Louise Williams, Jakarta – Hundreds of ethnic Chinese business families fled the central Javanese town of Cilacap over the weekend after mobs torched warehouses, sunk fishing trawlers and attacked shops and homes.

The two days of violence continued overnight on Saturday as local fishermen began stoning and looting the homes of their bosses, many of whom are ethnic Chinese Indonesians. Locals said about 80 per cent of the town's 200 fishery bosses had fled with their families.

The new wave of rioting rekindles fear of further unrest across Indonesia as the economic crisis bites, sharpening divisions between the poor and the relatively affluent ethnic Chinese minority which controls much of the country's commerce.

In East Java, the Jakarta Post newspaper reported looting as villagers, angered over steadily rising food prices, robbed rice mills, shops and plantations. The official Antara newsagency reported mobs looting rice, sugar and other basic commodities in three towns. In Cilacap soldiers were outnumbered by rioters who accused the local bosses of employing unfair fishing practices.

Reports from the town, 250 kilometres south east of Jakarta, said the first rampage began on Friday when 10 fishing trawlers, five cars, and 20 houses belonging to ethnic Chinese were set ablaze. A second more serious wave of unrest began on Saturday night when mobs attacked more homes, government buildings, the central marketplace and the Nusantara Fishery Port and warehouses.

The military said all roads leading into Cilacap had been sealed, and soldiers had been given permission to shoot. The military district chief, Lieutenant Colonel Basuki Kuntadi, said: "We have heard the fishery bosses families have fled to Jakarta, fearing further violence."

The Observer newspaper warned over the weekend that a new round of price increases, particularly for the most sensitive staple food, rice, could again provoke explosive social tensions. The ethnic Chinese minority has traditionally been the target of mob violence because of its relatively affluent position and control over business.

"The rice shortage became acute from December last year, with people in towns queuing for rations and some people in rural areas subsisting on leaves," it said in an editorial. "The shortage was partially brought under control by a feverish importing campaign, but prices of the nine basic commodities remain exceptionally high.

"Several days ago hungry people started looting rice from a warehouse in East Java. If this trend continues it may some day explode like a bomb, signaling the beginning of a social revolution."