Indonesia Betrayed: How Development Fails (review)

While “Indonesia Betrayed” was how President Suharto described an unsuccessful coup attempt by the Communist Party in 1966, Elizabeth Collins’ book Indonesia Betrayed: How Development Fails uses this expression to describe Suharto’s long-term impact on the Indonesian economy and society. This book provides factual evidence that Suharto, the leader of the New Order regime, may have betrayed Indonesia far worse than the Communist Party through his debt-led growth development policy and authoritarian style of government. The purpose of the book, however, is to do more than just analyse the history of development in Indonesia. It adequately describes the causes, expectations, and results of the so-called reformasi (Reformation) movement in Indonesia. Collins, a professor of Southeast Asian studies at Ohio University, analyses issues from the perspective of the most marginalized Indonesians and comes to the conclusion that development was unsuccessful in bringing long-lasting prosperity to the country.

Suharto, the second president of Indonesia, tried to implement development as the country’s main economic strategy; he even called himself “The Father of Development”. Studying the origin of Suharto’s New Order development policy, Collins describes that as a strong anti-Communist policy, Suharto converted the political and economic orientation of Indonesia from that of a communist country to a more Westernized society based on capitalism. His main economic policies were based on the World Bank and IMF development ideals of industrialization and liberalization, and the attainment of high economic growth financed by external debt. However, she shows that in practice, the corrupt Suharto and his cronies were the largest beneficiaries of this external funding. Soon after, the need to repay the debt drove the regime to exploit Indonesia’s natural resources and tropical forest. Collins also explores how this economic policy was done simultaneously with repressive politics. For three decades, the New Order created artificial harmony and maintained political stability by oppressing opposition through minimizing the number of political parties; depoliticizing students, peasantry and urban workforce organizations; and centralizing local governments. Collins also describes how the government was able to violently suppress protesting indigenous communities deprived of their long-standing access to forests and other resources through both military force and the Mafia. However, this policy led NGOs and student groups to begin the pro-democratic movement against Suharto’s development policy in the 1970s.

Collins shows how the problems of huge external debt were hidden during a sustained period of economic growth, two decades prior to the 1997 Asian crisis. In the wake of widespread rioting following a massive price hike caused by drastic depreciation during the crisis, the reformasi movement, led by students and worker groups, overthrew Suharto’s presidency. This pro-democratic movement led the Indonesian public to believe that a democratic government and a more equal distribution of power and wealth would arise.

This book also describes the consequences of the debt-based development policy brought about by Suharto’s regime. One of the main problems Collins identifies is the export-oriented policy required by the World Bank and the IMF to ensure that Indonesia repays its debts. She claims that this requirement led to the creation of large-scale agriculture, capital-intensive industries, and increased mining by foreign companies in Indonesia. Since the main export in Indonesia was palm oil, the increased emphasis on exporting this product encouraged large-scale agriculture, violently pushing the indigenous farmers off their land. Unable to compete, and lacking sufficient property rights to hold onto their land, these farmers were forced into unskilled labour in the cities’ industrial sectors.

Collins explains how this increased urban migration resulted in population explosions in urban areas and increased slum settlements. The urban migrants were forced into unskilled labour, but with no genuine labour unions and no legal protection, they were marginalized and unprotected. As the world’s fourth most populous country, Indonesia has enjoyed a comparative advantage in labour costs. Collins claims that the government, the corporate representatives and the government-controlled labour union colluded to maintain minimum wage as...