In the wake of the financial crisis which has swept East Asia, suffering in Indonesia has led to political instability in that nation. Overseas Chinese living there, who tend to be among the economically privileged, have been among the first to feel the effects of this instability. People are scared, not knowing what will happen next. Even President Suharto, who ruled Indonesia with an iron fist for 32 years, has at last succumbed to pressure from both inside and outside Indonesia and stepped down. For the moment, the situation seems to have stabilized. However, the riots which shook Jakarta and other major cities have caused serious losses for overseas Chinese and Taiwanese business people there. They have also led to debate over the "Go South" policy and the ROC's ability to protect overseas Chinese.

In the wake of the East Asian financial storm, most of the region's nations now find themselves rebuilding. Indonesia, however, is embroiled in the most serious political turmoil it has seen in 30 years. The university students who are at the head of the protests lay blame for the social chaos squarely on President Suharto's shoulders. Suharto, unable to stand against the criticism he faced both at home and abroad, announced his resignation on May 21. In accordance with the Indonesian constitution, he turned over the reins of power to his vice president, B.J. Habibie.

The students' protests began in early February. When, on May 5, the Indonesian government began enacting the reforms requested by the International Monetary Fund, reforms which required higher transportation and electricity fees, increasing the economic burden on Indonesia's 200 million people, these protests began to give way to riots. On May 9, just as the mood of the public was reaching the boiling point, Suharto flew to Cairo for a summit with the leaders of 15 developing nations, and the situation in Indonesia deteriorated further.

Thousands of Indonesians poured into the streets, looting shops, beating shopkeepers, destroying cars and setting fires. As Indonesian society's usually repressed anti-Chinese sentiment was given full vent, Chinese-owned shops and businesses became primary targets for the mobs. On May 12, six students from Jakarta's Trisakti University were shot and killed by security forces, raising the protests to a higher pitch, and reports of injuries and deaths began to pour in from all over the country. Over just a short period, more than 500 people died in the riots.

In Bandung, Indonesia's third largest city where 30% of the population is Chinese, ethnic Chinese business people have suffered heavy losses. Taiwanese business people and ethnic Chinese in Jakarta and other major cities are frightened. In neighborhoods with high concentrations of Taiwanese, residents have taken to carrying clubs with which to protect themselves and their families from possible attack. Some residents have pooled their funds to hire soldiers or armed local gangsters as bodyguards. Huang Hsueh-hsien, who operates an aqua-culture business, has gone so far as to form his own security force.

Many Taiwanese in Indonesia have invested in factories, and although their losses are not as severe as those of the ethnic Chinese shopkeepers, their heavy investments mean that they are unable to pull their assets out quickly. As for those who have put down roots, who have Indonesian citizenship and carry Indonesian passports, all they can do is to get somewhere safe and wait for the trouble to blow over.

Protecting overseas Chinese

In response to the troubles, the Ministries of Foreign Affairs (MFA), National Defense (MND) and Transportation and Communications (MOTC), together with the Overseas Chinese Affairs Committee (OCAC), formed an inter-departmental committee to discuss measures to guarantee the safety of Taiwanese business people and overseas Chinese in Indonesia. As a result of this committee's deliberations, the MOTC requested that travel agents temporarily halt tours to Indonesia, and the MND prepared a modern version of the cavalry: five C-130 cargo transport airplanes and a naval task force. The ROC ordered its representatives in Indonesian to set up emergency shelters at the Jakarta Taipei School, the Hilton Hotel and the Java Hotel, as well as requesting Indonesian military and police forces to increase their protective measures.

On May 16, the first planeload of Taiwanese and overseas Chinese arrived in Taipei on an Eva Air flight. Although those on board were much relieved at having escaped the danger in Indonesia, they nonetheless were very critical of the ROC government and the airline for their handling of the situation. Luo Chung-kuei, a Taiwanese businessman, wrote a letter to the newspapers in which he pointed out that the much-hyped "first plane out" had actually been chartered by the Taipei office of his company after the Indonesian office of the Business Association of the ROC and the MOTC had failed to arrange a plane. And Eva Air had used the crisis to turn big profits, charging those fleeing the danger full fare for their tickets and demanding cash-only payment in US dollars.

Foreign Minister Jason Hu has had to face public doubts about the government's ability to protect Chinese abroad, and criticism over its lack of action to get people out. Hu counters that the ROC's representative office in Indonesia began working to register all those ROC nationals in Indonesia as early as February. But of the more than 30,000 in Indonesia, only some 10,000 registered. When the situation became volatile, what could the representative office do? In response to questions about why the government didn't simply pull everyone out, he says that when Taiwan was faced with the PRC missile crisis a few years ago, it asked the governments of other nations not to pull out their nationals for fear it would panic the people of Taiwan. Now that another nation is facing a similar difficulty, the ROC feels obligated to make repayment in kind. He further points out that although every nation has made preparations to evacuate its own people and has encouraged them to leave Indonesia, the first to be pulled out have been the dependents of diplomats stationed in Indonesia; so far, no nation has completely evacuated its citizens. Hu also mentions that the ROC hopes to preserve good relations with Indonesia in the future. He says that when the MFA deals with any situation, it cannot only look at the short term, but must also keep long-term objectives in mind.

Trading oil for rice

Because Indonesia is the largest nation in Southeast Asia, when things turn tough there, the rest of the region prepares for trouble. Many in the finance industry believe that this most recent crisis is weighing heavily on the rest of Southeast Asia, which had just begun to recover. Based on the principle of helping yourself by helping others, Taiwan should be extending a hand to Indonesia. When the chaos in Indonesia boiled over on May 14, Indonesia's economics minister, Ginandjar Kartasasmita, and two other economics and finance officials came to Taiwan to ask for concrete economic aid. They suggested a plan whereby Indonesia would trade crude oil for rice to alleviate food shortages caused by the crisis. In response, the MFA has, with the help of the Council of Agriculture, gathered 200,000 tons of rice to be sold to Indonesia at the international market price of US$200 per ton.

Although the US$16.0 billion that Taiwanese business have invested in Indonesia is not easily pulled out, Vice Minister of Economic Affairs Lin Yi-fu says that based on investment guarantees with Indonesia, Taiwanese firms can apply to the government for compensation for losses incurred due to rebellion, rioting or armed conflict. The ROC government will, in turn, apply to the Indonesian government for compensation on their behalf. As no one foresees a recovery in the Southeast Asian economies in the near term, in June the Ministry of Economic Affairs will publish a new set of proposals for expanding Taiwan's global exports. These new proposals will encourage local businesses to invest in the Americas, Europe and the newly emerging economies.

As to the criticisms leveled at the government's "Go South" policy in the wake of the recent political upheavals in Cambodia and the turmoil in Indonesia, in proposals to strengthen economic cooperation with Southeast Asia it made in March, the Executive Yuan had already stressed the need to set up a Southeast Asian economic research institute to evaluate the risks and rewards of investment in the region. Unfortunately, the recent crises exploded on the scene while planning for the institute was still in the preparatory stages. It seems, then, that the government needs to pick up its pace. Foreign Minister Jason Hu says that business will evaluate the current circumstances for themselves when deciding whether or not to "Go South." In any case, the government will not give up its efforts to provide them with the best political and diplomatic environment in which to carry out their business.

At the moment, it is still unclear how events will turn out in Indonesia. What should Taiwanese business people do? With Taiwanese businesses having been exposed to two recent upheavals in the region, the establishment of a Southeast Asian research institute is something that can no longer wait. On the brighter side, these experiences have most certainly improved the crisis management capabilities of relevant government agencies. Wherever in the world Taiwanese may go to invest in the future, they will still be able to depend upon the strong support of the government.

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For ethnic Chinese in Indonesia, the first task to be taken care of after the rioting will be to get their homes back in shape. Once things settle down, many Taiwanese business people will also be returning to pick up where they left off. (photo by Huang Tzu-ming)