Shoeb Kagda, Medan – Indonesia's third largest city is bracing itself for further social unrest as between 2,000 and 3,000 farmers are expected to march to the provincial governor's office today demanding land reforms. The farmers are asking the state government to return to them about 100,000 hectares of land currently owned by state plantation company PTPN 2 and appropriated under the New Order government of former president Suharto.

The demonstration, said the director of the Institute of Legal Aid, Kusbianto, is planned to coincide with National Agricultural Day tomorrow. "We are optimistic that the government will return the land because the farmers form a powerful lobby group and especially since the land was acquired through collusion."

Coming a week after more than 10,000 transport workers demonstrated for a reduction in the price of auto spare parts and food, which led to rioting in the city centre, residents of Medan expressed concern over the escalating social unrest. "Medan is a hot spot for social discontent and the events which led to the downfall of Suharto began here," said Fauzie Yusuf Hasibuan, head of the local chapter of the Indonesian Bar Association. "But while we want the demonstrations to be peaceful, many other elements are inciting social unrest."

He said that in addition to food, the major issue in North Sumatra amongst the local populace was widespread corruption and the illegal appropriation of land. Many North Sumatrans, he noted, are unhappy about the strict control of the province's resources exercised by the central government in Jakarta.

Much of North Sumatra is controlled by large plantation companies which grow palm oil, rubber and cocoa. These companies have benefited from the 80 per cent fall in the value of the rupiah against the greenback as their export earnings have soared.

But little of this money has found its way back to the local farmers who continue to eke out a living growing vegetables on small plots or working for the plantation companies. Average daily wage in the province is about 6,000 rupiah (S$0.94), lower than the 10,000 rupiah in Jakarta.

With the economic crisis deepening, causing the prices of basic necessities to rise significantly, mass looting of warehouses, shops and businesses owned by the ethnic Chinese minority has been reported. "Most Chinese are very worried but are staying put for the moment," said one Medan-based Chinese businessman. He added that many local Chinese families were also experiencing economic hardship and could not afford to leave every time there was unrest. "We are preparing for the worst but hoping for the best," he said. "But if there is mass rioting and women are raped again, many of us will leave Medan and the country for good."

Like most of Indonesia's urban centres, ethnic Chinese dominate the economy and form the backbone of the distribution system. Many of them supply machinery and spare parts to the bigger agricultural companies, as well as run medium-sized retail outlets dealing in goods ranging from steel pipes, electronic items, jewellery, foodstuff and garments.

A local banker with an international bank told BT that many of his Chinese customers have transferred their capital overseas and are reducing their business exposure. "Most Chinese businessmen want to concentrate on growing their business but with so many rumours of social unrest, their main preoccupation is the safety of their families, especially their wives and daughters."

He said there has also been a dramatic slowdown in the amount of foreign investment flowing into the region as most investors have adopted a conservative approach.