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Indonesia News Digest No 6 - February 10-16, 2003
Detik.com - February 10, 2003
Suwarjono, Jakarta -- Although [President] Megawati's supporters
have come out into the streets, students are not trembling with
fear. This afternoon (Monday), 1000 students from 12
organisations will be calling for the "Tritura" (*) at the
presidential palace. Tritura is the three demands of the people
(*), reduce prices, try the corrupters and build a self-reliant
nation. The Tritura will be called for by 12 student
organisations in their action in front of the presidential palace
this afternoon.
The 12 student groups have come together under the banner of the
Youth and Student Opposition Front (Barisan Oposisi Kaum Muda
Mahasiswa, BOKMM). This group is made of "the most right-wing"
groups such as KAMMI (Islamic Students Action Front, (Kesatuan
Aksi Mahsiswa Muslim Indonesia) and the "most left-wing" groups
such as LMND (National Students League for Democracy (Liga
Nasional Mahasiswa Demokrat).
As well as KAMMI and LMND, BOKMM includes the Muhammadiyah
Student Association (Ikatan Mahasiswa Muhammadiyah, IMM), the
Indonesian Muslim Student Movement (Pergerakan Mahasiswa Islam
Indonesia, PMII), the Islamic Student Association (Himpunan
Mahasiswa Islam, HMI), HMI MPO (a splinter group of HMI), the
Indonesian National Student Movement (Gerakan Mahasiswa Nasional
Indonesia, GMNI), the Indonesian Catholic Students Movement
(Pergerakan Mahasiswa Katolik Indonesia, PMKRI), the Indonesian
Christian Students Movement (Gerakan Mahasiswa Kristen Indonesia,
GMKI), Forkot (City Forum) and other groups. According to the
public relations coordinator of KAMMI, Novri Hermawan, the action
will be joined by around 1000 students. "We are not mobilising
all of the potential masses today. What is important is that we
can safeguard the consistency of the movement", he told Detikcom
on Monday morning.
Today's action will begin at the University of Indonesia Salemba
campus at 11am where speeches will be held explaining the
student's demands on the Mega-Hamzah government. From Salemba the
students will move off towards the presidential palace via Jl
Kramat Raya, Jl Kwitang, Jl Medan Merdeka Timur and Jl Medan
Merdeka Utara, where the palace is located.
Before reaching their goal, the students will stop at Jl Kwitang
in the Senin area where they will hold speeches for around one
hour which will then be followed by more speeches in front of the
Gambir train station.
"At Senen and Gambir, we intend to hold speeches because we want
to involved the people in strengthening our demands. These two
places are busy central locations, so the people will know what
we are doing", said Novri.
* Tritura" (Tri Tuntutan Rakyak, Three Demands of the People). A
political slogan of 1960s which called for the banning the
Indonesian Communist party, the purging communist elements from
the Dwikora cabinet and the lowering of prices of basic
commodities.
[Translated by James Balowski.]
Asia Times - February 14, 2003
Tony Sitathan, Jakarta -- Indonesia is hoping to improve its
image as a safe haven for foreign direct investment, especially
after the Bali bombings. That task will evidently include a tough
battle to win the hearts and minds of workers, who account for
almost one-third of Indonesia's 220 million population. Labor
unrest appears to be fermenting while President Megawati
Sukarnoputri's government prepares for an election in 2004.
Indonesia's labor unions, suppressed by the authoritarian regime
of Suharto, seem to have made an unwelcome comeback. "We see
greater participation of those in SBSI [Indonesian Prosperity
Labor Unions] and PPBI [Center for Indonesian Labor Struggle]
that were largely monumental in bringing down the past regime of
Suharto," said labor activist Soemadi Wiratakusuma.
Neither large conglomerates nor smaller companies have been
spared the sudden demand for more labor rights sweeping across
Indonesia. Several months ago clove-cigarette maker Gudang Garam
faced a major labor protest in its East Java factory in Malang.
It crippled its production for at least two weeks and cost
several billion rupiah in lost sales.
The mining industry is another hotspot for labor disputes. There
was a major labor dispute last year at Kaltim Prima Coal, which
is considered the largest coal-mining company in Indonesia. There
were complaints of human-rights abuse as well as a lack of
concern for the welfare of employees. However, company officials
addressed the situation quickly and production resumed after
several days.
More recently there was a labor dispute faced by PT Thiess
Contractors Indonesia (TCI), the largest Australian-owned coal
contractor operating in the mining and construction sectors. The
labor dispute went all the way to parliament, where the House
Commission VII, which deals with labor disputes, decided that the
agreement between the management of TCI and its former 171
employees was final. It concluded that additional demands made by
the workers were illegal since they had received a severance
package and most of their outstanding issues were already
resolved.
Another labor fiasco, which gained international media attention,
was when Garuda Indonesia, the state-owned national airline, was
plagued by a pilots' dispute that could have paralyzed domestic
and international flights. The pilots complained that they had
been severely underpaid compared with international pilots at
other national airlines. To prevent a strike planned for this
Tuesday, Garuda went to the police. Since then the matter has
been forwarded to the Ministry of State Owned Enterprises and
strike averted. The ministry has promised to look into the labor
fracas.
After suffering massive losses, Garuda Indonesia had just broken
into the black and had started paying off its overseas creditors.
Perhaps the Pilots Association saw it as an opportune time to
press for pay increases. Others in the airline industry saw it
differently. Frank Samuel, who has been working with a foreign
aviation-maintenance company in Indonesia for the past three
years, called the proposed strike self-serving and said that the
pilots should "be comparing their pay scale to Thai Airways and
Malaysian Airlines instead of Singapore Airlines and Cathay
Pacific".
Lim Hock Guan, a Jakarta-based businessman who frequently travels
on Garuda, was even more critical. "They [the pilots] have little
regard for the passengers. Many people rely on them for local
travels and meeting families during the Hari Raya Haji holiday
time that falls on February 12 ... I am not sure if they are
being opportunistic or just plain foolish," he said.
According to Kim Dae-yong, a South Korean-based businessman who
runs a Korean supermarket in South Jakarta, Indonesia will repel
foreign investors if the labor unrest continues. "Look at
globalization and the effects of AFTA [Association of Southeast
Asian Nations Free Trade Agreement] in 2003, we see more
competitive labor in Vietnam, China and even India. The cheap
labor of Indonesia is not attractive enough for foreigners, [who]
do not want to be embroiled in labor disputes and issues of poor
productivity," he said.
The overall competitiveness of Indonesia's workforce is being
questioned. And the fact that the government might pass a labor
bill on crucial issues -- including the recognition of the right
of workers to strike, the existence of temporary workers, and
sabbatical leave -- has to be examined even more closely.
Although many agree that Labor Law No 25/1997 passed by the
Suharto regime stifled workers' rights, there has to be a
tradeoff when it comes to balancing the interests of the employer
and the employee.
The bill has drawn criticism from both labor unions and
employers. The Jakarta Legal Aid Institute as well as several
other labor groups maintain that the bill fails to address the
issue of protecting workers from unfair dismissal or recognize
the rights of temporary workers, who might be subject to abuse by
employers.
Whatever the outcome of the labor bill, Indonesia has to realize
that globalization is quickly changing the way companies and
employees operate. The iron rice bowl of the past has given way
to market forces that cannot be controlled by state ideology.
Sukarno failed miserably to mold Indonesia into the spirit of
Nasakom, which was the state's ideology for nationalism, religion
and communism. Nor was it successful under the Suharto regime,
when national development was a coveted trophy over basic human
rights. A middle ground for workers has to be found -- the sooner
the better.
Labour issues
Aceh
West Papua
Anti-war movement
Government & politics
Corruption/collusion/nepotism
Environment
Health & education
Economy & investment
Democratic struggle
Twelve student organisation call for Tritura
Labour issues
Indonesia: Labor pains
PT DI workers oppose massive labor dismissal
Jakarta Post - February 15, 2003
Yuli Tri Suwarni, Bandung -- Four thousand workers of Bandung- based aircraft manufacturer PT Dirgantara Indonesia (PT DI) went on strike on Friday to protest the company's reported plan to lay off 3,500 workers.
The workers, organized by the Communication Forum for PT DI Workers (FKK), laid down their tools for two hours and picketed outside the company's front office.
"We want the board of directors to explain the rumors of the mass dismissal of 3,000 workers," said FKK chairman Arif Minardi on Friday.
According to Arif, the workers also sought clarification about the government's plan to reshuffle the board of directors as mentioned by State Minister of State Enterprises Laksamana Sukardi.
Previous reports said the company would lay off 3,500 from the total of 9,600 workers to make the company more efficient. The plan will be discussed during the company's shareholders meeting later this month.
Kompas daily reported company spokesman Rakhendi Triyatna as saying that the measure was part of efforts to improve the company's performance, which had deteriorated since the onset of the economic crisis in 1997.
The rumors of layoffs had cause uncertainty among the workers, which could adversely affect the working environment in the company, Arif said.
Arif said the workers were not opposed to the dismissal plan, but it should be implemented transparently and the process should involve workers' representatives.
Arif also demanded that the amount of severance pay for the dismissed workers be jointly decided by representatives of management and workers and that all parties should commit to a joint decision.
If the management refuses to fulfill the demand, including clarifying the dismissal plan, a large demonstration will be staged, according to Arif.
During the demonstrations, the protesters also criticized the performance of the board of directors chaired by Edwin Sudarno, alleging that he was sluggish in the fight against corruption, collusion and nepotism.
Similar protests were organized in mid-2002 when the workers demanded that company president Jusman S. Djamal be replaced because he neglected the workers' welfare. In March last year, the workers went on strike.
| Aceh |
Jakarta Post - February 15, 2003
Aceh -- The police in Banda Aceh are still pursuing a prodemocracy activist Kautsar who mobilized Acehnese to go on strike recently without permission from security authorities.
The spokesman for the Aceh Provincial Police, Adj. Sr. Comr. Sayed Hoessainy, said on Friday the police would continue to hunt the suspect.
Kautsar, also deputy chairman of the Student's Solidarity for Acehnese people (SMUR) is wanted by the police after he along with other student activists mobilized Acehnese people in North Aceh to go on strike last week without a permit.
The demonstrators during the rally demanded independence for the province.
Security authorities have also arrested Muhammad Nazar, coordinator of the Aceh Referendum Information Center (SIRA) for a similar case.
[According to MN Djuli who was responding to the original posting of this article, Kautsar and Muhammad Nazar did not call for a strike and the summons against them was for making public speech without permit. At first they were accused with organising a public rally without a permit, but it turned out they were not the organisers, only guest speakers at the rally, on which occasion the paramilitary police (Brimob) shot at and gravely injured four participants - James Balowski.]
Agence France Presse - February 12, 2003
Indonesian police have arrested a leading pro-independence activist in Aceh province after accusing him of organising an unauthorised rally.
Muhammad Nazar, chairman of the Aceh Referendum Information Centre (SIRA), was detained after six policemen kicked down the door of his home at 1.30 am, according to his wife.
He was arrested for holding a rally without a police permit at Lhokseumawe in North Aceh two weeks ago, said precinct deputy police chief Commissioner Ari Rahman.
"The arrest is related to a police wanted list issued in North Aceh two weeks ago which Nazar is on. He has also mobilised people and carried out public incitement," Rahman told AFP.
SIRA has campaigned peacefully for a referendum on independence in the province on the tip of Sumatra island.
A peace deal between the government and armed separatist rebels has been in force for two months. The Free Aceh Movement (GAM) says it began disarming on Sunday under the demilitarisation phase of the pact.
Nazar's wife, Dewi Meuthia, said the armed policemen kicked down the door of their house at Lampulo Baru near Banda Aceh and took her husband away in handcuffs.
She said the police, who had an arrest warrant, shouted obscenities at her and at a SIRA activist who was spending the night in the house.
David Gorman, representative in Aceh of the Henry Dunant Centre which brokered the truce with GAM, said he had received reports of Nazar's arrest but did not have full details. But "I think giving a public speech is not wrong," Gorman said.
Nazar in March 2001 was jailed for 10 months for sedition for seeking a vote on self-rule. He was arrested in November 2000 after SIRA organized pro-referendum mass rallies in Jakarta.
The group also organised a peaceful rally attracting hundreds of thousands of people in the provincial capital Banda Aceh in 1999.
Agence France Presse - February 11, 2003
Separatist rebels in Indonesia's Aceh said they have begun disarming as part of a peace deal but warned that the military must relocate its troops if the process is to continue.
Some weapons were stored at a beach area in East Aceh on Sunday, said the Free Aceh Movement's (GAM) military chief Muzakkir Manaf.
He said this showed GAM's willingness to comply with the demilitarisation phase of the accord reached on December 9 with the Indonesian government.
But any future disarmament "will heavily depend on the commitment of the Indonesian military and police to pull out troops from areas which previously have been agreed" by both sides, Manaf said Tuesday.
Aceh, which has witnessed 26 years of bloody violence, began the first day of a five-month demilitarisation phase on Sunday.
During this period GAM should start placing weapons at secret designated sites while the army relocates its forces and changes its role "from a strike force to a defensive force".
"GAM across Aceh is now ready to store their weapons. But is Indonesia also ready to relocate troops and reformulate [the role of police paramilitary] Brimob troops as stipulated in the Geneva peace deal?" Manaf said.
The Libyan-trained GAM leader said he had not received instructions from the Sweden-based GAM supreme commander Hasan Tiro to store all weapons.
"What exists now is the gradual storing of weapons by GAM rebels," he told reporters in North Aceh's main town of Lhokseumawe.
The demilitarisation phase was one of the most difficult issues during the Geneva peace negotiations. GAM leaders feared the process could leave them defenceless against troops and police who outnumber them seven-to-one in the province at the tip of Sumatra island.
Jakarta, in one of several key concessions, allowed the GAM to maintain its arms dumps secret from the military.
The Henry Dunant Centre, which helped mediate the peace deal, is informed of the location of the arms dumps. It has the right to conduct "no notice" inspections of them to verify that GAM is complying with the agreement.
Although each side has complained of numerous ceasefire violations since December, the two months have seen a dramatic decline in deaths.
Jakarta Post - February 11, 2003
Nani Farida and Ibnu Matnoor, Aceh -- The Joint Security Committee (JSC) named on Monday six new peace zones to shore up the fragile peace deal between rebels and the government, which brought an end to almost three decades of a separatist war in the restive province of Aceh.
The announcement brings the number of peace zones to seven, and comes one day after Aceh embarked on the crucial demilitarization phase that will last five months.
The six new peace zones encompass the subdistrict of Kawai XVI in West Aceh regency, Peusangan in Bireuen, Sawang in South Aceh, Tiro in Pidie, Simpang Keramat in North Aceh, and Idi Tunong in East Aceh.
The first demilitarized zone was established on Jan. 25 for the subdistrict of Indrapuri in Aceh Besar regency, where both rebels and government forces are prohibited from carrying guns.
In the six additional zones, soldiers, police and members of the separatist Free Aceh Movement (GAM) will also be able to move freely, but will not be allowed to carry weapons.
A statement from the JSC said on Monday both parties had also agreed that "no political or clandestine activities will take place within the peace zones".
The two sides would also be prohibited from conducting "provocative acts", it added.
But the peace zones would not be effective until after two weeks of preparations, said JSC officials.
"The agreement on these six (additional) peace zones clearly shows the commitment by both parties to the peace process, and to the people of Aceh, as we move into the very important demilitarization phase," said Maj. Gen. Tanongsuk Tuvinun of Thailand in the statement.
The Thai general is the senior envoy of the JSC, which is comprised of representatives from the government, GAM and foreign monitors from the Geneva-based Henry Dunant Centre (HDC).
He said the establishment of the zones, which is a critical step toward the demilitarization stage, is to improve security and to allow foreign donors to deliver humanitarian and economic development aid in Aceh.
"We've had a good couple of weeks. Deaths and armed clashes are even lower than they have been, and now we've got these peace zones," said Tuvinun.
"The JSC has been working very hard on this, and it has kept its word with the people," he added.
The zones were part of the historic peace agreement signed in Geneva, Switzerland, between GAM and the government on Dec. 9, 2002, to bring an end to 26 years of war in the resource-rich province.
In accordance with the truce, both sides began the process of demilitarization on Sunday, in which the rebels would lay down arms in designated areas for five months.
The demilitarization phase also required the military to retreat to their barracks, and the police to revert the role of its elite Mobile Brigade (Brimob) from a special strike force to its original function.
However, the demilitarization phase appeared ineffective on Monday, as the rebels had yet to store weapons, and security forces had yet to recall their soldiers to defensive positions.
GAM spokesman Teungku Kamaruzzaman said the rebels were ready to lay down 20 percent of their arms in at least 32 locations across Aceh, which would only be known by the HDC.
"We will complete the disarming of all our weapons in five months," he added, declining to mention the number of arms belonging to GAM.
The separatist group has been fighting for an independent Islamic state in Aceh since 1976.
Aceh, where some 10,000 people died in the prolonged conflict, has seen a major decline in bloodshed since the December signing of the landmark accord brokered by the HDC, which has mediated peace talks since 2000.
The government has accused GAM of trying to disrupt the improving security by making major violations to the truce.
Coordinating Minister for Political and Security Affairs Susilo Bambang Yudhoyono has said the government would announce its new stance on the peace agreement this week.
"There are too many violations, irregularities and distortions [of the accord], most of which have been committed by GAM," he said during a dialog with locals on Sunday in Lhokseumawe, the main town of North Aceh.
Susilo, who flew to Aceh to mark the start of the demilitarization phase, said the JSC had explicitly blamed "serious violations" on the separatists.
"Now, we have to make sure whether we will all comply with all the agreements drawn up in the peace pact or not," he added, without elaborating further.
Radio Australia - February 10, 2003
After five months jail in an Indonesian prison, Australian academic Lesley McCulloch has been finally been released. The British-born McCulloch was sentenced to five months prison for visa violations in Indonesia's rebel Aceh province. She was detained on September 10 with American nurse Joy Lee Sadler. Indonesian prosecutors accused the women of spying, threatening them with espionage charges -- charges they both denied, saying the documents related to victims of the Aceh conflict.
Presenter/Interviewer: Linda LoPresti
Speakers: Lesley McCulloch, speaking on a mobile phone from Bangkok on her first
McCulloch: It feels fantastic, yesterday I didn't really have time to take in the fact that I was released and that I was free, but today it feels ... I've been shopping a little bit already and I went on a frenzy in Bangkok and so it feels as though I'm free at last and it feels great.
Lopresti: So what are your plans now, what do you intend to do?
McCulloch: Well I'm in Bangkok for two days and then I'm off to London and Scotland to visit friends and family there and I've been very afraid and find this whole five months quite traumatic so I thought I'd go back and spend some time with them. And then I'll be coming to Australia around the beginning of March.
Lopresti: Speaking about your detention, there's been a lot in the press about your incarceration, but can you tell us what it was like? Where were you imprisoned and how were you treated?
McCulloch: Well I'm sure that everyone knows the story, that when we were arrested on the 10th of September in ? Aceh at a military checkpoint, we were assaulted by the Indonesian military. And then we were put through a fairly taxing interrogation process where there was a lot of intimidation and harassment for several days, before we were transported to North Sumatra and then finally up to Banda Aceh where we spent three months ... in a small room with no windows. And again quite a high level of intimidation before being finally transferred to the local Banda Aceh jail where our living conditions, our difficult living conditions were actually much worse.
Lopresti: When you speak about intimidation were you physically abused?
McCulloch: Apart from the initial assault at the army checkpoint and then I experienced sexual harassment while being transported from south Aceh to Medan, which took two days in a convoy of 10 police trucks. Apart from that we were never physically harmed, but there was a lot of taunts about espionage related charges and perhaps sent to jail in Jakarta for a long time. Most of the staff at the holder station were not Acehenese, they were Javanese, and so there was no sympathy at all for the problems of Aceh. Whereas at the prison, the staff were local Acehanese and there was a lot of sympathy towards the plight of the Acehanese.
Lopresti: How do you see the future for Aceh? I mean there's been a peace pact in place now between the rebels and the Indonesian military since December, do you find that hopeful, and also are you going to continue your research into Aceh?
McCulloch: I will continue my research into Aceh because I've been writing on Aceh for the past four years and so I've seen Aceh through the bad times and I want my work to continue through what will hopefully be the good times and actually become a safer place. The peace agreement has been in place since the 9th of December and in many places in Aceh the locals report that they do feel the situation is much safer. But in many of the villages the situation has little changed. Since the peace agreement on the 9th of December, 12 civilians have been killed, nine members of the separatist movement and four members of the Indonesian military. In fact, the figure is probably much higher, but there has still been disappearances and there's still intimidation, harassment of the local Acehenese population.
Lopresti: Lesley your American companion Joy Sadler as you said she did go on a hunger strike in Aceh and she had many serious health problems. Where is she now and will you keep in touch with her?
McCulloch: Joy is in the US but when she returned home, she had been on a hunger strike for 40 days and she had some serious health problems and the fact that the hospitals in Aceh were unwilling to start an IV for her, that she so badly needed and her veins collapsed. But the news from Joy was that she was a little bit healthier, she was out of hospital, she wants to come back to Aceh but whether she can or not because of her health, her ongoing health problems is another story.
Lopresti: Then what about you Lesley, any plans to return to Indonesia?
McCulloch: I'd like to return, of course I want to return to Aceh but I'm just not sure when.
Lopresti: So you haven't been deterred by your ordeal?
McCulloch: Absolutely not, I mean it was a pretty horrendous experience but it was also a very interesting experience because of course we've all heard stories of police brutality, Joy and I experienced that first hand. I'm much rather that it hadn't happened because it was traumatic but I have gathered a lot of information and I can speak about these issues from a very personal perspective now.
Agence France Presse - February 9, 2003
The Indonesian government and Aceh rebels on Sunday entered the crucial demilitarization stage in the process to end a bloody 26-year separatist war in the resource-rich province.
Under a peace pact signed on December 9 in Geneva, Jakarta and the separatist Free Aceh Movement (GAM) agreed to begin demilitarization two months after the signing of the agreement facilitated by the Geneva-based Henry Dunant Center (HDC).
During the coming five-month phase, GAM should start storing weapons at secret designated sites while the army relocates its forces and changes its role "from a strike force to a defensive force." The HDC has mediated in talks between the Indonesian government and GAM since 2000 but previous ceasefires have always broken down.
Visiting HDC head Martin Griffiths however said there was "enough confidence between the two parties to start the demilitarization." Griffiths said the two sides agreed at a meeting Saturday to start the demilitarization phase on time on Sunday and presented their "concrete, specific" proposals on how they are going to meet their obligations over the next five months.
"I am pleased to say we now have the commitment of both parties, a basis for discussion and a schedule. With that basis, we can begin to negotiate the details of what each side promises to do and when they will do it," he said.
The HDC, in a press release issued here Sunday, said details of the demilitarization phase will be fine-tuned in the coming days and weeks.
"Trust is the key, between both parties and HDC," Griffiths said. "GAM's got to trust that HDC will not reveal the placement locations. The Indonesian government must trust that HDC is carefully, accurately monitoring the placement," he said.
Top Security Minister Susilo Bambang Yudhoyono on Sunday marked the start of the demilitarization by flying to Lhokseumawe, the main town of North Aceh district where GAM has been most active, to address a dialogue with local leaders.
He is scheduled to address a similar dialogue in the provincial capital Banda Aceh on Monday. Griffiths is scheduled to fly to Lhokseumawe later Sunday to meet with Yudhoyono.
The demilitarization phase proved one of the most difficult issues during the Geneva peace negotiations. GAM leaders were fearful the process could leave them defenceless against troops and police who outnumber them seven-to-one in the province at the tip of Sumatra island.
Jakarta, in one of several key concessions, allowed a "two-key" arrangement under which the location of arms dumps will stay secret from the military. The HDC has the right to conduct "no notice" inspections of them to verify that GAM is complying with the agreement.
Although each side in the bloody 26-year separatist war has complained of numerous ceasefire violations since the pact was signed in December, the two months since the agreement has seen a dramatic decline in deadly violence.
The HDC statement said nine GAM deaths have been reported since December 9 compared with a reported average of 102 a month last year. Four police or soldiers had been killed compared with an average of 45 a month last year. And 24 civilians had died since December 9 againt an average 87 a month last year.
The Joint Security Committee charged with monitoring the peace process groups officials from the military, GAM and foreign monitors who represent the HDC and are led by a Thai general.
Sydney Morning Herald - February 10, 2003
Matthew Moore -- The academic Lesley McCulloch was yesterday released after five months' imprisonment in Indonesia's Aceh province and will return to Australia next month to write an account of her experience.
Scottish-born Ms McCulloch, 40, shouted "Freedom" as she left the prison and said later that while there were times she had been angry, she was not resentful about being jailed.
"The information I have gathered has been very useful. I'm not bitter after the stories I've heard about the interrogation process the Acehnese and Indonesians suffer and the corruption of the judicial process.
"It's been very interesting," she said by phone as she left for Kuala Lumpur, where she was deported after she had served her sentence.
Ms McCulloch and an American friend, Joy Sadler, 57, were arrested in September in a stronghold of the Acehnese separatist army GAM after police found them with military maps and articles about GAM.
They were held for four months at the police station in Banda Aceh, the province's capital, and were eventually convicted of visa offences after being accused of spying. Ms Sadler was released a month ago.
Ms McCulloch said she would visit Scotland next week, before going to Deakin University in Melbourne, where she has a three- year grant to work on a project on security sector reform in Indonesia.
The former University of Tasmania academic has had a tense relationship with Indonesian officials for years, partly because of her almost completed book on the Indonesian army's legal and illegal business activities.
Her release coincided with the first day of a new phase in the two-month-old ceasefire agreement in Aceh that aims to bring peace to Indonesia's easternmost province after a 26-year civil war.
For the next five months, GAM members are to surrender their arms to secret compounds where they will be guarded by members of the Henri Dunant Centre (HDC), the Swiss-based humanitarian group that brokered the agreement.
An HDC spokesman, Martin Daly, said from Banda Aceh yesterday that the demilitarisation process would be "tough and complex" and much detail had yet to be worked out. "Nobody is going to back up to a warehouse with a dumptruck full of weapons," he said.
| West Papua |
Time Magazine - February 17, 2003
Simon Elegant -- Patricia Spier was heading home from a mountaintop picnic in Indonesia's eastern province of Papua when the ambush began. Out of nowhere, a hail of automatic-weapon fire perforated the two Toyota Land Cruisers in which the American schoolteacher and a group of her colleagues and husband were traveling in.
"I was shot in the back and fell to the floor," Spier recalls. "The attackers kept shooting and shooting for about 45 minutes ... it felt like thousands of bullets and pieces of shrapnel [were] ripping through the vehicle ... People were screaming."
By the time the gunfire stopped, three people were dead, including Indonesian instructor Bambang Riwanto and two Americans: Edwin Burgon, the 71-year-old principal of the International School of Tembagapura; and Spier's husband Rick, 44, a fourth-grade teacher from Colorado.
For months after the August 31 attack, it seemed likely that no one would unravel the mystery of why these teachers were targeted on a mountain road leading to the giant Grasberg mine, which is run by P.T. Freeport Indonesia (PTFI), a subsidiary of New Orleans-based Freeport-McMoRan Copper & Gold. The military blamed the attack on the Free Papua Movement, a ragtag group of Papua rebels fighting a desultory war to free the province from Indonesian rule, but produced scant evidence to back the claim. Meanwhile, relatives of the slain teachers have grown increasingly frustrated by the inability of local police and the US government to find answers. "We respected our government and Freeport," says Dirk Burgon, son of the dead school principal, "and nothing has happened."
Until now. Reports are finally leaking out that may shed some light on the case. A preliminary police-investigation document obtained by Time posits that members of the Indonesian military- who were supposed to protect miners, international teachers and other expats connected to the Grasberg mine-may have been behind the killings, not the separatist Free Papua Movement.
The evidence cited by police is at best circumstantial but intriguing. Investigators found 100 spent shells in the area of the attack, yet the poorly armed rebels are not known to waste precious ammunition. In addition, the military produced the body of an unidentified Papua man shot by soldiers the day after the ambush, and claimed it was one of the assailants. But an examination of the corpse revealed that not only had the man been dead longer than the military insisted, he also had a medical condition-massive enlargement of the testicles-that would have made it difficult for him to be a guerrilla fighter. Eyewitnesses say that the gunmen wore military style paraphernalia such as boots and camouflage face paint, although no insignias were seen. The report concludes that it is "very possible" there was military involvement in the attack.
Indonesian soldiers have been accused of murder before. Last week, during a tribunal on the 2001 killing of Papua independence leader Theys Eluay, an army officer admitted that Eluay had been strangled to death by a private. The officer testified that the private had been ordered to pressure Eluay to stop agitating for independence. The controversy over the killing of the teachers is now intensifying questions about the dependability of Indonesia's armed forces. At the same time it complicates relations between Indonesia and the Bush Administration, which wants to preserve ties to the world's largest Muslim nation to bolster its global war on terror.
Since the deadly nightclub bombings on the Indonesian island of Bali -- an attack that was recently shown to have al-Qaeda connections-the US has fostered closer links with Indonesia's military, offering funding and training to help root out dangerous Islamic elements in the nation's society. If soldiers were involved in the murder of Americans, that effort could be derailed-as could Indonesia's broader standing with the US "This is not an issue where just the military-to-military component of our relationship could be affected," says a senior US official. "It's the whole relationship." Nevertheless Washington has made it clear in recent weeks that it is determined to get to the truth. In December, George W. Bush sent a personal envoy to Indonesian President Megawati Sukarnoputri to underline the importance he attached to finding the culprits in the Papua killings. With Megawati's consent, four FBI agents were dispatched to Indonesia, arriving in Jakarta on January 23 and traveling to Papua earlier this month to begin an inquiry into the attack. The FBI has conducted two previous probes into the matter but lacked the authority until now to complete a thorough investigation.
Indonesia also has its own team of police and military investigators on the case, but it's not clear how effectively they are navigating this political quagmire. No arrests have been made and the former deputy chief of police in Papua, Brigadier General Raziman Tarigan, was recalled to Jakarta in mid-January after speaking publicly about the possibility of military involvement in the killings.
There is more at stake for Jakarta than just a diplomatic breach with Washington, grave though that would be. The Grasberg mine sits on the largest gold deposit and the third largest copper deposit in the world. The mine supports a company town of some 110,000 employees and residents; PTFI, its operator, is one of the largest individual contributors to the Indonesian government's coffers, paying taxes last year on a revenue of $1.9 billion. "I think a lot of people will be concerned if the people who are supposed to be protecting us turn out to be the same ones who carried out the attack," says an American PTFI contract worker who asked to remain anonymous. "Several families I know have already left, and I'm pretty ready to go myself." In addition to paying hefty taxes, PTFI also gives millions of dollars a year directly to the armed forces in exchange for security services. The Indonesian military receives only about a third of its budget from Jakarta, so it must raise the rest by other means. A 2002 report by the International Crisis Group, a Brussels-based research institute, says the army posted in Papua derives a large portion of its income from "logging and other activities and protection fees paid by resource companies." PTFI has little choice but to boost its contribution in troubled times. In 1996, after a riot by local tribespeople halted mining operations, the company agreed to spend $35 million to construct military barracks and additional facilities, according to a report by the Robert F. Kennedy Memorial Center for Human Rights.
Indeed, some foreign analysts and diplomats believe the company's deep pockets may have provided a motive for the ambush. PTFI officials decline to comment on any aspect of its security operations, but a source close to the company says PTFI had been in discussions with local military officers prior to the attack about the possibility of reducing the firm's reliance on the nearly 650 soldiers and police who guard the mine. That could have meant a sharp drop in the cash given to troops. In other words, goes the theory, the teachers may have been slaughtered by rogue elements in the military who wanted to send a message to the mining company that full payments should continue. Military officers strongly deny any connection to the killings. "I am sure my men wouldn't do that," says Colonel Mangasa Saragih, the district army commander overseeing the town of Timika near the Grasberg mine. "We do not want to cover anything up." A US official familiar with the case acknowledges that, while there are indications of military involvement, "investigators have not yet gathered enough evidence that would stand up in court." Indeed, the preliminary police report seen by Time offers no smoking gun. Dirk Burgon fears that his father's killers won't be found because the political price of justice -- broken bonds between Indonesia and the US, embarrassment for the Indonesian government -- is too high. On February 20 the Bush Administration's budget package is expected to be passed by Congress. The package includes $400,000 in funding for the Indonesian military -- a modest sum but symbolically important. For one thing, it would override a 1999 congressional ban on providing money to the country's armed forces -- a punishment for alleged human-rights violations by troops during East Timor's drive for independence. If funding is approved, the Indonesian military might appear "to have exonerated itself of the implication that its ilite special forces recently murdered two US teachers," says Kurt Biddle, coordinator of the Indonesia Human Rights Network.
Burgon says that in January he met with members of the FBI, US State Department and congressional aides to press for a resolution to the case. The reaction to his lobbying gave him little solace. "We were told [an investigation implicating soldiers] was not conducive to the Pentagon's goal of restoring ties with the Indonesian military," Burgon says. If so, the truth about the ambush might prove to be another casualty of America's all-consuming war on terror.
[Reported by Jason Tedjasukmana/Timika.]
The Australian - February 14, 2003
Jim Buckell -- Pressure from the Indonesian Government has forced RMIT University to withdraw official support for a conference on West Papuan independence scheduled for later this month.
The co-sponsor of the conference, the New Internationalist magazine, has transferred the venue to the Victorian Trades Hall after RMIT refused to allow it to proceed on campus at Storey Hall.
The university's Globalism Institute had been involved in convening the conference. RMIT's pro vice-chancellor for research and innovation, Neil Furlong, said last night it was "not appropriate that universities formally endorse activities such as conferences and forums where criticism on matters pertaining to the sovereignty of other nations is intended". "It is in this context, and in respect to our body of international students and their broad cultural backgrounds, that RMIT University has decided not to host the West Papua conference."
A spokesman for Australian Greens leader Bob Brown said RMIT had behaved in a cowardly manner. "Australians had a right to hear about the plight of West Papuans," the spokesman said. Senator Brown would approach the university to reverse the decision.
It is understood the cash-strapped university is fearful that it could be threatened with cuts to its education programs in Indonesia or that fee-paying students from Indonesia might be discouraged from attending RMIT. RMIT expects to enrol 1465 Indonesian students this year. It does not keep figures on provincial origin, so cannot account for numbers from West Papua.
Indonesia is a significant source of fee-paying students for Australian universities. Last year almost 10,000 Indonesian students were enrolled, making it the fifth-highest source country, behind Singapore, Hong Kong, Malaysia and China. The Australasian editor of New Internationalist, Chris Richards, said yesterday that Indonesia was in the process of reversing its earlier position granting a degree of autonomy to West Papua.
Jakarta Post - February 11, 2003
Nethy Dharma Somba and Kanis Dursin, Jayapura -- The Papua Legislative Council (Papua DPRD) rejected on Monday the government decision to split up the province into three provinces and vowed to file a judicial review with the Supreme Court against a presidential decree endorsing the establishment of the provinces of Central and West Irian Jaya.
Papua DPRD chairman John Ibo argued that indigenous Papuans were not yet ready to take up the challenge posed by the two new provinces, and that splitting up Papua into three provinces now would only benefit non-Papuans, who would be recruited to fill vacancies in the bureaucracy.
"All DPRD members reject the government decision to create new provinces in Papua," John said before a group of over 2,000 student protesters inside the Papua legislature compound in Jayapura on Monday. "And then thieves would come in and rob the province," John said to thundering applause with cries of "merdeka", or "independence", from the crowd.
John was referring to presidential decree No. 1/2003 on the establishment of Central Irian Jaya and West Irian Jaya provinces, as well as the creation of Paniai, Mimika and Puncak Jaya regencies and Sorong mayoralty. The decree, issued by President Megawati Soekarnoputri on January 27, 2003, was a follow-up to law No.
45/1999 on the same issue. Under law No. 45/1999, Papua was already divided into three provinces: Papua, which covers the area along the border it shares with Papua New Guinea, including provincial capital Jayapura in the north, Wamena in the center and Merauke in the south; Central Irian Jaya, which covers Biak, Serui, Enarotali, Mulia, Nabire and Timika; and West Irian Jaya, which covers Sorong, Manukwari and Fak-fak.
Following the enactment of the law in 1999, which many saw as an attempt to weaken the secessionist movement in the province, students and civil society activists in Papua staged street rallies to protest the ruling. The protests peaked with the occupation of the Papua Governor's office in Jayapura for three days. The protests prompted the Papua legislature to hold a plenary meeting and issue decree No. 11/1999 rejecting the splitting of Papua into three provinces. The government later issued a decree delaying the implementation of law No.
45/1999. John said the legislature would once again send DPRD I decree No. 11/1999 to the central government to remind President Megawati that Papuans were still opposed to the plan to create the new provinces. He added that the local legislature, the governor and students, as well as civil society activists, would set up a team to analyze the decree and prepare to file a judicial review with the Supreme Court against the ruling.
He accused President Megawati of deceiving the Papuans by splitting up the province, despite an earlier understanding that the province would not be split until the Papuans were ready to fill the additional positions which would be created in the bureaucracy. "When DPRD members and Governor [J.P. Solossa] met with President Megawati in Jakarta, she told us that the new provinces would not be created unless the Papuans themselves were ready and requesting it. Now that she has issued the decree, she is cheating us," John said. He did not say that he himself had met with Megawati. He stressed that Papuans were not opposed to the idea of splitting the province, "but let the people decide what they want. "We have been cheated repeatedly, and now we are not only cheated, but also intimidated," John said without elaborating.
Over 2,000 students from a total of 12 universities and other higher learning institutes in Jayapura, Abepura and Sentani detained a truck convoy from Abepura, some eight kilometers outside the provincial capital, to Jayapura, protesting the central government's decision to split up and establish several regencies and a mayoralty in Papua province.
"We want the central government to revoke its decision to accelerate the establishment of Central and West Irian Jaya provinces," said John Baransano, senate chairman of the Abepura- based Protestant theological school, STT I.S. Kijne. The protesters also charged that presidential decree No. 1/2003 contradicted law No. 21/2001 on Papua's special autonomy status, especially article 76, which stipulates that the establishment of new provinces in Papua should be conducted with the approval of the Papua People's Assembly (MRP) and the Papua House of Representatives (DPRP), after seriously taking into account socio-cultural unity, the readiness of human resources, and economic ability, as well as future development.
The MRP has not yet been established, although the Papua legislature submitted the draft of a ruling on the establishment of MRP to the central government six months ago, which remains unsigned for unknown reasons.
The government granted special autonomy status to Papua in 2002 to appease indigenous people who had long harbored resentment over development policies, which they considered to have marginalized Papuans. A minority secessionist movement has been fighting for Papuan independence since the 1960s.
Jakarta Post - February 10, 2003
Jakarta -- About one thousand students from various universities in the Papua capital of Jayapura held a rally Monday to protest the government's decision to divide the province into three, Antara reported.
Gathered in front of the Papua council building, the students said the move would increase criminal activity in the resource- rich, but less developed province. Some students carried banners which read, "It Is Untimely to Separate Us", "Madame Mega, Do Not Separate Us With Your Decree", and "President has been Pitting Us against One Another".
Separately, about one hundred Papuan students in Jakarta staged similar protests at the office of the Coordinating Ministry of Security and Political Affairs.
The government last week issued Presidential Decree No 1/2003 in a bid to implement Law No 45/1999 over the establishment of West Irian Jaya, Central Irian Jaya and Papua provinces, as well as Paniai, Puncak Jaya and Mimika districts. The central government claimed that Papua -- three-and-a-half times larger than Java -- was just too large to be managed by one provincial administration.
Radio New Zealand - February 12, 2003
The Free Papua Movement's representative in Vanuatu, Andy Ayamiseba, says the Indonesian plan to split Papua province into three is aimed at crushing the independence movement.
Last month, President Megawati Sukarnoputri signed a decree to go ahead with the division which the government says is necessary because it is impossible for one governor to administer the current number of districts.
There has been strong local opposition to the plan which Mr Ayamiseba says both breaches the Indonesian constitution and contradicts its policy of special autonomy for Papua. He says the division is aimed at creating discord among Papuans.
"The whole idea behind this is just to divide and rule. Now they were thinking that by dividing the province in three then they will have the pros and the contrast and then they leave to us to fight among ourselves so that they could by means of that disrupt the concentration of bringing a united West Papuan achieving more international support."
| Anti-war movement |
Straits Times - February 15, 2003
Robert Go, Jakarta -- The chief of Indonesia's largest Muslim organisation has warned that an attack on Iraq would spark street riots and the resurgence of radicalism in the world's most populous nation.
Cleric Hasyim Muzadi, head of the moderate and 60-million-strong Muslim organisation Nahdlatul Ulama (NU), said during a visit to Canberra earlier this week: "The war is very dangerous for all of us. An attack against Iraq will give momentum to and help fundamentalists enlarge their movement in Indonesia. There will be riots."
His views came as Indonesia signalled its strongest opposition yet to a US-led war against Iraq, saying it fully supported the proposal to allow United Nations inspectors to complete their work.
The Foreign Ministry said yesterday: "The strengthening of the inspection team would send a powerful signal of the international community's common sense of purpose in urgently addressing the question of Iraq in an effective, yet peaceful way.
"Indonesia remains steadfast in its principled view that the question of Iraq must be dealt with through the United Nations." Other Muslim groups have aired views similar to NU's, causing concern.
Observers fear the demonstrations would not only be targeted at the interests and citizens of the US and its allies but could also pose serious political problems for Ms Megawati Sukarnoputri's government, coming at a time when its relationship with Washington is looking up.
A New York Times report said US envoy to Jakarta Ralph Boyce had lavished praise on Indonesia's anti-terrorism efforts.
A Western diplomat told The Straits Times: "The general feeling is Indonesia has done much better when it comes to fighting terror.
"We feel the security situation is much improved after Bali, and the government deserves credit for that." But on getting Indonesia to join the campaign against Iraq, Washington did not seem to be making headway.
Indonesia's position on Iraq is dominated by warnings of possible street riots following an attack against Iraq.
As Mr Hasyim said, an attack would be a golden opportunity for radical fundamentalists to gain more support.
Riots would weaken Indonesia's economic prospects and challenge Ms Megawati's government. Some already feel she is too easily pushed around by the US and not pro-Islam enough.
Jakarta Post - February 9, 2003
Thousands of Indonesians hit the streets of Jakarta on Sunday, staging a peaceful demonstration against the looming US-led war on Iraq.
Organized by the relatively small Justice Party (Partai Keadilan), it was clearly the biggest ever anti-American protest in Indonesia, involving students, Muslim activists and families carrying babies.
The exact number of protesters was unclear. Some local media reports put the number at about 100,000, while the Associated Press said there were "at least 50,000" protesters.
State news agency Antara news agency said there were "tens of thousands" of people involved in the rally, but Reuters quoted observers as saying the crowd was closer to 7,000 when it marched past the US Embassy.
The protesters displayed banners with slogans such as "Stop War, Save Iraq", "No More Blood", "Save Peace and Humanity", "Bush's War Against Iraq Equals State Terrorism" and "No More Blood For Oil".
The protest commenced in Central Jakarta at the Hotel Indonesia roundabout, near the British Embassy, and then moved to the US Embassy, where police had tightened security. The demonstrators remained peaceful and dispersed shortly after midday for prayers at the nearby Istiqlal Mosque.
Indonesia is strongly opposed to a US-led strike on Iraq as the United Nations has not approved such action. Muslim leaders and democracy activists alike have condemned US President George W. Bush for threatening to wage war on Iraq. They say Bush is more dangerous than Iraqi leader Saddam Hussein as an outbreak of war could result in thousands of Muslim deaths.
"It seems that US President George W. Bush is afraid of losing face if he fails to attack Iraq," Justice Party chief Hidayat Nur Wahid was quoted as saying by AP. "The attack is a crime against humanity which should be protected by the international communities," he said.
The government on Thursday said evidence presented by US Secretary of State Colin Powell on Iraq's lack of compliance with UN weapons inspectors was not sufficient justification for an invasion.
Foreign Affairs Minister Hassan Wirajuda said Powell's presentation to the UN Security Council demonstrated the need for more work by weapons inspectors, not unilateral action.
"For Indonesia, the intelligence information conveyed by the US has an indicative nature which requires further verification by the UN inspection team," he was quoted as saying by Reuters.
"Indonesia supports the extension of the UN inspection mission and leaving the Security Council to judge whether the report can give enough reason or no reason at all for imposing a sanction on Iraq," he added.
The peaceful nature of Sunday's protest was seen by some observers as evidence that Westerners in Indonesia are unlikely to be threatened in the event of a US-led war on Iraq.
But some analysts warn that military and political factions seeking to destabilize the administration of President Megawati Sukarnoputri could hire former members of radical Islamic militia groups, such as the Islamic Defenders' Front (FPI) and Laskar Jihad, to attack Westerners and/or foreign interests if the US commences military operations against Iraq.
| Government & politics |
Jakarta Post - February 15, 2003
Ridwan Max Sijabat, Jakarta -- Stealing the nomination start, the Golkar Party, a political machine that backed the former, repressive New Order regime, has nominated five political figures in its race to return to power in 2004, from whom one will be selected as the party's presidential candidate.
Party Chairman Akbar Tandjung revealed to the press on Friday that a team set up to select the Golkar presidential candidate has nominated Coordinating Minister for People's Welfare Jusuf Kalla, Yogyakarta Governor Sultan Hamengkubuwono X, Minister of Transportation Agum Gumelar, former defense minister Wiranto, and Coordinating Minister for Political and Security Affairs Susilo Bambang Yudhoyono as possible candidates.
"Of the five, the selection team jointly led by Slamet Effendy Yusuf and Mahadi Sinambela, will select only one, who will be put forth as the party's candidate in the next presidential race," he said.
Acting upon its political experience gained during the 32-year New Order regime, Golkar tried to get a head start in the presidential campaign by introducing relatively fresh figures, who are expected to repair the party's badly tarnished image.
Kalla, who was expected to raise political support in the country's eastern region, confirmed his presidential candidacy and said he was preparing himself for the race.
Agum and Susilo, two military figures, were expected to be snatched up by other political parties as presidential candidates.
Many political analysts doubt that the sultan would accept his nomination by Golkar, because he represents all tiers of society through his current appointment as governor and his status as king.
Analysts have also said that Golkar would be politically overburdened if it nominated Wiranto, who was closely linked to former president Soeharto and the 1999 East Timor riots that claimed hundreds of lives.
Akbar implicitly conceded that the absence of his name on the list had to do with his corruption conviction as ruled by verdict of the Central Jakarta District Court, which sentenced him to three years' imprisonment, and upheld by the Jakarta High Court. He and his party seemed reluctant to take the risk of nominating him, as there is little chance of the Supreme Court accepting his appeal.
Aside from the capabilities and credibility of the five nominees, Golkar was also putting its own credibility to the test in the first direct presidential election. Political analysts said that Golkar was assessing its popularity by naming the five prospective presidential candidates.
The majority of Indonesians, as well as pro-reform and pro- democracy groups, still feel traumatized by, and antagonistic towards, former president Soeharto's dictatorial regime, which had the full support of Golkar and the military for over three decades.
The presence of Soeharto loyalists in Golkar could be a deterrent for voters to vote for the party and its candidate in the 2004 elections.
However, whoever Golkar's candidate, he is certain to face incumbent President Megawati Soekarnoputri, who almost certainly will be put forth by the Indonesian Democratic Party of Struggle (PDI Perjuangan) as its presidential hopeful.
Jakarta Post - February 15, 2003
Kurniawan Hari, Jakarta -- Six of the largest political parties qualified for the general election scheduled for 2004 following the House of Representatives approval of electoral threshold on Friday.
The decision dealt a major blow to over 200 minor and newly born parties as they will have to set up coalitions or join parties which have secured the approval to contest in the election.
The ruling was agreed upon on Friday during a hearing between home minister Hari Sabarno and the House of Representatives special committee deliberating the election bill.
Mutammimul 'Ula from the Justice Party (PK) expressed disagreement with the ruling, but the bigger factions insisted on approving Article 142 on electoral threshold.
The article stipulates that political parties which won at least 2 percent of the House seats following the 1999 election qualify for the next elections.
There were 500 House seats up for grabs in 1999, meaning only those who won at least 10 seats survive the cut. They are the Indonesian Democratic Party of Struggle (PDI Perjuangan), Golkar Party, United Development Party (PPP), National Awakening Party (PKB), National Mandate Party (PAN), and Crescent Star Party (PBB), which won 153, 120, 58, 51, 34, and 13 seats respectively.
Mutammimul, whose party garnered only seven seats, said the ruling was unfair. But the Muslim-based party, which joins PAN in the Reform faction, could not change the agreement.
The election bill, expected to be endorsed on February 18, also poses tougher requirements for political parties to contest the elections.
Among other things, political parties must open an executive board in chapters in at least two-thirds of the total number of provinces, and in two-thirds of the regencies of each province. Each political party must also have at least 1,000 members in each regional chapter.
Under the new requirements, political parties with less than 2 percent seats must merge with other parties, otherwise they are not allowed to contest in the elections.
Apart from approving the issue on political contestants, the House's committee unanimously agreed to adopt a combination of a proportional system and an open-list of candidates.
The two issues were among many other articles agreed upon at the meeting. Agustin Teras Narang who presided over the meeting disclosed that there were still 22 unresolved items.
Legislators Ali Masykur Musa of PKB and Hamdan Zoelva of PBB appealed to fellow legislators to bring the unresolved items to a plenary session to be voted on, but other factions wanted to negotiate on those issues.
Among the unresolved items are the variance of the electoral system which includes the number of legislative seats and the constituency; the institution which must be held accountable for the elections; and the mechanism of the appointment of General Elections Commission (KPU) general secretary.
Legislators agreed to have a lobbying session on Saturday and would convene for another hearing with the minister before endorsement on February 18. Key articles in the elections bill Article 6: Elections for members of House, Provincial Legislature, Regency Legislature adopt proportional system and open-list of candidates.
Article 78: Personal donations and institutional donations for the campaign must not exceed Rp 100 million and Rp 750 million respectively.
Article 80: Election contestants are not allowed to receive donations from foreign agencies, unidentified donors, government or state enterprises for the campaign.
Article 119: A decision to delay elections is issued by the President after hearing recommendations from KPU if the elections cannot take place in 40 percent of provinces or 50 percent of registered voters do not vote.
Article 137-141: Penalties for violations of this law vary from 15 days to 3 years imprisonment or Rp 100,000 to Rp 1 billion in fines.
Laksamana.Net - February 9, 2003
It was a palace insider, Brutus, who stabbed Julius Caesar from behind, not any external enemy. President Megawati Sukarnoputri also knows that it is highly likely the organized action to pull down her government comes not from outside, but from within her inner circle.
Waves of anti-Megawati street demonstrations staged by student demonstrations since early January have disturbed many Megawati loyalists within her Indonesian Democratic Party of Struggle (PDI-P).
Megawati's husband Taufik Kiemas and PDIP members within his political faction, such as Mangara Siahaan and Panda Nababan, attended Saturday the 30th anniversary of the party at Bekasi, east of Jakarta.
The rally, in which thousands of PDI-P supporters turned out, was officially touted as a part of the consolidation process in the run-up to the 2004 general elections, but was also used to challenge political figures suspected as the masterminds behind the street demonstrations.
Panda Nababan repeated warnings of the alleged involvement of former Armed Forces Commander Wiranto, former Finance Minister Fuad Bawazier, and former Cooperative Minister Adi Sasono as the men to watch.
Panda Nababan recalled Megawati's direction to the party to stay cool in the face of provocation, but added his own slant. "When party chairwoman Megawati instructed PDI-P cadres to stay cool, this means we have to be sensitive to our surrounding environment.
"We already know those who want to create disturbance," said Nababan, citing Wiranto, Adi Sasono and Fuad Bawazier as the troublemakers.
The scheme of the Kiemas group is apparently to provoke the anti-Megawati forces in what one party source says is a specific agenda of escalating the polarization between the nationalists and the Muslim groups.
Kiemas is said to have enjoyed a close connection with the military and intelligence community since the Suharto era and at one time was identified as an agent reporting to Maj. Gen. (retired) Nichlany Sudardjo.
According to Richard Tanter in his work Intelligence Agencies and the Third World, A Case Study of Indonesia, Nichlany was identified as Deputy II/operations in 1969-1972 and then Assistant Military Attache to the United States in 1973.
This connection suggests that Kiemas is still working with the military ultra-nationalist group who want to aggravate the battle between Megawati and the Islamic forces.
Within the former intelligence body BAKIN, Nichlany was identified as a close ally of General Ali Murtopo and Benny Murdani. Both generals are branded by the Muslim forces as the supporters of the Chinese Catholic groups.
Mobilizing pro-Megawati supporters on to the street would provoke the anti-Megawati movement to radicalize demonstrations, with the likelihood of physical clashes between the pro- and contra-Mega demonstrators.
On the same day of the PDI-P mass gathering at Bekasi, hundreds of motorbike taxi drivers staged demonstrations supporting Megawati and Vice President Hamzah Haz as the legitimate government.
It was later revealed that each participant was paid between Rp30,000 and Rp60,000 to take part in the pro-government demonstration. Some admitted that they were asked by "friends" to demonstrate, but could not identify who these friends were or who they might represent.
Few of the party rank and file joined this demonstration, suggesting that Kiemas failed to mobilize grassroots party cadres to overt and potentially violent action. This suggested that Megawati still holds sway over the rank and file of the party.
The State Secretariat led by State Secretary Bambang Kesowo represents another vulnerable element within her government.
Still fresh in public mind is last year's questioning of Kesowo's alleged involvement in misuse of Presidential Assistance Funds for upgrading police housing. Although a special team of parliament declared Kesowo and the State Secretariat to be not implicated in the scandal, the public was left with the impression that the powerful institution operates as a state within a state, and is effectively beyond the control of the President.
Sources close to Megawati add that her refusal to meet with student activists or the press followed advice from her inner circle to stay aloof.
This provided grist for the mill of Eros Djarot, chairman of the Bung Karno Nationalist Party (PNBK) and a former close advisor to Megawati, when he said that the maneuvers to topple Megawati from within her own circle appeared more coordinated and systematic than those from outside government.
| Corruption/collusion/nepotism |
Reuters - February 7, 2003
Joanne Collins, Jakarta -- A UN investigator examining Indonesia's legal system called on the government to take urgent and drastic action to tackle corruption in the country's judiciary, or see badly needed investment dwindle.
"Public confidence in the government and its administration of justice is seriously undermined; there is a risk that the public will ... take justice into their own hands unless something is urgently done," UN special rapporteur Param Cumaraswamy said in a report issued this week.
The report on the independence of judges and lawyers in Indonesia also said future prosecutions over the 1999 East Timor bloodshed needed to reflect international standards and the government should be encouraged to develop a plan to ensure that happened.
"The several acquittals before the Ad Hoc Human Rights Court for East Timor is not surprising," the report said, referring to a string of trials over violence surrounding East Timor's vote to break from former ruler Indonesia. Of 15 suspects who have received verdicts thus far, only one military officer and two civilians have been convicted in the Jakarta-based court.
The report follows a 10-day fact-finding mission by Cumaraswamy to Indonesia last July when he said the country's legal system was among the worst he had seen and that President Megawati Sukarnoputri's government lacked the political will to root out graft. Those comments angered Indonesia's justice minister who said at the time that Cumaraswamy had exceeded his authority during the mission.
A spokesman for Justice Minister Yusril Ihza Mahendra declined immediate comment on the report on Friday. Cumaraswamy, a former commercial lawyer from Malaysia, said in the report it was "quite amazing that during his mission and after, no one was able to inform him as to how many lawyers there are in Indonesia." He also said authorities declined to grant him access to Aceh, Papua and the Moluccas to see how their justice systems worked.
Aceh and Papua are centres of separatist activity and the Moluccas have been hit by sectarian violence. The government told Cumaraswamy his security could not be guaranteed in the areas.
Key in a series of recommendations by Cumaraswamy were calls for Indonesia's constitution to be amended to provide for an independent judiciary and impartial prosecutory service, for the Chief Justice to call on corrupt judges to resign and that the government increase its budget allocation to finance legal reforms.
Legal uncertainty and problems with the court and justice system have been cited by many analysts as key reasons many foreign investors have been reluctant to put money into the world's fourth most populous country, still trying to get back on its feet after the Asian economic crisis in the late 1990s. "If corruption is not arrested and excised, the negative impact on the flow of investments will continue," Cumaraswamy's report said.
Broad foreign investment pledges slumped 35 percent to $9.74 billion last year compared with the previous year. But Indonesia has won praise over its legal reform efforts from some analysts who say court cases against several high profile and powerful Indonesians reflected the government's resolve to improve the system. And Cumaraswamy said he appreciated "the willingness and openness of the government" and others "to discuss issues and problems affecting their respective institutions and agencies."
| Environment |
Asia Times - February 13, 2003
Bogor -- Floods and killer landslides that followed each other in quick succession in Indonesia -- flood warnings reached a peak this month -- are the latest reminders that the country has a long way to go in correcting past environmental mistakes.
Heavy rainfall in different parts of the archipelago, including Java, southern Sumatra, Kalimantan, and southern and southeastern Sulawesi, has led to the dislocation of tens of thousands of people.
While the floods are not surprising, government officials and activists are saying their impact has been made worse by Indonesia's damaged environment, especially due to deforestation.
The huge gap between the annual demand for wood, which is placed at 60 million cubic meters a year by the Forestry Ministry, and the country's timber production -- 12 million cubic meters per year -- also plays a key part in the growing problem. The gap between supply and demand is met by widespread and devastating illegal logging.
"This gap has pushed up timber theft and driven the expansion of logging areas into conservation forest," said Togu Manurung, director of Forest Watch Indonesia (FWI), the national chapter of a global, independent forest monitoring network.
One example illustrates how that hurts Indonesia -- the Gunung Palung National Park in West Kalimantan is a rainforest and one of the last safe havens for orangutans. According to Forest Watch, 80 percent of the national park has been illegally logged.
Here in the capital, many fear a repeat of last year's massive flooding, the worst in decades. Jakarta Governor Sutiyoso said there is unlikely to be repeat of that, but said heavy rains and high tides were likely to peak on February 20.
In Bandung, West Java, local officials are clear about why their area got major floods -- and are livid about it. Endang Sudradjat, chief of the local forestry office, says the central government's interference in forestry affairs -- allowing abusive firms to keep logging -- hurts the environment further.
"The landslides and floods that hit several areas in the province over the last two weeks have a lot to do with the continued deforestation and rampant logging carried out by PT Pertuhani, which should no longer have the authority to slash trees in forest areas in the province," he told provincial officials.
He said that the central government's forestry ministry gave the firm authority to manage forests, when this power is now with the local governments. Likewise, he said that central forestry officials were ignoring the provincial administration's policy of a moratorium on logging for three years.
In the province of Riau, the local chapter of Koham (Human Rights Commission) is to sue 11 plywood and pulp and paper companies for destroying the forests, which led to the flooding that claimed at least five lives there as of last week.
The latest spate of natural disasters caused little surprise among non-government organizations (NGOs), which had recently issued a joint statement scathing in its criticism: "Illegal logging and corruption have changed from bad to worse; forest destruction intensifies ... but the Indonesian government does not learn from those occurrences."
Before the recent disasters, the government's forestry policies came under fire during a meeting of Indonesia's donors in late January, where activists demanded more action by both Jakarta -- and its donors -- to address the problem.
Reports discussed during that meeting said that "... the amount of forest cover lost every seven days is comparable to the area of Greater Jakarta".
Among its members of this group, called the Consultative Group on Indonesia (CGI), are the Indonesian government, World Bank, International Monetary Fund, Asian Development Bank, governments of the Netherlands, Japan, United States, Britain and Australia, and United Nations agencies. Activists say that the donors could use their clout to get the Indonesian government to improve its management of the environment, but that they are not doing this.
Law and regulations have been largely ineffectual in preventing deforestation due to the corruption that ties together forestry officials, police and the wood-based industry, critics say. Thus, "we see international pressure as the most effective way", said Manurung.
Arbi Valentinus of Telapak, a Bogor-based NGO that focuses on the timber trade, says that in effect, "The government and the CGI have used taxpayers' money and loans from foreign donors to help the companies continue to destroy forests illegally."
In fact, data from the Center For International Forestry Research (CIFOR) and Telapak show that the Indonesian government has bailed out companies in the forestry industry to the extent of Rp34 trillion (about US$3.8 billion) over three years to allow them to continue exploiting forests.
A big debtor is forestry tycoon Mohamad "Bob" Hasan -- charged with embezzling state funds and now imprisoned for corruption -- and the Sinar Mas Group, which is owned by Eka Cipta Wijaya, a crony of former Indonesian president Suharto.
These companies, now under the control of the Indonesia Banking Restructuring Agency (IBRA), have a combined production capacity of some 6.1 million cubic meters of timber. The official estimate of the timber available to them this year is only 3.5 million cubic meters.
"This means the remaining timber needed to meet their demands comes from illegal loggers, and that the government helps companies that are supporting illegal logging," said CIFOR's Bambang Setiono.
Since IBRA's aim is to sell these companies to any investors, including old owners, the fear is that once these companies are sold and attract new investors, they will be allowed to get new lines of credit from the Bank of Indonesia.
But CIFOR is urging the Indonesian government to delay the sale of loans owed by forestry companies at a large discount, saying this will allow their former owners or associates to buy them back, get new loans and further fuel illegal logging.
| Health & education |
Asia Times - February 15, 2003
Bill Guerin -- Indonesia has some 200 pharmaceutical manufacturers and 1,600 pharmaceutical distributors. Several international pharmaceutical companies have manufacturing plants and offices in Indonesia, including Astra Zeneca, Bayer, Glaxo Wellcome and Schering. State-owned pharmaceutical giants PT Indofarma and PT Kimia dominate the domestic market. There are four state-owned pharmaceutical companies in Indonesia, but only these two are candidates for partial privatization.
State Minister for State Enterprises Laksamana Sukardi announced this week that because of the lack of bidders for the recent offer of a 46 percent stake in Indofarma, the tender process will be started all over again. Sunny Corp from China, Washington Soul Pattison Ltd from Australia and Korindo from South Korea were the only three listed consortia bidding for Indofarma out of a total of 40 who had asked for tender documents. Two of the three pulled out of the final bidding process.
Indofarma is among four state companies scheduled for sale last year as part of the privatization program, delayed because of poor market conditions and lack of investor interest. Last February Sukardi said the government would not divest a majority holding in PT Indofarma because it had a "public-service obligation" to provide generic medicines at low prices. Around the same time, Kimia Farma withdrew from an earlier plan to set up a joint-venture company with STADA Arzneimittel AG to sell generic drugs in Indonesia, citing uncertainty over Jakarta's privatization strategy.
Previously the government plan was to retain majority control of Indofarma because it was responsible for producing generic drugs for domestic consumption but, after the move by Indofarma's politically well-connected president director, Gunawan Pranoto, to take up the same baton at Kimia Farma, the government changed tack and announced it would sell a majority 51 percent stake in PT Indofarma, the No 2 pharmaceutical company, and retain majority control of the largest pharmaceutical manufacturer, PT Kimia Farma.
A month later it was announced that a majority holding in Indofarma would be offered after all, though the government would still maintain majority ownership of Kimia Farma. The government apparently now plans to sell only 39 percent of its 91 percent holding in Kimia Farma and, once the sales are complete, it will retain a 20 percent stake in Indosat, 29.7 percent of Indofarma, and 51.3 percent of Kimia Farma. The sales of PT Indofarma and PT Kimia Farma have been included in successive Letters of Intent (LoIs) signed by the International Monetary Fund and the government.
Indonesia's No 2 drug maker has 28 branches covering the whole archipelago and churns out 4 billion tablets and 500 million capsules of generic drugs every year together with patented herbal medicine products and supplementary health-care items.
Indofarma's unaudited sales in 2002 increased by 14 percent to Rp700 billion ($78.65 million) from Rp602 billion in 2001 but net profit fell by an estimated 16 percent to Rp100 billion in 2002 from Rp120 billion in 2001 due to rising production costs. The company has targeted sales of Rp800 billion for 2003 and will spend Rp50 billion on a new manufacturing unit in South Sulawesi to increase production.
Indofarma's new president director, Edy Pramono, criticized the government for dragging its feet on the Indofarma divestment, before this week's announcement that there were no buyers anyway. He said the company was eyeing total capital expenditure of Rp300 billion to increase production in future and was hopeful that net profit could increase to Rp200 billion this year. Indofarma expects the government to fix a definite schedule for the company's privatization because delays in the process over the past two years were discouraging foreign investors, he said.
Last August the cash-strapped government authorized the divestment of a maximum stake of 51 percent in Indofarma, up from its previous14 percent. Analysts had said a 14 percent stake was too small to entice investors. The government currently owns 80.73 percent of Indofarma after floating the firm in 2001. After a showbiz-style initial offer of Indofarma shares made in Surabaya, the shares lost ground to close at Rp245 from the eventual initial public offering (IPO) price of Rp250.
The company planned to offer up to 1.462 billion shares during the IPO, 906.25 billion government shares and up to 556.09 billion new shares were to be offered at a price of between Rp225 and Rp415 per share.
The onset of the Asian financial crisis in late 1997 quickly brought the Indonesian pharmaceutical sector to a grinding halt. The rupiah dropped dramatically and lost 75 percent of its value in the early stages. By 1998 it had lost nearly 80 percent of its 1997 value. Given an annual inflation rate of 10 percent at the end of that year, the rupiah's real depreciation then was one of the biggest country currency devaluations in the postwar era. Interest rates went through the roof, at one time reaching 30 percent, and to cap it all, foreign banks refused to honor letters of credit from Indonesian banks. To this day almost 95 percent of raw materials used in the production of medicines are imported, and in the worst days of the crisis local pharmaceutical producers were unable to import their basic needs.
By early 1998, the cost of producing drugs had more than doubled and retail drug prices were up by over 400 percent. World Bank surveys showed that drug prices increased by 200-300 percent between November 1997 and March 1998. A dangerously low four months of raw material stock sparked off a government subsidy program for raw materials.
By the time production had resumed, consumers had almost completely switched to using locally produced generics or herbal medicines, leaving the foreign-produced or imported brands high and dry, a situation not much different from today.
It took the government until 2001 to come up with a plan to launch branded medicines at cheaper prices, but this met widespread resistance from doctors, pharmacists, and some legislators. Both the Indonesian Doctors Association and Indonesian Pharmaceuticals Watch claimed the government was trespassing on the domain of other professions, as the Food and Drug Supervisory Board (BPOM) no longer had the authority to set drug prices.
The plan was to produce and distribute 20 medicines, ranging from antibiotics to analgesics, under a project run totally by Indofarma on the sound premise that more efficient production methods would be able to reduce prices of the drugs by 50-60 percent in comparison with similar patented drugs or other brands. The plan had been announced by the head of BPOM, Sampurno.
The project also meant that the government would not subsidize raw material imports and would be able to wash its hands of complaints from other producers that expensive drug prices were due to the cost of imported drugs components. Amid criticisms that this was sheer protectionism, and akin to giving a monopoly to Indofarma, the government promised similar facility would also be offered to other pharmaceutical companies, both state-owned and privately owned.
Sampurno, it should be noted, is also one of the commissioners of Indofarma, giving rise to fears that the policy was created simply to help Indofarma promote its new products.
House of Representatives member Ahmad Sanusi Tambunan from Commission VII, which supervises, among other issues, health, reminded the doctors not to allow themselves be made scapegoats for the government's failure to make drugs more affordable.
Privatization was also intended to restructure strategic state industries and enable them to perform well in the face of increased global competition. Prices are certainly in Indonesians' favor in spite of the volatility of the past few years. "Our products are the cheapest in Asia after India and China. So we will certainly be able to compete on the ASEAN market," said Indonesian Pharmaceutical Companies Association chairman Anthony Ch Sunarjo, adding that the local pharmaceutical industry had been anticipating this year's ASEAN Free Trade Association (AFTA) with some enthusiasm.
The main fear is that other Association of Southeast Asian Nations member countries would seek to bar Indonesian pharmaceutical products from entering their markets by setting up various non-tariff barriers, including imposing complicated requirements for Indonesian drug producers to register their products in their respective countries.
"I believe ASEAN member countries, which remain unprepared for AFTA, will do their utmost to create various other kinds of barriers to block the entry of our pharmaceutical products," he said. Indonesian products remain competitive in the global market and the country exports to no fewer than 59 countries.
As the fourth-most-populous nation in the world, the potential of the domestic market is enormous, though, as in almost every other sector, smuggling and counterfeiting grossly distort the market.
Low per capita medicine consumption and thus low product demand, as well as the need for a substantial research budget, have meant that local companies have historically been limited to the licensing, formulation, distribution and marketing of drugs. Many manufacturers have small operations, each producing a limited range of products. They lack the financial resources and the technical expertise for original research and, unable to create new drugs, they either manufacture under license from foreign drug companies, they produce and distribute generic medicines ("me-too drugs"), or simply copy from foreign companies.
Despite the existence of a seemingly comprehensive system of monitoring by the Department of Health, many local producers still package innocuous, harmless powder and sell it as branded medicine to unsuspecting customers. Although the fake products are usually sold at lower prices than the genuine article, they are, of course, completely ineffective. Consequently, the brand image of the legitimate holder of the brand name suffers when the fake product fails to cure a patient's illness. Long accustomed to self-medication with local herbal medicine, jamu, consumers often do the same with pharmaceutical products.
Prior to the economic downturn, the improved health and increased per capita income of Indonesians led to increased demands to provide better-quality health care and health-care products.
Indonesia's consumption of medicine was estimated at US$4 per capita in 2000. This was small compared with other ASEAN countries (the Philippines $6, Thailand $11, and Malaysia $11), but indicative of a market mismatch between the purchasing power of consumers and the high price of such products. There are still an estimated 1,500 pharmaceutical distributors in Indonesia, but only about 20 have national networks. Kimia Farma, like Indofarma, services the whole country through a network of branches and agencies, though the former, with its PT Kimia Farma Apotik, reaches out all the way to the consumer.
The sector is still very much over-regulated and bureaucratic. Distribution and storage are hampered by the sheer size of the country and its high humidity.
Research and development funds account for less than 1 percent of the total budget allocated by Indonesian pharmaceutical firms.
Under the AFTA scheme, the flows of pharmaceutical products within the region will be freed from tariff and non-tariff barriers. The total foreign investment in the pharmaceutical sectors among ASEAN countries, except for Singapore, has achieved of between $2 billion and $2.3 billion over the past 10 years.
Legislators are now saying that selling national assets in such an unfavorable investment climate is a bad move and are pressing the government to cancel the privatization program until at least after the 2004 elections. They are calling for a special law on privatization and the sale of state assets.
Minister of Health Achmad Suyudi is revamping the national health system, virtually unchanged since 1984, thus helping to provide improved quality and affordability to health services for all levels of society,
Regional autonomy and a paradigm shift in health development have increased the pressure on the government to shift to a bottom-up scheme, which would involve the participation of the buying (and voting) public and move nearer to the day when all Indonesians can expect basic health care as one of their rights. All this costs a great deal of money, and any paradigm that puts the health-care budget in a category of investment for the future, rather than a drag on the state budget, will be a long time coming.
The bottom line, succinctly put by Anthony Sunarjo, is that "as long as the people have to pay their health care alone, without a credible insurance scheme or without the elimination of value added tax on the drugs, any price is expensive".
| Economy & investment |
Asia Times - February 8, 2003
Bill Guerin -- Jakarta has officially announced that regional governments can now borrow from foreign sources if certain conditions are met.
Regional administrations can qualify for central government permission to borrow from external sources as long as they fulfill the criteria. They must have additional financing sources and have no outstanding debts. If they have outstanding debts, the debts must have already been budgeted for and the administration must be committed to repaying them.The total amount borrowed should be no more than an amount equal to 75 percent of their previous year's budget.
The government's annual budget has had to provide for the allocation and transfer of contingency funds to local governments to avoid any fiscal gap in the regions and to ensure that the quality of public services is maintained throughout what is still seen as a transition period.
Regional governments receive support from the state budget in the form of a general allocation fund, known as DAU, and a specific allocation fund, really an emergency instrument but given every year, called DAK. By law, 25 percent of all national domestic revenues -- excluding foreign loans, export revenues and the like -- must be given via DAK directly to districts, which get the money in the form of block grants.
Revenue from natural resources such as oil, gas, forestry, etc is split between the central government and the producing regions under a revenue-sharing formula. Oil and gas-producing regions get 30 percent revenue from their gas production, and 15 percent from oil. In the case of other resources that are not mined, such as forests and fisheries, those regions retain 80 percent of the income.
Last, but certainly not least, the borrowing should be approved by the House of Regional Representatives (Dewan Perwakilan Daerah). This body, a local legislative assembly, is similar to the US Senate and was brought into existence after an amendment to the constitution. The assembly consists of an equal number of directly elected representatives from each province.
The new policy is intended to boost development and increase the quality of public services in the regions and to many will appear eminently sensible, although strangely there has been no official comment from the International Monetary Fund. In earlier days, similar moves were consistently criticized and vetoed by the IMF. The IMF feared that by loosening control, inexperienced regional governments would go on spending sprees and inflate the central government debt even further.
The separation of East Timor and ongoing demands for a referendum in Aceh forced then-president Abdurrahman Wahid to speed up the planned laws governing fiscal decentralization, namely Regional Autonomy Law 22/1999 and Revenue Sharing law 25/1999. The laws were implemented with haste, with little consensus, and with few outside the legislative process even understanding what they were all about.
The IMF was quick to point out glaring contradictions in the newly crafted laws. "Law 22 says the local government can borrow from external sources with approval from the central government ... but Law 25 says the local government can only borrow from the central government," the Fund said at the time.
Wahid, like B J Habibie before him, needed to ensure there could never be a return to the autocracy at the center, as well as act against the threat of a more radical decentralization, ie, a possible breakup of Indonesia. When vice president under Wahid, Megawati Sukarnoputri said the planned autonomy law went against the principle of Indonesia being a unitary state as laid down in the 1945 constitution, which she holds sacrosanct.
Letters of intent since then have included the promise from Jakarta that "to ensure that Indonesia's overall fiscal management is in line with our agreement with the International Monetary Fund ... the central government is committed to prohibiting local governments from borrowing independently to fund their budgets".
Local government officials, of course, are all for the new policy as they say it will give "flexibility" to local budgets.
Ambiguity and technical discrepancies pepper the existing autonomy laws, political issues remain unresolved and Jakarta appears unwilling to believe that local bureaucrats and legislatures have any real capacity to craft budgets, or know how to monitor performance.
However, last month's meeting with the Consultative Group for Indonesia (CGI) and donor groups, Finance Minister Boediono said the DAK allocations for 2003 would be used for development of basic education and health services (as well as infrastructure) but from next year on more attention would be paid to proposals from the regions themselves rather than central government considerations.
Decentralization was designed to empower regional and local authorities to help manage developments in their regions in an effort to help them be more responsive to the needs and desires of the local populations.
Understandably, local governments are after the highest possible local revenues, but demands for more tax revenues and greater financial independence have caused willy-nilly, non-standard income-boosting schemes and regulations. In the early days of the new autonomy, legislators in some regions increased their salaries threefold amid allegations of vote-buying and bribery. Several cases are awaiting judicial process.
Regional governors argued that the law is full of loopholes that can still be used by the central government to continue to wield power over them, but a study by the Research Triangle Institute showed that regional governments created almost 1,000 new taxes and charges during the run-up to and through fiscal year 2001. An estimated 60 percent of these were implemented directly by regional governments -- that is, without central review and, therefore, in direct contradiction of the law.
At the same time as the news on regional borrowing was released, the big guns were being rolled out at a two-day seminar in Jakarta on regional borrowing. Though the Finance Ministry has issued a circular that discourages local banks and regional banks from lending to local governments, the regional administrations want to issue bonds for development financing.
Governors have been lobbying the People's Consultative Assembly (MPR) to push Jakarta to allow them to issue bonds, as an alternative funding source for financing badly needed development programs. They say the pace of economic development in the regions has been slow because of the lack of funding, and cite a "lack of financial commitment" on the part of the central government.
The seminar, officially opened by MPR Speaker Amien Rais, is the latest move by regions to pressure the central government to ease the existing policy that bans regional governments from issuing bonds. The Finance Ministry has long opposed any such idea, but has let it be known that it might be taken more seriously by next year at the earliest.
Bank Indonesia governor Sjahril Sabirin is even less happy. He said that issuing regional bonds was not an ideal policy at this moment, given the dimensions of the national debt burden. Sjahril prefers proper debt management, as he told the seminar. "What this hugely indebted country needs is a good debt-management program, because the huge debts have made investors perceive Indonesia to be a high-risk country in terms of investment," he said.
Regional autonomy, by its very nature, was meant to devolve monetary authority to the provinces. In the old days regions were in the share-out of local and foreign development loans through Bappenas, the National Development Agency, which controlled the national borrowing. The provinces want this authority for the regional legislative assemblies.
In 1999, Wahid's chief economics minister Rizal Ramli temporarily banned local administrations from raising both offshore and domestic loans without getting central government permission first. Four years later, amid different sets of pressure and with the benefit of experience, the Megawati administration will actually allow borrowing on the hope that there is more chance of controlling it. The interest on foreign and domestic debt is a stranglehold that forces Indonesia to seek new loans in a vicious circle that traps the government within a master-servant relationship with the major donors. Does the new paradigm make sense, given the level of existing national debt, which eats up some US$6 billion a year in capital and interest payments?