Introductory Note: In 1993 the Government of Japan took the initiative to organize The Tokyo International Conference on African Development (TICAD) and I was invited as a guest speaker, in particular on the agenda item “Asian Experience and African Development”. I was very encouraged that Japan, one of the richest countries in the world, gave special attention to the suffering of millions of people in Africa. In my presentation I emphasized the many similarities of the challenges faced by Indonesia and the countries in Africa, including the diversity of its population and the many challenges to be faced. During that occasion, my colleagues who also attended the Conference (professors Sadli, Emil Salim and my other colleagues) had occasions to interact with delegates from different countries in Africa, which later on was followed up with many visits by Sadli and Emil Salim to those countries. The intensive interactions with the actual problems they saw in Africa strengthened their convictions in arguing for the relief of the debt-ridden countries in their meetings with officials of the multilateral agencies (the World Bank and the IMF) as well as in their meetings with representatives of the highly developed countries. It was encouraging news for all of us when the multilateral agencies finally introduce the HIPC (Heavily Indebted Poor Countries) debt relief for the highly indebted developing countries, although the pace of relief was unfortunately slow.

Introductory Note: The compilation of the First Five-Year Development Plan (Repelita I) began in 1967 and continued in 1968. The implementation of Repelita I began in the fiscal year of 1969–70. At the time, the fiscal year started on 1 April and ended on 31 March of the following year. When Repelita I was being drafted, exchanges of views were held with various circles concerning the basic guidelines of the entire five-year plan programme. Because Repelita I was already under preparation, its basic framework was utilized as material for the exchanges of views on the basic ideas of the overall five-year plan program.

Introductory Note: In 1984 the Yomiuri Shimbun, one of Japan's leading dailies, invited me to deliver a keynote address at the 1984 Yomiuri Symposium on the International Economy. The keynote address was delivered on 17 May 1984 and published in the Daily Yomiuri of 18 May 1984. In the address I refered to the increasing perceptions in the world of the growing interdependence of the world economy which, however, are not translated into meaningful actions. I further encouraged Japan — which had the highest growth rate, the lowest unemployment rate and the lowest inflation rate among the industrial countries during the years of severe recession — to be more assertive in taking up new initiatives to respond to the economic crises facing the world.

Introductory Note: When any change of administration occurs in a country, like that in our country in mid 1966, there will be a tendency to accrue new debts on top of old ones. The old debts are those incurred by the old administration whose repayment has yet to be fully settled. The settlement of these old debts is the responsibility of the new administration. If the new administration is in no position to assume this responsibility and does not consider the debts as its responsibility, the governments of other countries will be in no position to extend fresh loans to the new administration and will even sue it in their domestic courts or international courts of law. They can even seize the property of the new administration, such as aircraft and vessels that happen to be in other countries. Therefore, there is no alternative for the new administration but to acknowledge the debts of the old administration as theirs and try to find the best solution possible. It is the obligation of the new administration to find a way to solve the problems of old debts in the best possible manner, while avoiding the accrual of further debts burdens.

Introductory Note: Devaluation is the official decreasing by the government of the value of a given country's currency against a foreign currency. If a currency's value decreases solely due to market forces and entirely without government intervention, the decline in a currency's value is called depreciation not devaluation. On 15 November 1978, the Government of Indonesia officially announced the devaluation of the Rupiah against the U.S. dollar from Rp415 per US$ to Rp625 per US$. The Rp415 rate had been in effect since 1971. Various explanations were given to the public about the policy. One way of conveying these explanations was through a television interview that took place on 22 November 1978. The interviewer was Drs. Sumadi, M.EC., a graduate in economics at an Australian university, who would later become the Director General for Radio, Television and Film, and then go on to serve as Indonesian Ambassador to Mexico, a post which also covered Cuba and Panama. The government prepared several anticipatory moves before making the decision. Two of the most important things involved were the sufficient stockpiling of foreign exchange reserves and food supply (rice) all across the country. Therefore after the devaluation announcement took place, every request for foreign exchange and/or food could immediately be fulfilled.

Introductory Note: A food crisis occurred in 1972. It was known as the “rice crisis” in Indonesia, a country where most of the population considers rice as the staple food. Rice prices jumped uncontrollably. Rice production had declined far below that of earlier years. It had been the policy of the government in previous years to handle price increases by selling its rice buffer stock to the public. At that time (1972), however, the rice stock was so limited that it could not cushion the impact of the soaring prices for rice in the markets. The problem was that there had been reports from senior agricultural and regional officials that the rice production was quite high; contrary to reports from the Central Statistics Agency, which said that the production was actually lower than in previous years. Because there were such great contrasts among the various reports, it was stressed, time and again, that the benchmark was to be the rice price level at any given harvest time. If the rice price at harvest time was higher than that of the year before, this would be considered an indication of lower production rates. So, what we used as a guideline was the rice price at harvest time and not the confusing paddy production forecast reports.

However, apparently certain senior officials at the agriculture ministry and in regional administrations were reluctant to report that the rice production in their areas was lower than in the years before. There was also another problem that worsened the government's buffer situation. That was the requirement for farmers to sell the higher quality rice or unhusked rice to the government, so it could be preserved longer. This caused the government's rice and unhusked procurement from the farmers to drop. To deal with the declining production, the government took various actions, all of which required time to implement. The impact of this time gap was exacerbated by continued confusion in the production reports and the stringent requirement on rice quality. After undertaking some fruitful policies, including importing rice on a large scale, the government then decided to convey a comprehensive explanation of the problem to the House of Representatives and the public. Eventually, the prices could be brought under control. The government's explanation was conveyed by the National Planning Agency (Bappenas) on 14 December 1972.

Introductory Note: In 1971, an international monetary upheaval prevailed. This monetary fluctuation involved the currencies of a number of industrialized countries. Tensions peaked on 15 August 1971, when the United States declared that it was no longer committed to the 1944 agreement with other industrialized countries on the determination of currency exchange rates (Bretton Woods Agreement).

Although this upheaval resulted most immediately in the fluctuation of the currency rates of industrialized countries, its impacts were also felt in developing countries. In the case of Indonesia, the changes in currency exchange rates between the U.S. and several European countries, as well as Japan, could be expected to bring a negative impact to Indonesian exports because those various countries were Indonesia's major export destinations. In order to be able to immediately take appropriate action, the government consistently monitored the latest developments in the world economy. Therefore, the government needed to take appropriate action immediately to prevent negative consequences. In matter of days, the government on 23 August 1971, announced that it would be taking several steps. In order to be able to take appropriate action, the government consistently monitored the latest developments in the world economy. In order to reduce confusion in media reporting and uncertainty in society, the government's timely announcement included an explanation that core economic elements (including the free flow of foreign exchange) remained unchanged.

Among the most vigilant in monitoring international monetary developments was Professor Dr Ali Wardhana, a Minister of Finance for fifteen years (1968–83) and Coordinating Minister for Economics, Finance and Industry for five years (1983–88). He was ever on the alert and always ready to take necessary action. At that time Indonesia was a member of Group 20, which gathered together ministers of finance for both industrial and developing countries. Professor Ali Wardhana was elected chairman of this group.

Introductory Note: At the beginning of the 1960, the Indonesian economy was in a tragic state. The standards of living in society were very low and were undergoing setbacks from year to year. One of the main sources of this situation was the strong government opinion at the time that economic affairs were unimportant. There was also the firm notion in government circles at the time that economics was completely useless; it was even considered a cause of social degradation. There was a strong view among the public at that time that the science of economics was totally useless textbook thinking. Some even viewed this science as something that could harm the way of life of the people.

In 1962, I was appointed professor of economics at the School of Economics, University of Indonesia. As normally practiced by colleges in Indonesia, a new professor is expected to deliver an inaugural speech in the relevant discipline. The core of my inaugural lecture in 1963 was that the economy was important to public welfare and had to be built through planning. For this development planning, economic analysis was required. This statement was a stark contrast to the prevailing and dominant view among government officials and a certain section of the society.

Introductory Note: Throughout the 1980s, the world experienced dozens of dazzling economic phenomena. A difficult recession occurred in the early years of the decade. Afterwards, industrial countries enjoyed a rapid growth simultaneously for seven years. Then the worst stock market crash since 1929 struck. In 1985, the U.S. dollar depreciated sharply against the yen, mark and other currencies. This development, coupled with a sharp decline in oil prices, hit Indonesia's economy like a one-two punch. During the 1980s, the world had to cope with an environment of high real interest rates. Another important symptom was a U.S. balance of payments suffering from a budget and current account deficit. This led to a huge surplus in Japan and West Germany. Also in the 1980s, capital moved from developing countries to developed ones. This was the result of the huge amount of debts owed by the developing nations. The debt crisis troubled many economies in Latin America. In the Southern Sahara Desert in Africa, the level of people's welfare dropped considerably. In contrast, the economies of South Korea, Taiwan, Hong Kong and Singapore grew swiftly. Another prominent economic phenomenon in that decade was the emergence of protectionism on the basis of a variety of excuses.

Introductory Note: The improvement of family nutrition is a very important endeavor. In 1978, I gave a message to the working conference of the National Programme for Family Nutrition Improvement Efforts. Nutrition improvement efforts are activities that involve various sectors so that they should be undertaken through cross-sector cooperation, as is the case with the program for food production promotion, the programme for family planning and various other programmes.

It is important for the nutrition improvement efforts to benefit from previous experiences in multi-sector cooperation. I have described such multi-sector cooperation experiences here to serve as examples to be utilized by the nutrition improvement programme. Among the important instances cited are communication among the various central government agencies, among regional agencies, and between the central and regional agencies, and on the other hand information, reports or feedback from regions to the central government. Through the utilization of knowledge gained from these experiences in multi-sector cooperation in relation to various different activities, the nutrition improvement programme is expected to proceed smoothly.

Introductory Note: Studying the attitude and habits of Bapak Sudharmono, S.H. in handling the various matters he faced over the years would be a good idea for those who are in charge of approving, rejecting or improving various kinds of proposals to build development projects; or of purchasing goods and/or equipment; or of hiring contractors; or of providing certain goods or services, etc.

The original heading of this article was “Is It Necessary?” a contribution in a book titled Impressions and Recollections from Friends — 70 Years H. Sudharmono S.H.

Bapak Sudharmono was the Vice President of the Republic of Indonesia for the period of 1987–93. He had formerly held the post of Minister/State Secretary for many years, and he had earlier served in the government in various capacities for a very long time. He began his close cooperation with the state economic team in 1966.

The way Bapak Sudharmono worked was fruitful and brought huge benefits for the nation and the country and could be a model not only for the Indonesian people but also for the peoples of other nations, who are trying to develop their countries.

Introductory Note: Equitable distribution of wealth is such an important element of development that it is often said it is one of the goals of development. However, if this equity should not materialize, and become just a mere slogan, this would ruin our development efforts. Therefore, equity and all facets of equal justice on all levels for all people should become an inherent element or an inalienable factor in development. In other words, equity must be transformed into a programme or programmes inseparable from development. Failing this, equity will become a mere catchword and our development efforts will not succeed.

Introductory Note: On 25 June 1975, I presented the Government's Explanation on the Pertamina crisis to the members of Commissions I, VI, VII, along with the State Budget, in a joint session of the House of Representatives.

The Pertamina crisis stems from measures taken by Pertamina that ran counter to the Law on Pertamina and other Government regulations; among these regulatory infringements were:

1. Undertaking huge construction projects outside of the Company's scope of duty;

2. Financing those projects by short-term foreign loans which it failed to repay;

3. Failure to submit to the Government taxes paid by foreign oil companies in the form of fossil oil;

4. Failure to pay the Company's own corporate taxes.

On top of the above infractions, there have been a number of other measures taken by Pertamina, whose purpose and motivation remain unclear, and which are currently under an in-depth and broad investigation at the time this explanation is being delivered to the Government; these include leasing and purchasing agreements for a great number of huge oil tankers.

The government has taken a great number of measures to resolve the Pertamina crisis. Among the lessons learned from this crisis are that stateowned companies should strictly abide by existing laws and regulations at all times, and that they have a duty to promptly submit comprehensive reports to the government.

To complement the account in Chapter 16 on the Government's Explanations on 25 June 1975, on the “Pertamina Issue”, the following three attachments have been placed at the end of this chapter:

Attachment I: Excerpts from Government Deliberation on the 1976/1977 State Budget at the House of Representatives delivered by the President of the Republic Indonesia on 7 January 1976. (page 315) Attachment II: Excerpts from State of the Nation Address by President of the Republic Indonesia Soeharto at the House of Representatives on 16 August 1977. (page 320)

Attachment III: Excerpts from Chapter 44 “Resolving Pertamina Crisis” from the book titled: Pikiran, Ucapan dan Tindakan Saya (My Thoughts, Words and Deeds), an autobiography by Soeharto as told to G. Dwipayana and Ramadhan K.H. (pages 304 to 306). Publisher P.T. Citra Lamtoro Gung Persada, Jakarta 1989. (page 322)

Introductory Note: The University of California at Berkeley invited me to give a presentation at The Walter and Phyllis Shorenstein Symposium on Economic Challenges in the Pacific-Asian Region in San Francisco on 28 March 1990. In my presentation I reviewed a number of critical challenges to Indonesia's development: the rapid-albeit declining-population growth on a relatively small island; the immense challenge of debt management to keep away from a debt crisis in the face of exchange rate volatility of major world currencies; continuous and consistent economic reforms, policy adjustments and restructuring; sustained progress in poverty alleviation; and preventing further environmental degradation. I also mentioned a number of other challenges: maintaining food self-sufficiency; human resource development; securing employment opportunities for a labor force growing at 2.3 million annually; reconciling the rapid growth of large enterprises with the country's ideals of equity and social justice; a purposeful government able to provide a sense of direction to the development process but also able to discard outdated regulatory functions and to encourage participatory development at the grassroot level.