Name : Luyện Minh Thư
Student ID : 11147853
Class : Advanced Accounting 60
HOMEWORK ASSIGNMENT
CLOSING CASE CHAP 1: The Political and Economic Evolution of Indonesia
1. The growth under the leadership of Suharto was not sustainable because of two following
reasons. Firstly, under Suharto rule, the economy grew at the expense of natural resources.
Both the renewable and non-renewable resources were utilized to the maximum for the
growth of the economy. Secondly, he was using “crony capitalism” in directing of the
political system to favor the business enterprises of his supporters and family. He gave the
government funds to members of his family or kept to himself.
2. After Suharto was removed, the Indonesia economy grow dramatically toward a vigorous
democracy. However, this growth has been at lower rate than in other nations such as India,
China. The problem is that economic liberalism has never really taken hold in Indonesia.
Many industries were shielded from foreign competition by protectionist policies. It leads
to a very small amount of foreign investment in Indonesia, because of the policies that
protect the domestic industry. Moreover, several sectors are still dominated by inefficient
state-run enterprises. In addition, the Government of Indonesia often imposed price control
measures and subsidies for some products.
3. Indonesia could take some actions to improve its economic performance:
• Encourage foreign investment. To do this, first of all, they need to have preferential
investment policies for foreign businesses such as import and export tax incentives, .
Besides, the government should exclude some industries that are in the policy of protection