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Suharto under siege, rupiah plummets

Sydney Morning Herald - October 7, 1997

Louise Williams, Jakarta &150; The Soeharto Government was facing an unprecedented crisis last night as a wave of public criticism over its handling of the fire emergency coincided with a dramatic fall in the rupiah and warnings of serious economic problems ahead.

The Environment Minister, Mr Sarwono Kusumaatmadja, pushed the urgency of the forest fire and smog crisis to a new level yesterday, saying: "If we do not change our ways, we will not survive as a nation."

Soon after, President Soeharto called an emergency meeting of economic ministers after the Central Bank intervened to save the sliding rupiah, which lost almost 5 per cent in morning trading.

More than 50 per cent has been wiped off the value of the Indonesian currency in less than two months.

At the same time yesterday, Indonesia's biggest Islamic organisations called on the Government to act more decisively in dealing with the forest fires, and to look at the corruption and collusion behind the burning off of large tracts of land despite warnings of the coming drought. The leader of the 28-million strong Muhammadiyah, Mr Amien Rais, said the fires, drought, economic crisis and fatal accidents of the past few months were a warning to both the Government and the community to "repent".

In a statement signed by religious leaders, Mr Rais said: "We are calling on the Government to remember that power is a mandate from Allah that has to be accounted for. No matter how great and strong a power is, Allah will one day take it back."

The biggest disaster facing Indonesia was the complacency and arrogance of those in power, he said.

Government ministers responsible for the recent disasters should resign and the Soeharto Government had to face the problems of corruption and collusion in its own ranks.

Mr Sarwono said Indonesia had no choice but to change its land-use policies, end slash and burn practices and stop the abuse of political connections to flout environmental regulations.

Asked whether he was concerned that a repeat of this year's haze could threaten the Commonwealth Games in Kuala Lumpur next year, he said: "Of course, we are very concerned. It is my job to stop the haze. If it happens all over again next year we are out of business as a nation."

Mr Sarwono was speaking at an extraordinary briefing for journalists by seven Indonesian ministers dealing with the fire crisis, in an attempt to arrest the damage to Indonesia's international image the haze crisis is causing.

Fire-fighting teams had put out scores of fires, he said, but fires burning in peat seams in Sumatra and Kalimantan would be difficult to extinguish and could burn for months.

On the economic front, the Central Bank moved in to halt the collapse of the rupiah yesterday morning when the currency fell to an all-time low of 3,855 to the US dollar, a loss of more than 50 per cent since mid-August.

The stock market also lost ground as brokers and economists predicted the rupiah could fall to the 4,000 mark, leaving scores of major Indonesian companies critically exposed on large US dollar debts.

There would be a certain economic slow-down and the prospect of politically sensitive inflation and unemployment as crop failures due to the drought coincided with the corporate financial crisis.