4. Indonesia's New Order Economic Institutions Performance
In the mid 1960s, Indonesia was facing economic chaos, experiencing stagnating output, widespread poverty and hunger, crumbling infrastructure, and a hyperinflation of almost 600% because of runaway deficit-financing (Wie, 2012). Following the political turmoil in 1965-1966, there is power shifting from President Sukarno to President Suharto. Then, the New Order regime emerged from a coalition of political and social forces, at the core of this coalition was the army leadership, but many intellectuals, businesspeople and anti-communist political groups also supported. Seeing their first goal as being the elimination of the communist party and its supporters, Suharto and his supporters then set about stabilizing the economic situation and undermining other potential political challengers (Aspinall & Fealy, 2010).
As explained before, Indonesia's economic development during the New Order era was impressive when compared to the 20 years the Old Order was in power before. Following the restoration of monetary stability by the New Order government, which successfully addressed hyperinflation and rehabilitated the deteriorated productive apparatus and infrastructure, the Indonesian economy witnessed an unparalleled period of rapid and sustained growth from the late 1960s onwards, lasting for the subsequent three decades. Indonesia's rapid economic growth during the New Order was accompanied by rapid social development, as reflected by a steady decline in absolute poverty, steady growth in private consumption per capita, steady rise in life expectancy at birth, and steady decline in the adult illiteracy rate (Wie, 2007).
a. Poor Property Right Institutions     Â
The New Order remarkable achievements in fact are not support by adequate property right institutions. This situation has a similarity with South Korea during the development era in 1960s to 1980s, since property right institutions did not play a significant role in Korea's economic development measured from Polity IV data set (Park, 2011). The Polity uses numeric values ranging from 7 for a subordinated or on-par executive, to 1 if executive is unconstrained. Refer to Constraints on the Executive Score by Polity 5 (2021), Indonesia only gains score 2 during 30 years from 1967 -- 1997.
Between Indonesia and South Korea at the developmental time indeed was categorized are authoritarian state. Indonesian political system under the New Order was authoritarian military-based regime, which was characterized by a central power on Suharto's hand. Robison (1986) argues that the feature of the New Order regime has been the entrenchment and centralization of the authoritarian rule by military, the appropriation of the state by its officials, and the exclusion of political parties from effective participation in the decision-making process.
Assessment from the Varieties of Democracy (V-Dem) project (2023) shown the Indonesia's political score is extremely low (score 0) in 1966 -- 1970, and still poor (score 1) during 1971 -- 1998, the same score with South Korea during 1963 -- 1987 period. The V-Dem's classification distinguishes between closed autocracies (score 0), electoral autocracies (score 2), and liberal democracies (score 3). The alteration in Indonesia's score in 1971 can be attributed to the occurrence of a general election, marking the first election in the New Order era. Clearly, from those indicators between Indonesia and South Korea have a poor property right institutions during developmental period.
 b. Fragile Contracting Institutions
Indonesia has a long history of banking and capital market from the late 19th century under the Dutch colonization. In 1965, there are 7 government-owned nationwide banks in Indonesia own, including bank that served specifically for farmer and fisherman cooperatives. Throughout the 1950-1970 period, several financial institutions were established by the Regional Government. Apart from that, the government is also encouraging the establishment of market banks to provide financial services to market traders. In the late 1980s, these Market Banks were then confirmed as rural banks (Bank Perkreditan Rakyat) which still exist today (Otoritas Jasa Keuangan, 2019).
Non-banking industries as contracting institutions also have been widely known by the Indonesian people since pre-independence era, such as cooperative institutions and formal pawnshops agency. Meanwhile, until early 1990s, rural Korean in particular depended on informal financial institutions instead of banks or other financial entities. The prevalence of small, informal financial setups, coupled with a notably low household savings ratio in the 1960s, points to inadequate contractual institutions in South Korea (Park S. , 2011). From this perspective, Indonesia in the early stages of development at least had more established contracting institutions than South Korea.
Furthermore, the issuance of the deregulation package in 1988 (Paket Kebijaksanaan Oktober 1988 -- Pakto 88), has led to emergence of several small and medium scale commercial banks. In the end, the number of commercial bank in Indonesia swelled from 111 banks in October 1988 to 240 banks in 1994 -- 1995, while the number of Rural Banks increased drastically from 8,041 in 1988 to 9,310 banks in 1996, before finally dropped during the financial crisis of 1997 -- 1998 (Izza, 2018)
