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ASIET Net News 41 – October 20-November 2, 1997
East Timor Human Rights Centre - 29 October, 1997
The East Timor Human Rights Centre (ETHRC) is concerned for the
safety of up to eight East Timorese men still in detention in
Semarang and Dili, for their alleged involvement in the
manufacture and possession of home-made bombs (see UA 23/97 and
UA 23/97PR).
In Semarang, Joaquim Santana, Ivo Miranda, Fernao Malta Lebre and
Domingos Natalino Coelho da Silva are still in detention at POLDA
(the local police station). Indonesian authorities have denied
lawyers, appointed by the detainees' families, access to the
detainees. It is not known whether charges have been brought
against them under Indonesian law and the ETHRC is therefore
concerned they may have been arbitrarily detained. Grave fears
are held for their safety as reliable sources have reported that
all four detainees in Semarang have been subjected to torture and
ill-treatment, including electric shock.
In Dili, it is believed up to four East Timorese men remain in
custody at POLRES (Regional Police Headquarters). Two of the
detainees, Constancio Chantal dos Santos and Paulo Jorge Pereira
are being held for subversion and armed rebellion against the
state and if convicted, could face the death penalty. The date
for their trials has not been set. Earlier reports said
Constancio Chantal dos Santos' fingers had been severed, however,
it now appears this is not in fact correct. Constancio Chantal
dos Santos and Paulo Jorge Pereira have had access to their legal
representatives but it is not known whether ongoing access during
interrogation has been allowed. Concerns are therefore held that
they may be at risk of torture and ill-treatement.
It is believed another two East Timorese men may still be in
detention in Dili in relation to the home-made bombs, although
this remains unconfirmed. One of the men has been identified by
ETHRC sources as Jose Ximenes (UA 23/97), while Amnesty
International previously reported that the fourth man was Eduardo
(AI Index 21/77/97). The ETHRC is still trying to confirm these
names and whether they are still in detention.
It is now believed that Joao Bosco Carceres, Acelino (no
surname), Nuno dos Santos, Soares (no first name), Fernando Lere
and Francisco Caldeira, previously reported as detained in
Semarang and Dili, are not in detention although this is still
unconfirmed.
South China Morning Post - October 28, 1997
Jenny Grant, Jakarta – Two East Timorese men could face the
death penalty if found guilty of trying to topple the Government
through terrorism.
"Both Constancio Costa dos Santos, alias Aquito, and Paulo Jorge
Pereira will face subversion charges with a possible maximum
sentence of the death penalty," said Martanto, head of East
Timor's prosecution office, in the Jakarta Post yesterday.
The suspects were arrested when they arrived in the East Timorese
capital of Dili from the Central Java town of Semarang on
September 15.
Military authorities caught the two carrying 20 homemade bombs
made in Demak, Central Java. Police also seized 44 rounds of
ammunition for M-16 rifles and 24 bullets for Colt 31 and FN-45
pistols.
"The bombs were produced using simple technology but were
powerful enough to demolish a high-rise building," said military
commander Colonel Salamat Sidabutar.
The military claims the two planned to bomb several strategic
locations in Dili, including the venue where the new East Timor
Governor was sworn into office on September 17.
They were caught after a bomb accidentally exploded at a house in
Demak on September 13. It had been rented since 1996 by four
members of the Associacio Socialista de Timor, a paramilitary
group demanding a free East Timor.
Armed Forces spokesman Brigadier-General Wahab Mokodongan said
last week that the group was financed by Avelino Maria Coelho da
Silva, who is secretary-general of the organisation.
He alleged that an Australian explosives expert came to Indonesia
to help the group make the bombs.
"In May this year Avelino invited an Australian instructor,
identified only as Geoffrey, to train the youths to produce the
bombs for one month," said General Mokodongan.
Two members of the group, including Mr Avelino, escaped to the
Austrian Embassy in Jakarta on September 19 seeking political
asylum. Four of their relatives are also inside the embassy.
Foreign Minister Ali Alatas has said the Government will not
allow the two allegedly involved in the bomb plot to leave
Indonesia when they are facing criminal charges. The Government
has asked Austria to hand over the two suspects.
Austrian diplomats were unavailable to comment on the state of
the group or their asylum bid.
More than 100 East Timorese have fled Indonesia through foreign
embassies in Indonesia in the past year. Most of them have
received political asylum in Portugal, the former colonial power
in East Timor.
Last week Brigadier Mokodongan accused Nobel laureate Jose Ramos
Horta of being directly involved in the terrorist plot. He has
denied the accusation.
Justice Minister Oetoyo Oesman said he did not believe the jailed
leader of the Fretilin resistance movement, Xanana Gusmao, who
was captured five years ago, was involved in the alleged bombing
plan, the Kompas daily reported yesterday.
Environment/land disputes
Arms/armed forces
Economy and investment
Politics
East Timor
Urgent action progress report
Suspects in bomb plot risk capital punishment
Indonesian military asked Timorese leader to kill Aussie journalist
Agence France Presse - October 19, 1997
Sydney – The president of the Timorese Democratic Party (UDT) said here Sunday he was asked by the Indonesian military to kill Australian journalist Hamish McDonald in 1975.
McDonald is now foreign editor of The Sydney Morning Herald.
Joao Carrascalao, whose forces at the time were collaborating with Indonesian troops, told ethnic broadcaster SBS radio that a Colonel Sugianto told him to set up an ambush to murder McDonald, who was then the only reporter covering East Timor.
McDonald was not available for comment Sunday.
Earlier this week in the Portugeuse capital Lisbon another key member of the UDT said the sole objective of a 1975 attack on the Timorese border outpost of Balibo was to kill journalists.
Five Australian journalists died in the assault.
The incident has been the subject of numerous unresolved inquiries in Australia, but Jakarta as always vehemently denied allegations the men were murdered by Indonesian troops.
The Sherman inquiry, released last year, found the journalsts were killed in crossfire.
However, Carrascalao told SBS's Portugeuse program that people giving evidence at the inquiry were too afraid to tell the truth.
"From the people that were inquired (sic), there is enough substance to prove the journalists were deliberately killed, and they were not killed in crossfire," Carrascalao said.
A total of 700 Indonesian troops attacked Bilibo on four fronts and were met with resistence from just one Fretilin freedom fighter, who was quickly killed at his machine gun position.
The International Commission of Jurists has called for a new inquiry into the killings in light of the fresh evidence.
Indonesia invaded East Timor in 1975 and annexed the former Portugeuse colony the following year in a move still not recognised by the United Nations.
Agence France Presse - October 21, 1997 (abridged)
Canberra – Nobel peace laureate Jose Ramos Horta Tuesday accused the Australian government of covering up Indonesia's involvement in the deaths of five Australian journalists in East Timor 22 years ago.
Australia's 1996 investigation into the killings was seriously flawed, the leading East Timorese independence activist said, joining calls into a fresh inquiry.
"Those journalists were murdered. It was premeditated, preplanned murder," he told ethnic broadcaster SBS radio here from Austria, where he was attending a conference on East Timor.
Jakarta has always denied allegations the men were murdered by Indonesian troops and Australia's Sherman commission found it was likely they lost their lives in crossfire in the heat of battle.
"I was very disappointed with the Sherman report," Ramos Horta said.
"There was no crossfire there on October 16, 1975. The area had been vacated by the Fretilin (independence) troops. The journalists were caught by the Indonesians and then executed in cold blood."
Australian officials in Indonesia at the time had heard radio transmissions where Indonesian military officials boasted about the killings and threatened more, he said.
Ramos Horta questioned whether Australia was interested in finding out the truth about Balibo, saying it was motivated by a fear of upsetting its northern neighbour.
"The Australia, New Zealand and British governments all decided to sacrifice their citizens ... for the sake of their commercial and diplomatic relations with Indonesia," he said.
The 78-year-old mother of one of the journalists, Malcolm Rennie, has returned to Australia from her home in Britain to try to uncover the truth about her son's death and recover his remains.
Wilhelmina Rennie said the British and Australian governments failed to fully inform her of the details surrounding her son's death.
"I would really like an apology from our own government and the Australian government for keeping us in the dark for 21 years," she told reporters here.
Australian Associated Press - October 22, 1997
Karen Polglaze, Jakarta – Indonesia's military has tried to link Nobel Peace Prize co-recipient Jose Ramos Horta with an alleged terrorist group.
Armed Forces spokesman Brigadier General Abdul Wahab Mokodongan also said the Indonesian government would ask the Austrian (Austrian) government to hand over for questioning six people who last month sought refuge in that country's embassy here.
The military believes two of the asylum seekers are the ringleaders of the plot to explode bombs in the 27th province.
It is alleged they are members of the Associacio Socialista de Timor (AST) and one of them, Avelino Maria Coelho Da Silva, was believed to be the secretary-general of the organisation.
General Wahab said Mr Ramos Horta was a close friend of Avelino.
The information linking the East Timorese independence advocate with the alleged terrorist group came from testimony from two arrested AST members, he said.
Meanwhile, human rights groups in Australia have claimed several East Timorese detained in Dili and Demak, a town near Semarang, in Central Java, were tortured in police custody.
"Reliable sources have told us that all people who were detained in Semarang were tortured," said East Timor Human Rights Centre (ETHRC) director Maria Brett. "We know that."
Human rights groups believe 10 East Timorese people were arrested in Demak after a bomb exploded in a housing complex there on September 13.
It is alleged an Australian man, identified only as Geoffrey, had taught the East Timorese the art of bomb-making during a six-week visit in March and April.
General Wahab said the bomb-makers were part of a special terrorist unit called the Brigada Nagra, established by Avelino in May.
"The group has been involved in terrorism, sabotage and murder in Indonesian regions, aimed at creating instability in the country," he told The Jakarta Post newspaper.
Two other men allegedly part of the same group were arrested on September 15 as they entered Dili by boat, after travelling from Demak, via Bali, according to an East Timor military commander.
The commander said security officers found 20 home-made bombs, ammunition, banned books and other items.
The men were also carrying several letters from jailed former Fretilin leader Jose Alexandre 'Xanana' Gusmao, a fact which causes the ETHRC to fear for their safety.
The ETHRC believes most of those detained in Demak and Dili have been released, but details remain sketchy.
Mr Ramos Horta and the other recipient of the 1996 Nobel Peace prize, East Timor Bishop Carlos Filipe Ximenes Belo, are currently in Austria for the All Inclusive Intra East Timor Dialogue.
The closed-door talks, the third in a series, are exploring the establishment of an East Timorese cultural centre in Dili and other projects.
East Timor was invaded by Indonesia in 1975 and formally annexed in 1976.
The annexation is not recognised by the United Nations, which regards the former colonial power, Portugal, as the administering authority.
Australian Associated Press - October 22, 1997 (excerpts)
Karen Polglaze, Jakarta – East Timorese independence advocate and Nobel Peace laureate Jose Ramos Horta today rejected accusations by the Indonesian military that he was linked to a clandestine group accused of making bombs.
Mr Ramos Horta also called on the Austrian embassy to resist Indonesia's pressure to surrender asylum-seekers who have taken refuge in the embassy here.
"These asylum-seekers are not terrorists as alleged by the Indonesian authorities," Mr Ramos Horta said in a statemet.
"Jakarta cannot document any murder of Indonesian civilians by the east Timorese resistance in the 22 years of Indonesian occupation."
Mr Ramos Horta said he had repeatedly called on the East Timorese resistance movement not to engage in violence. "In particular, I have urged the armed resistance in East Timor never to initiate any action that might harm civilians, be they East Timorese or Indonesian transmigrants living in the territory," he said.
Mr Ramos Horta described the alleged bomb-makers as idealistic kids who naively believed a few amateurish and home-made bombs could stop the arsenal Indonesia deployed in East Timor.
Australian Associated Press - October 24, 1997
Stephen Spencer, Canberra – The federal ALP has moved to dramatically recast major areas of its foreign policy, in what it frankly admits is a recognition that some areas, in particular Indonesia and land mines, could have been handled better in government.
For the first time, the draft policy to be put to January's ALP National Conference recognises the right to self-determination for East Timor, declaring this to be the only lasting solution to the conflict there.
And in a move that could further strain relations with Indonesia's military-backed government, the draft platform commits a Beazley Labor government to consulting with Indonesia's opposition pro-democracy forces.
If Labor were to be elected, the East Timor proposal would mark a major change in foreign policy by Australia, which is still the only country to recognise Indonesia's 1975 forced annexation of the former Portuguese colony.
However, opposition foreign affairs spokesman Laurie Brereton said he was confident Australia's relations with Indonesia had matured enough to cope with the new policy.
"Because of the maturing of the relationship between the two countries over the last two decades, we now have a very close relationship which should allow us to express a view," Mr Brereton told AAP.
But he made it clear that differences over East Timor would not be allowed to derail relations between Australia and Indonesia.
"It's a view - no more than that," Mr Brereton said.
"But we're not in a position to impose that view."
On the question of wider consultation with Indonesia's pro- democracy forces, Mr Brereton said it was a recognition that Australia needed to look to the future beyond President Suharto's rule.
"It's not a matter of taking sides," he said.
"We're simply indicating that the dialogue should be broader than it has been in the past."
Mr Brereton said the new policy on East Timor, and support for a complete ban on landmines, which the Keating government opposed, were a recognition that some areas of foreign policy could have been handled better by the Keating and Hawke governments.
"It builds on Labor's strengths when in government and reviews critically our weaknesses, such as Indonesia and landmines," he said.
The draft platform now commits Labor to completely eliminating Australia's stockpile of landmines, except for a very limited number which would be retained for defence force training.
In a major overhaul of Labor's platform, which previously held a position on virtually every world trouble spot, Mr Brereton said Indonesia and China were the only two countries to be singled out in the draft policy.
And in a pointer to the direction of the entire new ALP platform, Mr Brereton said this was due to a recognition that platforms should be about guiding principles, rather than specific instructions on every area of policy.
The foreign policy, for instance, is headed Securing Australia's Place in the World, and contains such sections as Engagement in Asia-Pacific and Beyond, Human Rights in International Relations, Global Diplomacy, and Strength and Self-reliance in Defence Policy.
The draft platform's position on foreign aid is likely to disappoint many aid organisations, with its commitment in the short term to merely sustaining the current historically low level of foreign aid.
Howard government budget cuts have taken aid spending to just 0.27 per cent of Gross National Product (GNP), compared to the United Nations target for developed nations of 0.7 per cent.
The draft platform promises not to further diminish this low level of aid, and to sustain and build it towards a longer term goal of 0.4 per cent, or more than one billion dollars extra a year, by 2005.
But in a move that is likely to be welcomed by aid organisations, Mr Brereton said the aid budget would now be unequivocally targeted at helping those most in need.
"It will have a single clear goal of helping developing countries and reducing poverty," Mr Brereton said.
While there was still scope for aid to be tied up with promoting Australian trade, Mr Brereton said this would now be secondary to the aims of the aid budget.
"Short term diplomatic and trade goals can compromise foreign aid," Mr Brereton said.
"Aid should be aid."
The Globe and Mail - October 18, 1997
Jacqui Birchall, East Timor – The path of most despair - Site of death and oppression since 1975, East Timor had little to offer one intrepid traveller – except perhaps the satisfying knowledge that her very presence was a burr in the side of the authorities.
In the Hotel Tourismo, Rico, a young man at the front desk, speaks excellent English. He joins me for lunch. He is attractive, attentive, talkative and curious. I should be suspicious.
It's not difficult to get into East Timor, the former Portuguese colony occupied by Indonesia since l975, and the sight of such atrocities as the 1991 massacre of between 100 and 200 Timorese. No visa, for instance, is required, and flights are easy to get from Denpasar, Bali or Jakarta, Java. But withstanding the pervasive presence of Intel, the secret police, is not as easy. I found the experience draining, and I know now that I would have been better off travelling with a friend for moral support. But I recommend a visit: Foreign visitors really annoy the Indonesian authorities.
The airport in Dili, the capital, is small, clean and bright. It is also the domain of plain-clothed, hard-eyed Intel men, who survey all incoming passengers and take note of non-Indonesians, who are rare and therefore obvious.
The streets of Dili are occupied mainly by soldiers. But the few children and teenagers I meet are friendly, curious and giggly. They cross the street to greet me in the usual Indonesian manner. "Hellooooooooo Mister!"
"Hellooooooo Mister!" I respond. They collapse in giggles. We try to talk. They examine all of my possessions and agree to let me take their photo. When I ask them where the Cathedral is, they point to a large, new, ugly building. This is a haven for the Timorese, where the Bishop and priests of East Timor provide sanctuary for the oppressed, for the freedom fighters of Fretilin, for the wounded, for the dying.
Back at the Hotel Tourismo, Rico joins me for dinner. I ask him about shopping and about beemos (small buses) to Bacau, a town where many of the atrocities have taken place. When I try to leave the hotel in the darkness of early evening, Rico and the hotel driver join me. Their presence prevents me from having contact with any Timorese. When I return to the hotel I am greeted by two serious, plain-clothed men carrying briefcases. They greet me by name and ask me about my plans to visit Bacau. They want to know which beemo I will be travelling on. How long I plan to stay there, and so on. Surpirised and naive, I answer all their questions. Somehow, I don't even seem to have the wherewithal to ask them who they are.
The next morning the hotel driver insists on taking me to the bus station. When a young man rushes forward to take my bag to an almost full beemo, he is sharply rebuffed by the hotel driver. I am placed in an empty beemo. Because I need a front seat to combat motion sickness, I don't mind, even though I know that I'm in for a long wait - beemos will not leave until they are full.
Then two men climb on board. One sits beside me and one across the aisle. Fellow motion sickness sufferers perhaps? The one beside me speaks excellent English, tells me he is a journalist and asks me if I am one, too - a question I will be asked many times. I tell him I am a teacher. He tells me he is one also, and discusses teaching techniques. He talks about loving a Balinese woman, something unacceptable between the Muslim Javanese and the Hindu Balinese families. He is pleasant company.
In Bacau he shows me the way to the Hotel Flamboyant. Once the pride of Portuguese East Timor, it has been used as a detention and torture centre and is now run down and dirty. The cold-eyed, monosyllabic hotel manager shows me various rooms. All have broken windows, wet floors and dripping ceilings. All the baths, sinks and toilets are covered in thick, brown grime. I decline each room I am shown. Is there anywhere else to stay in Bacau? My journalist/teacher companion sadly shakes his head.
I decide to leave my too heavy bag on the hotel steps and to explore Bacau on foot before returning to Dili on the afternoon beemo. Bacau was once considered a resort town by the Portuguese. Now it is quiet, run down and poor.
After a few minutes my companion tells me he must leave. I am vaguely disappointed - he is a great interpreter. I look up find myself in front of the Catholic church. I am lucky enought to have the name of the priest and he takes me to his home for lunch. Young, attractive, from a wealthy family in a land far away, he is living in a town where war crimes, government interference and shocking poverty are prevalent. I admire him greatly.
On the beemo back to Dili I am once again accompanied. This time the man's English is poor. He displaces the young man next to me, engages me in conversation and offers me a cigarette and sex later that evening. I point to my pseudo wedding ring and he feigns sleep. He later tells me that he, too, is a teacher and that he lives in Dili.
Nonetheless, he fails to recognize the Dili bus station when we arrive and insists on trying to climb into my taxi. Goodbye, Mr. Secret Policeman, I say, and leave him, chagrined, on the side walk.
The next day I spend my time with a German couple who have rented a car and a driver. (In East Timor all rental cars come with government drivers.) We stop to view the prison, the largest and most modern building in East Timor, which spreads out above beautiful white beaches. Later we pass East Bacau, a fragile and desperate shanty town set up to house Javanese brought here with false promises of land and government housing. The government wants to make the Timorese a minority in their own country. In Bacau we visit the old, enclosed market. Rake thin Timorese men and women, with betel nut stained mouths, hollow eyes and sad, tired clothing surround us. I ask if I can take their picture. But when I attempt to take my new friends into the church to meet the friendly priest, our way is blocked by an English-speaking Indonesian who stands with arms outstretched. He forbids us entry and tells us he is a farmer.
Outside of town we stop and speak Portuguese to several old men, their stilt houses rising high above them, while passing soldiers in big trucks yell abuse at us and wave their AK 47s. In Lospalos, another town with a history of atrocities, our driver takes us to the police station, where we are obliged to register our presence and to get a surat jalan - a pass allowing us in the area. I look at the wall behind the officer's head and see that in this, the eighth month of the year, only 28 people have visited Lospalos. The town is small and dismal, with the same forlorn air that permeates all of East Timor. Lunch is not good.
Back in Dili I grow despondent with the high prices and the constant presence of Intel. Canadian travellers cheques and charge cards are not accepted in East Timor and I find myself unable to pay the hotel bill. The hotel owner intervenes at the bank, shaking his head over the difficulties of financial transactions here.
One reason for my visit is to deliver to someone in Dili a book listing all of the atrocities that have occurred in East Timor since the Indonesian invasion. When I do, my contact points out government spies, most of them working as tour guides and drivers. I am told that foreigners are checked as soon as they make their reservation to Dili.
Two days later I fly out. Even though I have come to East Timor from a troubled township in South Africa, I am cowed by my experiences. Nothing I have seen before matches the tragedy and desolation that is East Timor. There is no music, no joy, no chatting throngs. Just a sense of despair, oppression and death.
Recently I attended a symposium on East Timor in Vancouver. One afternoon at a presentation at Simon Fraser University's downtown campus, I found myself surrounded by 10 or 15 Indonesian men. All carried note pads and tape recorders and took extensive notes. After the presentations, the Indonesians began to harangue and to discredit the conference. The Indonesian Consul was seated in the front row of the lecture theatre. During the question period I stood up to challenge them.
Why, I asked them, if everything is so good in East Timor, why was I always accompanied by Intel? Why was I not allowed in a church? Why can't tourists rent cars without a driver? The men yelled abuse at me. The consul in the front row shouted and waived his fists at me. My legs felt shaky. I found it hard to believe I was in downtown Vancouver.
Notes
Accommodation Dili is limited. There is the hotel Tourismo, the Hotel Dili and the much more expensive Hotel New Resende Inn. The Hotels Tourismo and Dili are the cheapest at around $27 a day. There are losmans (B&Bs), but I didn't find one suitable for a woman travelling alone.
[Jacqui Birchall is a Vancouver teacher.]
East Timor Human Rights Centre - October 21, 1997
The East Timor Human Rights Centre (ETHRC) is concerned for the safety of Manuel Afonso and Lino Xavier Nunes who are currently in detention at POLRES (Regional Police Headquarters) in Dili, following their arrests in July and September 1997. It is believed they may be at risk of torture and ill-treatment as East Timorese detainees in military or police custody are routinely subjected to torture and ill-treatment, especially if they are denied access to independent legal counsel and members of their families. Both men have legal representation, however, it is still unclear whether they have been allowed access to their lawyers.
Manuel Afonso was arrested at 4.00am on 13 September at the Becora terminal in Dili, by four POLRES intelligence agents, one of whom has been identified as Sergeant Lino do Rosario. He was taken at gunpoint to POLSEK (police sector) headquarters and later transferred to POLRES. The ETHRC is concerned that he may have been arbitrarily detained solely for his political views as sources have reported that prior to his arrest, he was being persecuted by the security forces for allegedly founding and leading a new clandestine resistance group. It is believed he is being held under Articles 106 and 108 of the Indonesian Criminal Code (KUHP) for attempting to "separate part of the state" and for armed rebellion against the state, charges which carry a maximum penalty of 20 years to life imprisonment. It is also believed he is being held under Articles 55, 56 and 110 of KUHP for planning and aiding the commission of a crime.
Lino Xavier Nunes was arrested on 30 July at the Chinese cemetery in Taibessi, Dili. It is believed he was arrested by a man called Mateus Antonio under suspicion of involvement in the alleged January 1997 killing of Mateus Antonio's son, a member of the GARDAPAKSI (Pro-Integration Youth Action Group). Nunes was taken to the BTT (Territorial Battalion) post at Taibessi in Dili before being transferred to POLRES. It is believed he is being held in relation to the killing under Articles 338, 170, 351 (3) of KUHP. If convicted, he could face up to 15 years in jail.
| Environment/land disputes |
Straits Times - October 27, 1997
Jakarta – The number of cities covered by the thick haze from rampant forest and bush fires nearly doubled yesterday, amid uncertainty over when the annual monsoon rains would arrive.
Meteorologists said the number of cities covered by the haze rose from 22 to 41 as at yesterday morning, while at least four airports shut down because of poor visibility.
The haze was blanketing large parts of Sumatra island, the Kalimantan region on the Indonesian side of Borneo island and the remote province of Irian Jaya.
"We have reports of two cities in Sumatra which have zero visibility," said an official at Jakarta's National Meteorology Bureau.
UN climate experts in Geneva said on Friday that the dry spell in Indonesia could continue for another three months because of the El Nino phenomenon, a periodic upwelling of warm water in the Pacific Ocean which affects global weather patterns. Dense smoke from forest fires in Sumatra and Kalimantan, particularly from huge deposits of burning peat spewing carbon into the air, has spread a choking haze over large areas of South-east Asia.
The annual rains normally start in September, with full monsoon rains coming in the following month. Only scattered rains have fallen so far, as drought prevails through much of the archipelago stretching 5,000 km along the equator. Residents in Jambi in Sumatra said thick haze had covered the city. "Actually, the situation is a little bit better, maybe because of some rains last night," said one of them. "But still, we cannot see the sun because haze has blocked it. People are wearing masks when outside their homes," he said.
Meanwhile, the governor of Indonesia's remote Irian Jaya province says he will not evacuate thousands of villagers suffering from hunger and disease in the mountainous Jayawijaya district for fear of "culture shock".
"The people in the three sub-districts have become inseparable from nature. If they are forced to move, they may suffer culture shock," Governor Jacob Pattipi was yesterday quoted by the state Antara news agency as saying.
At least 493 have died of famine or drought-related illnesses in the province and relief efforts have been hampered by a lack of available planes and poor weather conditions, including haze from forest fires.
Reuters - October 27, 1997
K.T. Arasu, Jakarta – The effects of the El Nino-induced drought hitting Indonesia could worsen sharply in the coming months, causing disease and hunger in many parts of the country, experts say.
And unless the authorities manage to restore confidence in the battered rupiah, the potential food crisis will loom even larger as Indonesia enters a delicate political period ahead of President Suharto's bid for re-election next March.
"In the coming three to four months you will have real hunger, increased infant mortality and increased mortality in various places," economist Taco Bottema of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said on Friday. "You will be more prone to diseases."
"The estimations are that there will be a reduced domestic agricultural product as a proportion of GDP (gross domestic product)," he said.
"People estimate (a decline of) between two to four percent next year...it could be a little bit higher," Bottema said, warning of a drastic reduction in food output in areas without irrigation.
He said those in the dry upland areas might contract tuberculosis, influenza and typhoid, while those in the lowlands would be exposed to cholera.
"What you will get...in eastern Indonesia where irrigation is not yet widely developed is malnutrition, hunger...and a move to eating root crops," he said. "The production of security food such as cassava, sweet potato and maize will be less."
"Rainfall in the mountain areas has left us. The rain falling on mountains becomes irrigation water downstream, so irrigation capabilities will be less than usual."
The El Nino weather pattern, caused by higher than normal sea surface temperatures in the eastern Pacific Ocean, has severely disrupted food production in parts of the archipelago and contributed to a famine that has killed 500 people in the eastern province of Irian Jaya.
The recent Asian currency crisis, which has slashed about 50 percent of the rupiah's value against the U.S. dollar since July, threatens to aggravate food shortages. The rupiah's fall has sent the price of imports, from computers and clothing to rice, soaring to levels unaffordable for many Indonesians. Already, there have been reports of people in southern Sumatra relying on tuber for meals because of insufficient rice.
According to H.S. Dhillon, vice-president of the Asia Pacific Society of Agronomists, the result is a potentially explosive situation that can only be defused with prompt action from Indonesia's leaders, currently seeking financial help from the International Monetary Fund (IMF).
"They should soften the blow. Otherwise, this is a powder keg," he said. "It (the IMF package) has to serve as a buffer."
A IMF-led team has been holding talks with Indonesian authorities for two weeks over an economic assistance package aimed at restoring investor confidence in the economy.
Dhillon said Indonesia could soften the blow of the drought by seeking a bigger package from the IMF. There have been rumours that the IMF would extend $25 billion to Indonesia.
"If people cannot afford to buy rice (because of rising prices)...then it might cause turbulence," agreed economist Christianto Wibisono of the private Business Data Centre.
"That is why (President) Suharto has sought intervention before the crisis becomes worse," he said.
"Now he (Suharto) can still bargain (with the IMF). If the economy collapses, the conditions will be set. He (Suharto) was pre-emptive," Wibisono said. "People are looking at the IMF as a specialist who can save them with professionalism and money."
Wibisono said deregulation of the country's agricultural sector was unlikely to be one of the conditions laid down by the IMF in its economic assistance package. "It might only come one or two years later," he added.
Millions of Indonesians carry out subsistence-level farming of a wide variety of food crops ranging from the rice staple to soybeans, which are fried with flour to make a local delicacy called tempe, and corn, eaten by people and used as animal feed.
Indonesia has been weaning itself away from dependence on the agricultural sector, but it still contributes significantly to earnings. In 1995, the agricultural sector contributed 16.1 percent of GDP, compared with 20.2 percent in 1990.
The country is among the world's top producers of oil palm, coffee, cocoa and rubber. ESCAP's Bottema said the drought was expected to delay the country's rice harvest, which usually begins in January, by some three months. A prolonged drought could also have long-term effects on the production of palm oil.
"A drought in early 1998, though not expected, would have both short term and long term effects (on oil palms)," said agronomist John McEwen, general manager of Bakrie Sumatra Plantations.
"This will result in a bigger proportion of male flowers and could also lead to abortion of some female flowers and a reduction in growth of maturing bunches. These could translate into a lower crop production 20 to 24 months later," he said.
The head of Indonesia's Central Statistics Bureau, Sugito, predicted in early October that the economy would grow by seven percent this year, compared with 7.98 percent in 1996.
He forecast an inflation rate of seven percent this year, against 6.47 percent in 1996.
"I think inflation will be around seven percent this year if we seriously handle food supplies," he said.
"We are optimistic that we can achieve economic growth of seven percent this year compared to 7.98 percent in 1996. It is clear economic growth will not he as high as in previous...," he said.
Miami Herald - October 27, 1997
Seth Mydans, Kuala Lumpur – Tigers and elephants are fleeing the burning jungles. Birds are falling from the murky skies. Schoolchildren are fainting at their desks. Ships are colliding at sea.
As a filthy haze from vast Indonesian forest fires continues to darken the sky across seven Southeast Asian nations, illness, ecological destruction and economic hardship are growing.
After four months, the man-made fires, set on the heavily forested islands of Borneo and Sumatra to clear land for crops, are spreading rather than shrinking. And with Indonesia suffering its worst drought in 50 years – a result of El Nino weather disturbances – no one knows how many weeks or months it will be until the monsoon rains finally arrive to douse the flames.
Smoke from the fires, mingling with urban pollution, has spread from Indonesia into Malaysia, the Philippines, Singapore, Thailand, Brunei and Papua New Guinea.
The calamity coincides with the worst economic crisis to hit the region in many years, darkening people's spirits even as it shortens their daylight hours.
Like the economic slump, it could have been foreseen and perhaps prevented. In both cases, warnings were ignored because the money was just too good. With government officials and private businesses growing wealthy together, short shrift was given to the environment.
A weak response
As with the economic crisis, the government response to the ecological disaster has been ineffectual and hampered by corruption.
Well-connected palm-oil plantation owners and pulp-and-paper companies in Indonesia have continued clearing land by burning off vast tracts of jungle, seemingly immune to laws or punishment. Firefighting has been disorganized, and villagers in some of Indonesia's worst-hit areas say they have received little or no help.
"The way the government is handling the forest fires simply shows its inability to face such crises," Emmy Hafield, director of Indonesia's leading environmental group, said last week. "So far, the government's commitment is not wholehearted; it is only a token."
The immediate effects of the smog have been dramatic. Airports have closed and flights have been canceled around the region. Uncounted days of work have been lost as factories and mines have shut down and hundreds of thousands of people have fallen ill with respiratory ailments.
Huge amounts of overseas investment are draining away as foreign business people begin to avoid the region and as tourism – a $26 billion industry in Southeast Asia – declines sharply.
"The haze is not only a national disaster; it has become an international disaster for the tourism industry," said Andi Mappi Sammeng, the director general of Indonesia's Tourism Department.
Tourism affected
Smog has dimmed the sun on beaches from Phuket in Thailand to the east coast of Malaysia to the southern Philippines. Hotels, restaurants and retailers in Singapore complain of a falling tourist trade.
The longer-term costs are harder to gauge.
The fires have burrowed deep into vast peat bogs and seams of coal, where experts say they may continue to smolder for years. Environmentalists say that if the drought and the forest fires continue for much longer, and resume again when the next dry season arrives in June, the haze could be a continuing blight.
Already it has affected agriculture, and food shortages and rising prices are predicted. Reduced sunlight is slowing the growth of fruits and vegetables and reducing yields of corn and rice. The smoke is tainting cocoa crops. Birds, bees and insects have disappeared in many areas, disrupting pollination.
Indonesia is the world's leading producer of robusta coffee beans, used largely for instant coffee. It is the world's second leading producer of cocoa and palm oil and is a major producer of rubber. All have been affected.
The delayed monsoon and the spreading drought have been caused by the warming Pacific waters of the El Nino weather pattern, which has begun to affect the region with unusual power.
"This year's El Nino was being predicted by various experts as one of the most severe this century," the U.N. Food and Agriculture Organization said in a report last month. "The food supply and water situation, therefore, is likely to deteriorate significantly."
Deaths reported
The island of New Guinea – including the Indonesian province of Irian Jaya and the nation of Papua New Guinea – is already suffering. Hundreds of people are reported to have died from starvation, dysentery and influenza. Haze is slowing deliveries of relief supplies to remote areas that can be reached only by air. Officials say hundreds of thousands of people are in urgent need of food and water.
If the smog lingers, the quality of life in hard-hit areas like much of Malaysia could be seriously affected, and some foreign companies and investors – already hurt by the economic downturn – could begin to avoid the region.
Some embassies and large foreign companies have already withdrawn many of their employees from cities like Kuala Lumpur, where white smog blurs the skyline and sears throats and lungs and eyes.
William Jackson, a U.S. government medical official, said no region had suffered through such a prolonged bout of pollution from cars, factories and fires. "The bad news is we just don't have the answers we need," he said. "The data just doesn't exist."
Some doctors say there could be a severe long-term toll on health that may not show itself for years, particularly among the young, the old and people with respiratory problems.
Neighbors miffed
The disaster is putting a strain on the carefully nurtured good fellowship of the region. Questions are being raised among some of Indonesia's neighbors about its handling of the fires, following warnings in past years about forest-burning.
"If Indonesia refuses to address its deadly pollution seriously, its neighbors must force the issue," The Bangkok Post said, with a bluntness unusual in Southeast Asia.
But the Indonesian government – while issuing an apology – has continued to duck responsibility, blaming the weather. And the big plantation owners have hurried to distance themselves, pointing their fingers at small farmers and wood thieves.
Indeed, the palm-oil producers, who have set most of the fires, may be among the few beneficiaries. They have cleared huge new areas for planting, and as the disaster has spread, palm-oil prices have risen sharply on the world market.
Associated Press - October 26, 1997
Jakarta – The worst drought in half a century has devastated crop harvests by as much as 40 percent, the government said Friday. Officials had earlier warned of rice harvest failures in some drought-ravaged areas.
Food Shortages and disease triggered by drought have been blamed for the deaths of about 500 people in Irian Jaya province, the remote western half of New Guinea. Agriculture Minister Syarifuddin Baharsyah said coffee production had dropped by about 40 percent, while tea and palm oil harvests were 30 percent below normal. He said food crops such as peanuts, corn, fruits and vegetables had also been badly affected.
The drought, linked to the El Nino weather phenomenon, has left many parts of Indonesia tinder dry, fueling hundreds of wildfires that have raged since July.
Monsoon rains normally fall by this time of year, but the World Meteorological Organization in Geneva said Friday it could be delayed as much as three months.
Meanwhile, a choking smoke haze from wildfires worsened over much of Indonesia. The government has estimated the fires, many deliberately lit to clear land, have burned 740,000 acres but some environmentalists maintain as much as 4.2 million acres have been blackened. Most of the fires are on the islands of Borneo and Sumatra, and have produced a thick smoke haze that threatens the health of more than 20 million people in Indonesia and neighboring countries.
Meteorologists said Friday the haze had increased over many areas of Sumatra. In the city of Padang, 560 miles northwest of Jakarta, it completely blocked out the sun, forcing motorists to switch on their headlights during the day, the official Antara news agency said.
Heavy rain fell in some parts of Borneo, where fires are raging in peat land and jungle, but it did not clear the air, Antara said. It said many residents of Banjarmasin, 560 miles northeast of Jakarta, continued to wear masks to protect against smoke inhalation.
Reuters - October 20, 1997
Lewa Pardomuan, Jakarta – Military helicopters flew rice and noodles to famine-stricken areas in Indonesia's remote Irian Jaya province on Monday as government officials said food shortages had also spread to Sumatra island.
Officials at the disaster co-ordinating office in Wamena, capital of Jayawijaya district in Irian Jaya, said 417 people had died because of food shortages and ailments, such as respiratory problems and malaria.
"Two helicopters flew to two remote districts this morning, bringing rice and instant noodles. We cannot take too much rice because of the long journey and the weather, which keeps changing," one official said by telephone.
Indonesia has been hit by a severe drought which has been exacerbated by the El Nino weather pattern. The drought has contributed to rampant forest fires in Indonesia, triggering a choking smog over a large part of Southeast Asia.
Officials earlier said at least 90,000 people in Jayawijaya faced a serious food shortage because of the drought which had destroyed crops, especially the staple sweet potato.
The official in Wamena said relief efforts had been hampered by the weather, which has been made worse by the smog.
Wamena, with a tribal population of around 45,000, can be reached only by air. Located at around 2,300 metres (7,500 feet) in the scenic Balien valley, it is surrounded by some of the world's most rugged terrain.
In the southern part of Sumatra island, villagers in some places have been eating a potentially deadly wild tuber for more than three months because of the rice shortage caused by the drought.
Media Indonesia newspaper reported on Monday that people had to prepare the tuber correctly because it was poisonous.
"We have to cook it properly, otherwise we will get poisoned. A lot of people have been poisoned so far, but none is dead yet," villager Dahlan was quoted by the newspaper as saying.
Government officials in West Lampung regency, on the southern part of Sumatra island, said rice had been sent to people in Pembantu-Bengkunat district because of the food shortage.
Government officials have said Indonesia had adequate rice stocks to offset the shortfall in production without having to import. But the country's rice production this year is expected to fall by 1.5 percent because of the severe drought.
Meanwhile, Craig Stromme, spokesman for the U.S. embassy in Jakarta, said U.S. C-130 Hercules planes had flown to Surabaya, capital of East Java province, to help put out forest fires there.
Three Hercules and 60 personnel from the Wyoming Air National Guard arrived in Jakarta on Saturday as part of Washington's humanitarian assistance to help deal with the smog crisis.
Co-ordinating Minister for Welfare Azwar Anas said the bush fires could last into December, well past the normal start of monsoon rains.
Reuters - October 26, 1997
Chris Johnson, Singapore – Choking yellow-grey smog over Southeast Asia has already closed factories, cancelled flights and lengthened queues in doctors' waiting-rooms.
But much worse could be in store if the raging forest fires across Indonesia are not put out soon – and for good.
Business executives and analysts say tourists may shun the entire region, badly damaging a US$26 billion dollar industry, if it gets a reputation for polluted air during the September-November season.
"If it is a constant thing, the whole area at that time of the year will be a no-go zone," said John Koldowski, director of strategic information at the Pacific Asia Tourist Association.
Industry is only beginning to count the cost of the fires, which have now been burning across Indonesia's Sumatra and Kalimantan for three months. Analysts say the total bill for the disaster is likely to run into billions of dollars.
They note a growing anger that the problem is partly self- inflicted, since many of the fires were caused deliberately to clear forests for agriculture or plantations.
Aside from accidents in which smog has been a factor – at least two shipping collisions and the crash of a Garuda Indonesia aircraft which killed all 234 people on board – experts say a big casualty will be lost working days.
Some 20 million people live in the worst-affected parts of Indonesia and many millions more in the east Malaysian state of Sarawak and the cities of Kuala Lumpur and Singapore, which have been blanketed by the suffocating pollution.
Although the onset of the northerly monsoon has now begun to blow the smoke away from some of these areas, many cities continue to report outbreaks of breathing disorders and skin ailments as a result of the poor air quality.
Singapore's air Pollutants Standard Index (PSI) was at unhealthy levels for much of the last week with the three-hour measurement reaching a peak of 175 at 1100 GMT on October 23.
A reading of zero to 50 is considered good, 51-100 moderate, 101-200 unhealthy and 201-300 very unhealthy.
The Singapore Environment Ministry advises the old and sick to stay indoors and all citizens to avoid vigorous outdoor activities while the PSI is in the unhealthy range.
"We estimate that hospital visits for upper respiratory type problems were up two to three times above their normal levels when the smog was at its worst in Indonesia," said Steve Tamplin at the World Health Organisation Philippine's office in Manila.
"This has an impact on days off work but we are just now beginning to collect the data," he said.
The picture in Singapore was similar with some hospitals reporting a doubling of respiratory complaints.
"This would mean a significant decline in man-hours because people are falling ill and calling in sick," said Keven Scully, managing director of Schroder Securities in Singapore.
The smog has reduced visibility across the region, closing at least a dozen Indonesian airports and delaying or halting completely air traffic to and from some Malaysian cities.
Malaysia Airlines System (MAS) says it has lost 6.5 million ringgit ($1.95 million) due to cancellations of flights caused by the smog. A total of 890 domestic flights and 34 international trips were scrapped last month alone.
Other airlines, including Singapore's Silkair and Garuda, have also been hit by the poor visibility.
The effect on tourism appears to have been almost immediate and threatens to be much more long-lasting.
Industry executives say Southeast Asia's inter-regional tourist industry was already suffering from the collapse in the region's currencies and the air pollution is now also reducing visits from some long-haul origins.
Some of Singapore tourist hotels report bookings down by as much as a third and five-star hotels have reported a reduction in business customers. Singapore's Ritz-Carlton, one of the city's most expensive hotels, says occupancy rates are down 10 percent.
Hoteliers say they expect to be able to ride out the problem this year and hope the seasonal rains will put out the fires in Indonesia by December.
Their nightmare scenario would be for the fires to keep smouldering or to be started again next year, destroying the essential tourist brochure image of sunshine and sandy beaches.
"Reputation for blue skies is vital," Citibank said in its monthly Asian Market View. United Nations climate experts in Geneva said on Friday that rains in Indonesia could be delayed far beyond the normal start of the monsoon due to the El Nino phenomenon, a periodic upswelling of warmer water in the Pacific Ocean which distorts normal weather patterns.
One climate scientist said the rains could be suppressed for three months.
Koldowski said the long-term effect will depend on whether the problem persists or recurs next year.
"The media are issuing stories on the problem throughout Europe and the U.S.," he said. "It is no longer a localised problem. It's obvious to the whole world."
Reuters - October 26, 1997
Lewa Pardomuan, Jakarta – Thick smog from rampant forest and bush fires spread to more cities in Indonesia on Sunday while uncertainties over the start of the annual monsoon rains lingered, meteorologists said.
They said the number of cities covered by the smog had nearly doubled to 41 from 22 as of Sunday morning, while at least four airports were closed due to poor visibility.
The smog is blanketing large parts of Sumatra island, the Kalimantan region on the Indonesian side of Borneo island and the remote province of Irian Jaya.
"Many more cities are covered by the smog. We have reports of two cities in Sumatra which have zero visibility," said an official at Jakarta's National Meteorology Bureau.
"There were some rains on Saturday in west Java and parts of Irian, but they were localised," he said.
U.N. climate experts in Geneva said on Friday that the dry spell in Indonesia could continue for three months – far beyond the normal start of the monsoon – due to the El Nino phenomenon, a periodic upswelling of warm water in the Pacific Ocean which affects global weather patterns.
Dense smoke from forest fires on Sumatra island and in Kalimantan, particularly from huge deposits of burning peat spewing carbon into the air, has spread a choking smog over large areas of Southeast Asia.
Indonesian meteorologists have said dry winds from Australia are still dominant and that wind patterns have delayed the possibility of widespread rains in the archipelago.
The annual rains normally start in September, with full monsoon rains the following month. Scattered rain has fallen so far this season while drought conditions prevail through much of the archipelago stretching 5,000 km (3,000 miles) along the equator.
The drought has also been blamed for more than 460 deaths from famine and disease among tribes in the remote, rugged jungles of Irian Jaya, where relief workers are flying in emergency supplies and medicines.
Residents in Jambi, on Sumatra island, said thick smog still blanketed the city. "Actually, the situation is a little bit better, maybe because of some rains last night," said one resident. "But still, we cannot see the sun because smog has blocked it. People are wearing masks when outside their homes," he said.
Officials at the forest fire control bureau in Jakarta said they recorded nine "hot spots" in Sumatra and Kalimantan, but added it did not necessarily meant the number of areas had subsided.
"Not all areas can be photographed by the satellite because they could be covered by smog," said one official.
Kompas newspaper reported on Sunday the drought had triggered a severe water shortage in a number of villages in East Java, which forced local people to buy fresh water for their daily needs.
Residents said they did not have enough money to buy water because the drought had destroyed their crops.
Agriculture ministry officials say the drought will affect production of key commodities in Indonesia such as rice, coffee, tea, cocoa and palm oil.
Political sources say authorities are also keeping a wary eye out for possible food riots, although officials say rice stocks are enough to see the country through the drought.
The smog has triggered alarms in Singapore, Malaysia and Brunei and has spread as far as the Philippines and Thailand.
Sydney Morning Herald - October 22, 1997
Louise Williams, Jakarta – The Indonesian Government has warned that forest fires and smoke haze are getting worse, and monsoon rains are expected to be further delayed, while another fatal haze-related shipping accident was reported in Kalimantan.
Extremely dry and hot conditions persisting across most of Indonesia prompted the new warning as smoke haze returned to most parts of Sumatra, closing 13 airports and reducing visibility in central Kalimantan to less than five metres.
"This year's dry season is different from those of previous years. For the first time ever, the dry season is deviating from the normal pattern," said the Environment Minister, Sarwono Kusumaatmadja, on the two- to three-month delay in monsoon rains.
The latest meteorological forecast suggested monsoon rains would not begin until next month, he said. Several days of patchy rain earlier this month were thought to mark the beginning of the wet but very hot and dry weather has returned.
At least four people were reported drowned and another 21 missing after a river ferry collided with a tug in central Kalimantan, where smoke haze had reduced visibility to three to five metres. There were 37 survivors.
Tens of millions of Indonesians, including Jakarta residents, face serious water shortages. Rural villagers have been walking off the land into nearby towns and a successful March harvest appears unlikely.
Environment Ministry officials said thick haze had returned to the Sumatran province of Riau, adjacent to Singapore. Firefighting efforts, including foreign help, were concentrated in Jambi, further south, where visibility has hovered between zero and 100 metres for almost three months.
In Irian Jaya, where starvation and drought-related disease have killed at least 461 people, supply drops by military aircraft continue.
Jakarta Post - October 17, 1997
Jakarta – President Soeharto denied press reports yesterday that a food shortage has forced people in Lampung and Java to eat cassava for their daily meals.
The President described how farmers in some regencies in Java prefered to consume tiwul (foodstuff made of cassava) or mixed it with rice because they believed it would give them extra strength to work in the field.
"It does not mean there is a famine, they have enough food but prefer such a diet," Soeharto said in a teleconference with 50 small-scale tempeh producers, who gathered at the National Tempeh Center in Cibitung, West Java.
Soeharto said some people in other provinces also chose to eat food other than rice as part of their daily diet.
"However, we must improve their food so it is more nutritious," he said.
At least 4,000 citizens of Papanrejo, in Kotabumi, North Lampung had to eat gadung, a type of wild tuber, because they could not afford to buy cassava.
Almost 450 drought-related deaths were recorded recently in Jayawijaya regency, Irian Jaya.
The President was optimistic the nation could maintain its self- sufficiency in food production which was first achieved in 1984.
"We must be grateful because 88 other nations are still struggling to liberate themselves from food shortage problems," he said.
This year's prolonged dry season has exacerbated the affects of forest fires and caused the failure crops and rice harvests in several provinces.
The teleconference was held in commemoration of the 17th World Food Day and the Second Rural Women's Day yesterday at Taman Mini Indah in East Jakarta.
In his speech, Soeharto reminded the international community that even today food remains one of the world's major problems, and that hunger and malnutrition still haunt many nations.
He said an estimated 800 million people in the world are suffering from chronic food and nutrition deficiencies.
"The commemoration of World Food Day is to set in momentum the continuous awakening of national and international solidarity to fight hunger, malnutrition and poverty," said the President.
Soeharto praised Indonesian women's role in food production and processing, especially in rural areas.
"I would like to express my heartfelt thanks and appreciation to women in rural areas for their important role in food production," Soeharto said.
The President also told people to consume more tempeh because it is cheap and nourishing.
"I think I am smart because I consumed a lot of tempeh in my childhood," Soeharto said laughing.
In anticipation of global competition in the production of tempeh, a highly nutritious traditional Indonesian food, the National Institute of Sciences has planned to set up the Indonesian Tempeh Center.
| Arms/armed forces |
The Scotsman - October 21, 1997
Trevor Royle – Traditionally Britain's foreign interests have been dominated by a mixture of strategic initiatives to protect national interests and direct action, as the Foreign Office puts it, "to promote Britain's interests overseas" and "to enhance the prosperity of the United Kingdom".
Most people would agree that these are legitimate aims, especially when they are underpinned by a further objective - the pursuit of good government and the observance of human rights. Yet, all too often in the past, Britain has found that there is an inherent contradiction in its foreign policy aims.
There have been cases where the Government has supported despotic regimes simply because they have been good trading customers.
Indonesia is a good example.
Britain continued to export British Aerospace Hawk warplanes and Alvis armoured vehicles to Jakarta even though there was evidence that the weapons were being used for internal suppression in East Timor. Previous governments usually dismissed the problem with the whore's argument that if Britain failed to supply the weapons then another country would step into the breach and orders worth some @ 500 million would disappear. All that seemed to change when Robin Cook became Foreign Secretary in May. No sooner had he taken up his appointment than he embarked on a moral mission to introduce an "ethical dimension" to Britain's foreign policy.
His mission statement was launched in a blaze of publicity and it seemed to catch the "caring" mood of the new Government.
It did not take long for Mr Cook's brave new world to be tested. Earlier this summer he was forced to honour the disputed contracts drawn up between Britain and Indonesia.
Only in September did he black export licences for the sale of small arms and armoured vehicles to Jakarta, on the grounds that they could be used in riot control and would therefore breach his new human rights policies.
Inevitably, Indonesia retorted by saying that it would buy the equipment elsewhere and several US firms are reported to be in discussion with officials in Jakarta. The Pentagon sees Indonesia not only as a growing regional power whose influence cannot be ignored but also as a good market. Arms sales worth $ 10.7 million (@ 6.6 million) have already been given the go-ahead with a further $ 90 million licensed by the State Department. The repercussions will be felt in Britain because defence sales are central to the well-being of the country's economy. A report published last week by the International Institute for Strategic Studies revealed the scale of the reliance and the extent of sales to countries which do not meet the standards now demanded by the Foreign Office.
These include Saudi Arabia, which has already been criticised by Mr Cook for employing a judicial system and a code of punishment which he finds unacceptable. At the time the Foreign Secretary was attempting to defend the two British nurses who faced harsh sentences from a Saudi court but it showed the difficulties of marrying trade with ethics.
Under the terms of the multi-billion dollar al-Yammamah arms sales deal, Saudi is a valued customer. In return for sophisticated weaponry it provides Britain with oil and cash and the economy benefits accordingly. Even Mr Cook had to concede that this is good for Britain. At the same time he has been confronted by the contradiction that arms sales cannot always be ruled by moral imperatives.
There have also been times when it seemed that the Foreign Secretary simply cannot win even when his heart is in the right place. During a visit to south-east Asia last month he caused inadvertent offence by refusing to grant visas to Burmese officials who want to attend next year's Asia Summit in London. His reasoning was laudable. The Burmese government has an appalling record of abuses against the human rights opposition leader, Aung San Suu Kyi, who is kept under house arrest and the country supplies the world with massive quantities of heroin.
Yet Mr Cook received few plaudits for his stand. No sooner had he made the decision than Malaysia's prime minister, Mahathir Mohamad, had accused him of introducing a policy of discrimination against a former colony. If Britain insisted on banning the Burmese then Dr Mahatir would rally his fellow south-east Asian countries and the conference would be boycotted with disastrous trading consequences for Britain.
Given the Malaysian prime minister's well-known sensitivity about Britain's imperial past, the outburst was not surprising, but it did provide a rather different view of Mr Cook's ethical stand. Instead of commending Britain for being even-handed Dr Mahathir regards the initiative as interference by a former colonial power.
Unfortunately, the Malaysian prime minister's response also appeals to those who do not entirely trust Britain's squeaky clean new image. At the Commonwealth Heads of Government Meeting this week and in the months to come, Mr Cook will have to walk a difficult line.
On the one hand he will want to maintain the ethical dimension at the risk of losing all international credibility. On the other hand he dare not push it too far at the risk of losing trade and diplomatic influence. It promises to be a difficult balancing act.
| Economy and investment |
Associated Press - November 1, 1997
Geoff Spencer, Jakarta – Indonesia shut down 16 insolvent banks and planned other austerity measures Saturday, a day after receiving word of $33 billion in foreign loans to revive an economy hit hard by financial declines across Asia.
Finance Minister Mar'ie Muhammad called for calm and stressed the government would reimburse depositors.
"These banks are insolvent to the point of endangering business continuity, disturbing the overall banking system, and harming the interests of society," he told reporters. He said the nation's 224 other banks would open as usual on Monday.
The move came after the International Monetary Fund announced what was its second-largest rescue package ever, $23 billion. Singapore and Japan said they would add another $5 billion each.
The government said it would announce further changes to its besieged economy on Monday. In exchange for the loans, Indonesia has apparently agreed to cut government spending and lower trade barriers, which could spell the demise of some inefficient state monopolies.
Until a few months ago Indonesia was among Asia's fastest growing of economies. But steep falls in currency and stock values across the region sent the economy spinning downward, a situation aggravated by wild swings in financial markets around the globe last week.
Indonesia, the world's fourth most populous nation, has recently been rocked by a series of riots and protests over the economic ills.
In an apparent move to head off more unrest, Mar'ie said the government would refund deposits up to $5,700 and refund larger deposits as best it could by using liquidated bank assets.
Some of the closed banks have close links to the government of President Suharto, a 76-year-old retired five-star army general who has governed for 32 years. They include Bank Jakarta, owned by Suharto's half-brother.
Analysts said the decision to take on the banks was long overdue and was a sign that government might be serious about more far- reaching reform.
Indonesia last month became the third Asian nation this year to seek IMF assistance because of currency turmoil. In July, the IMF approved a $1 billion loan for the Philippines and in August put together a $17.5 billion package for Thailand. The biggest IMF loan, $50 billion, went to Mexico in 1995.
Suharto, who goes by just one name, has tolerated little political dissent, but until now has been able to deliver sustained economic development.
Critics complain that the Indonesian economy is dominated by a small group of his family members and close associates.
Sydney Morning Herald - November 1, 1997
Louise Williams, Jakarta – For fifteen days Pak Waska has been ready: waiting under the vast, concrete highway overpass, his work bag packed, his shirt neat and clean, the thick fumes of the crawling traffic swirling around his face.
It was here in the long boom years that developers would come looking for day labourers for the thousands of new construction sites around Jakarta. The men would pour off buses from rural villages and gather in the shade under the new tollway, brimming with enthusiasm for the opportunities that lay ahead.
With Indonesia's currency, the rupiah, now at an all-time low and much of corporate Indonesia on the brink of defaulting on their debts, the work has dried up.
The Association of Indonesian Contractors confirmed yesterday that almost half of the 4.3 million day labourers in Jakarta had lost their jobs in the construction industry in the past three months, with another 500,000 more losing their jobs with companies that deal with property. A chief executive of one of Indonesia's largest companies said this week that 10 per cent of jobs would be shed in the corporate sector, meaning a loss of hundreds of thousands of jobs.
Even with an International Monetary Fund rescue package due to be announced today, most economists believe recovery in Indonesia will not begin until late next year.
So, now the men live under the overpass, merely waiting: their beds marked out in rows of cardboard squares, a filthy canal their bathroom, a rope strung up to dry their clothes. With no income, they have been reduced to begging for food on credit from the noodle and rice hawkers at the bus stop across the road.
At least 150 people now live here under one slab of concrete. Some, they say, have been waiting for 40 days for work. They have no money left to go home and Indonesia has no unemployment benefits.
This is the real impact of the region's currency crisis, and the beginning of what may turn out to be critical social problems for the Soeharto Government. One recent report said 7,000 people a day were pouring into Jakarta, looking for jobs that were no longer there. Jakarta city officials say thousands of new beggars and vagrants are appearing on the streets as development projects in rural towns are frozen due to the financial crisis.
One Jakarta city official said: "Unemployed people tend to behave badly because they are frustrated and do not have anything to do. This situation could lead to riots, if there are sensitive issues such as the gap between the rich and poor."
Indonesia's booming property sector, heavily exposed on massive US dollar loans, has been hit hard by the rupiah's depreciation of more than 35 per cent since August. Some industry sources say 60 to 80 per cent of Jakarta's developers will be forced out of business by the end of the year.
Pak Waska, a father of four, said: "I have been waiting for 15 days but there is no work yet, I can do any work. I just have to keep waiting; my wife and my children are depending on me.
"I can't go home now because I have no money for the bus fare. It is terrible here. I don't know why this is happening. We are simple people. This is the Government's business."
Another young worker disagreed: "This is because of the high value of the US dollar. I have read about it in the newspaper."
The impact of the slide in the rupiah's value is starting to be felt right across the board. The prices of all imports, or products with an imported component, are soaring. Medicine went up 15 per cent this week and big increases in the price of building materials have added to the construction industry's woes. Lay-offs in manufacturing are also expected as large companies cut back costs to service their debts.
Hoarding and speculation is also sending the prices of local foodstuffs spiralling. Rice has increased since the currency crisis began in August by as much as 40 per cent in the outer islands. Figures released for Jakarta yesterday show a 25 per cent increase in the price of cooking oil, 11 per cent for chilli and almost 8 per cent for rice - all three staple items. Political analysts are already warning that a protracted economic crisis could lead to serious social and political unrest.
An economist, Ms Marie Pangestu, said of the economic slow down, increased unemployment and inflation: "Everyone is being asked to take the pain. We are looking at a very tense period politically if the Government does not anticipate the impact on ordinary people and we could have some very serious [social] problems by early next year."
At the same time, Indonesia is facing what may be the most severe drought on record. A new United Nations assessment says "real hunger" and deaths can be expected in the next three months, following recent weather predictions which say monsoon rains may be delayed another three months. In rural villages crops cannot be planted and widespread crop failures are expected to hit by the beginning of next year.
Pak Hardi, a father of six, said: "There is no work in the kampong [village], we can't grow anything because of the drought and we even have to buy water. There is [no] reason to stay."
The United Nations Economic and Social Commission for Asia and the Pacific said: "In the coming three to four months you will have real hunger, increased infant mortality and increased mortality."
At another construction site across the city work is slowing.
Everyday, the workers say, prices are rising because of the currency crisis and the drought.
One said: "It is like someone is playing with the prices; they are rising every day. Lots of subcontractors run away because they can't pay their people and can't pay the suppliers. People are very frustrated now.
"If there is a demonstration in front of Parliament we will go and join it."
An editorial in the Jakarta Post newspaper yesterday said: "The picture is gloomy and the number of workers losing their livelihood has already reached dangerous proportions. Those who have lost their jobs cannot expect to regain them in the near future."
Even within the air-conditioned halls of the luxury Plaza Senayan, the mood is glum.
Indonesia's nouveaux riches have been reduced to window-shopping. The price of imported luxury goods has already increased 15 per cent this month. Interest on home and car mortgages is now close to 30 per cent. Everywhere, shops are almost empty, with banners proclaiming sales.
A man in the office relocation business said companies were cancelling plans because they were paying rent in US dollars and could not afford anything else.
A political analyst, Ms Dewi Fortuna Anwar, warned: "If this goes on much longer we could see a lot more political dissatisfaction."
Sydney Morning Herald - November 1, 1997
Louise Williams, Jakarta – Indonesia announced last night that it had reached agreement with the International Monetary Fund on a rescue package for its ailing economy.
Although no official figures were given, the package is believed to be worth about $US20 billion ($28 billion), which would force the closure of 17 banks, the removal of fuel subsidies and an end to most agricultural monopolies.
Announcing the agreement, the Finance Minister, Mr Mar'ie Muhammad, said economic growth would fall over the next two years, but the Government still anticipated growth of around 7 per cent in 1999-2000.
"The Government firmly believes this policy and program will be effective in restoring the health of the Indonesian economy so as to improve the welfare of the people and alleviate poverty," an official statement said. The Government aimed to reduce the current account deficit to less than 3 per cent of GDP within two years.
Earlier, Mr Mar'ie met President Soeharto in what analysts said was the final briefing on the IMF deal.
Speculation over the package brought confusion to the stock market, which suffered early losses on fears the economic reforms would not be sufficient, but shares rebounded later as investor sentiment over the IMF deal improved.
All negotiations have been in private, but economists and investors expected the IMF package to include loans of about $US20 billion, to provide a stand-by fund which would allow the Soeharto Government to defend its currency and gradually ease the tight monetary policy which has been hurting business.
Indonesia's corporate sector is struggling to manage $US60 billion of foreign debt, following the 35 per cent devaluation of the rupiah over the past three months. In an attempt to prevent a further fall in the currency, the Government has sharply increased interest rates, leading to a credit squeeze. In exchange for the IMF funds, the Soeharto Government is believed to have agreed to phase out fuel subsidies, a sensitive move which will increase prices across the board and could spark public opposition at a time when the financial crisis and drought are forcing millions out of work.
The package is also expected to include an end to the clove monopoly controlled by Mr Soeharto's son, Hutomo "Tommy" Mandala Putra, as well as the wheat monopoly which benefits the President's close friend, Mr Liem Sioe Liong, and his daughter Siti "Tutut" Hardiyanti Rukmana.
But it is understood Indonesia's most politically sensitive staple food, rice, will continue to be government-controlled.
Some observers said the controversial national car project, which gives tax and tariff concessions to a company controlled by Tommy Soeharto, would not be cancelled but that he would take a less prominent role in the project.
Most observers said the IMF package would include a list of banks to be closed. Indonesia has over 230 banks, now operating with problem loans of close to 12 per cent of their assets, and economists have long argued there must be a shake-out in the financial sector.
Australian loan dependent on Jakarta raiding its own reserves
Although the details have not been spelt out, there appears to be a significant difference in the terms under which Australia lent $US1 billion to Thailand and the promised loan, probably of another $US1 billion, to Indonesia. If anything, the money we stump up for Indonesia should be even more secure than the money we have provided to Thailand.
In the case of Thailand, we had to put our money up-front. Our $US1 billion went into a $US17 billion kitty, along with $US4 billion from the International Monetary Fund. Our money is being drawn down in proportion to the IMF money, one dollar from Australia for every four dollars from the IMF.
In the case of Indonesia, it seems, Jakarta will have to first work through most of its own reserves, which stand at $US20 billion, then move on to the core money provided by the IMF. Only when those funds are depleted, sources say, will Jakarta be able to draw on money put up by countries like Australia.
In neither South-East Asian country will Australia face any foreign exchange risk. Under the terms hammered out, each borrower promises to return our $US1 billion in US dollars, plus interest.
But we do have to stump up real money and we do face a possible credit risk, even if it is to extremely credit-worthy customers, especially in the case of Indonesia.
IMF teams are believed to have discovered that the Indonesian Government has about $US5 billion squirrelled away in the Indonesian banking system, over and above the $US20 billion in reserves. This additional sum will have to be drawn down before our money is touched.
Dow Jones Newswires - October 29, 1997
Bernice Han, Singapore – Indonesia's National Logistics Agency (Bulog), the state-owned food price regulator, is seen targeted by the International Monetary Fund for reform, a senior agricultural specialist based in Jakarta told Dow Jones Tuesday.
The IMF is in the midst of discussions with the Indonesian government to thrash out a multi-billion dollar aid package to shore up the economy following the rupiah's 33% plunge against the U.S. dollar since July 1. An aid package, orchestrated by the IMF, but also involving the World Bank and Asian Development Bank, is expected to be announced Friday.
The IMF is widely expected to require the Indonesian government to make some structural reforms to Bulog as part of its conditions for economic aid.
"I've heard of the rumors as well," said the agricultural specialist, who didn't want to be identified.
Bulog has long been seen as the symbol of President Suharto's reluctance to make hard choices on deregulation and economic reform. It was created more than 40 years ago to ensure food security and price stability for Indonesian farmers and consumers.
The body holds the sole import monopoly on rice and rice flour, white sugar, soybeans, garlic, wheat and wheat flour, onions, garlic, leeks, cooking oil and other commodities.
When local prices of essential food commodities such as cooking oil and rice rise above what Bulog deemed as excessive levels, the agency intervenes by selling the commodities at below prevailing market prices.
Bulog didn't respond to repeated telephone calls from Dow Jones.
No one was able to confirm if Bulog will be phased out altogether or simply have its trading monopoly in key commodities removed, said the agricultural specialist.
"But Bulog is a very visible structural body and the IMF and World Bank have consistently told the Indonesian government that it has to be phased out," she said.
In a recent report, the World Bank criticized regulations which still distort prices and business opportunities, thereby increasing costs and causing losses in efficiency as resources become attracted to protected activities.
Now that Indonesia has requested economic aid from the IMF, the time may be right to apply pressure on the government to reform Bulog, the agricultural specialist said.
A severe drought afflicting the country, believed to be brought about by the El Nino weather pattern, is causing a growing food shortage and thereby driving up food prices.
The drought may make the role of Bulog more important than ever, said the agriculture specialist, referring to the agency's role in ensuring food stability and prices.
Indonesian agricultural production is already down about 10% overall this year, according to sources at its Ministry of Agriculture.
For instance, Indonesia's 1997 paddy rice production is estimated at 49 million metric tons, down two million tons from the previous year, while coffee production is expected to be 40% lower at 270,000-300,000 tons.
According to trade sources, Indonesia is likely to import as much as 1 million tons of rice for calendar year 1998.
El Nino is a warm weather phenomenon which typically lasts 12 to 15 months and brings dry weather conditions to the Pacific Rim countries.
Although it still maintains its trading monopoly in key commodities, Bulog has already undergone some structural reforms, said the specialist.
In early July, Bulog had its monopoly on the import of raw sugar partially removed as part of a new government deregulation package. The country's sugar producers, which use raw sugar as raw materials, are now allowed to import raw sugar directly for manufacturing and export. Prior to that, only Bulog was allowed to import raw sugar.
"To its credit, Bulog has actually gone through some reforms," she noted.
If it's true that Bulog is being targeted by the IMF for reforms, said the agriculture specialist, then the key questions should be: "Is Bulog going to be eliminated, be phased out eventually or be made accountable to the Ministry of Finance?'
It's a dilemma for the Indonesians, said a Singapore-based economic analyst with an international research organization.
"Bulog's importance is bigger because of the drought, yet at the same time it's a drain on government fiscal resources," said the analyst, who didn't want to be identified.
The government has projected its budget deficit this fiscal year could reach 9.2 trillion rupiah because of the economic slowdown, said the analyst. The Indonesian fiscal year runs from April to March.
The analyst said the government recorded a budget surplus of around 812 billion rupiah during the 1996-97 fiscal year.
"So Bulog could be a further strain on the government," he said. "But the pledge of aid from other countries may lessen the chances of Bulog being scrapped.'
Australian Prime Minister John Howard said Wednesday he had reached an agreement in principle with Suharto to extend financial aid, subject to Indonesia meeting the IMF requirements. The amount hasn't been decided yet.
Japan has also agreed to offer aid as part of a wider IMF support package, while Indonesian State Secretary Moerdiono reconfirmed that Singapore had offered to give the country $10 billion in aid. Malaysia also offered Indonesia a $1 billion standby credit facility to help the country overcome its currency crisis.
"The Indonesians may not need to depend too much on the IMF because of the aid," said the analyst, referring to the pledge of aid from Malaysia and Singapore.
Bulog will probably be phased out gradually, he said.
[Joyce Teo in Singapore contributed to this article.]
Sydney Morning Herald - October 30, 1997
When President Soeharto built himself a modern office block in the late 1960s, it was known for a time as the KISS building, an abbreviation of words borrowed from English – koordinasi, integrasi, stabilisasi and sinkronisasi. It was not long, however, before Indonesians were saying KISS stood for "ke istana sendiri-sendiri" – "to the palace one by one".
A politician of astuteness and craft, Soeharto is known as a man who can achieve remarkable results in an empat mata (four eyes) meeting.
His one-on-one abilities have been to the fore again this week as wrangling continues over the conditions to be attached to an IMF rescue package for the battered Indonesian economy.
The Singapore Prime Minister, Goh Chok Tong, recently called in for a chat with the President and came away with his arm up his back and a $US10 billion ($14.3 billion) hole in his national wallet. Malaysia's Deputy Prime Minister, Anwar Ibrahim, went in for a chat and came out minus $US1 billion.
Yesterday it was the turn of John Howard, who seems to have been a little more guarded - he said that while Canberra was willing to come to Indonesia's aid, it would do so within the framework of the IMF package.
All of a sudden, Soeharto has managed to put together an impressive line of credit from his friends. This has led some to speculate that he is preparing to dispense with the IMF, which wants a stringent overhaul of the Indonesian economy.
It is highly unlikely Soeharto will send the IMF away with a flea in its ear. If nothing else, that would send a terrible message to the market. But he does seem to playing hardball in an attempt to win lighter conditions from the fund.
Ideally, says an economist, "you need people sitting around a table discussing their contributions. To pick people off one by one unexpectedly is not so good. It's a pity the IMF package didn't get locked away before any of these meetings [with foreign leaders] took place."
Until recently, most observers thought Jakarta would end up with an IMF package not unlike that accepted by Thailand, which has been guaranteed $US17 billion, including $US1 billion from Australia. Indonesia did not need a large sum - unlike Thailand it had not squandered its reserves in a futile attempt to prop up its currency - and it is said the IMF was prepared to be quite generous, perhaps offering $US8-10 billion, with Japan chipping in a bit more.
Suddenly, every man and his dog seems to be getting in on the act, willingly or not. It isn't just the IMF plus the Japanese. It is those two, plus Singapore, plus Malaysia. Even the Americans have been floating around. Not to mention John Howard.
The Australian Reserve Bank has always taken the view that IMF conditions are an absolute essential of any rescue package for Indonesia.
That makes sense - it's no good putting up a large sum unless Jakarta agrees to make the necessary reforms. It is also important that the IMF provides a significant part of any rescue package – otherwise there is no truncheon with which to ensure compliance.
What is the IMF pushing for? It is unlikely the fund is calling for an end to Indonesia's $US1.3 billion national car project. Nor does it seem to be seeking an end to Jakarta's costly and controversial plans to build commercial passenger aircraft. Those two projects, which are close to the President's heart, may well collapse of their own accord.
But the IMF is thought to favour far-reaching reforms in the financial sector. It is also believed to be pushing for an end to "rent-seeking" monopolies in commodities such as wheat and sugar, which benefit one or two well-connected Indonesians at the expense of the wong cilik, or little people.
According to a source in Jakarta, Indonesia is seeking a standby credit of about $US17billion, of which about $US4.5-5 billion is expected to come from the IMF.
Sydney Morning Herald - October 30, 1997
Chris Lydgate in Singapore and Louise Williams in Jakarta – The Indonesian President's comments that the Singapore Government had agreed to offer a $US10 billion ($14.2 billion) aid package to Jakarta, separate from ongoing negotiations over an International Monetary Fund rescue package, have caused shock and confusion among the region's economic analysts.
Singapore was abuzz with speculation yesterday about the Government's motivation in offering the aid, the effect it would have on Indonesia's delicate negotiations with the IMF, and whether Indonesia's President Soeharto had simply misspoken or was trying to improve his bargaining position.
The announcement came as IMF officials left Jakarta after two weeks of talks aimed at reaching agreement over a loan program to prevent corporate and banking collapses in the face of massive US dollar debts.
The negotiations have been held behind closed doors but analysts said the IMF was likely to insist on sensitive reforms such as cuts in consumer subsidies, removal of agricultural monopolies, a major banking shake-out and possibly the scrapping of projects linked to the political elite.
An IMF austerity program would be likely to force an increase in prices of fuel and electricity, both of which are highly politically sensitive as Indonesia faces a certain economic slow-down, spiralling unemployment and inflation because of the collapse of the rupiah and the stock market.
Confusion arose in part because Singaporean officials did not endorse Mr Soeharto's remarks.
An official from Singapore's Ministry of Foreign Affairs simply reiterated that Singapore "would help to supplement the IMF effort" and said the details had not been finalised, while a spokesman for the Monetary Authority of Singapore declined to elaborate.
An Indonesian Finance Ministry official said the details of the Singaporean offer had not yet been worked out, but confirmed that the money was not linked to the IMF package and would, therefore, not come with the same conditions.
A Jakarta newspaper quoted a Singaporean source as saying the first $US5 billion came "with no conditions imposed". President Soeharto said Singapore would provide a $US5 billion soft loan and spend a further $US5 billion buying rupiah on the money market to prop up the Indonesian currency, which has lost more than 35 per cent of its value against the US dollar in less than three months.
At the same time, Mr Soeharto also said: "Don't misunderstand. We are not asking the IMF for money. We already have programs in place, we just need the IMF to check them because they have experience. The situation is not that we are asking for money from the IMF, then we are tied to this or that condition."
Singapore's Prime Minister, Mr Goh Chok Tong, apparently made the offer last week as a gesture of ASEAN solidarity in the face of the financial crisis rolling through South-East Asia.
But details remained sketchy - until Mr Soeharto's off-the-cuff remarks at a ceremony at Parasuan in east Java. A day earlier, the visiting Malaysian Finance Minister, Mr Anwar Ibrahim, pledged $US1 billion for Jakarta.
Analysts said any agreement that jeopardised or even "watered down" the IMF negotiations would unsettle investors.
"The IMF's bargaining position falls through the floor if Singapore comes through with $10 billion without any conditions," said an analyst, Mr Bruce Gale, of the Political and Economic Risk Consultancy in Singapore.
"I can't believe they'd do that."
Mr Tom Soulsby, head researcher for ANZ Securities in Jakarta, said: "It [the offer] reduces the leverage ability of the IMF to get reforms through ... Some of the hard decisions that need to be made may not be made."
Sydney Morning Herald - October 30, 1997
The national car
In February last year the Soeharto Government awarded exclusive tax and tariff privileges to Timor Putra Nasional, a company controlled by President Soeharto's son, Hutomo "Tommy" Mandala Putra, to produce a national car. About $US750 million ($1.07 billion) was obtained by the Government from local banks to finance the company's first assembly plant.
In June this year, the Government announced that the "Timor" would become the official car for all government departments and state-owned companies. The tax breaks given to the company are said to be in exchange for a commitment on local content - 60 per cent within three years.
However, the Timors on the road now are manufactured in South Korea in partnership with Timor Kia Motors. In Korea, Kia has recently been placed in receivership. The Timor models are selling poorly in Indonesia, despite being almost half the price of similar sedans.
Japan, the US and the EU have taken Indonesia to the World Trade Organisation over the issue, claiming unfair trading. The national car has become a symbol of favouritism and nepotism in business.
The national jet
A multi-billion dollar aircraft development program controlled by Technology Minister, Dr Jusuf Habibie. About $US1.2billion provided through state banks to finance the production of a twin-prop aircraft, currently operating on domestic routes, in both a civilian and military version.
More than $US100 million has been diverted from the reforestation fund to the project, with payments due only when aircraft are sold. No Indonesian-manufactured aircraft have been sold in Western markets. A new company was established earlier this year to raise $US2 billion to develop a jet.
Import monopolies
Rice, rice flour, sugar, wheat and wheat flour, soybeans, onions, shallots, garlic, leaks etc. Indonesians pay 58 per cent above world prices for sugar and sugar income is a source of patronage funds for the civilian and military leadership as well as a means of subsidising the price of rice, the most politically sensitive crop.
Wheat is also linked to the political elite. The Government sells wheat at a subsidised price to the Salim group, controlled by a Soeharto ally, Mr Liem Sioe Liong, which grinds it into flour and sells it back to the Government, adding a 30 per cent margin which is passed onto consumers. Wheat was targeted for deregulation this year until officials were reminded that President Soeharto's daughter Siti Hardyanti "Tutut" Rukmana also owns a flour mill.
Fertiliser subsidies
In June this year, Indonesia's chief auditor told Parliament the Government had spent $US6.1 million in subsidies and excess payments to an agro-technology company, Ariyo Seto Wijoyo, which has a monopoly on urea pellets. The company's chairman is President Soeharto's eldest son, Sigit Harjojudanta. Farmers were so unhappy about the heavy-handed efforts to get them to use the pellets that three village co-operatives in east Java were burnt down in protest. Eventually the Government bought all the pellets consumers refused to purchase.
Sydney Morning Herald - October 30, 1997
Tony Wright, Jakarta – The Prime Minister has told Indonesia's President Soeharto that Australia, in the spirit of "regional mateship", stands ready to dig deep as part of a major international rescue package for Indonesia's ailing economy.
Mr Howard would not put a figure on Australia's proposal, but indicated that it was likely to be as much, and possibly substantially more, than the $US1 billion it has already provided to prop up Thailand's economy.
However, he said Australia's assistance would be part of an arrangement supervised by the International Monetary Fund (IMF) and was conditional on Indonesia accepting that it had to abide by terms set by the IMF.
Mr Howard's offer came during an hour-long talk with Mr Soeharto here yesterday.
He said it was "an important element of Australia's role as a fully active participant and player in the Asia-Pacific region".
"It is the act of a friend, it is an act of a good neighbour, it is an act of a nation willing to assist another nation with which it has very long-term interests and long-term association," he said.
"It is also in the interests of the Australian nation and the Australian people that the Indonesian economy be strengthened and be supported - Indonesia is increasingly buying Australian goods and services.
"I regard the offer I made today to the President as a very important manifestation of the closeness of that relationship."
Mr Howard's offer came less than 24 hours after Mr Soeharto's surprise announcement that Singapore had offered arescue package of $US10 billion, and that Malaysia had offered $US1 billion.
But Indonesian officials said the money from Malaysia would come with no strings attached, and was widely seen as an attempt to allow Indonesia to bypass stringent economic reforms that would come with IMF intervention.
IMF conditions would be likely to require that Indonesia crack down on its generous bank credit policy and reduce protection on such projects as its national car - production of which is owned by Mr Soeharto's son Tommy - and its domestic aircraft industry, which is supported by the Science Minister, Dr B.J. Habibie, a protege of the President.
Indonesia's economy is reeling from a collapse in the value of its currency, the rupiah,and is suffering a crisis in agriculture and lack of confidence among international investors following drought and uncontrolled forest fires that have spread a choking haze across South-East Asia.
Mr Howard said Australia's help would come either as "an initial support mechanism" or in the form of a "stand-by credit facility".
Last month Australia provided $US1 billion to Thailand in the form of a currency swap in an attempt to halt the slide of the Thai baht.
Asked how much Australia was willing to stake for Indonesia, Mr Howard said he would "not get into amounts".
Asked whether he believed Indonesia would be willing to accept an IMF package, Mr Howard said he had detected from Mr Soeharto that Indonesia was "very close to reaching agreement" on the IMF proposal.
Mr Howard said he had also raised the issue of human rights in East Timor, and had urged Indonesia to give the East Timorese a greater say in their own affairs.
Sydney Morning Herald - October 28, 1997
Louise Williams, Jakarta – The International Monetary Fund's rescue package for Indonesia is expected to be delayed until later this week after private talks reportedly stalled over politically sensitive issues such as the subsidised national car project.
The package was originally due to be presented to President Soeharto last Friday, but talks continued over the weekend and yesterday and analysts said they did not expect an announcement for another few days.
A leading economist, Mr Sjahrir, said the national car program, which gives exclusive tax and tariff concessions to one of President Soeharto's sons, the national passenger jet development and government trading monopolies on agricultural products such as rice would "remain contentious" during the talks.
"The Government will consistently argue that the national car is an internal matter for Indonesia," he said.
Up to $US1 billion ($1.46 billion) in loans have been provided by State banks to the project, which is supposed to develop a national Indonesian car in partnership with Kia Motors of South Korea.
Kia Motors was placed in receivership by the South Korean Government last week and the involvement of President Soeharto's son Mr Hutomo "Tommy" Mandala Putra has made the project more a symbol of economic nepotism than national pride.
Mr Sjahrir said the Soeharto Government would also vigorously defend the national aircraft program, which has already lost hundreds of millions of dollars.
It already produces a turboprop aircraft but now aims to design and manufacture a 130-seat jet, for which a separate finance company was set up earlier this year to raise an initial $US2 billion.
The visiting Malaysian Deputy Premier and Finance Minister, Mr Anwar Ibrahim, said Kuala Lumpur was preparedto contribute $US1 billion to help Indonesia restore its economy.
The Indonesian State Secretary, Mr Murdiono, clarified that Malaysia's aid "is outside the IMF program".
Reuters - October 23, 1997
Lewa Pardomuan, Jakarta – Indonesia's state-owned aircraft manufacturer Industri Pesawat Terbang Nusantara (IPTN) said on Thursday it had found counter-trade deals beneficial and denied the bartering option had been taken because of difficulty in selling its planes.
IPTN, headed by Research and Technology Minister Jusuf Habibie, said it had so far signed counter-trade deals with Malaysia and Thailand worth $135 million in exchange for sales of its CN-235 turboprop aircraft.
From Thailand, Indonesia is to receive 110,000 tonnes of rice, while from Malaysia it will obtain 20 trainer aircraft and 1,500 Proton sedan cars.
"Habibie is very eager in doing business through counter-trade. It is of course beneficial for Indonesia because we want to sell our aircraft. We are optimistic about the prospects of such trade," IPTN's chief executive officer, Salomo Pandjaitan, said on the sidelines of a counter-trade conference.
When asked if counter-trade deals were preferred because of low demand for the aircraft, Pandjaitan said: "No. Frankly, we were rather disappointed about the cynical point of view that we sell planes for rice. In fact, we received cash for the sale," he said.
Although the funds were used to purchase commodities and goods from buyer nations, IPTN would receive cash in turn from other government departments, he said.
IPTN produces the 44-seater CN-235 jointly with Spanish aircraft manufacturer CASA. The company is also marketing its N-250 70- seater aircraft, a larger version of the CN-235, which will begin deliveries in 1998.
Pandjaitan said the company had signed memorandums of understanding (MOU) with South Korea to sell CN-235 aircraft in exchange for infantry fighting vehicles and military trucks in a deal worth $120 million.
He said IPTN would deliver six CN-235s to Malaysia in January, but gave no details on deliveries for Thailand.
"We have also signed an MOU with Pakistan worth $216 million for the purchase of eight N-250 aircraft. Other details have to be finalised because Pakistan also wants an offset deal," he said.
Industry analysts have said counter-trade deals involving the IPTN aircraft underlined Jakarta's reliance on political goodwill to sell its aircraft rather than competitiveness.
But they say sales based on goodwill and political mechanisms are unlikely to continue for long because they are a product of lobbying rather than economic need.
Pandjaitan said the company was also exploring the possibility of selling aircraft to Finland and Croatia through counter-trade deals.
He said Croatia, for instance, had proposed selling fishing vessels.
An IPTN spokesman said on Thursday a total of 160 CN-235s had been sold, with 150 already delivered. Of the total, 32 were sold by Indonesia and the rest by Spain, he said.
He said buyers included the state-run Merpati Nusantara Airlines, the defence ministry, Brunei and the United Arab Emirates.
IPTN, set up in 1976, has been widely criticised for its venture into the high-cost aerospace industry that began with the CN-235. The government has poured $1.6 billion into IPTN, with $650 million earmarked for the N-250s.
But Pandjaitan said the prospects for the sale of the company's aircraft were good.
"The prospect is quite bright. (Minister) Habibie's prediction the N-250 will come good in terms of marketing has been proven. The demand is good in Europe because the plane is quiet and fast," he said.
Habibie has said IPTN has received 219 domestic and foreign orders for the N-250 aircraft, and that it only needs to sell 40 more to break even.
Sydney Morning Herald - October 22, 1997
Louise Williams, Jakarta – In a new effort to arrest the slide of the rupiah, Indonesia's Central Bank has announced that commercial banks may lend hundreds of millions of US dollars from their reserves.
The Central Bank has cut minimum reserve levels for Indonesian banks from 5 per cent of US dollar deposits to 3 per cent, releasing $US850 million ($1.16 billion) into the money market.
But analysts say the reduction in reserves increases the risk for banks if depositors seek to withdraw their savings. The banking sector is already weakened by bad debts and a large number of small and inadequately funded operations.
The credit squeeze was originally imposed by the Indonesian Government in a failed attempt to use high interest rates to prop up the value of the rupiah, which has fallen more than 35 per cent in three months.
But the heavy exposure of many Indonesian companies to US dollar debts has forced the rupiah down, and the Central Bank has been intervening in the market since last week to try to stabilise the currency.
The high interest rates imposed to protect the rupiah have been damaging local business, dramatically slowing construction and threatening industrial production.
The Central Bank also announced it would cut interest rates by about 1 per cent on short-term deposits.
The new strategy comes as talks between the Indonesian Government and the International Monetary Fund near completion on a rescue plan. Unlike Thailand, which exhausted its foreign reserves in a failed attempt to prop up the baht, Indonesia's debt crisis is concentrated in the private sector.
Analysts believe Indonesian companies owe close to $US80 billion, about 60 per cent in short-term debt due in the next three months.
Far Eastern Economic Review - October 23, 1997
John McBeth with Fanny Lioe in Jakarta – On October 10, two days after Indonesia announced it was going to seek the International Monetary Fund's help in salvaging its economy, Jakarta newspapers carried pictures of a smiling President Suharto playing golf with his industrialist friend, Muhammad "Bob" Hasan. Two weeks previously, when the currency crisis was reaching its peak, the 76-year-old president was shown riding a motorcycle.
Most of Suharto's countrymen are in no mood for games or joyrides. Across Indonesia, the man in the street is beginning to feel the impact of the currency crisis and the inflation and unemployment that is arriving in its wake. Taxi drivers, those barometers of street sentiment, tell bitter tales of hardship. In Jakarta, cabbie Mantar says he can't afford to pay his children's school fees because the economic uncertainty has forced his regular customers to use cheaper modes of transport. A couple of months ago, he was earning around $25 a day. Now, it's closer to $5. "How can I feed my four children if this goes on?" he asks, plaintively.
It isn't a rhetorical question. The knock on effects of the rupiah's slump, in addition to speculation and hoarding, have sent food prices spiralling. Over the past month, the price of rice has shot up as much as 40% on outlying islands like Kalimantan (but only 1%-2% in Jakarta). Vegetable prices have soared 10 % -25 % in some places; cooking oil is up 40%.
If prices stay high or climb further, the public mood could turn rebellious. Political analysts warn that a protracted economic crisis on top of a prolonged drought that's already hurting rural Indonesians could lead to social unrest. For the authorities, that will be especially unwelcome in the run-up to the meeting next March of the People's Consultative Assembly, which is expected to endorse Suharto's seventh five-year term.
"If this goes on much longer we could see a lot more political dissatisfaction," says Dewi Fortuna Anwar, a senior researcher at the Indonesian Institute of Sciences.
Or worse. Economic crises in Indonesia tend to reopen age-old ethnic animosities – often leading to communal friction. Street interviews conducted by the REVIEW reveal that many Indonesians blame politically well-connected ethnic-Chinese businessmen for the rupiah's slide. "Any slowdown in job creation has social consequences," frets Alex Erskine, chief economist for Citibank in Singapore. "That is in the back of everybody's mind."
At the moment, it's hard to see where and how jobs can be created. Manufacturers are struggling to cope with the twin blows of reduced domestic demand and more-expensive imports. Wilson Nababan, president-director of business-research firm CISI Raya Utama, says the economic downturn has in particular hurt medium- sized companies involved in garments, shoes, plastic ware and metal working; local demand for these products has sagged. Meanwhile, the rupiah's slide has wounded import-dependent businesses for example, pharmaceutical firms, which rely on overseas suppliers for 95% of their raw materials.
As a result, companies are being forced to lay off workers and cut back on production. Simon Hunt, a London-based copper- industry analyst who visited Indonesia in early October, says some companies have gone from three shifts, five days a week, to one shift every two or | three days. Firms with cash balances could be sorely tempted to close factories and earn 30% interest at the bank.
Things look just as bad in the construction sector. The rescheduling of many property projects has already led to 150,000 workers being laid off in Jakarta according to the Union of Construction Businessmen, and many more could follow as property firms take stock of their positions. Businesses serving the construction industry like makers of cement, iron rods and ceramics also face a crunch.
"Even low-cost housing, which is supposed to be recession- resistant, has been hit hard," says a senior executive at a property company in Jakarta. "We're going ahead with projects that are under construction or those that have already been financed, but the others are under review. Anybody would be lying if they told you I they were going ahead with all their projects."
Even the hotel industry is reporting a 15 per cent downturn in occupancy as postponed projects and general uncertainty force business travellers to reschedule their visits. Small-businessmen and traders aren't I doing much better. "My income is going down because the purchasing power of my customers is going down," says Basri, a rice trader in eastern Jakarta's Pulogadung market. "They used to buy 10 kilograms each time, now they're only buying five kilograms."
A nearby jeweller says his business has fallen off 50% in the past two months. "I haven't had one customer in the past two days," he complains. "If this condition continues I'll be forced to close my business. "
The man in the street, meanwhile, is groaning under the weight of inflation particularly in basic commodities. Worse may follow. Although the government hasn't yet raised fuel prices, Finance Minister Mar'ie Muhammad hinted at it in a rare press conference on October 10, when he said the government was committed to abolishing petroleum subsidies. It's not clear whether this would include subsidies on kerosene, the principal cooking fuel in rural Indonesia.
| Politics |
Indonesia Times - October 29, 1997
Jakarta – The government is necessary to stop isolating ethnic Chinese from political life, an expert said.
"It is not healthy for our political development as the isolation will invite broad public curiosity," Sayidiman Suryohadiprojo told a gathering here on Tuesday.
Suryohadiprojo made the statement in a national dialogue on ethnic Chinese dispute sponsored by CIDES, the Center for Information and Development Studies, a think tank of the Muslim intellectual group ICMI.
Suryohadiprojo, vice chairman of CIDES' Advisory Board and the keynote speaker in the dialogue, said
the government policies have isolated the Ethnic Chinese from political life considering bad experiences in the state's history.
During the Dutch colony, ethnic Chinese were treated better than the Indonesian origins and very less of them struggled for Indonesia's independence, he said.
Moreover, in late President Soekarno's government, an ethnic Chinese organization played prominent role in the political life, but it had affiliated to the banned Indonesian communist party (PKI), he added.
"On the other hand, the New Order government gives them a big chance to involve in economic activities."
This economic strength, said the retired general, is not supported by a formal and open political strength.
"Consequently, they undercover political power through their closeness with state apparatus," he said.
"They undercover financial back-up to certain state apparatus in order to smoothen their business. "It is even more dangerous."
He called on the government to open more access for them to involve in the political life.
He also suggested the government to hold military training both for Indonesians and ethnic Chinese to develop closer brotherhood between the two parties.
He also called on the ethnic Chinese to join in social and political organizations in the country. The dialogue also presented ethnic Chinese figures, including Sofyan Wanandi, historian Ong Hok Ham and chairman Ethnic Chinese association (Persabi) Usman Effendy.
Laksamana Sukardi, another speaker, called on the government to stop discrimination against ethnic Chinese to solve the ethnic dispute.
"Give them political and social rights similar to their Indonesian brothers," he said.
He cited a number of regulations, including the complicated procedures for ethnic Chinese to get Indonesian citizenship.
Moreover, the government gives specific signs in their identity card and passport.
"They have to change their names into Indonesian names as Chinese characters are not allowed," he added.
Straits Times - October 26, 1997
Jakarta – Outspoken Muslim scholar Amien Rais has suggested a national poll be held to determine whether the majority of Indonesians want President Suharto re-elected next year for a record seventh five-year term, the Jakarta Post reported yesterday.
"I still do not believe that all Indonesians want to re-elect Pak Harto," he told reporters after a seminar on the economy on Friday.
Mr Amien, chairman of the 28-million-strong Muhammadiyah Muslim organisation, said if the poll result showed a majority wanted Mr Suharto to stand again, "we all must honestly accept that".
But he added the 1,000-strong People's Consultative Assembly (MPR) – the country's highest legislative body which will meet next March to elect a new President – should also "take the poll result into consideration if a majority chooses the contrary".
Asked to comment on the ruling Golkar's announcement that it would renominate Mr Suharto, Mr Amien said the MPR should also consider voices other than political organisations.
"The MPR should be able to catch the informal messages of the people and then respond to their aspirations," he said.
"Renominating President Suharto would only mean that we turn him into a cult figure."
This was a reference to remarks by the Indonesian leader earlier this month that he did not want to be made into a cult figure.
He also told Golkar last weekend it should reconfirm its decision to nominate him with the people.
Mr Amien told reporters he believed there were many people eligible for the presidency: "I think there are many Indonesians who have the capacity equal to the first President Sukarno and incumbent President Suharto. The only thing to do is to give the eligible candidates the opportunity."
The view was shared by former Finance Minister Frans Seda, who said the younger generation lacked the opportunity to lead the country.
The Jakarta Post also reported yesterday that Golkar was making an all-out effort to persuade other groups in the MPR to follow its lead on backing Mr Suharto for another term.
The armed forces has hinted it would support his running again, the paper said.
Golkar MP Tutty Alawiyah reportedly said Mr Suharto's renomination by the MPR would not only be desirable, but would also show respect for the tradition of reaching decisions by consensus.
In a separate report, retired Lieutenant-General Moetojib, chief of the State Intelligence Coordinating board, warned that anti- government groups might try to disrupt the presidential election next year.