Acting Presidency of Suharto
Encyclopedia
The Acting Presidency of Suharto followed the Transition to the New Order in which General Suharto was the President albeit on an interim basis. The term lasted from 12 March 1967 until 27 March 1968 when Suharto was officially elected as President of the Republic of Indonesia.
realized that his political career was at an end and he became concerned at cutting his losses. On 7 February, he sent a letter to Suharto saying that he was willing to hand over the running of the Government to the General but also added that he would like to continue on as Head of State. In the time between the arrival of that letter and the formulation of the reply, the People's Representative Council
(DPR) passed a resolution which called for a Special Session of the Provisional People's Consultative Assembly
(MPRS). Suharto, accompanied by the Commanders of the Navy, Air Force, and Police, met with Sukarno on the 11th February to reject his offer and to wait instead for the result of the MPRS Special Session.
On 20 February 1967, Sukarno chose to step down and hand over executive power to Suharto whilst still retaining his position as President. Sukarno's decision did not stop the DPR from insisting that the MPRS Special Session go ahead. Originally calling for an MPRS Special Session to be held for the purpose of reviewing Sukarno’s performance as well as reaching a final decision on whether or not he was involved with the 30 September Movement
(G30S), the DPR now asked that the MPRS Special Session add Suharto's election as Acting President to the agenda.
The Special Session was opened on 7 March 1967. On that day, Suharto delivered a speech absolving Sukarno of any involvement with the G30S. The Special Session now turned on the matter of the Presidency. Such was the intensive debate surrounding this matter that the Special Session did not finish on 11 March 1967 as intended but had to go for another extra day. But when the decision was finally made, it was unanimous. On 12 March 1967, the MPRS agreed to withdrew its mandate from Sukarno and remove him as President. Replacing Sukarno, in the capacity of Acting President would be Suharto.
which had been formed by him in July 1966. He would reshuffle this Cabinet in October 1967 and create the Revised Ampera Cabinet
.
For the political parties, the main point of contention was whether the Legislative Election will use the district system or proportional representation
. In the previous year, ABRI
had expressed interest in the district system and as such handed to the DPR an election bill which favors the district system. The bill was successfully blocked in the DPR as the list of parties not wanting change to the district system included the Indonesian National Party
(PNI) and Nadhlatul Ulama (NU). With time running out until the 1968 Legislative Elections, Suharto needed to hammer out a compromise.
Suharto held a series of meetings during the first three months of his Acting Presidency with the leadership of the political parties. To accommodate the political parties, Suharto backed out of the notion of a district system and began supporting proportional representation; the trade-off being that the Government would be able to appoint some of the DPR members. The breakthrough was made on 25 July 1967 when the political parties agreed that the Legislative Elections will be held using proportional representation, that the Government will appoint 100 out of the 460 DPR members, and that the Government will appoint 1/3 of the members of the new People's Consultative Assembly (MPR).
Despite the breakthrough it quickly became clear that it would be difficult to meet the deadline set by the MPRS. The bill would have to be rewritten and would have to go through the proper procedures before it could be passed. The bill was resubmitted to the DPR on 16 December 1967 but by January 1968, Suharto reported to the Chairman and Vice-Chairmen of the MPRS that it would be impossible to hold a Legislative Election in 1968.
Palace.
On 12 September 1967, he signed a bill into a law which approved the formation of Bengkulu
Province
Minister of Foreign Affairs. He suggested the idea to Indonesia's Minister of Foreign Affairs, Adam Malik
who promised to bring it up with Suharto. Suharto was interested in the idea and sent Malik to a conference in Thailand in August 1967. The conference was also attended by the Ministers of Foreign Affairs of Malaysia, Singapore
, and Philippines
. On 8 August 1967, the five Ministers signed the Bangkok Declaration
which marked the formation of the Association of South East Asian Nations (ASEAN). The declaration called among other things for the cooperation to help accelerate economic growth and promote stability in the region.
The reversal of Sukarno's policy of Confrontation with Malaysia was completed with the establishment of diplomatic relations between Indonesia and Malaysia in early September 1967. At the same time, diplomatic relations were also established with Singapore with the opening of an Indonesian Embassy there. Running contrary to these two diplomatic successes was the deterioration of Indonesia's relationship with the People's Republic of China
. The perception of the Indonesian Government was that China had backed the Indonesian Communist Party (PKI). The deterioration was not helped by the fact that the response to Indonesia's suspicion was the ideological zeal of China's Cultural Revolution
. In October 1967, Indonesia announced that it was freezing diplomatic relations with China.
The emergence of Suharto as Acting President was well received by the West
, who was keen to not only invest but give aid. Relationship with the Soviet Bloc cooled down but nevertheless, Suharto would work towards repaying the debt incurred during the Sukarno Government. More details can be seen later in this article.
The next step was to continue purging ABRI of PKI and Sukarnoist elements. With the Army,most intense purges happened in Central Java
, East Java
, and North Sumatra
with the Commanders of the Regional Military Command (Kodam) supervising the areas in question leading the purge. Outside of the Army, the Air Force had been weakened enough by its alleged involvement with G30S. The Police tried to resist but political pressure became too strong for them to overcome. Only the Navy resisted, criticizing the purges as practice reminiscent of the Old Order.
Suharto also began reorganizing the Command Structure of ABRI. The first step was taken by stripping the Commanders of the Army, Navy, Air Force and Police of their Cabinet status in August 1967. Suharto's Acting Presidency also saw the establishment of the State Intelligence Coordinating Agency (BAKIN), another agency to ensure state security in addition to the Operational Command for the Restoration of Security and Order (Kopkamtib). In addition to all this, Suharto issued a regulation regarding pay for ABRI soldiers. The regulation provided provisions for pay, conditions for pay rise and the various types of allowances for the members of ABRI.
Beginning in July, Indonesia faced a security problem in the form of the North Kalimatan People's Forces (Paraku) and the People of Sarawak's Guerilla Forces (PGRS), two guerilla armies consisting of people of Chinese ethnicity, with communist leanings, and backed by Beijing
. By the end of 1967, ABRI troops, working together with troops of Malaysia, had made progress but it was unknown as to when the conflict could have been decisively ended.
. The agencies issued a joint communique which called for: elongating working days for legal procedures, increasing the amount of facilities for legal procedures, maximizing the amount of manpower for legal procedures, improving facilities, and improving coordination between the courts, the attorneys, and the police.
In the months leading up to Suharto’s assumption of the Acting Presidency, the trials of Old Order figures revealed that they had been very corrupt. To address this problem and to return any money that belonged to the state, Suharto formed the State Finance Supervision (Pekuneg) in April 1967. However, it would not be long before accusations of corruption were thrown at the new Government. Suharto responded to this by forming the Abolition of Corruption Team (TPK) on 2 December 1967.
and the Sukarno-era practice of printing extra money to raise funds when the budget runs short was discontinued. Technically speaking, however, Suharto’s budgets ran deficits because foreign aid and external borrowing are not supposed to be counted as revenue.
The new Government also undertook a reform of the tax
system. On 26 August 1967, the DPR passed the Amendment and Revision of Collection Methods for Income , Wealth, and Corporate Taxes Law with Suharto smoothing out the details through a Government Regulation (Peraturan Pemerintah).
Under the new tax system, the taxpayer has two methods by which they can pay tax. The first method is the individual tax counting (menghitung pajak sendiri) method. Using this method it was up for the individual to count the amount of tax they are to pay and to hand the tax in to tax offices. The second method is the non-individual tax counting (menghitung pajak orang lain) method. In this method an individual was appointed by the Head of the Tax Inspection to count and pay the taxes of other individuals. If the individual counting the tax abused their poistion, they could be subject to a fine of paying 100% tax . Under this system, the roles of a tax officials are reduced to giving information and making sure that the amount of tax that has been paid is accurate.
, interest rates were kept between 6 and 9%. Steps were also taken to reform the exchange rate system by the abolition of the multiple exchange rate of the Sukarno system in July 1967.
In May 1967, the liberalization of the banking sector was continued. ten foreign-owned banks and a joint venture bank were allowed to open. For the foreign-owned banks, the catch was that they were only allowed to operate in Jakarta
. On 30 December 1967, the DPR passed the Fundamentals of Banking Law. It was a law that categorized banks, their functions, and the guidelines for establishing banks. Further regulations were expounded by Suharto in February 1968.
and the stability of price was guaranteed. On 10 May 1967, Suharto formed the Logistics Affairs Agency (Bulog), to look after these matters. Its position was further strengthened when Suharto named it as the single purchasing agency for rice with Bank Indonesia as the single financing agency. Bulog immediately set a target of purchasing 597,000 tonnes of rice for the year but would delay when it comes to purchasing rice, preferring instead to wait until harvest season to make their purchase. However the year’s harvest was bad and from September 1967 onwards there was a shortage of rice. Although the bad harvest meant that Bulog was unable to fulfill its target purchase, it had 280,000 tonnes of rice under its control. Nevertheless instead of sending its supply of rice to the market, Bulog focused instead on distributing rice to members of ABRI and the civil service
. With high demand and no step being taken on the supply side, the price of rice had nowhere to go but up, its high price causing discontent within the population towards the end of the year.
On 8 July 1967, the DPR passed the Guidelines for Animal Husbandry
and Health Law. The law called for setting aside land to grow animal food as and vaccination against animal diseases as well as categorizing the different kinds of Farming Enterprises and calling on the Government to invest capital in animal husbandry.
import
procedures in addition to taking a step back and giving as well as assisting the private sector an opportunity to conduct trade. For the year 1967, Indonesia was able to earn $770 million from its exports although it would spend $805 million from its imports and thus, running a trade deficit.
In earning $770 million from exports, $244 million was earned from exporting petroleum
whilst $526 million was earned from non-petroleum exports. These non-petroleum exports included timber
, rubber
, coffee
, tin
, palm oil
, tea
, tobacco
, pepper
, copra
, and palm seeds. Timber was the highest non-petroleum export, raking in $227.8 million. In spending $805 million on imports, $68 million was spent on petroleum whilst $737 million was spent on non-petroleum imports. Some of the non-petroleum imports included rice, flour
, fertilizers, cement
, paper
, iron
, steel
, tractors, and aircraft
. For the most part, the imports were raw materials which constituted 36.6% of the imports followed by consumption goods on 35.8% and capital goods on 27.6%.
.
In December 1967, Suharto issued regulations for private enterprises wishing to exploit Indonesian forests. Suharto set down the conditions for the private enterprises; first was that they would have to pay license fees and secondly, they would have to pay royalties to the Government based on the amount of forest that they intended to make a profit from. As part of the policy, Suharto regulated that the region from which the forest was exploited will have first priority in receiving the money made from the two fees for the purpose of regional development.
Starting from February 1967, the Government began receiving aid from a group of donor nations and or organizations called the Inter Governmental Group on Indonesia (IGGI). IGGI consisted of Australia
, Belgium
, Britain
, Canada
, France
, Japan
, New Zealand
, Switzerland
, the United States
, Asian Development Bank
(ADB), the International Monetary Fund
(IMF), the United Nations Development Program, and the World Bank
. In 1967, the Government received $675.4 million in aid; comprising credit, food aid, infrastructural aid, and technical aid.
With regards to the Communist Bloc, the nations from which Sukarno had already borrowed heavily during his Presidency, Suharto wanted Indonesia to settle all of its debts plus interest although debts would still be rescheduled. Starting from mid September to early October 1967, protocols on debt rescheduling were agreed upon and signed between Indonesia and the Governments of East Germany, Czechoslovakia, and Hungary. In November 1967 it was the Soviet Union’s turn to sign a similar protocol with Indonesia.
; expecting it to supply water to Jakarta and West Java, generate electricity, stop floods at Citarum, increase fishing production, and as a place for tourists to recreate.
industry and urban planning
. Similar to parallel regulations regarding ABRI and the bureaucracy
, the government also issued regulations regarding pay and allowances regarding those who work in state-owned enterprises.
) concept and cooperatives was required to view itself as an equipment of the revolution. The new law placed cooperatives back as a purely economic institution and to undo the previous cooperatives law, does not approve of discrimination based on political beliefs amongst its leadership. The new law also called for the Government to guide, assist, supervise and protect cooperatives in its policies. This in effect, gives the Government authority over cooperatives although considerable autonomy was still given to the cooperatives.
as Government policy on a national scale. In 1967, he signed the UN Declaration on Population and had already taken steps to implement family planning. By the end of 1967, 6,456 people had participated in the family planning program (KB) with the infrastructural backing of 116 KB clinics.
system in 1967. Through a Ministerial Regulation, a Social Security Fund was established by the Department of Manpower. Under this fund, all costs for illnesses, pregnancy, giving birth, and deaths were covered by the Ministry. Only employees of private enterprises are eligible for this entitlement and it was not compulsory.
.
citizens. The policies that were adopted include the non-recognition of Confucianism as a religion, banning Chinese holidays such as the Chinese New Year
, banning Chinese newspapers, banning Chinese schools, and banning the usage and teaching of Mandarin
.
Towards the end of 1967, the Government also moved to regulate amateur radio broadcasting. Although the Telecommunication Law of 1964 had promised punishment to anyone who was illegally owning radio transmitters, amateur radio stations had begun forming after G30S as a form of political dissent against the then Sukarno Government and had become quite popular as a hobby. The Government regulated that amateur radio stations would be allowed to continue provided that the broadcasters get a permit from the Government before broadcasting and that they join an amateur radio organization.
When the MPRS turned its attention to the Presidency, Suharto faced an obstacle in the form of MPRS Chairman General Abdul Haris Nasution
. Nasution was of the opinion that Suharto should deliver an accountability speech before going on to run for President. This notion did not gain momentum and Nasution was forced to let the matter go. On 27 March 1968, Suharto was officially elected to a full five year term; in the process officially becoming President of Indonesia.
Election to the Acting Presidency
By February 1967, President SukarnoSukarno
Sukarno, born Kusno Sosrodihardjo was the first President of Indonesia.Sukarno was the leader of his country's struggle for independence from the Netherlands and was Indonesia's first President from 1945 to 1967...
realized that his political career was at an end and he became concerned at cutting his losses. On 7 February, he sent a letter to Suharto saying that he was willing to hand over the running of the Government to the General but also added that he would like to continue on as Head of State. In the time between the arrival of that letter and the formulation of the reply, the People's Representative Council
People's Representative Council
The People's Representative Council , sometimes referred to as the House of Representatives, is one of two elected national legislative assemblies in Indonesia....
(DPR) passed a resolution which called for a Special Session of the Provisional People's Consultative Assembly
People's Consultative Assembly
The People's Consultative Assembly is the legislative branch in Indonesia's political system. It is composed of the members of the People's Representative Council and the Regional Representative Council. Before 2004, and the amendments to the 1945 Constitution, the MPR was the highest governing...
(MPRS). Suharto, accompanied by the Commanders of the Navy, Air Force, and Police, met with Sukarno on the 11th February to reject his offer and to wait instead for the result of the MPRS Special Session.
On 20 February 1967, Sukarno chose to step down and hand over executive power to Suharto whilst still retaining his position as President. Sukarno's decision did not stop the DPR from insisting that the MPRS Special Session go ahead. Originally calling for an MPRS Special Session to be held for the purpose of reviewing Sukarno’s performance as well as reaching a final decision on whether or not he was involved with the 30 September Movement
30 September Movement
The Thirtieth of September Movement ) was a self-proclaimed organization of Indonesian National Armed Forces members who, in the early hours of 1 October 1965, assassinated six Indonesian Army generals in an abortive coup d'état. Later that morning, the organization declared that it was in control...
(G30S), the DPR now asked that the MPRS Special Session add Suharto's election as Acting President to the agenda.
The Special Session was opened on 7 March 1967. On that day, Suharto delivered a speech absolving Sukarno of any involvement with the G30S. The Special Session now turned on the matter of the Presidency. Such was the intensive debate surrounding this matter that the Special Session did not finish on 11 March 1967 as intended but had to go for another extra day. But when the decision was finally made, it was unanimous. On 12 March 1967, the MPRS agreed to withdrew its mandate from Sukarno and remove him as President. Replacing Sukarno, in the capacity of Acting President would be Suharto.
Cabinet
Suharto retained the Ampera CabinetAmpera Cabinet
The Ampera Cabinet was the Indonesian Cabinet which served under President Sukarno and later on, Acting President Suharto from July 1966 until October 1967. The Cabinet was formed after the Provisional People's Consultative Assembly session of 1966 which commissioned Suharto to form a new Cabinet...
which had been formed by him in July 1966. He would reshuffle this Cabinet in October 1967 and create the Revised Ampera Cabinet
Revised Ampera Cabinet
The revised Ampera Cabinet was an Indonesian Cabinet which served under Acting President Suharto from October 1967 until June 1968. In addition to the Acting Presidency, Suharto was also Minister of Defense and Security in this Cabinet....
.
Legislative Elections
The 1966 MPRS General Session passed a resolution calling for Legislative Elections to be held no later than 5 July 1968 and this became one of the first matters that Suharto attempted to address during his Acting Presidency. In doing this, he would have to deal with political parties.For the political parties, the main point of contention was whether the Legislative Election will use the district system or proportional representation
Proportional representation
Proportional representation is a concept in voting systems used to elect an assembly or council. PR means that the number of seats won by a party or group of candidates is proportionate to the number of votes received. For example, under a PR voting system if 30% of voters support a particular...
. In the previous year, ABRI
Military of Indonesia
The Indonesian National Armed Forces in 2009 comprises approximately 432,129 personnel including the Army , Navy including the Indonesian Marine Corps and the Air Force ....
had expressed interest in the district system and as such handed to the DPR an election bill which favors the district system. The bill was successfully blocked in the DPR as the list of parties not wanting change to the district system included the Indonesian National Party
Indonesian National Party
The Indonesian National Party is the same used by several political parties in Indonesia from 1927 until the present day.-Pre-independence:...
(PNI) and Nadhlatul Ulama (NU). With time running out until the 1968 Legislative Elections, Suharto needed to hammer out a compromise.
Suharto held a series of meetings during the first three months of his Acting Presidency with the leadership of the political parties. To accommodate the political parties, Suharto backed out of the notion of a district system and began supporting proportional representation; the trade-off being that the Government would be able to appoint some of the DPR members. The breakthrough was made on 25 July 1967 when the political parties agreed that the Legislative Elections will be held using proportional representation, that the Government will appoint 100 out of the 460 DPR members, and that the Government will appoint 1/3 of the members of the new People's Consultative Assembly (MPR).
Despite the breakthrough it quickly became clear that it would be difficult to meet the deadline set by the MPRS. The bill would have to be rewritten and would have to go through the proper procedures before it could be passed. The bill was resubmitted to the DPR on 16 December 1967 but by January 1968, Suharto reported to the Chairman and Vice-Chairmen of the MPRS that it would be impossible to hold a Legislative Election in 1968.
Dealing with Sukarno
The MPRS Resolution which appointed Suharto to the Acting Presidency also gave him the power to take legal action against Sukarno. Suharto chose not to take any legal action and instead, Sukarno was still allowed to reside at the Presidential Palace and enjoy his freedom. Suharto also continued to insist that Sukarno was still the Head of State. Speaking on 13 March 1967, Suharto insisted that Sukarno was still President and Head of State, although without the political power that came with the office. This state of affairs did not last long. By May, Suharto decided that Sukarno was no longer allowed to use the title of President of the Republic of Indonesia and placed the former President under house arrest at BogorBogor
Bogor is a city on the island of Java in the West Java province of Indonesia. The city is located in the center of the Bogor Regency , 60 kilometers south of the Indonesian capital Jakarta...
Palace.
Other
During the course of 1967, Suharto confirmed that West Papua would be given a plebiscite concerning the matter of integration with Indonesia.On 12 September 1967, he signed a bill into a law which approved the formation of Bengkulu
Bengkulu
Bengkulu is a province of Indonesia. It is on the southwest coast of the island of Sumatra, and borders the provinces of West Sumatra, Jambi, South Sumatra and Lampung. The capital and largest city is Bengkulu city. It was formerly the site of a British garrison, which they called Bencoolen...
Province
Foreign Affairs
The idea of pooling together the nations of South-East Asia into one organization came from Thanat Khoman the ThaiThailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
Minister of Foreign Affairs. He suggested the idea to Indonesia's Minister of Foreign Affairs, Adam Malik
Adam Malik
Adam Malik Batubara was Indonesia's third vice president, a senior diplomat, and one of the pioneers of Indonesian journalism.-Early life:...
who promised to bring it up with Suharto. Suharto was interested in the idea and sent Malik to a conference in Thailand in August 1967. The conference was also attended by the Ministers of Foreign Affairs of Malaysia, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, and Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
. On 8 August 1967, the five Ministers signed the Bangkok Declaration
ASEAN Declaration
ASEAN Declaration or Bangkok Declaration is the founding document of Association of Southeast Asian Nations . It was signed in Bangkok on August 8, 1967 by the five ASEAN founding members - Indonesia, Singapore, Philippines, Malaysia and Thailand as a display of solidarity against Communist...
which marked the formation of the Association of South East Asian Nations (ASEAN). The declaration called among other things for the cooperation to help accelerate economic growth and promote stability in the region.
The reversal of Sukarno's policy of Confrontation with Malaysia was completed with the establishment of diplomatic relations between Indonesia and Malaysia in early September 1967. At the same time, diplomatic relations were also established with Singapore with the opening of an Indonesian Embassy there. Running contrary to these two diplomatic successes was the deterioration of Indonesia's relationship with the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
. The perception of the Indonesian Government was that China had backed the Indonesian Communist Party (PKI). The deterioration was not helped by the fact that the response to Indonesia's suspicion was the ideological zeal of China's Cultural Revolution
Cultural Revolution
The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...
. In October 1967, Indonesia announced that it was freezing diplomatic relations with China.
The emergence of Suharto as Acting President was well received by the West
West
West is a noun, adjective, or adverb indicating direction or geography.West is one of the four cardinal directions or compass points. It is the opposite of east and is perpendicular to north and south.By convention, the left side of a map is west....
, who was keen to not only invest but give aid. Relationship with the Soviet Bloc cooled down but nevertheless, Suharto would work towards repaying the debt incurred during the Sukarno Government. More details can be seen later in this article.
Defense and Security
The first order of business for Suharto to give official recognition to ABRI's non-military role. Measures had been taken to create a doctrinal justification for ABRI's interference in non-military matters and this had culminated in August 1966 with the formulation of the Four Duties, One Function (Indonesian: Catur Dharma Eka Karya Acronym: Cadek) Doctrine. The doctrine stated that in addition to its defense and security role, ABRI also takes part and would serve in other fields outside of the aforementioned functions of defense and security. 31 March 1967, Suharto called on ABRI to adopt and implement Cadek.The next step was to continue purging ABRI of PKI and Sukarnoist elements. With the Army,most intense purges happened in Central Java
Central Java
Central Java is a province of Indonesia. The administrative capital is Semarang. It is one of six provinces on the island of Java.This province is the province of high Human Development in Indonesia and its Points Development Index countries is equivalent to Lebanon. The province of Central Java...
, East Java
East Java
East Java is a province of Indonesia. It is located on the eastern part of the island of Java and includes neighboring Madura and islands to its east and to its north East Java is a province of Indonesia. It is located on the eastern part of the island of Java and includes neighboring Madura and...
, and North Sumatra
North Sumatra
North Sumatra is a province of Indonesia on the Sumatra island. Its capital is Medan. It is the most populous Indonesian province outside of Java. It is slightly larger than Sri Lanka in area.- Geography and population :...
with the Commanders of the Regional Military Command (Kodam) supervising the areas in question leading the purge. Outside of the Army, the Air Force had been weakened enough by its alleged involvement with G30S. The Police tried to resist but political pressure became too strong for them to overcome. Only the Navy resisted, criticizing the purges as practice reminiscent of the Old Order.
Suharto also began reorganizing the Command Structure of ABRI. The first step was taken by stripping the Commanders of the Army, Navy, Air Force and Police of their Cabinet status in August 1967. Suharto's Acting Presidency also saw the establishment of the State Intelligence Coordinating Agency (BAKIN), another agency to ensure state security in addition to the Operational Command for the Restoration of Security and Order (Kopkamtib). In addition to all this, Suharto issued a regulation regarding pay for ABRI soldiers. The regulation provided provisions for pay, conditions for pay rise and the various types of allowances for the members of ABRI.
Beginning in July, Indonesia faced a security problem in the form of the North Kalimatan People's Forces (Paraku) and the People of Sarawak's Guerilla Forces (PGRS), two guerilla armies consisting of people of Chinese ethnicity, with communist leanings, and backed by Beijing
Beijing
Beijing , also known as Peking , is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010. The city is the country's political, cultural, and educational center, and home to the headquarters for most of China's...
. By the end of 1967, ABRI troops, working together with troops of Malaysia, had made progress but it was unknown as to when the conflict could have been decisively ended.
Justice
In an effort to help the Government form policy in this field, law enforcement agencies (The Supreme Court, the Ministry of Justice, the Office of the Attorney General, and the Police) held a conference in Cibogo, West JavaWest Java
West Java , with a population of over 43 million, is the most populous and most densely populated province of Indonesia. Located on the island of Java, it is slightly smaller in area than densely populated Taiwan, but with nearly double the population...
. The agencies issued a joint communique which called for: elongating working days for legal procedures, increasing the amount of facilities for legal procedures, maximizing the amount of manpower for legal procedures, improving facilities, and improving coordination between the courts, the attorneys, and the police.
In the months leading up to Suharto’s assumption of the Acting Presidency, the trials of Old Order figures revealed that they had been very corrupt. To address this problem and to return any money that belonged to the state, Suharto formed the State Finance Supervision (Pekuneg) in April 1967. However, it would not be long before accusations of corruption were thrown at the new Government. Suharto responded to this by forming the Abolition of Corruption Team (TPK) on 2 December 1967.
General Economic Conditions
By the end of 1967, the Suharto Government had been able to reduce inflation from 650% at the end of the previous year to 120%.Fiscal Policy
With regards to the budget, Suharto undertook a policy of a balanced budgetBalanced budget
A balanced budget is when there is neither a budget deficit or a budget surplus – when revenues equal expenditure – particularly by a government. More generally, it refers to when there is no deficit, but possibly a surplus...
and the Sukarno-era practice of printing extra money to raise funds when the budget runs short was discontinued. Technically speaking, however, Suharto’s budgets ran deficits because foreign aid and external borrowing are not supposed to be counted as revenue.
The new Government also undertook a reform of the tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
system. On 26 August 1967, the DPR passed the Amendment and Revision of Collection Methods for Income , Wealth, and Corporate Taxes Law with Suharto smoothing out the details through a Government Regulation (Peraturan Pemerintah).
Under the new tax system, the taxpayer has two methods by which they can pay tax. The first method is the individual tax counting (menghitung pajak sendiri) method. Using this method it was up for the individual to count the amount of tax they are to pay and to hand the tax in to tax offices. The second method is the non-individual tax counting (menghitung pajak orang lain) method. In this method an individual was appointed by the Head of the Tax Inspection to count and pay the taxes of other individuals. If the individual counting the tax abused their poistion, they could be subject to a fine of paying 100% tax . Under this system, the roles of a tax officials are reduced to giving information and making sure that the amount of tax that has been paid is accurate.
Monetary Policy
In terms of monetary policyMonetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
, interest rates were kept between 6 and 9%. Steps were also taken to reform the exchange rate system by the abolition of the multiple exchange rate of the Sukarno system in July 1967.
In May 1967, the liberalization of the banking sector was continued. ten foreign-owned banks and a joint venture bank were allowed to open. For the foreign-owned banks, the catch was that they were only allowed to operate in Jakarta
Jakarta
Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre...
. On 30 December 1967, the DPR passed the Fundamentals of Banking Law. It was a law that categorized banks, their functions, and the guidelines for establishing banks. Further regulations were expounded by Suharto in February 1968.
Agriculture
With agricultural production still not functioning at maximum capacity, Suharto had to make do with ensuring that the supply of riceRice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
and the stability of price was guaranteed. On 10 May 1967, Suharto formed the Logistics Affairs Agency (Bulog), to look after these matters. Its position was further strengthened when Suharto named it as the single purchasing agency for rice with Bank Indonesia as the single financing agency. Bulog immediately set a target of purchasing 597,000 tonnes of rice for the year but would delay when it comes to purchasing rice, preferring instead to wait until harvest season to make their purchase. However the year’s harvest was bad and from September 1967 onwards there was a shortage of rice. Although the bad harvest meant that Bulog was unable to fulfill its target purchase, it had 280,000 tonnes of rice under its control. Nevertheless instead of sending its supply of rice to the market, Bulog focused instead on distributing rice to members of ABRI and the civil service
Civil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....
. With high demand and no step being taken on the supply side, the price of rice had nowhere to go but up, its high price causing discontent within the population towards the end of the year.
On 8 July 1967, the DPR passed the Guidelines for Animal Husbandry
Animal husbandry
Animal husbandry is the agricultural practice of breeding and raising livestock.- History :Animal husbandry has been practiced for thousands of years, since the first domestication of animals....
and Health Law. The law called for setting aside land to grow animal food as and vaccination against animal diseases as well as categorizing the different kinds of Farming Enterprises and calling on the Government to invest capital in animal husbandry.
Trade
In July 1967, the Government simplified exportExport
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
import
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
procedures in addition to taking a step back and giving as well as assisting the private sector an opportunity to conduct trade. For the year 1967, Indonesia was able to earn $770 million from its exports although it would spend $805 million from its imports and thus, running a trade deficit.
In earning $770 million from exports, $244 million was earned from exporting petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
whilst $526 million was earned from non-petroleum exports. These non-petroleum exports included timber
Timber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
, rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
, coffee
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
, palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
, tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, pepper
Black pepper
Black pepper is a flowering vine in the family Piperaceae, cultivated for its fruit, which is usually dried and used as a spice and seasoning. The fruit, known as a peppercorn when dried, is approximately in diameter, dark red when fully mature, and, like all drupes, contains a single seed...
, copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
, and palm seeds. Timber was the highest non-petroleum export, raking in $227.8 million. In spending $805 million on imports, $68 million was spent on petroleum whilst $737 million was spent on non-petroleum imports. Some of the non-petroleum imports included rice, flour
Flour
Flour is a powder which is made by grinding cereal grains, other seeds or roots . It is the main ingredient of bread, which is a staple food for many cultures, making the availability of adequate supplies of flour a major economic and political issue at various times throughout history...
, fertilizers, cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
, paper
Paper
Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....
, iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
, steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
, tractors, and aircraft
Aircraft
An aircraft is a vehicle that is able to fly by gaining support from the air, or, in general, the atmosphere of a planet. An aircraft counters the force of gravity by using either static lift or by using the dynamic lift of an airfoil, or in a few cases the downward thrust from jet engines.Although...
. For the most part, the imports were raw materials which constituted 36.6% of the imports followed by consumption goods on 35.8% and capital goods on 27.6%.
Mining
Mining, both for oil and mineral resources alike, received legal recognition under the Guidelines of Mining Law. It gave guidelines for mining processes as well as giving private enterprise the opportunity to do business in the mining sector. Under this law, the private enterprises are to pay fees for the contract, exploration, and exploitation to the Government who in turn will hand it over to the Provincial and Regency Governments to be used for development. The importance of petroleum quickly become apparent by the fact that it was Indonesia's top export earner for the year 1967, bringing in $770 million's worth of revenue.Forestry
In the field of forestry, the DPR passed the Guidelines of Forestry Law on 24 May 1967. The law outlines the categories of forests, from protected forests, which exists for the purpose of preventing floods and erosions to production forests, from which timber are cut down to be exported. It also set provision for nature reserves and forests set aside for the purpose of tourismTourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
.
In December 1967, Suharto issued regulations for private enterprises wishing to exploit Indonesian forests. Suharto set down the conditions for the private enterprises; first was that they would have to pay license fees and secondly, they would have to pay royalties to the Government based on the amount of forest that they intended to make a profit from. As part of the policy, Suharto regulated that the region from which the forest was exploited will have first priority in receiving the money made from the two fees for the purpose of regional development.
Investment and Foreign Aid
At the beginning of 1967, the Government passed the Foreign Investment Law. By the end of 1967, 23 projects with the backing of foreign capital was approved: 14 direct investments, 8 joint ventures, and 1 working contract. Another investment law, this time directed towards domestic investors, was also in the process of being formulated.Starting from February 1967, the Government began receiving aid from a group of donor nations and or organizations called the Inter Governmental Group on Indonesia (IGGI). IGGI consisted of Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
, Britain
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
, the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
(ADB), the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), the United Nations Development Program, and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. In 1967, the Government received $675.4 million in aid; comprising credit, food aid, infrastructural aid, and technical aid.
With regards to the Communist Bloc, the nations from which Sukarno had already borrowed heavily during his Presidency, Suharto wanted Indonesia to settle all of its debts plus interest although debts would still be rescheduled. Starting from mid September to early October 1967, protocols on debt rescheduling were agreed upon and signed between Indonesia and the Governments of East Germany, Czechoslovakia, and Hungary. In November 1967 it was the Soviet Union’s turn to sign a similar protocol with Indonesia.
Infrastructure
In July 1967, the Government completed the Jatiluhur Dam in West Java. The Government saw the dam as a multipurpose infrastructureInfrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
; expecting it to supply water to Jakarta and West Java, generate electricity, stop floods at Citarum, increase fishing production, and as a place for tourists to recreate.
State-owned enterprises
Throughout the course of the Acting Presidency, the Suharto government did some work with regards to state-owned enterprises. The government established new state-owned enterprises in the fields of the textileTextile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
industry and urban planning
Urban planning
Urban planning incorporates areas such as economics, design, ecology, sociology, geography, law, political science, and statistics to guide and ensure the orderly development of settlements and communities....
. Similar to parallel regulations regarding ABRI and the bureaucracy
Bureaucracy
A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...
, the government also issued regulations regarding pay and allowances regarding those who work in state-owned enterprises.
Cooperatives
On 18 December 1967, the DPR passed the Basics of Cooperatives Law. Although the previous Government already had its own Cooperatives Law which was passed in 1965, the Suharto Government viewed it as a law that politicized cooperatives. By requirement of the Sukarno-era legislation, a cooperative had to represent nationalist, religious, and communist elements in the adoption of Sukarno’s Nationalism, Religion, and Communism (NasakomNasakom
Nasakom was a political concept during the Sukarno presidency in Indonesia. It is an acronym based on the Indonesian words NASionalisme , Agama , and KOMunisme ....
) concept and cooperatives was required to view itself as an equipment of the revolution. The new law placed cooperatives back as a purely economic institution and to undo the previous cooperatives law, does not approve of discrimination based on political beliefs amongst its leadership. The new law also called for the Government to guide, assist, supervise and protect cooperatives in its policies. This in effect, gives the Government authority over cooperatives although considerable autonomy was still given to the cooperatives.
Health
As Acting President, Suharto had already begun to take steps to show that he wanted to adopt family planningFamily planning
Family planning is the planning of when to have children, and the use of birth control and other techniques to implement such plans. Other techniques commonly used include sexuality education, prevention and management of sexually transmitted infections, pre-conception counseling and...
as Government policy on a national scale. In 1967, he signed the UN Declaration on Population and had already taken steps to implement family planning. By the end of 1967, 6,456 people had participated in the family planning program (KB) with the infrastructural backing of 116 KB clinics.
Social Security
The Ministry of Manpower experimented with a social securitySocial security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
system in 1967. Through a Ministerial Regulation, a Social Security Fund was established by the Department of Manpower. Under this fund, all costs for illnesses, pregnancy, giving birth, and deaths were covered by the Ministry. Only employees of private enterprises are eligible for this entitlement and it was not compulsory.
Veterans Affair
On 7 August 1967, the DPR passed the Veterans of the Republic of Indonesia Law. The law outlines not only the criteria for being a veteran but also their privileges; including receiving preference should a veteran apply to be a civil servant, being allowed to go back to their old jobs after they finished their service, and to receive skills education from the Government before they return to full civilian life. The law also called on the Government to ensure the veterans’ social security through grants. Provisions were also made in the law for the formation of a Republic of Indonesia Veterans’ Legion.Religion
In religious affairs, Suharto adopted a stance of supporting religious tolerance and was against forced religious conversion. As will be seen however, this tolerance does not extend to ConfucianismConfucianism
Confucianism is a Chinese ethical and philosophical system developed from the teachings of the Chinese philosopher Confucius . Confucianism originated as an "ethical-sociopolitical teaching" during the Spring and Autumn Period, but later developed metaphysical and cosmological elements in the Han...
.
Chinese Indonesian
By the end of the Acting Presidency, the Suharto Government had taken measures to suppress the cultural life of its Chinese IndonesianChinese Indonesian
Chinese Indonesians, also called the Indonesian Chinese, are an overseas Chinese group whose ancestors emigrated from China to Indonesia, formerly a colony of the Netherlands known as the Dutch East Indies...
citizens. The policies that were adopted include the non-recognition of Confucianism as a religion, banning Chinese holidays such as the Chinese New Year
Chinese New Year
Chinese New Year – often called Chinese Lunar New Year although it actually is lunisolar – is the most important of the traditional Chinese holidays. It is an all East and South-East-Asia celebration...
, banning Chinese newspapers, banning Chinese schools, and banning the usage and teaching of Mandarin
Standard Mandarin
Standard Chinese or Modern Standard Chinese, also known as Mandarin or Putonghua, is the official language of the People's Republic of China and Republic of China , and is one of the four official languages of Singapore....
.
Information and Telecommunication
In accordance with the Basic Points of the Press Law, which was passed in late 1966, the Government formed the Press Council in July 1967. The Press Council was an institution designed to assist the Government in developing and fostering the Indonesian media. The Press Council was to be chaired by the Minister of Information.Towards the end of 1967, the Government also moved to regulate amateur radio broadcasting. Although the Telecommunication Law of 1964 had promised punishment to anyone who was illegally owning radio transmitters, amateur radio stations had begun forming after G30S as a form of political dissent against the then Sukarno Government and had become quite popular as a hobby. The Government regulated that amateur radio stations would be allowed to continue provided that the broadcasters get a permit from the Government before broadcasting and that they join an amateur radio organization.
Bureaucracy
As Acting President, Suharto began taking steps to reform the bureaucracy by forming a taskforce called the Team Assisting the President for the Ordering of Government Apparatus and Administration. In December 1967, the Government executed two policies with regards to the bureaucracy. The first one was a regulation parallel to the ones that he made with regards to the pay, pay rise, and allowances to ABRI Soldiers and State Owned Enterprises Employees. The second one was an announcement that the Government was raising the pensions of retired civil servants as well as allowances for the widows and children of retired civil servants.Election to the Presidency
The failure to hold a Legislative Election by 5 July 1968 meant that a new People's Consultative Assembly (MPR) would not be able to form which also meant that a new President and Vice President could not be elected through an MPR General Session. For Suharto, this meant that the length of his term as Acting President was in doubt. Wishing to solidify his position, Suharto used the DPR to lobby the MPRS to hold a General Session. The MPRS Leadership agreed and scheduled a General Session to be held in late March. The General Session was opened on 21 March 1968 and the first matter that it turned to was the Legislative Election. The MPRS quickly passed a resolution, setting 5 July 1971 as the new deadline for the Legislative Election.When the MPRS turned its attention to the Presidency, Suharto faced an obstacle in the form of MPRS Chairman General Abdul Haris Nasution
Abdul Haris Nasution
In this Indonesian name, the name "Nasution" is a family name, and the person should be referred to by the family name "Nasution".Abdul Haris Nasution was an Indonesian general who was twice appointed Army Chief of Staff and who escaped an assassination attempt during the...
. Nasution was of the opinion that Suharto should deliver an accountability speech before going on to run for President. This notion did not gain momentum and Nasution was forced to let the matter go. On 27 March 1968, Suharto was officially elected to a full five year term; in the process officially becoming President of Indonesia.