The Debate on Economic Policy in Newly-independent Indonesia between Sjafruddin Prawiranegara and Sumitro Djojohadikusumo

Abstract

In 1949, after a four-year long armed struggle, Indonesia finally achieved effective control over its entire territory, with the exception of West Irian (now Papua). Nevertheless, the young nation faced serious political and economic problems. The Japanese occupation and the long fight against the Dutch had seriously impoverished the Indonesian people. The new government also faced armed insurrections and secessionist movements in various regions such as Aceh, West Java, South Sulawesi, and the Moluccas, which threatened the country's territorial integrity. In late January 1950, scarcely one month after the transfer of sovereignty, Raymond Westerling (a rogue member of the Dutch army) along with a few hundred troops under his command, carried out an audacious but quixotic plan to occupy Bandung and Jakarta. Although this plan immediately failed, it increased the sense of vulnerability of the Indonesian government.