Theme II Economic Change After Independence

Theme II: Economic Change After Independence 1 Love of money is the root of all evil. - The New Testament Lack of money is the root of all evil. - George Bernard Shaw 1 Office of the Vice President The Republic of Indonesia - B.J. Habibie: 72 Days as Vice President

ai. Changes and Continuity: Agricultural Sector 1. Technological advancements by the green revolution changed traditional means of production to embracing technological aid and improvement that increased the quality and quantity of produce. Gaining a competitive advantage over their neighbours, they were a pillar. a. Indonesia’s Bimas, a state agricultural programme provided funding and physical inputs (innovations in rice strains, fertiliser, and irrigation techniques) to promote rice production. From 1968-1989, rice production increased by 2.5 times to nearly 30m tonnes. Accounted for 50% of GDP. Probe: However, the Agricultural sector while growing, saw a general de- emphasis as in Repelita 4 and 5, growth targets for industry consistently outweighed agriculture and its share of GDP shrank (51% to 16%). b. Malaysian yields (3x to 600000 tonnes for rubber and 25x to 5 million tonnes for palm oil) improved over 120% between 1954 and 1970 with the use of technologically advanced farm machines such as tractors, combine harvesters and water pumps as well as high yielding variants of crops. Agricultural exports contributed to 7% of GDP growth c. The green revolution saw Marcos utilise IR8 (high-yielding variety International Rice Research Institute (IRRI)), chemical fertilizers and irrigation techniques. From 1961 to 1981, rice production doubled to 7.9 million. Philippines was dubbed the “Rice Granary of Asia”. Micro-comparison: Both countries milked the green revolution full as clear from how rice production was boosted to such an extent that both countries were able to achieve self-sufficiency in rice production. Both Vietnam and Thailand even went to learn rice production techniques from Philippine’s IRRI. 2. Change was also plain where governments decided to eventually diversify into other sectors instead of premising their economy solely on the agricultural sector. This signified that the change of the agricultural sector from a sole contributor to a shared one. a. Mahathir’s 1981 Heavy Industry Corporation of Malaysia (HICOM) saw state led firms like Perwaja Steel led the development of the heavy industry in Malaysia. Manufacturing constituted of 60% of Malaysia’s exports as it became one of the world’s largest producers of semiconductors. 8% of GDP. Marked the breakaway form the emphasis on agriculture 10 years ago. b. De-emphasis on agriculture from Marcos to Aquino and Ramos under Aquino’s Comprehensive Agrarian Reform Program (CARP) laid the foundation for the subsequent diversification into EOI by privatising inefficient SOEs like Philippine Airlines and giving foreign investors the right to 100% ownership in Philippine companies. Micro-comparison: Unlike Mahathir’s economic aims, the Aquino’s and Ramos’ reforms can also be said to have a secondary purpose: Re- distribute wealth and power to the people that has been centralised among the business elites in SOEs and landowners.

3. Governments were insistent that the agricultural sector remained a nationalised and domestic enterprise with minimal emphasis on profiting from it in the international market, enacting minimal change in both approach and economic worldview, leaving them primal and economically insignificant. a. Ne Win’s autarkist policies in the “Burmese Way to Socialism” rejected partnerships from IRRI and refused to fund agricultural modernisation. He also forced peasants to grow cotton for use in state factories instead of rice as cash crops. Once “Granary of the East,” “Burma became a net importer b. Sukarno’s Berdikari discouraged the dependency of the agricultural sector on foreign markets while rice and staples were reserved for domestic consumption. The Gotong Royong emphasised slow domestic production instead of enhancing quality and quantity as the state failed to expand pesticide use due to lack of forex. Micro-comparison: The underwhelming economic influence of the agriculture sector can be said to be the product of both countries’ failure to commercialise cash crops to be sold as exports and instead, overlook their economic value to focus domestic consumption. 4. Countries that decided to embark on an export-oriented economy ended up abandoning the agricultural sector or relying still on labour intensive industry. a. Sukarno’s 8 Year Development Plan (1961-1969) placed agriculture as a support sector and minimised investments in agriculture innovations and instead, focused on prestige projects and strategic industries such as steel (Cilegon) and Petroleum (Pertamina). Indonesia became a net-importer of rice in 1965 and close to a million people were on starvation diet2 b. Vietnam still embarked on collectivisation during which a vast majority of cooperatives used rudimentary means of production such as ploughs and draught animals as was lagging in mechanising farming, compromising quality and quantity of the products. From 1958-1975, average paddy yield increased by only 3.9%. Probe: However, 1986 Doi Moi, although still preserved collectivisation, granted peasants the freedom to manage their farms. Vietnam went from a net food importer into the world’s second largest exporter of rice by 2005. aii. Changes and Continuity: Industrial Sector 1. Flourished as government undertook programs to develop industries to be stable enough to transition the country from ISI to EOI, cementing its role as a significant pillar of the economy. a. Mahathir’s 1981 Heavy Industry Corporation of Malaysia (HICOM) saw state-led firms like Perwaja Steel lead the development of Malaysia’s heavy industry. Manufacturing sector now constituted for 60% of exports (3x increase from 10 2 https://www.insideindonesia.org/editions/edition-114/a-matter-of-life-or-death-for-the-indonesian- nation

years ago) as it becomes one of the world’s largest producers of semiconductor. 8% economic growth Probe: However, Malaysia still relied on primary products even though Mahathir looked to diversify. Palm oil, rubber, and tin remained vital for 22.2% of forex. b. Sarit’s 4th National Economic Development Plan (1977-1981) de-emphasised ISI and started promoting EOI. Industrial areas such as Bangchan Industrial Estate were fully occupied with 51 companies producing a range of export products. By 2000s, manufacturing doubled to 34% of Thai GDP as compared to 50 years ago. 2. Backpedalled as governments abandoned the progress made in industrial sector to focus on the use of manual labour to contribute to the economy instead of mechanisation. Reducing its economic significance to negligible or even nothing at all. a. The DRV’s 1st 5-Year Plan (1961-1965) gave priority to heavy industry. However, this was found to be impractical due to the limitations of the workforce in terms of available expertise and capital goods needed to premise industrial initiatives due to the Vietnam War. Priority subsequently shifted to agriculture. b. Khmer Rogue believed that Cambodia was to be built with agriculture as its base to turn it into an Agrarian Utopia. Pol Pot declared Year Zero, destroying all Cambodian institutions, including factories. He also forced labourers to be farmers and even executed them, completely eradicating Cambodia’s industrial base. Micro-comparison: Vietnam’s digression is an involuntary byproduct of the economic burden due to the Vietnam War while the Khmer Rogue’s was a byproduct of purposeful and deluded idealism. 3. Little change nor transformation as governments tended to focus on the country’s agriculture sector as the main economic driver. Consequently, there was little to no or ineffective stimulus to de