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ECONOMIC AND SOCIAL PLANNING WITH PARTICULAR REFERENCE TO SOCIAL SECURITY IN INDONESIA
(by T. I. Mathew)
I.
Early efforts in development planning
1. The achievement of economic development through development planning has been a cherished goal of Indonesia even before the country's independence. As in many other developing countries of Asia, both the machinery and mechanics of development planning in Indonesia underwent a series of revisions and reformulations before they attained their present form and character.
2. The first serious effort in development planning was made in 1952 with the establishment of a State Planning Bureau which formulated a five-year plan fcr the period 1956-60. The State Planning Bureau continued in existence until 1958. Thereafter, a National Planning Council (DEPERNAS) was established in 1959 with a member of the Cabinet as chairman. The eight-year plan (1961-68) prepared by the DEPERNAS did not have any tangible impact on economic development and was, therefore, abandoned in 1966. By that time the country experienced extreme economic stagnation accompanied by hyperinflation resulting in a serious setback to all developmental activities in the country.
II.
Recent planning activities
3. When the present régime came to power it addressed itself to the urgent tasks of arresting the process of economic deterioration and the creation of a sound basis for economic growth. By a Presidential Decree passed in June 1967, the National Development Planning Agency (BAPPENAS) was established as a succesSOF to the DEPERNAS. By 1969 Indonesia achieved a fairly consistent pattern of political stability accompanied by a certain degree of economic recovery to enable it to launch its First Five-Year Development Plan (REPELITA-I), Covering the period 1969- 74.
4.
The first plan (1969-74) laid priorities on expansion of food production, development of exports, reduction of unemployment through encouragement of labour-intensive enterprises, more equitable income distribution, rehabilitation of the infrastructure and the educational system, expansion of social services and regional development. Based on an over-all annual rate of economic growth of 5 per cent, the plan set physical targets in all major economic sectors and some social sectors, viz. health and education. In order to achieve the targets, the plan provided for a total investment of Rp. 1,420 billion at 1968 prices, Rp. 1,059 billion to be channelled through the development budget and Rp. 361 billion through the banking system and direct private investment. As a matter of policy, the Government concentrated its development expenditure on those sectors and programmes for which private capital was not forthcoming. The sectoral allocation of planned public development expenditure was of the order of 35 per cent for agriculture, 22 per cent for transportation and communication, 12 per cent for industry and mining, 12 per cent for electric power, 9 per cent for education and 4 per cent for health.
5.
In recent years the Indonesian economy has shown considerable stability, growth and dynamism. The rate of inflation has been progressively reduced over the years from 650 per cent in 1966 to 112 per cent in 1967, 85 per cent in 1968, 9.5 per cent in 1969, 8.2 per cent in 1970, 5.6 per cent in 1971 and only 2.5 per cent in 1972. The country's gross domestic product has been growing at an annual rate far above the 5.0 per cent anticipated by the first plan. It is estimated that GDP grew by 6.2 per cent in 1969, 6.9 per cent in 1970, 7 per cent in 1971 and 6.5 per cent in 1972. According to preliminary estimates, the rate of growth has been of the order of about 7 per cent in 1973. This impressive growth rate is attributed mainly to the rapid rise in exports and foreign investment.
6.
Indonesia's Second Five-Year Development Plan (PEPELITA-II covering the period 1974-79 is designed to give priority to agricultural and industrial development, increased export earnings, development of transport and communications, regional development, improved land and water use,
rural development and transmigration, creation of job opportunities and income redistribution. Creation of more employment opportunities and provision of more widely distributed welfare benefits are listed as two of the basic objectives of the second plan.