could use legitimate methods of getting their products through reports in other words eliminate the smuggling. In all this they were actually surprisingly successful even today that experience in Indonesia between 1966 and 1969 is often used almost as a textbook case of how you can turn around an economy that was in pretty dreadful shape fairly quickly by implementing what the bank would call not exactly neoliberal but certainly market-based policies and particularly of course with the exchange rate. Well Sahato immediately ran into problems the early years of the new order he did face opposition from student groups from parts of the military some in the business community these days are often here Sahato referred to as a dictator and certainly wasn't the dictator over that period he was actually having to negotiate every step of the way not just with colleagues in the military but also with other groups there's particular anger about the emphasis on attracting foreign investment many Indonesians thought this was in a sense a retrograde step it was going back to the colonial period particularly not surprisingly perhaps indigenous business groups resented the what seemed to be the favors that would be given to foreign investors all this boiled over in January 1974 when the then Japanese Prime Minister Mr Tanaka visited Jakarta and there were the street riots reflecting hostility I think particularly on the part of student groups to the growing role of the Japanese. Sahato reacted on the one hand by being fairly tough he clamped down a lot of student groups he closed newspapers but he also realized he'd have to adopt more restrictions on foreign investment immediately following the next year there was another serious crisis with the the collapse of Pertamina the big state oil enterprise Pertamina had really been run almost as a state within the state a flam another rather flamboyant general called Ibn Satoa really ran it as his own personal fiefdom little or no control from either the finance minister ministry all the planning agency he ran up colossal debts foreign debts and ultimately this led to a major scandal and the Indonesian government was forced because it was a state enterprise it was a government entity was forced to take over the Pertamina debts fortunately it had something of a foreign exchange boom at that point with the big jump in world oil prices but much of the in the early years of the so-called oil boom quite a lot of the extra foreign exchange had to go to pay out these debts and that was a bitter lesson not just for Sahato himself but also for the technocrats advising him well a lot of people thought I can remember myself I was working in Jakarta in that period and many people thought that Sahato was about to go he was on the skits you know there'd be major problems first of all with the anti-Japanese riots and then with the Pertamina collapse he was almost certainly going to be toppled by right rival elements in the military but he did manage to survive and I think that was a great credit to his own political and tactical skills and really from the period 76 right through until the mid to late 1980s there were a number of important policy changes I talk about these in the book Indonesia's often given credit not least by the World Bank for managing the oil boom rather better than other petroleum economies around the world like Nigeria say or Iran of course Iran there was a violent revolution which toppled the Shah in in 1978 or indeed places like Venezuela Sahato and the technocrats did over this periods managed to strengthen the control of the central government this I think in some ways was one of Sahato's most remarkable achievements he did recentralize the economy and of course particularly he reasserted control over those regions producing oil and gas and also other agricultural exports the biggest state regions in Sumatra and so on the same time there was a big jump in rice yields the so-called green revolution Sahato used the oil revenues to subsidize fertilizer this led to quite sharp increases in rice yields particularly in Java and Bali but also some other parts of the country as well so that led to a big improvement in the food situation and in fact by the mid 80s Indonesia was boasting that it was self-sufficient and rice no longer to import rice and also through the 1980s there were a series of policies which did give non-oil export producers greater incentives and this was when you began to get an increase in labor intensive manufacturers textiles garments footwear all this one much admiration from the world bank and from foreign observers but there were many critics by 1995 Indonesia was celebrating 50 years of independence quite a lot of triumphant official statements about economic and social improvements the world bank the year before had put out a report called the Asian miracle something of that sort but Indonesia was one of the countries that were included indeed a lot of Indonesians were rather surprised about this you know really the same as Korea and Taiwan you know even laboring Malaysia which they knew was considerably more prosperous in terms of capital GDP but nonetheless Indonesia was patted on the back by the world bank and indeed by many other not western of course Japanese economists and government officials as well but there was mounting criticism from students from NGOs from elements within the business community why well I think one of the reasons was the rise of very large business groups the so-called conglomerates dominated many of them by Chinese who were known to be fairly close to Sahato and his family Sahato's family had themselves started to build up very large business groups it was well known this was being done on the back of various lucrative monopolies in the oil sector and elsewhere there was ongoing problems with regional imbalances some of the outer irons were getting increasingly happy the old problems that were there in the 1950s were starting to re-emerge many people thought that in spite of what the government claimed the poverty problem hadn't really been effectively dealt with on top of all this there were serious environmental problems starting to emerge particularly as a result of wholesale destruction of Indonesia's forests there are other grievances as well as I said many people thought the government was lying about poverty reduction the official poverty figures came under a lot of criticism people said the poverty line was far too low many young Indonesians and NGOs and so on were really quite outraged that you know the government was using these government officials everyone knew perfectly well they were leading fairly lavish lifestyles themselves but they apparently thought that you know the average Indonesian could live off 15 dollars a month or something and this sort of thing gave rise to more and more criticism but still in early 97 and some of you I'm sure can remember this period Sahato did still appear to be an impregnable position many people thought he was certain to get another five-year term as president wouldn't in fact be president for life I can remember having an argument with the late Michael Leafa down at the LSE Michael was taking a view they're never going to get rid of me be carried out in a coffin and then of course many people thought another family member most likely Tutut his oldest daughter would succeed him so there was a lot of talk about a Sahato didesty this was early 97 now by mid 97 serious problems are emerging in Thailand they weren't exactly unanticipated everybody knew that the Thai part was overvalued the Thai economy was slowing down finally of course the Thai government did in July 97 was really forced to allow the boat to float it floated down with very very sharply and there was a lot of discussion July August September 97 would there be contagion to other parts of Asia as far as Indonesia concerned there's a lot of talk fundamentals are strong you know this has been a robust fast-growing economy for the better part of 30 years but of course as we know what really happened was there was really a massive unanticipated economic collapse I give my own views about why this happened in the book I must say not everyone agrees with them I see much of the problem fundamentally as one of confidence I don't agree with the argument the IMF caused the problem but certainly both the IMF and the many Indonesian economists were I think very slow to grasp how serious the situation was certainly as the magnitude of the crisis became obvious in early 98 I'm sure some of you remember the group here starting to depreciate very very quickly the government indeed appeared to be in complete denial March 98 after Sahato had been re-elected he announced a new cabinet with no serious technocrats at all his own daughter was in the cabinet various other well-known crime cronies like Bob Hassan one or two others really didn't have any credibility at all there was serious riots in May 98 and then as I said earlier Sahato was in favor of his vice president um Habibi launched a series of reforms Habibi had a reputation as a bit of an economic crank and some ways he was but rather to everyone's surprise he listened to some of the competent economists both in the cabinet and in the government and indeed in the business community as well I think the most important of the reforms that he implemented war was the regional decentralization legislation which was clearly intended to defuse some of the problems outside Java of course he allowed the referendum in East Timor which culminated of course in 80% of the East Timorese voting for independence that sent shockwaves through the rest of Indonesia and indeed in neighboring countries not least Australia he failed to be re-elected in 1999 this was when elections to the president were still indirect in other words the electorate voted for a new parliament and the parliament augmented by various other odds and ends the so-called MPR elected the president uh so Habibi uh was not elected uh two further presidents followed quite quickly uh this was a period of considerable instability when many people certainly abroad were saying the place is going to break up I can remember going to a seminar down in the city of London some gentleman announcing the loud voice that you know Indonesia was annexed to the Slavia it was going to break up and the effect on neighboring countries would be devastating blah blah blah and a lot of that talk was around internationally also I think to some extent within Indonesia but Indonesia held together I suggest in the book some of the reasons why this did happen why there wasn't a break on 2004 as a result of constitutional revisions um the president was directly elected and of course Cecilo Bamba Newliono a former Sahato era general was elected with use of Kala well-known businessman from eastern Indonesia from Sulawesi as he's running well I talk in the book a bit about um the SBY years um SBY managed to present himself with considerable success as a reforming politician in spite of his background as a Sahato era general he had some things going for him he had very good English had been educated in the United States and also international experience had I think he'd been in charge of the Indonesian peacekeeping contingent in Bosnia um he clearly certainly compared with Sahato who of course never really learned English and was never happy speaking or foreign language and never really traveled much outside Indonesia he presented himself very much as an outward looking cosmopolitan leader of what was going to be a new Indonesia he made a number of promises about economic reforms well not all these were filled 2009 he came up for reelection um perhaps everyone's surprise he was re-elected quite comfortably he didn't actually have to go through a a second run-off he got I think a majority in in the in the first round of elections his running mate was no longer Kala who in fact had teamed up with another candidate his running mate was a respected economist called Budiono um and it appears the vast majority well not the vast majority but a substantial majority of Indonesians I think over 60 felt that was safer to stick with this team particularly as the world economy fell into a severe recession safer to stick with this team than look for someone else the last part of the book I look at the achievements and failings of the Uriyona years they've been fairly well documented and much discussed growth accelerated again post 2004 but at the same time I think the evidence does suggest inequality is increased in fact I argue in the book relative inequalities have probably been increasing in Indonesia for several decades particularly in urban areas Indonesia and here of course this is true of many Asian African countries it's urbanizing rapidly but at the cost of widening inequalities both within urban areas but also between urban and rural areas is economic nationalism still an issue will I argue on the book that yes I think it is the sahato era conglomerates I mentioned earlier many of them are run by Chinese who are known to be extremely close to sahato and indeed some of them by sahato's own family many of them are still around and of course indigenous business people again are complaining that you know playing in spite of many statements by Uriyona and other ministers the playing field isn't really level it's still true that there's a large number of very small businesses in Indonesia but only a small number of large ones many of them do still seem to be led by Indonesians of Chinese origin many of whom built up these conglomerates during the sahato era I also have a look at the question of the role of government I mentioned earlier during the Sakana era the government was really extremely weak I think one of sahato's achievements was to strengthen the government he was helped of course by substantial revenues from Ireland has the problem now the government has to at least in my view and I think the view of many observers it has to mobilize more tax and non-tax revenues there's still in spite of the decentralization measures that were originally introduced by Habibi and then implemented in 2001 there's still a lot of tensions between the centres in the region on top of that there are still of course ongoing debates about corruption Indonesia is still according to the World Bank and indeed transparency international and various other international league tables Indonesia is still seen as a fairly in some cases very corrupt country in 2002 an anti-corruption commission known as the Kape Ka was established Uriyona gave it some support although I think the support at times was rather grudging it does appear that under Jacowe the Kape Ka has been given more powers and it is actually now getting some fairly big scups as it were and in fact I gather I haven't actually seen it but I gather the latest transparency international ranking Indonesia has moved up a bit at least partly because the eyes of many business people the Kape Ka is finally starting to get some muscle gets but there is still a serious problem and of course this is reflected in what I think is the very low level of confidence that many Indonesians still have in the government whether they're business people or farmers whether they're in Java or elsewhere I think there is a tendency for many Indonesians to feel you know the government is predatory uh it's not on our side as it were uh you can say this is hardly unique to Indonesia and many parts of the world governments are profoundly distrusted by large segments of the population in some ways we're seeing that now I think the rise of people like Trump and America um but uh I think this is still a serious problem in Indonesia the central government is not terribly strong in terms of its economic resources but neither is it really respected in spite of the fact that you know the army now seems to be playing very much a minor role and certainly Jikowi's election I think made it clear that it's possible for new politicians to emerge in Indonesia who don't come from the old elites but even allowing for all this I think the the problems this is what I argue in the book the problems are still serious I hope very much that Jikowi finishes his term so far he seems to be able to deal with problems in the parliament and indeed some extent problems in the military and civil society but we can't rule out of course and of course the example of Thailand shows that we can't rule out some kind of military coup if indeed the elected civilian government proves to be weak or unstable okay I'll leave it now I'd be delighted in your comments thank you very much so it was obviously a very wide-ranging and sweeping outline of the book and obviously this is a book launch and there is some leaflets where you can you can get some discounts from the book right I haven't checked it you know right okay so for the time being maybe we can open up for questions and please I'd be very interested in comments so anyone wants to start yeah certainly hope there's no repeat of 1998 as I say I talk in the book about why I think that economic clap remember GDP collapsed by 30% in one year because that had all sorts of ramifications for living standards and so on and it took Indonesia seven years to get back to the pre-crisis level and pick up the GDP some people say oh it was just a glitch it was a very serious collapse and it took a long time for the economy to recover and I think in some ways was still some of the consequences so I hope nothing like that happens again I mean when I'm in the mood to be optimistic and I'm sure this is true of many Indonesians as well I argue well I think the constitutional amendments that were made in that period between 1999 and 2004 they've bettered down if now I have what three direct election presidential elections I think the important changes that came about in central regional relations although that controversial I think they have led to a feeling of great empowerment in Indonesia were still serious problems I think particularly with what was in Indonesia and other parts of the outer islands as well I think many people feel that some of your problems are the outer islands and I think many people still feel you know Java's got the infrastructure Java's got the as it were the best these the best schools and we're relatively neglected but at least now many regions outside Java have the funds to spin on health and education but whether they're going to spend those funds wisely to be the fair amount of criticism to be fair amount of criticism direct direction officials I think many Indonesians feel that they really want to go back to the very central islands but I just hope the reforms and they have been very real reforms this is where I don't agree with people like some of you may know that we really have these differences in the so-called univocs and they're busy arguing oh you know nothing much has changed and all the oligarchs are still running the place you know they've just re-arranged the ditch it's not the Titanic but nothing much has happened I don't agree with it I mean I think the post-magnet reforms have been significant but Indonesia was still it's a little in the country we're facing I've seen serious problems of inequality a lot of talk about it is the structure one of the I think that the bad legacies of the Sahato world is the fact that relatively little is done to expand in this world you've only got to go to China to see what China's government has done now it's something that the government over-expanded it is discussed in the old country but it is hugely impressive and Indonesia still acts that what we know is that we just want to be the second who's just getting paid for and the second highway system is still very underdeveloped and if you spoke to Indonesia in the 1970s they were talking about trans-java island they're still talking about trans-java island I think we will ultimately get through it I think we have much to say about the problems in Indonesia it's much easier for a lot of credit government like China to do infrastructure because they're just great to land and if they compensate people they feel that the compensation is inadequate yeah it was enough that's tough they're in law but I think from the usual and the other democracies of Indonesia just but me for everyone else is not not convention-based it's nice to listen I love it there's still a lot of the trans-java is being done so all this will take time I mean you can't wind the magic wand you can't do this for a very long period of time and what to do I know you can take a fair amount of credit system some of it out of fear of it they said we're going to have a lot more credit and they say he says all the right things but we'll get implemented well ASEAN economic integration has I mean I know it's rather fashionable to sort of steer at ASEAN and say oh it hasn't achieved much it's just a talking shock but I think the ASEAN countries as a whole are far more integrated than they were 50 years I think about 25 percent of total trade within within ASEAN is interregional oh okay that's a low proportion compared with Europe but I'm not sure that the ASEAN's would particularly want to follow the European template and it's produced a lot of problems as we know but I think the ASEAN countries now as a group I mean they know a lot more about what I love them you know you've got Indonesians going to study in Singapore or Malaysia but or the Philippines oh we've got Filipinos coming to work Indonesians the banking sector you know they're mixing far more and I think learning far more about what we do and I think that will process will continue one of the big issues is how will ASEAN respond to China so with threat from China well is it a threat the Chinese would say oh no you know our aims are peaceful we want more trade we want more investment but they the Chinese do tend to want trade investment on their terms I think the ASEAN's got to be fairly tough the Chinese are also rather inclined to play off the weaker states against the stronger one having said all that you know I think they're very real benefits to us and indeed other parts of it but it won't be easy for Indonesia I think of course there's also the problems of South China Sea all over Indonesia itself so they're marginally involved in this problem but they couldn't get worse I mean I think Indonesia would almost certainly have to get this ASEAN alliance yep I have a little bit to say about I mean one could write a whole book on Taiwan in fact the whole book has just been written on Taiwan I've just been sent a copy of this to review you might have seen it it's just come out from the National University of Singapore Press and it's edited by two well-known Australian experts Rob Cram and John McCarthy it looks extremely interesting and it's precisely on these issues the political economy of Taiwan it's very controversial my own view I make this point in the book I think Taiwan has been demonised for some reason it has become the cop that everyone loves that hate in fact I think most people who have taken a long cool look at Taiwan and Indonesia think that the benefits from Taiwan cultivation have been considerable and also there has been and continues to be a series to build up small oldest industry as well as biggest thing but of course we all know the negatives the problems of deforestation of course the fires which get a huge publicity no I don't think Taiwan is likely to come but there are other problems many other problems as well I mean it's been argued as I said one of the criticisms of Sahara was the way that the disaster was also a destruction of the indigenous forest I think cleaning up the mess is going to take a long time I mean I've heard people argue that there's something now like 40 million hectares of badly degraded land land that was under forest was deforested of course the forest concessionaires were supposed to replant but very few of them ever did so you really end up with this well really a problem of desertification and tackling that's going to be very difficult I hope well I'm sure there will be international help but the Palma story clearly it's complicated but I tend to think some of what comes out from some of the western environmental groups is very exaggerated I mean to the point where they say you should you know boycott don't buy margarine this has got a little sticker saying this has been sustainably sourced which I think is nonsense I mean I'm told I think the sort of palm well now is in about 20 percent of everything buying and supermarket from soap and toothpaste margarine whole range of product and I think world demand for vegetable oils is set to increase very rapidly not least because of demand in China and India and Indonesia is one of the few countries certainly in Asia that has the capacity to expand palm oil cultivation the challenge is to make sure it's done in a sustainable way and in a way that benefits local people but I would recommend this book as I say it's just come out and it's certainly written by very knowledgeable people who are sensible and they're not just taking extreme view I have a question over there sorry are you talking about investment from China or investment Chinese owned conglomerates very likely but then practically everybody seems to have there's an excellent book you may know it it's written by American journalists with long experience and in the musical Richard Bulls because it's really biographies long but it's much more than that it's got this you know this famous photo on the front of VM and so hard over their arms and I mean there's no doubt the book is quite fascinating I mean there's a lot in it I haven't realized including the fact that Liam himself he built up that huge conglomerate everyone knows as a result of favours from Sahato but he was very shrewd I mean he got you know Sahato's a simple cut mono I think he was a cousin of Sahato's was one of the key um original investors uh in the uh in Liam's conglomerate and in addition of course there were he's always had a lot of indigenous business people working for him and I think you're right that I mean partly as a result of of the sort of you know the criticism during the latter part of the Sahato era about the conglomerates I mean every time you picked up a business magazine you know there'd be yet another list of the top 20 or the top 30 or the top 50 and look they're practically all owned by either Chinese or Sahato's family or the family of a few other very well connected political families uh now understand that you know I think that sort of thing would cause problems in practically any country really uh but I do think there have been changes as I said many years of conglomerates now okay you know maybe they're still quote owned by well-known families of Chinese descent all those you're quite rightly say by now the third or fourth generation Indonesians but of course they're recruiting more and more Indonesian managers and indeed you know you look now at the figures uh one of the interesting developments post Sahato is that they've started to ask ethnic questions again in the census and 2010 they just people were quote invited to identify themselves by ethnicity now of course during the Sahato era that was not allowed at all and it seems that there are about in 2010 there are about 2.8 million Indonesians out of what 240 million identified themselves as Chinese now many are probably partially Chinese and you know perhaps just didn't want to say they were Chinese but it's a very small number and you know you look at many big firms now and you know look at professions look at the legal profession or the medical profession now in the early 1950s these professions were dominated by Chinese Indonesians of Chinese descent now of course the great majority are indigenous well I know Indonesians make jokes about the number of butters and lawyers and so on but so I suppose that's a different kind of ethnic problem but um I think it is changing it's changing very rapidly simply because more indigenous Indonesians are getting better education and moving into professional managerial job I know people like Adam Schwartz an American who's had again a long experience in Indonesia I think I've heard him argue two generations the problem will have gone nobody will bother him you know you might have had a Chinese great great grandfather but who cares you know you're Indonesian you look Indonesian speak Indonesian so I think it's a problem that will inevitably go away I think the problem is actually much less serious in Malaysia partly because the numbers are much smaller but also because Malay politicians just can't help playing the race in Malaysia and I don't think that is now the case in Indonesia so in some ways I think I would worry more about the problem in Malaysia than in Indonesia I think you know I mean you can understand why you know the Malaysian government decided to set up the new economic policy but my own view is I should have scrapped it years ago of course you've now got massive vested interests within umno that just do not want this affirmative action to go and I think that's a very serious problem I think it's causing a lot of the current eruptions with Najib but just changing Najib and getting another prime minister isn't going to solve the problem in Malaysia we're really going to need quite massive political change so in some ways I'd worry more about Malaysia than in Indonesia any further questions one of the things I mean I don't know if you were there or not but a few years ago Yuri Yonah came to London he actually came to talk out with us here no probably not but I mean I mean it's a bigger lecture fair than this so it's absolutely happy and I must say Yuri Yonah this is where he was awfully good at talking to an international audience and good at it and projecting Indonesia is this you know enlightening the Islamic democracy and you know all the great things we hear about the Middle East of course this doesn't apply to Indonesia but extension Malaysia as well and I noticed Hillary Clinton but amongst other ones who might be in visits to the Indonesia and all about this as well you know if you want an example of a country which is democratic and largely Muslim women crying for the role in the economy blah blah blah he just got to do an interview with just a download of these things tell me that thing that you say it's not in English but you have to remember this when you think of the whole foundation which in Indonesia he pushes this thing as well I think broadly I think the number of extremists are tiny but I really think the numbers are so sweet um but I don't want not to be a major problem I've heard you know the feeling of a security area you just don't acknowledge what you feel about the ISIS resilience in South Australia this is diarctic, the Indonesia increase with a lot of the systems that I hope people from Australia said that there's no government to approve their security methods So I think we have a very clear idea. I mean, even a jacuzzi text. It's always going to be good. I mean, given the international public's opinion, country-level opinion, we're never going to be free contaminations, you know, from the Middle East. But at the moment, the populist support for extremists is very easy. I mean, when the Balibongs came to trial, I mean, given the getting of some people in the presidential and the public opinion, because I think, you know, about 90% of the people, you know, that's not the way we do things. I think, you know, you can't say that you're in the Middle East, that you're in the Union. So from that point of view, it's in very small areas. And there's more to the people. Any other questions? Can I take the privilege as the chair and ask one question? Can I ask a little bit more of your evaluation of Jokowi? Particularly, how much do you see his rise as a response to the kind of regional inequality, conflict, and kind of crisis of confidence of the governments? To what extent his rise is a response to this? And if so, you started with the three turning points. But when we reflect back a couple of decades later, would we see 2014 as another turning point? No, I don't think so. I think I see it as a continuation of the direction of international elder statesmen or something. And as far as I know, he certainly didn't get directly involved with the opposite two-way races. I know he was, anyway, Jokowi, as I say, he didn't come out to be involved twice. He actually, in that way, is a very interesting guy because he comes out of a social class. And of course, many people claim never really existed. And he still doesn't exist. And that's the indigenous Javanese, which I see. No, as far as it is. One furniture is family. One furniture factory, they gather quite successfully. So he understands the problems of small and mediums there, isn't it? Far more, I think. I think the real problem is whether he will have the support to allow for the purpose of it. And the parliament is a problem. I mean, we didn't observe it. But perhaps, you know, perhaps one, I think, we were perhaps rather naïve and naïve, to expect somebody to estimate it in a way even in a magic form, and all of that bad. And it's just a happy medicine. No, it's never that easy. In any case. And again, I mean, I know this has become quite boldish to compare Indonesia and Egypt into just the scientists who are running our business. And obviously, if one does compare Indonesia to the post-Mirbara people in Indonesia, in some ways, manage to negotiate the problem far more successfully than Indonesia, which is just about being naïve. Nature around it means I don't know much about it. You may not be as corrupt or distasteful as Mirbara or Egypt is far from being naïve as it is. So I mentioned Fethi Hadid earlier. I actually think he's a very perceptive observer of Indonesia and he's an Indonesian origin. But he's now got a project looking, I think, is comparing Indonesia with Turkey and Egypt. So that, I think, will come up with some rather interesting conclusion. And some people, for example, in the current issue of the Turkey or for themselves on Sahara. Leaders who model themselves on Sahara usually end up badly. Still, I mean, I think, as we say, I don't see 2014 as an innocent, it's a turning point. I think it's a continuation of the democratic process that's been surprisingly successful. One can only hope it won't come down. There are probably elements in the military who are still fed up. I don't know how much back in Kibowo we're really having in the military. You hear different views from different people. But I think the whole, the rise of Jacoes and it's not just Jacoes. I mean, getting all these politicians cropping up. There's this woman in the East Java. I think she's the mayor of Sahara by now. Is that right? What's in it? Yeah. She seems again to be an extraordinarily interested forceful person. Don't agree with all the views. I mean, she seems to have very strict views on the sale of alcohol. It's understandable, perhaps. But I think the decentralization process, the local regional elections, they are going to produce a new class of politicians from the regions. And I think on the whole, that can only be healthy. But then, of course, people look at the Philippines and say, well, look at the horrors that emerge from the provinces in the Philippines, including this guy, that looks as if he may not be elected. It's an express of, apparently, beliefs among other things and extra-dutiful killings. It's all a bit shocking. But so far, I think Indonesia's, it's matured politically in a way that I would not have predicted 15 years ago. And I think it looks, in some ways, does look perfectly the same. We've got these problems in the local mafia bosses and in John Sadell down at the LSE, what Wright's about was. And the Philippines doesn't seem to be able to break out of that. So one hopes Indonesia will be able to. But time will tell. But I think so far, Indonesia's can be quite proud of what's been achieved since 19, and as I say, I mean, things could have been a lot worse, a lot worse. I'm going to tell you something. How wide your is that actually the challenges that you're going to actually face is because the last time that you came to London and you really stressed about your infrastructure. Of course, infrastructure, and you really stressed this at the non-jab of my infrastructure. It's just like, of course, this is like, maybe what you like most popular views or really want the instant and everything, but at the same time understanding of very gradual things, not really that, or what they're asked. And just like, how gradual is actually the safe way to make this society understand? Well, I think on infrastructure, I mean, there are a number of challenges that Indonesia needs, you hear people say, Indonesia needs 60 containers. It certainly needs several. I mean, the port of the Tongan Priyat in Anjikantu is hopelessly a little bit adjusted here. And of course, the roads, because, you know, those huge trucks, in the last time I got stuck on a traffic jam coming in from Chang'an in the sectors now, on a daily basis. You've got these huge trucks coming in from all the factories out of Tonga. They're coming in to try and get through to Tongan Priyat. You've got the Texas and buses coming in from Newport. You've got just local people trying to get through to Tongan Priyat. And all using one not particularly wide road. And there are points where the road narrows and the jams and just get rid of them. Now, what's the solution? Well, one solution is a fast train in from Chang'an. Now, I don't know why they didn't do that 25 years ago. And if you go to Beijing, or to Shanghai, or put your fast trains into the city, you've got to. But you can get into the city without having to negotiate congested roads. Now, I would have thought that was a perfectly profitable as it were business to hand over to a private train operator. But here I think when it comes back to this sort of nationalism, I mean, the Parliament gets very upset whenever there's any suggestion, even say electricity generation, which is another area where Indonesia is much more expensive. And of course, you've also now got the constitutional court playing what many economists see as a very negative role. Now, the constitutional support likes to say, ah, look at that. You know, the thing is that after 33 and 19, that it's out of the constitution, that these measures must also be used for good of the people. Why? Nobody's going to hug you with that. Does that really mean that you can't say have a French phone building a power plant in Symaquem, or East Java? I think the nationalism is still a serious problem. Now, I don't know really where the problems are in the Parliament, in the courts, some combination of both. But there still is this reaction whenever foreign participation in infrastructure is mentioned. OK, you get it in India as well. You get it in many parts of Africa. So I'm not saying India is necessarily the worst in other parts of the world. I think with China, probably because we had a very autocratic problem. You can push these projects forward. The local people, the jets are tough. You just shut up and we shoot you. But certainly, post-Sahata, no Indonesian government should be able to do that. And we've got times that might be pushed. There's a very good book by an American political science called Jamie Davis that actually got rid of the problem. And some of the problems, particularly with the Chinese Java power. I think he spells out, you know, the sort of political ended problem very well. And they're not going to go away anytime soon. And this is where I think the Parliament has played a rather disappointment in the way that obstructs it as well. Finally, I think they've got a new trainway from Japan to the bottom of the net. And I think the Chinese put up, of course, that was quite good. And then the Japanese got upset. Part of Japanese are losing that. And then they've lost that in Australia in about some way. So that feels a bit different, I think, generally. But my own view is, Indonesia will have to have time to participate in this one. Partly just for the technical aspects. But partly also for the money. I mean, I was a bit amused because I was in Japan just before the 2014 election. And of course, both Jukoe and Kibowo were running around the country with these shopping lists. And Kibowo, I think, is listed. Infrastructure, you know, projects of x billion dollars. And the next day, Jukoe would come up with an even more reward on itself. Which up to a point was OK, because at least now I think they've realized the importance of the infrastructure. And of course, what they weren't saying is, A, where is the money going to come from? I mean, how are these projects actually going to be? Well, remember, Java now is one of the most ditzy top tier of the deal is on the planet. The 2010 census gave a population that was 130 to 70. And 30 to 30 are similar. Which means about 1,000 people per square kilometer. Now, the neighborhood, which is considered the most ditzy, is 500 people per square kilometer. So Java is very densely simple. A lot of Java has become an urban most suburb. And it fits around, say, the city of Bangalore, China, when we were making the 70s, and there were several cities. So how is it, in fact, here? And that, I think, is also because, of course, much of Central Asia, and that will probably continue. But it doesn't mean that building lives, you know, because you've got to fight with dozens of people easy to get a life that they can't afford. Remember, I, you know, I went through time. I mean, Jukoe, when I was married, Jukoe, we sort of went around the country as a negotiator, because people were, you know, gazing at the barge of deep dive sites, to get the same things, just to get the land. But you can't do that for the whole country. And I think the role of local government, government, its group has, will be very important. But, you know, if that pushing, they're only doing it for their own interests. It's very, very important. And somebody else is going to risk it to get it, you know, it's got a new highway and it's not going to lump it right up to made up, right up to action. You're going to be negotiating with something like 500 different, well, perhaps not 500, but I think 200 of local government units, which is a massive job for any dive. So it's, it is going to be difficult now. You know, I think this district need to get a license. Of course, the smart guys look across Malaysia. It turns Malaysia right at the heart of the country. You know, the crossing from Singapore and Johor, right up to the border of Thailand. It's very impressive, not only on the highway. They're like, why can't we have something like that? And ultimately, they'll get it, but it will take time. And it will be different. And you know, I think one of the perhaps unintended consequences of reduced centralization or distillation is that you are building up a lot. You know, local fifths of it. Or not so many new partners, of course. I don't think that's true. Well, perhaps, no, I think many have a genuine desire to improve the health, education and values reduced in number. But they don't necessarily have the thumbnail of the soul. They don't have the expertise. They don't have the ingenuity. They don't have the teachers and health workers. So it will take time for all of the units who needs to be trained. You know, there's plenty of talent in it. It's a question of making good use of the education through the... You know, I know there's been a lot of discussion about education, and particularly the most piece of test because that was very much, you know, intervicious. It's the lowest and the most possible exception to really have an ingenuity. And this was after Julian improved the salaries of teachers, brought in new professional qualifications for teachers. And he was Indonesia's still coming second in policy. And people pointed out quite correctly, well, it'll take time for these reforms to bed down. And many people, certainly the primary level and the second level, many teachers are back. And we're pointing to the 70s and 80s and I think the high schools are good. So they weren't particularly good. So, you know, if the quality, the reason you're optimistic, that might be when you notice I won't, you know, do you do it honestly if you're not interested in it? No. I mean, should I be the same, if we remember three or something? If we were very close. And to be fair, I think we all knew we were probably good. Fair. I was looking recently at some of you among those times higher-wown things that we invested in last year, maybe for engineers. It wasn't a single. No, I'm not sure it was any. No, it was one of the engineering. If there were two places from China, might not a single one. Not a single one of these. Now, maybe that it's all a good fight. So, I mean, I think people say that times higher-wown things are in their sleeper, in their institutions, which may be good. But a lot of times, several times. So it was a worry. I think the standard of education was still a huge amount. And in a way, though, this is, I think, a medicine from the last period which is still considered a big expansion in the 50s, but there have been, I think, more quality teachers for quality education. It was not terribly good through the 50s and 60s, but those were the people who came in the 50s from next year. And it's difficult to break out of that site. And I think you've almost done an interesting campaign and get it started. But I'm morbid now. Any other questions? Okay. I think it's getting quite late. So, yeah, it was a fascinating session. So, thank you very much for staying until late. And can we also thank Anne for... Anne, as I say, there's still some slides. Yes, please do take the flier and please do buy the book, which was the whole point of the session. Well, do get hold of this. Looks, I haven't had time to look at it carefully, but I think it's pretty good. And I think the palm oil issue is a hugely important one. I think it says a lot about AWOP's Indonesia's managed to achieve. Remember, palm oil is not indigenous to Southeast Asia. It comes from Nigeria. Now, why aren't the Nigerians growing palm oil? Why is all the palm oil now being grown in Malaysia and Indonesia? That itself is a very interesting question. And I think the... You know, I'm not a person who demonizes palm oil. And I think many millions of Indonesians are benefiting, but I think the challenge is to make sure that particularly the small holders benefit a bit more. And hopefully, I think, again, it's a process of reform, better policies. But I think it can be done. I mean, look at the rubber story, which I think is a great triumph for Southeast Asia. I mean, rubber, again, not a crop indigenous to Southeast Asia, but now it's almost all grown in Southeast Asia, natural rubber. And almost all grown by small holders. Very few large rubber states left. Hopefully it will. I mean, you know, for technical reasons it's more difficult for small holders to grow palm oil. They've got to get it to the factory for processing more quickly. I often think rubber is the ideal family friend you can look for. Anyone can tap a rubber tree. The women do it, the kids do it, everyone does it. The palm oil is more difficult physically, and you need more capital equipment for the processing. But I think if they work away I think things will improve. So I'm certainly not a person who is against palm oil. But I think there have been problems with this. Okay, so let me thank again and for your excellent presentation. And thank you everybody for your participation. Thank you.