Asian Financial Crisis

Hadi Soesastro

Ref Batch
K
Focus Area(s)
Ref Batch Number
1
Country of Reform
Interviewers
Andrew Schalkwyk
Name
Hadi Soesastro
Interviewee's Position
Executive Director
Interviewee's Organization
Center for Strategic and International Studies
Language
English
Nationality of Interviewee
Indonesian
Place (Building/Street)
Jakarta Post Building
Town/City
Jakarta
Country
Date of Interview
Reform Profile
No
Abstract
Hadi Soesastro discusses economic deregulation and political and civil service reform in Indonesia since 1986. The 1986 plunge in oil prices affected Indonesia severely, and precipitated a number of deregulation policies, backed largely by academics and government technocrats, including tariff reductions, industrial reform and investment encouragement. Soesastro recalls resistance to reform from entrenched interests, and Suharto’s reform of several sectors in which his close associates or he himself were not involved. The second wave of reform came in the wake of the 1997 Asian financial crisis, which plunged Indonesia into a severe recession. Efforts by the International Monetary Fund to help recovery were stymied by Suharto's resistance to reform, especially in industries in which he had personal interest; this eventually led to his resignation. Major reforms were later achieved in the financial and political sectors. The leading result of political reform was decentralization, under populist pressure and fear of secession. Soesastro also discusses reforms in the Finance Ministry since 2004, including anti-corruption and personnel reform. He also speaks about the failure of judicial reform in Indonesia. Finally, he reflects on challenges faced by the Indonesian government at the time of the interview.
 
Profile

Hadi Soesastro, an economist and public intellectual, was one of the founders of the Center for Strategic and International Studies, and at the time of the interview he was the executive director of the center, with which he had been involved for 38 years. He was a member of the National Economic Council of Indonesia. He served as an adviser to late former President Abdurrahman Wahid, the World Bank and the Asian Development Bank. Soesastro held a doctoral degree in economics and had taught widely, including at Columbia University in New York. He died in May 2010. 

Full Audio File Size
77MB
Full Audio Title
Hadi Soesastro Interview

Services for the People, by the People: Indonesia's Program for Community Empowerment, 1998-2006

Author
Rushda Majeed
Focus Area(s)
Core Challenge
Country of Reform
Abstract
When financial crisis and weather-related natural disasters ravaged Indonesia’s economy in 1997, national leaders searched for ways to cushion the impact on poor rural households. A team of public servants within Bappenas, the country’s powerful national development planning agency, suggested an aggressive, nationwide expansion of an experiment in community-driven development. The Kecamatan Development Program (KDP), which worked at the kecamatan, or subdistrict, level, furnished block grants directly to poor communities and empowered villagers to determine how they wanted to use the funds—whether for building roads, bridges, schools, or health clinics. Communities chose, planned, implemented, and maintained projects on their own, supervised by village volunteers, subdistrict committees and verification teams, and specially trained facilitators. Planners at Bappenas worked with the World Bank to modify and scale up the original KDP experiment. The Ministry of Home Affairs, which also participated in the early phases, took over the program two years later. During an eight-year period, the new KDP provided direct benefits for more than half of Indonesia’s 70,000 villages, helping communities move out of poverty in greater proportions than their counterparts in non-KDP areas did.
 
Rushda Majeed drafted this case study based on interviews conducted in Jakarta, Indonesia, in October 2013. The research benefited from additional interviews conducted by Jonathan Friedman in May and June 2013. This case study is the first in a two-part series; see “Expanding and Diversifying Indonesia’s Program for Community Empowerment, 2007 – 2012.”  Case published February 2014.
 
Associated Interview(s):  Susan Nina Carroll, Herman Haeruman

Expanding and Diversifying Indonesia's Program for Community Empowerment, 2007-2012

Author
Jonathan Friedman
Focus Area(s)
Country of Reform
Abstract
In 2007, Indonesia embarked on a multiyear effort to expand an innovative community-driven development program, first started in 1998, into the largest program of its kind in the world. For nearly a decade, the Kecamatan Development Program had empowered communities to determine how they wanted to use funds for their own development, whether for small infrastructure projects, health and education, or microcredit opportunities. Communities planned, implemented, and maintained projects on their own through village and intervillage committees. The program experienced very low levels of corruption, and in some communities it was the only government program to provide direct benefits that actually reached citizens. It was also successful in raising the incomes of Indonesians in poor parts of the country. From 2007 to 2012, the central government significantly expanded the program and launched pilot projects to extend participation to geographic areas and activities beyond the scope of the original program. Although the scale-up strained management, creating occasional delays and gaps in implementation, the program continued to raise the incomes of the poorest Indonesians. This case study offers several lessons about scaling up community-driven development.
 
Jonathan Friedman drafted this case study based on interviews conducted in Jakarta, Indonesia in May 2013. The research benefited from additional interviews conducted by Rushda Majeed in October 2013. The case was prepared by ISS in partnership with the World Bank as part of the Bank’s Science of Delivery initiative. This case study is the second in a two-part series; see “Services for the People, by the People:  Indonesia’s Program for Community Empowerment, 1998 – 2006.” Case published February 2014.