One of the key items agreed between the IMF and Indonesia was the decision to break up the national clove monopoly which has been controlled by President Suharto's son, Tommy, since it was established seven years ago. Our economics correspondent James Morgan reports on the significance of this move:
The first impression of Indonesia is the pervasive smell of cloves. The country's smokers consume the local variety known as keretek, clove-flavoured cigarettes which became popular when the Dutch tried to establish a global monopoly in the spice and brought it to their Far Eastern possessions.
Until
recently however the cloves were imported from Zanzibar because of their
superior quality. But local production has increased and today 80,000 tons a year are grown at home.
All of this has had to be sold to the Clove
Suport and Trading Board under the control of the president's son, Tommy.
This
monopoly was, said its members, designed to increase the welfare of the
farmers.
The farmers did in fact receive more than the world price but the main
result was a doubling of the price paid by cigarette manufacturers thereby
increasing the welfare of the Suharto family.
The profits might total about
300 million dollars a year.
Ending the clove monopoly therefore
strikes at the very heart of Indonesia's system of Asian values.