The IMF and the economics of Jakarta tofu

Thousands of peddlers pad through Jakarta's smog-filled streets every day, hooting and clicking like a flock of exotic birds.

"Min-Yak! Min-Yak!" croaks a palm-oil merchant, prompting caged cockatoos to squawk in response. "Ta-hu, Ta-hu, Ta-hu," cries a vendor of deep-fried tofu. A chopstick, tapping on a wok like a rattlesnake, announces that fried rice is for sale.

The cacophony of this pushcart legion lures everyone from tycoons to their servants. But the carts - kaki lima or "five-legs," for the two legs of the peddler, the two wheels of the cart, and the post it rests on - are also a reminder of those living on the vulnerable edge of poverty in this capital city of 10 million.

The kaki lima are among the most visible of Indonesia's working poor, scratching out a small margin of survival in Jakarta's streets - a margin that, for many, is getting thinner. The ranks of the poor have surged in the past three years, to about 40 million, by government estimates.

Yet if Indonesia follows international prescriptions for fixing its languishing economy, the urban poor, increasingly restless and alienated, could bear the brunt.

The International Monetary Fund and the World Bank - which have extended billions in loans here - are urging Indonesia to do away with fuel and electricity subsidies to control a growing budget deficit. Economists say the step is necessary to head off an eventual collapse of the currency, the rupiah. But short-term, the moves will fuel inflation, increasing the pain felt by the urban poor.

In the past 30 years, a largely agrarian nation has become a highly urban one, with 40 percent of Indonesians now living in cities, without the land to fall back on in times of need.

Roughly half of the 210 million population are estimated to be "vulnerable" to poverty, according to the United Nations Development Program. "Vulnerable' means that any economic shock reduces their nutrition, sees their kids pulled out of school. It's frightening," says Satish Mishra, who runs a UNDP-sponsored poverty-alleviation program.

In 1998, the fall of long-time dictator Suharto coincided with a 15 percent contraction in the economy that destroyed millions of jobs. Although the economy is no longer shrinking, it continues to languish.

A ballooning budget deficit, and confusion in the government as President Abdurrahman Wahid has fought for survival against corruption allegations, has weakened the rupiah and increased prices for key commodities.

Jakarta's kaki lima are already feeling the pinch. If you stroll into the mazelike Tegal Parang slum, you can see why. The jumble of buildings and alleys leaves everything in perpetual twilight. A cloying combination of odors from the fermenting soybeans of small tofu factories and sewage from the river fills your nose.

The smell is almost enough to put you off this mainstay of Indonesian diets. Yet stuffed with fillings and deep-fried by the tahu vendors, it becomes hard to resist. Indonesians ate about 2.5 million metric tons of tofu products last year. With soy less expensive than meat, the poor rely on tofu for much of their protein.

But it is getting more expensive. "I've been here since 1972, and I'm on the brink of going out of business," says Tukino, a father of five, who owns a tofu factory here that caters to peddlers. "I don't care who runs this country, I just want the pain to stop."

Mr. Tukino sits in his two-room home attached to the factory. He runs through his expenses as he strips off his yellow knee socks and the gum boots he uses to tromp the factory's dirt floor, soggy with soy juice.

The biggest expense is soybeans, most of which are imported from the United States. American farmers sold 1.3 million metric tons of soybeans last year, and soybean prices have risen 50 percent in rupiah terms in the past six months. Mr. Tukino's suppliers have told him prices will increase again soon, to reflect the rupiah's 15 percent fall since January.

That's in addition to the currency's 25 percent decline in 2000. Though not at the record lows it touched in 1998, the currency has been steadily slipping on concerns about the country's political stability and its ability to service its debts. The rupiah is now near a 27-month low.

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