Economi System In Soekarno Era

In the era of guided democracy, President Soekarno carried out a Guided Economy system. In this economic system, the president is directly involved and regulates the economy. All economic activities are centered on the central government. As a result, economic activities in the regions have been disrupted and decreased. In the era of guided economy, Indonesia has repeatedly changed its economic design along with the success of the cabinet in power. In the implementation of this Guided Economy, changes only occur in large cities, resulting in the large number of urbanizations that occur. Cities became very crowded while the rural areas became deserted. The system made by the government to regulate foreign trade was made in the early 1950s and high import tariffs. With the existence of new policies, making the activities of major exports come from the periphery areas of Sumatra, Kalimantan, and other outer islands which have revenues such as oil, rubber, copra, tin, tobacco, all of which have been put in place. What is caused by this situation is the proliferation of trade on the black market. Moreover, the distance to Singapore which is very close makes it easier for traders to smuggle their products out of Indonesia and return with illegal imported consumer goods. By selling their products abroad, traders get 20 times the price of goods rather than being sold in Jakarta. Although from a political point of view Soekarno managed to keep Indonesia united, "guided democracy" and the principles that accompanied the Guided Economy brought Indonesia to one of the most dramatic economic crises in history.