Indonesia is struggling to find competent entrepreneurs to fill the vacuum left by ethnic Chinese who fled during the May riots. David Jenkins, Asia Editor, reports.

THE Indonesian Government does not wait until your plane touches down in Jakarta or Bali to let you know what it thinks about its ethnic Chinese minority. The visa application form asks those of Chinese descent to write their name in Chinese characters. It then asks them to fill in their government-assigned code number.

The blue-and-white Customs declaration form asks incoming passengers if they have any of the following prohibited goods: "Narcotic drugs, firearms, weapons, ammunition, laser guns, explosives, pornography, Chinese printing, Chinese medicines..."

Chinese characters are prohibited on shops and signboards. Chinese-language newspapers are banned, save for one anodyne publication put out by the Chinese affairs section of Bakin, the State intelligence co-ordinating board.

There is an "informal" 3 per cent limit on the number of ethnic Chinese students who may be admitted to State universities, including the most prestigious ones. Few Chinese are accepted by the military academy, although some do join as professionals. There are very few in the bureaucracy.

The ethnic Chinese, some of them descendants of settlers who arrived in the East Indies 200 years ago, may carry Indonesian passports and speak not a word of Chinese. They may have changed the family name from Tan to Sutanto or from Lim to Salim. They may even have married pribumi (indigenous) Indonesians or, in rare cases, converted to Islam.

But they are not quite the real thing, not quite paid-up members of the club. Worse, in the eyes of some, they are probably fifth columnists, the eyes, the ears and the "hidden hands" of Beijing or Taipei, subversive Marxists one minute, shameless capitalists the next.

Resentment of the ethnic Chinese, who account for perhaps 3 per cent of Indonesia's 211 million people but who are said to control 70 per cent of the nation's corporate wealth, is never far below the surface.

It erupted into violence in May during the final stages of the campaign to topple former president Soeharto. In Java alone, as many as 3,000 Chinese shops and houses were looted and torched. In parts of Jakarta's Chinatown whole blocks of shophouses were razed, in some cases after the arrival in trucks of powerfully built agents provocateurs, who may have been soldiers. And in a new and ugly twist, there were claims that as many as 150 ethnic Chinese women had been raped.

In the wake of these disturbances an estimated 40,000 ethnic Chinese fled Indonesia, most temporarily, others permanently. Indonesia's most prominent ethnic Chinese tycoon, Liem Sioe Liong (Salim Sudono), who built a fortune on the back of his long friendship with President Soeharto, was one of those who left. He has not returned. Nor is he expected to. "The trauma of May '98 is very deep," says Sofjan Wanandi, a prominent ethnic Chinese businessman. "Never before have the Chinese felt so totally hopeless and unprotected."

Nor did President B.J. Habibie help matters when he gave the impression that he would not be too upset by the non-return of the Chinese who fled in May because their place in business would be taken by pribumi Indonesians. Habibie has since backed away from those remarks, partly because Indonesia can ill-afford the wrath of powerful Chinese communities in East Asia and North America, partly because his nation desperately needs the capital and know-how of the ethnic Chinese.

Indonesia's ethnic Chinese, Habibie has now decreed, are no longer to be victimised. There is to be no more use of the terms pribumi and "non-pri". There is to be no more discrimination by government officials, from ministers down, on the basis of ethnicity or religion.

Provincial governments are to implement, finally, a rule that ID cards must not carry an administrative code – in Jakarta, where the practice is well-established, the code is "OO" followed by a number – identifying the bearer as a person of Chinese descent. At the same time, it is no secret that Habibie, who courted the nation's Muslim majority during his years as chairman of the Indonesian Association of Muslim Intellectuals (ICMI), would like to advance the interests of indigenous businessmen at the expense of the Chinese.

His point man in that endeavour is Co-operatives Minister Adi Sasono, an old ICMI figure who is seen by many as the most anti-Chinese member of a Cabinet thought to include three or four such figures.

In an attempt to advance his agenda, Habibie has arranged for BULOG, the State Logistics Agency, to cancel rice and cooking oil distribution arrangements with hundreds of ethnic Chinese businessmen and award them instead to indigenous entrepreneurs, some of whom have little or no experience in the field.

That does nothing to put Chinese hearts at ease. It might also backfire. Until May, Indonesia's rice distribution network was dominated by Chinese traders. They had the aptitude and the application to ensure that the system ticked over efficiently, despite some profiteering on their part and despite the pay-offs they had to make to an increasingly venal indigenous bureaucracy.

Those arrangements are now in disarray. Some Chinese have fled. Others have been "encouraged" to drop out of the distribution network. Across Indonesia, the Chinese are cowered and frightened, dismayed by routine reports of looting and arson, fearing that further violence may be on the way.

The most obvious way to fix the food problem would be to encourage the Chinese to get back into business, providing them with guarantees that the Government is serious about their safety. That is unlikely to happen. In post-Soeharto Indonesia the pendulum has swung decisively against the Chinese, a reaction to the favoured treatment given by the former president to prominent Chinese tycoons, some of whom lined the pockets of the Soeharto family in return for lucrative business favours.

"The emphasis now is on the small enterprises and co-operatives," says Sofjan Wanandi. "The Government is not interested in the [ethnic Chinese conglomerates]. They feel the Government is basically hostile to them."

According to some analysts, Adi Sasono has two parallel goals. One is to get food out to people in need. The other is to build a replacement business culture for the ethnic Chinese, particularly the larger Chinese groups. The Habibie Government is working, critics allege, to build a new system of patronage and political power, based on the rents and the benefits that come from State access to imported food and other subsidised items, which can be channelled through the co-operative movement.

"It is still early days," says a diplomat with long experience in Indonesia, "and the success or otherwise of this attempt remains to be tested. There are a lot of people who are extremely sceptical because the co-operatives, during the Soeharto era, were just a shell and trying to inject some substance into it will not be easy.

"But my feeling is this co-op thing will continue to be a strong ideological touchstone for people like Sasono. It will continue to be very important for them in terms of distributing largesse and receiving, in turn, political support."

While many Indonesians would support the view that a new accommodation is necessary between indigenous and Chinese businessmen, it is by no means certain that all of those favoured by Adi Sasono are up to the task of running the nation's food distribution system, at least for the time being. Nor is this the best time for experimentation and on-the-job training. Indonesia has had a string of bad harvests and has been forced to buy millions of tonnes of rice from Thailand and Vietnam. The distribution of imported and locally grown food is a vast and complex undertaking.

Another problem is that the co-operatives movement, like the bureaucracy, has been dogged by corruption and inefficiency. In one of the more spectacular recent examples of corruption, the head of the Jakarta logistics agency, retired Colonel Ahmad Zawawi, whose job it was to get rice to the hungry and the destitute, is accused of arranging the illegal export of 1,900 tonnes of rice to Malaysia.

Meanwhile, there are signs that some officials and indigenous businessmen are once again sub-contracting work out to small Chinese traders. No-one really doubts that some Chinese businessmen will eventually pick up where they left off. But the Chinese are unlikely to enjoy the influence they have had in recent years. "Things will sort themselves out," says one expert. "But I think it will be in the context of regimes which are much more consciously and avowedly pribumi in cast and thinking. And the Sino-Indonesians who don't like that can go and those who can accommodate it... will make an accommodation."

What is happening now, according to this source, is that old distribution networks are breaking up. "That reflects the sorting-out that is going on in Jakarta between the old class who benefited from the capitalism of the Soeharto era and an emerging new class of people who are seeking to replace them. And the struggle for ascendancy is going on all the time."