Origins
In the mid-1950s, the economists who would become the Berkeley Mafia were students at the Faculty of Economics at the University of Indonesia (FEUI). The faculty was headed by Sumitro Djojohadikusumo, an economist who had served as Minister of Trade and Industry and Minister of Finance for the Government. Sumitro was the only teacher with an economics doctorate and so had to turn to foreign lecturers from the Netherlands and lecturers from other faculties to assist in educating the students at FEUI. [5]
As tensions grew between Indonesia and the Dutch government over West Irian (now known as West Papua), Dutch lecturers began to leave the country. Sumitro turned to the Ford Foundation for assistance. [5] The Ford Foundation then began a process by which students from the FEUI were chosen to undertake overseas studies at the University of California, Berkeley. After the Ford Foundation had conducted some preliminary preparations, the overseas studies program began in 1957. By the early 1960s, all of the students who had been sent abroad had returned from Berkeley and had begun taking up positions as lecturers at the Army Staff and Command College (SESKOAD). [6]
In 1966, General Suharto took over executive control in Indonesia from President Sukarno in a coup by virtue of Supersemar. Although he would not formally become president for another two years, Suharto began laying down the foundations for what would become the New Order regime. In late August 1966, Suharto held a seminar at SESKOAD to discuss political and economic matters and the way in which the New Order would approach those problems. The FEUI economists, headed by Widjojo Nitisastro, attended the seminar.
During the seminar, the economists set out their ideas and policy recommendations. Their presentation impressed Suharto, who invited them to begin work as a team of experts in the field of economics and finance. [7]
Accomplishments and controversies
On October 3, 1966, on the advice of these economists and others, Suharto announced a program aimed at stabilization and rehabilitation of Indonesia's economy. [6] The Berkeley Mafia focused on low inflation, fiscal constraint, and market deregulation. [8] The program also aimed at rehabilitation of infrastructure and development of the agricultural sector. At the same time, an international program to support economic recovery was established under the auspices of a newly-formed Inter-Governmental Group on Indonesia.
The new economic program was successful at stabilizing the economy. Inflation fell from 650% in 1966 to only 13% in 1969. [9] After Suharto became president in 1968, the members of the Berkeley Mafia team were appointed to ministerial and senior advisory posts in Suharto's cabinet. Thus, the group had a great influence on economic policy and successfully brought Indonesia's economy to an unprecedented growth period. The growth rate was high, averaging around 6.5% per year between the late 1960s and 1997, when South East Asia was hit by the severe Asian financial crisis. [8]
The Berkeley Mafia's liberal approach towards economics was not supported by everyone. Within the New Order, it encountered opposition from generals such as Ali Murtopo, Ibnu Sutowo and Ali Sadikin, whose economic approaches were more nationalistic in nature. [10] Some other groups, like the Indonesian branch of Hizb ut-Tahrir, considered the Berkeley Mafia to be traitors, a view stemming particularly from its willingness to privatise the nation's industries. [11] With the beginning of the oil boom in the mid-1970s, Suharto favored the economic nationalists and so the Berkeley Mafia's influence was restricted.
Suharto would turn to the Berkeley Mafia again in the mid-1980s, when the price of oil began to drop and with it Indonesia's economic growth. The Berkeley Mafia presided over the liberalization, deregulation, and the renewed growth of the Indonesian economy. [12] Once again, the Indonesian economy began to grow, and once again, the Berkeley Mafia encountered political opposition. This time, their opponents were Sudharmono and Ginandjar Kartasasmita, who advocated economic nationalism, as well as BJ Habibie, who wanted a technology-centered economic development. As on the previous occasion, Suharto sided with the economic nationalists, and the Berkeley Mafia's power weakened.
During Indonesia's economic collapse from the 1997 Asian financial crisis, people blamed the Berkeley Mafia and considered it to be part of the New Order regime. During the Reform era, only Widjojo was retained in the government.
Suharto was an Indonesian military officer and the second president of Indonesia. Widely regarded as a military dictator by international observers, Suharto led Indonesia as an authoritarian regime from 1967 until his resignation in 1998 following nationwide unrest. His 31-year dictatorship is considered one of the most brutal and corrupt of the 20th century: he was central to the perpetration of mass killings against alleged communists and subsequent persecution of ethnic Chinese, irreligious people, and trade unionists.
Suharto resigned as President of Indonesia on 21 May 1998 following the collapse of support for his 32-year long presidency. Vice President B. J. Habibie took over the presidency.
The New Order describes the regime of the second Indonesian President Suharto from his rise to power in 1966 until his resignation in 1998. Suharto coined the term upon his accession and used it to contrast his presidency with that of his predecessor Sukarno.
Selo Soemardjan, also spelled as Selo Sumarjan or Selo Sumardjan, was a well known senior academic in sociology at the University of Indonesia, and is known as the Pioneer of Indonesian Social Sciences. He was awarded with the title Kanjeng Pangeran Haryo, a knighthood from the Yogyakarta Sultanate.
The Fourth Development Cabinet was the Indonesian cabinet which served under President Suharto and Vice President Umar Wirahadikusumah from March 1983 until March 1988. The cabinet was formed after Suharto was elected to a 4th term as President by the People's Consultative Assembly (MPR).
Emil Salim is an Indonesian economist and former politician. Born of Minangkabau parents, both from the village of Koto Gadang in West Sumatra. His uncle is Agus Salim, one of the founding fathers of the Republic of Indonesia and Minister of Foreign Affairs in the early 1950s.
Ali Murtopo was a prominent Indonesian general and political figure during the first half of General Suharto's New Order regime.
Sumitro or Soemitro was a prominent Indonesian general in the early years of General Suharto's New Order before suddenly falling from grace in January 1974 after the Malari incident.
Mohammad Sadli was a leading Indonesian policymaker and economist.
Boediono is an Indonesian politician and economist who served as the 11th vice president of Indonesia from 2009 to 2014. He became vice president after winning the 2009 presidential election together with the then-incumbent President Susilo Bambang Yudhoyono. Before this, he had been the Governor of the Indonesian Central Bank and a professor of economics at Gadjah Mada University.
Probosutedjo was a businessman and the younger half-brother of former Indonesian president Suharto. Like many Indonesians, he took only one name. Probosutedjo was one of seven children from his mother's second marriage, his father being Atmopawiro and his mother Sukirah. Like Suharto, he was born and raised in the small hamlet of Kemusuk to the west of the main town of Yogyakarta..
Widjojo Nitisastro was an Indonesian economist, who was known as the main architect of the Indonesian economy during the New Order regime of President Suharto, serving as Minister for National Development (1971–1983) and Coordinating Minister for Economy, Finance and Industry (1973–1983). He was one of Indonesia's best-known and most respected economic policy-makers, both within Indonesia and overseas.
Sumitro Djojohadikusumo was an Indonesian statesman and one of the country's most influential economists. He held ministerial positions under Presidents Sukarno and Suharto intermittently between 1950 and 1978. During his career in government, Sumitro served as minister of industry and trade, minister of finance, and the minister of research in five different cabinets. He was also the dean of the Faculty of Economics at the University of Indonesia.
The Indonesia Project is a center of research and graduate training on the Indonesian economy at the Australian National University (ANU). It is located in the Arndt-Corden Department of Economics, Crawford School of Public Policy, part of the ANU College of Asia and the Pacific in Canberra. It was established in 1965 with an initial grant from the Ford Foundation.
Suharto was the second President of Indonesia, having held the office for 31 years from 1967 following Sukarno's removal until his resignation in 1998.
Muhammad Chudori was an Indonesian journalist. Chudori co-founded The Jakarta Post in 1983 and served as the newspaper's first general manager.
Johannes Baptista Sumarlin was an Indonesian economist who served as Minister of Finance. Sometimes linked with the so-called Berkeley Mafia group of economic advisers which included senior Indonesian economists such as Widjojo Nitisastro, Emil Salim, and Ali Wardhana, Sumarlin held various important economics posts in the Indonesian government for many years until the late 1990s. He graduated from the Faculty of Economics, University of Indonesia (FEUI) in 1958. Positions held in government included, among others, Chairman of the Supreme Audit Agency, Minister of Finance, Chairman of the National Planning Agency (Bappenas), and Minister for Administrative and Bureaucratic Reform.
Siti Hediati Hariyadi, popularly known as Titiek Suharto, is an Indonesian businesswoman & politician. She is the second daughter of Suharto, the second president of Indonesia. She currently serves as a member of the Indonesia House of Representatives.
Ali Wardhana, more colloquially known as Bung Ali, was an Indonesian professor and economist, who served as the third Coordinating Minister for Economics, Finance, Industry, and Development of Indonesia from 1983 until 1988 and the 21st minister of finance of Indonesia from 1968 until 1983. He was one of Indonesia's most senior economic policy-makers during the New Order regime of President Suharto, being a member of the influential Berkeley Mafia, a group of American-educated Indonesian economists who shaped the Indonesian economy during the New Order. He was the longest-serving Minister of Finance, as well as the fifth longest-serving minister in Indonesian history.
Bambang Subianto was an Indonesian academic and technocrat who served as Minister of Finance from 1998 to 1999. Before assuming the post of finance minister, Bambang worked in the Department of Finance for about a decade.
