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Defeat the evil solutions to the financial crisis being taken by Indonesian government

LMND-PRM Statement - December 6, 2008

Viva Liberation!

The following is a statement from (the temporary) National Collective of National Student League For Democracy-The Politics of The Poor (Liga Mahasiswa Nasional untuk Demokrasi-Politik Rakyat Miskin, LMND-PRM), Indonesia, about the capitalist crisis now and the solutions being taken by our government, the Susilo Bambang Yudhoyono-Jusuf Kalla regime.

We have been campaigning about the issues in this statement by holding mass actions a few weeks ago and we are going to continue our campaign and simultaneously build a united group with other democratic forces in Indonesia. One of these groups in Yogyakarta is the United People's Committee (Komite Rakyat Bersatu, KRB). KRB plans to hold a mass action in December 3 and 10 on International Human Rights Day. The theme of the action is similar to our statement.

We are asking for your support by sending us statements or messages about the capitalist crisis that's happening in the world, especially in Indonesia. We would also like material about the situation in your country and what measures your government has done as the solution for the crisis.

We are going to translate your statements and writings and publish it in our blogspot at www.lmnd-prm.blogspot.com and in the Indonesian mass media.

Thank you
Viva Liberation !

Niken D.I.
International Coordinator LMND-PRM

Overthrow the government of colonial agents, build a governance of the poor

There is no democracy and peace in Indonesia, under the government of the colonial agents (President Susilo Bambang Yudhoyono-Vice President Yusuf Kalla, the House of Representatives (DPR), the People's Consultative Assembly (MPR), the political elite, the pro-imperialist political parties, and the military) within the capitalist economic system! Companies are bankrupt, there are mass lay-offs and the price of fuels and basic goods are high.

Neoliberalism (the free market), which is considered as a "panacea" for the global economic crisis and social gaps post the 1997 crisis, in fact cannot realise its sweet promises that are often campaigned for the pro-neoliberal economy supporters. Since signing of the Letter Of Intent at the end of Suharto regime, it has continued to be refined by latter governments: Habibie, Megawati, Gus Dur, and the SBY-Kalla, with various regulations, but no "beautiful" dream of the so-called trickle down effects are visible. The valley of poverty grows deeper.

Welfare, knowledge, decent health, healthy and nutritious food, clean and modern housings, decent wages are the "ideals" for the poor in this country, but the natural wealth has been dredging by the international corporation (Exxon Mobil Oil, Freeport Mcmoran, Halliburton, Total, Caltex, etc.), meaning to say, taken by the international capitalists, leaving them only the crumbs of profit (production sharing) for the poor of this country! People of this country are truly left with nothing.

In fact, there should not be any reason for poverty in this country. Because this country has abundant natural resources, including the resources not owned by the other states. This country has a gold, coal, gas, oil, rubber, palm oil; diamond, tin, percha (fiber optic material), iron, steel, copper, plutonium, uranium, etc., and a large number of populations. But, this country has low labor productivity (productive forces). Labor quality is still low, technology and management's also low. But, in countries such as Cuba, Venezuela, Bolivia, which face the same problems, this weakness can be overcome by full participation and people's power! As a result, there's free education and health, cheap fuel, affordable housing (social welfare increase) in these countries.

Instead, it was not participation, sovereignty, independency and people's power built by government, but foreign debt and investment. Since the power of New Order government to the government of SBY-JK, the investment of foreign capital is "the spearhead" of the development of the country. Indonesia, even as the "Asian Tiger" because of the rapid economic development.

But, is it true? The fact says otherwise. It's when the financial crisis occurred in 1997, triggered by the monetary crisis in Mexico, the routine of cash to pay debts in the country was empty (tequila effect). Then the crisis in Chile, Bath's devaluation in Thailand occurred as a result of the exchange rate system and free capital outflows, with a quick-strike crisis in various countries in Asia (including India). These crises also occurred in developed countries, such as the United States, England, and France. The withdrawal of large-scale capital from developed countries to developing countries, and vice versa, from developing countries to developed countries, have resulted in the exchange rates of currencies of developing countries.

The effects of financial market instability are, in fact, drag the crisis in countries that have enough foreign exchange reserves. The absence of defense system in the financial system, causing destruction of industrial real, because the industry in developing countries need raw materials, energy and technology from the other countries. All of which must be purchased with the dollar exchange rate. The multiplicity of one currency and the disintegration of the currency in developing countries causes the price of a product skyrockets beyond the real value of commodities and the reach of people's purchasing power of public goods.

In Indonesia, 1997, due to the economic crisis, all economic sectors experienced downfalls, both the agricultural, manufacturing, construction, transportation, trade, and services. Consequently, growth in the economic sectors averages at 7% to zero, or even below the zero/minus. Outstanding currency rupiah experienced a sharp decline, from Rp. 2300, - per one U.S. Dollar in July 1997 shortly before the crisis to Rp. 15.000, - per one U.S. Dollar on 15 June 1998.

Several days later even became Rp.17.000, - per one U.S. Dollar. In real terms, earnings per population in Indonesia had fallen sharply to about U.S. $400 in 1998, where in the time before the crisis around U.S. $1000. Notes from the government, on 6 June 1998, unemployment in Indonesia is around 15.4 million people, that is, around 17.1% from a workforce of 90 million.

Now, 11 years post-crisis (I), or 9 years of the program, the Structural Adjustment Program (Structural Adjustment Program), the financial crisis, food crisis, and the energy crisis in the world and in this country slam the poor like a "silent tsunami ". No poor survives from that tremendous imperialist exploitations.

Neo-liberalism that considered as "panacea" for addressing the crisis was in fact generated the worst economic crisis. Goods trade liberalisation, services and finance liberalisation by the IMF, World Bank, Asia Development Bank through the World Trade Organization (WTO), share market internationally in the form of foreign exchange transactions, letters of shares (such as sub-prime mortgages), or the measure of commodity (Commodity Futures Market) to create a transaction to become a free commodity with a price that is very speculative.

Market shares, which initially used to attract capital for the expansion of the company and to facilitate trade of commodities, then became very autonomous and do not have relations with the real sector. In Indonesia, through the liberalization of trade and financial Singapore Stock Exchange-broker that 80% of the shares are foreign investors have greater and loose autonomy.

Capital is the largest incoming short-term capital (Short Term Investment) or regular known as "Hot Money" and this is far greater than the Foreign Investment Long-Term (Long term Foreign Direct Investment). Therefore this is often referred to as the Economic Bubble (bubble Capital). Short-term investments can be in the short time, and the players share profit (profit taking) from the margin of difference between the price of shares without question due to the process of production.

Therefore, hot money does not have any relation to the real sector. In the real sector of factors that determine the price of a stock. In the United States, Credit Housing Crisis (sub prime mortgage) that triggered the current crisis, resulting from decreases in sales of shares times the price of housing so that doubled the value of the actual production of housing. Consequently, the consumers that install housing or apartment are unable to pay off the installments because it has been too costly. This situation is creating the "stock broker" to sell (selling) securities to them. As a result, world trade stock collapses. United States with its highest value of shares transaction experienced great losses that urged government to implement the bailout.

To anticipate this, the SBY-JK regime had to make such contradictory policies, amongst others these are:

1. By increasing Interest Rate to 9.5%.
2. By removing CPO Export Taxes (Crude Palm Oil).
3. By eliminating the Minimum Wages Province and restricting the wage increase only up to 6% (the decision of 4 ministers).
4. By buying back country companies to secure the share prices of companies.
5. To bailout of the private company's debt and the plummeting price shares.
6. Export Services Taxation (JKP) or Goods Taxation (BKP) for the non-concrete goods will be charged 0% VAT.

Results of the economic crisis (II) and solutions from SBY JK regime, amongst others are:

1. The foreign exchange reserves are being exhausted, either to pay debt interest of 9.5%, Buy Back and Bail Out. That is why in 4 days (24 - 27 October 2008), foreign exchange, decreased to $4.2 Billion U.S. With the limited foreign exchange reserves of the state, the balance sheet is weakening and this will be resulted in the destruction of rupiah. Hoping to get injections to invest by raising interest rates and buying back, but in fact the state is losing the foreign exchange. Foreign investors will continue to sell shares, the shares because of the low purchasing power of the stock market appears to have no perspective. They sell their shares as soon as possible in order to secure the profits.

2. The Increasing Interest Rate to 9.5% of Indonesia, will trigger loans misfire in a large scale. And will lead to disintegration of the bank and company.

3. Country cash is increasingly little again because CPO taxes (which is one of the inflow of State) have been removed, and planned Export Services Taxation or Goods Taxation with no concrete will be charged0% VAT.

4. The devastation of rupiah against the U.S. Dollar, Yen and the Euro will destroy the value of imports (import value per September 2008 Indonesia experienced a decrease of 5.53 percent, worth USD11, 21M). Currently, Indonesia is still dependent on the Import sector, and the weakening rupiah against foreign currencies make the prices of raw materials, energy, technology and imported goods will be more expensive. The expensive production costs will make the price of a commodity skyrockets above the low rate of purchasing power and trigger the bankruptcy of companies that depend on loans to banks and imported raw materials.

5. The abolition of Minimum Wages Province, which is considered to save the company and make foreign investors, are not "gone out of business" or "flee helter-skelter". Thus reducing the level of purchasing power of the lower working class. In the third quarter of 2008 purchasing power of workers to minus 19.15 percent from wages. So indeed, this had drug the government accelerate the company's bankruptcy itself.

6. So, the lay offs, and the rise of fuel price and primary needs are the effect of crisis and results of evil solutions done by SBY-JK regime.

In this case, the National League for Democracy-the Politics of the Poor demands:

1. To overthrow Government Agent colonists and forming People's Poor Governance Association.
2. To decrease the price of fuel and basic materials.
3. To disapprove of the Decisions of 4 ministers.
4. To nationalise bank, mines and oil and gas industry, and companies in bankruptcy.
5. To impose 5% tax for shares transactions buying.
6. To lower the Interest Rates of Indonesia.
7. To drag the government letters of bonds and debts.
8. To abolish foreign debts.
9. To drag bank recapitalisation bonds.
10. To catch and punish corruptors, and also the perpetrator bad debts and to confiscate their properties and assets.
11. Do not use dollars for any transaction in the country.
12. To fight against the remaining opponents from the New Order, the military and also the pseudo-reformers.
13. To exclude the deceitful activists.

We invite all people and all people's movements to:

1. Form Democratic Consolidation Unity.
2. Form Unity Movement (Non Cooptation-Cooperation) as a power base against imperialist dominance and the colonists' agent government.
3. Build Centre of Movement in the villages, factories and colleges.
4. Develop a lot of political forums collectively as a means of the awareness raising and consolidation.
5. Conduct a form of Unity Action to the DPR/MPR/local parliament, the Palace, the Governors, the Majors, Indonesia Stock Exchange, and the World Bank.

Yogyakarta, November 6, 2008
National Student League for Democracy- the Politics of the Poor

(Paulus Suryanta)

Propagated by LMND-PRM
email: elemende.prm@gmail.com
blogspot: www.lmnd-prm.blogspot.com
Contact persons: 085224772996 (Eman), 081574304391 (Surya)
Address: Jalan Cantel, GK IV, No 354, Kotamadya Yogyakarta, Indonesia