Gauging Growth: Development of National Accounting in Indonesia

by Pierre van der Eng


Together with India and Japan, Indonesia has the longest history of national accounting in Asia. This history could be of help in the reconstruction of historical national accounts, because the difficulties experienced by early national accountants provide an indication of some of the technical problems which the Asian Historical Statistics Project could face in the near future.

Antiquated National Accounting

The first estimate of total income of Indonesians in Java, Indonesia's core island, was made by Governor-General Merkus for 1840, to estimate a maximum limit for the circulation of money. No details of the estimation procedure were given, suggesting that this was merely an informed guess. Later estimates for 1900, 1904, 1913, 1920, 1922, and 1924 were based on more detailed information, but they remained incomplete and confined to the incomes of Indonesians in Java (Baga 1954; CEI 1979: 16-17).

The first substantive effort to estimate total income for all population groups in the whole of Indonesia for 1926-32 was undertaken by L. Goötzen (1933), then Treasurer-General of the Dutch East Indies. He estimated total income of the Indonesian, European (including Japanese and Americans), and `Foreign Oriental' (Chinese and Indian) population groups, in order to establish whether the Indonesian income earners endured a heavier tax burden than income earners of other ethnic backgrounds, and whether this burden had increased with the crisis after 1929. The estimates sufficed for that purpose, even though total Indonesian income was merely based on the gross value of registered farm production, the wage and land rent bills of foreign-owned and government enterprises, and an arbitrary estimate of profits and wages paid in indigenous trade and industry.

Götzen's work provided a basis for a more comprehensive exercise by J.J. Polak, a Dutch economist at Princeton University, who was commissioned by the Dutch East Indies government in exile during 1942-43 to estimate Indonesia's national income. Polak (1943) had to make do with sources available in the United States. He used income tax data to estimate total income for the European and 'Foreign Asiatic' groups, and output and wage data by industrial sector to approximate total income of indigenous Indonesians for 1921-39. Polak's work was not immediately published upon completion, largely because it showed that average income in the group of Europeans was 50 times higher than average income among indigenous Indonesians, which 'did not satisfy the publicity aspirations of those who had commissioned [the report]' (letter by J.J. Polak to the author, 13 May 1996). After an abstract in Dutch was published in 1947 and the University of Indonesia had mimeographed copies in 1950s, the work was finally published in full in 1979.

The results of Polak's creative use of the available statistical data were confirmed by the Dutch Central Bureau of Statistics, which used an extensive flow chart to model the entire Indonesian economy for 1938 (CBS 1948). The first postwar estimate of GNP was made for 1950 at the Far East Program Division of the Economic Cooperation Agency, the US organization in charge of the Marshall Plan. Details are not available, but comparison with estimates for later years would suggest that the estimate of US$3.1 billion was certainly too low. Another author, D. Groenveld, used quantity indices to extrapolate Polak's estimates for 1948/49-1952/53 (Baga 1954).

Systematic National Accounting

All methodologies used to produce the above results did not conform to the national accounting conventions, which were established at the time at the United Nations (UN) as the System of National Accounts (SNA). In 1953 the UN sponsored the American economist, D. Neumark, as national income adviser at the National Planning Bureau (Biro Perancang Negara, BPN) in Jakarta. Neumark (1954) produced estimates of Net Domestic Product (NDP) for 1951-52 using the output (or value added) approach. He was forced to make bold assumptions to overcome the shortcomings, gaps, and inaccuracies in the available basic data. Not surprisingly, his estimates were disputed at the time (Bakker 1954; Hollinger and Tan 1956, 1957).

BPN concentrated its limited resources on the first five-year development plan (1956-60). Further improvement of the national accounts data did not have priority until the UN sponsored a special Bureau of Economics and Finance (Biro Ekonomi dan Keuangan) at BPN in 1958, where Muljatno Sindudharmoko and L. Baranski revised Neumark's estimates and made crude extrapolations for later years. Muljatno (1960) contains a detailed explanation of the procedures used to estimate NDP for 1951-55. Some other estimates for 1953-58 were later used in aggregated form in BPN publications (BPN 1959: 112). They were also submitted to the UN Statistical Office for publication in the Yearbook of National Accounts Statistics.

National accounting received a further impetus in 1962, with the establishment of the Statistical Research and Development Centre (Pusat Penelitian serta Perkembangan Statistik) at the Indonesian Central Bureau of Statistics (Biro Pusat Statistik, BPS). One of the tasks of the centre was to improve Indonesia's national accounting system, after the responsibility for the compilation of national accounts was transferred to BPS. Improvements were expected from special surveys aimed at exploring output in the sections of the economy which were poorly covered by official statistics, such as small-scale industry and services. Further surveys were scheduled to monitor input use and pricing more accurately. Still using the output approach, the Indian statistician K.N.C. Pillai used fresh data to establish a new accounting system in 1963, but this work was obstructed when Indonesia withdrew from the UN in 1965. Pillai left instructions for his Indonesian counterparts, on the basis of which a new NDP series on the basis of fresh data for 1958-62 was developed and published (BPS 1966).

Modern National Accounting

BPS developed a new set of GDP estimates, which was first published in 1967. After UN technical assistance had been resumed a year later, the series was revised and later extended to 1973. For the first time estimates of GDP by industrial origin and of expenditure on GNP were given, albeit that private consumption was simply estimated as the residual after all other expenditure items had been accounted for. Despite the fact that for comprehensive national accounts data conforming to SNA guidelines had become available, the standard of reliability still left much to be desired (Arndt and Ross 1970: 48-54). Arbitrary decisions, such as mark-ups for uncovered sections and trade margins, called for revisions and further improvements.

Indonesia's national accounting system has since been through three major rounds of revisions, each coinciding with changes in the base year. Each round yielded significantly higher estimates of GDP in the overlapping years. The differences were caused by a range of changes in the accounting procedures, which affected levels of output, input use and pricing, and the extension of accounting to sectors hitherto not covered. Because changes have been detailed, it is not possible to specify in brief what caused the different results in overlapping years. Moreover, while most of the data for the 1950s and 1960s were published with detailed supporting tables and explanations of the underlying accounting procedures and assumptions, such information has become noticeably sparse in later publications of Indonesia's national accounts.

What is clear, however, is that the results of the several rounds of various national economic surveys (agriculture, industry, mining, and household expenditure) were incorporated in the estimation procedures. Of particular importance were the Input-Output (I-O) Tables. The first I-O Table was compiled for 1969 as a finger exercise. A more elaborate I-O Table was completed for 1971, with the assistance of the Institute of Developing Economies in Tokyo, on the basis of much more detailed surveys into input use, pricing of inputs, and output in particular sectors. This work became the model for later I-O Tables, compiled by BPS for 1975, 1980, 1985, and 1990. The last two rounds of revisions of the national accounts have been based on the ever more intricate I-O accounting procedures.

National accounting has in the meantime advanced beyond the improvement of estimation procedures. BPS now produces quarterly estimates of GDP. It also constructs GDP data sets for each of Indonesia's 27 provinces, which in some cases reach back to 1966 (Kerr 1973). In fact, BPS (1996) recently even produced GDP by district (kabupaten), although the results are ambiguous.2 Despite their shortcomings, these data sets provide adequate impressions of the regional spread of GDP, although their totals still do not add up to the national total of GDP.


The discussion has indicated that the available historical time series on total output and national income in Indonesia are incompatible due to the changes in definitions and the significant degree of underestimation in the past. Simply linking these estimates to form a series spanning the period 1921-94 would ignore such inconsistencies and would make growth seem to be higher than it actually was. Rather, the definitions will have to be reconciled and underestimation of output found in later series has to be accounted for in the earlier series.


  1. Where the data published by Muljatno, BPN, UN and BPS overlap, for 1951-62, they reveal significant discrepancies. Suhartono (1967: 100-145) has tried to reconcile these inconsistencies in order to compile his own estimates of NDP for 11 sectors in an effort to model the Indonesian economy for those years.
  2. For instance, GDP per capita in Jakarta was Rp.2.9 million, the same as in several rural districts such as Indramayu and Cilacap (both in Java), while GDP per capita in Kediri (East Java) and Fak Fak (Irian Jaya) was a steep Rp.6.3 million.


Arndt, H.W. and C. Ross (1970) 'The New National Income Estimates', Bulletin of Indonesian Economic Studies, 6, No. 3, pp. 33-60.

Baga, M. (1954) 'Pendapatan Nasional' [National Income], Buku Peringatan Dies Natalis ke-4, Fakultet Ekonomi, Universitas Indonesia, 4, pp. 26-35.

Bakker, C. (1954) 'Some Remarks about Dr. Neumark's Estimation of the National Income of Indonesia in 1951 and 1952', Ekonomi dan Keuangan Indonesia, 7, pp. 597-602.

BPN (1959) Laporan Pelaksanaan Rentjana Pembangunan Lima Tahun. [Report on the Progress of the Five-Year Development Plan] Jakarta: Biro Perancang Negara.

BPS (1966) Pendapatan Nasional Indonesia menurut Lapangan Usaha (Industri) 1958-1962. Methode Penghitungan dan Sumber Data. Jakarta: Biro Pusat Statistik.

BPS (1967) Pendapatan Nasional 1960-1964 menurut Lapangan Usaha. Jakarta: Biro Pusat Statistik. BPS (1996) Produk Domestik Regional Bruto Kabupaten/Kotamadya di Indonesia, 1983-1993. Jakarta: Biro Pusat Statistik.

BPS, Pendapatan Nasional Indonesia, statistical series since 1970.

CBS (1948) 'De Nationale Rekeningen voor Nederlandsch-Indië, 1938' [National Accounts for the Netherlands Indies, 1938], Statistisch-Econometrische Onderzoekingen, 4, pp. 61-146. (Translated and reprinted in CEI 1979: 103-129)

CEI (1979) Changing Economy in Indonesia. Vol. 5: National Income. The Hague: Nijhoff.

Götzen, L. (1933) 'Volksinkomen en Belasting' [National Income and Taxation], Koloniale StudieNn, 17, Vol. 2, pp. 449-484.

Hollinger, W.C. and A.D. Tan (1956, 1957) 'The National Income of Indonesia, 1951-1952: A Critical Commentary on the Neumark Estimates', Ekonomi dan Keuangan Indonesia, 9, pp. 785-798 and 10, pp. 2-33.

Kerr, A. (1973) 'Regional Income Estimation in Indonesia: Historical Development', Ekonomi dan Keuangan Indonesia, 21, pp. 216-224.

Muljatno (1960) 'Perhitungan Pendapatan Nasional Indonesia untuk Tahun 1953 dan 1954' [The Calculation of Indonesian National Income for 1953 and 1954], Ekonomi dan Keuangan Indonesia, 13, pp. 162-211.

Neumark, S.D. (1954) 'The National Income of Indonesia, 1951-1952', Ekonomi dan Keuangan Indonesia, 7, pp. 348-391.

Polak, J.J. (1943) The National Income of the Netherlands Indies, 1921-1939. New York: Netherlands and Netherlands-Indies Council of the Institute of Pacific Relations. (Reprinted in CEI 1979: 25-102)

Polak, J.J. (1947) 'Het Nationale Inkomen van Nederlandsch-Indië, 1921-1939' [National Income of the Netherlands Indies], Statistisch-Econometrische Onderzoekingen, 3, pp. 104-108.

Suhartono, R.B. (1967) The Indonesian Economy: An Attempt in Econometric Model Analysis. Ph.D. thesis, Wayne State University, Detroit (Michigan).

               Overview of important available estimate of
               national income in Indonesia

    Source        Coverage       Procedure   Constant Prices of  Aggregate
Gotzen(1933)       1926-32        I-O mix           -             NDP
Polak(1943)        1921-39        I-O mix         1929            NDP
Neumark(1954)      1951-52           O            1938            NDP
Muljatno(1960)     1951-55           O            1952            NDP
Suhartono(1967)    1951-62           O            1955            NDP
BPS(1966)          1958-62           O            1960            GDP
BPS(1967)          1960-64           O            1960            GDP
BPS                1960-73          O+E           1960            GDP
BPS                1971-83          O+E           1973            GDP
BPS                1983-93          O+E           1983            GDP
BPS                1993-94          O+E           1993            GDP

Note: I=income approach, O=output approach, E=expenditure approach to national income

The Australian National University