Medan a ticking time bomb

THE FINANCIAL CRISIS & THE ASIAN HEARTLAND: INDONESIA

Resource-rich and less populated than Jakarta, Medan is buffered from the full brunt of the economic plague. But all is not as quiet as it appears. DERWIN PEREIRA reports

IT IS midnight in the small fishing enclave of Percut, some 40 km from the North Sumatran capital of Medan.

Fisherman Ramli, 32, and four friends meet at his attap-house veranda by the riverside for a game of “joker”. The stakes are high – 30,000 rupiah (S$7) – for the man with the lowest card score.

The occasional faint breaths of wind do little to distract these kretek-smoking men who spend the next six hours trying to outdo one another for the prize.

“I get four days’ earnings in one night,” said Mr Ramli. “It is big money and a dream for many of us to win such money. It just takes the pressure away from our problems.”

Indeed, these are hard times for many in Medan.

Like many other cities affected by the economic crisis, prices of basic staples like rice, cooking oil and sugar here have skyrocketed, hitting the middle and lower-income groups hardest.

Salaries remain unchanged and people have lost jobs. But despite the contagion effects of the ailing economy, the third largest city in Indonesia seems to have absorbed the blows rather well.

Conventional wisdom would suggest that in the current situation, Medan, a multi-racial melting pot of Sumatran ethnic groups, Javanese, Chinese, Indians and Arabs, would face a domestic implosion.

Historical antecedents are instructive. From the end of the 16th century through to the early 17th century, Medan was a battlefield in the power struggle between the kingdoms of Aceh and Deli. In the 19th century, it was involved in a war against the Dutch.

That track record has been reflected in recent decades. In 1994, for example, Medan was rattled by the country’s worst urban violence.

Thousands of workers, demanding better pay, ransacked stores and killed an ethnic Chinese businessman. While the broader protests clearly arose from workers’ grievances, the rioters were also venting long-simmering resentment against the ethnic Chinese who make up 30 per cent of Medan’s population.

But with Indonesia facing its worst economic crisis in three decades and political and racial violence sprouting in other areas, everything seems rather quiet in this city of 2.5 million. Even the student protest movement, so active and aggressive in Java, seems outwardly muted here. Why?

Political analyst Soly Lubis of the University of North Sumatra said that Medan was relatively insulated from the current crisis, the major brunt of which was felt by Jakarta and other parts of Java.

He said: “Most of the key industries are located there and hence a major circulation of money. They are in direct contact with the economic fire. We feel the heat but not as much as they do.”

OBSERVERS here argue that North Sumatra, including Medan, has had fewer problems because the province is rich in resources.

It produces more than 30 per cent of Indonesia’s exports and handles 60 per cent of them. Tobacco is grown around Medan, and oil, palm-oil, tea, rice and rubber are also produced in large quantities. These are exported from Belawan port, about 25km from Medan.

Noted Mr Jhon Ritonga who teaches economics at the University of North Sumatra: “We don’t have food shortages like other provinces in Java given that our population is much smaller and less congested. So staples and other goods are easily available.”

He said that many farmers – they make up 65 per cent of North Sumatra’s 11 million population – had in fact gained from the crisis because they have been able to increase profits by selling rice and tobacco, for example, at higher prices.

“That is the irony of this crisis. It runs counter to what foreigners believe is happening in Indonesian villages,” he said.

“Definitely no starvation and hardship here to rile the people.”

Mr Ritonga said that the ones who really felt the effects of the economic crunch were in urban areas in Medan, albeit to a
lesser degree compared to their counterparts in Jakarta.

“Most of the workers are coping with rising food prices on salaries which have not been increased at all,” he said.

But observers said local authorities and the military pre-empted potential problems that could arise from this by launching a series of economic initiatives in the very early stage of the crisis.

Mr Nawani, a senior official of North Sumatra’s trade and industry department, said that the authorities initiated daily “pasar murah” or markets selling rice, sugar, milk and other staples at lower prices. They did this by securing the help of big businesses.

Rice, for example, was sold at 1,100 rupiah a kilogram compared to the market rate of Rp 2,500. He said that government
officials also helped to train retrenched workers for other jobs.

A government source told The Straits Times that this helped to “calm nerves”.

“We were aware that many people in the city were upset. We did not want people to exploit the situation and have a re-run of 1994 all over again,” he said. But observers are less than optimistic that the measures taken were sufficient and some argue that Medan is a ticking political time-bomb.

Said lawyer Ramadhaniel Daulay of the Indonesian Legal Aid Foundation in Medan: “What we need are long-term measures to fight corruption and collusion affecting all of Indonesia.

“It is like cancer. The disease is spreading slowly throughout the country but its effects are not yet full-blown in Medan.”

He said that if the local government does not redress the question of rising food prices in the next three to six months, the city could face internal conflict with racial dimensions given the large presence of Chinese in the city, many of whom areshop owners.

“They could become vulnerable scapegoats if the economic crisis worsens.”

Local officials believe that the worst of the crisis is over and that the city is making a slow recovery.

Mr Nawawi pointed out the measures taken by central and local governments had stabilised food prices, although he acknowledged they were still high. He added that unlike other areas, factories and businesses in Medan had not shut down during the crisis.

Unemployment figures were also low, with some analysts putting it at less than 5 per cent.

The picture looks less rosy for those affected by the economic crunch.

Farmer Erboru Nebaho, 48, brushed aside any suggestion that she had made more money during the crisis.

She said that the rising prices of fertilisers and the dry season’s onset negated any profits she had made.

About 30 km away, in a factory producing plastic products, labourer Toby Larusa, 20, said that he and his friends were struggling to make ends meet with the salary they get. He earns about 200,000 rupiah a month, including overtime.

He said: “We can’t take it anymore. We have all been suffering quietly but we plan to stage a demonstration soon to demand more pay and plead with our bosses not to lay off more workers.”

Asked why the workers had not resorted to protest earlier, he said that they were “scared” of hardline action by the powerful Indonesian armed forces.

The military, which has tightened its grip here after the 1994 riots, will be the single most important factor in containing such forces not just in Medan but elsewhere in Indonesia during this period of uncertainty.

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