The myth about the Chinese-Indonesians

Some say many goods have become scarce or expensive because their distributors, mostly traders of Chinese descent, have fled the country. Economist Kwik Kian Gie says this is a myth created to discredit Chinese-Indonesians.

JAKARTA (JP): Recent media reports have prompted me to question their accuracy. They claim that goods are becoming hard to find and expensive after their distribution was crippled because traders of Chinese descent fled abroad. Since Chinese- Indonesians control 70 percent of the economy, trade is crippled, the reports say.

Is this true? Too many claims and figures have been bandied about without support of even the most basic research. We do not need detailed research, but we could ask ourselves and use our own observations to answer this question.

We have to treat the "theory" carefully. It is not impossible that the May riots in Jakarta and Solo were politicized to discredit particular parties.

It's true that many shops were closed for a few days after the May 14 riots and that some shops were emptied by looters. Reports of rapes, torture and killing made Chinese-Indonesians angry, anxious and insecure. Many of them did indeed flee the country. But how many? One estimate puts the number at 100,000. Even if this figure is accurate, is it enough to cripple the economy?

We should analyze this with a cool head.

According to television reports, many Chinese-Indonesians who fled abroad returned to Jakarta a few days after the May 14 riots. By then, Jakarta was safe. We saw tanks and armored cars and combat-ready soldiers everywhere.

Has the destruction of shops and offices disrupted the flow of goods and services? Of course it has. Several shops where we regularly bought our goods have been razed. But there are many other shops in Jakarta still intact. Clearly the reports that the distribution network was crippled because about 100,000 Chinese Indonesians fled abroad is an exaggeration.

The fact that prices soared shocked me, and everybody complains about this development. But this was not caused by the poor distribution network. The distribution infrastructure may have been damaged, but not to the extent of disrupting the flow of goods. If the distribution network has been badly damaged, then goods must be piling up in some warehouses. This is not the case.

If we have a shortage, it is more because of scarcity in supply. Why? Because we import many of our basic needs. With the rupiah plunging to Rp 15,000 per dollar, people could not afford them anymore. As sales decline, traders stop importing them, which is how scarcity develops.

The core of the problem is the overall economic condition. It is not because 100,000 Chinese Indonesians have fled, taking their wealth with them. Those who are suggesting this are creating an image that Chinese-Indonesians lack patriotism. They also suggest that the Indonesian economy is vulnerable so long as Chinese-Indonesians control the economy because they keep fleeing the country every now and then. This is a grossly misleading picture, and is an attempt to cover the weaknesses in the fundamentals of our economy.

I know of some people who have gone abroad. But they have been traveling all the time. Some of them may have decided to stay abroad because they feel safer. But practically everyone that I know who left has now returned to Indonesia.

The core problem is that the economy was built on the basis of corruption, collusion and nepotism (KKN). Through KKN, they reaped funds from the Jakarta Stock Exchange, from domestic and foreign banks. Since this was ill-gotten wealth, they keep part of it abroad.

Who are these people? By definition, KKN involves a cooperation between entrepreneurs and the rulers. Since the rulers are the pribumi (indigenous), it would have been impossible for any Chinese descendant to engage in KKN without the participation of the pribumi. The profit that the latter has reaped is as big as that reaped by their partners of Chinese descent. But the pribumi do not own companies, so they do not pay taxes. Their wealth is invisible because they do not own factories. They stashed their wealth in foreign bank accounts, the secrecy of which is guaranteed. They have no obligation to employees or workers and they have no overhead to worry about.

I am not trying to defend the handful of Chinese-Indonesian conglomerates who are equally evil. In past articles, I have exposed their dirty practices and condemned them.

But I can categorically state that the majority of Chinese- Indonesians, who number in the millions, are hard working people with work ethics, who love the country and did not flee in May. They would not feel at home abroad even if they had the money to move.

Some parties are creating the myth that Chinese descendants do not love this country, are unpatriotic and that they have all fled. They argue that the role of Chinese-Indonesians in the distribution network should be replaced by pribumi entrepreneurs.

While I do not mean to belittle the impact of the May unrest, but I feel we should put the matter in its true perspective.