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Bulletin of Indonesian Economic Studies

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M. Hadi Soesastro: Indonesian public intellectual,

Asia Pacific visionary

Hal Hill & Mari Pangestu

To cite this article: Hal Hill & Mari Pangestu (2010) M. Hadi Soesastro: Indonesian public intellectual, Asia Pacific visionary, Bulletin of Indonesian Economic Studies, 46:2, 171-179, DOI: 10.1080/00074918.2010.503561

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Published online: 27 Jul 2010.

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M. HADI SOESASTRO:

INDONESIAN PUBLIC INTELLECTUAL,

ASIA PACIFIC VISIONARY

Hal Hill* _{Mari Pangestu}*

Australian National University Ministry of Trade, Jakarta

This note commemorates and celebrates the life and contribution of M. Hadi Soe-sastro, a Bulletin board member who passed away on 4 May 2010. Hadi was argu-ably Indonesia’s leading public intellectual in the ields of international economic policy and political economy, ASEAN economic cooperation, and East Asian eco-nomic integration. He made seminal contributions in these ields, and on the politi-cal economy of reform in Indonesia, the economic development of East Timor, and energy economics. He also played a major role in institutional development, most notably at the Centre for Strategic and International Studies, and in many other of-icial, academic and research endeavours in Indonesia and East Asia.

Martinus Yosefus Marwoto Hadi Soesastro – widely known simply as Hadi or ‘Mingkie’ – will be remembered as a public intellectual, institution-builder and visionary. His interests were diverse, ranging across international economic pol-icy, East Asian regional architecture, energy issues and political economy. From his base at Jakarta’s Centre for Strategic and International Studies (CSIS) for nearly four decades, he piloted that institution to international recognition as the best-known Indonesian think-tank dealing with international economics, politics and security issues.

He was a top-class thinker and writer about international economic integration, in the Association of Southeast Asian Nations (ASEAN), East Asia and beyond. He was arguably Indonesia’s best-known intellectual in these and related topics. He was at the forefront of, and closely involved with, every major policy initiative in this ield over the past quarter-century. He was a key adviser to ASEAN when its leaders sought to chart new ways forward. He was a founding member of the Paciic Economic Cooperation Council (PECC), and he helped to create the notion of ‘open regionalism’. ASEAN and PECC created precedents that helped launch the APEC (Asia Paciic Economic Cooperation) process, built on principles irst

*_{We are indebted to many people who provided us with information about Hadi.} Par-ticular thanks go to the staff at CSIS, and to Mely Tan, Thee Kian Wie, Andrew Elek and Chris Manning. We especially thank Mely for passing on an autobiographical note that Hadi wrote in 2008, ‘M. Hadi Soesastro: a short write-up about myself’, unpublished, Mel-bourne, September 2008. Unless otherwise indicated, the quotations in this paper are taken from that source.

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172 Hal Hill and Mari Pangestu

proposed in CSIS. Hadi then continued to shape the agenda of both APEC and PECC, in which he remained actively engaged.

Although never formally in government employ, he was highly inluential in the public domain, and also within Indonesian government ministries, particu-larly in the ofice of the president and the departments of foreign affairs, trade, inance, and mines and energy. Moreover, in his quiet, unassuming and highly effective manner, he projected Indonesia to the region and the world in both good and challenging times, functioning as a sort of unoficial ambassador. His wise counsel was frequently sought by ministers, diplomats, academics, journalists, oficials from international organisations, social activists and business people.

But Hadi was much more than a public intellectual and ever-present partici-pant on the domestic and international conference circuits. For over 30 years he was a proliic writer in Indonesian and English. In most years he would author at least half a dozen substantial pieces of work, in addition to numerous notes and opinion pieces. And he served as an inspiring role model to a younger generation of Indonesian students and researchers at CSIS and the various other institutions where he taught or advised.

HIS LIFE AND CAREER Early days in Malang

Hadi was born Tan Yueh Ming on 30 April 1945. Growing up in Malang, East Java, he had a comfortable and happy family life. His father and mother retained their Chinese names – Tan Sien Giok and Kwee Ting Lan respectively – although he later observed that nobody in the household could speak Chinese and that he rued not having learnt the language.

As beitted the man, ‘Mingkie’ (a Dutch-inluenced nickname) had a cosmo-politan, literate upbringing, with a pronounced Dutch inluence in a typical Chinese Indonesian peranakan environment.1_{His father was a well-known}

jour-nalist and writer who ran a small but successful printing and publishing busi-ness known as Paragon Press, established by Hadi’s grandfather on his mother’s side. His mother was an accomplished dressmaker. The family spoke Indonesian mixed with ‘Passer-Maleisch’ (‘bazaar Malay’), plus some Javanese and Dutch. His father was Buddhist, and the house had a Buddhist altar. Hadi converted to Catholicism at a young age, as did his mother later, while a younger brother con-verted to Islam upon marriage.

The family spent a year in The Hague in 1949. Returning to Indonesia, Hadi attended Catholic schools run by Dutch orders but with Indonesian the language of instruction.2_{His senior secondary school was the famous SMAK (Catholic senior}

high school) St Albertus, which still had a Dutch priest as headmaster, and whose illustrious alumni included former ministers Rahmat Saleh and Rudini and the

1 Peranakan are descendants of earlier (15th and 16th century) Chinese immigrants to the Netherlands Indies, who adopted many local customs and were largely assimilated into local communities.

2 Hadi and his siblings maintained their proiciency in Dutch partly through a prized subscription to the Dutch version of Disney’s Donald Duck magazine!

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doyen of the economic technocrats, Widjojo Nitisastro. In addition to completing his secondary schooling with distinction, Hadi had many interests. He describes himself as a ‘fanatic boy scout’ who dressed up every year for Lord Baden Powell’s birthday. He was chair of a youth social club, the Perhimpunan Pergaulan Umum (PPU) Muda Malang, which held regular social and cultural events.

Eight years in Germany

After Hadi completed his secondary schooling in 1963, the family decided he should study abroad. They chose the Rheinisch-Westfaelische Technische Hochs-chule (institute of technology) in Aachen, because of personal connections. Hadi was keen to study ship-building ‘since Indonesia is an archipelago’. Before com-mencing formal study, he took a six-month praktikum at a ship-building factory in Luebeck. After irst taking intensive classes in German, which he mastered quickly, Hadi enrolled in mechanical engineering. The Indonesian community on the campus was small, and he soon met the country’s future president, B.J. Habi-bie, then a doctoral candidate at the same university. HabiHabi-bie, already dream-ing of developdream-ing an Indonesian aircraft industry, persuaded Hadi to switch to aeronautical engineering, with the prospect of joining him at the Messerschmitt factory, where Habibie later obtained a directorship.

Meanwhile, Hadi became active in the Indonesian Students Association, PPI (Perhimpunan Pelajar Indonesia). The student community at that time became embroiled in Indonesian politics, with sharp divisions emerging that paralleled those back home. Across Europe, the West German PPI was condemned as a ‘reac-tionary force’. After September 1965 the level of political activity subsided, and Hadi, who was then working in a chocolate factory in his spare time, was elected chairman of PPI West Germany. This in turn brought him in contact with Indo-nesian students in many countries across Western Europe. A number of these new acquaintances were to play prominent roles back in Indonesia, both nationally and in Hadi’s life, including Daoed Joesoef (one of the co-founders of CSIS and a former education and culture minister), businessman Sofyan Wanandi3_and

busi-nessman and former minister Cosmas Batubara.

The Centre for Strategic and International Studies (CSIS)

Graduating in 1971, Hadi became increasingly attracted to the idea – then under active discussion in these circles – of establishing a new institution in Indonesia for ‘independent analysis [of] international and national developments as a basis for policy formulation’. It was to be called the Centre for Strategic and International Studies. The founding group visited leading European institutes of international and strategic affairs to develop their ideas. Hadi was offered a job at the newly formed CSIS, and returned home in late 1971 to the institute that was to be the centre of his life for nearly four decades.

His longest absence over this period was for doctoral studies at the RAND Gradu-ate School in Santa Monica, California, from September 1974 to May 1978. His early CSIS years had led to a broadening of interests, and he was particularly attracted to international political economy. At RAND, Hadi was very focused. ‘There were no extra-curricular activities like [those] during my student years in Aachen.’ He

3 Hadi singles out Sofyan as the person ‘who in a way discovered me’.

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worked on a variety of research topics, as well as taking graduate classes. His the-sis, written under the direction of the then RAND director, economist Charles Wolf, was entitled ‘Policy Analysis for the External Finance of Indonesia’s Development’. It was also used as an input into the third ive-year plan (1979–83) developed by the national development planning agency, Bappenas. The late Moh. Sadli, one of Indonesia’s best known economists, was the external examiner.

Back at CSIS Hadi quickly became a central igure in the organisation. He had been Executive Director briely in 1973–74, and held the post again from 1989 to 1996 and from 1999 to 2008. He was also Director of Studies (1978–82 and 1984–89) and head of the Department of Economics (1982-84), in addition to frequently editing the Centre’s English-language journal, TheIndonesian Quarterly. Hadi was central to establishing CSIS’s pre-eminence as Indonesia’s leading internationally oriented think-tank. This achievement was recognised in the 2008 rankings com-piled by the respected US-based Foreign Policy Research Institute, which placed CSIS in the top 30 think-tanks in the world outside the US, and as the leading one of its kind in Southeast Asia.

Other activities

Hadi’s other major periods abroad were as a visiting professor at Columbia Uni-versity in New York in 1988–89 and 2005, where he taught a course on Southeast Asian economic development, and at the Australian National University – as the Okita Fellow in 1997 and as adjunct professor from 1999 until his death. Those vis-its cemented the very close relationship between CSIS and these two universities.

In addition to his executive responsibilities at CSIS, Hadi maintained a wide array of domestic and international responsibilities. A brief listing gives some indi-cation of the breadth and range of his activities. He taught on a regular or occa-sional basis at the University of Indonesia, the Naval Staff College in Jakarta, Atma Jaya University and the Prasetiya Mulya Management School. He was a member of the editorial boards of the two CSIS journals, TheIndonesian Quarterly and Anali-sis, and of the Asian Economic Journal, the Asian Economic Policy Review, the ASEAN Economic Bulletin, the Asian Development Review and this journal.

Along with his close life-long friend Jusuf Wanandi, he was one of the found-ers of the inluential ‘second track’ network of regional strategic institutes, the ASEAN Institutes of Strategic and International Studies (ISIS). Within this group-ing he played a key role in developgroup-ing the network of economists. He also chaired the International Steering Committee of the PAFTAD (Paciic Trade and Develop-ment) conference series, and the Expert Group of the Economic Research Institute for ASEAN and East Asia (ERIA) in Jakarta. He was inluential in the establish-ment of the latter.

His institutional board memberships were equally diverse. He was always active in the Indonesian Economists Association and had been a member of its cen-tral board since 1987. Other long-running memberships included the Indonesian National Committee of the World Energy Conference; the Indonesian Institute of Energy Economics; the Indonesian National Committee for Paciic Economic Cooperation; the International Advisory Board of the Asia Society (USA); the Tifa Foundation, including as its irst chairman; the Association of German Alumni; the Department of Education and Culture’s jury for the Youth Scientiic Writing Contest; and the Indonesia Forum Foundation.

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Oficial government assignments and responsibilities were no less extensive. For example, activities just over the past decade included membership of Indo-nesia’s National Economic Council (DEN); the expert group on the feasibility of an East Asian Free Trade Area (and various successor proposals); the ASEAN Plus Three Expert Group; the ASEAN–Korea Eminent Persons Group; and the India– Indonesia joint study group (as co-chair). His private sector activity was more limited, but since 2005 he had served as an independent commissioner for three Indonesian companies, Semen Gresik, Sepatu Bata and Adira Finance.

MAJOR INTELLECTUAL AND POLICY INTERESTS

As his international reputation developed, Hadi would typically make about a dozen presentations annually at international conferences, as well as many in Indonesia. As a result he produced 20 or more papers each year. The sheer demands on his time (and the fact that he never refused a request from his many close friends) meant that he did not always have the opportunity to ‘dot all the ‘i’s and cross all the ‘t’s’ in these papers, and hence to send them to inter-nationally refereed outlets. But there is a richness and diversity in this output that is remarkable, and in the process Hadi initiated thinking about big policy and analytical issues that paved the way for others to do more detailed follow-up work.

He made seminal contributions to several ields. We highlight some of these, guided also by the four papers he regarded as his most signiicant in one way or other (see ‘Selected publications’ below).

Hadi was always attracted to the political economy of economic policy. As with the best work in this ield, he would think through the ‘irst-best’ analytics, and then develop his arguments cognisant of the political constraints and reali-ties. Although he was not formally trained as a political scientist, he had an intui-tive grasp of political economy issues. His 1989 Asian Survey article, ‘The political economy of deregulation in Indonesia’ (Soesastro 1989a), is a masterly analysis that has become the standard reference for understanding how and why Indo-nesia’s comprehensive 1980s economic policy reforms were successful. The con-text is well known to Bulletin readers. As international oil prices fell sharply in the early 1980s, Indonesia could well have succumbed to the debt crisis that hit many other developing country commodity exporters, especially given the powerful domestic opposition – both ideological and personal – to the kinds of reforms that were needed.

As Hadi explained it, the central elements were the intellectual expertise of the technocrats in judging what reforms were needed, and their adroit political man-agement in persuading then President Soeharto of the case for reform. The key was, in his words, ‘low politics’, the introduction of successive reform packages in a pragmatic, non-ideological fashion, avoiding grander philosophical debates. To engage in the latter

… would result in a political polarization even within the government itself that would be of much greater intensity than the clashes of interest and development ideas that … characterized the opposing camps on the issue of deregulation in its initial years. Thus it appears that the best strategy to keep the deregulation policy going is to keep the debate at the level of ‘low politics’ (Soesastro 1989a: 866–7).

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The emphasis was instead on ‘winning over a new constituency for further reform’, as Hadi put it, approvingly quoting a former coordinating minister for economics, Ali Wardhana.

Hadi returned to these political economy themes on a number of occasions, always carefully crafting the arguments to suit the circumstances. For example, in a 2005 paper with Chatib Basri, he examined the political economy of trade policy a few years after the economic crisis, noting that Indonesia is a relatively open economy ‘and deserves much credit for its unilateral liberalization’ (Soesastro and Basri 2005: 8). However, there was concern about ‘creeping protectionism’. ‘Patron client relationships are still strong, and the increasing role of extra-state actors has enabled various interest groups to organize lobbies for trade protection …’ (Soesastro and Basri 2005: 10).

How to achieve greater economic integration and cooperation in ASEAN and

the broader East Asian region, consistent with openness at home and international

engagement, was arguably Hadi’s principal policy and intellectual engagement over the past quarter-century. It is dificult to think of any other Southeast Asian academic with Hadi’s breadth of contacts, depth of analytics and clarity of vision. In the 1990s, much of this work was focused on ASEAN. Then, as the issues and players widened, he became a major voice in East Asia. Hadi never deviated from his belief in an outward-looking Indonesia and ASEAN, with the opportunities and responsibilities attached to such a role.

His 2006 Asian Economic Policy Review paper, ‘Regional integration in East Asia: achievements and future prospects’ (Soesastro 2006), is perhaps the clearest artic-ulation of his thinking on these issues. He employed a framework for thinking about regional integration as comprising market integration, functional integration and institutional integration. He argued that the irst of these has been the major driver, in turn explained by rapid unilateral liberalisation, the rise of global pro-duction chains and the fact that Southeast Asian regional trade agreements have generally not been import-substituting in orientation. He saw ASEAN as the central hub for the evolving regional architecture. Importantly, he noted that ‘[i]deally, the hub should extend the same preferential treatment to all spokes’ (Soesastro 2006: 228), in other words endorsing the principle of open regionalism. He also observed the important contribution of ASEAN through its undemanding rules-of-origin requirements.

Nevertheless, he recognised the challenges associated with this elevated role for ASEAN. First, ‘ASEAN … is a relatively weak hub as it is dealing with eco-nomically more powerful economies’. Second, there is a need for greater political will. Here Hadi expressed his impatience with the pace of progress (Soesastro 2006: 232):

In the immediate future, not much can be expected from the East Asian Summit. … Leaders in China and Japan must show their statesmanship. China must stop its Japan-bashing, and Japan must come to terms with its own past … Unless this is done in good faith, it is simply futile for the group to begin to seriously articulate the vision for East Asia …

Moreover, when he felt that his much-cherished ASEAN needed to lift its game, he would occasionally say so, bluntly. For example, commenting on the role of ASEAN in the wake of the Asian inancial crisis, he observed (Soesastro 1999: 158–9):

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The public has been largely disappointed with ASEAN. Its perception is that of a helpless ASEAN, an ASEAN that cannot move decisively, an ASEAN that is trapped under its organizational and bureaucratic weight, and an ASEAN that fails to respond to real, current problems and challenges.

Among the four signiicant articles Hadi nominated, the least known inter-nationally was his work on the economy of East Timor. Since the mid-1980s he had taken a close personal interest, arguably more so than any other Indonesian economist. No doubt he was attracted to the study of East Timor for several rea-sons: its extreme poverty and hardship, the controversial manner of its incorpo-ration within Indonesia in 1975, the negative attention it received in Indonesia’s dealings with the west, and personal connections through the Catholic church and some young East Timorese staff members at CSIS.

For East Timor, Hadi identiied the key economic challenge as ‘economic viabil-ity’ (Soesastro 1989b). When these were highly sensitive matters in Indonesia, he wrote frankly about the economic costs of East Timor’s annexation, the continu-ing security challenges, and the rent-seekcontinu-ing associated with the award of special commercial privileges to businesses operating in the then Indonesian territory. He concluded (Soesastro 1989b: 228):

More than [for] any other region in Indonesia, the goal of fostering East Timor’s eco-nomic and social development poses dificult and delicate challenges … Its deep-seated and long-standing problems of poverty, the circumstances surrounding the civil war and its integration into Indonesia, the security situation, and continuing problems of apathy and low morale in some quarters all contribute to making East Timor a test case for the Indonesian government’s commitment to equitable region-al development.

More than a decade later (Soesastro 2001), Hadi returned to these themes, now in the context of challenges for a new nation state. He also provided a clear and far-sighted analysis of economic and political options for the emerging relation-ship between Indonesia and East Timor. Stressing the likelihood that Indonesia would become East Timor’s principal trading partner, he considered a range of practical ‘separation’ issues, including the treatment of Indonesian property in East Timor (such as that owned by state-owned enterprises like Pertamina), the settlement of commercial claims, the repatriation of refugees, the case of families of dual nationality, the education of young East Timorese in Indonesia and the use of the Indonesian currency in East Timor. He also emphasised Indonesia’s responsi-bilities towards an independent East Timor, again a highly sensitive issue at home (Soesastro 2001: 93):

Indonesia must recognize its gross mishandling of the territory for 24 years and contribute actively to the healing of the deep wounds between the two countries.

HADI THE PERSON

Hadi had wonderful personal skills. He was modest, exquisitely courteous, even-tempered, unselish, and unfailingly loyal to his friends and colleagues. He treated all people equally, from heads of state to students and his personal staff. He moved effortlessly across international boundaries, cultures, classes and age groups. He took particular interest in his younger staff, nurturing them and their

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careers and paying attention to their personal as well as their professional devel-opment. Such was his moral authority that he never needed to raise his voice, even when passionately arguing for a cause. He had seemingly endless reserves of energy, travelling constantly, but always remaining unlappable and engaged.

The many tributes from CSIS staff described him as leader, mentor, teacher, father igure and friend. His successor as Executive Director described him as a ‘true intellectual’, but a person who was humble and never boasted about his achievements. A loyal administrative staffer remarked that in 38 years of working for him she ‘never saw him angry’.

Although quietly spoken, Hadi had a wonderful, under-stated sense of humour. For example, at the time of the Asian inancial crisis, when things were really gloomy in Indonesia, he once quipped that there are two international ratings agencies – ‘one has poor standards while the other is moody’!

What drove him and enabled him to achieve so much? First, his intellectual capabilities were of a very high order, as was his uncanny ability to explain com-plex technical issues in a clear and simple manner. He grew up in very interesting, transformative times, in a family and social milieu that nurtured his intellectual inclinations, his way of thinking, his open-mindedness and his ability to articu-late.

Second, he had a strong sense of mission and public service, combined with a strategic political mindset. He possessed these qualities from a relatively young age, as a boy scout, as a student activist in Malang and Aachen, and most of all in his able leadership of CSIS.

Third, and related, his capacity for leadership, in creating and running organisa-tions and networks, was evident very early, no doubt inspired by the role models in his family and community. His friends were continually amazed at his ability, willingness and passion to organise. And this was not just in the world domain, of international conferences, ‘second track’ forums and the like; it extended to the social and creative, including weddings, painting exhibitions and musical per-formances.

Fourth, he combined these qualities with those of a reined gentleman of impec-cable taste. Relecting his family interests, he had a life-long passion for books and reading. This was always evident in the way he ran the many CSIS publications, which included attention not only to substance but also to the layout and even the font and colour scheme of the cover. Staff members at CSIS quickly learnt that nothing is published, printed or displayed without approval based on the ‘good eye’ of Hadi.

He was sustained in his endeavours by his loving wife, Janti, and their two sons, Auguste (Agus) and Albert, who are both, like their father, turning out to be cosmopolitan international role models for a fast-changing Indonesia. Mention must be made of the family’s most important ‘hobby’ in a packed and busy life: their dogs. The Soesastro household was famous for its four-legged members. These could number more than two dozen, of assorted varieties and breeds from all over the world (several indeed were experienced international air travellers!), from pedigrees to three-legged strays picked up on the Jakarta streets. Such was the talent of these dogs that it was not unknown for them to ‘author’ the annual Soesastro family Christmas card, explaining their origins, how they had come to

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be members of the Soesastro family, and the sort of news they thought friends of the Soesastro family all around the world might be interested in.

Hadi received numerous awards and honours. In 1995, on the occasion of Indo-nesia’s 50th anniversary of independence, he was awarded the Dharma Karya Pertambangan dan Energi (Mining and Energy Award). In 2009 he received an honorary doctorate from the Australian National University.

His noble spirit lives on in his work, his vision and his mission. He may be remembered in one of his last pronouncements, from his 2009 Christmas letter to friends:

Christmas 2009 is meant to be one that changes the way I view life. … And yet I see no reason why Christmas is not a cause for celebration. There is something impor-tant about the notion of these two simple words, ‘to be’ (existence, life, relations to nature and the higher order of things) that I am learning from the experience of trying to deal with an illness. And, I want to share this with you. … Please join me in lighting a candle to life and all there is to it.

SELECTED PUBLICATIONS

Those marked * are the papers that Hadi observed were the ones ‘to have been most frequently cited in academic or policy circles’.

1980

‘Basic energy budgets of rural households in Indonesia’, The Indonesian Quarterly 8 (1): 21–38. *

1989

a ‘The political economy of deregulation in Indonesia’, Asian Survey 29 (8): 853–69. * b ‘East Timor: questions of economic viability’, in Unity and Diversity: Regional Economic

Development in Indonesia since 1970, ed. H. Hill, Oxford University Press, Singapore: 207–30. *

1999

‘ASEAN during the crisis’, in Southeast Asia’s Economic Crisis: Origins, Lessons and the Way Forward, eds H.W. Arndt and H. Hill, Institute of Southeast Asian Studies, Singapore: 158–69.

2001

‘East Timor’s economic relations with Indonesia’, in East Timor: Development Challenges for the World’s Newest Nation, eds H. Hill and J. Saldanha, Institute of Southeast Asian Stud-ies, Singapore: 84–96.

2005

‘The political economy of trade policy in Indonesia’, ASEAN Economic Bulletin 22 (1): 3–18 (with M. Chatib Basri).

2006

‘Regional integration in East Asia: achievements and future prospects’, Asian Economic Policy Review 1 (2): 215–34. *