Published: Sep 22, 2007

Small enterprise relishes the 'economic crisis'.

Lea Jellinek

Before leaving for Jakarta to do research on the impact of the economic crisis on the urban and rural poor, people warned me of the dangers I would confront. The international media screamed about crime and violence. Friends phoned to say I would be lucky to come back alive. Economists described a crash of the rupiah, massive unemployment, dire poverty, dramatic hikes in the price of basic foods, a drop in incomes, malnutrition and starvation, with half the population dropping below the poverty line by 1999. The images were of impending chaos.

Expecting to be robbed as my taxi took me into Jakarta from Sukarno-Hatta airport, I carefully hid my money, Visa card and travellers cheques in all sorts of places. The city looked grey, with a sense of foreboding. An expatriate friend told me at which police station to buy a chili spray gun and pistol.

However, by the time I reached Central Java, instead of discovering crisis, I found an economic boom. Small enterprises such as blacksmithing, bird selling, services and repairs, petty trade, traditional markets and trishaw driving were thriving in a way they had not done for 30 years. With my research team, I travelled from Semarang to Blora, to Yogyakarta, Wonosari, and Gunung Kidul in Central Java, and to Pacitan in East Java. Wherever we went we saw the same dynamic small scale economic activities. We called it 'communal capitalism'.

Why is the outside world getting such a distorted picture of what is happening in Indonesia? Why the focus on violence, poverty and desperation when what we are seeing in most parts of Indonesia is little people beavering away, admittedly against great odds, to create a better future for themselves? What caused this homegrown economic boom? Why aren't the press, government, international agencies and economists reporting it? Why are they placing such stress on dire poverty and the 'social safety net' (a social welfare system which is supposed to provide rice, work and education for the poor) when most of the poorest people are not getting this assistance but are mainly helping themselves?

Cottage industry

True, in urban areas prices have risen three fold, and an estimated 20 million people have lost their jobs in factories, offices, hotels, shops and supermarkets. Yet in rural areas there seem to be plenty of opportunities. Kinship and neighbourhood ties in the village provide social security when the going gets tough in the cities. Sons and daughters returning home from jobs in the city have been rapidly absorbed into rural society. They are learning traditional agricultural, house building, cottage industry and small trade skills from their parents. Cottage industries, destroyed during the economic boom years of Suharto's New Order, are reviving.

In Gunung Kidul for example, the dry area east of Yogyakarta, blacksmiths between 1975 and 1997 had a bad time competing against mass-produced agricultural tools imported from China. But with the economic crash, the imports have stopped. The blacksmiths now struggle to fulfil the many orders for agricultural tools from all over Indonesia. Clusters of blacksmiths in the same village pool resources to buy the iron they need. Much of it comes from railway tracks, dug up and stolen in the bankrupt industrial districts of Cilegon near Jakarta. Other metal comes from the urban riots and violence, the wrecked buildings, burnt out cars, shops, and supermarkets. A new industry - collecting scrap metal - is flourishing.

Blacksmiths work in groups to satisfy the demand for spare parts for cars and other machinery, now that imports are so expensive. They also have to meet a demand for gamelan (the Javanese musical instruments) from America, Holland and Australia. Sons and daughter help their parents. Neighbours pitch together to help meet the supply. The blacksmiths have developed community micro-credit systems of borrowing and lending. These enable their enterprises to thrive, yet have no relationship with the formal economy. Without any government assistance, the people are creating their own enterprises, while providing all the necessary skills, capital and markets.

Semarang, on the north coast of Java, is Indonesia's fifth largest town. One road in the city centre has been taken over by people buying and selling birds. Bamboo cages containing tropical birds of all shapes, colours and sounds are piled under trees in the middle of the busy street. Buyers and sellers mingle among them. Bird keeping has become popular during the economic crisis, especially among the urban middle classes who have turned from their more expensive hobbies of buying imported goods. It is said to be good for the psyche in times of crisis. For years, city authorities used to clear the bird market away to make room for traffic, but now it has virtually taken over the street. Cage making and bird food production are booming with it.

Many traditional markets in the towns and villages of Central Java, often displaced during the New Order boom years, have come back. A vibrancy, renewed energy and life pervade them. Peasant women, with only a few items to sell from their home gardens, sit in rows on the ground in strategic locations at the entry to the markets. They told us happily how they could now find a space from which to trade. Only two years earlier they could find none. Thugs linked with government authorities controlled the markets and used to charge extortionists fees to all who operated in them. Little people without resources could not afford a place to trade.

Trishaws

Trishaw (becak) drivers were under the New Order driven out of most towns and cities in Java. People with little income, often labourers or poorer peasants, drove trishaws in the agricultural off-season when there was no work in ploughing, planting, weeding or harvesting. The trishaws were appropriate - most towns are flat, the vehicles were non-polluting and provided a reasonable livelihood when there was nothing else to do. They provided flexibility for the drivers, who could pedal part-time in the city and cultivate part-time in the village. Now the trishaws have been allowed to return. The high cost of petrol and spare parts has affected the capital intensive and mechanised forms of transport such as private cars, buses, mini-buses and taxis. Small enterprises building and repairing trishaw have gained a new lease on life.

Small-scale repairs, services and recycling is experiencing a boom. Whatever can be fixed - fans, batteries, televisions, radios, motor-bikes, bicycles, household utensils, shoes - is being repaired. Everything is reused, nothing is thrown away. It is as I remember Indonesia in the early 1970s, when everybody seemed to be a fixer. Nothing was beyond repair. The consumerism of the 1970s, 80s and 90s has been replaced by a collect, recycle, repair and reuse society.

The boom in small-scale activities can be partly explained by the devaluation of the rupiah and the consequent cut in foreign imports. A virtual tariff barrier has been set up around Indonesia, and it is one that seems to suit agriculturists and small-scale entrepreneurs, especially in rural areas. It does not suit the international experts, bankers and capitalists. Indonesians themselves are providing goods for their own 200 million people, and so locals rather than foreigners are reaping the benefits.

Because of their cheap price, many Indonesian products are in demand from abroad. Commercial products such as coffee, pepper, copra, tea, sugar, vanilla, fish and timber are selling well. Most farmers on the islands outside Java are benefiting, with much higher incomes than they had during the Suharto years. Even if they have to pay more for rice and other basic necessities, they are receiving more - up to three times - for their produce. In Central Java, cattle and teak are selling for three times their normal price. Teak furniture is being exported abroad. They are highly visible on Melbourne streets, which throughout our summer advertised cheap, durable, outdoor teak furniture for sale.

Hopefully many of these small businesses will continue to provide a livelihood for many Indonesians when large scale investment returns to Indonesia. Small enterprises have gained a breather through the collapse of big business.

Bambang Rustanto, who is a research anthropologist in Jakarta, contributed to this article. Lea Jellinek is a freelance development consultant who lives in Melbourne.