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ASIET NetNews Number 3 - January 26-February 1 1, 1998
East TimorSIAGA halted from approaching parliament
Political/economic crisisConstancio tears up prosecutor's document David Ximenes goes on trial East Timor's litany of woes
Environment/land disputesNewly jobless IMF to speed Indonesia credits Shops looted in Java after price rises Army warns Ruined Indonesians Foreign firms prepare for evacuation Indonesia unveils banking reforms Opposition in public attack on Soeharto Scapegoats
Human rights/lawNew smoke hazard feared as fires flare
Arms/armed forcesAJI protests to Media Indonesia
Economy and investmentABRI delays all arms purchase plans
MiscellaneousSuharto & Sons
Government slanders the KNPD Government accused Indonesia businessman `in clear' Anti-Chinese campaign being provoked
| Democratic struggle |
The report starts with describing the situation at the Parliament building like a "market place" with protest delegations coming and going every day. These groups were allowed to proceed under the watchful eye of the security forces. The report provides a more in-depth report of a demonstration organised by a group called SIAGA (the name means READY)
The report goes on: This group was given a more negative welcome by the security forces. They were halted and prevents from entering the courtyard of Parliament. When they asked why they were being stoped, an officer said tersely: "Orders from our superiors."
Speaking for the group, Ratna Sarumpaet, the playwright, said she could not understand why people were not being allowed to speak to members of Parliament. If more are prohibited, dont be surprised if yet more people will flood the streets, she said. "And if casualties start falling, whose responsibility will it be?" she asked. "This is a clear example of the government shutting its earts and showing no concern about people's conditions."
The group carried a banner 8 by 1.5 metres big saying: "We reject Suharto!" The protesters were dressed in black with red headbands all carrying the word SIAGA. They held aloft many posers. This seems to have made the authorities decide to prevent them from going any further.
After failing to negotiate any solution, Ratna read out a statement demanding a total overhaul of the political and economic system. It called on the MPR -- which will meet next month -- to accept Amien Rais and Megawati as candidates for the presidential election and rejedted Suharto's nomination for the post.
The crowd then went to Megawati's residence and held a dialogue with the PDI leader.
| East Timor |
FALINTIL activist Constancio stunned the court at the hearing of his trial last week when he angrily tore up the prosecutor's response to his demurrer which had challenged the indictment read out at the first hearing.
He unfurled a large banner in court with words that could not be seen at the time, and shouted pro-East Timorese slogans. He was heard to shout: "However long it takes, the struggle for East Timor's independence will be victorious" and "We are not terrorists who want to murder innocent people. We are only strugging for our country's independence."
The protest action by the defendant was halted when security forces in court seized his banner and dragged him from the courtroom. Outside the court, Constancio, with his lawyers by his side, continued to shout pro-independence slogans.
In the previous session, the defendant continued to insist that bomb-making in Semarang had been done on the instructions of the supreme commander of FALINTIL, Xanana Gusmao, who is now in prison in Jakarta.
[Until now all eports about the trial have only mentioned Constancio as the defendant. However, a brief report in Jakarta Post on 15 January mentioned Paul George Roderigues Pereira, who was arrested together with him at Dili harbour on 15 September, as being his co-defendant - Tapol.]
According to an AFP report on 23 January, the trial started in Dili of David Ximenes 44, who is being charged with "separatism". The charge carries a maximum sentence of life. (The report does not mention the article under which he is being charged.)
In the indictment, Ximenes was accused of a series of activies between January 1994 and May 1997, including setting up an anti- Indonedian underground movement known as the clandestine, working jointly with the armed wing of the resistance.
He was blamed for organising the "violent" demonstrations on Christmas Eve 1996 to greet returning Nobel laureate Bishop Belo that left one dead and scores wounded, and during the visit of UN envoy Jamsheed Marker that left many wounded.
He was also accused of receiving correspondence from the jailed East Timorese leader, Xanana Gusmao. The prosecution also alleged that he gave instructions to disturb the 29 May elections last year.
Andrew Perrin, Dili -- The troubled Indonesian province of East Timor is facing yet another catastrophe - this one generated not by politics but by the failure of monsoon rains due to the El Nino effect.
A report has been sent from the AusAid office in Dili to the Australian Government requesting urgent assistance for thousands of Timorese hit by failing crops and the increase in price of basic necessities, such as rice, on the back of the Indonesian currency crisis.
The report states that the worst hit region is the island of Atauro, 32km off the coast of Dili. So far this year the mountainous island has received no rain and the crops which provide the staple diet of the island's population of 7000 -- corn, pineapples and bananas -- have all failed. The water supply is also dangerously low.
Across the island [of Atauro], schools are closing early as children battle the debilitating effects of starvation, the report says. The problem has been magnified by the absence of pigs and goats most of which were wiped out two months ago by a bout of swine fever.
On the mainland, communities along the north coast from Liquica in the west to Los Palos in the east are facing similar problems. The report says that many people are subsisting on the seeds for next year's corn crops. Most of this year's crops have failed, but two days of heavy rains last week have eased some of the pressure.
Still the situation is critical as the increase in rice prices pushes it beyond the means of many Timorese. So far this month rice has increased in price by 33%.
The provincial government of East Timor has agreed in principle to provide 10 tonnes of rice to Atauro but so far nothing has been delivered.
Due to the ongoing political turmoil in East Timor, overseas aid is restricted in the province. AusAid, the Australian government's overseas aid agency, is in Timor assisting with water supply and veterinary needs. The peak body representing non- government aid organizations in Australia, ACFOA (Australian Council for Overseas Aid), has written to the Foreign Minister, Alexander Downer, requesting that he raise the issue as a matter of priority with the Indonesian Government on his trip to Jakarta this week.
"We are very concerned about the contents of this report", said Janet Hunt, executive director of ACFOA. "We have asked that Mr. Downer specifically raise the issue of East Timor with the Indonesians to explore with them what assistance Australia could provide."
An AusAid spokesman said that the Government ha received the report, but no mention of it would be made during Mr. Downer's visit to Jakarta.
"We are receiving similar reports from many parts of Asia and although we are treating the East Timorese situation with the utmost seriousness, it will be assessed in the context of the whole of Indonesia. Mr. Downer will discuss the drought with Indonesia, but will not enter into specifics on East Timor," the spokesman said.
| Political/economic crisis |
Seth Mydans - Jakarta, Jan. 28 One,by one, most of Minarsih's friends at an electronics factory here were taken aside and quiety fired. Too ashamed to tell her, they simply disappeared, returning to the villages they had left years ago in search of fortune in the big city.
Mrs. Minarsih's turn came a few days aga, and she too left without goodbyes, one of the latest victims of an economic disaster that is expected to see milllons of Indonesians lose their jobs in the coming months.
All I could think of was my son: how will I feed him now?" said Mrs.Minarsih who is 25. Four years ago, like countless other rural people, she fled the poverty of her village, leaving her son with her parents and sending home part of her pay to help support them.
This week defeated in her hopes for a better life, she boarded a train for the I2-hour journey home to Surabaya in eastern Java, part of an ebb tide after a decade of surging prosperity for the 200 million Indonesians.
These newly unemployed are one force the Government fears, a growing mass of suffering and angry people who could rise up in violent protests and shake its hold on power. Small food riots have already begun in Java, and the economic crisis is becoming a political threat.
The Surabaya train was hot and noisy and packed with travelerers joining a vast annual exodus of city dwellers heading home for the holiday that marks the end of the Muslims' holy month of Ramadan.
But this year is different. Like Mrs. Minarsih, many people boarding the train had lost their jobs and would not be retruring when the holiday is over.They will remain in villages that are already deep in poverty, sharing with their families the coming privation.
Their hardships will be compounded by the worst drought in 50 years, which has caused crops to fail across Indonesia and is now bringing catastrophic flooding as heavy rains hit.
Indonesia's falling currency, failing banks and huge foreign debt have caused panic in financial markets and among economists from Washington to Tokyo who fear a worldwide economic crisis. This week the Government announced a freeze on payment of corporate debt and a broad reorganization of banks.
Here at home, the crisis has already cut into the lives of millions of people, forcing up the prices of rice and cooking oil and milk and electricity, and shrinking the value of money they can no longer save.
Officials and labor leaders say they expect 2 million people or more to lose their jobs in the coming year, in addition to the 4.4 million already unemployed and the millions more who live hand to mouth with parttime work.
And the number of unemployed could rise even higher. More than two million people leave school and enter the work force each year, and with most economists predicting a deep recession, only a few may be able to find work.
Foreign economists say the true extent of unemployment is higher than these numbers suggest. People who may work only an hour or two a week are officially "employed."
The fear is that deepening hardship will bring a wave of riots. Over the years, the highhandedness of the Government and its favoritism toward wealthy business executives has mostly been tolerated because life in Indonesia grew steadily more comfortable. But after 32 years in power, President Suharto has begun to lose the support of much of the middle class and there is growing talk of change, though he is expected to be anointed by an obedient legislature to a new five-year term in March.
Mass protests, violence and an overreaction by security forces such a chain of events could turm even the elite against him, though senior military officials say they are ready to quell any violence, and some 14,000 troops are being deployed in Jakarta to maintain order during holidays.
Over the last 18 months, Indonesia has seen dozens of riots in towns across the country, protesting everything from land
seizures to police abuses. Much of the violence has been directed at the Chinese minority, who are seen as economically privileged, and at Christians.
In the last two weeks, several small riots have broken out in eastern and central Java over increases in food prices. Small protests strikes have also been staged at tories over wages and working conditions.
The Government is bracing for the possibility of a violent reaction on Sunday when it stops beans, sugar and flour, and on when it removes price supports from fuel and electricity.
"We cannot underestimate the frustration of our own people," said Amien Rais, a Muslim leader who has become a leading critic of the Government. They look friendly they look innocent, they look patient, but all of a sudden they transform themselves into tigers and do very destructive things".
Mrs. Minarsih, who like many Indonesians uses only one name. seems typical. "I was sad when I lost my job," she said, "but I was really angry, too. I was angry, but I didn't show it. I've been working there for four years. I've done my job. I was never in trouble. So how can they just let me go?"
Like other economy-class passebgers, she had received a 70 percent discount -- to about 20 cents -- on her ticket home as part of a Government effort to clear the capital of its new mass of restive unemployed. But the city's deepening poverty may be thwarting this plan: Some of Jakarta's poorest people say they can't afford even 20-cent tickets home.
The train to Surabaya was a sort of Noah's ark of the city's disadvantaged: jobless factory workers, market vendors, food- stall operators, part-time security guards, day laborers, bus- fare collectors, newsboys and purveyors of plastic bottles of water to motorists stuck in traffic.
As the train waited to depart, vendors filled the aisles selling wash cloths, baseball caps, small packets of tissues, mock- leather wallets and rubber monkey masks.
Feeding her 3-month-old baby with bits of mashed banana, Surateni, 27, squeezed onto a crowded seat, her belongings at her feet in a cardboard box tied with pink plastic string.
She was bringing a cluster of rambutans -- the only gift she could afford -- to the two sons waiting for her in her village. The price of rambutans, small clusters of fruit, has tripled in recent days.
The rising prices have all but eliminated the livelihood that supported Mrs. Surateni, who fries and sells catfish at a market stall in central Jakarta. Both rice and cooking oil have doubled in price, she said, reducing her daily profit to 5,000 rupiah, or less than 40 cents at the latest exchange rate.
She has cut the portions she serves her customers, she said, but if prices rise any more -- as they will with the austerity planned by the Government -- she will have no profit.
Mrs. Surateni already lives at the bottom of the economic scale, so she is prepared for hardship. "We'll find a way to survive," she said. "We don't have any choice."
Sander Thoenes, Jakarta -- The International Monetary Fund is to approve its second tranche of (#1.7bn) in stand-by credits to Indonesia in February, earlier expected, in recognition of the country's radical reforms and bank restructuring, an IMF official said yesterday day.
Mr Bijan Aghevli, deputy director IMF's Asia and Pacific Department, said the Fund's board was to approve the second disbursement well before it is due on 15 March, following Indonesia's announcement this week fully to guarantee deposits and credits to commercial banks and create an agency to restructure the banking, following a drastic deregulation package earlier this month.
In October Indonesia obtained $38bn in credit pledges from the IMF and other lenders which with $5bn from its own resources makes up a total rescue package of $43bn. When President Suharto reneged on some of the terms sending the rupiah into a tailspin, the Fund and the government put together a more radical set of measures this month. "They have acted on their promises in record speed," Mr Aghevli said. "They produced 15 decrees in six days." Bankers and investors reacted positively to most of the banking reforms, but some doubted whether the government could risk a full guarantee for the banks. Mr Aghevli and Sudradjad Djiwandono, governor of the central bank, in separate interviews defended these moves as the least of all evils.
"It's a huge amount of money, more than Rp350,000bn (#13 6bn)," Mr Sudradjad said. "But this guarantee only becomes a real cost it someone is defaulting. We have to guarantee everything and then we put some banks under receivership."
"There certainly will be a cost, but much of that cost is already there," Mr Aghevli added. Indonesian bankers estimate the central bank spent Rp60,000bn in November and December alone to prop up many of Indonesia's 225 banks. "In effect the government already owns a majority stake in some of these banks, as most of the other depositors have left."
Mr Sudradjad said that IBRA, the bank restructuring agency, could spend Rp30,000bn but it would also be able to collect bad loans and sell assets of banks it took over. Indonesia lacks precedents for corporate bankruptcies but it has a state debt collecting agency which can evade the courts in foreclosures for stated enterprises.
Mr Sudradjad conceded, however, that plans to issue bonds to fund IBRA had not been finalised. Standard & Poor's downgraded the country's debt rating within hours of the reform announcement. "Right now we have very bad ratings" we can't sell any bonds," he said. "We may just have to rely on rupiah bonds."
The governor said that he still encouraged bank mergers but added that increases of the capital require to meet, and a deadline, had yet to be set. "The most important thing is that they are healthy, and only then that they are big."
Angry mobs have looted and trashed dozens of shops owned by ethnic Chinese in Indonesia"s Central Java province because of rising prices, an official said Wednesday.
Hartoyo, an official of the regency of Rembang told Reuters by phone that mobs of youths had attacked shops in the small coastal villages of Fragan and Sarang, about 500 km east of Jakarta. "There was a riot over the price of basic commodities and price rises," he said "The area is not yet calm and troops have come from neighbouring regions," he said.
Nine shops were destroyed by local youths in Sarang on Tuesday night and 17 in Kragan on Monday night, he said, adding that all were owned by ethnic Chinese. "All the shops were destroyed by local youths and in Kragan there was also a church damaged," he said. "All the foodstuffs were looted. There were no victoms, only the stock was taken and the shops destroyed."
The police and military in the region were not immediately available for comment on the trouble.
[This item shows the insidious campaign now being mounted by some top generals to hound the opposition and provoke anti-Chinese progroms. If they succeed, things could get very rough for minority groups up and down the country after the Chinese and Muslim festivities of this week come to an end - Tapol.]
Indonesia's military Tuesday warned the country against linking politics with the economic crisis gripping Indonesia, saying it could lead to further instability.
"We must never be caught offguard by rumours and politicise the present economic crisis", said the social and political chief, Lt General Yunus Yosfiah. "History had shown that confusing economic reforms and political reforms could lead to a rise in political instability", he was quoted as saying by the national news agency, Antara.
"We must not use street demonstrations or other political manouevres to solve the country"s problems. We must instead strengthen national unity to get out of this difficulty," he said.
The military has taken a more visible stance over the past month in showing its support for nationwide campaigns mounted to bolster the country"s devastated currency.
Military leaders specifically called on all non-indigenous Indonesians, primarily ethnic Chinese and Indians to join the "Love the rupiah" campaign and turn in their dollars. "With the spirit of nationalism, we must be willing to make some sacrifices and participate in movements like "Love the rupiah" and "love local products" campaigns, Yosfiah said. The military has warned that it will not tolerate any disruption in the run-up to the prepsidential selection in March when Suharto is widely expected to be returned for a seventh term.
Scapegoats are suffering for a financial crisis few understand. Nick Cumming-Bruce reports from Jember, East Java
Heavy locks on the steel door of their modest village shop and the fear that discourages Lucy and her ethnic Chinese family from walking the few yards from their house to open it reveal the racial hatred threatening to turn Indonesia's economic crisis into violence.
"It looks dangerous," Lucy says after venturing a few yards up a side street in her east Javanese village of Balung and then turning back. "I can see it on people's faces."
A week earlier a mob of stone-throwing Indonesian youths with knives, sickles and iron bars attacked their shop screaming "Kill the Chinese". As the family ran for their lives, the mob emptied the cash drawer, stole 40 sacks of rice and tried to set the shop on fire.
Now the Chinese "ghost-to-ghost" network, as they call their grapevine, has warned them that when midday prayers have finished at the local mosque, their shop will be attacked again and burnt down. As they speak, a gang of 40 motorcyclists are breaking into a Chinese-owned store a mile or two up the road.
"I've heard they are going to burn all the Chinese houses on the 29th," Lucy says, wistfully handing over snaps of a married sister in Derby. "I plan to move away for a few days. If I had enough money I would go to England."
The attack was part of a wave of anti-Chinese violence in eastern Java, the most crowded and politically dominant island in Indonesia's vast archipelago. In the coastal town of Muger, some people have printed the word "Muslim" on their doors as protection against the mob which rampaged through their streets earlier this month. Last Friday Chinese shops were smashed in another eastern town, Probbolingo.
The day before the attack in Balung, fire reduced the "Source of Gold", a fancy new shopping mall in the nearby town of Jember to a smoke-blackened shell. Local Indonesians say it was an accident, but local Chinese are convinced it was racially inspired arson.
But it is not only the ethnic Chinese who fear that East Java's experience may prove to be only a modest forerunner of wider rioting reminiscent of the violence which preceded President Suharto's rise to power 32 years ago.
"There's no grip on the situation to prevent local conflict from becoming a national conflict," warns Marzuki Darussman, an MP (sic - former MP) who sits on Indonesia's human rights commission. East Java's violence is a response to the financial crisis that has plunged Indonesia's currency to disaster levels, not just for debt-burdened corporate giants but for small consumers at the end of a food production chain heavily affected by the cost of imports.
Few understand why basic essentials have doubled or tripled in price, and why cooking oil is running out. "Is Indonesia going to war?" a Jakarta resident recalls someone asking in his home village.
The frustration inflames bitterness towards the Chinesewho represent only 3 per cent of Indonesia's 200 million people but control 70 per cent of its wealth. The Chinese are getting richer at the expense of poorer Indonesians by hoarding and profiteering, says Mushodiq Fikri, a Muslim leader in Jember. "People are suffering, they wait for a chance to react, so this [violence] could happen a few more times."
The authorities too are starting to make scapegoats of the Chinese. The Chinese worry about how the situation will develop as real hardship sets in. Chinese-owned shops already depend on selling old stock and are not buying more "If I buy and sell at these prices I will die," one store owner explained simply. Goods now available, albeit at high prices, will just run out.
In East Java some Chinese are not waiting to find out what happens then. The flow of Chinese from smaller villages to bigger towns has already begun.
By Jay Solomon and Peter Waldman
Jakarta -- The local office of the Crown Worldwide moving company has asked its insurer in London to clarify an urgent point for some concerned customers: Are household goods awaiting shipment covered against rioting?
That's the kind of question on many expatriates' minds here these days. With Indonesia's inflation rate at 25% and rising, layoffs rife, and an economy sinking like a stone, tension is rising in the world's fourth-most-populous country. Thus clearing out -- safely -- has become the main preoccupation for many foreigners and affluent locals, particularly members of Indonesia's relatively well-off ethnic-Chinese minority, who fear they will bear the brunt of any violence.
Stages of alert
Most people in these privileged groups are still hanging around, watching for the first signs of serious unrest. But though no exodus has begun, planning certainly has.
Engineering giant Bechtel Group Inc. recently gave out checklists to employees of things to do during three stages of alert, leading up to a full evacuation.
The Jakarta International School, whose 3,062-pupil enrollment is down 100 students from the fall semester, has laid in extra stocks of food, water and fuel for its emergency generators, in case a crisis forces it to keep students at its campuses.
The school has given its bus drivers special training in what to do if confronted by a mob, and has a deal with its bus contractor for access to information from the contractor's far- flung radio network. Administrators keep in touch with several embassy military attaches who have children at the school.
"Otherwise, it's business as usual," says Headmaster Niall Nelson. Crown Worldwide, the movers, reports a surge of roughly 50% in outbound relocations in January compared with a year ago. Household goods, by the way, are insured against riot damage, says Crown Worldwide's Rick McCarthy.
Many people "want to move before the presidential election in March, or as soon as possible after that," he says. "We'll be busy for quite a while."
One ethnic-Chinese treasurer of a foreign bank here recently admonished her daughter "not to do anything that promotes jealousy in others," she says. "Just keep quiet."
Open plane tickets
Greg Doyle, who manages the Jakarta office for human-resource consultants Hewitt Associates LLC of Chicago, says: "We've been hearing from quite a few U.S.-based multinationals who are dusting off their evacuation plans. Some companies, particularly outside Jakarta, have already begun taking out dependents."
An American retail executive, who asked not to be identified, holds open-dated airline tickets to both Singapore and Hong Kong, lest the flights to one are full. "You never know if there'll be enough room on the planes," he says. Oil companies have given their foreign nationals open airline tickets, plus $1,000 pocket cash, to be repaid later if not used in a pinch.
Oil and gas companies, familiar with such tenuous times from the Mideast, have taken the lead here in emergency planning. Though none would speak on the record about their preparations, for fear of offending Pertamina, their state-owned joint-venture partner, several executives confirmed that security planning has become quite detailed in recent weeks.
One major European oil producer has devised a five-shaded color scheme for its levels of alert: from the current Code White -- "routine" -- through Codes Yellow, Orange, Red and, ultimately, Black -- "emergency." At each level, different groups will be evacuated, beginning with ethnic-Chinese spouses and ending with all foreign personnel.
The company's outside security consultants are devising transportation routes and booking airplane seats. Concerned about a rush on the airport in an emergency, the company has considered evacuations by sea on tankers calling at its petrochemical facility near Jakarta, but passed.
"Do you really want to be on an ethylene tanker with riots raging?" asks an executive involved in the deliberations. "It's potentially one big bomb."
If the situation gets that bad, most executives expect foreign militaries will help evacuate people. (Four U.S. warships are currently calling on the Indonesian island of Bali, a U.S. official confirms. Although U.S. Navy vessels visit Indonesia regularly, four at once in Bali is rare, this official says.) Most expatriates who have left Indonesia during the currency crisis have been driven out more by economics than fear, foreigners here say. Many expatriate experts have been fired, as have Indonesians, by debt- strapped local employers. Others have opted to leave after having their salaries switched from dollars to rupiah, in effect gutting their pay. Some others, particularly non- Westerners working here, are trapped.
One of Indonesia's biggest textile makers, Texmaco Group, employs nearly 800 Indian workers -- more than half of whom are eager to return home, says one of the company's Indian executives. But with their suddenly meager rupiah salaries, many have no money for air fare, let alone savings to start over in India, the executive says.
As usual in Indonesia, it's the ethnic-Chinese merchant class that has the most to fear from the mounting instability. Long the targets for Indonesians' rage, the country's Chinese -- constituting about 4% of the country's 204 million people -- have already been badly hit in the past 18 months in a string of riots across several islands. Now, many indigenous Indonesians associate the country's worsening plight with the "conglomerates" -- the giant Chinese-run companies that took on much of the$65 billion in private debt that has helped sink the rupiah.
"Where Can I Go?" Many Indonesian Chinese have stashed some money away overseas; the wealthier ones have contingency plans to flee to Singapore, Australia or North America. A private banker in Singapore says some of his clients have stocked their yachts for the 36-hour journey from Jakarta to the city-state. But most ethnic Chinese, like Indonesians, have to make do.
"I'll just close up my shop if the riots happen," says Henny, a furniture saleswoman in Glodok, Jakarta's Chinatown, who says she's resigned to the idea that unrest may be coming.
"Where can I go?" asks the bank treasurer. "I don't want to end up a beggar in some distant country."
She has been preparing for hard times for months, stocking up not only on household goods but on things like balloons, shoes and children's birthday presents. She expects supplies to vanish and prices to soar. Terrified of indigenous Indonesians' mounting envy and resentment toward the ethnic Chinese, she and her family are doing all they can to remain "invisible," she says.
The most explosive times are expected to be between now and April, Indonesians say, as layoffs mount, prices rise and the presidential election gets under way. "Safe- deposit boxes in Singapore are full. Cash is kept at hand. There is plenty of food stored at home," says one of Indonesia's most prominent ethnic- Chinese banking tycoons. "But this is not just the ethnic Chinese. It's all Indonesians."
[Kate Linebaugh contributed to this article.]
By Darren Mcdermott and Jathon Sapsford
Indonesia unveiled sweeping reforms of its bloated banking sector, but raised the specter of a debt moratorium as some Indonesian companies will be granted a "pause" in their foreign- debt payments.
The reform package announced Tuesday morning, buoyed Indonesia's fragile currency, which surged dramatically.
The package, shaped in cooperation with the International Monetary Fund and far more comprehensive than many international bankers had expected, aims to shrink the number of banks, guarantee the claims of nervous depositors and creditors on domestic banks, and start cash flowing again through the nation's frozen financial system. Indonesia's Finance Ministry said it will create a bank- restructuring agency that will be funded by issuing government-backed bonds. It will also reform the outdated legal framework for banking operations and cut restrictions on foreign ownership of Indonesian banks.
"The government has decided that from today it will stand behind the commercial banks of the country and guarantee that obligations to depositors and creditors will be met" for at least two years, the Finance Ministry said in a statement. Among the more than 200 Indonesian commercial banks, those that are found lacking "good prospects for restoring themselves" will be placed under the newly created Indonesian Bank Restructuring Agency to be merged, sold off or recapitalized, the ministry said.
"This means that the public can now rest assured their bank deposits are now completely safe and sound," it added, clearly hoping to stem widespread cash hoarding that has threatened to escalate into bank runs.
International Monetary Fund Managing Director Michel Camdessus said he "welcomed" the moves. "It is my conviction that the new measures will be implemented effectively and will contribute to a resolution of Indonesia's present crisis," Mr. Camdessus said in a release.
But there were no reassurances for foreign creditors, as Indonesia's point man for working out its $65 billion in private foreign debt raised the specter of a debt moratorium. "A temporary pause in foreign-currency debt servicing, both of interest and capital, would be needed for ... companies to allow time for new arrangements to be worked out between lenders and borrowers," Radius Prawiro told reporters.
The government has established two committees, one for the nation's foreign debts and one for domestic debts, Mr. Prawiro said. The committee on foreign debt will be headed by Bank of England Executive Director Pen Kent, who said he sees a three- month hiatus in payments likely for some but not all of the 228 companies that fall into the debt-restructuring "framework" he will be constructing. IMF officials, meanwhile, said Indonesia's creditors were forming a steering committee that would establish a liaison with the two Indonesian committees.
It wasn't clear if the payment pause was effective immediately, though Mr. Prawiro said that it would be "most effective" if it were. Most Indonesian companies have ceased making payments in any case.
The reforms are needed to keep transactions flowing across the archipelago, from village markets to foreign-exchange markets. As Indonesian banks have run short on cash and international bankers have cut off lending, even healthy companies have found themselves unable to finance operations like foreign trade that would keep foreign exchange flowing into the country. The central bank, which still has close to $20 billion in foreign-exchange reserves, said it would now stand behind credits issued by local banks, meaning they should again be accepted in international financial markets.
Backing up its words with action, the central bank, Bank Indonesia, jacked up interest rates -- pushing the two-week interbank rate to 24% from 18% -- and began buying rupiah in the foreign-exchange market.
Even before the announcement, international bankers were questioning whether the measures could fully restore confidence to the nation and global markets. Food prices have been rising in the run up to Indonesia's biggest Muslim holiday of the year, beginning late this week, and fears of social unrest are growing.
Bankers, meanwhile, are just starting to get a feel for the size and complexity of Indonesia's massive foreign debt. In the latest sign of how little is known, Japan's Ministry of Finance has quietly ordered leading Japanese banks to submit a tally of their loans outstanding to Indonesia. Such moves will be necessary before international banks and government can coordinate how to restructure Indonesia's obligations, officials say.
In Tuesday's trading on the Jakarta equities market, the key index rose 0.5%, mainly on the strength of tobacco and banking shares. Traders said trading was generally cautious, as the market digested the news.
But the rupiah rose dramatically on the news. In late Asian trading, the rupiah was at 10,487 to the dollar after ending Monday at around 13,050 to the dollar. Markets in Singapore, where the bulk of rupiah trading takes place, closed early Tuesday and remain shut through the end of the week.
Other Asian currencies rose as well Tuesday. Some traders attributed the gains in regional currencies more to players with long U.S. dollar positions squaring up ahead of the holiday rather than to the effect of the news, pointing out that many details of the measures need to be clarified. Jakarta markets will shut Thursday and Friday.
Some traders were expecting Indonesia's central bank to use the thin market to team up with other Asian financial authorities in a massive effort to boost the rupiah. Singapore and Japan participated in such a move in November, after Indonesia signed its first IMF accord, and a Japanese official said Sunday that Japan would be assisting Indonesian with unspecified measures this week.
Still, after weeks of being distracted by the larger sums involved in South Korea's $153 billion foreign-debt crisis, international bankers and regulators now appear to be turning their attention to Indonesia.
Japan's Finance Ministry told nine top Japanese banks, assembled for a closed-door meeting in Tokyo late last week, to measure their exposure to Indonesia in an effort to "coordinate policies," according to bankers familiar with the gathering. Banks are now preparing to give the ministry those totals, critical data bankers believe will be used to help put together an international rescue package.
Vice Finance Minister for International Affairs Eisuke Sakakibara said Sunday that Tokyo would participate in "some sort of measures" to be announced this week, but didn't elaborate. Japan is Indonesia's biggest single creditor, holding some $23 billion of the nation's private-sector foreign obligations, according to the Bank for International Settlements.
Japan's Indonesian debt tally comes as bankers from Japan, the U.S. and Europe are closing in on a final agreement to restructure South Korea's private-bank borrowing into a series of new government-guaranteed loans from one to three years in maturity. But Japan's bankers say Indonesia's problems are going to be far harder to work out.
South Korean officials have been at a loss to detail their banks' exposure to Indonesia -- as have Indonesian officials themselves, who lack an accurate inventory of their foreign debt.
Although bankers talk about working out a way to help Indonesia, in fact they hold few cards in a country where the law prevents them from putting companies that don't meet payments into receivership. "We have no leverage," concedes the regional head of a European bank. "Except that they will cut themselves off from international lending for many years to come."
Louise Williams, Jakarta -- In the first sign of a co-ordinated opposition movement, pro-democracy figurehead, Megawati Soekarnoputri, and Muslim leader, Amien Rais, publicly denounced President Soeharto yesterday in front of masses of cheering students in the central Javanese city of Yogyakarta. Their appearance, billed as a political discussion at Yogyakarta's Islamic University, is their first together since Mr Rais proposed a pro-democracy alliance earlier this month to challenge President Soeharto's bid for a seventh five-year term, due to begin in March.
Punching her fist in the air, Ms Megawati -- the popular daughter of Indonesia's founding President Sukarno -- told about 1,500 students: "Indonesia's situation is like the Titanic, and President Soeharto is taking no action. I reject President Soeharto's re- election because Indonesia is not only facing an economic crisis, but a crisis of belief in the Government."
The lecture hall was packed to capacity and hundreds more students watched on TV monitors outside as participants criticised collusion, corruption and nepotism in the Soeharto Government.
Within Indonesia's tightly controlled political system there is no mechanism which allows either Ms Megawati or Mr Rais to stand against President Soeharto. Indonesia's handpicked Parliament has elected President Soeharto unopposed for over three decades and is expected to re-elect the 76-year-old strong man in March, despite mounting calls for his resignation and the continuing economic meltdown.
But the public movement against the Soeharto Government remains significant in a nation where criticising the President can be punished as treason, with a maximum penalty of death. Mr Rais, who heads the 28 million-strong Muhammadiah Islamic organisation, told the cheering crowd: "Indonesia used to be an Asian tiger, now it is an Asian beggar. Thirty years of no change, enough is enough. The man at the top must be held responsible."
Further east in the provincial town of Probolinggo, security forces reported about 1,000 people had attacked and looted shops, demanding shopkeepers hand over supplies of basic food such as rice, sugar and cooking oil. East Java has been hit by a number of food riots since the sharp devaluation in the rupiah triggered panic buying.
The dramatic collapse of the rupiah is sending prices spiralling and forcing mass layoffs, just ahead of the year's most important Muslim holiday of Idul Fithri, when Indonesia's majority Muslims are obliged to return home to their villages for elaborate celebrations. The Australian Foreign Minister, Mr Downer, was due to arrive in Jakarta late last night, and faces the difficult task of steering Australia's close bilateral relationship with the Soeharto Government at a time when the economy is on the verge of collapse.
The New Zealand Government has warned its companies against giving credit to Indonesian firms, saying the crisis meant major corporations were not paying their debts.
At an earlier meeting in Jakarta at the weekend, Mr Rais called for the support of other community organisations, saying he and Ms Megawati could not challenge the Government alone. Mr Rais had also called for the support of Indonesia's most powerful Islamic leader, Mr Abdurrahman Wahid, who leads the 38 million-strong Nahdlatul Ulama (NU). However, Mr Wahid has since suffered a stroke and remains in intensive care in hospital in Jakarta.
Political analysts say Ms Megawati has little chance of succeeding in her bid to replace President Soeharto, because she remains banned from participating in mainstream politics and faces the threat of a military crackdown if she tries to mobilise her supporters.
Indonesia's Chinese have risen far. But in accumulating wealth they have aroused envy, and as Louise Williams reports, when times get tough, they have further to fall.
At a vehicle spare parts shop in Semarang, in central Java, a customer angry at rising prices shouted at the Chinese shopkeeper that he wanted to slash him with the thick, curved blade of a harvesting knife. The man was convinced that the Chinese was trying to cheat him. The shopkeeper quickly closed his store.
Further east along the staunchly Muslim coast, angry mobs had already attacked Chinese shops, burning down a supermarket and hurling stones at traders in several clashes last week, and blaming the relatively wealthy ethnic Chinese for hoarding rice and sugar as prices spiralled in the face of the collapsing rupiah.
In Jakarta, members of the business elite say Chinese children are disappearing from the city's most expensive schools and moving with their families to Singapore. Others have shifted to homes near a private airport where executive jets wait on standby in case chaos breaks loose. Ahead of the ethnic Chinese have gone billions of US dollars, part of the capital flight that has sent the Indonesian economy into a spin.
The military announced that food hoarders would be charged with sedition, as officials blamed the rich and middle class (many of whom are Chinese) for panic-buying which forced prices up.
Anecdotal evidence suggests that Chinese merchants in rural villages are seeking out the comparative safety of larger towns and closing their businesses as the devastating economic downturn raises fears of bloody ethnic scapegoating.
Over the past two years, as the gap between the rich and poor has widened, angry Muslim mobs have attacked Chinese and Christian targets in a string of riots fuelled by social envy.
Indonesia's ethnic Chinese, many of whom are Christians, make up about 3 per cent of the population, but control about 70 per cent of the wealth. Millions of poor Muslims will be the first laid off from menial jobs and the least able to cope with inflation when the full impact of the dramatic currency devaluation is felt.
But that picture leaves out the key to economic power, the political elite of Soeharto's New Order regime.
President Soeharto has used the business acumen and the regional networks of the ethnic Chinese to provide business opportunities for his friends, relatives and military officers. And the wealthiest of the Chinese have used Soeharto for access to monopolies and concessions over natural resources, commodities and key local markets.
Now, in the face of rising anti-Government sentiment and increasing hardship for tens of millions of poor Muslims, it is not inconvenient for the Chinese to take the blame, to shift the focus away from the crony business practices, corruption and nepotism built during Soeharto's more than three decades in power.
"The Chinese have a strong economic role, which is why the poor people have strong negative feeling towards them, and so if there is a feud or a riot then the Chinese become the scapegoats," says a psychologist and commentator, Darmanto Jatman.
"The situation is becoming much worse because of the economic crisis. Two days ago mobs even stoned the luxury train from Jakarta because it is a symbol of wealth and now they hate the symbols of the rich.
"In normal times the Javanese are used to repressing their feelings, and the relationship is fine, because that is their culture, so if they hate someone they just repress it. But if something happens to spark a fight then they express their hatred very aggressively."
The political commentator Professor Arief Budiman says the Chinese have always been used as a buffer. "The Government uses the Chinese like a money machine. The Chinese have a South-East Asian business network, they are easy to bribe, and then they [indigenous Indonesians] turn around and blame them -- so the Chinese are very useful."
The position of the ethnic Chinese is not so different now from what it was under Dutch colonial rule, when the economic distortions were introduced, Budiman argues.
The Chinese were granted a position somewhere between the colonisers and their subjects. Indigenous Indonesians were banned from commercial activity to prevent them gaining any power to rebel, so the Chinese were relied upon to keep the colonial enterprise ticking over, handling a string of profitable monopolies and even acting as de facto tax collectors on behalf of the Dutch.
"The number of Dutch was very small, so they had to rule by using the local people. They used the Chinese to prevent the indigenous people from gaining any economic power, but kept the Chinese isolated and used them as a kind of buffer who could be blamed any time something went wrong," Budiman explains.
Darmanto refers to an incident from colonial times that speaks volumes about attitudes towards Indonesia's Chinese. In the early 1800s Prince Diponegoro rose up against the Dutch in Java. But, as the story is still told in the region, the prince fell in love with a Chinese girl, and immediately the battle turned against him. And so, many believe, if a Javanese man falls in love with a Chinese woman, his fate will be bad.
When Paulus was a young child his town of Juana, on the coast of central Java, was ablaze with anti-Chinese rage. Hundreds of kilometres away in Solo, an ethnic Chinese man riding a motorcycle had collided with a Javanese man riding a bicycle, sparking a fight that engulfed much of heavily populated region for days.
Today, Paulus is leaning on the counter of his electronics store. It is the Muslim fasting month of Ramadan. Outside, the heat is thick and the streets are sleepy, as the residents of the predominantly Muslim town wait out the last hours of the day before they are permitted to eat.
In three weeks the price of the portable cassette decks on the shelves has gone up from 140,000 rupiah to 250,000 rupiah -- about a month's wages for a factory worker. The players are locally made, but from imported components, so the plunge in the rupiah has hit hard.
Paulus has Javanese friends and believes relations are OK on a personal level.
"But, people do blame the Chinese -- that is just the way they think. The Chinese are the outcasts, they are the scapegoats everywhere," he adds. "My parents remember 1980, when the town was on fire. They are afraid that time will happen again. This crisis is going on for too long for people to manage."
Paulus does not know where his ancestors came from. His family has been in Indonesia for four generations. He doesn't speak or read Chinese, because the public use of Chinese language was outlawed after the bloody communal violence of 1965 which propelled Soeharto to power.
In a nearby city a Chinese businessman says: "If you want to grab power you must step on someone, and the head of the Chinese is flat and not slippery, they say, so they use our head -- the armed forces, the Muslims, everybody."
In business, he says, the price of opportunity is high.
The military, for example, demands its cut. "An officer comes in and says how nice it was that he found a brand new car waiting for him at his previous post, or that his wife and children want to go shopping in the United States -- he doesn't ask directly.
"We don't dare say no. We are already traumatised about our position in this society."
In the 1950s a Chinese trader in central Java named Liem Sioe Liong became a supplier to the prestigious Diponegoro division headquarters of the armed forces in Semarang. At the time the division's chief supply and financial officer was a Lieutenant Colonel Soeharto. He evidently trusted Liem and was comfortable with the merchant's low-profile manner and undistinguished business history.
By 1990 Liem was Indonesia's richest man, presiding over a corporate empire under his Indonesian name of Salim which stretched across Asia, into Australia and the United States and pulled in billions of dollars and employed hundreds of thousands of Indonesians.
Under President Soeharto's New Order, a number of Chinese entrepreneurs have flourished and built multinational empires spanning vast interests.
According to Adam Schwarz, the author of A Nation in Waiting, the Chinese prospered under Soeharto, because they are "good at business", and had a head start in the capitalism game over the indigenous Indonesians.
"In general terms, the Chinese in Indonesia are better educated than their indigenous counterparts. Perhaps because of their political vulnerability they tend to save much of their money, distrust strangers and depend to a great extent on personal relationships and family networks -- often extending into broader affiliations with overseas Chinese communities in the region."
So Chinese firms had access to well-established networks of credit, market information and domestic and overseas trading contacts, says Jamie Mackie of the Australian National University. But they also had to rely on political connections, bribes and payoffs to protect their positions.
Under Soeharto the Chinese built up a strong and mutually beneficial relationship with the Government and the armed forces.
In exchange for generating economic growth and supplying funds to their political patrons, the Chinese received a long list of favours: tax breaks, state bank funding, access to import and trading licences, introductions to foreign investors.
Eighty per cent of companies listed on the stock exchange are controlled by ethnic Chinese.
In mid-1997 the Salim group shifted some of its operations -- and funds - to Singapore, unleashing a vigorous debate about economic nationalism. Indonesia's rising Islamic movement wants to redraw the lines of privilege and provide "affirmative action" for the majority Muslims.
The problem with the Chinese debate is that the fabulously wealthy conglomerate owners are the few, and the least likely to face angry Indonesian mobs. "The Chinese in the small towns cannot run away and like other middle-class people they are scared and so are hoarding rice," says Arief Budiman. "I have heard the rich Jakarta families are moving their capital to Singapore and sending their families out.
"If there are riots there will be victims. The Chinese will be the first targets."
| Environment/land disputes |
John Aglionby, Jakarta -- Forest and brush fires have flared up again in Indonesia and are threatening a bigger crisis than last year, when more than 2 million hectares were burnt and choking smog spread from Australia to Thailand.
According to an expert, global climate conditions and the sequence of events - fires followed by a short wet season and then more fires - are similar to 1982-83, when 3 million hectares of primary and secondary forest were lost in Kalimantan, at a cost of $A7.5 billion.
This time the fires were starting much earlier and were more widespread, he added.
Satellite data shows that hundreds of hotspots have appeared in East Kalimantan, on the island of Borneo, and more than 200 on Sumatra since the end of December, when the monsoon season ended prematurely.
The official Antara news agency said many of the hot spots were in the Bukit Soeharto forest reserve in East Kalimantan province. Motorists had complained of poor visibility on roads near the reserve, it said. "A vast area of yellowish bush in the forest park has begun to smoulder again, while trees are withering in the prolonged dry season."
The Indonesian Government, struggling with a currency crisis, was told of the new fires a week ago by Western analysts, but has done nothing to put them out or publicise them.
The Environment Minister said he was checking the accuracy of the reports. The authorities in East Kalimantan have issued a danger warning and an oil company had to evacuate 50 people from a rig surrounded by blazing brush.
Smoke has not yet returned to Sumatra but it is feared that it soon will, since the huge peat swamps in South Sumatra which produced much of last year's noxious smog are starting to burn again.
| Human rights/law |
The Alliance of Independent Journalists has sent a strong protest to the Jakarta daily, Media Indonesia for sacking one of its journalists, Meilani Dhamayanti. She was sacked for her report of an interview with the chairperson of the PRD on 20 January. The item entitled "The person guilty of the bomb blast" included just one paragraph from the interview. She was attempting to present both sides of the story.
As Meilani said in her letter to the editors on 22 January, that she handed in the interview to the editors meeting and did not know whether her story would be published. Moreover two of her superiors expressed the opinion that it was OK to publish the story.
On 20 January, Meilani was summoed by the chief executive of Sumber Daya Manusia and told that the publication of the interview jeopardised the future of the paper and therefore, on the instructions of Suryo Paloh, editor in chief of the paper, Meilani was being asked to quit.
AJI says in its statement that there can be no justification for her dismissal as she had performed her duties professionally. What is still worse is that editor in chief Suryo Paloh sent a copy of the dismissal letter to armed forces headquarters, a body that has nothing whatever to do with running the newspaper. He was clearly trying to rebutt a document of the PRD which mentions that Suryo Paloh's paper is supportive of the PRD in the party is being reported in the newspaper.
AJI demanded that Meilani should be reinstated. Media Indonesia proclaims itself as being "the voice of the people". It should not act in this arbitrary fashion, especially at times like these when an economic crisis is raging and there is a crisis of confidence in the government.
The statement is signed by chair Lukas Luwarso and Secretary Dadang RHs.
| Arms/armed forces |
Jakarta -- The Armed Forces (ABRI) made a surprising decision yesterday to delay all planned arms purchases, including the Russian Sukhoi30K jet fighters.
Armed Forces spokesman Brig. Gen. A. Wahab Mokodongan told journalists that the monetary crisis had forced the military to cut its spending. "This move will save us about US$20 billion (sic)," he said, adding that the Armed Forces would ask the government to delay the procurement of the jet fighters and other military equipment in the wake of the economic crisis.
The Indonesian government in August opted to buy 12 Sukhoi-30K jet fighters and eight MI-17-IV helicopters from Russia to modernize its air defense system. It switched to the Russian fighters after canceling the planned purchase of nine American- made F- 16 jet fighters which, according to Jakarta, had been continuously linked to human rights issues. The first batch of the Sukhoi fighters was expected to be delivered early this year.
The Armed Forces also decided to delay the procurement of the remaining three of the five submarines, which had been ordered from Germany. The first two submarines were delivered last September.
Wahab did not say how long the purchases would be suspended.
The austerity measures were taken following an ABRI top brass meeting yesterday morning. The meeting also decided to gradually reduce the number of Indonesian military attache posts at Indonesian representative offices abroad by 70 percent. The meeting further decided to scale-down or cancel various military functions, ceremonies and trips abroad and nationwide. It was also decided that all large-scale military exercises requiring a huge budget would be scrapped or downgraded.
When asked whether this meant that the military's state of readiness would lessen, Wahab said that the Armed Forces would still be in full control of any arising situation. He said the Armed Forces headquarters still perceived the situation was stable and within their control. "Our troops will be ready in two to four hours, whenever the situation gets worse," he said.
"We are always prepared for the worst possible situation."
He warned that the Armed Forces would use a repressive approach if the situation got out of control but added that "this would only be the last resort".
| Economy and investment |
George J. Aditjondro -- Since seizing power in the mid-1960s, Indonesian President Suharto has translated his absolute political power into a massive family fortune. The Suharto family is worth an estimated $16 billion according to Forbes magazine, and $35 billion according to one estimate attributed to the CIA. Suharto's desire to protect this empire while the economy melts down has dismayed international investors and confounded officials from the International Monetary Fund (IMF), who see economic reform and the end of so-called "crony capitalism" as essential to Indonesia's recovery.
The Suharto family wealth figured prominently in the conditions set by the IMF in its $43 billion bailout of the Indonesian economy. That agreement, which has so far failed to end investors' skepticism, included cutting off subsidies to a car company owned by one of his sons, dissolution of the clove monopoly owned by that son and cancellation of two power plant projects in which another son has a stake.
Suharto watchers are skeptical. One of the power plant projects had been publicly canceled last fall and then quietly resurrected a few months later. A Western economist with a regional brokerage told one wire service that Suharto may try to pacify international interests by agreeing to new terms -- but will then proceed at his own pace. He has already shocked the stock market -- causing the rupiah to drop to a record low of 16,500 per U.S. dollar (compared with 2,400 last year) by indicating that he will appoint technology minister B.J. Habibie as his running mate in March. This, after agreeing with the IMF, to scrap Habibie's $2 billion passenger jet project.
The problem is that the Indonesian government has been a financial instrument of the extended Suharto family for 32 years. The president and other members of his family now control 25 foundations with stakes in dozens of large companies, ranging from flour mills, cement factories, fertilizer factories, toll roads and timber concessions to oil palm plantations. The 76- year-old strongman is being asked to change not just his economic policies but his family's way of life. Suharto developed his skill in transforming politico- bureaucratic power into business deals in the early 1950s when he served as an army commander in Central Java. At that time, Indonesia had just achieved independence, and its military was so under-funded that army divisions set up foundations and gave special deals to a handful of businessmen who supplied the commander with rice, uniforms and medicine for his soldiers.
In 1965, when leftist military officers attempted to seize power from President Sukarno, Suharto and other conservative officers, allied with the United States, launched a ferocious counterattack, slaughtering somewhere between 500,000 and 2 million suspected communists. Over the next year, Suharto outmaneuvered his military colleagues and assumed absolute power.
It was then that Suharto's financial empire building began in earnest.
Suharto's main business operator was an old friend from Central Java, Liem Sioe Liong. Today, Liem is an 83-year-old billionaire who runs the original Suharto-linked financial empire, the Salim Group. He speaks Indonesian with a heavy Chinese accent 61 years after migrating from his native land at the age of 22.
Liem's first major money-making operation with Suharto was the Bogasari flour mills, which milled wheat provided by the United States under the U.S. Food for Peace program. Indonesia's National Logistics Board (Bulog), the government procurement office, diverted a potential competitor from Singapore to the small East Indonesian market. The huge western Indonesia market, with 80 percent of the flour business, was allocated to the Bogasari firm.
This exemplifies how Bulog and other government agencies and departments have been used during Suharto's 32-year presidency. Any bureaucrats or officeholders who resisted soon found themselves looking for new jobs.
Suharto's other longtime business friend from his early army days in Central Java is Mohammad Hasan, known commonly as Bob Hasan. Hasan is the antithesis of Liem Sioe Liong. He speaks fluent Indonesian with a Jakarta accent, plays golf twice a week with Suharto and has set up several news media organizations to defend his patron. His Nusamba Group -- which control millions of hectares of timber concessions -- is another major money maker for the Suharto foundations. Hasan exemplifies the political face of Suharto's empire. By hiding the family foundations and individual shares of the family members in Sino-Indonesian business entities, Suharto has effectively concealed his own alliances with Chinese businessmen. The Chinese, a very small, affluent minority in Indonesia, are unpopular there. Recently, Suharto's spokesmen have been accusing "the conglomerates" -- shorthand for Chinese interests -- of speculating with foreign currencies, a tactic similar to the one used by Malaysian Prime Minister Mohamad Mahathir, who has blamed philanthropist- speculator George Soros and "the Jews" for Malaysia's economic problems.
After accumulating initial capital from the Salim and Nusamba business groups, Suharto's six children, began to form their own conglomerates in the '70s and '80s. Father was always ready to give a supportive push here and there, beginning with his oldest son, Sigit Harjojundanto.
Sigit's air freight company, Bayu Air PT, got its start by airlifting cattle from Suharto's family ranch in West Java to the outer island provinces. I was then covering Suharto for a magazine that has since been banned by the Indonesian government for reporting on a shady government contract and I learned that Indonesian air force planes were used for Sigit's venture -- but only after after the Bayu Air logo had been glued over the military logo.
Suharto's oldest daughter, Siti Hardijanti Rukmana, known as Tutut, has won contracts on favorable terms to build hundreds of kilometers of for-profit toll highways in Malaysia, the Philippines, China and Burma. Only after 25 years do the host countries take over the toll taking.
Together, Tutut and Sigit also now control 32 percent of the Bank Central Asia, the largest private bank in the country.
Titiek, Suharto's second-oldest daughter, is married to an army officer named Prabowo Subianto who commands the Indonesian Army's special forces. His family has business ventures in dozens of countries, including Uzbekistan, Portugal, Sudan and Guinea Bissau. With the Suhartos, the Subianto family also owns stakes in seven private Indonesian banks, making them the second-biggest Indonesian banking family -- after the Suhartos. Then there's Bambang, whose joint ventures with construction firms in Manila and Sydney have built water supply projects and power plants in the Philippines, Indonesia and China. His Singapore-based Osprey Maritime Ltd. is also rapidly becoming one of Asia's largest oil tanker fleets. He will not suffer as a result of the IMF-imposed reforms, because the agreement does not affect Suharto-linked companies operating outside of Indonesia.
Tommy, Suharto's youngest son, is the flashiest of the clan. His dream is to turn Indonesia into an economic world power by developing a domestic automobile industry. He is producing a car called the Timor. Most economists and auto industry observers regard Tommy's national car project as a vanity-driven scheme that makes little economic sense. A planned $1 billion in subsidies to Tommy's firm was canceled at the behest of the IMF.
Tommy is hardly out of business, though. He uses a terminal at the new international airport near Jakarta to run his own private airline, Sempati Air. The Indonesian business press has repeatedly reported that Tommy owes the government back rent on his hangars and offices and hasn't even paid his catering bills.
The youngest sibling, Mamiek, has recently emerged in the business world after a company of hers obtained a deal to give a face lift to the northern shore of Jakarta Bay. The bidding was not competitive and Mamiek's company did not do an environmental impact study, as required by Indonesian law.
Since Suharto's children rushed into business, most major state companies have been forced to form joint ventures with the Suharto-linked private companies. The state- owned road management company, PT Jasa Marga, is a shareholder in Tutut's private toll-road company. The company has no reason to complain when the parliament, controlled by Suharto, approves annual hikes in tolls. It makes money, too.
In short, by blurring the difference between public and family enterprises, the Suharto oligarchy passes along to Indonesian taxpayers the inflated costs of crony capitalism.
One wrinkle in the IMF's pressures on Indonesia to reform is the friendly relationship of some U.S. corporations with the Suharto children. As Business Week reported last summer, "it is well- nigh impossible" for U.S. firms "to get a deal done without a Suharto clan member as ally, agent, or partner."
For example, the Nusamba Group has a 4.7 percent share in the Indonesian subsidiary of the Louisiana-based Freeport McMoRan mining company, according to the Wall Street Journal Interactive Edition, Asia. Over the last two decades, Freeport has established a huge copper, silver and gold mining operation in the province of Irian Jaya. The native Amungme and Kamoro peoples who live in and around the site have complained bitterly about evictions, pollution and disruption of their traditional way of life, drawing support from the Catholic Church, human rights groups and environmental activists. Troops under the command of Suharto's son-in-law now protect the mine.
Tutut and several other Indonesians have a 25 percent stake in PT Lucent, the local subsidiary of Lucent Techonologies. Another one of Tutut's companies, which specializes in supplying aircraft, military and navigation equipment, serves as the Indonesian agent for General Dynamics, General Electric and other U.S. firms. Tutut's company certainly would have profited if Indonesia had bought nine F-16 fighter jets that General Dynamics originally planned to sell to Pakistan. But when Indonesia's critics on Capitol Hill attacked the deal last spring as a protest against human-rights abuses in East Timor, Suharto got so angry that he unilaterally canceled it -- a rare instance in the Suharto family in which principles prevailed over profits.
Bambang has a mutually profitable relationship with the Hughes Space and Communications Inc. Since 1994, Hughes has sold two communication satellites to a company linked by Bambang -- a transaction made possible in part by a $136 million loan guarantee from the U.S. Export-Import Bank. Hughes's international division has a 10-percent stake in the enterprise. As George A. Tadler, vice president for Indonesian business development of the company told Business Week, "It isn't bad to have a President's son as partner."
Hughes has also sold a satellite to one of Bambang's joint ventures, a consortium with a Filipino telecommunications company. This consortium obtained a $25 million loan guarantee from the Ex-Im Bank last August to launch its first communication satellite. If Bambang and his partners are unable to pay back their loans, U.S. taxpayers will have to pick up the bill.
The question now is whether the family is serious about eliminating its own privileges in the Indonesian economy. Tutut says yes. She told the Indonesian Observer that even before her father signed the bailout agreement with the IMF, he had warned his children some of their projects would have to be shelved.
"Father asked us whether we were prepared for some of our business projects to be delayed," she was quoted as saying. "We said we were ready and had no objection to the agreement. I have no objections as long as it is for the sake of our people and the nation."
[Sources: Indonesian Business Data Center, Business Week, Dow Jones, Far Eastern Economic Review.]Tutut: President Suharto's oldest daughter, has taken a recent financial hit -- although she is still immensely wealthy. She serves on the board of a cab company that defaulted on a $260 million loan, helping to cause the fall of a Hong Kong investment house. She was responsible for the recent "National Love Indonesia" and "I Love Rupiah" campaigns, and maintains a high public profile by chairing important Indonesian charities. Tommy: Suharto's youngest son, is said to be the president's favorite. The disaster of his 1990 monopoly of the Indonesian clove industry cost the government close to $350 million in bailouts. He may have to sell his stake in the Lamborghini sports car business. Prabowo Subianto: Suharto's son-in-law -- whose own family is in many business ventures -- is married to his second-oldest daughter, Titiek. Her recent plan for building a bridge between Sumatra and Malaysia has been abandoned due to the current economic fallout. Bambang: Suharto's second-oldest son, had part-ownership in one of the 16 Indonesian banks that were shut down in an initial attempt to reform the country's economy. Hughes Electronics, Deutsche Telekom, Siemens, Hyatt, Hyundai are among his equity- holding foreign partners.
| Miscellaneous |
[The following is a translation of a press release sent to ASIET by the KNPD]
Conditions in Indonesia recently have become of ever more concern. The economic crisis which indicates Indonesia's fundamental economic weakness gets worse and worse. As a result the price of goods has jumped and the "little" people are the ones who must sholder all of this.
The government always considers the people stupid and that they understand nothing. The people's aspirations are never given any attention. As an example, the people's desire for a succession in the national leadership has not been positively responded to by the government. Meanwhile, the voices of criticism are frequently silenced, considered subversive and a disturbance to national security. Pro-democracy groups which want to struggle for human rights and the people's sovereignty are often accused of being behind disturbances or riots. The recent bomb explosion [on January 18 - JB] in an apartment in the Tanah Tinggi area, Central Jakarta is an example of the attitude of the government which is reactive and unwise in viewing problems, accusing the KNPD of being the masterminds behind the explosion.
Reflecting on the above, we, from KNPD Yogyakarta state:
"In reality an ideal struggle is like the sun which gives light and benefits to all. But if it is difficult to create, we, the youth of this nation, are ready to become the candle!!!"That the KNPD is an organisation formed from the uniting of a number of youth organisations, pro-democracy groups along with individuals and sympathizers of the pro-Megawati Sukarnoputri Indonesian Democratic Party; That the KNPD was not formed by the People's Democratic Party (PRD) and is not affiliated with the PRD; That in carrying out it's struggle, the KNPD uses the principles of moral demands and peaceful actions without violence. Because of this we reject the accusation that we were the one's [behind] the bomb explosion at the apartment in the Tanah Tinggi area, Central Jakarta not long ago, and we state that we are not responsible for this explosion; That the many recent riots are created by social unrest. Social unrest which happens because the voice and the interests of the people are never paid any attention, the tap of democracy is blocked, and there is no willingness from the government to accept constructive criticism from society. Because of this, we demand that the government quickly move to carry out political and economic reforms for the creation of the people's prosperity and sovereignty. We also demand that the government stops playing politics and scapegoating [others] in facing the problems of this country.
Yogyakarta, January 25, 1998
Gunardi Handoko, Chairperson
Waldjijah, Secretary
[Translated by James Balowski. The title of this press release was the translators choice.]
The government of President Suharto faced a volley of criticism Monday, accused of orchestrating a bombing plot to silence dissent and blamed for the economic crisis gripping Indonesia.
Opposition leaders said the failure of Suharto, 76, over the last 30 years to accept criticism was a direct cause of the crisis. The govt had fostered a culture of "corruption, collusion and nepotism", said Amien Rais, head of the 28-million strong Muhamadiyah Islamic movement, adding that there was a crisis of confidence both hear and abroad, in Suharto's rule.
And leading human rights official Hendardi accused the govt and military of orchestrating a bombing plot in a bid to cow the public amid the country's crisis.
"I think it's just an arrangement by the govt, an arrangement by the military," the Indonesian Legal Aid and Human Rights Association executive director told AFP. "The people will think its just an arrangement."
Hendardi and three other prominent Indonesians who have been critical of the govt or military, were allegedly named in an e- mail message found by investigators at the scene of the bomb blast here on 18 January.
"The military published the e-mail to make people afraid. The old strategy like before cannot make people afraid anymore," Hendardi added, saying their tolerance of such tactics had been whittled away by the crisis.
"This strategy will boomerang on the govt. The people have a crisis of confidence not just in the economy but in the government."
Referring to a number of opposition figures offering themselves as candidates in the March presidential selection, he said people were now challenging Suharto's rule. "Before you didn't see people challenge Suharto," he said.
Jakarta -- A prominent ethnic Chinese businessman said yesterday the military intelligence agency had cleared him of involvement with a bomb explosion in Jakarta last week.
Tycoon Sofyan Wanandi said military intelligence investigators had found nothing after an hour of questioning to link him to a bomb blast.
"Today I have come to clarify with the authorities about the documents they found during the investigation of the bombing," said Mr Wanandi, head of the diverse Gemala Group.
"The whole clarification of the whole situation has been accepted by the authorities and that is all they told me today."
His comments followed a meeting at the National Security Co- ordination Agency headquarters in which he repeatedly denied he was connected to the January 18 blast.
The Jakarta Post reported at the weekend that documents naming him had been found at the site of the explosion, a home-made bomb factory the military claims was being used in a plot by the outlawed People's Democratic Party.
"I have never met anyone from the People's Democratic Party, I never got involved with them and I never helped give funding to the party," Mr Wanandi said.
Newspaper reports said an e-mail found in the bombers' apartment mentioned Mr Wanandi, and intellectuals and activists, as having links with the group or supplying it with funds.
Mr Wanandi said he did not know why he had been questioned and declined to comment on suggestions he had been called in because of his high-profile role as the spokesman for Indonesia's Chinese community and a group of Indonesia's richest businessmen.
"It never came up in questioning," he said.
Diplomats were puzzled by Mr Wanandi's summons, saying they suspect it is an attempt to silence the businessman, who regularly speaks on controversial issues in the media.
The blast occurred as the explosives were being handled by bomb- makers in a Jakarta flat, injuring all three. One suspect was detained and two others escaped.
Activist Hendardi was also named in the e-mail but yesterday the director of the Indonesian Legal Aid and Human Rights Association accused the Government and military of orchestrating the bombing plot in a bid to subdue the public amid the country's economic crisis.
"I think its just an arrangement by the Government, an arrangement by the military," he said.
About 70 protesters staged a noisy but peaceful demonstration outside Parliament in Jakarta yesterday, demanding President Suharto retire.
A document believed to have been drafted by Kopassus, the crack forces unit commander by Major-General Prabowo, son-in-law of Suharto, is circulating among the mass media. It calls for an anti-Chinese and IMF campaign and accuses the Chinese conglomerates of engineering the current monetary crisis and of giving funds to the PRD.
The document alleges that there is close collaboration between the Jimbaran Group (see below) and the PRD, along with allegations that the PRD manufactured the bomb that exploded prematurely last week in Tanah Tinggi, Jakarta. The document claims that an activist who is acting as the go-between between the Jimbaran Group and the PRD sent a letter to the PRD saying that the CSIS is willing to support the PRD with cash.
The Kopassus document, which was drafted by Prabowo, commander of the special unit, has already been followed through by journals which support the status quo such as the weekly GATRA and the fortnightly Forum Keadilan. It is believed that the campaign will be the cover story in this week's issues of the two journals, just as the fasting month end and everyone is celebrating the Lebaran festival.
Sofyan Wanandi, spokesperson for the Jimbaran Group who is also close to the CSIS, is due to be questioned by the police about the reports of money for the PRD. He has said he is ready to appear before the police. Prabowo is said to be increasingly angry with Wanandi because he has refused to take part in the "love-rupiah" campaign and has categorically refused to sell dollars. [Sofyan Wanandi owns his own huge business empire called Gemala with a lot of investments in the US. He is pushing for a better-regulated capitalist system in Indonesia which puts him in conflict with the Suharto family interests.]
There are already signs that efforts to transform the monetary crisis into an anti- Chinese campaign are being reflected on the streets. Some Muslim groups have organised protests against the IMF accusing it of being an infidel. A secret meeting was also held by Suharto's foster-brother Probosutedjo to promote this campaign.
"They want to redirect public anger towards blaming the Chinese conglomerates for the crisis," said one person who attended the meeting. Meanwhile attempts are being made to get the support of some Muslim leaders to take part in the "love the rupiah" campaign by selling dollars and contributing gold.
If this campaign succeeds, the Chinese will become the target for being responsible for the crisis, in this way distracting attention from the true cause of the crisis, the greed of the Suharto family, collusion, corruption and nepotism. TAPOL adds:
Republika, the newspaper of ICMI and Habibie, carried a lengthy report Saturday, alleging "political manipulations" behind the collapse of the rupiah, and pointing the finger at "conglomerates', a buzz word for Chinese business. A number of Muslim personalities were quoted as supporting these accusations.
The report also strongly supported Habibie as the candidate for the vice-persident, arguing that his hi-tech qualifications were crucial to Indonesia's future.