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Bulletin of Indonesian Economic Studies

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

MOH. SADLI (1922–2008), ECONOMIST, MINISTER

AND PUBLIC INTELLECTUAL

Hal Hill & Thee Kian Wie

To cite this article: Hal Hill & Thee Kian Wie (2008) MOH. SADLI (1922–2008), ECONOMIST, MINISTER AND PUBLIC INTELLECTUAL, Bulletin of Indonesian Economic Studies, 44:1, 151-156, DOI: 10.1080/00074910802001553

To link to this article: http://dx.doi.org/10.1080/00074910802001553

Published online: 16 Jul 2008.

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MOH. SADLI (1922–2008),

ECONOMIST, MINISTER AND PUBLIC INTELLECTUAL

Hal Hill Thee Kian Wie

Australian National University Indonesian Institute of Sciences, Jakarta

Mohammad Sadli, who passed away on 8 January, aged 85, was one of the most signifi_cantfi_{gures in modern Indonesia. He was a member of the remarkable} group of economists dubbed the ‘Berkeley Mafi_{a’ who transformed the} Indo-nesian economy from the despair of the early–mid-1960s to the unparalleled pros-perity that prevailed for three decades under Soeharto. A long-time professor at the Faculty of Economics of the University of Indonesia (FEUI), Sadli was one of the country’s leading public intellectuals, with periods as academic, cabinet min-ister, public commentator and business adviser. He was a national fi_{gure at the} centre of public debates for half a century, always the voice of reason, tolerance and good judgment.

Born in Sumedang, West Java, Sadli had a moderately privileged upbring-ing. He gained admission to the Hogere Burgerschool (HBS, a Dutch secondary school) in Semarang. This was a prestigious Dutch ﬁ_{ve-year secondary school} that was open to only a relatively small number of Indonesians from prominent families. As a result, as Sadli used to say, he became ‘half Dutch’. He recalls in his memoir in this journal (Sadli 1993) the importance of his thorough and broad education at the HBS.

As with many of his generation, his education was interrupted by war and the independence struggle. In 1940 he enrolled in civil engineering at the Technische Hogeschool (TH, School of Engineering) in Bandung, the forerunner of today’s ITB (Bandung Institute of Technology). He was forced to suspend his study dur-ing the Japanese occupation and went to Yogyakarta to become a teacher. These years were an important part of his life, and he developed contacts with other young Indonesian nationalists, notably Sarbini Sumawinata. Through them, Sadli became interested in politics and economics. He also began to converse in Indo-nesian for the ﬁ_{rst time, because the Japanese had banned the use of Dutch.}

After Indonesia’s independence in 1945, he resumed his studies in the School of Engineering at Gadjah Mada University, graduating in 1952. With his develop-ing interest in economics, he was invited in 1953 by the inaugural Dean of FEUI, Sumitro Djojohadikusumo, to become his research assistant. The commanding Sumitro quickly became his role model. A year later he was sent to the Massachu-setts Institute of Technology for a two-year Masters program, with another year of postgraduate study at the University of California, Berkeley. These were his ﬁ_rst serious exposures to modern economics.

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152 Hal Hill and Thee Kian Wie

Returning to Indonesia in 1957, he found FEUI ‘almost empty’ (Sadli 1993). As a result of Indonesia’s worsening relations with the Netherlands over the West Irian dispute, all of the Dutch professors had left. Sumitro had ﬂ_{ed the} coun-try on account of his involvement in the failed PRRI rebellion,1_{while many of} Sadli’s contemporaries were still studying abroad. The three senior faculty mem-bers, Sadli, Subroto and Marjono, therefore faced the difﬁ_{cult task of running the} faculty. Sadli was assigned to head its Institute of Economic and Social Research (LPEM). He also completed and successfully defended at FEUI the doctoral dis-sertation on industrial economics that he had been working on in the US.

Sadli had another year abroad, in 1963–64, at Harvard. By then FEUI was barely functional. It was deeply polarised between mainstream and leftist economists, with the former increasingly side-lined. (He once quipped that he spent much of 1965 reading novels at home!) However, under the leadership of Professor Widjojo Nitisastro, the university’s group of mainstream economists remained intact and pressed the case for reform whenever they could. Fortuitously, they kept in contact with sections of the armed forces, notably through the Bandung Staff and Com-mand School of the Army (Seskoad), where they met Major General Soeharto.

Once Soeharto had assumed effective control of the country in March 1966, these economists moved to centre stage and were progressively inducted into the cabinet. This was a momentous phase in the country’s economic history: hyper-infl_{ation was quickly brought under control, investment increased and growth} resumed. Looking back at this period, it is diffi_{cult to imagine a more talented} group of economists in cabinet anywhere in the world, with Widjojo, Ali Ward-hana, Sadli, Emil Salim, Subroto, Radius Prawiro, Sumarlin, Saleh Afi_{ff and others} among its members.

Sadli was assigned several major tasks. One was to establish an attractive for-eign investment environment, in a country where virtually all forfor-eign capital had either been nationalised or driven out. To this end, in 1967 he was appointed the ﬁ_{rst chairman of the Technical Team for Foreign Investment, the forerunner of the} current Investment Coordinating Board (BKPM), and he began to negotiate deals with foreign investors.

He formally joined the cabinet in 1971, ﬁ_{rst as Manpower Minister (1971–73)} and then as Minister of Mining (1973–78). Neither was an easy portfolio. The Department of Manpower (deliberately termed that, rather than the more political ‘Labour’, which was associated with communist labour agitation) presided over a heavily managed labour relations system, especially in the wake of the recent purge of leftist elements. The Department of Mining was more to his liking techni-cally, and it set up his long association with the industry. However, he assumed the portfolio at the peak of the 1970s oil boom, when the state-owned oil company, Per-tamina, was being run almost as a personal ﬁ_{efdom by its then president director,} the colourful General Ibnu Sutowo. When the company later crashed spectacularly in 1975, leaving debts of $10 billion—then equivalent to one-third of the country’s GDP—it was Sadli and his colleagues who had to clean up the mess.

Sadli was the fi_{rst of the so-called Berkeley Ma}fi_{a to leave the cabinet. He was} not reappointed in 1978. He never offi_{cially explained the reasons, but they were}

1 A rebel movement in West Sumatra in the late 1950s, known as the Pemerintah Revolu-sioner Republik Indonesia (Revolutionary Government of the Republic of Indonesia).

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probably two-fold: he arguably lacked the ﬁ_{re and ambition to continue in} politi-cal life, and he felt a certain ambivalence (alongside a great deal of respect) for Soeharto’s heavy-handed style of government.

Leaving cabinet, while remaining close to the inner circles of government, Sadli embarked on a new career that included an extraordinarily wide range of domes-tic and international activities. These years were arguably among the happiest of his life. He had become one of the third world’s best known and most respected economists and, freed from his ministerial responsibilities, he received a never-ending ﬂ_{ow of invitations for conferences, high-level committees and advisory} work. These invitations were in recognition of his many strengths: his technical competence, his ability to get to the core of an issue, his credentials in having con-tributed to one of the great development success stories of the second half of the 20th_{century, and his charm and negotiating skills.}

He served for three years as secretary general of Kadin, the Indonesian Cham-ber of Commerce and Industry, and subsequently was director of its ‘think tank’, the Institute for Economic Research and Development (LP3E-Kadin). He was invited to join the boards of several major companies, especially in the mining industry. In the 1990s, he served as chair of the Indonesia Forum Foundation, a group established by the Association of Indonesian Economists (ISEI) to promote informal, policy-oriented discussion among academics, business people and gov-ernment ofﬁ_{cials. In addition, he continued to hold his post at FEUI, and to keep} in regular contact with the student community.

From 1992 to 1995, Soeharto chaired the Non-Aligned Movement. One of his decisions was to invite seven prominent Indonesian economists, including Sadli, to advise the non-aligned countries on their debt problems. Sadli and his col-league Emil Salim visited several African countries, and established ties with Afri-can economists, including those associated with the AfriAfri-can Economics Research Consortium. This led to major conferences in 1997 and 1998 involving economists from Africa and East Asia, both unfortunately somewhat overtaken by the Asian economic crisis.

From the early 1990s, without ever consciously setting out to do so, he devel-oped what became arguably the most widely read email network on the Indo-nesian economy. Its origins were typically Sadli—an interest in many issues, and a very wide circle of friends and colleagues all round the world. He would read material and circulate it, while friends would send him pieces. The contents also reﬂ_{ected the man and his interests. There were his regular commentaries on} Indo-nesian politics and the economy, for outlets such as Business News, Kompas, Tempo

and Koran Tempo. But the content of his email distributions was much broader than this. It would range from the latest intellectual developments in economics to major development issues in the ‘South’, and to radical critiques of the Soeharto regime. It was not uncommon for Sadli to add a pithy or humorous comment on the pieces he circulated. Sadli’s self-discipline and intellectual stamina were evi-dent from the fact that the ﬂ_{ow of written material continued until he was well} into his eighties; for example, during the period 2001–06 he wrote 141 columns and opinion pieces, principally for the above outlets.

Sadli was eminently qualiﬁ_{ed as a technical economist, but his strength as a} policy maker and public intellectual lay also in his capacity to comprehend the socio-political context of economic development, to articulate frankly issues of

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community concern, and to write about complex economic issues in a manner understandable to a lay readership. He was arguably without peer in this respect in Indonesia, and he was at his most forthright during difﬁ_{cult and challenging} times. For example, in the immediate aftermath of the Asian economic crisis, and not without some personal risk, he wrote increasingly critical articles on Soehar-to’s handling of the crisis. After SoeharSoehar-to’s fall, he never shied away from criti-cising the simplistic and populist views of ‘nationalist’ commentators, whom he chided as ‘supernationalists’.

He is sometimes credited with the formulation of what is occasionally referred to in Indonesia as ‘Sadli’s Law’. Its precise origins are not known, but the essential notion is that ‘bad times may produce good economic policies, and good times frequently the reverse’. This was no doubt based on the experience of Sadli and his colleagues, who had the ear of Soeharto when he really needed their advice, in the 1960s and the ﬁ_{rst half of the 1980s.}

Three quotes illustrate Sadli’s rare and remarkable attributes, as well as under-lining his persuasive powers of communication. The ﬁ_{rst, from 1973, shows his} concern that the policy reforms his group presided over, while generating rapid economic growth, may have been having some negative social consequences:

Nowadays, villages are humming with small Japanese … rice hullers. These in-novations proﬁ_{t the landowners … The rice is better polished, less broken and} hence fetches a better price …. Yet as a result many female workers engaged in hand pounding are displaced with [adverse distributional effects]. These shifts in employment and income distribution will probably never be registered in a census, … but they can shake the foundations of village life.

The second quote, from the mid-1970s, reveals frankly his sober and clear-headed approach to attracting foreign investment back into the country from the late 1960s:

When we started out attracting foreign investment in 1967, everything and every-body was welcome. We did not dare to refuse; we did not even dare to ask for bonafi_{dity of credentials. We needed a list of names and dollar}fi_{gures of intended} investments, to give the credence to our drive. The fi_{rst mining company virtually} wrote its own ticket.

The third, from 1988, reminds the reader that, highly desirable though the major and successful deregulation reforms of the 1980s were, there remained a deep-seated mistrust of liberalism in Indonesia:

When the New Order government came in, it abolished the extensive price controls of the old regime because it wanted to rely on the price mechanism for the alloca-tion of resources. Such is still the ruling policy, but old habits die hard. One of the economic doctrines of the New Order is that it is against ‘free ﬁ_{ght competition’,} because the latter is too much identiﬁ_{ed with ‘capitalism’, which even the New} Order cannot embrace.

Sadli wrote very little about himself and his personal philosophy. He was a modern, broad-minded Moslem intellectual, who never wore his religion on his

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sleeve. After 9/11 he once quipped that ‘it will be difﬁ_{cult for me to visit the US} because my name is Mohammad!’ He never to our knowledge had any formal political association. His views were shaped by his times and by his sense of prag-matism as to which economic policies were politically and institutionally feasible. Growing up as a member of the tiny intellectual elite of colonial Indonesia, his opinions were arguably closest to those of Fabian and Dutch socialist circles. In the 1950s the Mahalanobis model of Indian central planning had some appeal. During the late Soekarno era, when it appeared that Indonesia might become a socialist country, he drew on the work of Oskar Lange to show how modern economics and socialist principles might be blended. He received his economics training in the US when Keynes was in the ascendancy, and these various schools of thought comfortably co-habited. However, he witnessed at ﬁ_{rst hand the} dev-astating effects of nationalism and ‘socialisme à la Indonesia’, and the traumatic events of the period 1958–65 no doubt tempered his advocacy of central planning models, and of interventionist strategies more generally.

Cosmopolitan, witty, engaging, charming, urbane and perennially optimistic, Sadli was also an earthy and humble person with a remarkably diverse array of acquaintances. He was extraordinarily accessible and friendly. Visiting his resi-dence at Jalan Brawijaya IV/24, one might encounter a Japanese businessman seeking advice, a European graduate student or an Australian journalist con-ducting an interview, a newly arrived diplomat receiving an informal brieﬁ_{ng, a} former cabinet minister reminiscing, or a bupati (district head) from Central Java soliciting support. He was very supportive of his younger ministerial successors and played a useful mentoring role for them.

He was comfortable in the Dutch, English and Indonesian languages, and would switch frequently between them, often in mid-sentence! He loved debate and banter. In a public forum, when asked to comment, he would often say, ‘I don’t know anything about this; ask X’. Then, after the discussion had proceeded for a while, he would interject with ‘Look, look, look …’ and then typically get to the heart of the matter. This was not a debating tactic, as it may have been for others, but a genuine desire to listen to alternative viewpoints.

His achievements have been widely recognised. Two Festschrifts were produced in his honour by the economics profession, to commemorate his 70th_{and 80}th

birth-days (Arsjad Anwar, Thee and Azis 1992; Ikhsan, Manning and Soesastro 2002). Various collections of his papers were published: by Business News on the occasion of his 70th_{birthday; a set of 43 articles by the Freedom Institute in 2002 (Sadli 2002);}

and a further 98 articles by the Centre for Strategic and International Studies (CSIS) in 2006 (Sadli 2006). The FEUI’s LPEM and the Australian National University’s Indonesia Project have jointly established an annual Sadli Lecture series in Jakarta; the ﬁ_{rst lecture was presented in 2007 by Prema-chandra Athukorala of the ANU.}

Sadli leaves a wife, Saparinah, an equally remarkable and respected intellec-tual, a long-time professor of psychology at the University of Indonesia, and co-founder of its Postgraduate Women’s Studies Program. Sadli used to refer to her as his ‘soul mate’. Theirs was a happy marriage. Many friends and colleagues had the pleasure of dropping by at the annual ‘open house’ at their tasteful residence on the second day of Idul Fitri to enjoy the good food and wonderful company.

At Sadli’s funeral on 9 January at the Heroes’ Cemetery in South Jakarta, his long-time friend and colleague Emil Salim referred to him as a ‘decent man’. He

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was that and much more: a true Indonesian patriot, a brilliant economist, a great cosmopolitan intellectual, a wise guru and a generous friend.

REFERENCES

Arsjad Anwar, M., Thee Kian Wie and Azis, Iwan Jaya (eds) (1992) Pemikiran, Pelaksanaan dan Perintisan Pembangunan Ekonomi[Economic Development: Thinking, Implementa-tion and Pioneering], Faculty of Economics, University of Indonesia and PT Gramedia Pustaka Utama, Jakarta.

Ikhsan, Mohamad, Manning, Chris and Soesastro, Hadi (eds) (2002) Ekonomi Indonesia di Era Politik Baru: 80 Tahun Mohammad Sadli [The Indonesian Economy in a New Political Era], Penerbit Buku Kompas, Jakarta.

Sadli, Moh. (1993) ‘Recollections of my career’, Bulletin of Indonesian Economic Studies 29 (1): 35–51.

Sadli, Moh. (2002) Bila Kapal Punya Dua Nakhoda: Esei Esei Ekonomi Politik Masa Transisi [If a Ship has Two Captains: Political Economy Essays during the Transition Era], The Freedom Institute, Jakarta.

Sadli, Moh. (2006) Pemerintahan SBY–JK: Berﬁ kir Secara Ekonomis, Politis, atau Bisnis? [The Yudhoyono–Kalla Administration: Focusing on Economics, Politics or Business?], Cen-tre for Strategic and International Studies, Jakarta.

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