page_title: Suharto
section_title: Socio-economic progress and growing corruption
hierarchical_section_title: Suharto / The "New Order" (1967–1998) / Socio-economic progress and growing corruption
caption_attribution_description: English: Soeharto as President of Indonesia, 1983
context_page_description: Suharto was an Indonesian military leader and politician who served as the second president of Indonesia, holding the office for 31 years, from the ousting of Sukarno in 1967 until his resignation in 1998. He was widely regarded by foreign observers as a dictator. However, the legacy of his 31-year rule, and his US$ 38 billion net worth is still debated at home and abroad.
  Suharto was born in a small village, Kemusuk, in the Godean area near the city of Yogyakarta, during the Dutch colonial era. He grew up in humble circumstances. His Javanese Muslim parents divorced not long after his birth, and he lived with foster parents for much of his childhood. During the Japanese occupation of Indonesia, Suharto served in Japanese-organised Indonesian security forces. Indonesia's independence struggle saw his joining the newly formed Indonesian Army. Suharto rose to the rank of major general following Indonesian independence.
  An attempted coup on 30 September and 1 October 1965, which according to the official history made by the army, was backed by the Communist Party of Indonesia, was "countered" by Suharto-led troops.
context_section_description: Real socio-economic progress sustained support for Suharto's regime across three decades. By 1996, Indonesia's poverty rate has dropped to around 11% compared with 45% in 1970. From 1966 to 1997, Indonesia recorded real GDP growth of 5.03% pa, pushing real GDP per capita upwards from US$806 to US$4,114. In 1966, the manufacturing sector made up less than 10% of GDP (mostly industries related to oil and agriculture). By 1997, manufacturing had risen to 25% of GDP, and 53% of exports consisted of manufactured products. The government invested in massive infrastructure development (notably the launching of a series of Palapa telecommunication satellites); consequently, Indonesian infrastructure in the mid-1990s was considered at par with China. Suharto was keen to capitalize on such achievements to justify his regime, and the parliament (MPR) on 9 March 1983 granted him the title of "Father of Development".
  Suharto government's health-care programs (such as the Puskesmas program) increased life expectancy from 47 years (1966) to 67 years (1997) while cutting infant mortality rate by more than 60%. The government's Inpres program launched in 1973 resulted in primary school enrolment ratio reaching 90% by 1983 while almost eliminating the education gap between boys and girls. Sustained support for agriculture resulted in Indonesia achieving rice self-sufficiency by 1984, an unprecedented achievement which earned Suharto a gold medal from the FAO in November 1985.
  In the early 1980s, Suharto government responded to the fall in oil exports due to the 1980s oil glut by successfully shifting the basis of the economy to export-oriented labour-intensive manufacturing, made globally competitive by Indonesia's low wages and a series of currency devaluations. Industrialisation was mostly undertaken by Chinese-Indonesian companies which evolved into large conglomerates dominating the nation's economy. The largest of these conglomerates were the Salim Group led by Liem Sioe Liong (Sudono Salim), Sinar Mas Group led by Oei Ek Tjong (Eka Tjipta Widjaja), Astra Group led by Tjia Han Poen (William Soeryadjaya), Lippo Group led by Lie Mo Tie (Mochtar Riady), Barito Pacific Group led by Pang Djun Phen (Prajogo Pangestu), and Nusamba Group led by Bob Hasan. Suharto decided to support the growth of a small number of Chinese-Indonesian conglomerates since they would not pose a political challenge due to their ethnic-minority status, but from his experience, he deemed them to possess the skills and capital needed to create real growth for the country. In exchange for Suharto's patronage, the conglomerates provided vital financing for his "regime maintenance" activities.
  In the late 1980s, the Suharto government decided to de-regulate the banking sector to encourage savings and providing a domestic source of financing required for growth. Suharto decreed the "October Package of 1988" (PAKTO 88) which eased requirements for establishing banks and extending credit; resulting in a 50% increase in the number of banks from 1989 to 1991. To promote savings, the government introduced the TABANAS program to the populace. The Jakarta Stock Exchange, re-opened in 1977, recorded a "bull run", due to a spree of domestic IPOs and an influx of foreign funds after the deregulation in 1990. The sudden availability of credit fuelled robust economic growth in the early 1990s, but the weak regulatory environment of the financial sector sowed the seeds of the catastrophic crisis in 1997, which eventually destroyed Suharto's regime.
  The growth of the economy coincided with the rapid expansion of corruption, collusion, and nepotism (Korupsi, Kolusi, dan Nepotisme / KKN). In the early 1980s, Suharto's children, particularly Siti Hardiyanti Rukmana ("Tutut"), Hutomo Mandala Putra ("Tommy"), and Bambang Trihatmodjo, had grown into greedy adults. Their companies were given lucrative government contracts and protected from market competition by monopolies. Examples include the toll-expressway market which was monopolised by Tutut, the national car project monopolised by Bam
caption: Suharto's official portrait for his fourth term (1983–1988)
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