In the era of guided democracy,
President Soekarno runs guided economic system. In the mid-1960s, the political
situation and the economy in Indonesia were in the disaster. After independence
in 1945 (and termination of a conflict with the Netherlands in 1949), this
young country beset with internal politics are dangerous because some political
forces – including the military, nationalist, Islamist, parties and
Communist-mutual opposite each other. For a decade, Sukarno, Indonesia's first
President, enough success to stem the threat from these forces. The Indonesian
economy quickly deteriorated due to debt and inflation, while exports weakened.
Foreign exchange eamed from the country’s plantation sector fell from USD $442
million in 1958 to USD $330 million in 1966. Soekarno implemented the command economy
system as applied especially in the flow of Communist countries. Indonesia’s
economy is very bad caused by political instability in the country wich is
reflected, among others, by the occurrence of some rebellion in a number of
areas. The peak of the economic devastation Indonesia happened in 1966 toward
the and of a long period, i.e. the occurrence of hyperinflation which reached
650%.
