West Papua

Spotlight on Papua

Jakarta Post Editorial - 26 July 2004

The recent declassification of documents by the US National Security Archive pertaining to the 1969 referendum on Papua has put this vast and resource-rich westernmost province of Indonesia in the spotlight.

The 35-year-old documents say, in effect, that the UN-endorsed referendum was a sham as it excluded most Papuans during the so- called "Act of Free Choice". In sum, the referendum was flawed.

One of the documents was a 1969 report from the American Embassy in Jakarta to the US Department of State, saying that the impending referendum unfolded like a Greek tragedy in which the conclusion was already preordained. Indonesia, it says "cannot and will not permit any resolution other than the continued inclusion of West Irian in Indonesia."

The documents referred to Papua, the western half of Papua New Guinea, as West Papua. Indonesia renamed the province Irian Jaya after the 1969 self-determination vote. Former president Abdurrahman Wahid changed Irian Jaya back to Papua on Dec. 31, 1999.

The Papuans voted unanimously to stay with Indonesia in the August 1969 referendum. The UN endorsed the referendum on Nov. 19 of the same year through its resolution No.2504 in which 80 countries expressed their support and 30 countries abstained.

It should be remembered that when Indonesia gained its independence in 1945, the country comprised more than 400 ethnic groups, encompassing stone-age to modern civilizations. Indonesian leaders believed that the most efficient way to hold the referendum was through the tribal chiefs.

Even today the vast and rugged province, which is 10 times the size of the Netherlands, is still acutely underdeveloped. When the referendum was held some Papuan tribes still lived in stone- age societies.

Language was a big barrier as Indonesian was new in the province and the tribes' dialects were alien to Indonesian officials.

Through the 1960s, the Cold War was in full swing. The US considered it prudent to take sides with Soeharto, an emerging pro-Western army general in Indonesia, to stem the influence of communism in the largest Southeast Asian country. In July 1969, National Security Adviser Henry Kissinger, according to the document, told president Richard Nixon prior to his departure to Indonesia not to raise the issue of Papua with Soeharto.

"You should tell Soeharto that we understand the problems they face in West Irian," Kissinger was quoted as saying in one of the documents.

Business interests danced to this tune. In fact the first foreign company to invest in Indonesia after the 1965 political earthquake that saw Sukarno tumbling from power was the US- based Freeport McMoRan. Thirty years later, the company was sitting atop the biggest gold mine in the world, according to Australian scholar Denise Leith.

We can say many things about the past, but nothing will change the fact that Papua was a legitimate part of Indonesia during those years. There is no way we can turn the clock of history back. The fact remains that the United Nations endorsed the referendum.

Having said this, however, we believe that the government should address the issue of the flaws in the referendum by facing it head-on. It should talk to the Papuans about the issue.

Secondly, the government should abandon its heavy-handed tactics in managing the province. Like people in other troubled regions of the country, the Papuans need no less than total sincerity from the government. A violent approach will never work. If the government promises something, it has to fulfill it. Nothing will shatter the common bond of trust faster than when the government says one thing at one time and another thing at another. When the government offers the province autonomy, it must make sure it honors this promise.

On the international front, the government should anticipate a possible credo emerging from diverse sides on the need for Papuan independence.

The government should prepare adequate diplomatic ammunition to defuse these factions before they become a movement too strong to resist.

The way we look at it, something is brewing on the international front. In March this year, Irish parliamentarians urged UN Secretary General Kofi Annan to review the world body's role in the 1969 referendum, joining South African Archbishop Desmond Tutu and scores of NGOs and European Parliamentarians. On June 28, 2004, nineteen US Senators sent a letter to Annan urging the appointment of a Special Representative to Indonesia to monitor the human rights situation in Papua and Aceh.

This is not to mention some groups in Australia that would like to see an independent Papua.

The government has to work fast. It is simply too costly to sleep on the issue and to pretend that losing another province -- after East Timor in 1999 -- will not hurt the nation.

Papuans need democracy not separatism

Jakarta Post - July 29, 2004

Andri Hadi, Jakarta -- Efforts by certain quarters, within and outside Indonesia, to question the decolonization process in Papua gain a momentum by the declassification of restricted documents in the US recently.

The documents portray the 1969 "Act of Free Choice" (AFC) as a sham, among others because it excluded most Papuans (The Jakarta Post, July 16, 2004). Arguably, this development may provide ammunition to the hands of people pursuing the separatist aspiration in Papua, thus endangering Indonesia's territorial integrity and its democracy. Questioning the decolonization process serves no purpose at all. The main pretext used by certain quarters to meddle in Papua is about upholding and promoting human rights, justice and welfare for the Papuans. Admittedly, these are all important issues that have to be pursued honestly of which the present-day democratic Indonesia serves as the best framework. Hence, justifying separatism is wrong and will lead nowhere in terms of redressing those important grievances.

Law No 21/2001 issued by the Government of Indonesia on Nov. 21, 2001 grants Special Autonomy Status to Papua and represents an honest attempt to give an opportunity for the Papuans to manage their own household. The Law also contains a generous scheme for revenue sharing in which Papua will receive around 80 percent of the money derived from forestry, fishery, taxation, as well as gas, oil and other mining explorations.

For the Indonesians the reintegration of Papua to the fold of the motherland, long denied by the Dutch, has exacted a lot of costs in terms of blood and tears. The Indonesians would therefore consider the duty to defend the Province as an article of faith. The status of the Province of Papua as part of Indonesia is final and was endorsed in 1970 by General Assembly Resolution 2504.

Let us put the record straight: Papua was an integral part of the Netherlands East Indies (NEI). From administrative point of view, the Dutch colonial government administered from Batavia (presently Jakarta) the whole territory of NEI. From territorial point of view, the indivisibility of Papua as part of NEI was recognized in the London Agreement of 1824 between Great Britain and the Netherlands as well as reflected in the 1825 Map of the NEI which places Papua as its easternmost boundary.

When declaring independence, Indonesia's founding fathers refer to the whole territory of NEI as the legitimate territory of Indonesia. This is in line with the principle of "Usi Posidentis" in which the successor state would inherit the whole territorial boundary of a colony. As far as Indonesians are concerned, the 1945 proclamation of independence was in itself an act of self- determination, covering the whole territory of Indonesia from Sabang to Merauke.

Self-determination is a one-off event and in the case of Indonesia, took place in 1945 in terms of Proclamation of Independence by Sukarno and Hatta. As such, all ethnic groups in Indonesia were automatically subsumed into the Republic of Indonesia without even being asked by way of "act of free choice". In this context, the Papuans are "more fortunate" than other ethnic groups in Indonesia simply because they were given the chance to express their choice in 1969.

Furthermore, Indonesia's nationalism is not based on certain ethnicity but possesses the nature of all-inclusiveness. This is the very reason why the concept of "indigenous people" with its possible implication that each group has its own right of self- determination is not applicable in Indonesia's context.

Indonesia embraces a long standing stance that decolonization process should be implemented once and for all for the whole territory of NEI, in the sense that no part of the former colony (i.e. Papua) should be treated differently. This stance -justified as it is in international law -- represents one of the roots of Indonesias irredentist claim over Papua.

It is also to be borne in mind that UN General Assembly Resolution 1514 (1960) concerning the right of decolonization did not mandate the application of the "one man one vote" system as the only way for decolonization process. Most importantly, the resolution underlined that self determination shall not result in a partial or total destruction of sovereignty and territorial integrity of the successor states.

It is important to note that following the adoption of Resolution 1514 (1960), many new states in Africa came into being in the 1960s without resorting to a plebiscite or "one man one vote system". In our immediate region, Sabah and Sarawak were also incorporated into Malaysia in 1963 without direct "one man one vote" plebiscite but by certification of a visiting UN mission that the people in these two regions seemingly did wish to joint the newly established Federation of Malaysia.

The legacy of colonialism has also compounded the application of "one man one vote" system. As we know, colonialism brings about a condition in which many countries in the Third World consist of many different ethnicities which are often crisscrossing and straddling states borders in a complex pattern. Henceforth, the rigid application of "one man one vote" system would be detrimental to the existing state borders and may provoke unnecessary conflicts.

In its attempt to reintegrate Papua, Indonesia used a range of methods, including coercive diplomacy. After it was clear that international situation (due to the height of the Cold War) militated against the Dutch continuing its retention of Papua, an opportunity was therefore ripe for the conclusion of the New York Agreement in 1962, which was basically a face saving formula for the Dutch. The final outcome of the Agreement was considered as granted, namely the ultimate reintegration of Papua into Indonesia.

As a matter of fact, the 1962 Agreement never defines the method with which the AFC should be conducted in Papua. Therefore, there is no obligation for Indonesia to employ "one man one vote" system for the AFC, especially in the light of difficult circumstances in Papua at that time, both relating to the human and social conditions as well as to the geographical situation and its inherent technical problems. In this regard, one could not but observe with regret the tendency to use "present lens" to interpret past event taking place in Papua. Interpretation of such a mode will obviously be misleading as well as out of context.

In conclusion, the AFC in Papua should be seen within the context of bilateral agreement between Indonesia and the Netherlands as well as the overall circumstances in Papua in the late 1960s of which employing the "one man one vote" system was not possible nor practical.

From the Indonesian perspective, Papua is first and foremost an irredentist claim due to the Dutch recalcitrance to return it to the fold of Motherland and the General Assembly resolution 2504 (1970) has sealed its final status within Indonesia.

The unified and democratic Indonesia is the best framework to correct the perceived injustice in Papua. In this regard, the international community should support Indonesia's attempt to consolidate its democracy. Indeed, fanning separatist sentiment, including questioning the AFC under the pretext of reestablishing history, would only weaken Indonesia's efforts to strengthen the democratic process.

Needless to say, separatism is a solution in search of problem and best to be avoided.

The writer is the Director for Public Diplomacy and Head of the Working Group on Papua at the Department of Foreign Affairs, Republic of Indonesia.

Labour issues

Jamsostek eyes informal workers

Jakarta Post - July 28, 2004

Jakarta -- Amid regional autonomy, state-owned PT Jamsostek has begun forging cooperation with regions to enlarge the coverage of the social security scheme not only for workers in the formal sector but also for those employed in the informal sector.

Jamsostek's president Achmad Junaidi said here on Monday that Jamsostek had signed an agreement with a number of provincial and regental administrations to register all workers employed in development projects and other fields in the informal sector.

"This move will benefit all sides. All social security funds collected from the informal sector will be deposited in local banks and workers employed in the informal sector will be well protected," he said.

He explained that Jamsostek has been eying workers in the informal sector because of the slow growth of the formal sector and the increasing number of development projects in regions in line with the implementation of regional autonomy.

Under regional autonomy, a bigger part of the development programs has been carried out by provinces and regions while the formal sector's growth has slowed down due to the nonconducive investment climate nationwide.

"We have to cover tens of thousands of workers employed in all development projects carried out in provinces, regencies and municipalities," he said, adding that Jamsostek has been also eying workers in the formal sector who have not been registered with the social security program.

He alleged that many companies had not registered the precise number of their workers and their monthly salaries with Jamsostek to avoid paying higher premiums.

With Law No. 3/1992 on social security programs, employers cover a bigger part of their workers' premiums in the health care, work-related accidents, death and pension schemes.

Junaidi said further that Jamsostek had targeted one million more workers in the informal sector until 2008, especially in resource-rich provinces such as East Kalimantan, Riau, Aceh and Papua.

Under a tripartite agreement with labor unions and the East Kalimantan provincial administration, Jamsostek has covered a total of 170,000 more workers employed in construction projects in Balikpapan and Samarinda.

Under the cross-subsidy principle, the government requires all expatriates who are paid higher salaries in general, to join the social security programs to help subsidize the participation of low-income workers.

So far, Jamsostek has assets of Rp 33 trillion (US$3.6 billion) collected from 28 million workers, including those in the informal sector.

Junaidi also said that a trauma center had been established in Tarakan General Hospital to improve medical services for workers in the province.

Jamsostek also handed over an ambulance and equipment to support the trauma center.

Land/rural issues

Indonesia seeks clear schedule to end farm subsidies

Jakarta Post - July 28, 2004

The Indonesian government has sent a delegation, led by representative from the Ministry of Industry and Trade Directorate General of International Cooperation Pos M. Hutabarat, to the World Trade Organization (WTO) general council meeting in Geneva.

He was accompanied by five subordinates, including Director of Multilateral Cooperation Djunari Inggih Waskito, according to a member of the delegation.

Last week, the government announced its stance against the initial draft proposal aimed at reviving that stalled global trade talks, saying the proposal failed to meet the requests of developing countries.

Indonesia's agenda in the meeting is as follows:

• Along with other G-22 members, Indonesia demands a clear timetable on when developed nations will end their heavy farm subsidies.
• As the G-33 leader, Indonesia demands clear status and the schedule of Special Products (SP) and Special Safeguard Mechanism (SSM).
• Indonesia also demands tariff reductions on industrial products be on a voluntary rather than a mandatory basis.
• Rejecting a linear reduction on tariffs on industrial products, which is considered a major disadvantage for most developing countries that usually impose high tariffs.
• Indonesia accepts only one of four "Singapore Issues" -- trade facilitation -- but through clarification of the details on freedom of transit, and cost and procedures. The rejected three items of the Singapore Issues are investment, competition policies and transparency in government procurement.

'War on terrorism'

Ruling puts next Bali trial in turmoil

Melbourne Age - July 26, 2004

Matthew Moore, Jakarta -- The trial tomorrow of the alleged financier of the Bali bombings will be the first case affected by Friday's landmark decision disallowing the law used to prosecute the bombers.

The lawyer representing Idris, the alleged money man, said the Constitutional Court decision meant prosecutors may have to abandon the case.

Ms Sarworini said her client was facing court over involvement in the Bali and Marriott Hotel bombings but prosecutors had combined the charges into one indictment document.

The indictment relies in large part on law No. 16 2003, the law the Constitutional Court disallowed because it was applied retrospectively.

"The decision says that the law is illegal so what should we do?" Ms Sarworini asked yesterday. "Should we go back and restart by only using law No. 15 [a related terrorism law]? And how would that work?" Ms Sarworini said the lawyers representing Idris would try to read the decision today and then decide what application to make to the court tomorrow.

Advertisement Advertisement But she admitted she was confused as Indonesia has no procedures for implementing the decisions of the new Constitutional Court.

The lawyer who won Friday's case, Wirawan Adnan, said yesterday that there are 70 people directly and indirectly implicated in the Bali bombings, including the 32 already convicted. All of them had been or were being prosecuted under the law No. 16 2003.

Because of the confusion about how the decision should now be applied, he said he would wait 30 days for authorities to release his clients, including the applicant in Friday's case, Masykur Abdul Kadir.

"They have to voluntarily release them for the sake of the law," he said If his clients were not released, he would seek judicial reviews in the Supreme Court to have the convictions overturned.

Mr Adnan said four of his clients, including the three on death row -- Amrozi, Imam Samudra and Muklas -- had each made two separate appeals to the Supreme Court. One appeal was against their verdicts and the other was based on the argument that law No. 16 2003 was illegal because it was retrospective. While the appeals against the verdicts had been dismissed, the decision on the retrospective applications are still pending.

"We are still waiting for a decision from the Supreme Court. After Friday's decision it's now impossible for them to deny our appeals," Mr Adnan said.

Officials from various government departments will meet today to try to work out how to ensure that the Bali bombers face their full punishments.

The director of the Asian Law Centre at Melbourne University, Dr Tim Lindsey, said that all of the Bali convictions will inevitably be overturned and new charges will have to be laid under existing criminal law.

But Justice Minister Yusril Mahendra said getting convictions under existing law could be difficult and the retrospective terrorism law was only approved because other laws were considered inadequate.

"At the time we gave up," he said, "because there were obstacles regarding legal material and legal procedures on arrest, the status of intelligence reports, and telephone intercepts which are not regulated in the codes of conduct for criminal cases."

Impact of court's decision understated

Melbourne Age - July 26, 2004

Matthew Moore -- Just an "advisory opinion" is how Foreign Minister Alexander Downer has for three days been playing down Friday's stunning decision by Indonesia's highest court upholding an appeal by one of the Bali bombers.

Downer also characterised the decision as "some technicality" and said there was no need to conclude that the convictions of all the Bali bombers would be overturned.

It may be simply that he is badly advised, but it is more likely he is doing what many senior officials in Jakarta are doing and deliberately refusing to acknowledge the far-reaching impact this decision will have.

The Chief Justice of the Constitutional Court, Jimly Asshidiqie, also played down the impact of his court's decision on Saturday when he said the convictions against the 32 Bali bombers still stood.

"The Constitutional Court ruling does not apply retroactively either," he said, refusing to elaborate.

Then Indonesia's Justice Minister, Yusril Mahendra, suggested the decision would have no impact on the bombers. "Their convictions remain legal because they were made before the Constitutional Court ruled on Friday," Mahendra said.

All these men are doing their best to minimise the damage Indonesia's judicial reputation, and anti-terrorism credentials, are suffering as a result of the decision, which says the way the law was used to convict the Bali bombers is in breach of the constitution.

But in characterising the decision as one of modest importance, they are deliberately misleading the public about what the decision really means. First, it is a decision not an opinion.

If Downer wants to understand its impact, he should talk to Tim Lindsey, director of the Asian Law Centre at Melbourne University. Lindsey is expert on Indonesian law who predicted this decision way back when the Bali bombers' trials began. He says this decision must lead to courts overturning all convictions of the Bali bombers.

That would be the only result possible in any decent legal system. While the decision will be distressing for victims of the bombing, he says it is good law and proof that Indonesia now has a court free of the political interference that destroyed judicial independence during the Soeharto era. "They [the convictions] can't stand. They are unconstitutional. End of story," he said.

After all, every conviction has been obtained under anti- terrorism law 16/2003. The court has ruled that cannot stand in the Bali cases because it is applied retrospectively to the bombings on October 12, 2002, and in breach of the constitution.

Although Lindsey says there is no doubt the decision will affect all the cases, he says it is too early to see just how that will happen. Indonesia has a new Constitutional Court, but does not yet have in place the regulations and procedures for implementing its rulings.

As he put it: "Whether they like it or not, ultimately the decision is binding. What's not clear is the mechanics of making it binding." Lawyers for the Bali bombers have already foreshadowed they will seek a judicial review for their clients in the Supreme Court, a course of action Lindsey says appears likely to succeed.

"If you look at the criminal procedure code, it says you can get your judicial review if you can show circumstances that weren't apparent previously would, if they had been known at the time of the trial, have led to acquittal," says Lindsey. "And you can't get better circumstances than this." When the convictions are overturned, the bombers are almost certain to be immediately re- arrested, charged with new offences such as murder and arson, and will then face new trials under existing criminal law.

This raises the legal principle of double jeopardy that says you cannot be charged for the same thing twice. Countries have different interpretations of double jeopardy and Indonesia has yet to work out what it means before the bombers are tried anew.

The only way to ensure the existing convictions stick would be to amend the constitution to allow prosecutions under retrospective law for the Bali bombings. And with the presidential election in September it would be a brave government that took this path.

Police say JI planning more attacks in Indonesia

Jakarta Post - July 26, 2004

Abdul Khalik, Jakarta -- Several members of the Jamaah Islamiyah (JI) network are still planning to launch terror attacks in various parts of the country despite the arrest of some of their leaders, a senior police officer said.

JI is listed by the United Nations as an organization that is linked to the Al Qaeda terrorist group.

National Police Director of Counterterrorism Brig. Gen Pranowo said that some members of JI who had been interrogated in Denpasar, Bali, had told the police that many JI members were refusing to give up terrorism.

"JI members are split into two main groups. One faction in the JI still believes that attacking strategic places is the best option they have, while others would like to stop the attacks," Pranowo told The Jakarta Post over the weekend.

He added that in the first faction, which is led by fugitives Azahari bin Husin and Noordin Moh. Top, members were still planning attacks on strategic locations throughout the country while the members of the other faction, whose leaders had been arrested by the police, had decided to quit.

Pranowo said JI's ability to mount serious attacks was severely dented by the arrest of many of its members after the 2002 Bali bombings, including Hambali, the group's alleged operations chief.

Hambali was Southeast Asia's most wanted fugitive before his August 2003 arrest by Thai police, who turned him over to the US

Pranowo agreed that it was possible that Azahari's group could recruit new members as part of a JI reorganization. "However, many JI members have stopped thinking of terror attacks and are reintegrating into normal society. For example, the five members currently being interrogated in Denpasar have been very cooperative with us," he said.

JI is suspected of having planned and carried out the Bali nightclub blasts that killed 202 people, mostly foreign tourists. Azahari and Noordin managed to escape a police raid in Bandung, West Java. Police earlier said the two may be in the possession of explosives, which could be used at any time.

Last week, the Malaysian police's intelligence chief was quoted as saying that remnants of JI were regrouping and planning more attacks in Southeast Asia.

Mohamad Yusof Abdul Rahman, chief of the Royal Malaysian Police's Special Branch, also said that two pesantren, or religious schools, one in Solo and one in Semarang, were sending out clerics to teach radicalism across Indonesia.

However, National Police chief of detectives Comr. Gen. Suyitno Landung Sudjono said it was normal for religious schools to send clerics to other pesantren. "We can't jump to the conclusion that the clerics are being sent to teach radicalism. That would cause unrest. Muslim clerics and their followers wouldn't accept that," said Suyitno. He also rejected allegations that some pesantren students were being trained as sleepers, who would one day be called into action.

Pranowo said that the police expected they would be able to capture Azahari and Noordin, citing important information obtained during the interrogation of suspects in Denpasar.

The police arrested five alleged members of JI in Sukoharjo, Surakarta, Central Java, earlier this month. They were subsequently transferred to Denpasar for interrogation.

Indonesia strains to hold Bashir

Melbourne Age - July 31, 2004

Matthew Moore, Jakarta -- Police are struggling to hold Abu Bakar Bashir on terrorism charges.

Suspected terrorist Abu Bakar Bashir is still in jail, but in the past week the 65-year-old preacher has had his best chance yet to escape the legal net police have used to hold him since the Bali bombings.

For months police have talked up new evidence and witnesses they said would finally jail Bashir for terrorist activities rather than the minor immigration offences they have relied on so far to keep him behind bars.

But last week's decision by Indonesia's new Constitutional Court has cut the ground from under their case, leaving them scrambling for any new evidence to continue holding the man accused of being the spiritual leader of Jemaah Islamiah, the group blamed for the Bali bombings.

By a 5-4 margin, the court overturned the anti-terrorism law No. 16 2003, which had given police wide powers to investigate and prosecute Bali bombings suspects and which has been used almost exclusively to convict 33 offenders so far.

Police have made no secret of the fact that their case against Bashir, which was expected next month, was based overwhelmingly on his role in Bali.

In April, when they arrested him as he was released after serving his immigration-offence sentence, they used law 16. Their warrant and other documents all referred to Bashir's role in Bali.

Five days after the Constitutional Court decision, police admitted they had no option but to scrap the allegations linking Bashir to Bali under law 16, but they refused to release him.

Chief of Detectives Suyitno Landung justified their decision: "We will continue to detain and investigate Bashir using law number 15 because we are charging him with involvement in several other acts including the Marriott bombing." Law 15 is the general anti-terrorism law passed in April 2003 but it is now clear that, like law 16, it only applies to terrorist offences committed after it was passed and not before.

Police admitted they had no option but to scrap the allegations linking Bashir to Bali.

To convict Bashir of terrorism, police will need evidence of his terrorist activities since Bali. And the difficulty there is that Bashir has been in their custody since October 2002 when they arrested him barely a week after the Bali bombings.

If they had some hard evidence, they could still prosecute him for conspiracy to murder or other offences under the criminal code, but their first case against Bashir showed how difficult that is. Allegations that Bashir planned to assassinate then vice-president Megawati Soekarnoputri were found not to have been proved.

Bashir's lawyer, Adnan Wirawan, who won Friday's case in the Constitutional Court, said police now had no evidence to hold his client and were acting unlawfully. "Police will do a lot of damage to our legal system because of their inconsistencies and because they are not respecting the Constitutional Court's decision," he said. And he said they are not alone in failing to accept the Constitutional Court ruling.

Justice Minister Yusril Mahendra, Constitutional Court Chief Judge Jimly Asshiddiqie, and Supreme Court Chief Judge Bagir Manan, have all said the Constitutional Court ruling will not affect the Bali bombing convictions even though those convictions were obtained under a law now ruled unconstitutional.

Under pressure to maintain a tough anti-terrorist stance, Mr Yusril even said he would support the execution of the three sentenced to death under the unconstitutional law because it was legal at the time it was passed.

"I would say the authorities, the Government, the Minister for Justice are demonstrating juvenile, childish behaviour like kids do when they lose a game," was how Mr Wirawan described their response.

He is planning more legal action to force the police to free Bashir. With 70 people already convicted or facing court over the Bali bombings, the impact of the court's decision has clearly rocked Indonesia's justice system.

Most judges, lawyers and prosecutors grew up under Soeharto when verdicts were decided in advance and there was no court that could rule legislation illegal.

With a new and independent Constitutional Court, that has changed. Few know how to respond, especially in the front line.

In Tuesday's trial of Bali bombing suspect Idris, The Age asked the chief prosecutor, Arief Aziz, why he was still prosecuting his case using law 16 when it had been ruled unconstitutional? Looking confused and angry, he replied: "Do you want him to be released?"

[with Karuni Rompies.]

Ba'asyir charged with Marriott blast

Jakarta Post - July 30, 2004

Abdul Khalik, Jakarta -- While unable to implicate Abu Bakar Ba'aysir in the Bali bombings, the National Police said on Thursday they would charge the Muslim cleric with involvement in the 2003 JW Marriott Hotel attack in Jakarta, to keep him in custody.

National Police chief of detectives Comr. Gen. Suyitno Landung Sudjono said Ba'asyir, as Jamaah Islamiyah's (JI) leader, masterminded the hotel bombing -- in which 12 people were killed -- despite the fact that he had been in prison since August 2002.

"Ba'asyir helped plan the Marriott bombing because he is the leader of the clandestine organization called Jamaah Islamiyah. He could have been planning the attack before he was arrested," said Suyitno.

The cleric was charged under Law No. 15/2003 on antiterrorism and Law No. 16/2003 on retroactivity that enables the police to charge suspects of the Oct. 12, 2002 Bali blast under the Antiterrorism Law, which remained a draft when the incident occurred. The police have to scrap the charges after the Constitutional Court declared Law No. 16/2003 unconstitutional, and therefore invalid.

Previously, the police had said Ba'asyir was behind all bomb attacks that rocked the country from 1999 to 2002.

The JI, a UN-listed terrorist organization, is blamed for the Bali blast, which killed 202 people, and the Aug. 5, 2003 JW Marriott Hotel attack.

Ba'asyir's lawyers demanded on Wednesday their client's immediate release because his detention letter says he was charged under the wrong law.

However, Suyitno insisted that Ba'asyir's detention would stand because of evidence that he was the leader of the JI.

"Law No. 15 stipulates that terrorism is an organized crime. So, Ba'asyir, as the leader of the organization, must be held responsible," he said.

Suyitno added that a document found during a raid on a house in Semarang in 2003, also revealed that Ba'asyir was the leader of the JI. "We confiscated explosives, guns and documents and arrested several JI members. The documents reveal that Ba'asyir is the JI leader, and the suspects arrested said they are JI members and Ba'asyir is their leader," he said.

The Constitutional Court decision

Exclusive report from Joyo News - July 29, 2004

Jeffrey Winters, Chicago, USA -- The real controvery in the recent Constitutional Court decision does not turn on retroactivity. In fact, all the judges (including the five for the majority) reject an absolute interpretation of retroactivity (which the defense team had argued for). And by rejecting an absolute principle of retroactivity, all the judges are very much in line with a key principle in international law going back to the Nuremberg trials -- that under certain extraordinary circumstances, persons can be tried under laws that are passed after the commission of a crime.

The truly controversial element of the majority decision is that they opined that the Bali bombing did not constitute an "extraordinary crime" but was rather an "ordinary" crime that was simply horribly brutal. And because the crime itself was deemed ordinary, it did not, in the majority's view, satisfy the conditions or reach the threshhold required to set aside the otherwise important objections to applying laws retroactively.

All the judges agreed that for extraordinary crimes a law can be enforced retroactively, but only the dissenting judges believed that the Bali bombing constituted a sufficiently extraordinary crime.

The five judges in the majority claim that while the Bali bombing was terrible, it is no more terrible than the thousands of Muslim men, women and children killed in Maluku [it is, I believe, significant that they make no mention of Christians being killed as well]. They also say that the Bali attack does not rise to the scale and scope of the mass killing of Jews during WWII. Apart from these examples (and passing references to the Statute of Rome and a 1999 international law, neither of which, they say, specifically mentions terrorism), no argument is made for why the Bali bombing is an ordinary crime, and why those involved should have been tried under ordinary existing laws.

The dissenting judges, meantime, focused on five considerations for retroactivity, but they did a rather poor job in their dissent when taking on the key question: are there or are there not sufficient grounds for viewing the Bali attack as an "extraordinary crime," thus legitimizing the use of laws retroactively? Their tone and their final conclusion make clear, however, that they believe the Bali bombing meets the domestic and international standards of an extraordinary crime.

The judges for the majority decision appear intent on not having the Bali attack be defined as "terrorist," but merely horrible. The reason it is important to avoid such categorization is that there are at least a dozen major international conventions on terrorism going back several decades that treat the sort of crime that occurred in Bali as distinct and indeed extraordinary. The comparison with the many Muslim victims cited in Maluku is weak because terrorist attacks such as we saw in Bali are not intended to harm particular people or groups, but are intended to sow terror. Thus it does not matter to the attackers that Muslims were also killed in a bombing perpetrated by Muslim extremists. The number of people killed or injured is also not the key issue in defining a terrorist act.

The judges went to extraordinary lengths to portray the Bali bombing as "ordinary," which then allowed them to say that retroactivity was therefore unjustified.

A quick note on the judges. Of the four dissenting judges, one is Balinese, one is a Batak, and two received advanced legal training abroad (they are the only two with international legal training on the court). Of the five majority judges, all received exclusively domestic legal training, one is from the TNI, and the rest are Islamic religious conservatives (particularly, Chief Judge Jimmly Asshidique).

Had the majority wanted to, they could easily have opined that the Bali bombs (and other terrorist attacks such as at the Marriott) constituted extraordinary crimes. Numerous international conventions support such an interpretation, and the fact that the Indonesian government passed the terrorist laws after the attacks demonstrates that the country's elected representatives believed that these actions were not merely ordinary murder but a quite distinct and extraordinary kind of crime.

With very little supporting evidence (comparisons etc) and even less legal rationale, the majority chose instead to severely undermine Indonesia's effort to confront the extraordinary crimes being perpetrated.

[Jeffrey Winters, Northwestern University.]

2004 elections

Bambang confirmed as winner

Agence France Presse - July 26, 2004

Jakarta -- A final tally of most votes in Indonesia's presidential election has confirmed ex-general Susilo Bambang Yudhoyono as the winner, the election authority said yesterday, a day before the official results were to be announced.

The Indonesian General Election Commission completed a manual count of district vote tallies from 25 of the country's 32 provinces on late Saturday, commission member Valina Singka Subekti told AFP.

Of them, the results of four provinces still needed re-checking, while the count for the remaining seven provinces was to be finalised yesterday, she said.

A partially completed electronic vote count has already shown Mr Bambang and his running mate to be the winners of the July 5 poll, with incumbent President Megawati Sukarnoputri in second place.

The electronic count has tallied the votes of nearly 70 per cent of registered voters, suggesting this will be the level of voter turnout.

The commission is scheduled to announce today the final official results of the election, the country's first direct presidential poll.

The electronic vote count found Mr Bambang, who resigned from Ms Megawati's Cabinet as security minister before the vote, had nearly 34 per cent of the ballots and Ms Megawati had just over 26 per cent. In third place is Mr Bambang's former boss, retired general Wiranto, with 22 per cent.

With no one looking set to get 50 per cent, the top two candidates are likely to go into a runoff vote due in September.

Mr Wiranto's camp refused to endorse the results finalised on Saturday, alleging fraud in the voting and ballot-counting processes, Ms Subekti said.

Mr Wiranto, a former military chief who stood for Indonesia's largest party, Golkar, said on Thursday the election has been riddled by flaws and violations.

He demanded the electoral commission publicly list all the alleged violations of elections laws that had taken place.

A total of 39 polling stations opened for six hours yesterday for a repeat vote at the sprawling Al-Zaytun Muslim boarding school in West Java's Indramayu district, where vote rigging had allegedly taken place, officials said.

The number of voters registered at the school for the July poll was more than double the number registered there for the April legislative election and almost all of the voters voted for Wiranto, officials have said.

The electoral commission said thousands of voters had been bussed in from Jakarta, many on military vehicles. But not a single voter showed up yesterday until the polling stations closed, said General Election Commission member Anas Urbaningrum, who monitored the poll repeat at Al- Zaytun.

Bomb halts poll count, ex-general set to win

Agence France Presse - July 26, 2004

A bomb has rocked the offices of Indonesia's election commission, delaying the announcement of the winner of this month's presidential poll.

Dozens of police including bomb squad officers evacuated the premises in Central Jakarta after the blast in a women's toilet. Police said no one was hurt and damage was slight but the incident heightened security fears as the country prepares for a second round of voting in eight weeks' time.

According to partial returns, ex-general Susilo Bambang Yudhoyono is certain to win Indonesia's first direct presidential poll but without the 50 percent needed to avoid a September 20 runoff between the top two candidates.

With about 85 percent of the vote counted, Yudhoyono had 34 percent compared to 26 percent for incumbent Megawati Sukarnoputri and 22 percent for another ex-general, Wiranto.

Wiranto, who stood for the Golkar party of former dictator Suharto, has challenged his likely elimination from the race. He has said the vote was flawed and his supporters say they may go to court to contest the result.

Any legal challenge would further heighten political uncertainty in Indonesia, which has been preoccupied with elections for almost the entire year. Separate polls for national and local legislatures were held on April 5, with Golkar topping the national vote.

Vice-president Hamzah Haz criticised security services after the blast. "The security and intelligence services should have detected [this] earlier to prevent this incident from happening," he told reporters. "It is not the KPU [election commission] which was careless. We knew these days would be critical so we should have intensified security."

Election officials were completing a manual count of district vote tallies from the 32 provinces. One of them, Hamid Awaluddin, said the counting would resume at 3pm but there was no information on when it would end. "I am saddened that this incident had to take place because we have gone through a lengthy and difficult process and we are almost finished," said senior election commission official Chus'nul Mariyah.

Wiranto, a former military chief who has been accused of condoning major rights violations during his tenure, complained of irregularities in the handling of ballot papers which were initially deemed spoilt.

Millions of ballot papers were not counted when voters inadvertently punched two holes in the folded papers. Just before the polls closed on July 5, the election commission ordered that such votes should be considered valid.

Former US president Jimmy Carter, one of hundreds of foreign poll monitors, had said various problems with the ballot did not appear to favour one candidate over another.

Yudhoyono called for a clean fight in the second round. He has complained of smear tactics spread by SMS messages in the world's largest Muslim-populated nation, which falsely allege that he is secretly a Christian.

"If we engage in a healthy competition, the people will get a good winner," he told hundreds of supporters. With Wiranto all but certain to be eliminated, both the Yudhoyono and Megawati camps have been putting out feelers about securing Golkar's support.

Golkar party chief Akbar Tanjung said Saturday his party has received a "concrete" coalition offer from Megawati. The party has not yet officially decided which camp to support.

Surveys show that party endorsements could in any case be of limited help in swaying voters on September 20. Almost a third of Golkar supporters voted for Yudhoyono, a former security minister, rather than for their official candidate Wiranto.

Voters boycott revote at Al-Zaytun

Jakarta Post - July 26, 2004

Nana Rukmana, Indramayu -- More than 11,500 voters from the Al- Zaytun Islamic boarding school boycotted the presidential election revote on Sunday, but committee officials declared the poll results valid, while observers called for a criminal investigation into the matter.

No voters had shown up to cast ballots by the 1 p.m. deadline. Thirty-nine polling stations had been set up outside the school complex in Indramayu, West Java.

Indramayu election commission member Agung Mardiyanto said Sunday's poll annulled the 24,818 votes cast during the July 5 election at Al-Zaytun, the largest Islamic boarding school in Southeast Asia.

"With the revote results, none of the five presidential pairs get votes. The rerun is valid. All witnesses and campaign teams of the presidential candidates have approved it," Agung said.

General Elections Commission (KPU) member Anas Urbaningrum and West Java poll committee official Fery Kurnia Rifkiansyah, who both witnessed the revote, confirmed the outcome of the rerun was lawful.

They said the no-show of a single voter during the election repeat was not a "substantial problem". "What's important to us is that the revote has been held in compliance with prevailing procedures," Anas argued.

However, deputy director of the Center for Electoral Reform (Cetro) Hadar Navis Gumay, who also witnessed the rerun, said the absence of voters was strange. "It should be investigated thoroughly," Hadar said.

He argued that the boycott could be categorized as a violation of the Election Law, which carries a jail sentence. "If a boycott is proven, it [Al-Zaytun] could be charged under Article 90 [1] of Law No. 23/2003 on presidential elections. The crime could result in a three-month jail term and maximum fine of Rp 100 million [US$11,111]," Hadar added. He said the boycott tainted the whole process of the presidential election.

Agung Mardiyanto further said that there was an indication that no one would show up to vote when not one person had registered for the revote at Al-Zaytun by the July 22 deadline.

The local committee had also sent an invitation to the school asking voters there to turn up on Sunday. It was rejected by the school.

Al-Zaytun director A.S. Panji Gumilang said there was no need for the school's residents, including teachers, students and employees, to vote again. The July 5 election, held at 83 polling stations inside the school compound, was valid, he argued.

The revote was held following alleged vote-rigging at Al-Zaytun during the July 5 election. The KPU then decided to invalidate the 24,818 votes cast as they were cast by people mostly mobilized from outside the school. Almost all of them voted for Wiranto-Solahuddin Wahid. The number of people registered to vote at Al-Zaytun was only 11,500 in the April 5 legislative election.

The election revote was marred by a protest by dozens of supporters of presidential candidate Megawati Soekarnoputri, the incumbent president.

The protesters, led by Megawati's Indramayu campaign team Sukamto, slammed the holding of the revote. "We denounce the repeat election because the KPU failed to take legal action over breaches during the July 5 poll, which forced it to hold a revote," Sukamto said. He claimed the poor turnout indicated that the KPU had not been serious in organizing the revote at Al- Zaytun.

Indonesian democracy 'yet to take root'

Jakarta Post - July 31, 2004

Kurniawan Hari, Jakarta -- While the July 5 election proceeded orderly and peacefully, democracy may prove to take much longer to develop in the world's largest archipelagic country, analysts and an election watchdog say.

They argue that various violations by candidates and election officials during the campaign period and on voting day show that people here do not understand the true meaning of democracy.

"We're just experiencing a ceremonial democracy and do not yet understand the essence of democracy," Arbi Sanit, a lecturer at the University of Indonesia, told a discussion organized to evaluate the country's first direct election on July 5.

All five pairs contesting the July election violated campaign rules, ranging from election schedules to ads on electronic and print media.

The five pairs were Wiranto and running mate Solahuddin Wahid, Megawati Soekarnoputri and Hasyim Muzadi, Amien Rais and Siswono Yudohusodo, Susilo Bambang Yudhoyono and Jusuf Kalla, and Hamzah Haz and running mate Agum Gumelar.

On voting day, some election officials were found to have punctured ballot papers for particular candidates. Some people also mobilized people to vote for certain aspirants.

According to the Independent Election Monitoring Committee (KIPP), 80 percent of election violations were committed by General Elections Commission (KPU) officials.

The Election Supervisory Committee (Panwaslu) also reported election violations in Tawau, East Malaysia.

The committee alleged that consulate staff punctured some 8,000 ballots in favor of presidential candidate Susilo Bambang Yudhoyono and his running mate Jusuf Kalla before the election.

In Timika, Papua, authorities found poll officials pierced 3,200 ballot papers for the Susilo-Kalla pair.

Meanwhile, there was also mass voter mobilization at the Al- Zaytun Islamic boarding school in Indramayu, West Java. This led to a dramatic increase of polling stations from 20 to 83.

Voters in the boarding school mostly voted for Wiranto and Solahuddin.

The General Elections Commission (KPU) has declared Susilo and Megawati the winners of the first round of the election and will therefore face each other in the Sept. 20 runoff.

Arbi said he hoped election procedures could be improved in the near future because it would determine the legitimacy of the elected president and vice president.

Indra J. Piliang of the Centre for Strategic and International Studies (CSIS) and KIPP director Ray Rangkuti agreed with Arbi, saying that laws and regulations dealing with the election were full of flaws.

Indra said that people doubted the legitimacy of the current House of Representatives members because they were appointed through an outdated electoral system.

Indra hailed, however, the fact that voters had become more independent and free from the control of political parties.

"I'm also glad because there were no reports of fatalities resulting from different political choices. It shows the growing maturity of the people," he said.

Ray Rangkuti said that campaign fund infractions and the video compact disc (VCD) scandal in Banjarnegara, Central Java, had tarnished the election.

Some presidential candidates were unable to explain the sources of their campaign funds, while a VCD recording caught police personnel in Banjarnegara promoting Megawati.

He said that there must be fair settlements of election violations, otherwise whomever was elected president would face strong resistance from the people.

Megawati, Hasyim accused of vote-buying

Jakarta Post - July 31, 2004

Indra Harsaputra and Blontank Poer, Surabaya/Surakarta -- East Java's General Elections Commission (KPUD) is investigating a report that a number of Nahdlatul Ulama (NU) clerics had received US$10,000 each to support Megawati Soekarnoputri and her running mate Hasyim Muzadi.

"We have received the report from people and are looking into the case," East Java KPUD member Aribowo told The Jakarta Post on Friday in Surabaya. He said that those reportedly given the money were clerics in East Java and Central Java.

The KPUD has also listed the names of clerics, who were offered money by Megawati-Hasyim's campaign team members ahead of the July 5 presidential election. The list, Aribowo said, included Ubaidillah Faqih from Tuban, Abdul Gofur from Lamongan, Mas Subadar from Pasuruan, Idris Marzuki and Saidin Zalzuli, both from Kediri. All are from East Java.

"Based on statements from witnesses, only Mas Subadar who once issued a religious edict against a woman president refused the fund, while Ubaidillah Faqih eventually supported candidates Wiranto and Solahuddin Wahid but the use of fund given to him was not clear," Aribowo added.

He said that among the NU clerics from Central Java, also offered dollars, were Hasbullah from Cilacap, Muntoha from Wonosobo, Zakroni from Kudus, Masruri from Brebes, Maimun Zubair from Rembang, Abdul Wahid from Purwodadi and Sahal Mahfudz from Semarang.

Based on the report, only Abdul Wahid and Sahal Mahfudz turned down the offer, Aribowo added. "KH Abdul Wahid is prepared to testify after the Legal Aid Institute gives him legal protection," he added.

The East Java KPUD also said its members had met an influential cleric, identified only by his initials as JL from Tulungagung, East Java, who admitted that he rejected an offer of Rp 4 billion from the same campaign team.

NU sources from Central Java confirmed that at least two influential clerics in the province rejected Rp 100 million and US$10,000 offered to them respectively by the local Megawati- Hasyim campaign team. They declined to name them.

Aribowo said his office would take the case to the central Elections Supervisory Committee (Panwaslu) after completing the investigation. Panwaslu member Didik Supriyanto said he did hear a report of $10,000 being distributed to each NU cleric in East and Central Java ahead of the presidential election.

The accusation was denied by Halim Mahfud, a member of the Megawati-Hasyim campaign team. "How could Pak Hasyim own such a huge amount of money for donations," he said. However, he admitted that Hasyim had often given donations to clerics long before he was picked by Megawati as her running mate.

Based on the Election Law, candidates could be charged with vote buying if they, their families or campaigners gave funds and asked the recipients to vote for their candidates.

Police chief fired over VCD affair

Jakarta Post - July 30, 2004

Abdul Khalik and Agus Maryono, Jakarta/Banjarnegara -- In an apparent demotion, the National Police have transferred the Banyumas, Central Java, Police chief, Sr. Comr. Andi Mapparesa, to a desk job for giving a speech supporting President Megawati Soekarnoputri's bid for reelection. Andi had violated an order by National Police chief Gen. Da'i Bachtiar that police officers must stay neutral during the legislative and presidential elections, said National Police spokesman Insp. Gen. Paiman.

"We have transferred him to headquarters in Jakarta as a human resources officer," he said.

Paiman said headquarters had confirmed that Andi had violated the order in a speech he gave on May 29 during a meeting with police officers' families and retired officers, in which he asked them to support Megawati's reelection bid.

The University of Indonesia Alumni Association (Iluni) released a video last Monday of the meeting, which was held in Banjarnegara regency.

The video clearly showed that Andi and his wife were attempting to encourage support for Megawati by pointing out several disadvantages for the police if a candidate other than Megawati was elected.

Iluni urged Da'i to resign for failing to maintain the impartiality of the police during the elections. Paiman said that a police team comprising detectives and officers from internal affairs was still investigating the case. The police have also reported the case to the Elections Supervisory Committee (Panwaslu) for criminal investigation, he added.

Meanwhile, the Banyumas Panwaslu said that a video store owner identified as Sumadyo was ordered by Bambang, a local police officer, to transfer the recording onto a video compact disc (VCD) and make several copies of it.

It was not clear however whether Bambang had been officially ordered by a superior to have the copies made or did it of his own accord.

Banyumas Panwaslu chairman Jauhar Hatta said that after the copies had been made and handed over to Bambang, one copy was left in the video store. "This copy was then found and watched by some people there, including Puji Rahardjo, who chairs Banyumas Golkar Youth and is a member of the Wiranto campaign team. Puji then borrowed the copy from Sumadyo and took it home," said Jauhar.

He said that Sumadyo lent the VCD to Puji after the latter assured him that he would be responsible should anything untoward happen. The police have named Puji as a suspect for distributing copies of the VCD.

Jauhar said his office would coordinate with the national Panwaslu in handling the case, adding that his team had questioned Andi to clarify what had actually happened during the May 29 meeting.

"Andi said he could not remember what he said during the meeting," he added.

Defeated ex-general takes political battle to court

Agence France Presse - July 29, 2004

An ex-general who was ruled out of the running in Indonesia's presidential race after finishing third in initial round voting has petitioned for a Supreme Court review of the poll.

Wiranto, who stood for the Golkar party of former dictator Suharto, said his demand was related to a dispute over millions of votes declared invalid due to the "dual punching" of folded ballot papers that were subsequently reinstated.

The former armed forces commander, who won 22 percent of votes in the July 5 poll behind Susilo Bambang Yudhoyono's 33 percent and President Megawati Sukarnoputri's nearly 27 percent, said the legal action was not a case of sour grapes.

"This is not some kind of fabricated decision. This is not an emotional decision in response to that problem, but it is to maintain the credibility of the election's result," he told a press conference.

Former US president Jimmy Carter, one of hundreds of foreign poll monitors, described the double-punching as a serious mistake, but said it did not favour any one candidate.

Wiranto said he would seek a separate judicial Constitutional Court review on "various problems" that occurred during and after the ballot which he claims cost him about 3.4 million votes.

Such legal challenges would intensify political uncertainty in Indonesia, which has been preoccupied with elections for almost the entire year. Separate legislative polls were held on April 5, with Golkar topping the vote.

In a separate development ahead of September 20 runoff vote between Megawati and Yudhoyono, the National Awakening Party (PKB), Indonesia's third largest party, backed down from an earlier endorsement of Yudhoyono.

The move comes amid heavy horse trading as the remaining two candidates compete for supporters of those eliminated.

PKB deputy chairman Mahfud Mahmuddin said Thursday a decision to back Yudhoyono made by a meeting of the party's regional executives a day earlier was not binding, according to the Detikom online news service.

PKB was established as the political arm of the country's largest Islamic movement, Nahdlatul Ulama, whose former chairman is standing as Megawati's running mate.

Which new President: Does it matter?

Jakarta Post - July 28, 2004

Richard Robison, Jakarta -- When the new president is finally confirmed later in September, she or he will confront the immediate task of assembling enough power to rule effectively. More fundamentally, though, is the task of arresting a seemingly inexorable slide into the sort of 'savage capitalism' that often accompanies parliamentary systems in their early years.

This will not be an easy task and certainly not one that can be addressed by the sort of technical and policy fixes advocated by the World Bank and other development agencies through programs of good governance and capacity building. The problem, instead, is one of power and politics.

Put simply, because the democratic revolution in Indonesia was not the consequence of any political or social revolution, it is inherited by many of the very forces of the previous regime for whom the function of the state is seen as one of allocating power and wealth rather than legislating and regulating. No politically effective reformist force yet appears on the radar screen.

As we have seen in the cases of both Abdurrahman Wahid and Megawati Soekarnoputri, post-Soeharto presidents have been ineffective reformers not least because of the power of these entrenched interests. In any case, they possess few resources that might be potentially used against to impose reforms.

Unlike Soeharto they must win elections and mobilize support in legislature. This means building complex alliances in a legislative assembly indifferent or hostile to reformist programs. Nor does a new president command the sort of fiscal resources Soeharto was able to call upon to fund economic projects or reformist initiatives independently.

At the same time, the apparatus of administrative power established by Soeharto remains more or less intact. Some elements, especially in the army and the judiciary now constitute a stubborn rearguard against social and corporate reform.

Most important, the programs of political, fiscal and administrative decentralization have shifted the balance of power further away from the center. Regions and provinces are now emerging as competing centers for revenues and authority, imposing their own fiscal and tax regimes. Importantly, decentralization has allowed governments to fall even more deeply into the hands of regional and provincial predators for whom the idea of public interest and collective goods is entirely foreign.

This phenomenon is not, as understood by the World Bank and other neoliberal commentators, a problem of a failed state. As an example, the accelerating destruction of national parks and forests cannot be blamed on poor resources and weak institutions. Rather, it is a process central to the interests of elites often organized and facilitated by regional officials and politicians themselves.

Yet, democratic reform and decentralization are expected to enhance the power of popular forces and interests against oppressive states. And it is true that both NGOs and various political alliances, together with the media, have in some cases been able to force rapacious and corrupt officials from office in a way never before possible. Does this not provide the basis for a new political alliance that might enable a president to outflank both the remnants of the Soeharto state and the new predatory interests? While the prospect of any president entrenching her or his power by leading a progressive revolution against predatory elements of the elite is a fanciful proposition, the possibility of a different sort of reorganization of power through a new populist social contract is not out of the realms of possibility. In this matter, the experience of Thailand's prime minister, Thaksin, is instructive. Replacing prime ministers who closely followed IMF reform prescriptions, Thaksin has not only instituted a more nationalist economic policy but has directly confronted the power of regional political and business interests in the parliament.

He built a national political party to bypass regional power brokers and put in place a new social contract at the grass roots level that linked centralized, national power with the sources of votes through grants to villages, new health policies and other populist policies. Money politics was re-centralized.

While such a scenario is not progressive it does provide the basis of a new alliance in which a president might triumph over parliament and regional power brokers. Certainly it is an option that might be attractive to Susilo Bambang Yudhoyono who has little strength or influence within the national legislature and few resources in the regions to match the vast networks of Golkar or the PDI-P. It would, however, be a high-risk option requiring courage and decisiveness.

At the same time, the task of defeating Yudhoyono may precipitate what is really a logical alliance -- that of the two secular, nationalist and statist parties; Golkar and PDI. Such a power block at the center would significantly boost any president by providing a majority in parliament and a potential basis for an assault on the contending centers of predatory power in the regions.

But there are important differences with the Thai case. Most important, Thaksin's agenda is directly to establish the political ascendance of national business through the Thai Rat Thai party. It is backed by a powerful and wealthy set of interests.

By contrast, neither Golkar nor PDI in Indonesia constitute a cohesive set of interests. Nor do they represent the center against the regions. Rather, they represent long strands of political alliance that extend down into the regions and provinces and include complex business and political elites. Business today in Indonesia may fund politics but is entirely incapable of organizing a party in their interests to capture power.

At one level, the changing nature of business in Indonesia will be ultimately critical in the political outcome. On the one hand, damaged by the crisis, no longer with access to state generated monopolies and easy credit, there is a trend for Indonesian business to be found increasingly in such areas as property and development, or in small scale insurance and finance, local and regional trading and in the more sinister black areas of the economy. These are natural allies for predatory politics, regional political bossism and 'savage capitalism'.

But we should not dismiss the prospect of a growing integration with a new Southeast Asian and mainland Chinese economic and corporate expansion. The fact that a large share of the assets sold by the now defunct Indonesian Bank Restructuring Agency (IBRA), including banks, have been purchased by firms from Singapore and other Asian countries rather than from the West demonstrates that Asian countries may be more able to negotiate the vagaries of the new business climate.

We might speculate that a new process of globalization linking Indonesia more closely to the larger economic agendas of Asia will be more pervasive and thus more capable of transforming Indonesia than Western corporate investment. If some elements of big Indonesian business is reconstituted as partners and brokers within this new relationship they too, will become more internationalized.

Thus the future for Indonesia may be conceived not as the oligarchic regionalism of, say, the Philippines, nor as the centralized populism of Thailand but more in terms of the organized and centralized capitalism of Malaysia.

[The writer is professor of political economy at the Institute of Social Studies in The Hague. He has recently co-authored with Vedi Hadiz, Reorganizing Power in Indonesia: The politics of oligarchy in an age of markets (published by Routledge, London).]

Susilo, Mega hazy on press freedom

Jakartra Post - July 28, 2004

Sari P. Setiogi, Jakarta -- Campaign workers for the two remaining presidential candidates, Susilo Bambang Yudhoyono and Megawati Soekarnoputri, expressed on Tuesday what appeared to be only lackluster support for press freedom.

"Our government will ask judges and prosecutors to apply the Press Law when dealing with cases involving the media," Susilo- Kalla campaign spokesman Alwi Hamu told a discussion on press freedom on Tuesday.

He regretted the fact that judges and prosecutors had often opted to apply the Criminal Code rather than the Press Law in cases where journalists found themselves in dispute with government officials or businesspeople.

The prosecution recently demanded a two-year jail term for two journalists and the chief editor of Tempo magazine for allegedly inciting public unrest and defaming businessman Tomy Winata.

Last year, two journalists received suspended jail terms for "insulting" President Megawati Soekarnoputri and House of Representatives Speaker Akbar Tandjung respectively.

Alwi asserted that while press freedom needed to be upheld, journalists tended to overlook what he claimed were their social responsibilities.

"It must be admitted that the Press Law provides the press with unfettered freedom. As a result, judges and prosecutors have found difficulties in protecting people from being subjected to trial by the press," he argued.

He said he favored a review of the law so as "to strengthen the press as an institution".

He also pledged that the Susilo-Kalla ticket, if elected, would recognize the pivotal role played by the press. "We realize that many government policies will be challenged by the legislature. Therefore, we place a lot of hope in the press," he said. Susilo's Democratic Party won only 57 out of the 550 seats in the House of Representatives.

Separately, the second secretary of the Mega-Hasyim Muzadi campaign team, Halim Mahfudz, said that Mega and Hasyim were impressed by the First Amendment to the United States Constitution. "However, it should be remembered that Indonesia is different from the US," said Halim.

He said the press needed to be regulated to enable it to play an effective role in the country. However, he declined to elaborate on how exactly this would be done.

Apart from the Press Law, Article 28 (e) and (f) of the Second Amendment to the Constitution on freedom of information also enshrines the principle of freedom of the press.

By contrast, the government has failed to revoke at least seven regulations that threaten press freedom.

Among them are certain articles of the Criminal Code, especially those concerning defamation, Law No. 32/2002 on broadcasting which permits government censorship, Law No. 4/1999 on bankruptcy, which states that a press outlet may be declared bankrupt if it creates public anxiety.

Commenting on the dialog, senior member of the Press Council Sabam Leo Batubara said that neither of the campaign team representatives had presented a clear vision for the future of press freedom in Indonesia.

Presidential candidates to woo undecided voters

Jakarta Post - July 28, 2004

A. Junaidi, Jakarta -- Susilo Bambang Yudhoyono and Megawati Soekarnoputri have their work cut out for them in wooing undecided voters whose first picks fell by the wayside in the July 5 election, analysts say.

"The number of undecided voters is high, but it doesn't mean they will not vote in the runoff. So the candidates, particularly Megawati, should work hard to attract them," head of the research division of the Institute for Social and Economic Research, Education and Information (LP3ES) M. Husain said on Tuesday.

The latest survey by LP3ES on July 5 in 32 provinces revealed that 70 percent of 26 million people who voted for presidential candidate Wiranto from the Golkar Party were still undecided of whether to choose Susilo or Megawati.

The survey, involving 4,511 respondents with a margin of error of plus/minus 1.5 percent, also said that 74 percent of 17 million supporters of presidential candidate Amien Rais of the National Mandate Party (PAN) had not decided who to vote for in the runoff.

According to the survey, 84 percent of the 3.5 million people who voted for presidential candidate Hamzah Haz of the United Development Party (PPP) also had no idea who they would vote for next.

Of the more than 47 million voters who saw their candidates eliminated, 10 million preferred Susilo compared to only three million who would vote for Megawati, the survey says.

Voters considered the economy, basic needs and corruption eradication as the top priorities to be addressed, the survey found.

The General Elections Commission (KPU) announced on Monday that Susilo and Megawati, who secured 39.8 million and 31.56 million votes respectively, would contest the Sept. 20 runoff.

Among the 156 million registered voters, only 121 million voted in the July 5 election.

Another pollster, the Indonesian Survey Institute (LSI), released its survey result, which said that between 5 percent and 17 percent of supporters of eliminated candidates had not decided on their next preference.

The survey, which was conducted in 32 provinces between July 17 and July 19, said 5 percent of Golkar's supporters and 7.6 percent of the National Awakening Party's supporters, whose parties nominated Wiranto, had not decided on who to vote for next.

About 16.7 percent of PAN supporters and 7.7 percent of the supporters of the Prosperous Justice Party, which also nominated Amien, and 11 percent of PPP supporters had also not decided on their new preferences. The survey involved 1,200 respondents with a margin of error of 3 percent.

"It appears that the majority of supporters of the eliminated candidates will vote for Susilo and only a small number will choose Megawati," LSI's director M. Qodari said.

Qodari said the survey showed that 68 percent of the respondents would vote for Susilo, 23 percent for Megawati and 9 percent were still undecided.

The survey did not include around 34 million registered voters who did not cast their ballots in July.

Political observer Indria Samego said the two candidates, especially Megawati, would need to work extra hard to woo the undecided voters and improve her vote gain.

"Megawati's team should think hard about how to woo more supporters in the two months left," Indria of the Indonesian Institute of Sciences (LIPI) said.

He said the candidates should increase their popularity through television ads since the survey showed that most of the voters were much influenced by ads.

He said grassroots support was more vital for the candidates, instead of support from the political elite since voters were independent.

Yudhoyono favoured to win 2nd presidential poll

Antara - July 28, 2004

Jakarta -- An independent political research organization predicted here Tuesday that Susilo Bambang Yudhoyono (SBY), winner of the first round of Indonesia's first-ever direct presidential election last July 5, will also prevail in the runoff poll on September 20.

The Indonesian Survey Institute (LSI) said according to a sruvey it had conducted, SBY would win 68 per cent of the votes in September, far surpassing the 23 per cent his only rival, incumbent President Megawati Soekarnoputri, would collect.

The LSI survey was carried out on July 17-19 in 150 villages across the country covering 1,190 respondents. The LSI used a "multi stage random sampling" method in the survey with a sampling error of approximately three, LSI's research director, Muhammad Qodari, said.

Megawati would win a smaller number of votes than in the first round of the election when she bagged 26 per cent of the votes, he said.

Nine per cent of the respondents in the survey said they had yet to make up their mind or refused to divulge their preference saying it was "secret".

The survey showed SBY who is pairing up with Yusuf Kalla is more popular than Megawati among respondents classified according to gender (men or women). SBY was also favored by 73 per cent of Moslem voters while Megawati enjoyed the support of only 18 per cent of them.

But Megawati was more preferred over SBY among Christian and Hindu voters.

According to the survey, SBY would win in all of Indonesia's provinces and Megawati only in Bali, West and East Nusa Tenggara.

Sixty-eight per cent of Golkar Party supporters as well as most of Moslem-based parties such as PKB,PPP, PKS and PAN were also predicted to vote for SBY.

Likewise, most members of Indonesia's largest Islamic organization, Nahdlatul Ulama (NU) were also expected to cast their votes for SBY although Megawati's running mate, Hasyim Muzadi, was the NU's non-active chairman.

Seventy-seven per cent of NU members were predicted to vote for SBY and only 16 per cent for Megawati. Most members of the second largest Islamic organization, Muhammadiyah, would also choose SBY (69 per cent) while Megawati would win the support of only 13 per cent.

Speaking on the same occasion, political observer Indria Samego said Megawati and her success team would have to think very hard af a way to disprove LSI's prediction, adding no political party elite would be able to influence their supporters' choice.

How Mega surged back into contention

Straits Times - July 30, 2004

Derwin Pereira, Jakarta -- It was tipped to be the battle of the generals. But in the end, it was not. Incumbent Megawati Sukarnoputri defied the odds with a last-minute surge that catapulted her into the second round of the presidential race with a fighting chance now for re-election.

Her late offensive left former military commander Wiranto by the wayside. And more significantly, it cut the spectacular lead the other four-star general, Susilo Bambang Yudhoyono, had on her and whom pollsters had predicted would get the 50 per cent majority mark to avoid a September 20 run-off.

The official results of the July 5 election showed him weaker with 36.6 per cent and Ms Megawati with 26.6 per cent, much more than the 14 per cent she had been expected to pull.

What explains the President's dramatic change in fortunes? Just three months earlier, her Indonesian Democratic Party-Struggle (PDI-P) slumped to an embarrassing defeat in the general election. Political observers believed she would never recover.

But the defeat only emboldened her as she stepped out of her palace cocoon to court the wong cilik -- or small people -- aggressively. The normally reticent and aloof 57-year-old leader mounted a charm offensive -- kissing babies, touring markets and shaking hands with farmers, fishermen and labourers.

The powers of incumbency played a big role. With the largest war chest and state resources at her disposal, she could work the ground more effectively than her rivals.

Some believe that she even used the national police to mobilise grassroots support. Indeed, there was damning evidence of this in VCDs circulating around the country. The police chief of Banyumas in Central Java is shown calling on several people at a meeting before the July 5 polls to support Ms Megawati. Others speculate that there might also have been electoral manipulation. There is little evidence, however, to suggest this happened.

Whatever the case, her opponent will have to contend with this advantage of incumbency in the second round. Palace loyalists argue that she got in on her own merits.

Despite doing badly in the parliamentary polls, she was still able to capture close to 20 million votes. She benefited from name recognition as the daughter of Indonesia's founding father, Sukarno.

She went into the race with another advantage: the opposition was divided. With five candidates in the first round, there was little chance of an anti-Megawati bloc emerging. It created a somewhat even playing field that increased her chances of getting into the run-off.

In the next round, the short campaign season will favour Ms Megawati, who could again use her position to get free media exposure and introduce populist policies to win favour.

With gold in the coffers, the palace could also attract major parties with the best deals. It appears to have already done so by wooing Golkar and the Muslim-based United Development Party (PPP) in a grand alliance.

It will certainly close the gap on Mr Bambang, whose saving grace thus far has been his personal popularity. Telegenic and soft- spoken, the 55-year-old Javanese general's image has propelled his nationwide appeal. His small Democratic Party managed only 7 per cent in the GE. But this increased fivefold in the July presidential election.

The figures fall short of expectations. Some blame the polls for playing up his popularity. But it could also be that the smear campaign against him by those close to the palace might have had the desired effect in the last weeks of campaigning in June.

A deluge of reports on his involvement in the attack on the PDI-P headquarters in 1996 and doubts about his Islamic credentials may have cost him valuable votes.

Mr Bambang enters the contest as front runner again. But the key for him will be whether his popularity can withstand the challenge of his rival's political machinery with its tentacles across the sprawling archipelago.

The force of incumbency will bring itself to bear again on the second round. Having put one powerful general out of the race, Ms Megawati appears to be in no mood to give up her throne to another.

Corruption/collusion/nepotism

Mega comes under fire on Sjamsul's case

Jakarta Post - July 26, 2004

A. Junaidi, Jakarta -- A group of non-governmental organizations demanded on Saturday that the Attorney General's Office resume its investigation into Sjamsul Nursalim, saying the President's order to stop the legal process against the business tycoon violated the Anticorruption Law.

Coordinator of the National Legal Reform Consortium (KRHN) Firmansyah Arifin said the office could not halt the investigation into Sjamsul, just because he had returned Rp 10.1 trillion (US$1.12 billion) in Bank Indonesia Liquidity Assistance (BLBI) funds that he had misused.

State prosecutors said their decision was based on Presidential Decree No. 8/2002 on release and discharge, resulting in the acquittal of a number of business heavyweights accused of misusing BLBI funds of both criminal and civil charges in exchange for debt repayment.

Firmansyah said the decree breached Article 4 of Law No. 31/199 on corruption eradication, which states that debt repayment to the state shall not cancel out criminal charges.

"What about other convicted corruptors who have returned state money. The Attorney General's Office has practiced discrimination by freeing Sjamsul," he said.

Businessman Winfried Simatupang and social foundation organizer Dadang Sukandar were both jailed for 18 months last year in a high profile corruption case that also involved Golkar Party leader Akbar Tandjung.

The judges convicted Winfried although he returned all Rp 40 billion belonging to the State Logistics Agency that he had misappropriated.

While acquitting Akbar, the Supreme Court sustained the prison sentence for Winfried and Dadang, despite the fact that the state losses were recovered.

The Judiciary Watch Coalition, the Indonesian Corruption Watch (ICW), the Jakarta Legal Aid Institute (LBH Jakarta), the Indonesian Judiciary Monitoring Society of the University of Indonesia's School of Law (Mappi FHUI) and the Indonesian Institute for an Independent Judiciary (LeIP) added pressure on the Attorney General's Office to resume its probe into Sjamsul.

"The office's decision has insulted the people's sense of justice," Firmansyah said.

Until the probe against him was dropped, Sjamsul had evaded legal investigation from May 2001, claiming he needed medical treatment abroad. It was the Attorney General's Office which permitted WSjamsul to go overseas.

Asep Rahmat Fajar of Mappi FHUI said the office's move to suspend Sjamsul's case had marred President Megawati Soekarnoputri's recent anticorruption drive which has resulted in the implication of Aceh governor Abdullah Puteh and lawmaker Nurdin Halid in high-profile corruption and smuggling cases.

Asep demanded that the President clarify to the public the reasons behind her controversial decree and her commitment to corruption eradication.

If the prosecutors fail to resume their investigation into Sjamsul, the NGOs would ask the powerful Corruption Eradication Commission (KPK) to take over the case, he said.

Asep said the NGOs would demand that the Supreme Court revoke the letter certifying that Sjamsul had repaid his debts issued by the Indonesian Bank Restructuring Agency. Seven other debtors have also secured similar certification and will also likely be acquitted of charges, They are Denin Tong of Bank Baja International, Husodo Angkow of Bank Sewu International, Hasyim Joyohadikusumo of Bank Pelita, Bank Papan Sejahtera and Bank Istamarat, Hokiarto of Hokindo Bank, The Nin King of Hutama Bank and Muhammad "Bob" Hasan of Bank Umum Nasional.

Sjamsul was declared as a suspect in 2000 after his Bank Dagang Nasional Indonesia (BDNI) failed to repay BLBI funds. The bank violated the legal landing limit regulation by channeling most of its loans to his group's subsidiaries

Human rights/law

Child trafficking, violence rampant in Jambi, East Java

Jakarta Post - July 26, 2004

Jon Afrizal and Indra Harsaputra, Jambi/Surabaya -- The celebration of National Children's Day on Friday, may be already over, but there is work to be done, for people of all walks of life in the country, especially the government on issues that need to be addressed immediately.

The two issues the government must address are trafficking of children and violence toward children in the country, especially in Jambi and East Java provinces.

In Jambi province, it is estimated that 100 children between the ages of 12 and 15 are sold each year as sex workers to pimps in several cities nationwide and even to Malaysia and Singapore.

Asmawati Achmad, the coordinator of the Indonesian Family Planning Association's (PKBI) Jambi office, said that trafficking of children had been going on for 10 years in the province.

Each month, two to three girls leave Jambi to work as sex workers. "Jambi has become a transit point and supplier of child sex workers," said Asmawati on Saturday.

Citing several cases Asmawati said child trafficking was well- organized and involved mafia. In every deal, the trafficking mafia usually sold two or three girls, who were always accompanied by a pimp.

The traffickers would take the girls under the guise of giving them the opportunity to work abroad. The members of the groups would entice the victims with the opportunity of working abroad.

The victims would join those who recruited them on a trip to "neighboring countries" and they would be given passports and other identity cards.

"The victims usually pay their own travel expenses to the traffickers. If they don't have money, the recruiters would pay the travel expenses for them, but it is considered a loan that they have to pay back later," said Asmawati.

Passing several seaports in the province, the victims are then brought to Pekanbaru, Riau province, and later shipped to Malaysia or Singapore or they ended up in Batam, Riau province or Medan, the capital of North Sumatra.

Asmawati demanded the government put an end to the trafficking of children, as it has brought misery to the children and their parents.

Separately in Surabaya, a local non-governmental organization Samitra Abhaya released a statement that the number of rape cases in East Java province rose last year to 417, or a 55 percent increase compared to 2002. Some 55 percent of the 417 victims last year were minors, according to Samitra's report made available to the media on Friday.

Deputy State Minister for Women Empowerment Irma Alamsyah said that the government was deliberating a bill on the eradication of women and child trafficking. The bill, when it comes into law, is expected to be able to help law enforcers to eradicate the rampant child and women trafficking.

She also said in Surabaya that the government would pay more attention to the rising number of cases of violence against children in the country.

Legislators insist on deliberating military bill

Jakarta Post - July 31, 2004

Kurniawan Hari and Tiarma Siboro, Jakarta -- Despite the growing opposition toward the Indonesian Military (TNI) bill, major factions in the House of Representatives are insisting on deliberating the government-sponsored draft.

Chairman of the Indonesian Democratic Party of Struggle (PDI-P) faction at the House Tjahjo Kumolo said the bill was designed to provide the TNI with clear guidelines in its duty to defend national unity.

"There is no intention whatsoever to revive the political role of the military," Tjahjo said after receiving representatives of non-governmental organizations who urged the faction to support their demand for a delay in the bill deliberation schedule.

The NGO representatives and experts will meet with other factions at the House in a last-ditch effort to prevent the deliberation from proceeding. They held talks on Thursday with House Commission I on security and defense that has been appointed to debate the bill.

Munir, from human rights group Imparsial, asked the legislators to allocate more time to gain inputs from the public.

The House commission has allocated three days from August 2 through August 4 to hear opinions from military experts and retired military officers on the bill. The deliberation itself is slated to start on August 24, and is expected to finish before the current House ends its term at the end of September. The new House legislators who were elected in the April 5 polls will be installed on October 1.

"The legislators can start the deliberation, but they must not rush to endorse the bill. We will appreciate the legislators if they allow the new legislators to continue the deliberation," Munir said.

Under Soeharto's New Order government, the military, then known as the Armed Forces (ABRI), executed both security and political duties at the expense of democracy. The military's territorial control was evident with the appointment of Army officers as governors, regents and mayors.

Tjahjo promised the PDI-P faction would not hastily endorse the bill. "We will look thoroughly into the content of the bill. It's more important to proceed with the deliberation while giving the public access to the debate," Tjahjo said.

Commission I member Chatibul Umam Wiranu of the National Awakening Party also suggested that deliberation should not be rushed, so as to avoid producing flawed legislation.

Opposition to the bill also came from former military chief of social and political affairs Lt. Gen. (ret) Hasnan Habib, who called on lawmakers to drop the draft, which he said could revive the military's role in politics.

Speaking at a seminar on Thursday Hasnan criticized the bill for contradicting the Constitution and the law on state defense.

According to the Constitution, the military is responsible for defense while the police are responsible for security. The bill, however, allows the military to meddle in security affairs.

Military analyst Mochtar Pabottingi of the Indonesian Institute of Sciences (LIPI) also gave a thumbs-down to the draft for adopting the old paradigm of unity between the military and the people, which he said would hamper professionalism in the military.

"The military is a state apparatus that plays a key role in guarding the state. The concept of unity between the military and the people will only provide excuses for the military to interfere in civil affairs, including politics," Mochtar said.

A step forward, a step back

Jakarta Post Editorial - July 30, 2004

By annulling Law No. 16/2003 on retroactivity of the Antiterrorism Law last Saturday, the Constitutional Court put the nation one step back in its fight against terrorism -- and took it one step closer to establishing a viable, working democracy.

The fact is, although legal professionals acknowledge that special conditions might exist to permit state authorities and lawmakers to waive the non-retroactive principle, this principle remains one of the most fundamental judicial tenets to this day.

After all, it provides the only formal guarantee that people will not be arrested arbitrarily for offenses, whether actual or alleged, under laws that did not exist at the time the offense was committed. Needless to say, this is essential in any country that respects -- or is making efforts to accommodate -- the basic rights of all individuals.

How, then, did Law No. 16/2003 come to be passed? As may be recalled, this law is an extension of a government decree that was enacted, in rather a hurry, in the wake of the Oct. 12, 2002 attacks on two nightclubs in Bali that killed at least 202 people.

For the first time in recent history, the retroactive principle was applied for the specific purpose of tracking down and capturing the perpetrators of the Bali bombings. A number of terrorists were arrested and tried, and several have since been sentenced either to death or life.

The retroactivity of the decree also made it possible for authorities to arrest and convict accomplices and abettors.

Given the proven effectiveness of the Antiterrorism Law, Saturday's ruling obviously raises a serious obstacle in the authorities' efforts to corral those implicated by, associated with or involved in the Bali bombings, but who have escaped the law so far.

It is believed that many such individuals have been in hiding since the key terrorists and accomplices were arrested within the first few months after the tragedy. Understandably, friends and family of Australian victims have been enraged by the anti- retroactivity ruling.

It is important, however, to view the issue within the Indonesian context, which goes above and beyond the Bali bombers or their accomplices. At stake is the much bigger issue -- especially at this stage of democratic and judicial reform -- of protecting and ensuring basic human rights.

In particular, it is about whether the fight against terrorism should take priority over guaranteeing protection for all citizens against arbitrary arrests and other legal measures, including those committed by the state -- which is, after all, another form of terrorism.

The narrowly split motion that passed the anti-retroactivity ruling -- five judges for and four against annulling Law No. 16/2003 -- shows that the two sides to the argument prevailed almost equally strongly during the deliberation.

It should also be noted that even though Law No. 16/2003 was scrapped, the judiciary still has Antiterrorism Law No. 15/2003 -- which, however, does not contain an clause on retroactivity.

In short, the Constitutional Court ruling limits what can and can't be done in the war on terror. However, the implied bounds are not likely to be as severe as some observers seem to expect. Even without the retroactivity principle, much can be done under existing laws to ensure that the people are protected against terrorism.

In conclusion, three further points must be noted: The first is that the Court has so far proved itself worthy of the public's trust in its capacity as the ultimate bulwark of law enforcement. The second is that, by publicly declaring its respect for and abidance with the court decision, the government is, for its part, making a valuable contribution toward the proper enforcement of law in Indonesia. Finally, both deserve to be commended for this show of wisdom and statesmanship.

Constitutional court reviews energy laws

Antara - July 30, 2004

Jakarta -- The Constitutional Court has summoned three ministers of economic affairs to provide a clarification on a petition for a judicial review of Law No 20/2002 on the electricity sector, and Law No 22/2001 on oil and natural gas against the 1945 Constitution.

The court session on the judicial reviews was held at the parliamentary building here on Thusday and the three ministers who gave the clarification were Economic Affairs Coordinating Minister Dorodjatun Koentjoro Jakti, State Entreprises Minister Laksamana Sukardi and Energy and Mineral Resources Minister Purnomo Yusgianyoro.

The session was started with the judical review of Law no 20/2002 filed by employees of state electricity company PT PLN, while the judicial review of Law No 22/2001 was filed by the Indonesian Legal and Human Rights Aid Association (PBHI).

The court session on the judicial reviews was still in progress when this report was issued.

The Constitutional Court has yet to decide whether or not to grant the demand for the judicial reviews, and if granted the two laws will be annulled.

Opposition to draft TNI a foreign plot: Army chief

Kompas - July 28, 2004

Jakarta, Antara -- Army chief of staff General Ryamizard Ryacudu has suggested that opposition against the draft law on the TNI (armed forces) within a number of circles is because of interference by foreigners who want to divide and weaken the Indonesian nation.

Ryacudu made the statement following an event commemorating the 54th anniversary of the Gatot Soebroto army hospital Jakarta on Monday July 26 saying that the TNI does not intend to use the draft law to go back to "bearing its teeth" as it did during the New Order regime of former President Suharto.

According to Ryacudu the strength of national defense and the Indonesian state is based on strength and professionalism of TNI officers in carrying out their function as the guardians of the sovereignty and integrity of the nation and state.

"If there are parties who reject the draft law on the TNI this indicates the existence of foreign forces who want to interfere in order to divide the unity and integrity of the nation and Indonesian state", he said.

Criticism against the draft law has persisted within a number of circles who are of the view that the law does not fulfill the concept of an integrated armed forces which is a global necessity. They believe that the draft law which has been presented to the parliament for deliberation still prioritises the army's role in territorial control.

A number of circles also consider that the draft law indicates the existence of an effort to bring the dual social and political role of ABRI [the former name of the Indonesian Armed Forces] back to life.

The law is also considered to be a threat to democracy in Indonesia over the next five years, particularly in relation to Article 9 (d) which reads "The army has the duty to carry out territorial development in accordance with the its role and authority as well as building TNI's unity with the people".

The stipulations of this article, aside from bringing the territorial commands back to life, also functions to enable the military to monitor the political life of the people down to the lowest levels. This is in contradiction with the last six years of struggle to create freedom of expression and association. (ANT)

[Translated by James Balowski.]

Reconciliation & justice

Susilo linked to the July 27 tragedy

Jakarta Post - July 28, 2004

Jakarta/Semarang/Yogyakarta -- While President Megawati Soekarnoputri again distanced herself from the tragedy of July 27, 1996 -- which identified her as then president Soeharto's political victim -- the eighth commemoration of the incident on Tuesday was marked by an attempt to link her opponent in the election, Gen. (ret) Susilo Bambang Yudhoyono, to the tragedy.

Megawati opted to open the Asia Pacific Economic Cooperation (APEC) transportation meeting in Bali on Tuesday. Her husband Taufik Kiemas and daughter Puan Maharani sent bouquets of flowers to be placed in front of the former office of the Indonesian Democratic Party (PDI) on Jl. Diponegoro in Central Jakarta.

Dozens of people chanted antimilitary slogans there: "Bring the perpetrators to court. Several generals were responsible for the violence. Bring Sutiyoso and Susilo Bambang Yudhoyono to court," they said.

Lt. Gen. (ret) Sutiyoso, the incumbent Jakarta governor, was then Jakarta Military commander, and then Brig. Gen. Susilo was his chief of staff, when Soeharto ordered the military to disperse a gathering of Megawati's supporters at the office. Soeharto ousted Megawati in June 1996 as PDI leader, fearing that she posed a threat to his government.

Her supporters guarded the office to prevent the government from taking it over. Five people were killed and 23 others went missing when a military-backed group launched the attack. Soeharto later appointed Sutiyoso as Jakarta governor, apparently in appreciation of his success in dispersing Megawati's supporters.

According to Tempo news weekly, in its latest edition, Susilo suspects that his name was linked to the tragedy to serve the interests of "those at the center of power". "There was no warning, yet, suddenly it surfaced like that," he said.

After almost two years with no significant progress, the Attorney General's Office recently pledged to pursue the case. Suspicions have arisen over the motives and timing of the renewed commitment to investigate the case, as the reemergence of the case could damage Susilo's bid for the presidency.

The official investigation team has declared 22 people as suspects, 10 are from the military, including Sutiyoso.

Megawati's aides, however, deny the allegation. According to them, "it would only backfire" if Megawati's camp attempted to blame the general for the incident.

Meanwhile, the police refused the request of a small group of youths to enter the commemoration venue, to avoid a possible clash with Megawati's supporters. Apart from condemning the military for the incident, they also shouted that "Megawati should be responsible for the violence." Megawati has shown little interest in the tragedy. She even strongly supported the reelection of Sutiyoso as governor in 2001.

Meanwhile, in Yogyakarta, dozens of Megawati's supporters gathered at Parangkusumo beach and threw military boots and traditional Javanese puppets to the water to symbolize the struggle against military power.

"I wish Ibu Megawati would be more serious in looking back over the bloody incident -- no matter if that implicated several influential figures here," coordinator of the event, Cindelaras Dwi Yulianto, said.

In Semarang, students of the Anti-repressive Forum held a peaceful rally, distributing flowers and antimilitarism messages to passersby.

KPU Semarang presented with rotten tomatoes

Detik.com - July 27, 2004

Triono Wahyu Sudibyo, Semarang -- Two student groups have held actions to commemorate July 27(1). One of the groups presented the Central Java National Election Commission (KPU) with a gift of rotten tomatoes while another group brought flowers. Both condemned the repressiveness of the military and demanded that cases involving the shooting of students be investigated.

The first group calling itself the Central Java Poor People's Front for Struggle (Front Perjuangan Rakyat Miskin, FPRM) which is made up of the People's Democratic Party (PRD), the National Student League for Democracy (LMND) and the Indonesian National Student Movement (GMNI), started their action at the Semarang water fountain on Jalan Pahlawan on Tuesday July 27. After a few minutes of speeches they held a long-march towards the KPU offices on Jalan Veteran.

At around 11am they arrived at the KPU offices and immediately began giving speeches rejecting all of the presidential candidates including those who have made it through to the second round. "None of the presidential candidates are suitable to lead this country. We therefore reject the results of the [July 5] presidential elections and call for the military institutions from the territorial military commands down to village to be abolished", shouted action coordinator Badrun during breaks in the action.

A short time later they wanted to throw rotten tomatoes as a symbol of the rottenness of the election administration however scores of police who had been on guard from the start prevented them from doing so. After negotiations, the demonstrators asked for permission to enter the grounds of the KPU offices to give the tomatoes to members of the KPU. After negotiations with a KPU staff member they were finally allowed to enter.

One of the KPU members, Hasyim Asy'ari, who was waiting for them inside, was immediately presented with a plastic bag full of rotten tomatoes by the 50 or so students. After Asy'ari had taken the tomatoes the demonstrators shouted and yelled and sung songs of struggle.

At around 12.30pm the demonstrators left and returned to the water fountain where the action began. Scores of police could be seen escorting them as they directed traffic.

At a different location meanwhile, a group of students calling themselves the Student Forum Against Repression (Forum Mahasiswa Anti Represifitas) also held a similar demonstration. The coalition of Student Executive Councils from the University of Diponegoro (Undip) started their action at Undip campus at 10am. Because the water fountain was already being used by the FPRM group in the end they head off to the Central Java KPU offices where they distributed flowers as a symbol of peace against violence. They also handed out a leaflet which condemned the failure to resolved the Trisakti, Semanggi and other cases(2).

While they were handing out the flowers the demonstrators who were wearing their university faculty jackets sang the song "Fall of the Flower". At 11.30am they ended the action and return to the campus which is only around 500 meters from where they were demonstrating. (nrl)

Notes:

1. Following weeks of protests at the Indonesian Democratic Party (PDI) headquarters in Central Jakarta by pro-Megawati PDI supporters after the Suharto regime engineered Megawati's removal as the party's democratically elected chairperson, on July 27, 1966, paid thugs backed by the military attacked and destroyed the PDI offices resulting in the death of as many as 50 people. Popular outrage at the attack sparked several days of mass rioting and violent clashes with police. Many had hoped that with Megawati's ascendancy to the presidency those responsible would be held accountable however Megawati and other leading party figures have publicly distanced themselves (refusing to attend annual commemorations) from the issue. Those who were eventually brought to trial in late 2003 have all been low ranking soldiers or civilians and have either been acquitted for lack of evidence or given light sentences. None of those believed to have organised or led the attack have been brought to trial.

2. In May 1998, security personnel shot into a crowd of student protesters from the Trisakti University near their campus in West Jakarta, killing four students and injuring several. This proved to be the spark which set-off three days of mass demonstrations and rioting in Jakarta which eventually lead to the overthrow of former President Suharto. The Semanggi I and II cases involved the fatal shooting of dozens of student demonstrators in Jakarta in November 1998 and September 1999 respectively.

[Translated by James Balowski.]

July 27 commemorations in Sulawesi rejects Mega and SBY

Detik.com - July 27, 2004

Jafar G. Bua, Palu -- If July 27 commemorations are usually identified with President Megawati Sukarnoputri, this was not the case in city of Palu, Central Sulawesi, where the commemorations was instead marked by actions rejecting Megawati and presidential candidate Susilo Bambang Yudhoyono (SBY).

The action was organized by around 50 people from the Central Sulawesi Anti-militarism Front (Front Anti Militerisme Sulawesi Tengah) who had been holding a long-march in the area of Jalan Protokol since 12noon on Tuesday July 27.

The front is made up of the People's Democratic Party (PRD), the Indonesian National Labour Front for Struggle (FNPBI), the National Labour Union (SPN) and a number of Palu youth organisations. "Oppose militarism", "Oppose Mega" and "Oppose SBY" was written on banners and expressed in speeches.

The demonstrators also demanded the disbandment of the military's territorial command structure from the level of Kodam, Korem, Kodim, Koramil and Babinsa(1). They also called the nationalisation of the military and the general's business asses. Despite being anti-militarism, they also called for the wages of soldiers and low-ranking officers to be raised.

The chairperson of PRD South Sulawesi, Eko Aryanto, said that they were demanding that militarism be eradicated and are calling for the formation of a united government of the people. "The 2004 elections are not the political or economic way for the people [to improve their lives]", he said.

During the long-march which started at GOR Park and proceeded to the South Sulawesi regional parliament on Jalan Sam Ratulangi via the Hotel Indonesia roundabout, demonstrators also distributed leaflets. After the demonstration ended, they returned to GOR park. (nrl)

Notes:

1. Following weeks of protests at the Indonesian Democratic Party (PDI) headquarters in Central Jakarta by pro-Megawati PDI supporters after the Suharto regime engineered Megawati's removal as the party's democratically elected chairperson, on July 27, 1966, paid thugs backed by the military attacked and destroyed the PDI offices resulting in the death of as many as 50 people. Popular outrage at the attack sparked several days of mass rioting and violent clashes with police. Many had hoped that with Megawati's ascendancy to the presidency those responsible would be held accountable however Megawati and other leading party figures have publicly distanced themselves (refusing to attend annual commemorations) from the issue. Those who were eventually brought to trial in late 2003 have all been low ranking soldiers or civilians and have either been acquitted for lack of evidence or given light sentences. None of those believed to have organised or led the attack have been brought to trial.

2. The TNI's territorial command structure mandates the deployment of military command posts and detachments at all levels of the civil administration: provincial, district, sub- district and village. This structure provides the organisational framework for the TNI to act as a political security force at all levels of society.

[Translated by James Balowski.]

July 27 commemoration turns bloody

PRD News - July 27, 2004

Risna -- On July 27, 1996, a bloody tragedy occurred which began with an attack on the headquarters of the Indonesian Democratic Party headquarters in Central Jakarta by a group organised by the military. Following the attack, the New Order dictatorship of former President Suharto launched a wave of arrests, abductions and banningings in order to kill off the Indonesian opposition movement which at the time was beginning to grow in strength.

In order to commemorated the incident, on July 27, a number of groups such as the United Opposition Front (BOB), the People's Forum and the Education Front of Concern held a joint action in which started with long-march from the University of Indonesia in Salemba, Central Jakarta.

The action was also joined by more than 500 people from various parts of Jakarta including the People's Democratic Party (PRD), the National Student League for Democracy (LMND), the National Peasants Union (STN), The Poor People's Youth Fighters (LPRM), the Democratic Student Network (JMD), the Indonesian National Labour Front for Struggle (FNPBI), the Papua Student Alliance (AMP), the Acehnese People's Front for Struggle (FPDRA) and the Women's Organisation for Aceh Democracy (ORPAD).

During the action the demonstrators shouted slogans and demands such as "Fight militarism, Mega-SBY", "Abolish Kodam - Korem - Kodim - Koramil - Babinsa" [the military's territorial command structure], "Try and arrest all of the human rights criminals of the New Order and fake reformists" and "Form a united government of the people".

Speeches were also given by representatives of each of the groups. BOB coordinator, Dita Indah Sari, reemphasised that "militarism is our enemy not because the evidence of its re- emergence is now before us, but because militarism has been our opponent long before today".

The anti-military demonstrators then continued their action in front of the offices of the governor of Jakarta, retired General Sutiyoso, who at the time of the July 27 tragedy held the post of Jakarta military commander. As the demonstration was about to break up, without warning security forces brutally attacked the action, beating demonstrators, forcing them to the ground and trampling on them. A number were seriously hurt and several had to be rushed to hospital.

"This incident indicates that the iron fist of the military will never stop repressing whoever threatens their power", commented one of the demonstrators following the incident adding "What occurred today will not make us retreat, but [just the opposite and] we will be back tomorrow".

Likewise, the coordinator of the action has stated that on July 28 the PRD will be holding another demonstration.

[Translated by James Balowski.]

July 27 demonstrations in Jakarta marred by clashes

Detik.com - July 27, 2004

Indra Shalihin, Jakarta -- An action commemorating July 27 in front of the city's government offices in Jakarta has ended in clashes. Students who were demanding that Jakarta governor Sutiyoso be tried in relation to the July 27 attack(1) were involved in a clash with Pamong Praja security guards after they forced their way onto the grounds.

The clash occurred at around 4pm on Tuesday July 27 after the situation became heated when students attempted to break down the front gates. The cause is unclear but not long alter this a clash broke out. The students, who were from the National Student League for Democracy (LMND), began throwing rocks which was reciprocated by Pamong Praja security guards.

The clash, which continued for around 15 minutes, only subsided after two units from the Central Jakarta police intervened. At around 4.20pm the demonstration was able to be broken up.

The LMND students had been demonstrating since 2pm. During the action they demanded that Sutiyoso be immediately taken to court. The students also said that President Megawati Sukarnoputri and presidential candidate Susilo Bambang Yudhoyono must take responsibility for the July 27 case. (iy)

Notes:

1. Following weeks of protests at the Indonesian Democratic Party (PDI) headquarters in Central Jakarta by pro-Megawati PDI supporters after the Suharto regime engineered Megawati's removal as the party's democratically elected chairperson, on July 27, 1966, paid thugs backed by the military attacked and destroyed the PDI offices resulting in the death of as many as 50 people. Popular outrage at the attack sparked several days of mass rioting and violent clashes with police. Many had hoped that with Megawati's ascendancy to the presidency those responsible would be held accountable however Megawati and other leading party figures have publicly distanced themselves (refusing to attend annual commemorations) from the issue. Those who were eventually brought to trial in late 2003 have all been low ranking soldiers or civilians and have either been acquitted for lack of evidence or given light sentences. None of those believed to have organised or led the attack have been brought to trial.

[Translated by James Balowski.]

Focus on Jakarta

New 'bajaj' scorned as city falls for mousy deer on wheels

Jakarta Post - July 30, 2004

After transporting Jakartans for nearly three decades, the city's bajaj will begin disappearing from the streets over the next few days. The city administration is determined to phase out the Indian-made bajaj in favor of locally made kancil (mini-taxi, literally means "mouse deer" in Bahasa Indonesia). The Jakarta Post's Urip Hudiono and Evi Mariani have been looking back at the history of the bajaj and the role these vehicles played in the development of Jakarta. This is the third of six articles.

A new generation of bajaj has been developed that meets all requirements for environmentally friendly public transportation. Despite the fact that the new bajaj are clean and fuel efficient as they run on compressed natural gas (CNG), they are unlikely to hit the city's streets to replace their older counterparts.

The problem lies in the number of wheels. City Bylaw No. 12/2003 on transportation refers to community service vehicles, which are defined as passenger vehicles serving restricted areas. However, this category excludes three-wheeled vehicles.

Instead of the new, improved bajaj, the Jakarta administration has set its heart on the kancil produced by local automotive company PT Kurnia Abadi Niaga Citra Indah Lestari.

The city transportation agency, meanwhile, has stipulated that any replacement for the bajaj must have a four-stroke engine and four wheels.

"We are willing and able to produce new bajaj for Jakarta. The only obstacle to their operation is the limited number of gas stations in the city that are able to supply CNG. Out of the 14 gas stations that are supposed to have CNG, only six are operational," said PT Abdi Raharja director Rudy Irawan, the distributor of the new three wheelers.

He said that the new bajaj, produced by Bajaj Auto Ltd., India, is powered by a 173cc four-stroke engine, which is more powerful, yet much cleaner and quieter, than the two-stroke engine used by the old bajaj.

Displaying emission test results that are far lower than the maximum limits set by the Ministry of Communication's Directorate General of Land Transportation, Rudy added that the new bajaj had even been approved for operation in California, which has some of the strictest emission control regulations in the world.

Convinced that the new bajaj is an economical and environmentally-friendly vehicle, Rudy says he cannot understand why the Jakarta administration refuses to approve the new bajaj, unless a "political decision" was behind it.

Nevertheless, being barred from the capital does not mean that the new bajaj has not received a warm welcome in other cities. "We have received orders for 100 bajaj each from the Palembang, Banjarmasin and Gorontalo municipal administrations, and been issued with permits for their operation in these cities," Rudy said.

He said the company's planned factory in Tangerang, Banten province, would be able to assemble some 500 bajaj each month, along with their spare parts. The company is also cooperating with the Surabaya and Yogyakarta municipal administrations to gradually phase out the becak (rickshaws) operating in those cities with the new bajaj.

News & issues

PRD celebrates 10 years of struggle

Green Left Weekly - July 28, 2004

Max Lane -- On the evening of July 22, more than 300 people gathered at the Jakarta Legal Aid Institute to celebrate the 10th anniversary of the founding of the People's Democratic Party (PRD).

Film footage taken by PRD activists over the last 10 years, as well as brief interviews with a range of figures who had been involved in the movement against the Suharto dictatorship since the 1970s, were screened. There were also a number of cultural performances. Greetings from Australia's Democratic Socialist Perspective and New Zealand's Alliance were read out. Workers involved in one of the big anti-privatisation strikes also sent messages.

Party leaders who had been founders of the party were there, including Dita Sari and Daniel Indrakusuma, as well as scores of new, younger members. Several former members -- mostly those who now work for non-government organisation -- were also present. Many activists from other groups also attended.

Keynote speakers were Sari and Yusuf Lakaseng, the current chairperson of the PRD's central leadership council.

Dita Sari reminded people of what it was like in 1994: "One decade ago was the age of dictatorship by a military and crony capitalist elite that buried the people's political freedoms. This was the 'New Order', which came to power over the corpses of 1 million left-thinking human beings, as well as exile, torture and the suppression of left progressive ideas and movements. The revival of the movement under the dictatorship required real strength, courage, consistency and skill by those trying to defeat the dictatorship. So the student activists left their ivory towers, to study politics and how to struggle with the people, with the workers and farmers." Sari described how 1994 was a time of escalating class struggle by workers and peasants. There had been large strikes and land occupations, and they were a magnet for the new generation of activists. The movement, both the PRD and the broader democratic movement, grew. In 1996, another round of demonstrations and protests erupted.

In this red-hot atmosphere, riots broke out and the regime seized on the opportunity to blame the PRD. Several party leaders and activists were arrested and the party was in effect banned. It continued underground and throughout 1997, it agitated around its main demands: "Overthrow Suharto! Repeal the five political laws! End the dual function [political role] of the military! A referendum for the East Timorese people!" Sari made special reference to the PRD members who had lost their lives in the struggle: Herman, Bimo, Suyat, Gilang and the revolutionary poet Wiji Thukul. They all disappeared, presumed killed at the hands of the regime in 1998, as the mass democratic movement headed for victory, with the overthrow of Suharto in May that year. Only Suyat's body was ever found.

Lakaseng assessed the current situation, pointing to the bankruptcy of the choice offered in the current presidential election: "Neither of the candidates entering the second round are worthy of support. Retired four-star general Susilo Bambang Yudhoyono was the brains behind the military operations in Aceh and West Papua, resulting in the deaths of many civilians. Incumbent president Megawati Sukarnoputri has wasted money on buying military equipment, pushed forward militaristic legislation, has done nothing for the welfare of the people and has been a servant of international capital." Lakaseng warned of the danger of the return of militarism. "The military has revived. Generals with much blood on their hands have confidently stepped forward as presidential candidates." This backward trend, he said, was partly due to the refusal of the democratic movement to unite, especially prior to the election.

Lakaseng emphasised that organising the oppressed classes, the workers and peasants, must remain the PRD's central priority. "There is no point in humouring ourselves and avoiding the reality that this is a heavy task", but in the end there is no other road forward than an open struggle for socialism.

In the meantime, the campaign priorities for the PRD were clear. In the final words of Dita Sari's speech: "Resist neoliberalism! Resist militarism! Abandon the fake democrats! Referendum for Aceh! Democratic dialogue for the Papuan People!"

Environment

Newmont case 'another blow to mining'

Jakarta Post - July 26, 2004

Jakarta -- Controversy over Newmont's operations, sparked by allegations from non-governmental organizations that the firm polluted waters in North Sulawesi, has dealt another blow to the nation's mining industry and hurt investment in the sector, an official and expert said on Sunday.

"The case has sent another negative signal to foreign investors in the country's mining industry, which has long been troubled by countless problems and uncertainty," said Simon Sembiring, the Director General of Geology and Mineral Resources of the ministry of mining, at a media conference on Sunday.

Simon said that mining businesses not only provided significant revenue for the government, but also had a trickle-down effect in remote areas, such as in creating jobs for locals and improving their living standards.

Simon was commenting on a recent allegation that the operations of PT Newmont Minahasa Raya, the local unit of US-based gold mining giant Newmont Mining Corporation, had polluted waters in Buyat Bay, Minahasa regency, South Sulawesi, which led to the spread of a disease resembling one that once affected people in Minamata, Japan.

Minamata disease was caused by mercury disposed of by local industrial firms. However, according to Health Minister Achmad Sujudi, the preliminary examination of four residents from Minahasa, who were thought to have fallen ill due to pollution in Buyat Bay, had not found any indication of Minamata disease.

Newmont is among the eight companies that received a "green award" from the government this year. The firm was given the award for its operations in West Nusa Tenggara.

The Newmont case is the latest in a series of problems besetting the industry that have caused a significant drop in investment in the sector.

Recently, the government and the House of Representatives agreed to amend the forestry law to allow 13 mining companies to resume their open-pit mining operations in protected forests. The companies had secured contracts prior to the issuance of Forestry Law No: 44/1999, which bans open-pit mining in protected forests.

According to data from the Ministry of Energy and Mineral Resources, total investment in the mining sector -- which reached US$1.15 billion in 1999 -- continued to drop in the following years to $422.30 million in 2000, $319.73 million in 2001, $298.12 million in 2002 and $63.93 million in 2003.

Meanwhile, PL Coutrier, an executive of the Indonesian Mining Association (IMA) said the association regretted baseless reports that discredited the mining industry. "Given its highly significant contribution to the regions, it is understandable that we cannot afford this sector to weaken," said Coutrier.

Elsewhere, PT Newmont Nusa Tenggara, a local unit of Newmont in Sumbawa island, West Nusa Tenggara, said it had filed a criminal complaint against various individuals in the area for defamation following an allegation that its operations on the island had caused another outbreak of Minamata disease.

Eyebox - Newmont environment policy

• Newmont requires all of its operations to comply with local laws and regulations that apply to its activities.
• For the design and construction of new facilities, and the modification or expansion of existing facilities, Newmont adheres to the host country's laws and regulations. However, in some countries, particularly developing countries, minimum design criteria and standards for mining and milling operations either do not exist or require a standard lesser than that which Newmont has set as a minimum for the company. In such cases, Newmont's own (higher) standards are applied, often based on the Nevada Administrative Code governing the design, construction and operation of mining facilities.
• Similarly, when discharges to surface or ground waters are unavoidable, Newmont is required to comply with the host country's laws and regulations. If country laws are nonexistent, inadequate or incomplete, the US primary drinking water standards will be deemed the appropriate standards for the protection of human health.

[Source: www.newmont.com.]

Hospitals, firms accused of polluting rivers

Jakarta Post - July 26, 2004

Wahyuana, Bekasi -- The stench along the Kalimalang River that runs beside a road linking Bekasi and Jakarta had long been overlooked by residents and motorists until the Bekasi environmental management agency found hazardous levels of toxic substances in the river.

A recent investigation held by the agency revealed that two hospitals and 12 companies located outside the industrial zone are allegedly responsible for the river pollution.

Head of the environmental impact supervision and management unit at the agency, Tirta Abdul Fatah, said that the officers had summoned representatives of the 14 companies on Thursday to clarify the allegation.

"We had yet to impose any sanctions against the companies. We just warned them to use proper waste treatment facilities and not to dump untreated waste directly into the rivers," Tirta said.

The agency revealed that the companies are metal processing company PT Cabinindu Putra, plastic manufacturer PT Sinar Jati Mulia, packaging company PT Bina Rukun Jaya, pesticide producer PT Basf Indonesia, vehicle assembling plant PT Karya Bahan Unigam and soft drink producer PT Coca Cola. The hospitals named are Annisa Hospital in Lemah Abang and Medika Hospital in Cikarang.

The companies allegedly dump industrial waste into several small rivers, such as Bekasi River, Sadang, Jaeren, Jambe, Menir, Sasak Jarang rivers and the Bekasi Laut Canal.

Tirta further said that the rivers contained high levels of heavy metal, far exceeding levels deemed safe under Government Regulation No. 82 on water management.

A spokeswoman of Annisa Hospital, Dian, said on Friday that the hospital would tighten control on its waste disposal. Separately, Media Hospital spokeswoman Debby claimed that the hospital management made a regular report on its environmental management in accordance with the regulations.

"We were once accused of dumping unprocessed waste into the river by Cikarang residents. But we have already installed a waste treatment facility. Moreover, the volume of the hospital's waste is small, so I wouldn't say it is hazardous," she told The Jakarta Post.

However, many of the industrial firms summoned on Thursday claimed that they were just invited for a meeting with the environmental management agency.

"The meeting was held simply to tell us that we have to pay more attention to the environment," said Kus Hariyanto, one of the executives of PT Bina Rukun Jaya. "Moreover, we do not produce liquid waste, and the volume of our waste is small," he added.

Officials blamed for deforestation in Leuser

Jakarta Post - July 30, 2004

Apriadi Gunawan, Medan -- An official of the Leuser Management Unit (UML), which manages the Leuser Ecosystem area, has stated that 25 percent of the vast 2.6-million-hectare area has been deforested.

UML's project director M. Ali Basyah said on Thursday, the deforestation had encompassed several regencies, including Karo and Langkat in North Sumatra province, and Southeast Aceh, South Aceh and East Aceh in Nanggroe Aceh Darussalam.

The area covers 11 regencies in Aceh and four regencies in North Sumatra. The famous Leuser National Park, which is rich in animal and plant species, is part of the area.

Basyah said deforestation in the area had continued unabated since the 1970s, as law enforcers -- including police and military personnel and forestry officials -- were involved in illegal logging there.

"The UML has uncovered several illegal logging cases that involved security personnel and forestry officials," he said.

Masrani, a well-known figure in Aceh, who recently won the Leuser environmental award, said he had once reported two soldiers in Serba Jadi district to the Aceh Military Command for their involvement in illegal logging activities.

The two soldiers were consequently discharged. According to Masrani, Serba Jadi residents had submitted a draft regulation to the local council that would help prevent illegal logging in the district.

The regulation was endorsed three months ago. Under the regulation, loggers are fined Rp 250,000 (US$ 26.3) for every tree they cut down illegally.

Meanwhile, Basyah said that conservation efforts in the Leuser Ecosystem area require a huge amount of money. According to international standards, the protection of each hectare of forest would cost at least US$1.

Thus, considering that 25 percent of the area has been deforested, some US$650,0000 would be needed to protect it.

However, Basyah said, the UML's contract to manage the area will expire on November 9, after which the International Leuser Foundation will take over its management for the next 30 years.

Buyat Bay tests show high mercury levels

Jakarta Post - July 30, 2004

Abdul Khalik and Fitri Wulandari, Jakarta -- Water consumed by residents living near Buyat Bay in North Sulawesi, where US- based PT Newmont Minahasa Raya has a mine, contained higher mercury levels than normal, a laboratory test confirmed on Thursday.

However, the test by the School of Mathematics and Natural Sciences at the University of Indonesia (MIPA UI) revealed that the mercury content of the water around the bay was far from the sort of levels that could cause Minamata disease, which some locals, aided by NGOs, claimed they were suffering from.

The findings were based on laboratory tests on the blood of four villagers who consumed fish and drinking water from around the bay -- Sri Fika M, Jukria, Masnah and Rasyid Rahmat.

They were among the residents of South Minahasa regency who reported Newmont to the National Police last week for allegedly polluting the bay. The residents claimed they were suffering from Minamata disease.

The tests revealed that the mercury levels in the blood of Sri Fika, Jukria, Masnah and Rasyid Rahmat were 9.51 microns per liter (u/L), 22.50 u/L, 14.90 u/L and 23.90 u/L respectively.

"The test results show that mercury levels in the blood of each of the residents is above the normal level of 8 u/L, while the blood mercury level required for the appearance of Minamata disease is between 200 and 500 u/L," said Dr Budiawan, the head of the MIPA UI's Center for Environmental Safety and Risk Assessment, in a press statement.

As the tests had nothing to say about the sources of mercury in Buyat Bay, Budiawan called for a thorough analysis to determine where the metal came from.

Further analyses were also needed to assess the possibility of other dangerous chemicals, including arsenic, cyanide and manganese, being present in fish and drinking water around the bay.

Earlier this week, State Minister for the Environment Nabiel Makarim declared that mercury levels in Buyat Bay were safe.

The four people who claimed to be suffering from Minamata disease only had skin ailments, he said.

On Wednesday, a group of non-governmental organizations (NGOs) submitted a number of scientific reports stating that dangerous concentrations of at least four heavy metals had been present in the bay since 1996.

According to the reports, the mercury level in bay sediment near the PT Newmont tailings pipe outlet in 2004 stood at an upper level of 3.509 -- above the World Health Organization limit.

PT Newmont has repeatedly denied any wrongdoing, claiming it has been operating in Indonesian in compliance with the prevailing legislation.

Kadar Wiryanto, a senior environmental manager at Newmont Pacific Nusantara, said he could not comment on the MIPA UI tests.

"We will look into it. Our company will take every allegation seriously," he said after a seminar on the alleged mercury contamination in Buyat Bay on Thursday.

In another development, Imam Hendargo A. Ismoyo, from Nabiel's office, said that the tests conducted by MIPA UI had not measured the levels of methyl mercury in the residents' blood. High levels of methyl mercury were chiefly responsible for Minamata disease.

"To test for methyl mercury, blood samples must be tested either in the United States or Japan," said Imam, who led a government team investigating the case.

He said the government was setting up a joint team to conduct further investigations, consisting of officials from the Ministry of Health, the Ministry of Energy and Mineral Resources, the Ministry of Maritime Affairs and Fisheries, the Office of the State Minister for the Environment, and the Technology Assessment and Application Agency (BPPT).

The team would also include experts from the University of Indonesia, Padjajaran University and the Bandung Institute of Technology (ITB), as well as former environment minister Emil Salim and former health minister Farid Anfasa Moeloek.

Meanwhile, Wan Alkadri, the environmental health director at the health ministry, said his office had asked the Minamata Institute in Japan to help investigate the case.

"We would like to know if it possible for the institute to send some experts here. We also would like to send blood samples to them for (methyl mercury) tests," he said.

Health & education

Activists split over HIV/AIDS program

Jakarta Post - July 28, 2004

Dewi Santoso, Jakarta -- A controversial harm reduction program that was introduced by the government on Friday has split opinion among activists over how effective it will be in containing the spread of HIV/AIDS.

The spokesman for the Working Group on HIV/AIDS at the University of Indonesia's School of Medicine, Zubairi Djoerban, expressed his optimism on Monday that the program would help reduce the spread of HIV/AIDS among injecting drug users.

"It will be one of the most effective measures to fight the spread of the virus among injecting drug users, provided that the government applies strict supervision," said Zubairi, who is also an AIDS expert.

According to 2003 data from the Ministry of Health, injecting drug users accounted for more than 80 percent of an estimated 80,000 people living with HIV/AIDS nationwide.

The ministry also estimated the number of injecting drug users in the country at between 124,000 and 196,000 at the end of 2002.

In an effort to curb the spread of HIV, the National Narcotics Body launched on Friday a pilot harm reduction program that will provide sterile disposable needles and disinfectants to injecting drug users, as well as methadone and buprenorphine for heroin users.

The pilot project, which will run for three years in Jakarta and Bali, will involve the police, local health offices, research centers and selected non-governmental organizations.

In Jakarta, the community outreach arms for the program are Atma Jaya University, which will run information and health kiosks in Duren Sawit, East Jakarta, and the University of Indonesia's Health Research Center, which will cover the Depok area. The project team has several working groups that will be in charge of running counseling programs, providing health services and operating a needle-exchange program at harm reduction posts.

However, Pelita Ilmu Foundation (YPI) project manager Pungky Djoko said he doubted the program would be effective in combating the spread of HIV among injecting drug users.

"The program requires close monitoring because otherwise we won't know whether the clean disposable needles will be used by one person only or will be shared with other injecting drug users. And to monitor each (injecting drug user) is no picnic," Pungky told The Jakarta Post.

Zubairi agreed the harm reduction program would only work if it was conducted in small working groups of four or five with one mentor.

"A small working group will help the mentor get close to the injecting drug users and monitor them easier," he said.

A similar harm reduction program has been implemented by the YPI in Kampung Bali, Central Jakarta, since 2002. To date, there are 190 people registered with the program.

The registered drug users have to bring their used needles to the harm reduction post, where they can be exchanged for clean disposable needles.

Bali/tourism

Hello recovery, Bali welcomes tourists back

Asia Times - July 21, 2004

Gary LaMoshi, Denpasar -- Even a vicious dry-season rainstorm that lasted nearly 24 hours couldn't dampen spirits among Bali tourists and the island's hospitality industry. Nearly two years after bombs killed more than 200 people in the main resort area of Kuta Beach, foreigners are streaming back to Bali.

Signs of the upturn are everywhere this summer high season, and follow a surprisingly strong Christmas-New Year holiday period. Traffic is crawling again around the Simpang Siur traffic circle linking Kuta to other leading tourist destinations. More and more motorcycle co-pilots ride wrapped in copper wire or rubber hoses, or drag wheelbarrows or plywood sheeting behind them, key indicators of a surging construction sector. The Yak, a new glossy, oversized magazine, chronicles lives and times and real- estate opportunities in too-hip Seminyak.

And most important, pale shoulders and broad bottoms crowd local sidewalks and beachfronts. "If there are no problems with the September [presidential runoff] election, we could get back to where we were before the bomb," says Mahalia Pantja, Bali business development manager for Tour East, a local tour operator headquartered in Singapore. With the way things are going, Pantja's estimate may be too conservative.

Record June arrivals

Bali's foreign direct arrivals in June topped 131,000 people, just ahead of the record for that month set in 2002. Australian visitors led the way, taking advantage of their winter school holidays to catch some sun. "In April-June we had more passengers than in all of last year," Andrea Jeremy from Australia's Qantas Holidays reports before digging into a Balinese lunch from a balcony seat overlooking high tide at the venerable Desa Segara Resort on Sanur beach.

Australian and Indonesian officials jointly opened the October 12 Australian Memorial Center at Bali's Sanglah Hospital this month, commemorating the 88 Australian victims of the nightclub bombings on Jalan Legian two years ago. The Australian government contributed A$4.5 million (US$3.3 million) to build the new burn and intensive-care unit, and speakers from both countries emphasized the close ties between Australia and Bali at the ceremony. An estimated one out of every 10 Australians has visited Bali; the island is a two-hour flight from Perth on the west coast and six hours from Australia's east coast. Some recent Australian visitors say they've come to Bali to help the island's tourism industry in its time of need, but Australia's consul general in Bali told reporters last month that he thinks people are just looking for a cheap vacation.

Since February, though, the greeting from Indonesian Imigrasi officers has been, "Welcome to Bali, please pay cash." New visa rules require Australians and holders of 20 other passports to purchase entry visas at the airport (US$25 for 30 days, or $10 for three days). This visa-on-arrival regime applies to other key tourist sources including Japan, North America and most European Union countries (some, such as former colonial ruler the Netherlands, are not among the lucky 21 and must get a visa from an embassy or consulate before they land. See Visa changes darken Bali's happy holiday recovery, January 17). And yet this added annoyance and competitive disadvantage -- beach resorts in Thailand, the Philippines and Malaysia don't require visas for those nationalities -- doesn't seem to have slowed Bali's comeback.

Cheap seats to the world's best island

Many signs point toward the post-bomb boom -- oops, let's say rebound -- continuing. Airline services are adding more Bali- bound seats, including a new Singapore Airlines service from Ahmedabad in western India and Air Asia bargain flights from Kuala Lumpur, with return fares starting at less than Rp500,000 (about US$56). Indonesia's national carrier Garuda is restoring service it cut in the wake of the bombing and the severe acute respiratory syndrome (SARS) outbreak of early 2003.

In its just-published annual World's Best Awards issue, Travel & Leisure magazine named Bali the top island destination for the third straight year, based on survey responses from more than 425,000 T&L readers. The magazine, affiliated with the American Express travel-services empire, also chose Bali as Asia's top tourist destination and ranked four Bali hotels in its global top 100. The Four Seasons Sayan Terrace in the highlands cultural hub of Ubud was rated the leading resort hotel in Asia, while the beachfront behemoth Ritz Carlton Bali Resort in Jimbaran Bay took honors as the best hotel priced at less than $250 a night, surprising perhaps, given the property's popularity with trendy young Japanese. Who knew those Hello Kitty-hugging parasito shinguru (parasite singles) where really value hounds?

The British government delivered further welcome news on July 6 when the Foreign Office dropped its travel warning for Indonesia due to the threat of terrorism. (The United Kingdom posted its warning after the Bali bombings, closing the barn door after 22 Britons died in the blasts.) The Foreign Office said the change was part of a worldwide strategy to use terrorism warnings "more sparingly", restricting them to cases of "extreme and imminent danger" of a terror attack based on specific intelligence reports. The British Embassy in Jakarta, however, noted that its assessment of the terror threat in Indonesia hasn't changed, but that's not as important as tour organizers now being able to get insurance on packages to Bali.

Britain before the bombs

Before the bombings, the UK generally placed fourth among overseas arrivals to Bali behind Japan, Australia and Taiwan, but ahead of Germany and the United States. In 2000, the last "normal" year before the September 11 terror attacks, more than 107,000 Britons came to Bali. Last year, just over 50,000 turned up, according to figures from the official Bali Tourism Authority.

Britain's move to drop its travel warning has raised hopes that other Western countries, most notably the United States, will roll back their travel advisories on Bali. Fallout from the bombings goes well beyond the heady tourist-arrival numbers, as this excerpt from BaliDiscovery.com, a leading clicks-and-bricks destination manager, notes: Arrival figure[s], although impressive, do not reveal the approximate 50% downturn in tourism business for Bali resulting from the fundamental remix of nationalities that comprise these totals when compared to only a few short years ago. The downward economic impact of the supplanting of long-haul, long-staying and high-spending Western Europeans and North Americans by regional visitors on brief, low-spending visits is not reflected in the aggregate totals for arrivals.

In the years leading up to the Bali bombings, visitors from the Asia-Pacific region made up about 60% of the total overseas arrivals in Bali, according to official figures. This year, visitors from the neighborhood comprise nearly 73% of the total. That figure is up 4 percentage points from 2003, showing that the trend is heading toward more visitors from nearby countries.

Changes in the tourist makeup are a reminder that despite the dry season, according to the calendar, and the recovery in the tourism industry, according to raw arrival figures, Bali still faces stormy weather before it puts the 2002 blasts firmly in its past.

Armed Forces/police

Power-hungry military overshadows Indonesia

Asia Times - July 28, 2004

Richel Langit, Jakarta -- Indonesia's fledging democracy has come under threat as the country's power-hungry military is seeking to regain its old powers lost to reform movements since 1998.

In the Indonesian military bill submitted to the House of Representatives (DPR) for deliberations recently, the military (known as the TNI) seeks to revive its territorial command, reintroduce its dual functions and limit the president's authority over the institution to approving troop deployment for war and civic services only.

The DPR is planning to start deliberating on the bill early next week and has promised to endorse it on September 30, just one day before the new members of the DPR elected in the April 5 legislative elections are to take their oaths of office. This means the DPR will have only 45 days to deliberate on the bill, which, if passed, will seriously undermine civilian supremacy and jeopardize the country's young and fragile democracy.

That the DPR insists on deliberating on and endorsing the bill now suggests that the military is out to fight for what it wants. The military and police will leave the DPR by the end of September and the DPR has agreed to endorse the bill around that time. The military clearly wants to participate in the deliberation and ensure that its demands -- territorial function and dual role, among others -- are accommodated in the bill.

President Megawati Sukarnoputri's Indonesian Democratic Party of Struggle (PDI-P) has thrown its backing behind the bill, despite all of its flaws.

Fears are rising that PDI-P, which badly needs the military's support to win the September 20 runoff election, will support the bill all the way to its endorsement in order to win the military's backing in the election.

PDI-P is the biggest faction in the DPR; it and the military together hold 191 seats in the 500-member DPR. But with anti- military feelings subsiding, the people at large will likely pay little attention to the deliberations of the bill.

After the downfall of authoritarian leader Suharto in May 1998, the powerful military embarked on a series of internal reforms largely aimed at forming a strong, professional military force deemed necessary to guard the world's largest archipelagic country. This return-to-barracks policy requires the military to abstain from practical politics and forces the institution to abandon its territorial command -- which in practice means deploying troops down to the regency level -- and dual functions, defense and socio-political roles.

In 2002 the People's Consultative Assembly (MPR), the country's highest legislative body, decided to end the presence of military and police personnel in both the DPR and the MPR by 2004 and 2009, respectively.

Therefore, as current DPR members end their tenure on September 30, the military and police will also officially quit the DPR on that day.

The military, which undoubtedly remains the country's strongest political entity, earned praise and respect in the April 5 legislative elections and the July 5 presidential elections as its personnel stayed largely neutral throughout the democratic process, despite the fact that three retired army generals contested in the presidential poll.

But the military's attempts to revive territorial command and to reintroduce its dual functions have put into serious question its commitment to reforms as well as the democratization process in the world's largest Muslim country.

The military's proposal to regain its old powers also reveals its ignorance, because it goes against MPR decree No 6/2001, which limits the military's role to safeguarding the country from external attacks, while leaving the police in charge of national-security issues.

It has become public knowledge that Suharto introduced the military's territorial function in the late 1960s as part of his efforts to control the political life of the people down to the village level. During his 32 years of leadership, military personnel spied over movements and activities of the public at large, especially those critical to government policies, in the name of political stability and economic growth. Many government critics were arrested and put behind bars on charges of inciting the people to rise up against the Suharto government.

The bill, which was drafted by the Ministry of Defense, also reintroduces the military's dual functions, which justified the military's involvement in practical politics during Suharto's reign. Under the doctrine, Suharto, a retired army general, mobilized military personnel to cow people into supporting his political bandwagon Golkar for more than three decades.

In return, Suharto provided seats in both the MPR and the DPR for both the military and the police. Currently, the military and police have 38 seats in both the MPR and the DPR, despite the fact they do not participate in elections.

The dual functions also allowed active military personnel to take up civilian posts in the bureaucracy and other high state institutions.

Very often active military officers were appointed governors and regents or secretaries general and other high-ranking offices in government departments or other high state institutions.

The dual functions, however, came to an abrupt end after the downfall of Suharto in May 1998, thanks to strong public demand for the military to concentrate on defense issues and leave politics to civilians. Active officers holding civilian positions were told to return or resign from the military service. Surprisingly, most of them opted to leave the service.

In addition to its requests for the return of old powers, the TNI bill also aims to limit the authority of the president over the military to approving troop deployment for war, leaving deployment for other purposes, including quelling social unrest and secessionist movements, under the authority of the military chief. Under its original version released last year, the military was even authorized to declare a state of emergency in certain areas and deploy troops there without necessarily asking for approval from the president. This clearly contradicts prevailing laws that position the president as the supreme commander of the country's military force.

During a presidential debate held before the July 5 elections, front-runners Susilo Bambang Yudhoyono and Megawati Sukarnoputri gave no clear answers to questions related to the military's future political roles. Given the fact that Yudhoyono is a retired army general and Megawati has turned a blind eye to the draft, the two are likely to offer political concessions to the military, especially if the compromises will help them win the September 20 runoff elections.

With the DPR already setting the endorsement date on September 30, pro-democracy activists are worried that horse-trading will mark the bill's deliberations. The legislators insist on completing the TNI bill before the current DPR tenure expires, to give legislators from the military an opportunity to participate in the deliberation.

Military ties

Rise in export of arms to Indonesia

The Guardian (UK) - July 31, 2004

Richard Norton-Taylor -- The government approved a significant increase in arms exports to Indonesia in the first few months of the year despite serious concern from MPs, Foreign Office figures show.

The value of equipment cleared for export in the first three months of the year was 5.5 millin Pounds, against 12.5 million Pounds for the whole of 2003, equivalent to a 76% increase, according to Whitehall's first quarterly report on strategic export controls. Forty-one licences were issued for Indonesia, equivalent to an annual increase of almost 50%.

The equipment included components for aircraft cannons, combat aircraft, general military aircraft, general military vehicles, military aero-engines, and weapons-launching equipment.

Paul Barber, a spokesman for the Indonesian human rights group Tapol, said yesterday: "We are disappointed that the government has failed to respond to repeated concerns about arms exports to a country where there is real risk that equipment will fuel internal conflicts and be used in violation of human rights."

He said the licences had been issued at a time when Indonesia was conducting a martial law offensive in the province of Aceh, its largest military operation since the invasion of East Timor in 1975.

British-made Hawk jets and armoured personnel carriers had been used in the offensive between May 2003 and May this year, which claimed at least 2,000 lives, he said.

A committee of senior MPs in May criticised the government for failing to investigate claims that British equipment had been used in violation of human rights or for offensive purposes in Aceh.

The MPs also criticised the government for inadequate monitoring of the end use of equipment, describing assurances provided by Indonesia as "not worth the paper they are written on".

Export licences for more than 330 million Pounds worth of arms were approved in the first quarter of this year, the figures, released on Wednesday but hitherto unreported, show. Big customers included Taiwan (13.5m), China (9m), India (35.5m) and Pakistan (6.5m).

Referring to continuing arms sales to Middle Eastern countries, Andrew Wood of the Campaign against the Arms Trade, Caat, said it was time the government started working towards a "demilitarised Middle East and imposing an arms embargo".

The Foreign Office minister Lady Symons said the decision to publish quarterly statistics reflected "the government's commitment to improving the openness of the licensing system, which is already acknowledged to be among the most transparent in the world".

Business & investment

When will investors give Indonesia a break

Jakarta Post (Part 1 of 2) - July 26, 2004

Sisira Jayasuriya and Chris Manning, Canberra -- The recent announcement by the Investment Coordinating Board Chairman that foreign direct investment (FDI) was down by one-third in the first half of 2004 is hardly news these days (The Jakarta Post, July 15). It is just further confirmation that investors continue to shun Indonesia, one of Asia's proud, "tiger" economies until the 1997 Asian Economic Crisis.

There is a widespread misconception that while the neighboring Asian countries have successfully pulled themselves out of the 1997 crisis, Indonesia remains in a perilous state, both politically and economically.

Both domestic and foreign investment is depressed. Gross domestic investment -- at less than 20 percent of GDP -- is among the lowest in Asia, and capital outflows continue to significantly outweigh inflows, as they have for every year since the fall of Soeharto in 1998. Consequently, Indonesia is mired in a low investment -- low growth trap.

Without underestimating the major challenges and problems confronting Indonesia, we believe that widespread perceptions about its political and economic conditions are based on a superficial understanding of the political economy of development. Unfortunately misplaced international perceptions seem to have permeated the psyche of the domestic business and policy elite, discouraging both investment and bold initiatives.

In terms of most indicators of political and economic stability, Indonesia actually compares quite well with its neighbors, or with India, with which it shares many important similarities. When considered in the context of the economic and political problems it faced after the 1997 crisis, from an international perspective much has been achieved.

The casual outside observer, informed mainly by the international media, could hardly be blamed for assuming that Indonesian news has been almost entirely a story of internal (and international) strife since the downfall of Soeharto.

This dismal picture has been bolstered by reports of about the ineffectiveness of President Megawati Soekarnoputri, the lack of central authority and instances of policy indecisiveness. Jakarta, it would seem, has lost control over the far flung provinces and districts, particularly after the decentralization law brought in January 2001.

But a focus on these issues misses the bigger picture. First, lets consider political reform. From decades of authoritarian rule under the Soeharto, Indonesia achieved an almost bloodless transition to a functioning democracy, confounding most analysts who had predicted widespread violence.

And, it is no mean feat for a country of around 220 million, most of whom have no experience of ever voting in a free election, to have maintained a climate of open debate and a functioning democratic regime for 5 years, and hold a largely peaceful and, by developing country standards, relatively clean presidential election which has seen the incumbent president accept a situation where she has been beaten into second place in the first round.

The Indonesians have demonstrated a political maturity and a commitment to democratic processes and institutions that compare favorably with countries with much longer histories of democratic rule.

Second, what about economic recovery? On the economic front, too, Indonesia's steady but unmistakable recovery from the depths of the financial and economic crisis has received less credit than it deserves.

The exchange rate has been stabilized at around Rp 9,000 to the US dollar, from Rp 10,000 in 2001; indeed the currency has appreciated by some 10 percent relative to its neighbors in the last 3 years.

On the domestic front, public debt has been drastically reduced, to less than 70 percent of GDP from 140 percent in 1998/99; on the external front, overall foreign debt -- of which public debt is around half -- is down to around 60 percent of GDP. Inflation has been brought down to 5 percent -- figures in June suggested it may be as low as 3.3 percent, and interest rates have also fallen.

Of course major problems remain, with weaknesses in financial systems, and concerns about corruption high on the list. But perhaps the one essential difference between Indonesia and its neighbors is in their growth performance.

Indonesia's GDP growth (according to IMF sources) was 4.1 percent in 2003 and likely to reach 4.8 percent this year. It is certainly below what its crisis affected neighbors have managed to achieve in recent years (like Thailand, which returned to its pre-crisis per capita income in 2002).

But even here the differences can be easily overstated. Contrary to common perception, the average GDP growth rate of Indonesia over the three years 2000-2002 at 4 percent actually exceeded, though marginally, that of Thailand.

Thailand has really only pulled ahead only since last year, when it grew at 4.8 percent compared with Indonesia's 4.1 percent, while Thailand's 2004 growth is projected to be as high as 7 percent. The key to this difference in growth performance is investment: Thailand has started to attract investment while Indonesia has not.

Similar comparisons can be made with other countries, such as India or Vietnam. There are no persuasive reasons for arguing that short or even longer term prospects for investment in Indonesia are significantly worse than in India, or Thailand or Vietnam. On most counts Indonesia offers an investment climate that is at least as good, if not better.

Take the overall level of policy liberalization. Indonesia had achieved quite significant economic reform by the time of Soeharto fell in 1998, and these reforms have remained in place in the post-Soeharto era.

Despite the widespread application of minimum wages and the dinosauric, new labor law, labor markets remain more deregulated in Indonesia, compared to India where restrictions on firing and bankruptcies are significantly stronger. And, Indonesia has no equivalent to the entry barriers placed on many key industries, such as garments, which are reserved for small scale enterprises in India.

When it comes to government interventions in industry, Indonesia is surely no worse than India, Vietnam, or even Thailand, where Prime Minister Thaksin's government has a well earned reputation for frequent interference in economic affairs, to the detriment of competition and at the expense of independent private investors.

What about political stability and institutions? Again, Indonesia is not a "basket case" by any means. It is true that India, for example, has had a much longer history of democracy, a seemingly better functioning legal system and a more established bureaucracy inherited from the British. But is the government more stable or is the general "law and order" situation much better in India? Today's Indian government is an unstable alliance of 12 parties, and depends on Communist parties that remain outside the government for a parliamentary majority. True investors recognize that policy stability has stronger roots, given broad consensus within the mainstream parties about the economic policy agenda. Similarly, it is also not obvious that India is safer haven from "terrorist" threat, given India's history of frequent regional, ethnic and religious conflicts and terrorist incidents, including almost daily reports of bombs and deaths in Kashmir. With regard to legal institutions India probably has a clear advantage over Indonesia. But Indonesia's legal institutions are hardly much worse than in China until recently or in today's Vietnam.

[Sisira Jayasuriya is Director of the Asian Economics Center, Department of Economics, University of Melbourne, and Chris Manning is Head of the Indonesia Project, The Division of Economics, Research School of Pacific and Asian Studies, the Australian National University.]

Auto industry revs its engines in Indonesia

Asia Times - July 20, 2004

Bill Guerin, Jakarta -- With interest rates at a record low, and plenty of cheap credit floating around, it is hardly surprising that there is substantial optimism in the Indonesian automobile industry. Though there is no nationally produced car, Indonesia's car assemblers sold 354,482 new vehicles last year, up 12% from the year before and a far cry from the days when the regional financial meltdown sent the rupiah plunging along with consumer spending.

Though the final result of the July 5 presidential election remains to be settled in a second round in September, the peaceful campaigning and polling so far is expected to have a positive effect on consumer spending, which already accounts for two-thirds of the country's economy. Only one Indonesian in every 35 owns a car, while in Malaysia the ratio is 1:8, and in Thailand it is 1:15. The Association of Indonesian Automotive Manufacturers (Gaikindo) expects the pent up demand to boost sales to over 410,000 units this year, well above the record 386,700 cars sold in 1997.

Gaikindo announced this week that sales of new vehicles in June had soared to 42,793, up 41% from the 30,319 sold in the same month last year.

Domestic automotive giant PT Astra International (Astra) once held a virtual monopoly to distribute cars in Indonesia, and though that monopoly may be long gone, the company remains a powerful force in Indonesia's car market. Astra, now heading for its highest market share since 2000, assembles almost half of the cars sold in Indonesia. Singapore-based Jardine Cycle & Carriage Ltd has recently increased its stake in Astra to 41.76% from 35%.

The 2003 reduction in tariffs under the Asia Free Trade Agreement (AFTA) has cut auto prices and boosted sales across the region.

Under AFTA, the Association of Southeast Asian Nations (ASEAN) members agreed to cut tariffs, including those on cars, to between zero and 5% by the end of 2002. The 10 ASEAN members are Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

For some countries, however, AFTA is a mixed blessing. In Indonesia, the import liberalization has seen foreign auto makers bringing in more built-up vehicles to establish their brand names, inevitably at the expense of the local industry. Major car producers such as Thailand and Malaysia -- which can achieve the minimum 40% ASEAN content that makes their vehicles eligible for the preferential tariffs and which produce cars in at least two ASEAN member countries -- benefit from the preferential tariffs under AFTA and penetrate the Indonesian market.

Malaysia moves markets

Malaysia, the region's second-largest market for passenger cars behind Thailand, is still Southeast Asia's only domestic car maker. It was forced to cut taxes on foreign cars by 40% this year as part of its delayed commitment to AFTA.

Malaysia's equivalent of Astra, national car maker Perusahaan Otomobil Nasional Bhd (Proton), has been hard hit at home by competition from foreign rivals who have boosted their presence there to take advantage of the market opening up.

Despite its earlier domination of the home market, thanks to government tariffs of up to 300% on imported cars and components, Proton's market share dropped last year to 49% from 60% in 2002 as Kia, Hyundai and Toyota cut prices and introduced newer models.

At one time, well over half the number of cars on Malaysia's roads were Protons, but protectionism and bailouts may be a thing of the past for the brainchild of veteran former premier Mahathir Mohammad.

In February this year the launch of the new Gen-2, a five-door hatchback, and the first of three models designed to boost flagging sales, was graced by the presence of Mahathir's successor, Prime Minister Abdullah Ahmad Badawi. Mahathir had set up Proton in 1983 in a tie-up with Mitsubishi and protected it to the hilt with massive tariffs on imports. Badawi, however, took the opportunity to emphasize that there would be no more government support for Proton, and the national car maker would henceforth need to stand on its own two feet.

Though Proton is said to be actively seeking a strategic foreign partner to take a 20% stake in the company, it has, in the meantime, expanded its Southeast Asian presence to neighboring Indonesia in anticipation of the bigger regional market generated by the very tax cuts Malaysia has tried to resist.

The new holding company, Proton Holdings Bhd, has set up a 51:49 joint venture with Tracoma Holdings Bhd (Tracoma) to buy a car manufacturing plant from Jakarta's Lippo group. The plant, which has an annual production capacity of about 40,000 to 50,000 units, was previously used to assemble the Chrysler Jeep and was acquired at a price that chief executive Tengku Tan Sri Mahaleel Tengku Ariff described as "cheap...cheap".

The joint venture will have initial authorized capital of US$8 million (Rp71.27 billion) and an initial paid-up capital of $2.5 million. A further $19.5 million will be injected by both parties to raise the issued capital to $22 million. The plant will undertake contract assembly of motor vehicles in Indonesia for Proton and other automotive manufacturers.

The tie-up will not only allow Proton to qualify for tariff cuts under AFTA, but it will also benefit Proton's bottom line as Tracoma will supply its motor vehicle parts to Proton directly from Indonesia instead of Malaysia.

'Detroit of Asia' zooms along

Car manufacturers elsewhere in Southeast Asia are still smarting over Kuala Lumpur's quick move to slap new taxes on foreign cars this year to compensate for the AFTA tariff cuts, but Thailand, known as the "Detroit of Asia", is doing very nicely itself.

In the mid-1990s the Thai government established a zone just south of Bangkok designed to lure the world's biggest car makers. Dangling the free-trade card and coupling it with tax breaks and cheap labor worked. The big names flocked to Thailand in droves.

However, when vehicle sales in Southeast Asia plummeted from 1.46 million in 1996 to 446,450 in 1998, following the 1997 Asian financial crash, Hyundai pulled out of Thailand and Mazda and Toyota, among others, scaled back operations.

But now, as AFTA begins to take shape and the region becomes a major market in its own right, Thailand, thanks to the full support of the government, has made fast progress in developing automobile parts manufacturing in the country. It is now the fastest growing car manufacturing center in ASEAN for various car makes.

The auto industry in Thailand, with a population of just over 65 million, only one-third the size of Indonesia, is the country's number one manufacturing industry in terms of value, and sales this year are expected to top 1.5 million vehicles, exceeding the pre-crisis peak in 1996.

Indonesia not only competes with Malaysia and Thailand within ASEAN in attracting such investment, but also with China.

China to rise in Indonesia

China's rise to an economic superpower threatens Southeast Asia as never before. But with more than a billion potential consumers it is also a low-cost production base for exports and a giant domestic market. Foreign auto makers are investing heavily in new factory production to grab a piece of the action in the world's fastest-growing major auto market, the third-largest after Japan and the United States.

By 2025, analysts say, China could overtake the United States as the world's largest car market. Toyota, Ford and its affiliate, Mazda Motors, as well as Honda, Mitsubishi and General Motors (GM) are all ploughing in new investments there, at the same time that they continue to invest heavily in Southeast Asia.

One encouraging sign for Indonesia is the recent news of a joint venture by one of China's 120 or so automotive factories, Great Wall Motors (GWM), which plans to set up a car manufacturing plant in East Java in a joint venture with Indonesia's state- owned heavy equipment maker PT Bharata.

A memorandum of understanding between the two companies is expected to be signed in August during a visit to China by Minister of Industry and Trade Rini MS Soewandi.

China may expand to other Southeast Asian countries, using Indonesia as a base.

The AFTA threat

AFTA could pose a serious threat to Indonesia's car industry if there is no credible, effective mechanism to verify the minimum 40% ASEAN content that makes industrial products eligible for the preferential tariffs. One problem is the need for a joint, independent mechanism to verify the vital minimum content.

As the market rebounds from post-crisis lows, the last thing Indonesia needs is for other ASEAN producers like Malaysia and Thailand to sneak in cars with less than the minimum content, and thus get the preferential tariffs. If this were to happen, Jakarta's efforts to develop its own domestic auto manufacturing industry would be thwarted.

Astra's Kijang van, for example, the most popular vehicle in the country, would be adversely affected because, although it has high local content, the vehicle still depends partly on imported parts with an average tariff of 7%.

AFTA is, then, a mixed blessing for Indonesia's automobile industry. Whether or not the country reaps benefits from AFTA also depends largely on how the new government due in October can coordinate its policies to attract major investment. Major barriers to investment include legal uncertainty, inflexible labor regulations and inefficient tax and customs services that do not prevent widespread smuggling.

Oil prices high, worries loom in Indonesia

Jakarta Post - July 30, 2004

Jakarta -- Oil prices remained high on Thursday but fell from record peaks, reviving fears over a ballooning fuel subsidy and widening state budget deficit.

Reuters reported that oil prices fell after Russia's justice ministry said it was not seeking to halt production by oil giant Yukos.

US light crude lost 40 US cents to $42.50 a barrel in early trading after climbing to a peak of $43.05 on Wednesday, the highest in the contract's 21-year history.

In London, Brent crude oil fell 33 cents to $39.20 after scaling a 14-year high of $39.68 the day before.

Wednesday's price peaks were driven by concerns about possible supply disruption from Yukos, which pumps a fifth of Russia's oil and faces bankruptcy as courts try to enforce the payment of a $3.4 billion tax debt.

But on Thursday a justice ministry spokesman said bailiffs, who had served writs barring property sales by the company's operating units, were not seeking to halt oil production.

Analysts generally predict any disruption will be minimal.

"Although Yukos' management has warned that intensifying pressure may have a negative impact on production due to its inability to finance exports, this appears to be a plea for sympathy rather than a real concern," consultancy Energy Security Analysis said in a note.

As a consequence of the rise in oil prices, Indonesia will face a ballooning fuel subsidy as domestic oil output has been declining and oil imports are on the increase.

The Ministry of Finance has said that a $1 increase in the oil price compared to the state budget's price assumption would add a deficit to the state budget of between Rp 700 billion and Rp 800 billion.

The 2004 state budget assumes an oil price at $22 a barrel while the fuel subsidy is set at Rp 14.5 trillion. Despite rising oil prices, the government has decided not to raise fuel prices in this election year to avoid social and political unrest.

Governmental officials have projected that the fuel subsidy could jump to Rp 56.90 trillion this year if the oil price averages $35 a barrel throughout the year. It will also inflate the state budget's deficit by around Rp 1.9 trillion.

For this year, the deficit is targeted at 1.2 percent of gross domestic product (GDP) or Rp 24.4 trillion.

High oil prices will also raise state oil and gas company Pertamina's cost of importing fuel and worsen the cash flow problems currently faced by Pertamina. This could in turn disrupt the provision of fuel by Pertamina on the domestic market as the government's subsidy is insufficient to cover Pertamina's rising costs.

Pertamina spokesman Hanung Budya Yukyanta said on Thursday that the government had disbursed Rp 2.38 trillion out of the Rp 5.1 trillion fuel subsidy for June.

"The disbursement of the remaining Rp 2.8 trillion will be discussed between the government and Pertamina this week," Hanung said.

National fuel stocks have dropped to a critical level of 21 days in the past few weeks as a result of Pertamina's cash flow problems.