Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 00074910500218392

(1)

Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=cbie20

Download by: [Universitas Maritim Raja Ali Haji] Date: 19 January 2016, At: 19:47

Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

A team player technocrat: Radius Prawiro,

1928–2005

J. Soedradjad Djiwandono

To cite this article: J. Soedradjad Djiwandono (2005) A team player technocrat: Radius Prawiro, 1928–2005, Bulletin of Indonesian Economic Studies, 41:2, 169-171, DOI: 10.1080/00074910500218392

To link to this article: http://dx.doi.org/10.1080/00074910500218392

Published online: 18 Jan 2007.

Submit your article to this journal

Article views: 41

(2)

A TEAM PLAYER TECHNOCRAT: RADIUS PRAWIRO, 1928–2005

J. Soedradjad Djiwandono

Institute of Defence and Strategic Studies, Nanyang Technological University, Singapore

Indonesia lost a prominent member of the Soeharto-era economic team known as the ‘technocrats’ when Bapak Radius Prawiro died from a heart attack on 26 May 2005, while undergoing medical treatment in a hospital in Munich. Radius Prawiro had an illustrious career, serving for 28 years as a cabinet minister and economic policy maker from the last cabinet of President Sukarno through most of the Soeharto cabinets. In the New Order he served as governor of Bank Indo-nesia, minister of trade, minister of finance, and coordinating minister for econ-omy, finance, industry and development supervision. Even in retirement he was recalled by Soeharto to assist government efforts to cope with the financial crisis that began to emerge in late 1997.

Radius Prawiro’s career at the centre of economic policy making under Soe-harto spanned the long period in which Indonesia experienced high growth together with substantial poverty reduction, and transformed its status from a low- to a middle-income country. As economist Thee Kian Wie has noted in per-sonal correspondence with the author, Radius is the only technocrat who took the trouble to write his own assessment and analysis of this remarkable period, in a book entitled Indonesia’s Struggle for Economic Development: Pragmatism in Action, published by Oxford University Press in 1998.

Several times during his long career in government, Radius played crucial roles in economic policy making. Some episodes that can be identified as bearing his imprint should be mentioned here. At the beginning of the New Order in the late 1960s, Radius was actively involved in the rescheduling of government debt accumulated under Sukarno, including the establishment of the debt negotiation forum, IGGI (Inter-Governmental Group on Indonesia), in his capacity as gover-nor of Bank Indonesia. IGGI later met annually to discuss foreign exchange needs and the amount each member country would pledge in loans to finance Indo-nesia’s development projects.

Another important episode was the state-owned oil company Pertamina’s financial scandal, which surfaced in 1974, soon after the first OPEC oil shock. The scandal was exposed in February 1975, when Pertamina failed to repay a matur-ing loan to a small American bank. It soon emerged that Pertamina had greatly overstretched itself with extensive and diverse business investments, accumulat-ing some $10.5 billion in debt that it now could not repay. In response, the gov-ernment set up several teams dedicated to different aspects of the problem; Radius was assigned to deal with the debts Pertamina had incurred through

Bulletin of Indonesian Economic Studies, Vol. 41, No. 2, 2005: 169–71

BIESAug05 29/6/05 4:18 PM Page 169

(3)

tanker chartering. In a legal case relating to the financial arrangements between Pertamina and oil tanker leasing operator Bruce Rappaport, Radius made his name when a New York court decided the case in Pertamina’s favour. The deci-sion saved Indonesia a vast sum: Pertamina’s debt under the Rappaport contract was reduced from $1.55 billion to $150 million. More than two decades later, pri-vate sector foreign debt became one of the major problems facing Indonesia, when rapid rupiah depreciation in 1997–98 led to bankruptcy for thousands of national corporations with high foreign exchange exposures. It was probably because of Radius’s previous successes in dealing with foreign debt problems that Soeharto asked him to chair the Indonesian team on private foreign debt, which was intended to help negotiate workable debt settlements with foreign creditors.

Aside from his contribution to economic policy making in the face of crisis, Radius also played an important role during the period when policies for liberal-isation (or deregulation, as it is more popularly known in Indonesia) of the econ-omy proliferated. Faced with declining oil prices in the early 1980s, Indonesia embarked on policies to open up the national economy through a series of dereg-ulation packages that allowed market forces to play a more important role. The deregulation process began in 1983, when Radius was finance minister, with the freeing of state banks to determine their own interest rates and the staged reduc-tion of central bank support in the financing of state bank loans. This step was fol-lowed by various additional deregulation packages in both the real and financial sectors. In 1988 an even more substantial banking deregulation package was introduced, in which bank licensing was liberalised for both domestic and foreign investors in order to accelerate further the development of this sector. At that time Radius was the coordinating minister for economic affairs, overseeing the dereg-ulation exercise and coordinating its implementation.

Radius’s experience as trade minister also led to his keen interest in addressing the proliferation of policy-generated barriers to domestic competition and trade, and when he was coordinating minister his office sponsored several seminars on domestic competition. In fact, so firm was his commitment to pushing trade liber-alisation that, as junior minister for trade during his tenure, I received a friendly reprimand from him for publicly stating that deregulation was not our objective, but was only a means for achieving greater market efficiency. He reminded me that the statement could be perceived as anti-deregulation.

Those who had some experience working with or under him would readily observe that in economic policy making Radius was a believer in flexibility, recognising the dynamism of the challenges facing the national economy. This is reflected even in the choice of the subtitle for his book: ‘Pragmatism in Action’. He also argued, however, that pragmatism should be balanced by a firm commit-ment to sound principles of macro and micro economics. And, perhaps because of his early assignment as head of the central bank, he believed in the pivotal role of monetary policy in influencing economic development. Indeed, he argued that the history of Indonesia’s development since 1966 is a testimony to the impor-tance of monetary management.

As a nationalist and central banker, Radius also believed that a well managed monetary and financial sector would serve the growth and development of the national economy, helping to eradicate poverty and to improve the welfare of the

170 J. Soedradjad Djiwandono

BIESAug05 29/6/05 4:18 PM Page 170

(4)

society at large. To put that into practice he placed a high value on teamwork in economic policy formulation and implementation. This view of the economic pol-icy making and development processes seemed to come naturally from his enchanting and jovial nature. Indeed, Radius was a very gentle, gracious, engag-ing and jovial yet humble soul, who treated everyone with the same respect and grace.

Radius’s strong conviction about the importance of teamwork, combined with his humble personality, was demonstrated in his last letter to the team (of which I am a member) entrusted with writing the history of Bank Indonesia. The letter was written on 18 May 2005, the day before he left for treatment in Germany. The most important advice he offered was that we should not individualise the con-tribution of officials, because we were writing the history of the institution. This is exactly the same message he gave in his book, when he wrote that economic policy formulation is a collaborative process of the team as a whole. Radius Prawiro was above all else a team player par excellence.

A Team Player Technocrat: Radius Prawiro, 1928–2005 171

BIESAug05 29/6/05 4:18 PM Page 171