By Cindy Shiner
Special to The Washington Post
Wednesday, May 6, 1998; Page A26

JAKARTA, Indonesia, May 5 – Riots and looting broke out in Medan in northern Indonesia, and tens of thousands of students demonstrated in other parts of the country as price increases went into effect as part of an economic reform plan worked out with the International Monetary Fund.

Reports from Medan, on the island of Sumatra, said police fired rubber bullets to disperse 1,000 or more rioters who burned vehicles and attacked shops owned by ethnic Chinese. The Chinese minority also was targeted in rioting that broke out in January after food prices went up.

The government of President Suharto raised the prices of fuel, transportation and electricity today as part of a subsidies-ending measure included in a $43 billion IMF bailout agreement. The economic crisis was sparked by a drop last summer in the value of the currency, the rupiah, which has lost 70 percent of its value.

Many people said the price increases, including a 71 percent rise in the cost of gasoline, caught them by surprise.

"We're feeling very cheated," said Madroji, 32, a driver of a three-wheeled motorcycle taxi. "Most of the passengers don't understand [the fuel price rise] so they won't give you the extra money that you charge."

When asked if he was angry over the price increase, he said: "How can I be mad? The people who have the power are the government."

IMF Managing Director Michel Camdessus said today that governments implementing belt-tightening measures need to keep their people fully informed of the new policies.

"For hard economic programs . . . to have chances of success, these programs will need to be understood by the people and have the formal consent of people," the Reuters news agency quoted Camdessus as saying today in Melbourne, Australia, where he was attending a conference.

Students demonstrated in at least five cities today – Bandung, Yogyakarta, Surabaya and Semarang, as well as Jakarta, the capital – calling for political and economic reforms. But many students take "economic reform" to mean eliminating the corruption, collusion and nepotism that have characterized Suharto's 32-year rule, rather than the austerity measures required by the IMF. More and more students are demanding that Suharto step down and that Indonesia's 200 million people be given the voice in government that they have been denied during his three decades of authoritarian rule.

The defense minister, Gen. Wiranto, warned Monday that the military would take "stern measures" against protests that authorities believed could lead to anarchy. Security forces have largely prevented students from taking their demonstrations off campus and into the streets.

Security forces here in the capital fired rubber bullets and tear gas at protesters today, injuring at least 25 students, wire services reported. There have been growing concerns of a violent crackdown following the recent clashes and reports of abductions and torture of political activists.

Camdessus voiced concern about the reported abuses, saying, "As a human being, I am extremely concerned about that and I believe that violations of human rights can never be an acceptable thing and can never be a good thing for economic progress."

The IMF has come under increasing pressure from the U.S. Congress to link its financial aid to respect for human rights.

The continuing unrest in Indonesia affected markets around the region today. The Hong Kong Hang Seng Index fell 2.75 percent to a level of 10,153; Singapore and Malaysia also posted heavy losses. Singapore businesses and banks are particularly heavily exposed in Indonesia. Stock markets in Japan, South Korea and Thailand were closed for holidays.