Economic legacy : From Dutch, to Indonesia Introduction Our beloved country Indonesia has colonized by some countries.

And every country that has colonized Indonesia, at least leave a legacy. Legacy is something thats heritaged by other to the another one and mainly, legacy is something thats still exist from long ago up until now. As the main title tells, of course this paper would mostly talk about legacy. Thats why Ive given the meaning of legacy earlier. But it isnt only a simple legacy. Its a legacy from Dutch, to Indonesia in economic sector. What is economy? In my opinion, economy is something related to money, something related to producer, distributor and clients. And economy is something thats caused by demand and supply thingy. The English words "economy" and "economics" can be traced back to the Greek words (i.e. "one who manages a household", a composite word derived from ("house") and ("manage; distribute")) and ("household management"). The first recorded sense of the word "economy" is in the phrase "the management of conomic affairs", found in a work possibly composed in a monastery in 1440. "Economy" is later recorded in more general senses, including "thrift" and "administration" An economy consists of the economic system of a certain country or region, which comprises the production, distribution or trade, and consumption of goods and services in that country or area. From an investment perspective, an economy depends on, and is limited by, available capital and resources, including land and labor. Moderate inflation in control on the price of goods on demand and supply helps to boost the overall economic growth. A little about economy Economy has some stage to evolve and the stage are :

The ancient economy which mainly based on subsistence farming. The industrial revolution phase that lessened the role of subsistence farming, converting it to more extensive and mono-cultural forms of agriculture in the last three centuries. The economic growth took place mostly in mining, construction and manufacturing

industries. Commerce became more significant due to the need for improved exchange and distribution of produce throughout the community.

The economies of modern consumer societies phase there is a growing part played by services, finance, and technologythe (knowledge economy).

Indonesias economic development in Dutch colonization era 1 16th 18th century Present-day research by scholars in pre-colonial economic history focuses on the dynamics of early-modern trade and pays specific attention to the role of different ethnic groups such as the Arabs, the Chinese and the various indigenous groups of traders and entrepreneurs. During the sixteenth to the nineteenth century the western colonizers only had little grip on a limited number of spots in the Indonesian archipelago. As a consequence much of the economic history of these islands escapes the attention of the economic historian. Most data on economic matters is handed down by western observers with their limited view. A large part of the area remained engaged in its own economic activities, including subsistence agriculture (of which the results were not necessarily very meager) and local and regional trade. An older research literature has extensively covered the role of the Dutch in the Indonesian archipelago, which began in 1596 when the first expedition of Dutch sailing ships arrived in Bantam. In the seventeenth and eighteenth centuries the Dutch overseas trade in the Far East, which focused on high-value goods, was in the hands of the powerful Dutch East India Company (in full: the United East Indies Trading Company, or Vereenigde Oost-Indische Compagnie [VOC], 1602-1795). However, the region was still fragmented and Dutch presence was only concentrated in a limited number of trading posts. During the eighteenth century, coffee and sugar became the most important products and Java became the most important area. The VOC gradually took over power from the Javanese rulers and held a firm grip on the productive parts of Java. The VOC was also actively engaged in the intra-Asian trade. For example, cotton from Bengal was sold in the pepper growing areas. The VOC was a successful enterprise and made large dividend payments to its shareholders. Corruption, lack of investment capital, and
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increasing competition from England led to its demise and in 1799 the VOC came to an end (Gaastra 2002, Jacobs 2000). 19th century In the nineteenth century a process of more intensive colonization started, predominantly in Java, where the Cultivation System (1830-1870) was based (Elson 1994; Fasseur 1975). During the Napoleonic era the VOC trading posts in the archipelago had been under British rule, but in 1814 they came under Dutch authority again. During the Java War (1825-1830), Dutch rule on Java was challenged by an uprising led by Javanese prince Diponegoro. To repress this revolt and establish firm rule in Java, colonial expenses increased, which in turn led to a stronger emphasis on economic exploitation of the colony. The Cultivation System, initiated by Johannes van den Bosch, was a stategoverned system for the production of agricultural products such as sugar and coffee. In return for a fixed compensation (planting wage), the Javanese were forced to cultivate export crops. Supervisors, such as civil servants and Javanese district heads, were paid generous cultivation percentages' in order to stimulate production. The exports of the products were consigned to a Dutch state-owned trading firm (the Nederlandsche Handel-Maatschappij, NHM, established in 1824) and sold profitably abroad. The heyday of the colonial export economy (1900-1942) After 1870, private enterprise was promoted but the exports of raw materials gained decisive momentum after 1900. Sugar, coffee, pepper and tobacco, the old export products, were increasingly supplemented with highly profitable exports of petroleum, rubber, copra, palm oil and fibers. The Outer Islands supplied an increasing share in these foreign exports, which were accompanied by an intensifying internal trade within the archipelago and generated an increasing flow of foreign imports. Agricultural exports were cultivated both in large-scale European agricultural plantations (usually called agricultural estates) and by indigenous smallholders. When the exploitation of oil became profitable in the late nineteenth century, petroleum earned a respectable position in the total export package. In the early twentieth century, the production of oil was increasingly concentrated in the hands of the Koninklijke/Shell Group. The momentum of profitable exports led to a broad expansion of economic activity in the Indonesian archipelago. Integration with the world market also led to internal

economic integration when the road system, railroad system (in Java and Sumatra) and port system were improved. In shipping lines, an important contribution was made by the KPM (Koninklijke Paketvaart-Maatschappij, Royal Packet boat Company) that served economic integration as well as imperialist expansion. Subsidized shipping lines into remote corners of the vast archipelago carried off export goods (forest products), supplied import goods and transported civil servants and military. The Depression of the 1930s hit the export economy severely. The sugar industry in Java collapsed and could not really recover from the crisis. In some products, such as rubber and copra, production was stepped up to compensate for lower prices. In the rubber exports indigenous producers for this reason evaded the international restriction agreements. The Depression precipitated the introduction of protectionist measures, which ended the liberal period that had started in 1870. Various import restrictions were launched, making the economy more self-sufficient, as for example in the production of rice, and stimulating domestic integration. Due to the strong Dutch guilder (the Netherlands adhered to the gold standard until 1936), it took relatively long before economic recovery took place. The outbreak of World War II disrupted international trade, and the Japanese occupation (1942-1945) seriously disturbed and dislocated the economic order. Indonesias economic condition on after independence 2 After independence, the Indonesian economy had to recover from the hardships of the Japanese occupation and the war for independence (1945-1949), on top of the slow recovery from the 1930s Depression. During the period 1949-1965, there was little economic growth, predominantly in the years from 1950 to 1957. In 1958-1965, growth rates dwindled, largely due to political instability and inappropriate economic policy measures. The hesitant start of democracy was characterized by a power struggle between the president, the army, the communist party and other political groups. Exchange rate problems and absence of foreign capital were detrimental to economic development, after the government had eliminated all foreign economic control in the private sector in 1957/58. Sukarno aimed at self-sufficiency and import substitution and estranged the suppliers of western capital even more when he developed communist sympathies. After 1966, the second president, general Soeharto, restored the inflow of western capital, brought back political stability with a strong role for the army, and led Indonesia into a period of economic expansion under his authoritarian New Order (Orde Baru) regime which lasted until 1997 (see below for the three phases in New Order). In this period industrial output quickly increased, including steel, aluminum, and cement but also products such as food, textiles and cigarettes. From the 1970s onward the increased oil price on the world market provided Indonesia with a massive income from oil and gas exports. Wood exports shifted from logs to plywood, pulp, and paper, at the price of large stretches of environmentally valuable rainforest.
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Soeharto managed to apply part of these revenues to the development of technologically advanced manufacturing industry. Referring to this period of stable economic growth, the World Bank Report of 1993 speaks of an 'East Asian Miracle' emphasizing the macroeconomic stability and the investments in human capital (World Bank 1993: vi). The financial crisis in 1997 revealed a number of hidden weaknesses in the economy such as a feeble financial system (with a lack of transparency), unprofitable investments in real estate, and shortcomings in the legal system. The burgeoning corruption at all levels of the government bureaucracy became widely known as KKN (korupsi, kolusi, nepotisme). These practices characterize the coming-of-age of the 32-year old, strongly centralized, autocratic Soeharto regime Indonesias economic condition nowadays 3 Today, the Indonesian economy still suffers from severe economic development problems following the financial crisis of 1997 and the subsequent political reforms after Soeharto stepped down in 1998. Secessionist movements and the low level of security in the provincial regions, as well as relatively unstable political policies, form some of its present-day problems. Additional problems include the lack of reliable legal recourse in contract disputes, corruption, weaknesses in the banking system, and strained relations with the International Monetary Fund. The confidence of investors remains low, and in order to achieve future growth, internal reform will be essential to build up confidence of international donors and investors. An important issue on the reform agenda is regional autonomy, bringing a larger share of export profits to the areas of production instead of to metropolitan Java. However, decentralization policies do not necessarily improve national coherence or increase efficiency in governance. Dutch legacy in Indonesia I believe that every country that has been colonized, will get some heritage or legacy from the country who colonized that certain country. And I believe that the legacy must been something that still exist nowaday in the country that has been colonized. But the legacy that Im going to mention is something thats related to economy. The legacy are : Senen market
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Senen market in Central Jakarta was built on 30-08-1735 is one of famous shopping centre in Jakarta. This market and its twin (a.k.a Tanah Abang market) was built by higher-ops of VOC named Justinus Vinks. On dutch colonialization time, there was so many chinese merchant in this market. And nowadays, this market is still the same. Crowded with many merchant. And full of trading activities. Just as the old times. Slingerland a.k.a Taman Impian Jaya Ancol 5
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Shahab,Alwi. Waktu Belanda Mabuk Lahirlah Batavia : 47-49 (with some translation and necessary add and/or edit)

Since 3 centuries ago, Ancol has already been recreation place especially for the Dutch to enjoy their weekend. At that time too, there were some Dutch ladies enjoying Ancols beach. Before there was a TIJA, this place was called as Bina Ria. This place is popular so that there was a song on early 70s titled Recreation at Bina Ria which was sang by Ernie Djohan And just for trivia, at that time, there was a rumor that some of driver whose crossing Ancols bridge must sound the horn so the driver wont be harmed by Aria (a.k.a the sweet one from Ancols bridge) and this Aria was dead when she tried to defend her virginity from a man who wanted to rape her. And I believe this rumor is still exist. Back to the topic, nowadays, Ancol has became a very popular place to go in Indonesia. Most of people will go to Ancol especially when it is a weekend and public/school holidays. Their income are very useful for both TIJA and government who takes a tax from TIJA. Glodok 6 Glodok was one of the oldest market in Jakarta. It is older than Tanah Abang market and Senen market which was built on 18th century. The name Glodok was originally from a name that sounds grojok-grojok on VOC times. And since Dutch colonization times, chinese people was already live here. Alongside with Glodok, there was a shopping district named {ancoran which once was a fountain where people took drinking water and take a bath. Glodok has a electronic centre which was known as Harco. It was built on 1970 by an Arabian named Abubakar Bahfen. In Harco, we could buy any electronic product with relatively cheap price and nowadays is dominated by Chinese product. In Dutch colonization times, this place was also crowded with chinese people who come and go. At that time, the chinese people has a braided hair and bald in front hairstyle. Up until now, even Glodok have to compete with other shopping center in Jakrta, its still the most prideful shopping center. And Glodok was once known as the place where money revolves.

Shahab,Alwi. Waktu Belanda Mabuk Lahirlah Batavia : 61-63 (with some translation and necessary add and/or edit) 6 Shahab,Alwi. Waktu Belanda Mabuk Lahirlah Batavia : 124-126, 168-172 (with some translation and\ necessary add and/or edit)

It has a difference between old times and nowadays. In the old times, Glodok is dominated by a residence even it is a market. But up until now, almost all of Glodok are just a shop. In this China town, we will get a number of sinshe which open healing practic for decades. When there was few doctor, people go to sinshe when theyre sick. Beside the sinshes shop, there are also some kiosk of chinese merchant which sell traditional medicine. Tanjung Priok (Tanjung Priuk) harbor 7 Nobody ever believe that a village, secluded on beach which surrounded by trees and a number of some ugly house are nowadays is a Tanjung Priok harbor on Jakarta Utara where thousand of ship from other country comes. Originally, the purpose of Tanjung Priok harbour was to substitute Sunda Kelapa harbor. On colonial times, this harbor gain profit because of Europe-Asia trading. When Tanjung Priok was chose, businessman which in Kali Besar and Pasar Ikan are all reject that because its location was around nine kilometres which considered as faraway. This harbour was built on 1877 and finished on 1886 which means it took nine years to finish the very first safe harbor where ships could get to near dermaga. But when investor came to Batavia, there was an expand for Priok harbour on 1912. The expand itself was done because almost 200 ships at one year waiting a turn to harbor This expand was done together with the starting of Batavia-Buitenzorg (Bogor) train road. Making. And a road which connect Tanjung Priok-Weltevreden (Senen) and Meester Cornelis (Jatinegara). For trivia, in the old times, this station was a gate for those who comes to Jakarta. But unfortunately, Tanjung Priok train are now abandoned so now there are so many scavenger and beggar. Spices trading In my opinion, this is also something that I could call as a legacy from Dutch. Why? Because up until now, the trade that once was found by the Dutch, is still used for now. and legacy itself is something that still exist from the colonization times until now. This is proven by nowaday volume of demand of spices is exceeding volume of supply to be exported. Java-centric, market-based economy

Shahab,Alwi. Waktu Belanda Mabuk Lahirlah Batavia : 207-209 (with some translation and necessary add and/or edit)

The Dutch colonial legacy is one that resulted in that sought not only to integrate Indonesia with its own constituent parts, but also the rest of the world. As outlined in this paper, this Dutch structural change resulted in large benefits for Indonesia as a whole, but almost no benefit for parts of the indigenous population and lasting structural problems that are still not effectively remedied to this day. One of the irrefutable benefits that Dutch colonialism had on Indonesia was that real Gross Domestic Product (GDP) grew in per capita terms. However, Glassburner believes that the Dutch succeeded largely by means of shrewd and ruthless dominance of export trade (mainly coffee, sugar, and indigo). Many argue that this is just further evidence of the colonial drain of funds [that] sapped the Indonesian economy and benefited the Dutch economy (Van Der Eng, 1996: 4).

Problem caused by the legacy Legacy in economic system : In the past colonial government of Netherlands force a capitalist way of think in economic system of Dutch Indies (Indonesia), for example native people are forced to producting raw material of farming result for being used in industry on Europe, even the economic orientation of native is just to fulfill family needs and social needs. Not for market needs (Boeke,1973). What was delivered by Boeke is showing that capitalist way of thinking thats taken by Indonesian government after independence (especially in new orde and nowadays)

Way to fight the problem To fight the capitalist way of thinking in our economy sytem, Soekarno and the other made UUD 1945 where on pasal 33 states that economy are built up as everyones usiness based on familiness. On old order, goverment do a nationalization to all foreign companies thats operating on Indonesia. Those foreign companies is the one who become BUMN that isnt oriented on profit but also justice and social fairness. This way of thinking was born from a concept of Bung Hatta which we called as koperasi (Rahardjo, 2011)