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Since Compulsory Planting System was abolished in 1870, East Indies (Indonesia) Economic entered liberal era. Liberal people were sure that rapidly economic development from private sector works would increase Indonesia people prosperity. The government interference in people economic continuously would give bad effect for people economics and prosperity.
As the development of liberalism, East Indies government issued Undang-Undang Agraria (Law of Land) and Undang-Undang Gula (Law of Sugar) in 1870.
The purpose of issuing the law were
- giver opportunity for foreigner businessmen to rent lands from Indonesia society;
- protect the land of native peasant property from the foreigner authority.
The Law of Land year 1870 contains the following things.
- Governor general was not allowed to sell government land. The land could be rent for 75 years.
- Government land were for example unexplored forest, land excluding village, and its residents own, custom land.
- Resident ownership land, for example all rice fields, farms, and others directly owned by countryside resident. Private sector entrepreneur could rent the kind of land for 5 years.
After The Law of Land and Law of Sugar were issued in 1870, European liberals could invest in plantation, mining, industry, and commerce. By them, the Dutch Indies Government applied politik pintu terbuka (Open Door Policy). Its means Indonesia was open for foreign Investment
Since them there were many investor from Netherlands, British, USA, Belgium, and France arrived to Indonesia, They rent government's that was ruled by Law of Land
Private business system, actually gave big profit for colonial government and investors. Everything was done by private investors to increase farm and plantation products and also made product transportation more fluently like Dutch Indies did.
Dutch Indies government succeeded to build dam, irrigation, main street, railway, bridge, and port. The Dutch Indies government explored Indonesian again to build those facilities.
During liberal period (1870-1900), private plantation was developed rapidly. Natural resources from Indonesia kept flowing to the Netherlands. The Netherlands became the biggest exporter for plantation product in the world. On the contrary, Indonesian people were really in suffering. Liberalism made people life were declining, Javanese lived in poverty and suffering
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