RISE AND FALL OF SUGAR INDUSTRY IN INDONESIA (2)

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This is the summary of Heritage hands-on's presentation titled "Rise and Fall of Sugar Industry in Indonesia" during the First Forum of Asian Network of Industrial Heritage, Taichung, Taiwan, 31 May 2018.

More information on the event is on the posting of 24 April 2018.

INDONESIA: FROM THE SECOND LARGEST SUGAR EXPORTER TO THE SECOND LARGEST IMPORTER IN THE WORLD?[i] 

  1. During the colonial era, the peak triumph was achieved through farmers’ sacrifice.  Sugarcane was produced in the fertile land of the farmers with a forced very low lease, forced labors and prioritized irrigation system.[ii
  2. High financial support for research institutions to produce super varieties. 
  3. In the beginning of Independence, Indonesia institutions and manpower were not exclusively ready to optimally develop sugarcane industry and trade. 
  4. There were no comprehensive policies and several of the existing ones were conflicting. 
  5. High input costs, poor management practices, inefficient government policies and a steady stream of cheaper imports.[iii]

POLICIES OF SUGAR INDUSTRY AND TRADE DURING THE COLONIAL ERA
1830-1870      The Cultivation System (cultuurstelsel) (forced sugar plantations and forced labors to increase production)
1870-1900      Market Liberalization (the Cultivation System was gradually eliminated and replaced by the Agrarian Law and the Sugar Law that provided opportunities for private sector to invest in sugar industry and trade)
1900-1930      Development of Syndicate System (implementation of ethical politics through migration, education and irrigation. The irrigation policy was applied in sugar industry by eliminating forced labors in sugarcane plantation, reducing government monopoly, regulating minimum wages and land lease).  
1931-1942      Cartel (sugar production and trade were regulated by government institutions)

POLICIES OF SUGAR INDUSTRY AND TRADE DURING THE INDEPENDENCE
1945-1965       Nationalization of sugar industry (1945-1959) (Taking over all foreign institutions and companies by the Indonesian Government).
Guided Economic System (1959-1965) (Regulated sugar industry and trade by the Indonesian Government).
1966-2010      Marketing liberalization (1966-1971) (Ministry of Agriculture was responsible for sugar production and Ministry of Trade was responsible for sugar trading).
Stabilization (1972-1997) (Regulations to increase sugar production and income of sugar farmers. Import of sugar was monopolized by a government institution).
Adaptation of free trade system (1993-2001) (Implementation of international trade agreement and import of sugar was open for private sector).
Import control (2002-2010). (Imported sugar was only to fulfill needs of industry sector, not for household consumption).



[i] Sri Wahyuni, Supriyati and J.F. Sinuraya, Sugarcane Industry and Trade: Lessons Learned from the Applied Policies during the Colonial Era up until This Period, Pusat Analisis Sosial Ekonomi dan Kebijakan Pertanian, Bogor.
[ii] Soentoro et.al., Usaha Tani dan Tebu Rakyat Intensifikasi di Jawa, Dalam Ekonomi Gula di Indonesia, IPB, 1999.
[iii] Guerin, Bill, How the mighty Indonesian sugar industry fell, Asia Times, September 26, 2002.











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