Fwd (GLW): Indonesia: Impending catastrophe

Alan Bradley alanb at SPAMelf.brisnet.org.au
Sun Oct 29 07:05:09 MST 2000

The following article appears in the current issue of Green Left Weekly

Indonesia: Impending catastrophe

On August 22, hundreds of members of the Riau Farmers Union demonstrated
outside the Indonesian People's Bank in Pekanbaru demanding rural
assistance loans so that they could buy seeds for the next harvest season.
On the same day in Sumatra's largest city, Medan, 10,000 public transport
drivers from the Organisation of Drivers and Owners of Public Transport
went on strike and brought the city to a standstill. They were demanding
cheaper spare parts, subsidised fuel and an end to the myriad of illegal
levies they are forced to pay.

On August 25, students from the University of Indonesia went on strike to
protest against the imposition of additional tuition fees, imposed after
cuts in government funding to universities. Under the new International
Monetary Fund (IMF) prescriptions, Indonesia's best universities are being

On September 7, hundreds of people on the island of Madura trashed the
parliament building after a military officer was elected by the local
parliament as district head. On the same day, on the island of Bangka,
sacked workers closed down the operation of the world's biggest tin maker.
They were protesting over poor redundancy compensation.

On September 11, thousands of taxi drivers ransacked the offices of the
Organisation of Land Transportation Owners and later took their taxis to
the national parliament to protest rises in taxi fares. On September 15,
2000 textile factory workers rallied outside the West Java governor's
office demanding substantial rises in the minimum wage for West Java and
the formation of an independent National Workers Council to replace the
Ministry for Labour.

On September 26, thousands of West Java farmers joined hundreds of textile
workers in an occupation of the West Java parliament. The farmers were
protesting against corruption in the Department of Agriculture, the
confiscation of land without compensation and the imposition of illegal
taxes. The textile workers were demanding wage increases. Speeches by the
farmers and workers demanded the resignation of the parliament for not
having defended the people's interests. <Picture: Picture>

On September 27, thousands of East Javanese peasants flooded into the
regional capital, Surabaya, demanding changes to the agrarian law to favour
labourers rather than landowners. They marched from the centre of the city
to the local parliament where they occupied the building and the compound.

On October 3, truck drivers at the port in Pontianak, West Kalimantan, went
on strike to demand a 100% increase in truck hire fees. Increases in the
price of fuel and spare parts were squeezing the drivers. Wharf labourers
supported the strike.

On October 4, 1000 peasants marched from the Presidential Palace to the
Bank of Indonesia, and then on to Proclamation Square in the centre of
Jakarta. They were demanding the provision of tractors, return of
confiscated land and an end to taxes on peasants' meagre incomes. On the
same day, in Makassar, thousands of students continued actions against
increases in fuel prices, trashing the governor's office, burning cars and
clashing with civil servants.

In Bogor, West Java, public transport drivers went on strike, taking their
vehicles and jamming the main square. They were demanding a rise in ticket
prices so they could earn enough to pay their petrol bills after the petrol
price hike. In Indonesia, public transport drivers rent the vehicles and
pay for petrol and repairs.

On October 13, hundreds of people occupied Caltex oil wells in South
Sumatra, halting drilling. They were demanding that Caltex employ more
local people as workers.

On October 16, 30,000 plantation workers went on strike in North Sumatra.
On October 19, 25,000 Surabaya workers, organised by the Indonesian
National Front for Labour Struggle (FNPBI), struck to demand a 100% wage
increase. On October 24, 3000 of these FNPBI workers demonstrated again in
Sidoarjo, after being attacked by thugs.

On the same day, 300 prawn farmers from Dipasena Lampung in South Sumatra
demonstrated in front of the Presidential Palace against President
Abdurrahman Wahid's decision not to prosecute their boss for corruption.

Paying for IMF `solutions'

This list of incidents is just a sample of the steady rise in social
struggle throughout Indonesia. Protests and mobilisations of every kind are
taking place as workers, peasants and unemployed organise themselves in
self-defence against the austerity and deregulation offensive that has been
launched against them.

Poverty has increased massively since the crisis. According to the World
Bank-funded Social Monitoring and Early Response Unit (SMERU) in Jakarta,
the number of poor people increased by 25 million, from 31 million to 56
million, between February 1996 and February 1999. Almost of all this
increase has happened since the end of 1997.

People classified as urban poor increased from 5 million to 13 million.
Rural poor increased from 25 million to 42 million. The increase was
concentrated on the island of Java where 15 million more people entered the
ranks of the poor in little less than two years.

SMERU's figure of 55 million poor is much lower than that issued by the
Indonesian Bureau of Statistics. The bureau calculates that there were 80
million people living below the poverty line in 1998. Activists working
with workers and peasants say the same.

According to the Urban Poor Consortium, a community rights organisation,
slum dwellers now make up 39% of Jakarta's population and 52% of Bandung's
population. Most of these slums have no fresh water. Slum dwellers must buy
their water and also pay for the use of public lavatories and bathing

The pressure on the poor was increased in October when subsidies on fuel
products were reduced and prices rose. The IMF requires another increase in
fuel prices next April. Meanwhile, Wahid has publicly stated that the
government will resist the call by the emerging union movement for a 100%
wage increase, and will accept 20% at the most.

The real catastrophe looming for the mass of Indonesian people is another
major collapse in the economy. While the government and some of its
international backers are talking up the economy, most of the signs look

On October 24, the Coordinating Minister for Economics, Rizal Ramli,
confirmed that the country's public debt had risen to the equivalent of
110% of gross national product. More than a quarter of the expenditure in
the national budget handed down on October 12 goes to repaying interest on
foreign loans and on treasury bonds issued to Indonesia's debt-ridden
banks. This means that almost all new borrowings are now being used to pay
off interest on past debts.

With these debt repayments, and more of the budget going to corporate
bailouts, military expenditure and the civil service, little is left for
social needs. Education expenditure, for example, has dropped to less than
1% of GNP, provoking even members of the national parliament to protest.
This was a 30% cut on the previous year's expenditure.

Teetering on the edge

Indonesia's banks and corporate sector, riddled with bad debts and
inefficiency, teeter on the edge of further collapse. Private capital
continues to flow out of the country. Finance minister Prijadi
Praptosuhardjo said on October 24 that he expected more than US$11 billion
to leave Indonesia this year.

Foreign direct investment has been negative for two years. The rupiah has
dropped 40% in value since September and domestic savings have dropped from
28% to 17% of GNP.

Domestic investment has basically halted. The current 4% growth rate is
almost totally consumption driven as a poorer population sells its assets
to meet basic needs.

With no signs of this situation changing, what is left of the Indonesian
private sector, mainly crony companies that flourished during the World
Bank-supported Suharto years, has little chance of move back towards the
pre-crisis situation.

These companies' debts to the banks will have to be written down again and
the government will have to spend more bail-out money to prevent the banks
collapsing. An article in the October 18 Asian Wall Street Journal assessed
that, if this happened, the public debt could grow to 130% of GNP and eat
up 50% of the budget.

Alternatively, the government could let many of the banks and corporations
go the wall. This would hand over almost all of the modern sector of the
Indonesian economy to multinational corporations at cheap prices. Many of
the companies would be gutted for short-term profit and millions more
workers would be thrown out of work.

This is the IMF's preferred scenario, causing tensions between the IMF and
the Wahid government. The crony corporate sector is the social base of the
Indonesian political elite, which the government represents. The Wahid
government must also defend bail-outs for some of the biggest and most
corrupt crony companies.

In either scenario — constantly escalating debt or a banking and corporate
collapse — the economy and society as a whole is heading for deep crisis.

Indonesia has a population of 200 million; between 30% to 40% of the people
are unemployed or underemployed and the labour force is growing by between
2 and 3 million people a year. Indonesia needs an 8% growth rate — an
impossibility in current circumstances — just to absorb those already

It is the mass of ordinary people — workers and farmers — who are already
bearing the brunt of this process and who will be made to pay even more
when the catastrophe hits. As the Asian Wall Street Journal analyst
commented: “Most of these people are young. They overthrew the Suharto
dictatorship to get a better life. If they get a worse one, the result will
be an explosion of social turmoil.”

[The author is the national chairperson of Action in Solidarity with
Indonesia and East Timor (ASIET) and a member of the Democratic Socialist
Party national executive.]

More information about the Marxism mailing list