Thursday, February 26, 1998

Chinese get Suharto plot blame

Andreas Harsono
The West Australian, February 26, 1998

A RETIRED but prominent Indonesian general has said Chinese tycoons and another retired general were behind an effort to overthrow President Suharto.

Sayidiman Suryohadiprojo, a prominent member of an elite circle of retired senior officers, said that Chinese Roman Catholics were leading a campaign against Mr. Suharto’s vice-presidential choice, B. J. Habibie, because he was a Muslim.

At the University of Indonesia yesterday no action was taken against 1000 students who broke a ban on demonstrations imposed for the preliminaries to the presidential election, which begins this week.

About 100 police and troops were deployed around the university campus as the students rallied to blame the government for the economic crisis.

General Suryohadiprojo said in articles published in the nation’s leading newspapers and biggest magazine that continuing violence against Chinese merchants and residents was part of general resentment against the nation’s wealthiest ethnic group.

He implied that the Jakarta-based Center for Strategic and International Studies had played crucial role as an advocate for various government policies that he claims harmed Muslims in the 1970s and 1980s.

He wrote that the CSIS had been opposing the “new paradigm in domestic politics,” and had influenced foreign interests that disagreed with the “new line of thinking” in Indonesia.

The articles came after allegations by military authorities against Chinese tycoon Sofyan Wanandi, the spokesman for an association of Chinese-owned corporations, and his brother Jusuf, who heads the CSIS.

The authorities claimed they had found evidence linking the pair with a bomb blast in a Jakarta slum, allegedly part of a student plot against Mr. Suharto.

The brothers denied any links but their long interrogation sent a signal to Muslims that Indonesian Chinese were not patriots. It was an inflammatory message. Amid rising prices and higher cost of living, anti-Chinese riots began to erupt.

The other retired general referred to by General Suryohadiprojo is almost certainly Benny Moerdani, 66, former commander of the armed forces, whom Muslims blame him for the killing of more than 150 Muslim protesters in Tanjung Priok in northern Jakarta in 1984. General Moerdani is a Catholic, a patron of the CSIS and a close friend of the Wanandi brothers. 

General Suryohadiprojo claimed that the international campaign against Dr. Habibie, originated with the CSIS because the vice-president nominee and likely heir to the presidency, was the chairman of the Muslim intellectuals’ group ICMI.

He accused foreign media of carrying out a character assassination of Dr Habibie, and criticised Singaporean statesman Lee Kuan Yew for saying that Dr Habibie might not get the support of the international business community if elected.

Indonesia’s domestic airlines were reported yesterday to be on the verge of collapse of the economic crisis. 

Hadi Soemarto, president of the Indonesian National Air Carriers Association, said the four airlines Bouraq, DAS, Mandala and Sempati earned only rupiah but their main costs were payable in United States dollars. The rupiah has lost more than 70 percent of its value against the dollar.

He said there was no danger of Garuda Indonesia and Merpati airlines collapsing because they were owned by the government.

Environment Minister Sarwono Kusumaatmadja said he would start today to bring rain in an attempt to contain forest fires in eastern Borneo. 

The World-Wide Funds for Nature said that damage caused by Indonesian fires and haze in 1997 had cost the region more than $2 billion. 

Sunday, February 22, 1998

Chinese make easy targets

As Indonesia sinks deeper into the economic morass, anger is being directed against the country’s most conspicuous ethnic minority.

Andreas Harsono
The Nation, February 22,1998

In Pamanukan, several pedicab drivers idled at street corners while waiting for passengers. In shadier places not far away, dozens of soldiers, had removed their boots and were taking their nap. Military trucks parked outside a closed bank.

“We have been stationed here for three days without going home,” said an army sergeant. “We didn’t even change our clothes.”

Three days after thousands of Muslims rioted, burned and looted more than 150 Chinese-owned shops, the atmosphere were still tense. No Chinese was seen on the street. 

“Perhaps they are scared. They have mostly fled to big cities like Bandung or Jakarta,” said one pedicab driver.  

Other shops, which were spared from the Feb 13 destruction, remained closed. But they cannot hide wounds inflicted by the rioters. Their iron grates were damaged and glass windows smashed. The graffiti scrawled on the walls read: “Attack Chinese," "Money hungry Chinese fool,” “Anti-Chinese" and “I love Muslim.” 

Muslim families painted Islamic words on their doors. Some simply put a sajadah, the Muslim praying mat, in bid to ensure that looters would not mistake their houses for Chinese one.

The word "pribumi” (native) were sprayed on some of the houses.

“The protesters initially blamed the Chinese for increasing the price of cooking oil from 4.200 to 5.800 rupiah (per litre),” said driver Amin Suhamin, explaining that two shops were first attacked but it took only minutes before the whole town ran amok.

The looters also went to Panorama Hotel and told the Chinese hotel manager, “It’s not yours. This is not your country.” Then they took everything --furniture, banknotes, kitchenware and towels-- into their waiting cars, motorcycles and pedicabs. 

“They were running amok,” said a Chinese trader, adding that the police officers and soldiers stationed here were outnumbered and couldn’t do anything but watch. “But please do not mention my name,” he whispered.

Riots over price hikes such as the one in Pamanukan had erupted in more than three dozen towns in Indonesia since early January. The riots spread to other islands such as Lombok, Sumbawa dan Sumatra.

Hundreds of vehicles were torched and thousands of Chinese-owned buildings were destroyed. Some looters were shot dead. Several Chinese were beaten by the mob. The economic crisis had made the same price increase in those towns of cooking oil, kerosene, rice, sugar or milk.

Many believe that the ongoing anti-Chinese campaign is the most serious since the mass killings in the late 1960s when General Suharto rose to power to replace Indonesia’s founding presiden president Sukarno.

It is estimated that round 500.000 leftists were killed, including many Indonesians of Chinese descent.
In addition to ethnic Chinese shopkeepers, protesters have targeted Christian churches over the rising cost of living.

“This is politics. It is not merely about staple items anymore. The churches have nothing to do with the price hikes,” said Suhamin.

Political analysts had their own explanations for the anti-Chinese riots. Some openly blamed Chinese speculators for stockpiling staple items. They also alleged that the Chinese were not nationalists because the community did not want to take the burden of the current economic crisis which had seen the rupiah lost almost 80 percent of its value.

Pro-government newspapers and television subscribed to this view. Businesswoman Siti Hardiyanti Rukmana, the eldest daughter of president Suharto, had complained that her “I love rupiah” campaign did not succeed since “many big businesses” gave no support, as if trying to say that the pribumi businesses people did give their support but not the Chinese. 

Others said the anti-Chinese campaign is engineered by some elements within the military with the help of the people like Rukmana. The purpose is to divert the public anger from president Suharto to the affluent minority. The campaign is pretty similar to the Dutch colonial strategy in inciting inter-ethnic hostility. 

Radical Muslim preachers also jumped on the bandwagon. Using the crisis as a cover. They attacked a right-leaning think tank which used to help the Suharto government to crack down on the Muslims in the 1970s and 1980s. Fadli Zon, a young Muslim activist, told the Far Eastern Economic Review that it is better to be rid of the Chinese and the become a less developed Indonesia rather than having to live the Chinese.

Muslim intellectual Ulil Abshar-Abdalla, who helped to cool the riots in the Rembang area on the northern coast of the Central Java, underlined the general impression here that the military had apparently tolerated the looting.

“The just looked on and let the looters attacks the Chinese,” he said.

Similarly, Muslim leader Amien Rais took a more conciliatory line.

"They Chinese are also our brothers and they have become a part of this integrated nation. The protesters have to direct their anger and protesters at the government since it must be held responsible for the economic problem,” he said 

Chinese traders lamented that they are the ones who are always made the scapegoats in the time of crisis. Unlike the rich tycoons who could easily fly to Singapore or Sydney, middle-class Chinese families have to stay put and brave the violence. 

Yohanes Lim Pek Hua, a Chinese shop owner who has a shop in Cikampek, same 100 km from Pamanukan, however, believed that he was immune to the rioting.

“I have very good relation with my neighbours here,” he said.

Some of his neighbours agreed. But such ties will not guarantee that the neighbours are prepared to defend Lim’s construction shop if it was looted by our siders. 

“Everybody is terrified,” the 40-year old trader said, adding that if his shop is looted, he would leave Cikampek and return to his hometown on the island of Kalimantan where the Dayak population are said to be much friendlier toward the Chinese.

“People do not want to face the real problem here but find a scapegoat. Perhaps, it is a tradition,” Lim said, bitterly.

Monday, February 09, 1998

In Indonesia, Apocalypse Looms in 'Social Explosion'

Andreas Harsono 
American Reporter Correspondent 

-- Ali Sadikin suddenly stopped laughing. Turning serious, he said he felt insulted as he watched Michel Camdessus, the managing director of the International Monetary Fund (IMF), fold his arms and look on as Indonesian President Suharto signed the controversial agreement drafted by the IMF to bail out the Indonesian economy. 

"Suharto is a bad guy, but Camdessus was treating my President like an old colonial master," said Sadikin. 

But the veteran dissident then sat down, looked around his spacious living room and burst into gales of laughter. "No, no, that man was getting his lesson. That's Suharto's responsibility," he said when he finally recovered. 

The 72-year-old retired marine general is not alone in his offended patriotism. Many other Indonesians felt similar things when the Washington-based financial institution -- with the backing of U.S. President Bill Clinton, Japanese Prime Minister Ryutaro Hashimoto and other world leaders -- pressured Suharto to sign a letter of intent in exchange for a US$43 billion package.

The Jan. 15 agreement was a "two-edged sword," Sadikin observed. On one side, Suharto was pressured to curtail monopolies and the "rent-seeking" businesses of his children and cronies, such as youngest son Hutomo Mandala Putra's $600-million so-called national car project, heir apparent Research and Technology Minister B.J. Habibie's $2 billion aircraft project, and associate Bob Hasan's lucrative plywood cartel. 

Critics blame Suharto's "crony capitalism" for creating the now-desperate situation in this, the world's fourth most-populated country. The rupiah nose-dived from 2,400 to the American dollar in July to more than 15,000 several days after the Camdessus-Suharto deal. The drastic decline in the rupiah's value (it closed at 9,100 to the U.S. dollar on Friday) has created other, far-reaching problems:

Indonesia's annual per capita income is now down from $1,200 to $300; stock market capitalization was reduced from $118 billion to $17 billion; only 22 of Indonesia's 286 publicly listed companies are now considered solvent; and only four firms remain with market capitalization of $500 million or more, out of 49 before the crisis. 

Various national figures, from opposition leader Megawati Sukarnoputri, the daughter of Indonesia's founding President Sukarno, to Suharto's in-law, Prof. Sumitro Djojohadikusumo, and retired Lt. Gen. Bambang Triantoro have called on Suharto to step down. 

Even as they place the blame on Suharto for the economy's ill, they were also surprised when they learned the details of the Suharto-Camdessus agreement, in which the father seemed to have surrendered his defense of his children. 

On the other side of the IMF sword, though, Suharto let millions of Indonesians bear the brunt of the current financial crisis. The IMF asked Suharto to cut the state monopoly on sugar, milk, cooking oil, garlic and other staple items, but not rice, which have now significantly increased in price. 

The agreement also required Suharto to sharply reduce or eliminate long-established fuel and electricity subsidies and to impose a one-percent surplus requirement for Indonesia's 1998-1999 state budget. 

The president also reworked his draft budget, presented to the House of Representatives on Jan. 6, with new assumptions -- that inflation would reach 20 percent this year in a corresponding period of zero economic growth. That means, experts agree, more than 15 millions workers will lose their jobs and thousands of factory-owners must face bankruptcy. Other workers will see prices rise as paychecks fall. 

Even worse, riots and social unrest are now much more likely to occur in many Indonesian towns and villages. Hostility toward Indonesians of Chinese descent --an ethnic minority here that runs most of retail businesses and are traditionally the target of social violence-- is already spreading. 

Rioters in the Jember area in the eastern tip of Java reportedly forced Chinese-owned shopkeepers to open their drug stores and to sell staple items at pre-crisis prices. Some merchants were threatened with machetes, and one supermarket was burned down as looters cleaned out the stores. In other cities and towns, hostile protesters threw firecrackers at Chinese motorists. 

A Javanese Sultan 

President Suharto, Asia's longest serving leader, rules Indonesia like an old-fashioned sultan. He made the armed forces his palace guard and the central bank his treasurer, and organized a by-the-numbers general election every five years to demonstrate to outsiders that Indonesia is a democratic country. His six children have also planted their influence everywhere, from politics to business, from the military to charity. 

The 77-year-old president -- who has been in power since 1965 and is still seeking his seventh term -- constructed his power base by practicing the carrot-and-stick strategy. He never hesitated to jail dissidents, human rights workers, unionists and journalists, not to mention East Timorese freedom fighters. 

But Suharto granted loyal aides lucrative business opportunities, forest concessions, mining licenses and other treats, including appointments to the cabinet and armed forces, ambassadorial posts and corporate boards. Like a traditional Javanese king, he encouraged foreign investors who want to do business here to seek joint ventures with his children.

Contracts seem to be more easily granted to foreigners who want to cooperate with them. But the Suharto children are almost always "silent partners" -- known as "sleeping partners" here -- who contribute no money to the ventures; usually, they have neither the expertise nor the capital. They do have their father's name, though, and that is reportedly enough to cow uncompromising bureaucrats, corporate boards and critical bankers. 

Investors are also encouraged to cooperate with Suharto cronies like Bob Hasan, who controls several investment firms, or Indonesia's richest businessman, Liem Sioe Liong, whose Bank Central Asia, the biggest private bank here, is jointly owned with Suharto's eldest daughter, Siti Hardiyanti Rukmana, and the president's eldest son, Sigit Hardjojudanto. 

Perhaps the most controversial multinational company operating in Indonesia is New Orleans-based Freeport McMoran Copper & Gold Inc., which pays Indonesia's largest annual tax bill. Freeport, which has mined copper and gold in Indonesia since the 1960s, has been criticized for years by international and Indonesian groups for allegedly mistreating indigenous peoples and the environment. 

Freeport's chairman, James Moffett, is an old and close friend of Suharto's. In 1996 PT Nusantara Ampera Bhakti, an investment firm that is 80 percent owned by Suharto-controlled foundations, purchased a five percent interest in Freeport's Indonesian unit, PT Freeport Indonesia. 

Some months later Freeport was granted government approval to nearly triple the capacity at its massive Grasberg mine on the island of Irian Jaya. 

In addition to foreign banks which are eager to tap into Indonesia's economic boom, economists said the "rent-seeking" working atmosphere has encouraged Indonesian businessmen to race to enter the circle of presidential cronies. 

One example of the perils of such eagerness is illustrated in the story of businessman Yopie Wijaya, the Chinese operator of PT Steady Safe, a taxi company in Jakarta. Although its total net assets were estimated at not more than $4 million, Wijaya managed to get a $265 million loan from once-prestigious Peregrine Holdings Ltd. in Hong Kong, then the largest non-Japanese investment bank in Southeast Asia. 

Wijaya's secret: He simply approached Rukmana and installed her as the chairwoman of the small taxi firm. 

He also drafted a grand proposal to buy rolling stock for a rail transport system linking Jakarta with satellite towns. He also talked about a long-term government concessions to run his carriages on a railway already funded by Japanese banks. 

Some bankers doubted the wisdom and viability of the proposal, but Peregrine executives believed him -- especially with Rukmana as his main backer. Peregrine gave him the money, but he used it instead to buy 19 percent of Rukmana's toll road corporation. 

The drama began to unfold when the rupiah started its steep slide against the dollar. Steady Safe could not repay the dollar-denominated loan and Peregrine went bankrupt, devastating the Hong Kong stock market. 

Foreign bankers and economists said the incident demonstrated just how an obscure company could get millions of dollars for questionable projects merely because of its alliance with a Suharto family member or friend. 

Steady Safe, to be sure, was not the only example. Indonesian officials said in December that the nation's offshore debt stood at $118 billion, consisting of $52.4 billion in government debt and $65.6 billion in private-sector debt. Around 60 percent of the private loans are due before June 1998. 

The Suhartos are so corrupt that a senior editor even remarked that it would be better for the nation if they just took the money and spent it on luxuries rather than on creating monopoly businesses that profoundly distort the nation's markets. 

"The practice has grown to such a colossal proportion that it has made Indonesia financially bloated and institutionally damaged," the editor said. 

Transparency International, a Berlin firm that measures the depth of corruption in national economies, called Indonesia one of the most corrupt nations in the world. The Suhartos have staked claims to virtually every part of Indonesia's economy; the media and automotive, agriculture and manufacturing, mining, telecommunications, banking and real estate sectors are all largely under their direct or indirect control. 

Estimates of Suharto's wealth have ranged between $16 billion to $40 billion. The Hong Kong-based Far Eastern Economic Review magazine commented recently that when it comes to cronyism, few can match the Suhartos. 

"The six children seem to have a finger in every corporate pie, thanks to the myriad contracts, equity stakes and exclusive licenses handed them over the years," the magazine said. 

Prof. Djojohadikusumo describes the problem here as an "institutional disease," saying that Indonesia needs far-reaching political reforms to restore public confidence on the government. "If we were just talking about the economy," he said, "then an aspirin is enough. An institutional disease needs antibiotics." 

Neo- Or Internal Colonialism? 

Hutomo Mandala Putra, widely known as "Tommy" Suharto, defends his family against the pressure for reform, saying that the IMF package is a "politically motivated" effort to cleanse the economy of "first family-dominated industries." 

"It had previously been agreed that the national car project would await the decision of the World Trade Organization, but maybe, the government is in desperate need of funds from the IMF and the World Bank, and maybe because it was politically motivated," he told a press conference after one of his banks was shuttered. 

He declined to answer directly when asked if he thought the Suharto-Camdessus agreement represented a kind of neocolonialism, but said, "I think it's a part of it." 

When asked whether the colonialist was the IMF, he responded, "You can guess." 

Tommy, who didn't hesitate to drive his sparkling royal blue Rolls-Royce to the press conference, obviously was aiming at a tender nerve of most Indonesians, who learn from their school benches that their founding fathers had fought desperately against the Dutch colonial rulers. 

Other economists and nationalist figures air similar sentiments. Some fundamentalist Muslim preachers even openly talked of the "orang kafir" trying to control Indonesia; Camdessus, according to their logic, is no more than an infidel. 

Meanwhile, the Muslim-based Media Dakwah magazine editorialized that the free market is only an illusion. In fact, the magazine said, the supposedly "free" market is controlled by a number of Western countries, whose use instruments including the IMF to continue their "dominance and existence" in developing countries like Indonesia. 

The magazine also alleged that the free market had only benefited Indonesia's big businesses, because 80 percent of its economy is controlled by Chinese-descent tycoons. The Chinese here comprise only 3.5 percent of Indonesia's 200 million population, of which 90 percent are Muslims. 

Some military officers are also fanning the anti-Chinese emotions, bombarding the media with various carefully-tailored allegations against the Chinese with appeals to nationalism and economic disparities. The military even questioned and charged a prominent Chinese businessman for allegedly financing a radical student movement in an apparent bid to trap wealthy Chinese in the role of scapegoats. 

The message is clear: blamed the crisis on Chinese and Westerners. Critics say Tommy, the Muslim clerics and the officers have actually been trying to divert public unease about the Suhartos to their traditional scapegoats through a classic manipulation of racism and ultra nationalism. 

Indonesian technocrats, who have helped Suharto shape Indonesia's economy since the 1970s, quietly confronted the arguments, saying that they actually could solve the crisis if only the first family did not resist the solutions. 

In particular, they cite one example. In December, two months after the IMF first agreed to give the nation its financial assistance, President Suharto approved the hugely controversial Tanjung Jati C power station in which his eldest daughter Rukmana has an interest. The contract was signed with Hong Kong developer Gordon Wu. 

The deal was at best puzzling. By pushing it through, Suharto alienated both the IMF and the World Bank. The $1.77 billion project went ahead even as the Indonesian power grid was already near 60 to 70 percent overcapacity. 

Suharto only revoked the decision after a telephone conversation with President Clinton, during which, analysts speculated, the issue was apparently raised. Suharto has also agreed to scrap 14 other controversial projects which involve another daughter. 

"The choice is either Bob Hasan or the IMF," said a young Indonesian market analyst, referring to the timber tycoon who is also a longtime friend and golfing partner of Suharto. 

He added that even though the IMF might bring American capitalists into Indonesia, they are still much better than the Indonesians. Tommy probably hasn't heard the talk emanating from some corners of Jakarta, among student activists, intellectuals and human rights workers, about "internal colonialism" rather than his neo-colonialism being at work here. 

Indonesia the talk goes, is being colonized by the Suhartos. 

Dissident journalist Goenawan Mohamad offers a useful analogy. "After the end of the World War II," Goenawan wrote, "the Japanese were put under an American-imposed constitution." 

"Most Japanese," he continues, "took it as a chance to build a more democratic society, which was to them preferable to the nationalistic flag-waving Nippon. The rest is their own determination to make the experiment a success." 

Even Megawati -- whose father, Sukarno, is still revered as the leader of the Indonesian revolution and the nation's first president -- who frequently echoes the anti-colonial sentiment of the 1960s and is ideologically closer to economic nationalism than global capitalism, agreed with the IMF reforms; she has thanked the institution for agreeing to bail out Indonesia. 

No Way Out 

Most analysts believed that the Indonesian monetary crisis has started to become a political disaster. Investors are losing confidence in the Suharto government. Terence Mahoney, managing director at TCW Asia, said the weak rupiah reflected the increased social and political risk premium associated with an unstable regime. 

"Major concessions have been made by Suharto, but we still have an election [in March]. We don't know who his successor will be, and unlike Thailand and Korea where you really seem to have public support [for reform] there still seems to be a lot of friction in Indonesia," said Mahoney. 

Ironically, Indonesia has no peaceful and democratic mechanism to change a sitting president. More than 500,000 left-leaning workers and educated ones --including many ethnic Chinese -- were killed when Suharto was replacing Sukarno following an aborted coup attempt blamed on the communists. 

Indonesia's 1,000-strong People's Consultative Assembly (MPR), which alone has the right to elect the president and vice president in March, is 57.5-percent-comprised of "people representatives" who are directly appointed by Suharto. 

The MPR has five factions: Suharto's ruling party, Golkar; the tightly-controlled Muslim-based United Development Party; Megawati's rival Indonesian Democratic Party (which is headed by a rival elected with government backing); the Armed Forces; and provincial representatives. 

Nomination of the president can legally be made only by one of the government-recognized factions, which have never nominated anyone but Suharto since the former general staged his first election in 1971. 

The president has reiterated that he would "not run away from responsibility" and would like to be elected to his seventh term. 

Even Megawati, who has declared her intention to challenge Suharto for the presidency, admitted that it is technically impossible to organize her pledge into real politics. She can only call on the MPR not to renominate Suharto. 

"It is unwise and starkly speculative and totally irresponsible if certain parties further their interest in reelecting Suharto to another five-year term," Megawati said, especially now that Suharto -- who cancelled an important trip recently for a 10-day rest while recovering from "fatigue" -- is not in good health. 

"We know that it is very difficult. Why did the government oust Megawati? Because she is basically a major concern to the President," said economist Kwik Kian Gie, referring to her removal at a military-backed rump convention in 1996 that eventually triggered some of the worst rioting in Jakarta in two decades. 

"If he is really healthy, he will stay. As long as Suharto wants to be president, she has no chance," said the Dutch-trained Kwik. 

But Megawati is now strengthening her alliance with two other opposition figures: Amien Rais and Abdurrahman Wahid, the leaders of the two biggest Muslim organizations in Indonesia. 

"Suharto should not be re-elected or else [there should be] a deadlock," said Ali Sadikin, adding without emphasis that Indonesia is simply waiting for a big, a very big, social explosion that might surprise even the world. 

"I'm actually very sad," the retired general, now a hardened dissident, said. "It's even too late for Suharto to step down. We have no other option but the explosion." 

And he did not laugh anymore.