Ten years after Suharto, Indonesians fight 'democratic' neocolonialism

By Sam King

This year’s May Day demonstrations in Jakarta took on a special significance because they came 10 years after General Suharto was forced by mass street protests to resign as Indonesia’s president. The May 1 marches were followed by another lively round of protests on May 21, the anniversary of the day Suharto fell. These mobilisations also protested the removal of fuel subsidies by the government of President Susilo Bambang Yudhoyono, which has caused steep rises in the price of all basic goods including food — amounting to a pay cut for ordinary people.

The coincidence of the 10th anniversary of Suharto’s fall and the Yudhoyono government’s austerity for poor people was not missed by many worker activists and others, who point out that all of Suharto’s “democratic” successors have continued and deepened economic policies pioneered under Suharto, which put national development and the poor at the mercy of foreign capital.

Four decades of economic growth along the lines prescribed by Western governments and financial institutions have left Indonesia without a broad industrial base. There is very little of the industry that is needed to process Indonesia’s enormous mineral wealth. As in all largely unindustrialised countries, most oil, natural gas and minerals are exported unprocessed. Industrial development is both narrowly export-focused and mostly foreign owned.

Low-tech labour-intensive industries like textiles, clothing, footwear and basic electrical goods are manufactured for export. The government imposes no requirement for foreign investors to transfer technology to Indonesia, which it could do. For instance, technology transfer has been demanded by Venezuela’s socialist President Hugo Chavez. Calling for investment to develop Venezuela’s planned new cable car systems, which will service poor hilltop neighbourhoods, Chavez stated that Venezuela would give contracts only to foreign companies that agree to pass on their technical knowledge to Venezuelans.

Indonesia’s present “democracy” — like the Suharto dictatorship — has secured considerable profits for capital. The economy returned to growth in 1999 and has averaged 5.2% GDP growth annually since 2000. GDP growth rose to 6.3% last year, according to the International Monetary Fund’s World Economic Outlook Database in April. Foreign direct investment reached a record US$10.3 billion in 2007, up from $6 billion in the previous year, according to BusinessWeek.

Even manufacturing has grown — by 41% between 2000 and 2007, according to a March report by Statistics Indonesia. However, the number of workers employed in manufacturing has been almost static since 2004. The same is true for workers in agriculture, services and transport. Only mining has had meaningful employment growth.

Two to three million people enter the workforce every year, so unemployment is rising. This has made it possible for bosses to reduce wages steadily over the last decade. Workers who are organised to demand higher wages are often threatened or sacked. Between 2004 and 2007, manufacturing workers received wage rises of 1.7%, while hotel workers received 13%. Over the same period, inflation was 41%, meaning real wages were 28-40% lower over four years. The previous seven years were a similar story.

Barbie dolls and false eyelashes

In “democratic” Indonesia, the statistical “average person” gets 5% richer every year, but the overwhelming majority get much poorer while watching the rich get richer. In 2006, the average monthly minimum wage was Rp602,700 (A$72.50) while the official minimum cost of living was Rp719,834 ($86.50). The average wage was Rp997,000 in 2006 and Rp1,077,312 in 2007. Inflation is expected to be over 10% this year due to the May cut in the fuel subsidy. The number of millionaires in Indonesia rose 16% in 2007, according to Forbes.com.

Growth in manufacturing does not mean more jobs in socially useful occupations, but finding niche markets in an irrational international marketplace. The latest “success story” is the production and export of false eyelashes. These are mass-marketed by the Japanese fashion industry to malls throughout the world. Madonna and Jennifer Lopez are among the customers. A large proportion of the world’s Barbie dolls are also made in Indonesia.

Faced with competition from more efficient Chinese manufacturing, Indonesian workers are told that they need to accept worsening working conditions to secure their jobs. However, the main obstacles cited by foreign investors in Indonesia are not wage levels but corruption, lack of legal security and poor infrastructure.


The international financial press prints articles that simply report the slowly improving “business environment” in Indonesia, while the Indonesian-language mass media are forced at least to discuss the social and environmental problems rife across the archipelago, because ordinary people view Indonesia as being in crisis. The question being posed to wider and wider audiences by radical left groups such the Political Committee of the Poor-People’s Democratic Party (KPRM-PRD) is, “Can the economic questions be solved by stepping outside capitalist logic?” Can Indonesia’s existing and often idle factories and workers and the mineral wealth all be mobilised to fulfil real human needs inside Indonesia? This would mean manufacturing capital goods that can improve efficiency in agriculture, modernising transportation, expanding primary industries that can process the massive agricultural, forestry and mining produce and expanding the health and education systems.

The Indonesian economy today is far stronger than the economies of the present imperialist countries were when they were in the early stages of industrialisation. For example, steel production in Indonesia today is 3.9 million tonnes per year. That is equivalent to 40% of the combined iron and steel production of the five largest industrial economies of 1870. The reason that Indonesia, like all Third World countries, is not able to use existing technologies to move on to a new stage of broad-based industrialisation is that it is forced to compete in an international market already dominated by around two dozen imperialist powers, which maintain a monopoly of advanced technology for themselves.

Every industry entered, every economic move made on the international market, is always closely watched by bigger, stronger and more experienced competitors that are ready to steal the ball at any time. Investment decisions are made according to what is profitable for foreign capitalists. For the imperialist countries to maintain their position of dominance, it is necessary to keep Indonesia and the majority of the world’s people in technological and therefore economic dependence.

In 2007, Indonesia exported US$101 billion worth of goods and services and received in return just US$61 billion in imports. Such an outpouring of wealth into other economies mimics the colonial economic structure under Dutch rule. Indonesia’s first president, Sukarno, made this point in Indonesia Accuses! — his defence speech delivered in a colonial criminal court in Bandung in 1929. He said: “The exports of such a colony always exceed its imports; the wealth extracted from it always exceeds the value of goods brought into it.” Money raised from these exports is often appropriated by foreign investors as profit. As for goods coming in, according to Sukarno: “All colonial land is primarily a field of enterprise for surplus foreign capital.”

Foreign debts

In 2008, the Indonesian government plans to spend Rp7.4 trillion ($2.1 billion) repaying foreign debt. In 2006 it paid $2.9 billion. This is despite the fact that a large part of the debt was accumulated under the military dictatorship and much of the money was embezzled by Suharto’s family and business partners, who have never been put on trial. This is not the first time Indonesia’s politicians have agreed, on behalf of the Indonesian people, to pay other people’s debts.

The 1949 Round Table Agreement that recognised Indonesian independence from the Netherlands committed Indonesia to pay US$1.1 billion in “debt” to the Netherlands for the expenses the Dutch accrued re-invading Indonesia after World War II. This agreement, brokered by the US, indicated the Indonesian workers’ and peasants’ contribution to underwriting the Marshall Plan to rebuild capitalist Europe after World War II.

In a press release last May 29, the IMF praised the government of Yudhoyono, saying: “Overall, fiscal policy has been sound”, with “further significant declines in the public debt-to-GDP ratio.” What this means is that there have been “further significant” flows of money from the government of Indonesia to its major creditors — Japan, the World Bank and the Asian Development Bank.

At its national congress held in June 2006, the left-wing Workers’ Demands Alliance (ABM) adopted a platform of four demands: “cancel the foreign debt”, “nationalise natural resources and vital industries that are foreign owned”, “build a strong national industry” and “eradicate corruption”. Nationalisation of natural resources such as oil, gas and minerals would provide a substantial income to the state that could be used for development such as building “a strong national industry”. The expropriation of foreign capital would stop the remittance of profits, which starves Indonesia of investment funds.

Cancelling payments on the unjust foreign debt would provide additional investment funds. On August 23, foreign minister Sri Mulyani Indrawati revealed that the government’s payment of interest on domestic and foreign debt this year would amount to Rp97 trillion (US$10.6 billion) — 12% of government revenue. Natural resources accounted for around 25% of government revenue in 2007, but most revenue from natural resources is taken by foreign companies.

Venezuelan impact

The Venezuelan socialist revolution and its making real the nationalisation of Latin America’s largest corporation — the Venezuelan state oil company PDVSA — are having a significant impact on Indonesian politics. It is not only the left in Jakarta that talks about the Venezuelan revolution. Elite politicians such as General Wiranto, now a presidential candidate, also talk in the mass media of the example provided by the Chavez government.

Wiranto — internationally infamous for his involvement in human rights abuses in East Timor — and other “fake reformers” from the political elite are comfortable portraying Hugo Chavez as a charismatic ex-general, while Niken Dwi Ismoyowati, from the newly formed Indonesian chapter of Hands off Venezuela, is more interested in the massive popular participation that has made the Venezuelan revolution possible. Speaking to Direct Action in July, Ismoyomati pointed out: “It was the people rising up that defeated the counter-revolution in 2002, and all of the social missions [programs for improving the living conditions of the poor] are organised by the people”.

Where there is some agreement — at least in words — between some figures in the political elite and the left on the need to nationalise, or at least increase state involvement in, certain key industries, this has led a section of the left to get involved in elite electoral politics. Most notably, labour movement activist Dita Sari and 40 other leaders of the National Liberation Party of Struggle (Papernas) joined the Star Reform Party (PBR) on August 2. The PBR does not originate from the popular movements. It is an Islamic party that has opposed cancelling the foreign debt and has pushed for Islamic law in many provincial representative bodies.

Last December, Sari told Australia’s Green Left Weekly that the PBR is “not left, revolutionary or progressive, but to some extent can accept our program”. She explained that her new orientation is related to the weakness of the social movements, which she described as “scattered”. She told GLW: “Everyone is busy with their own issues, their own meetings and day-to-day activities, like it’s business as usual.” She added: “We keep banging on those doors. We keep saying ‘come on, come on, come on’ to the social movements.”

Constructing a people’s alternative

Manik Wijis Sadmoko from the KPRM-PRD, which recently broke with Sari’s group, argues that, on its own, even outright nationalisation is not enough. He told Direct Action: “In the 1950s [then president] Sukarno, under pressure from the workers, nationalised Dutch-owned businesses. Because the workers did not take control themselves, management passed into the hands of the military, which became very rich. These new ‘capitalist bureaucrats’, as they were called at the time, became a key base for the military dictatorship that took power in 1965.

“In Venezuela the PDVSA was nationalised in the 1970s but it did not benefit the people until the character of the Venezuelan state changed fundamentally. Today in Indonesia there is a well-connected section of the elite who believe they would benefit by bringing some more of the economy under the control of the corrupt Indonesian state, where they could use it as their milking cow.”

The KPRM-PRD agitates for nationalisation “under people’s control”. It sees groups like ABM and the National Struggle Front (FPN), which groups workers, urban poor, peasants and students, as the building blocks of a future working people’s government. Such a government would be able to replace the existing capitalist government when all the popular organisations are united, eventually forming workers’ councils, peasants’ councils and community councils.

“All of the Indonesian people are oppressed by neo-colonialism”, said Sadmoko. “For that reason the people are responsive to a political and economic program that can end that oppression. Many people at first find it hard to believe that change is possible, so we like to point to the example where change is actually happening — in Venezuela.”

History of struggle

People’s councils are not new in Indonesia. Local laskar (people’s militia) and badan perjuang (struggle organisations) formed spontaneously all over Indonesia in 1945 to fight off the returning Dutch colonialists. By early 1946, the struggle organisations had overthrown village heads, pro-Dutch bureaucrats and local nobles. This spontaneous local movement annihilated much of the colonial infrastructure. In doing so, the common people became armed, mobilised and much more politically aware. This popular movement prevented the Dutch from ever re-establishing their colonial regime across the archipelago.

A section of the movement led by a widely known revolutionary, Tan Malaka, attempted to establish popular power at the national level by uniting all the popular struggle organisations into a national council that would allow the common people to govern directly in their own interests. Tan Malaka, who was supported by the supreme commander of the republican army, General Sudirman, forged unity under the slogan “100% independence”. This was opposed to Sukarno’s policy of “diplomacy”, which involved promising concessions to the Dutch in exchange for them recognising the republican government.

Tan Malaka was jailed by the republicans in 1946. After Sukarno publicly threw his personal support behind diplomacy, the struggle organisations movement failed to establish its power nationally. However, popular struggle dominated Indonesian political life from the 1950s until the coup of 1965. Only the mass murder of the left by Suharto’s New Order military dictatorship in 1965-66 was eventually able to defeat popular politics. After the massacres, in which at least 1 million people were killed, Indonesia was once again opened up to be picked over by foreign capitalists.

Today, 10 years after the defeat of the military dictatorship, the political space is growing again for mass mobilisation politics. According to the KPRM-PRD, this will again lead to the formation of popular struggle organisations that can become the basis for a people’s power able to take Indonesia out of its current impasse. “Indonesia is still oppressed by foreign capital. The Indonesian capitalist class has proven itself powerless to solve all of the basic social problems of the people — so the people have no choice but to fight”, said Sadmoko.

Rapid and spontaneous formation of trade unions, including some 86 federations by 2006, tends to support this analysis. There are also countless struggles of peasants and the urban poor. Unity of the 86 federations would massively increase the bargaining position of workers, but that alone could not solve the social and economic problems of working people. If capital can still move offshore or shut down factories when it pleases, and make all the important decisions about the economy, trade unionism alone will be helpless.

“Only the organised power of all the working people around a clear program of national liberation can defeat neocolonialism’’, said Sadmoko. “There are no shortcuts, and we reject collaboration with rotten politicians. We are confident. National oppression is the objective basis for people to become conscious and to make a popular national liberation movement. We are fighting every day to bring that into being.”