9 - Progress and Challenges of Indonesia's Development (1990)

Summary

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a purposeful government able to provide a sense of direction to the development process but also able to discard outdated regulatory functions and to encourage participatory development at the grassroot level.

Let me start with an update of some statistics on Indonesia, most of which are certainly quite familiar. The total population of Indonesia in 1990 is about 182 million, out of which 110 million live on Java. Indonesia has the third largest population in Asia and the fifth largest in the world, after China, India, the United States and the Soviet Union.

The vigorous implementation of the family planning programme has brought about a demographic transition: Total fertility rate declined from 5.6 children in 1970 to 3.4 children at present, while the crude birth rate came down from 43 in 1970 to 28 births per 1000 persons. Meanwhile mortality rates have also declined substantially: Infant mortality rate decreased from 124 in 1970 to 58 infants per 1000 live births, while the crude death rate came down from 19 in 1970 to 8 deaths per 1000 persons.

As a result of the demographic transition the rate of population growth has decreased from 2.5 per cent in 1970 to just below 2 per cent per year. For Java the growth rate is about 1.5 per cent and for the other Indonesian islands 2.4 per cent. A significant feature of the decrease in population growth is the fact that it was achieved during a period of very rapid declining mortality.