Suharto's New Order 1967–1998 — 32 Years of Stability, Development, and Autocracy

From Suharto's seizure of power in March 1967 to his resignation on 21 May 1998 — 31 years — was the longest single regime in modern Indonesian history. The label New Order (Orde Baru) defined itself against Sukarno's Old Order (Orde Lama). The era temporally overlaps with South Korea's military-led developmentalism under Park Chung-hee and Chun Doo-hwan, and shares many features: developmental autocracy + anti-communist, pro-US alignment + military-civilian rule. That Bali's tourism industry began as national strategy in this period makes it a key Part of the Field Notes.

A. The Political System of the New Order

Suharto's regime rested on three pillars:

1. Dwifungsi ABRI (Dual Function of the Armed Forces) — The military's right to intervene in both defense and political-social affairs. 15–20% of parliamentary seats appointed by the military, with military personnel placed in local government, state enterprises, and the press.
2. Golkar (Functional Group) — Disguised as a functional group rather than a political party, it served as the ruling apparatus. It won over 70% in six consecutive elections (1971, 1977, 1982, 1987, 1992, 1997).
3. Pancasila Ideology — The sole legal ideology. PKI activities, atheism, and religious critique were all banned.

Opposition was forced into two parties — PDI (Democratic Party, the Sukarnoist successor) and PPP (United Development Party, Islamic) — combined with Golkar into a three-party system from 1969 that blocked any unfavorable candidate.

Press freedom was severely restricted. In 1994, three major magazines — Tempo, DeTik, Editor — were permanently banned after publishing government criticism. Internet censorship, email surveillance, and a KGB-style intelligence agency (BAKIN, later BIN) operated openly.

Sources: New Order (Indonesia) · Suharto · Golkar · Dwifungsi

B. Economic Development — The Berkeley Mafia and Five-Year Plans

The achievement of the New Order was economic stability. Inflation fell from over 600% in 1966 to the 10s by 1968. Annual GDP growth of 7%+ through the 1970s–80s. GDP per capita rose from USD 50 in 1968 to USD 1,200 in 1996 — a 24-fold increase.

The architects were the Berkeley Mafia — a circle of US-trained economists (Widjojo Nitisastro, Emil Salim, Ali Wardhana, and others). They designed the Repelita (Five-Year Development Plans) — six in total from 1969.

Key policies:

• Green Revolution (1970–1985) — Bimas and Inmas agricultural programs; rice self-sufficiency achieved in 1984
• Oil boom (1973·1979 oil shocks) — Pertamina as the core foreign exchange earner
• Export diversification (1980s) — apparel, electronics, plywood after oil prices fell
• Jakarta infrastructure — Soekarno-Hatta Airport (1985), Bali Beach Hotel (1996), etc.

In 1996 Indonesia was classified as an East Asian Tiger, and was a candidate for OECD membership in 1997. The following year, Krismon turned everything upside down.

Sources: Berkeley Mafia · Repelita · Indonesian rupiah

C. The 1971 Master Plan for Bali Tourism — Why Bali Became a Tourist Island

In 1969, the World Bank recommended that Indonesia commission a Master Plan for Bali Tourism. The 1971 plan, prepared by the French consultancy SCETO:

• Concentrate Nusa Dua as a 5-star resort enclave
• Sanur for mid-range hotels
• Kuta·Legian for the backpacker zone
• Ubud·Tampaksiring as cultural tourism
• Reserve the rest of Bali for agriculture and tradition

This spatial separation strategy is the original template for Bali's tourism map today. The Garuda direct flight to Bali opened in 1972, the Pertamina Cottages (the first 5-star) in 1975, and the Bali Beach Hotel·Sanur Beach Hotel and others followed in the 1980s.

Bali's livelihood structure shifted rapidly from rice farming and crafts to tourism services in this period (see 5.1). Visitors to Bali increased fourteenfold from 100,000 in 1971 to 1.4 million in 1996. The structural fact that over 50% of Bali's GDP comes from tourism was cemented.

Sources: Tourism in Bali · Nusa Dua · Picard M., Bali: Cultural Tourism and Touristic Culture (Archipelago Press, 1996)

D. The Invasion of East Timor (1975–1999)

On 7 December 1975, the New Order government invaded East Timor, just nine days after the leftist Fretilin government declared independence following Portugal's withdrawal. With tacit approval from the US and Australia and including events such as the 1991 Santa Cruz massacre, an estimated one-quarter of East Timor's population (~180,000) died over 24 years.

The invasion was the dark side of the New Order and drew increasing international criticism. The 1996 Nobel Peace Prize to Carlos Belo and José Ramos-Horta (East Timorese independence figures) intensified pressure. In August 1999, President Habibie (Suharto's successor) permitted a referendum — 78.5% voted for independence — and Timor-Leste gained independence on 20 May 2002.

Sources: Indonesian invasion of East Timor · Santa Cruz massacre · Carlos Belo

E. The 1997 Asian Financial Crisis (Krismon) and Resignation (May 1998)

The Asian financial crisis triggered by Thailand's baht devaluation in July 1997 struck the rupiah. The exchange rate went from 2,400 IDR/USD in July to 16,000 IDR/USD by January 1998 — an 85% collapse. Inflation surged past 60%, unemployment rose, and food prices spiked.

The IMF bailout (USD 43 billion in total) carried painful conditions — ending subsidies, privatizing state companies, opening financial markets. When fuel subsidies were lifted on 4 May 1998, prices jumped 71%.

On 12 May, four Trisakti University students were shot by snipers at a protest. The next day, the May 1998 Riots (Kerusuhan Mei 1998) erupted in Jakarta — 1,200 killed; mass rapes of Chinese-Indonesian women. Reformasi (reform) demands swept the country.

At 9 a.m. on 21 May, Suharto resigned in a brief speech transferring power to Vice President Habibie. Thirty-two years ended. Jakarta erupted at Merdeka Square, and protesters hoisted the Indonesian flag from the roof of the parliament building.

Suharto was indicted on corruption and human-rights grounds, but poor health delayed his trial; he died in January 2008 untried. Transparency International estimated his total embezzlement at USD 15–35 billion — recorded as the most corrupt individual of the 20th century.

Sources: 1997 Asian financial crisis · Fall of Suharto · May 1998 riots of Indonesia · Reformasi (Indonesia)

F. Assessing the Suharto Era

Positive:

• Economic stability and growth (24× rise in GDP per capita)
• Rice self-sufficiency (1984)
• Infrastructure (roads, power, ports, airports) via Five-Year Plans
• Tourism industry nationalized as strategy — Bali, Yogyakarta, Lombok

Negative:

• 32 years of one-man autocracy
• Suppression of press and political activity
• East Timor invasion (180,000 dead)
• Cover-up of the 1965–66 mass killings
• Corruption — family and inner-circle konglomerat (chaebol-like) formation
• The shock of Krismon — 1998 GDP at –13.1%

The Suharto legacy is complex: the cause of "order and development" intertwined inseparably with the reality of "autocracy, corruption, and violence". After the 1998 resignation, the Reformasi era (1.1.5) became the process of settling this inheritance.

Sources: Schwarz A., A Nation in Waiting: Indonesia in the 1990s (Westview Press, 2nd ed., 1999); Hill H., The Indonesian Economy (Cambridge University Press, 2nd ed., 2000)

Quick Summary

Sources / References

• Wiki — New Order (Indonesia) · Suharto · Fall of Suharto · 1997 Asian financial crisis · Indonesian invasion of East Timor · Tourism in Bali
• Official — Badan Pusat Statistik (BPS) — 1968-1998 GDP statistics · Bank Indonesia — Krismon white paper · Komnas HAM — May 1998 report
• News — Financial Times — "Suharto: The richest looter of 20th century" (2004) · The New York Times — Suharto obituary (2008-01-27) · Yonhap — Korea-Indonesia Krismon comparative coverage
• Academic — Schwarz A., A Nation in Waiting: Indonesia in the 1990s (Westview, 2nd ed., 1999); Picard M., Bali: Cultural Tourism and Touristic Culture (Archipelago Press, 1996); Hill H., The Indonesian Economy (Cambridge University Press, 2nd ed., 2000); Robinson G., The Dark Side of Paradise (Cornell, 1995); Vickers A., A History of Modern Indonesia (Cambridge, 2nd ed., 2013)