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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

A PEOPLE'S ECONOMY

That is what activists inside and outside the cabinet want for Indonesia. Will they succeed?

By Tom McCawley / Serang


Adi Sasono On empowering the masses

Winners The top pribumi companies

Tycoon Bakrie says the poor must benefit, too

Dealmakers An M&A team gets the job done in Jakarta

Politics Factionalism is ripping Indonesia apart

NOOR BACHRI CANNOT SAY enough good about Minister for Cooperatives Adi Sasono. "We are hoping for a lot from him," says the portly Indonesian merchant, who chairs a cooperative, owns six pesantren (Islamic boarding houses) and runs a firm that sews for-export leather jackets. The goodies Sasono is expected to dole out include easy-to-pay loans - and perhaps 20% of the assets of bankrupt conglomerates, most of them owned by tionghoa (ethnic Chinese). "During the Suharto era, the officials acted as the business tools of the Chinese," says the middle-aged Bachri. "Not now under President B.J. Habibie." Outside a venerable mosque, Suardi, 30, says simply of Sasono: "He is our hero."

Meet the object of their affection. Clad in a handsome gold batik shirt, the 55-year-old activist minister made a flying visit to the West Java town of Serang early this month. His audience, which included devoutly bearded Islamic clerics, listened intently as Sasono preached his vision of a New Deal for Indonesia. Denouncing corruption and the sidelining of Muslims, Sasono pledged big breaks for the country's 53,000 cooperatives. "Anyone who opposes the People's Economy opposes the people!" he declared in ringing tones. Loud cheering erupted - the same thunderous response that greets Sasono on his trips to factories, farms and mosques across the archipelago's 17,500 islands.

Even Big Business is clapping, especially the parts of it that are pribumi (indigenous peoples) but not too closely linked to Suharto. "If one race that makes up just 3.5% of the population controls 90% of businesses not owned by government companies, there will be a lot of social discomfort," warns tycoon Aburizal Bakrie. Fellow pribumi Fadel Mohammad of the Bukaka infrastructure group sees the People's Economy - Ekonomi Rakyat in the national language - as a way to empower the middle class. Publicly, the Chinese are also supportive. "In principle, Ekonomi Rakyat is a good idea," says Harun Hajadi, managing director of Chinese-controlled property conglomerate Ciputra. But he warns: "It should not become part of a political agenda."

That is one worry. Economists Mari Pangestu and Sri Mulyani Indrawati also fret about the market-distorting effect of too much cheap credit. Sasono's ministry has been granted 20 trillion rupiah ($2.67 billion at current exchange rates) for relending at interest rates as low as 16%. Since deposit rates can be as high as 50%, they fear the money will simply be placed in bank accounts, with co-op managers pocketing the yields. "We might go from one form of corruption to another," says Jasso Winarto of Sigma Research in Jakarta. M. Chatib Basri of the University of Indonesia is wary of the rise of a new class of pribumi cronies. Many blame the collapse of the Indonesian economy last year on the monopolies, franchises and privileges extended to companies owned or close to Suharto and his children.

Sasono's credentials do little to reassure some economists. Born in Pekalongan in Central Java, the minister enrolled in civil engineering at the elite Bandung Institute of Technology, alma mater of Bakrie and Mohammad. But he never graduated, choosing instead to become an activist in the movement to topple president Sukarno in 1965-66. It was during those days that he formed a friendship with Muslim leader Amien Rais, who is running for president next year. After Suharto came to power, Sasono joined car-maker Krama Yudha as an executive. He also worked for the Ministry of Research and Technology, which was headed by Habibie. Sasono returned to full-time non-government grassroots work in 1979. He eventually became chairman of the Habibie-sponsored CIDES, a think-tank that advocates a greater say for pribumis in public life.

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