¹ The best English language source of information about Pertamina's problems is the Far Eastern Economic Review (FEER). More recently, The Asian Wall Journal (AWSJ) which began publication in September 1976 has also reported on developments in depth. See also Glassburner, Bruce, “In the Wake of General Ibnu: Crisis in the Indonesian Oil Industry,” Asian Survey, XVI, 12 (Dec. 1976)Google Scholar, and various reports in the “Survey of Recent Developments” series in the Bulletin of Indonesian Economic Studies (BIES).

² For a long time the critics of Pertamina argued that the reality was different from the appearance. It now seems clear that they were right. However, for the new and uncertain Suharto government in need of successes to point to, at the time the distinction probably did not seem important.

³ See the various articles written by Hunter, Alex in the BIES between 1965 and 1968, especially “Oil Exploration.” BIES, [1], 1 (June 1965)Google Scholar and “The Oil Industry: The 1963 Agreements and After,” BIES, [I], 2 (Sept. 1965)Google Scholar.

⁴ Hunter, Alex, “Oil Exploration,” BIES, [1], 1 (June 1965)Google Scholar.

⁵ Hunter, Alex, “The Oil Companies: Diverging Interests?” BIES, [II]. 3 (Feb. 1966)Google Scholar.

⁶ Hunter, Alex, “Indonesian Oil: A New Generation of Explorers.” BIES, [III], 8 (Oct. 1967)Google Scholar.

⁷ For a history of Pertamina covering the period until 1972 written from the company's point of view, see Bartlett, Anderson G. III et al. , Pertamina Indonesian National Oil (Djakarta, 1972)Google Scholar. See also the semi-official Pertamina Indonesian State Oil Enterprise: Reference Book, Second Edition (Singapore, 1974)Google Scholar; Hunter, Alex, “The Indonesian Oil Industry,” Australian Economic Papers, June 1966Google Scholar; and Thomas, K.D. and Panglaykim, J., “Indonesian Exports: Performance and Prospects: Part II.” BIES, [III] 6 (Feb. 1967)Google Scholar.

⁸ For some details of the “work contract” arrangements, see Gibson, Joyce, “Production-Sharing: Part I,” BIES, [II] 3 (Feb. 1966)Google Scholar. Some information on the arrangements now known as “production-sharing” are in Bartlett. op. cit.

⁹ “Pertamina: Diversification, Conglomerate or Private Empire?” Indonesia Ruya, 22 and 24 Nov. 1969 quoted in the U.S. Embassy Translation Unit Press Review (USETUPR) 220/1969 and USETUPR 221/1969. (In some eases, in quoting from the USETUPR in this article minor corrections to the English have been made.) For Pertamina's reply to Indonesia Raya, see “Pertamina Replies”, Angkatun Bersendjata, 25 Nov. 1969, USETUPR, 222/1969.

¹⁰ For a detailed list of Pertamina's subsidiaries in 1974. see Arndt, H.W.. “Survey of Recent Developments,” Table 10. BIES, X, 2 (July 1974)Google Scholar.

¹¹ Editorial, Indonesia Raya, 25 Nov. 1969, USETUPR 221/1969.

¹² See Mackie, J.A.C., “The Report of the Commission of Four on Corruption,” BIES, VI, 3 (Nov. 1970)Google Scholar.

¹³ Indonesia Raya, 26 Jan. 1970, USETUPR 18/1970.

¹⁴ Mackie, op. cit., pp. 90–91. The reports on Pertamina were published in Sinar Harapan on 18 and 20 July 1970, USETUPR 137/1970, 138/1970, and 139/1970.

¹⁵ For details of the food crisis, the consequent inflation, and the food procurement problems that developed in the first half of 1973, see the various “Survey of Recent Developments” articles in the BIES during the period.

¹⁶ Several problems arose. For one thing, foreign resources are not perfectly substitutable for domestic resources. For another, foreign resources are usually available only after a time lag, and sometimes the time lag can be quite substantial (several years in the case of large, capital-intensive projects). For a discussion of some of the economic dangers that the oil boom posed for Indonesia, see Arndt, H.W., “Survey of Recent Development,” BIES, X, 2 (July 1974), 2–7Google Scholar.

¹⁷ The Deputy Chairman of the Badan Koordinasi Penanaman Modal (Investment Coordinating Board) has noted that “Examination of one of Pertamina's ‘side enterprises’, such as the Krakatau Steel Project, for example, reveals that Pertamina's managerial facilities, personnel, and credit standing were used precisely because there was no alternative ‘pool’ containing the requisite skills and capital.” Soehoed, A.R., Commodities and viable economic sectors: a possible basis for development planning, mimeographed (Jakarta, Aug. 1976), p. 9Google Scholar. See also Glassburner, op. cit, p. 1105 who comments that “the total impact of that unwise decision [to proceed with the Krakatau Steel Project] cannot be laid at Ibnu's door.”

¹⁸ See Ibnu Sutowo's comments in the interview from Tempo, 17 Jan. 1976, quoted below.

¹⁹ See the sharp criticisms of the behaviour of international banks by the Governor of Bank Indonesia and international bankers in the report by Seth Lipskey, Indonesian Observer, 13 Sept. 1976.

²⁰ See Arndt, H.W., “Survey of Recent Developments,” BIES, XI, 2 (July 1975)Google Scholar, and various reports in the FEER at the time.

²¹ Professor Widjojo Nitisastro is both Minister of State for Economic and Financial Affairs and Minister of Planning.

²² Developments are summarized in the “Survey of Recent Developments,” BIES, XI, 3 (Nov. 1975), 12–13Google Scholar.

²³ For relevant extracts from the President's Speech, see McCawley, Peter, “Survey of Recent Developments,” BIES, XII, 1 (Mar. 1976), 2Google Scholar.

²⁴ The speech was reprinted in full in Sinar Harapan, 21, 22, and 24 May 1976.

²⁵ The so-called Khemlani loans affair was a major political issue in Australia throughout 1975. In late 1974, the then Minister for Minerals and Energy, Mr. Connor, became involved in secret negotiations with an overseas businessman in several attempts to raise large long-term loans of between US$2 billion and US$4 billion in the Mid-East. The negotiations failed and led to increased political difficulties for the Whitlam Labour Government, eventually contributing to its downfall. See Paul Kelly, The Unmaking of Gough, Ch. 12 (Sydney, 1976).

²⁶ See the extract from President Suharto's 1976/77 Budget Speech quoted in McCawley. op. cit., and Professor Sadli's comments about long-term borrowings quoted above.

²⁷ “Saya Tak Pernah Berfikir Ingin Jadi Dirut Seumur Hidup,” Tempo, 17 Jan. 1976 (also in USETUPR 11/1976).

²⁸ The comment of one foreign businessman in Jakarta that “At least he got out and did things instead of just sitting round among the manila folders and drinking tea like so many of these other administrators” (The Australian Financial Review, 5 Mar. 1976) represented a widespread view, especially within the foreign business community in Jakarta.

²⁹ Obviously the parallel should not be taken too far. For example, there is no evidence whatsoever that Mr Connor stood to make any personal financial gain out of his proposed loan borrowings.

³⁰ FEER, 4 Feb. 1977 and see the extensive report in FEER, 11 Mar. 1977. Although the precise position is not clear, what is clear is that there was a good deal of public information available about Pertamina's tanker fleet. For example, the Repelita II document (II, 172) published in early 1974 provided details of the planned expansion of Pertamina's total tanker fleet (including hire purchase tankers) from 2.1 million dwt in 1974 to 3.5 million dwt in 1979.

³¹ Unidentified report, quoted in the FEER, 19 Mar. 1976.

³² Ibid.

³³ In the absence of precise information one needs to be careful in placing reliance on unidentified sources, but the magnitudes tally with other reports. The Australian Financial Review, 7 July 1976, carried a report from a New York Times correspondent suggesting that between 28 and 34 tankers were involved, and that “even Pertamina is not certain precisely how many there were”.

³⁴ See “The Oil Carrier Surplus: Outlook for the Next Ten Years,” The OECD Observer, 82 (July/Aug. 1976)Google Scholar.

³⁵ Glassburner, op. cit., considers some other aspects.

³⁶ See Arndt, H.W., “Survey of Recent Developments,” BIES, XIII, 3 (Nov. 1977)Google Scholar. For details of the negotiations, see various reports in the AWSJ and the FEER, especially 11 Mar. 1977. Details of the tankers in dispute can be found in the latter report in the FEER, and in the AWSJ, 10 Dec. 1976. At the time of writing, there was increasing prima facie evidence of largescale corruption connected with the hire purchase of Pertamina's tankers as well as other Pertamina projects initiated in the early seventies.

³⁷ These figures are given in Rice, Robert C. and Lim, David, “Survey of Recent Developments,” BIES, XII, 2 (July 1976)Google Scholar.

³⁸ The separation of projects such as the Krakatau Steel plant from Pertamina naturally affects Pertamina's balance sheet and financial situation, but does not reduce the Indonesian public sector's total commitments to either domestic or foreign creditors.

³⁹ This is not to suggest that the economic impact of the domestic debts was unimportant. The central bank was obliged to create credit to enable Pertamina and the Government to settle debts, and as a result domestic credit expansion continued at a high rate throughout 1975. Earlier in 1974, the Government had made it clear that priority was to be given to controlling credit expansion in an effort to reduce the inflation rate. It seems clear that, in effect, domestic monetary policy was dominated throughout 1975 by the consequences of Pertamina's problems and that the Government's anti-inflationary strategy was set back by at least a year. See McCawley, Peter and Manning, Chris, “Survey of Recent Developments,” BIES, XII, 3 (Nov. 1976), 12–16Google Scholar.

⁴⁰ “Apparently” because details of the net amounts of additional real capital that became available are not known. To the extent that there was gross overcharging (or simple corruption) when goods were supplied to Pertamina, the debts incurred reflected little or no transfer of resources to Indonesia. However presumably a substantial amount of real goods and services did become available when the debts for such projects as the LNG scheme and Krakatau steel were incurred.

⁴¹ See Rice and Lim, op. cit.

⁴² It seems that in the period 1973 to 1975, the institutional controls on public sector investment that should operate through Bappenas (National Planning Agency) and the Department of Finance were bypassed on a number of important occasions. See the section on “Public Sector Investment” in McCawley and Manning, op. cit.

⁴³ Estimates of Pertamina's expenditure on an annual basis are not publicly available — indeed because of the chaotic state that the company's accounting system was in during the early seventies, it is possible that the Indonesian Government itself does not yet have a clear view of the situation. However, it seems that for a period, the value of Pertamina's annual investments (which were not included in the central government's budget) must have been approaching the total value of annual investments included in the First Five Year Plan. Even in its shrunken state, Pertamina remains a quite significant part of the public sector — in 1977/78, the company's budget (approximately Rp 1,200 billion) was equivalent to about 28 per cent of the Indonesian Government's budgeted expenditure for the year (Rp 4,247 billion).

⁴⁴ For information on the 1976/77 Budget, see BIES, Mar. and July 1976.

⁴⁵ Some Indonesian commentators have pointed to the role of foreign businessmen and multinational companies in the Pertamina affair. The critics argue that the German companies involved in the Krakatau Steel Project, for example, must have been aware that inflated prices were being set for many contracts, but were apparently not particularly concerned by the situation and in some cases were prepared to involve themselves in rather doubtful business deals. The financial dealings of one Mr. Bruce Rappaport, who apparently stood to make substantial profits on Pertamina's tanker arrangements, have been discussed at length in the FEER.

⁴⁶ FEER, 30 July 1976.

⁴⁷ Criticisms of Bulog and P.N. Perhutani led to these organizations being investigated by the Commission of Four; see the leaked reports of the Commission of Four in Sinar Harapan in July 1970 (also USETUPR, July 1970) and J.A.C. Mackie, op. cit. Problems in the Perusahaan Listrik Negara are discussed in Peter McCawley, “The Indonesian Electric Supply Industry,” unpublished Ph.D. dissertation (Australian National University, 1972), pp.333–35. Reports of the situation in Irian Jaya are given in the report from Hamish McDonald on “West Irian's Pertamina,” FEER, 13 Aug. 1976. The Directorate General of Customs has been a continual object of criticism in recent years in the editorial columns of all main Jakarta dailies.

⁴⁸ The corresponding classification in Indonesia was into Perusahaan Jawatan (Perjan), Perusahaan Umum (Perum), or Perusahaan Perseroan (Persero).

⁴⁹ See Rudner, Martin, “The Indonesian Military and Economic Policy,” Modern Asian Studies, X, 2 (1976), 283Google Scholar, and Glassburner, op. cit. 1110.

⁵⁰ To take one example, in early March 1970, Dr. Hatta, former Vice-President of Indonesia and at that time Adviser to the Commission of Four, said that he was in favour of all state revenues and expenditure, including the revenue and expenditure of the military, passing through the Department of Finance. See the editorial, Pedoman, 10 Mar. 1970. In recent years, more government institutions have been compiling annual reports, some of which are publicly available.

⁵¹ An index of social control would reflect such things as whether the National Accounting Board and Parliament can easily investigate the affairs of the company, whether comprehensive annual reports are published, and whether journalists and academics can obtain and publish information on the affairs of the state enterprise.

⁵² Ibnu Sutowo did not disguise the fact that he was a “growth” rather than an “equality” man. See his comments in Prisma, V (1 Feb. 1976), 51Google Scholar.