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Indonesia News Digest 1 – January 1-8, 2007

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 News & issues

Airlines never held responsible, says consumer foundation

Jakarta Post - January 8, 2007

Jakarta – While Indonesia has lost many lives to plane crashes, the airlines have never been held responsible, an activist group says.

The Indonesian Consumers Foundation (YLKI) is advising families of the passengers on a missing Adam Air plane to sue the airline for negligence, even though the cause of the presumed accident is still unknown.

YLKI chair Indah Sukmaningsih said the airline's management should account for their failure to ensure the safety of the 96 passengers and six crew members on board the Boeing 737-400. Negligence that leads to an accident is a corporate crime, Indah noted, adding that YLKI was ready to provide advocacy.

Taking Adam Air management to court would help launch an era of responsibility in airline management, she argued.

"It would serve as a strong warning to the airline companies that passengers' safety is of the utmost importance," Indah told The Jakarta Post. "So it would not be about winning or losing the case. Without due legal process, it would be difficult to determine who should be responsible for the disaster," she added.

Indah said in other crashes, relatives of the victims have simply accepted compensation provided by insurance firms. "The government has never take legal nor administrative actions against the airline companies for the accidents that may have been caused by negligence," she added.

The public, she said, had the right to know whether the pilot had followed standard procedures or whether a plane crash was caused by malfunctioning equipment.

Mezak A. Ratag, head of the research and development section of the Meteorology and Geophysics Agency (BMG), said a pilot must never skip a standard procedure, or an accident could result. Unfortunately, Mezak said, many pilots from commercial airlines ignored the procedures.

"I have received reports that many pilots of commercial flights don't collect or study the weather maps provided by the BMG before they fly the planes," he was quoted by Antara as saying at the launching of the International Year of Planet Earth in Bandung on Saturday.

The weather map contains information about rain, wind velocity and cloud formations, as well as turbulence along the route. It is available one hour before the flight's scheduled departure.

Mezak said pilots should attend briefings with BMG officials about the weather conditions along the planned route. "In foreign countries, pilots go to a room and study the weather before they go on duty."

Mezak said every airport that serves commercial flights should have a briefing room where pilots can discuss the weather with BMG officials. Several airports, including Husein Sastranegara in Bandung, do not have such a facility.

Yogya quake survivors still without homes after seven months

Jakarta Post - January 8, 2007

Sri Wahyuni, Yogyakarta – Uswatun Khasanah hugged her 9-month- old daughter Revi close to her chest. As the 25-year-old mother wrapped a blanket around the baby girl, she kept a wary eye on the rain pouring down in front of their makeshift shelter.

Her husband Singgir, 40, was busy covering a thin mattress, the only one they own, with plastic to protect it from the rain being blown in by the gusting wind. "I have to use the plastic or the water will soak the entire mattress," said Singgir, as he prepared a warm spot for his daughter.

A moment later he was using a piece of bamboo to get rid of the puddles of accumulated water on the tarpaulin that serves as their roof, before the flimsy shelter totally gave way. "It looks like we'll have to stay up all night again unless the rain stops," he said softly to his wife, who nodded tiredly.

Like thousands of others, the family has been living in a makeshift shelter since a 6.3-magnitude earthquake struck on May 27, 2006. The quake killed nearly 6,000 people and displaced almost 1.5 million in Yogyakarta province and parts of Central Java.

"Since the start of the rainy season earlier this month, we are often forced to stay awake all night so we can stay on guard in case something bad happens," Singgir told The Jakarta Post.

Singgir and his family live in Sumbermulyo village in Bambanglipuro subdistrict, Bantul regency, about 20 kilometers south of Yogyakarta city. He said none of the earthquake survivors in his neighborhood had finished rebuilding their flattened homes.

Government reconstruction money has arrived in the area, but most of those who have started rebuilding their homes have only gotten as far as laying a new foundation.

The Yogyakarta provincial administration, which is overseeing post-quake reconstruction in the province, has said it will provide Rp 15 million for each family whose house was destroyed in the earthquake.

Many people, particularly residents of Bantul regency, which suffered the brunt of the quake damage, have only received about 40 percent of the promised Rp 15 million, leaving them just enough money to lay the foundation.

"With the money, we are actually expected to be able to lay the foundation and build the walls of the house up to a meter high. But because of the skyrocketing prices of construction materials, we can only lay the foundation. If you don't have money of your own, you can't build the walls, much less complete the entire house," Singgir said.

As a result, thousands of displaced families in Yogyakarta are still living in temporary shelters, usually consisting of little more than a tarpaulin set up as a roof on the foundations of their new homes.

One of the reasons so many people are living in these makeshift shelters is the government's decision not to provide quake survivors with transitional shelters, instead focusing on getting them directly into permanent houses.

While some donor countries and non-government organizations have provided survivors with transitional shelters, there are not nearly enough for all those displaced from their homes in the quake.

According to a recent survey by a national team set up by the central government on July 3 to coordinate post-quake reconstruction in Yogyakarta and Central Java, at least 40 percent of displaced families in the two provinces are still living in temporary shelters.

"That is the percentage of those who have not yet started rebuilding their houses at all," said the team's secretary, Danang Parikesit.

Given that most of those who have begun rebuilding their homes have only laid the foundation, the actual number of families in temporary shelters is no doubt much higher than 40 percent.

"According to our survey, only some 16.5 percent of those people whose houses were completely destroyed have completely finished rebuilding their houses, including roofs. That is the figure for Yogyakarta. In Central Java it is probably far lower," Danang said.

Yogyakarta has been praised for the speed of the reconstruction process following the earthquake. One of the reasons for this was its decision to directly appoint management consultants to lead the work rather than selecting them through tenders.

On the other side, the Central Java administration has been criticized for moving too slow and wasting valuable time holding tenders and bids for project leaders.

Of the Rp 997 billion budgeted by the central government to repair or rebuild nearly 100,000 houses in Central Java, only about 42 percent of the money has been disbursed by the provincial administration.

In Yogyakarta, of the approximately Rp 1.7 trillion budgeted by the central government to repair or rebuild more than 200,000 houses in the province, 93 percent of the money has been disbursed and distributed to earthquake survivors.

According to Danang, rebuilding destroyed houses has been the main focus of both provincial governments.

After the immediate need of housing is addressed, the administrations are then expected to turn their attention to pushing economic recovery.

"The money that is flowing into both the communities and the local governments, through numerous programs, hopefully will be able to serve as a trigger for better economic growth that will make the regions more economically sound than ever," Danang said.

For 2007, the central government reportedly has allocated some Rp 2.7 trillion from the state budget for continued rehabilitation and reconstruction work in Yogyakarta and Central Java.

"The central government plans to complete all of the rehabilitation and reconstruction work in Yogyakarta and Central Java within three budget years," said the chairman of the national coordinating team, Soetatwo Hadiwigeno. He added that the reconstruction of all destroyed houses was expected to be completed within two years after the date of the earthquake.

New titles explore violence against women

Jakarta Post - January 7, 2007

A. Junaidi, Jakarta – Two books on the unforgivable issue of violence against women, Kembang-Kembang Genjer and Dendam Perempuan dan Cerita Lain, were launched in the same building, the H.B. Jassin Literary Documentation Center at Taman Ismail Marzuki arts center in different weeks in December.

The first title, written by Sinar Harapan daily journalist Fransisca Ria Susanti, divulges the physical and sexual violence suffered by 13 women members of Gerakan Wanita Indonesia (Indonesian women's movement/Gerwani) from the 1970s-1980s.

Gerwani, a progressive women's organization, was accused of being a branch of the banned Indonesian Communist Party (PKI). The PKI was held responsible by the regime of former president Soeharto for the failed coup and the murders of seven army generals and a lieutenant in September 1965.

The 13 women reveal how they were arrested, detained for years, mostly without being tried and tortured after the failed coup.

The women, including Gerwani secretary-general Kartinah, have not been given any explanations as to why they were imprisoned, and deny any involvement in the coup. "Gerwani is not under PKI. It's a sovereign organization," Kartinah said at the book launch.

In the book, Kartinah and several of the women claim to have met two young women prisoners who were forced by the military to testify that they had disfigured the army officers' corpses in the Lubang Buaya area of East Jakarta.

According to two military-controlled newspapers, Gerwani members danced naked and sang a folk song, Kembang-Kembang Genjer, while carrying out the abuse.

Many scholarly books on the incident as well as historians have said that the army officers were shot and killed by elements of the army, who then dumped the bodies in a well in Lubang Buaya. Soeharto blamed the killings on the PKI and, supported by civilian militias, hunted down, "disappeared" or killed hundreds of thousands members and sympathizers of the party, including individuals erroneously accused of being PKI.

Thousands of alleged members of the PKI and its associated organizations were also imprisoned for years, mostly without trial.

The second title – while it is a fiction anthology – also focuses on women's sufferings against a variety of settings, including the 1965 tragedy.

"I want to reveal women's sufferings at that time through my short stories," said author Martin Aleida, a former journalist of Tempo magazine.

One of the nine stories, titled Dendang Perempuan Pendendam (Song of a woman with a grudge) tells about a woman whose father was killed for his being an alleged follower of the PKI.

The woman's uncle had revealed her father's hiding place to the military, and in doing so, subsequently acquired her family's farmland. For this, the woman hates her uncle to his dying day.

In Tanpa Pelayat dan Mawar Duka (No mourners nor flowers), Martin describes the funeral of a spy who had sent hundreds of suspected PKI sympathizers to the military. Nobody, not even his adopted son, mourn him nor visit the graveyard, and the grave diggers refuse to bury the man.

Aside from the mass persecution of 1965, Martin also sets his stories in Aceh, and death is clearly a major theme of the collection.

Despite the tasteless cover with its image of a rose, like popular paperbacks, Martin's stories present interesting angles and read like real-life news in a literary style.

Jakarta may ban bikers from main thoroughfares

Jakarta Post - January 5, 2007

Adisti Sukma Sawitri, Jakarta – After raising on-street parking fares and directing motorcyclists to drive in the "slow" left lanes, the Jakarta administration is now planning to ban bikers from using main roads altogether during peak hours.

"It is very uncomfortable (for car drivers) having so many motorcycles on city streets. We must regulate them," said Governor Sutiyoso at City Hall after meeting the city-sanctioned Jakarta Transportation Board on Thursday.

The two bodies are planning to encourage motorcyclists to leave their motorbikes outside main thoroughfares and take the busway instead. Cheaper fares would help attract motorists, Sutiyoso said.

This opened the opportunity for developers to construct off- street parking sites around these main streets, he said.

Motorcycles have sharply increased in numbers on Jakarta streets during the past five years as public bus and taxi fares have increased by more than 100 percent since the first fuel price hikes in 2002.

Cheaper to use than taxis, motorcycles are popular because they can weave through traffic jams, although they expose riders to the city's notorious air pollution.

The board estimates more than three million motorcycles use Jakarta streets every day compared to the city's 2.5 million cars.

Board chairman Soetanto Soehodho said motorcycles were often driven dangerously between cars and this caused traffic congestion. Their weaving about, meant bikers often took up as much space as cars, he said.

Soetanto admitted the plan to ban bikes from main roads would not work unless the administration gave riders an affordable and comfortable public transport alternative.

"You can't just tell people to stop riding motorcycles but not give a solution to their transportation needs," he said.

Search continues for Indonesia ferry survivors

Agence France Presse - January 1, 2007

Nabiha Shahab, Rembang – Indonesian navy ships have renewed efforts to reach survivors of a ferry disaster who spent a third night on the open sea as continuing rough weather hindered the search for hundreds still missing.

"Navy ships are still searching now. We're still trying the best we can," Central Java navy commander Colonel Yan Simamora told AFP on Monday.

Fishermen and search and rescue teams have thus far found around 200 survivors following the sinking of the ferry off the coast of Java late Friday with some 600 on board, officials said.

The ill-fated ferry was en route from Kumai on Borneo island to the Javanese port city of Semarang when it sank. Initial investigations showed bad weather was likely to blame.

Eleven survivors and two bodies were brought in here at around 2am Monday. Search and rescue workers had to carry the survivors who were too weak to walk off the fishing boat which picked them up.

Deckhand Wawan, 20, was rescued after two days in the water. "I'd floated around since Friday night until the fishermen's boat found me sometime Sunday night, almost midnight," Wawan told AFP.

"For more than two days I held on to a lifebuoy until they found me," he said. "I saw at least four other people with me – they were all saved by the fishermen."

Other rescue efforts were focusing on three liferafts with around 30 to 40 survivors which were found by helicopters on Sunday.

Transport Minister Hatta Radjasa told ElShinta radio the survivors seemed healthy and had waved to the helicopters. But Simamora said bad weather had made it impossible to pick them up Sunday.

"We did try to evacuate them by air but the weather did not permit us to do so as the waves were up to four metres high and it was raining heavily," he told ElShinta, adding that food and drinks had been dropped to them.

Health department officials said at least 187 people had been rescued, with 130 treated in Tuban hospital and 57 in Rembang. "There are 187 survivors and almost 400 more passengers who are still missing," health department crisis control centre head Rustam S. Pakaya told the official Antara news agency.

Health workers were preparing for the worst and had brought in hundreds of body bags, he said.

Warships, fishing vessels and helicopters have braved continuing bad weather and rough seas to scour the waters off the north coast of Java since the "Senopati Nusantara" (Archipelago Commander) sank.

Meteorologists warned the bad weather would continue for the next few days. "The weather is still not conducive for sailing. We expect waves as high as two to four metres (six to 12 feet)," said Arif Triono from the Meteorology and Geophysics Agency in Surabaya, East Java.

"Besides high waves... we also expect heavy and continuous rain with strong winds up to 80 kilometres (50 miles) per hour," he told AFP.

Preliminary investigations showed bad weather was to blame for the accident, officials said as they continued to collect data.

"Our investigation so far shows that bad weather coupled with high and heavy waves caused the ferry to sink," said Setio Rahardjo, head of the National Committee on Transportation Safety.

"We have not had evidence of a collision or any carelessness by the Senopati," Antara quoted him as saying.

The vessel was carrying 542 passengers and 57 crew when it sank. It was licensed to carry 850. Ferries are a crucial link between the archipelago nation's 17,000 islands and frequently carry more people than officially acknowledged.

Meanwhile, all 11 passengers and crew were rescued after another ferry sank in rough seas off the resort island of Bali, radio reports said Monday. A third ferry carrying 100 people from Sumatra island to Bangka island capsized late Thursday, killing at least three people.

 Human rights/law

Two years on, Munir murder case is cast in shadows

Jakarta Post - January 4, 2007

M. Taufiqurrahman, Jakarta – Solving a murder case is rarely easy, especially when it allegedly involves one of the country's most powerful, yet secretive institutions: the National Intelligence Agency (BIN).

Regardless of BIN, it should not have been all that difficult for the government of President Susilo Bambang Yudhoyono to find the mastermind of the murder of rights campaigner Munir Said Thalib. There was so much support, and also pressure from the international community as well as the local public, a public grown wary of past skeletons in the closet. Although the Munir case has not yet gained the stature of, say, the imprisonment of Myanmarese pro-democracy leader Aung San Su Kyi, it has nevertheless gained attention outside the country.

Western leaders have voiced concern over the slow pace of the investigation into Munir's death.

Departing for Amsterdam to pursue postgraduate studies, Munir was poisoned with arsenic on a Garuda flight in 2004.

European Commission chairman Manuel Baroso questioned Yudhoyono about Munir's murder while the two were attending an Asia-Europe meeting. A US Congress member was reported to have sent a letter to the Indonesian government to push for an accelerated investigation into the murder.

In early November, Philip Alston, the UN special rapporteur on extrajudicial killings, wrote to Yudhoyono about the possibility of him being granted access to the investigation of Munir's death through technical assistance, such as DNA testing. After a meeting with Munir's widow, Suciwati, in mid-October, Alston said he would press Jakarta to step up the investigation.

Among her travels abroad to campaign for justice, Suciwati herself traveled to the US to drum up support from international human rights bodies and Congress.

At home, after months of feet-dragging, the House of Representatives in early December ordered the President to form a brand new investigative team. It argued that an investigation by the revived team would come up with little, judging from experience. The House also called on the government to seek international support in the investigation into Munir's death if necessary.

Yet the case remains unsolved. Worse, a severe blow was dealt by the Supreme Court when it quashed the murder conviction of Garuda Indonesia pilot Pollycarpus Budihari Priyanto, the sole suspect in the murder who was sentenced to 14 years in prison by the Central Jakarta District Court, one year earlier. With the ruling, no one or no single institution has been held accountable for Munir's death.

Yudhoyono himself has from the early stages of the investigation stated that he wanted the mastermind to be caught. But it seems that efforts to unravel the mystery have come up against a brick wall.

Even the replacement of the BIN chief, which analysts have said was motivated by Yudhoyono's efforts to speed up the investigation into the case, has produced little result.

It could have been bureaucratic inertia but some suggested the probe stalled because Yudhoyono would have to deal with some of his former seniors in the military.

Whatever the constraints, what is at stake is the President's human rights record, which he might want to watch out for ahead of the 2009 elections. The Munir case makes him an easy target for his rivals – the solving of the assassination was expected to be a landmark effort in ending the culture of impunity in the country.

With many human rights violations still in the dark, including those handled by Munir and his colleagues in the independent Commission for Missing Persons and Victims of Violence (Kontras), many were hoping for clues to unsolved cases, once the death of the leading fighter against impunity himself was solved.

Parents are still waiting for answers on their children's disappearances and deaths; the wife of the missing poet Wiji Thukul, for one, has been trying to locate her husband's whereabouts since 1998; and survivors of violence, without any guarantee of protection, seal their lips.

All this and much more happened way before Yudhoyono was elected president in 2004. But because few have been brought to account for these rights violations, a larger stake than the incumbent's fate in 2009 is Indonesia's future of humanity, the core issue championed by Munir.

Set up special court to hear environmental crimes, govt told

Jakarta Post - January 5, 2007

Apriadi Gunawan, Medan – The government should set up a special court to hear environmental crimes because suspects in illegal logging cases are evading justice in the regular courts, the Indonesian Forum for the Environment (Walhi) says.

Speaking from Medan, North Sumatra on Thursday, executive director Chalid Muhammad said dozens of suspects had been freed by courts in the past year despite compelling evidence they were involved in illegal logging.

An example was former Southeast Aceh regent Armen Desky's son, Marzuki Desky, who Walhi had evidence was involved in logging. He was freed by Southeast Aceh district court four months ago but the prosecutors were appealing the case.

"That's only one case. There are many other illegal logging suspects in this country who are going unpunished, like those responsible for the logging in Aceh, North Sumatra, Papua and West Kalimantan," Chalid said.

Walhi had proposed the idea of a special court to several House of Representatives legislators but had got no response, he said. "It's about time the government considers setting up such a court to ensure those responsible for illegal logging do not always escape justice."

Chalid believed judges and prosecutors tended to try illegal logging offenses as "ordinary" crimes and gave perpetrators light penalties or acquitted them. In reality, environmental crimes were complex and involved large amounts of money and serious corruption, Chalid said.

Illegal logging was also causing increasing numbers of natural disasters across the country. "In the past five years, disasters caused by illegal logging have tripled," Chalid said.

The floods and landslides that have devastated Sumatra in past weeks, killing at least 120 people and damaging thousands of houses, are being blamed on deforestation. The government, meanwhile, has pledged to encourage replanting to save the country's remaining forest.

Despite these promises, Chalid said the scale of damage at Gunung Leuser National Park had continued to increase from 2005-2006. Some of the timber illegally cut from the park is being used to build houses for tsunami victims in Aceh and Nias, while the rest is being sold abroad, he said.

Chalid said Walhi was planning to file a class action lawsuit against the government for its failure to deal with forest destruction. "We're tired of listening to the government's pledges of its commitment to deal with forest destruction, while every day deforestation continues at a rapid pace and illegal loggers walk free," he said.

 Politics/political parties

Election date change suggestion raises eyebrows

Jakarta Post - January 9, 2007

M. Taufiqurrahman, Jakarta – The Indonesian Democratic Party of Struggle (PDI-P)'s suggestion that the presidential election be held before the legislative poll has drawn criticism from political analysts.

PDI-P chairwoman Megawati Soekarnoputri called for the early election Sunday. She was quoted by her deputies as saying that an early presidential poll would strengthen the country's presidential election and boost candidates' chances of winning.

Megawati, president of Indonesia from 2001 to 2004, was beaten by President Susilo Bambang Yudhoyono in the 2004 election after she lost the support of party members whose resources had been sapped by the legislative election.

She is reported to have instructed lawmakers to work for the adoption of the proposal during the deliberation of a new package of political laws this year.

J. Kristiadi of the Centre for Strategic and International Studies said that changing the schedule of the elections would be difficult as it would involve a comprehensive amendment of the country's political laws.

He said that instead of working to change the schedule of the presidential election, the PDI-P should start forging a coalition to nominate a candidate.

"And if the PDI-P wants to strengthen the presidential system, it could propose giving veto powers to the president or stripping some of the House of Representatives' excessive powers," Kristiadi told the Post.

Analyst Ray Rangkuti of the Civil Society Circle described the PDI-P's proposal as "ridiculous".

"How can you stage a presidential election without knowing which political parties have garnered a significant enough number of votes for them to be able to nominate candidates," Ray, a former national coordinator of the Indonesian Election Monitoring Commission told the Post.

He added that if the proposal were adopted it would have grim political implications.

"There will be a period of six months in which the legislature is powerless as its members gear themselves for the elections, while a new president has already been elected. This will be very dangerous, as there will be no institution to oversee the executive," he said.

Ray said he doubted that the PDI-P proposal was aimed at improving the country's political system.

"It is borne out of their concern about losing another presidential election because all their financial resources have been used up in the legislative election. This also lays bare the fact that what matters most in elections is money," he said. Lawmaker Ferry Mursyidan Baldan of the Golkar party agreed with Ray.

Ferry, who chaired a House special committee tasked with deliberating a package of political laws for the 2004 elections, said that a legislative election was needed to name the parties eligible to nominate presidential candidates.

"Under the present regulation, the result of legislative elections decides which political parties can nominate candidates," Ferry said.

However, Syamsuddin Haris of the Indonesian Institute of Sciences was positive about the move, although he said the 1945 Constitution would have to be amended to accommodate it.

"It is a good idea, but difficult to follow up as it will involve the amendment of the state Constitution, which stipulates that the presidential poll comes after the legislative election," Syamsuddin told The Jakarta Post on Monday.

Syamsuddin is the head of a team being consulted by the Home Affairs Ministry in the drafting of the new political law that will serve as the legal basis of the 2009 elections.

He also said that the proposal would meet with opposition from political factions in the legislature that were opposed to making amendments to the Constitution.

Politician ousted over polygamy

Jakarta Post - January 9, 2007

Jakarta – The Islamic Reform Star Party officially dismissed House of Representatives Deputy Speaker Zaenal Ma'arif for polygamy Monday evening.

Bursah Zarnubi, the party leader, said that the party had also sent a letter to House Speaker Agung Laksono, suggesting that Zaenal be dismissed from his post as a deputy speaker.

Zaenal was reportedly fighting with the party before the controversy over his decision to take a second wife arose in December.

He had previously said that if he were dismissed, he would start a new party. "Having said that, he chose to add fuel to the fire," said Bursah.

Agung said the House would hold a leadership meeting Tuesday to determine Zaenal's fate.

Meanwhile, Ade Daud, a member of the Reform Star Party said that the party would not interfere in the vacant board position left by Zaenal.

PDI-P wants fewer parties

Jakarta Post - January 8, 2007

Denpasar – The number of political parties running candidates in the 2009 general election should be slashed so as not to confuse voters, a politician said Sunday.

"Less political parties would also make the Indonesian political system more practical and less costly," said Pramono Anung, secretary-general of the Indonesian Democratic Party of Struggle (PDI-P), Indonesia's second-largest party.

Under the Soeharto regime, which fell in 1998, Indonesia had only three political parties. The number swelled to 48 in the 1999 elections and dropped to 24 in 2004. It is expected to increase again in the 2009 elections, as more than a dozen new parties have registered with the government.

The government has increased the electoral threshold every five years in an effort to tighten requirements for parties to qualify for elections. "We hope that no more than 12 political parties will contest the 2009 elections," Pramono said as quoted by Antara.

Lesson learned from Aceh - all politics is local

Jakarta Post - January 3, 2007

Endy M. Bayuni, Jakarta – The people of Aceh have spoken. They voted for independent candidates Irwandi Yusuf and running mate Muhammad Nazar for governor and deputy governor, in the first ever direct democratic elections in this once-troubled territory.

Irwandi comes from the Free Aceh Movement (GAM), which in August 2005 signed a historic peace agreement with the Indonesian government in Helsinki. Nazar had been a student leader who actively campaigned for a referendum to determine the future of Aceh during the politically turbulent years.

The pair polled 38 percent of the 2.1 million votes cast, while their nearest rivals only collected 13 percent.

The two ran as independent candidates because no existing political parties would have nominated them. These existing parties, all Jakarta-based, nominated the other six pairs of candidates who contested the gubernatorial election. GAM would probably have been the political vehicle of choice for Irwandi and Nazar if the group had been allowed to nominate candidates.

The establishment of local political parties, regional-based as opposed to national-based, is one of the terms of the Helsinki deal. This was seen as a concession that would allow GAM to transform into a political party able to fight for its interests (anything short of independence) at the ballot box. But before local parties can be established, the House of Representatives in Jakarta must first finish drafting and then pass the necessary legislation.

In no other part of Indonesia can a person run for office as an independent candidate. Every one, whether in national or local elections, must be nominated by an established political party. The only exception is for candidates running for the Senate-like Regional Representatives Council.

But given what is happening in Aceh other provinces in the country may soon be vying for the same privilege of allowing independent candidates, free from ties to political parties, to run in elections and even to establish their own regional political parties.

And why shouldn't they? Last month's gubernatorial election in Aceh, whose final results were announced just before the end of the year, confirmed the old adage that all politics is local.

Remove the independence element from GAM and they, or rather their nominees, are still seen by the Acehnese as the best people to represent, articulate and fight for their interests.

Candidates chosen by big party bosses in Jakarta stand very little chance precisely because they are seen as representing the interests of Jakarta.

The vote for GAM does not necessarily mean that voters share the independence sentiments of the group's founders.

Voters in Aceh don't necessarily comprehend what the two independent candidates represent politically, and the pair does not have any sort of track record to indicate they can lead a regional administration.

But the results of the election in many respects showed voters' disdain toward Jakarta and all that it represents. And the political parties are seen as nothing more than an extension of the interests of the party bosses in Jakarta. More than anything, Aceh represents the deep mistrust that voters have for political parties.

This is a sentiment that is not necessarily specific to Aceh. In many other provinces, people have nothing but contempt for political parties. In the 2004 presidential election, 62 percent of voters nationwide cast ballots for Susilo Bambang Yudhoyono, a non-partisan candidate who established his own Democratic Party to run for office.

But it is in representing the interests of the regions that the national political parties have failed the most. Hence, the vote in Aceh. And it would not be surprising that if given the chance, people in other regions would also vote against Jakarta.

Remember, this country went through a series of bloody armed rebellions in the 1950s because of regional discontent over Jakarta's iron-fisted rule. The military managed to suppress the rebellions by force, but it could not kill the aspirations for a better deal and a fairer share of the cake.

Jakarta should consider itself lucky that only in Aceh and Papua have separatist sentiments been translated into armed insurgencies. Just because other provinces have not taken up arms does not mean they do not share the discontent at being used and being exploited by Jakarta.

For Jakarta-based political parties, the chief lesson from the elections in Aceh is that they had better start paying heed to the wishes and aspirations of the regions.

They have to stop treating the regions as simply part of the "floating mass" that can be mobilized to get the vote out every five years, only to be forgotten once elections are over. And they have to stop nominating politicians from Jakarta to take up seats at national or local legislatures.

They need to start grooming local politicians who rise through the local ranks, and prepare them to represent the parties at the local and national levels. Most of all, they need to remember that at the end of the day, all politics is local.

Struggle starts for House leadership

Jakarta Post - January 2, 2007

M. Taufiqurrahman, Jakarta – While the House of Representatives is yet to decide on the fate of deputy speaker Zaenal Ma'arif, political factions in the legislature are clamoring for his dismissal.

The United Development Party (PPP) proposed that the House leadership hold a meeting with the factions to discuss a the prospect of a leadership shuffle.

"The sooner the better because we must quickly act upon the PBR (Reform Star Party)'s decision to recall Pak Zaenal from the House leadership," the House's PPP faction leader, Endin Soefihara, told The Jakarta Post on Friday.

The Muslim-based PBR decided Thursday to recall Zaenal as deputy House speaker after he took a second wife last week.

The move opened a window of opportunity for several major political factions in the House, which claimed they were disproportionately represented in the House leadership.

These factions, including PPP, the Democrat Party and the National Mandate Party and the Prosperous Justice Party have called for a shake-up in the House leadership for some time.

Demands for such a shuffle had also been raised by other factions who claimed to have been disillusioned by House Speaker Agung Laksono's erratic leadership.

Untung Wahono of the PKS said that should a leadership shuffle take place the PBR could not nominate a candidate to replace Zaenal because he was elected in a package together with candidates from the Nationhood Coalition including PKS, PAN, PBR and PPP.

"Pak Zaenal was elected the House deputy speaker representing the Nationhood Coalition and is not a representative from the PBR," he told the Post.

Untung, however, said that a shuffle would not happen soon as it needed to involve an amendment to the law on the House composition and its standing orders.

The House leadership consists of one speaker and four deputies who proportionately represent the political configuration at the legislature.

The House leadership failed Friday to make a decision about the PBR decision to recall Zaenal.

House deputy speaker Soetardjo Soerjogoeritno of the Indonesian Democratic Party of Struggle said that a meeting was held with Zaenal only to hear the reasoning behind his decision to be polygamous.

Soetardjo also said that no decision could be made as the House leadership was yet to receive an official letter from the PBR central board about its move to demote Zaenal.

Zaenal, who appeared helpless following his demotion, was on the offensive Friday.

Speaking after the meeting, Zaenal said he would remain a deputy speaker, arguing that he would not answer to the PBR central board as he was nominated for the post by the Nationhood Coalition. The polygamous politician also said that he would form a new political party to challenge the leadership of Bursah Syarnubi, the present leader of PBR.

"I will also find evidence about his violations of the party's statutes," Zaenal told reporters.

 War on corruption

Activists cry foul over cash for council members

Jakarta Post - January 3, 2007

Oyos Saroso H.N., Bandarlampung – Non-government activists reacted resolutely to Bandarlampung Mayor Eddy Sutrisno's allowance "gift" to city councillors by protesting Tuesday.

The city's 45 councillors received Rp 37.8 million (US$4,108) each as part of their communication allowance. The Jakarta Post can reveal the allowances were raised from the remains of the Badarlampung city budget, which was originally set aside to pay contract workers.

Many contract workers have not yet been promoted to civil servant status, however their salaries had been allocated. This money was then reallocated for the allowance.

Bandarlampung city administration secretary Sudarno Edi said that in order to hand out the allowance, Bandarlampung's mayor changed documents for Bandarlampung's 2006 budget for working units.

Bandarlampung City Council Speaker Azwar Yakub said the allowance met the 2006 government regulation standards on allowances for legislative members.

Despite this, the 2006 allowance has been highly criticized as it was not originally allocated in the city's yearly budget. Demonstrators said the mayor's gift was graft.

"With the number of poor people on the rise, councillors are enjoying big parties with the people's money. They truly have no sense of crisis," Anti-Corruption Committee coordinator Ahmad Julden Erwin said Tuesday.

He said the distribution of the allowance was against government regulations, passed in 2005, on the management of regional budgets.

Under the regulations heads of regions, offices and units are prohibited from spending public funds that have not been allocated in the city's budget, he said.

Regulations also insist spending be based on efficient and effective principles.

Furthermore, Erwin said the councillors have already been paid enough despite performing poorly in their positions. Each councillor reportedly receives a Rp 10 million monthly salary.

"When there are plenary meetings to discuss local ordinances or other important matters, many of the councillors do not show up," he said. "They prefer to conduct field studies overseas and in other big cities in the country, producing unclear results. So it's weird that they're getting large communication allowances."

Home Minister M. Ma'ruf has released a circular on the disbursement of communication allowances for council members.

"Although the allowance was not allocated in the 2006 budget, after consulting the mayor, the money can be collected," City Council Speaker Azwar Yakub said.

As of Tuesday, some 30 councillors have collected the allowance, which is for the January-June period. The remaining allowance for July-December will be dispersed later this year.

Corruption body, a witch-hunt and a counterattack

Jakarta Post - January 5, 2007

Ary Hermawan, Jakarta – There must be nothing more bitter than feeling you have been victimized, especially when you were supposedly working for the greater good. That must have been the feeling among the General Elections Commission (KPU) members jailed for corruption by the Corruption Court.

Amid a waning of trust in the government's effort to eradicate corruption, in August members and former members of the national poll body, mostly academics, filed a request with the Constitutional Court for a judicial review of the 2002 law that established the Corruption Eradication Commission (KPK) and the Corruption Court.

Chusnul Mariyah and Valina Singka Subekti – neither of whom were charged – joined their convicted colleagues Nazaruddin Syamsuddin and Daan Dimara in filing for the review.

Former KPU secretary-general Safder Yusacc, former KPU finance bureau head Hamdani Amin, who died in prison this December, and KPU general bureau head Bambang Budiarto also signed the request.

KPU member Mulyana Wira Kusumah, who has been convicted of corruption twice by the Corruption Court, filed a separate request for a judicial review. He has also challenged the KPK's authority to conduct wiretapping – which led to his conviction.

The poll body members maintained the creation of the Corruption Court under the same law that also set up the Corruption Eradication Commission was unconstitutional. By establishing the court through the KPK law, they argued, the government had given judicial as well as executive power to the body.

Thus, they said, anyone investigated and charged by the KPK could never escape prosecution. And the body was not given the authority to decide to halt an investigation. With such great powers, they said the KPK could be dangerous if it were controlled by corrupt parties.

The poll body members said their lawsuit was an effort to ensure the anti-graft drive did not turn into a witch-hunt that violated the constitutional and civil rights of individuals. But to activists, the judicial review was seen as an attack on the fledgling anti-corruption drive.

The Constitutional Court had earlier granted a request filed by the Indonesian Legal Society and a graft suspect, Dawud Djatmiko, to cancel a passage of the 1999 law on corruption. The court ruled graft suspects could only be taken to court for corruption if they were suspected of violating formal regulations such as presidential decrees or the Criminal Code, and not for violating societal norms, such as the principle of fairness.

Eleven legal experts gathered in Yogyakarta to study the petitions for judicial reviews of the KPK law. Apart from requests to scrap its authority to conduct wiretapping, there was also a request for the Constitutional Court to strike down the law on the Corruption Eradication Commission and the Corruption Court.

On Dec. 19, 10 days before the anniversary of the Corruption Eradication Commission, the Constitutional Court issued its ruling on the judicial reviews. It stated that the Corruption Court was unconstitutional because it caused a duality in the judiciary.

The establishment of the Corruption Court by the government was a double standard in the fight against corruption, Constitutional Court chief Jimly Ashsiddiqie said.

But to ensure continued efforts to fight graft, the Constitutional Court decided not to make its ruling effective immediately, giving the government three years to draft a special law on a new anti-graft body before the old Corruption Court was dissolved.

This has led to confusion and criticism from legal experts.

The Constitutional Court, according to the experts, has no legal basis for postponing the implementation of its ruling by three years.

Lawyer Adnan Buyung Nasution and National Resilience Institute Governor Muladi criticized the ruling and urged the government to disband the Corruption Court immediately or legalize it.

The government has said it will respond to the court's ruling as swiftly as possible, and stressed it would not hamper the anti- graft campaign.

Despite the controversy over whether the Constitutional Court's ruling will cripple the anti-graft body, the ruling has highlighted allegations that the government has been discriminatory in its fight against corruption, focusing on certain parties while ignoring those involved in some of the biggest graft cases.

Mulyana and Nazaruddin, a criminologist and a political scholar, respectively, as well as former fisheries and maritime affairs minister Rokhmin Dahuri, a professor at the Bogor Institute of Agriculture (IPB), were all lecturers without records as corrupt politicians.

They may have been found to be engaged in corruption, but those who have been involved in repeated acts of corruption, made possible by powerful connections, remain free.

The state suffered more than Rp 150 billion (about US$16 billion) in losses in the Bank Indonesia liquidity funds case, not to mention the case of former president Soeharto, who is alleged to have enriched himself, his family and cronies at great cost to the state. The fact that only relatively minor corruption cases have ever been taken to court has led to a loss of trust in the government's ability and willingness to fight graft.

In an apparent bid to demonstrate its toughness, the Attorney General's Office recently started releasing a weekly list of the most wanted corruption fugitives.

The Constitutional Court's latest ruling creates the possibility for either an improvement or the abandonment of the anti-graft drive, depending on the government's commitment.

On the positive side, allegations of discrimination would disappear if all cases were tried by an ad hoc corruption tribunals. But that would mean the government would have to work extra hard to establish the necessary infrastructure, especially in the regions, to enable the tribunals to handle all cases filed by the Attorney General's Office and the Corruption Eradication Commission.

But fears are that given the pervasiveness of corruption across the nation, corruption tribunals in the regions would be at risk of bribery, due to lax supervision and imperfect infrastructure. And that would be a substantial setback in the fight against graft. The government and lawmakers will have to be extremely prudent in drafting an effective law on the establishment of graft bodies, to avoid providing any ground for the law to be thrown out by the Constitutional Court.

The KPK is still a powerful body and is badly needed in the fight against corruption. It still has the authority to investigate and prosecute corruption cases. Nor did the Constitutional Court strip it of its power to conduct wiretapping, as requested by Mulyana.

For that reason, the government should set in place clear and strict regulations to prevent the corrupt from controlling such a powerful body.

 Regional autonomy

Survey finds autonomy doing little to improve governance

Jakarta Post - January 5, 2007

M. Taufiqurrahman, Jakarta – The introduction of regional autonomy in 2001 has increased corruption more than it has improved public services, according to the results of a survey announced Thursday.

The Governance Assessment Survey, conducted by Yogyakarta's Gadjah Mada University, in collaboration with the Partnership for Governance Reform, found that regional autonomy has done little to improve access to public services for the poor or to professionalize the bureaucracy.

More than 1,800 people, including members of non-governmental organizations and the press, politicians and civil servants, were interviewed across 10 provinces for the survey.

Only 20 percent of respondents believe that human resources at health offices are of good quality. The majority of respondents also say the bureaucracy is more concerned with its own needs than those of the public.

The chief researcher for the survey, Agus Dwiyanto, said 51.4 percent of the respondents were of the opinion that regional budgets were drawn up mainly to serve the interests of local politicians and bureaucrats. "Only 32.4 percent believe the budgets are designed to meet public interests," Agus told a press conference.

Most respondents are also of the opinion that regional budgets are unable to address the basic problems of residents. "Only 25.9 percent of respondents said regional budgets could be used to solve problems at the local level, while 47.5 percent believed the contrary," he said.

There is a widely held perception in the country that decentralization has only helped spread corruption to the regions, and the results of the survey mirrored this belief.

The majority of respondents believe there is a great deal of secrecy in the decision-making process in the awarding of government projects in the regions. Respondents also see corruption as the norm.

Close to 40 percent of those surveyed are of the opinion that it is common for government officials to collect illegal fees when they provide public services.

The fight against corruption appears to be an uphill struggle, with a majority of respondents saying the two main institutions tasked with combating graft – the police and the prosecutor's office – are among the most corrupt state bodies.

"Of 1,844 respondents interviewed, 1,256 said the police have a serious problem with corruption," Agus said.

When it comes to the prosecutor's office, 1,084 respondents say there is a high level of corruption in the body.

Despite the overall bleak view of governance offered by the survey, there were some bright spots.

The survey found that some regional governments scored well with respondents, who viewed them as striving for excellence and representing the best interests of residents.

Gorontalo province was named the best administration with a governance index rating of 0.51, while Nanggroe Aceh Darussalam had the lowest governance rating of 0.36.

"This is good news that everyone should hear about," said Mohammad Sobary, the executive director of Partnership for Governance Reform.

Regional autonomy blamed for poor family planning program

Jakarta Post - January 3, 2007

Jakarta – Decentralization has been blamed for the downfall of the national family planning program during the reform era.

Activists and officials say that the program, a success during the Soeharto regime, has been damaged by a lack of awareness on the part of local administrations and shifting priorities in national development programs.

"The government has to put the reproductive health program, including family planning back, at the top of its priorities, otherwise the country will face an unrestrained expansion of population in the future," said Inne Silviane, executive director of the Indonesian Planned Parenthood Association (PKBI).

Under the regional autonomy system, the National Family Planning Coordinating Agency (BKKBN) has little power, as many regency administrations have merged the office with other institutions. There is also less funding for the family planning program, which has been blamed for the recent baby boom.

Data from the Central Bureau of Statistics shows that the country's total population has continued to increase in recent years, from 179.4 million in 1990 to 205.8 million in 2002. The number reached 219 million in 2005. Experts have predicted the number could soar to 298 million people by 2050.

The birth rate declined from 5.6 percent in 1970 to 3.02 percent in 1991, and to 2.6 percent over the past few years, but that rate represents the birth of more than 4.2 million infants annually.

The government was also asked to be aware of the real population growth/birth rate minus the mortality rate, which according to the BPS reaches up to 3.2 million people, or 1.4 percent, per year.

"The threat of soaring population numbers has to be the government's main concern because the population problem goes beyond the number. If population control doesn't happen in tandem with economic development, this could lead to various problems, not excluding poor health, limited education and poverty," said BKKBN deputy chairman for family planning and reproductive health Siswanto Agus Wilopo.

He said that it was good that the government had finally increased the budget for reproductive health services, including for the family planning program.

"We'll receive up to Rp 1 trillion (US$110 million) for the program, making us optimistic the family planning campaign will be revitalized next year," said Siswanto. Over the past few years, the BKKBN has received between Rp 500 billion and Rp 600 billion.

He explained that since family planning problems were rooted in a combination of lack of education and information, advocacy and campaigns about quality family planning should be a priority for the government, especially for low income groups and people in rural areas.

They needed to understand how family planning related to reproductive health and not only learn about using contraceptives, Siswanto added.

Data shows that the number of contraceptive users among fertile couples has reached more than 60 percent of the population since 2002, but the contraceptive rate among poor families reached only 52.4 percent, which means this population segments makes the greatest contribution to the millions of babies born every year in the country.

These people suffer the most due to poor access to family planning, both in terms of information and service. Their lack of understanding of contraception is among the reasons for unwanted pregnancies and other problems related to reproductive health, including the alarming mortality rate of 307 deaths per 100,000 births in the country, the highest in Southeast Asia.

Inne of the PKBI said that despite its weakened authority at the regency level, BKKBN still had bargaining power at the provincial level.

"I understand that every region has its own priorities for development, however continuous advocacy and support from the central government will drive them to place more of a focus on reproductive health, particularly in the family planning program," she said.

 Environment

Group sees the environment as election issue

Jakarta Post - January 5, 2007

Jakarta – The Jakarta chapter of the Indonesian Forum for the Environment (Walhi Jakarta) says the next governor should have a keen understanding of the current issues that are key to the enforcement of environmental law.

In its year-end report, made public Wednesday, the organization said weak law enforcement had led to the development of environmental problems in the city.

"Moreover, the administration's development policies deny public participation, which has resulted in human-caused environmental damage over the years," Walhi Jakarta chairman Selamet Daroyni said.

The report notes the major problems in Jakarta's environmental history, including air, water and land pollution, floods, droughts, the inadequate waste management system and poor energy choices.

"Up to 70 percent of air pollution in Jakarta comes from vehicle emissions. This figure alone is enough to show that if the city government does not introduce a good macro-transportation system, we will continue to breath in polluted air," Selamet said.

The report says the city is at a critical juncture with losses due to air pollution estimated at Rp 4.3 trillion in 2015, compared to Rp 1.8 trillion in 1998. Atmospheric pollutants and irritants have been linked to chronic respiratory problems.

The group predicts that in 2007, the concentration of particles in the air will change as the energy crisis has forced the government to push some regulations that pursue the use of coal in industry.

Although the city's water management is contracted out to two private companies, the quality of water is not getting better.

"Many people drink groundwater, which is 75 to 85 percent contaminated by E-coli and other fecal coliform, as the waterworks' pumping and purifying equipment is only sufficient to supply 45 percent of Jakartans," Selamet added.

Whereas water shortages are experienced in the dry season, floods leave 370,000 families homeless in the rainy season, with total losses estimated at Rp 92.5 billion per day.

Data from the city public works agency shows that Jakarta has 78 flood-prone areas, while data from the Central Statistics Agency says the city has about 500 flood-prone areas.

The city administration has allocated about Rp 500 billion to prevent this annual disaster, but Walhi Jakarta says most of the money has been spent on dredging waterways and buying pumps, which will not significantly help in controlling floods.

The city's poor waste management system is also putting residents at risk of disaster.

"Jakarta produces 6,000 tons of garbage daily but the administration can only manage 88 percent," Selamet said. "The government's master plan for waste-management until 2015 clearly shows they are merely reliant on the technology of private institutions to solve the problem."

The conversion of conservation areas to commercial areas is also blamed for environmental hazards.

"In 1965, about 27 percent of Jakarta was green open space. In 2000, it dropped to 13 percent and now it is only 9 percent. This is a serious problem. The administration has been inconsistent in enforcing the environmental impact analysis requirements for development projects. It accommodates business interests while ignoring the environment," Selamet said.

So far, the group said, none of the gubernatorial candidates seemed to have a good grasp of current environmental issues.

"This will simply lead to the mobilization of resources for gaining power and the neglect of the people and environmental issues," Selamet said.

Indonesia has ratified the International Covenant on Economic, Social and Cultural Rights, which requires the state to respect and observe human rights and freedoms, including the right to a clean environment.

The group expressed hope for a new perspective in policy-making that did not discriminate against the poor or ignore environmental hazards and their abatement.

"These changes include the revision of the city's spatial plan and the provision of a low-cost, safe public transportation system, as well as an end to the eviction of the poor," Selamet said.

Erosion, sand mining chew away at Tangerang beach

Jakarta Post - January 3, 2007

Multa Fidrus, Banten – Aisyah looks out from her oceanfront bamboo hut at the submerged concrete foundations of her family home in Karang Serang village, Tangerang regency.

The food stall owner said that nine years ago the house, which was located on a 2,000-square-meter block of land, was situated about a kilometer from the coastline. She inherited it from her parents.

The mother of three is just one of many residents living on the regency's north coast whose homes succumbed to erosion. Aisyah and the other people who were left homeless now occupy a soccer field that belongs to the village administration.

When The Jakarta Post visited her in September, Aisyah and her three children were eating their lunch on a bamboo bench in front of the hut enjoying the sea breeze. The hut was within 10 meters of the shoreline.

In mid-December, when the Post made a second visit, Aisyah and her children were busy wrapping up their things in old cloth. The erosion had shifted a little further inland and Aisyah was consequently moving her house 10 m away from the old location.

Her youngest daughter, 18-year-old Anisah, was sound asleep on the bench amid the bundles of things and kitchen appliances, ignoring the waves sweeping materials from along the shore and the sound of the waves crashing on the sand.

The administration had recently built a 50-meter-long rock wall, called a "wave bumper", to halt erosion in the area. But apparently it was not erected in the right position as many of their homes remained unprotected.

Concrete rubble is the only sign there were once houses in the area. Hundreds of hectares of fish ponds, shrimp farms and rice fields that once existed in the coastal villages of Ketapan, Karang Serang, Tanjung Anom and Marga Mulya were also washed away.

Waves and high winds damaged the shoreline bit by bit, a condition that was worsened by illegal and indiscriminate sand mining from the beach, carried out by people from outside the area.

"The sand mine was run by people who obviously had a lot of money at their disposal. They hired trucks and employed many people to take the sand at night, when we were off guard. They only stopped because we threatened them physically," Aisyah said, adding that sooner or later the village would be engulfed by the sea.

Even after the "outsiders" had left, however, some residents who had previously made a living as fishermen or shrimp farmers began operating the sand mine. They excavated the sand and loaded it onto waiting trucks, accepting money from the drivers.

"I only earn Rp 25,000 a day from sand mining. I used to be a fisherman, but I haven't been able to afford to take my boat out regularly since the fuel price increases in 2004," Sabarudin said.

To feed his wife and five children, Sabarudin said he had no other choice but to take sand from the beach, although he was aware the practice was causing irreparable damage to the coastal environment. "What else can I do? I have no other skills. I have no land to farm or capital with which to start a business," he said.

Village head Firdaus said he was powerless to stop the operation of the sand mine because he could not offer the workers other forms of employment. "Only the government has the power to do something," he said, adding that halting the operation of the mine would only cause more social and economic problems because most of the miners were village residents.

He said he had made several attempts to halt the mining, but gave up each time in the face of protests by villagers. "They rely on sand mining as their main source of income," said Firdaus, whose village has a population of 4,969.

Over the past 10 years, more than one-and-a-half kilometers of the coastline has been reclaimed by the sea. Natural forces will continue to erode the beach, resulting in significant losses for the people who live there. But without incentive to act, the local government will only ignore the problem.

 Health & education

Poor service, public ignorance allow bird flu virus to spread

Jakarta Post - January 8, 2007

Hera Diani, Jakarta – When avian influenza became a major global issue in 2006, some foreign health experts thought it was over hyped.

They said that people should indeed be cautious about the disease because influenza spread easily and called for global funding efforts to stop the disease. "But I think it's been over hyped. There is no indication or evidence that it will become a global pandemic," said a US HIV/AIDS researcher.

Other experts were concerned that fear of an avian influenza epidemic had caused other major health issues to be overlooked. So is the bird flu threat nothing to be worried about?

Maybe. But in the case of Indonesia, the hype surrounding it was seen as necessary to bring it to the serious attention of the people and the government.

According to the World Health Organization, bird flu remains essentially an animal disease, but one that has infected more than 250 people worldwide since late 2003, killing more than 150 of them.

In Indonesia, the first cases of bird flu in fowl were detected in 2003, and the first cases in humans in 2005. The country now has the world's highest number of human deaths from the virulent H5N1 strain of bird flu, with 75 people infected and 57 dead. Most of the infections were contracted from domesticated fowl. The most recent, on Jan. 7, was a 14-year-old boy in Tangerang, west of Jakarta.

The country is on the front line in the battle against the disease. No other nation has counted more deaths than Indonesia, where millions of chickens roam backyards freely.

Indonesia has attracted international criticism for not doing enough to stamp out the virus or to inform people of the danger. Many experts see it as the weak link in global efforts to ward off a possible pandemic.

To be fair, the avian influenza problem is very complicated in Indonesia. As a geographically big country with over 220 million people and billions of chickens and ducks, it requires a lot of resources to fight bird flu.

There are approximately 30 million homes which keep chickens in their backyards, and millions more birds out there, making widespread vaccination and mass preventive culling difficult.

The complexity of the problem has revealed how poor the nation's health system, animal health services and public awareness campaigns are. Only after bird flu surfaced did the country establish a pandemic preparedness commission.

Delayed treatment due to poor public awareness of the virus has led to the significant mortality rate. In many cases in West Java, even doctors and nurses have failed to take the problem seriously and immediately treat patients showing bird flu symptoms, while officials have been late to arrive at infection sites after the disease is reported.

The bird flu public awareness campaign run through the mass media has been of little help. People are still relaxed about the threat and there have been instances of farmers refusing to hand over their birds to the authorities despite being promised compensation.

In North Sumatra, farmers refused to have their poultry vaccinated, saying that they were healthy. The men drank the animals' blood in a protest.

In addition to halting the spread of the deadly disease, the government should use this time to improve the health system, animal health services and public awareness campaigns.

Observers have said there is a need for detailed and non- reactionary or superficial programs. The government's recent plan to cage fowls in residential areas to curb the spread of the virus, for instance, is likely to be futile unless people keep the cages and surrounding areas clean.

They have also said that it is vital that vets in each district stay on the alert for bird flu cases and respond to them, which means reliable vaccination programs, as well as the efficient killing of infected birds and compensation provision.

Such initiatives have been difficult to introduce, however, particularly because local administrations now have greater authority over internal matters. There is a need to increase the level of activity at the provincial and district levels.

The public awareness campaign needs to be more aggressive, as people will only follow the example if they see that there have been bird flu victims in their areas.

There is also a need for biosecurity awareness, involving educational institutions, places of worship and community groups.

 Aid & development

Traditional communities and farmers still the victims

Radar Tanjab - January 5, 2007

Jambi – Traditional communities and farmers in Indonesia, particularly in Jambi province, Sumatra, are still falling victim to disadvantageous government policies and as a consequence both groups suffer from high levels of poverty.

Almost three-quarters out of 40 million poor people in Indonesia are farmers and members of traditional communities said Isti Komah, the public relations officer for the Jambi branch of the Preparatory Committee for the National Liberation Party of Unity (KP-Papernas) on Thursday.

This poverty occurs because the development programs implemented by the government have yet to be able to comprehensively reach rural communities. Whereas 70 percent of Indonesia's people work as farmers and are still living below the poverty line.

Government policies that are unpopular and bring suffering to farmers include increases to the price of fertilizer and fuel that implicitly have an impact on farmers and traditional communities that become the victims.

Farmers become the victims of these policies and continue to be poor because of limited access to business capital and the burden of daily living expenses as a result of the high cost of production.

Moreover, the government's now has a policy to import rice, so the problems will further hem in farmers because it will cause the price of Indonesian farmers' unhulled rice to decline dramatically said Komah.

The main reason for all of this is the yearly increases to fertilizer prices while subsidies are cut and production of natural gas is "pawned off" to foreign companies.

Farmers and traditional communities are also hemmed in by problems of land and agricultural conflicts with parent companies that are unable to be resolved by the government.

The government's claims that it has succeeded in reducing poverty totally contradicts with data from the Indonesian Autonomous Institute that shows as of April last year poverty had reached 22 percent of the total Indonesian population of 220 million people. (ant)

[Translated by James Balowski.]

Focus on working-age population, says expert

Jakarta Post - January 3, 2007

Jakarta – The government is being urged to pay more attention to the country's large working-age population, the result of the Soeharto-era family planning program that reduced the national infant mortality rate.

"As many as two million people need jobs every year, which is quite a burden for the government, which still can't afford to provide jobs for them all," said Moertiningsih Adioetomo, a demographics expert at the University of Indonesia.

Speaking at a recent seminar sponsored by the National Family Planning Coordinating Board, she dismissed reports that Indonesia was currently facing a population boom.

She said that Indonesia, the world's fourth largest country, with around 220 million people, had seen its population grow by about four million annually over the past few years. In the 1980s, it was around 5.33 million a year, a number that dropped to 4.98 million in the 1990s, before settling at 4.12 million in 2000, Moertiningsih said.

Quoting data from the United Nations' World Population Program, she said Indonesia's working-age population had reached 150.6 million in 2006, up from 148.3 million the year before. It is predicted to hit 170.8 million by 2015.

Moertiningsih added that Indonesia's current birth rate of 2.6 percent meant that more than 4 million children were born every year. But only half of those children would go on to higher education, she said. The other half would be likely to enter the work force at the end of junior high school, a pattern of minimal education that would see many people stay in poverty.

She said that in the future, the family planning program would face challenges in serving the poor, who often had larger families than the wealthier and better educated sectors of society.

Comprehensive family planning advocacy should be a government priority in order to prevent a continuing legacy of poverty in the country, she added.

Moertiningsih said that the government also needed to curb population growth to less than 1 percent to maximize the well- being of the people.

Indonesians feel worse off, pessimistic, survey says

Jakarta Post - January 2, 2007

Alvin Darlanika Soedarjo, Jakarta – More Indonesians say they are economically worse off compared to 12 months ago and most cite the increased costs of basic goods and travel expenses as the main reasons, an end-of-year survey says.

"We found that more people (said they) were worse off than better off. There has been a... trend since June 2006," TNS Indonesia research director Daniel Lindgren said.

Daniel, who made the study with research director Yanti Zen, interviewed more than 1,000 people aged 18 from provinces around the country.

The pair found 32 percent of people said they were worse off this December compared to 26 percent in June. "It appears that there (has not been) a full recovery from the fuel price increases," Daniel said.

About a quarter of the respondents who believed they were worse off said the rising cost of basic goods was the main cause. Other reasons for being worse off included losing one's job, little or no pay increases, increased family sizes and illness.

The study found a greater proportion of people said they were worse off in Java than in other areas. About 36 percent of those who put themselves in the worse-off category lived in Java compared with 23 percent in Sumatra and around 22 percent in other provinces.

Those who said they were better off credited their success to improved business conditions. Reasons for being better off included higher incomes, new jobs, bonuses, more income earners in the family and less people to take care of in the house.

The survey found 51 percent of those surveyed said their standard of living remained unchanged, down from 54 percent in June.

Daniel said in Jakarta, people seemed to be less optimistic about their prospects for this year. "The Gallup end-of-year study, which TNS does the data collection for in Indonesia, shows that 33 percent of adults in Jakarta said 2007 would be worse for them than 2006," Daniel said.

Only 22 percent of Jakartans thought things would look up in 2007. Researchers found no significant differences between men and women's responses to the survey.

TNS conducted the study by interviewing 1,004 people in North Sumatra, West Sumatra, Riau, Jambi, South Sumatra, Lampung, Jakarta, West Java, Banten, Central Java, Yogyakarta, East Java, Bali, West Nusa Tenggara, West Kalimantan; and South, Central and Southeast Sulawesi.

Desperate plight of Lampung working class

Jakarta Post - January 2, 2007

Oyos Saroso H.N., Bandarlampung – With the prices of basic needs continuing to soar, life is tough for Sugeng Supriadi. The 39- year-old contract teacher at a junior high school in Bandarlampung makes ends meet driving a pedicab.

The graduate of Tanjungkarang Teacher Training College, who has worked at Nusantara junior high school for the past 20 years, said his monthly take-home pay of Rp 120,000 was far from enough to feed his family.

A 2005 government regulation on the promotion and transfer of contract teachers to posts in the civil service stipulates that a contract worker's salary is determined by the related government office, with the money coming from the state or local budget.

In Sugeng's case, the private school's board is entitled to set his fee and hours. He gets paid Rp 14,500 an hour, teaching less than 10 hours a month. "I don't mind driving a pedicab. I cannot put food on the table unless I do," Sugeng said.

His eldest child is in junior high school. He also has a child in the fourth grade and a 5-year-old who is yet to go to school.

After teaching, at around 1 p.m., Sugeng waits for passengers near Ramayana shopping center in Bandarlampung. He goes home to rest at 5 p.m., heading out again after dark to look for passengers. He earns an additional Rp 15,000-20,000 daily.

"I won't get money if I wait for passengers because there are so many pedicab drivers now. I have to compete with motorcycle taxi drivers too," said the resident of Tanjung Agung in East Tanjung Karang.

Thousands of contract teachers share a similar fate, earning Rp 75,000-500,000 per month. The province has set a minimum wage of Rp 510,000. Factory workers are in a similar predicament.

Safrudin supports his wife and two school-aged with a job in a factory in Bandarlampung that pays Rp 510,000 a month. He stopped taking the bus to work when the fare went up to Rp 1,000 from Rp 600, making the 35-kilometer journey by bike instead.

"My wife doesn't cook on our kerosene stove anymore but over the fire," said the resident of Gulak-Galik in North Telukbetung.

He said the Rp 100,000 assistance payment he collected monthly from the government made little difference because the prices of basic goods and transportation fares continued to increase.

Workers in Lampung earn less than those in Java, despite the higher cost of living in the province, but many workers like Safrudin do not dare protest since they are paid according to the wage rates set by the city administration.

Workers in Bandarlampung and other smaller cities in Lampung are unwilling to stage protests for fear of dismissal. But activists from a number of non-governmental organizations have drawn attention to their plight through rallies.

The United People's Alliance (ARB), grouping various elements of society in Lampung, has demanded that Lampung Governor Sjachroedin Z.P. raise the minimum monthly wage to Rp 814,306, arguing that Rp 510,000 is no longer sufficient. "We don't want to be cheated again." said ARB spokesman Rachmat Husen.

He said the governor and the local manpower office needed to create better working conditions and raise the minimum wage as soon as possible.

Rachmat said many men and women were exploited by large companies that paid meager salaries. A local daily owned by a prestigious media company in Indonesia pays its reporters Rp 300,000 a month.

In April, a large-scale food producer was reprimanded by the local manpower office for paying its workers below the minimum wage, and three companies were also given warnings last year for remunerating their workers between Rp 200,000 to Rp 350,000 per month. For next year, the province has set a minimum wage of Rp 560,000.

Governor Sjachroedin said the current wage rates had been recommended by the remuneration committee. "I only received its recommendation and endorsed it. I personally find the amount to be inappropriate. But, we should also consider other aspects, such as the poor business climate and other conditions. I hope the minimum wage can be raised to at least Rp 1 million," he said.

 Bali/tourism

Balinese children trapped in dark underside of tourist industry

Jakarta Post - January 4, 2007

The sexual exploitation of children is growing at an alarming rate and now affects millions of children across the globe. The Indonesian government, UNICEF, local and international NGOs and Microsoft Corp. met in Bali last week to discuss this pressing issue. The Jakarta Post's Rita A. Widiadana and contributor Wasti Atmodjo look at the issue in the following articles.

"Ketut Astika", a fifth grader in East Bali, was surprised when a middle-aged Western man visited his small house in a hilly area of Karang Asem regency, some 100 kilometers east of the provincial capital Denpasar. The boy quickly grew alarmed when he saw half-naked and naked pictures of himself that the man had downloaded from the Internet. He was a sexual predator and had traveled thousands of kilometers in search of poor boys on the exotic island of Bali, which has become a hot spot for child sex tourism.

Sexual predators have taken advantage of the rise in the Internet to locate targets and form virtual communities where they can share information. There are ample websites featuring pictures of children in sexual positions, and tips from predators on where to find children.

Ketut is just one of hundreds or perhaps thousands of boys and girls in Bali prostituted by their parents, aunts, uncles or strangers to serve foreign tourists traveling to the island.

His pictures are among an estimated 1.5 million images of children as young as 18 months posted on websites catering to pedophiles. The easy availability on the Internet of these images and information on the children has helped facilitate child sex tourism.

Lenient punishments, weak law enforcement and a lack of commitment on the part of the government to tackle the sexual exploitation of minors has made Bali and other places in Indonesia a haven for foreign sexual offenders preying on youngsters.

A recent meeting was held in Bali to address these problems and determine how the Indonesian government, NGOs and international organizations can work together to eliminate all forms of exploitation against children.

The sexual exploitation of children can involve the following: the possession, manufacture and distribution of child pornography, online enticement of children for sexual acts, child prostitution, child sex tourism and the sexual molestation of children.

Anna-Karin Jatfors, a child protection expert at the United Nations Children's Fund (UNICEF) Indonesia, said the Indonesian government, UNICEF, NGOs and law enforcers had enough information to determine that child sexual exploitation was a major and growing issue. She said there was evidence of criminal syndicates operating throughout the country and Asia.

"Monitoring the extent of the problem is very difficult as it is a criminal and underground activity." Bali, she said, as one of the world's top tourist destinations, was at great risk of sex tourism.

"We only have to walk through Kuta or any other tourist area at night to see for ourselves the many young girls working on the street or in many of the clubs, karaoke bars or even hotels operating in the area."

In Indonesia, about 30 percent of the 40,000 to 70,000 commercial sex workers are children aged between 12 and 17. This figure has risen significantly in the last few years.

Ahmad Sofian from the Indonesian organization End Child Prostitution, Child Pornography and the Trafficking of Children (ECPAT), said that tourism had both positive and negative effects on the country.

Every year, around five to six million foreign visitors come to the country, bringing much needed foreign currency. While most are legitimate tourists, some of these visitors arrive in the country intent on preying on Indonesian children.

Child sex tourism a growing concern

Jakarta Post - January 4, 2007

As a developing country saddled with huge foreign debts, Indonesia's tourism industry is a much needed source of income. But along with holidaymakers and honeymooners have come child sex tourists, a problem the government often turns a blind eye to.

"What really matters to the government is just collecting foreign exchange income from the lucrative tourism industry to lift up our economy, but it pays little attention to many of its consequences, including child sex tourism," said Ida Ayu Agung Mas, a prominent Balinese women's activist and member of the House of Representatives.

In Bali, Batam in the Riau Islands and West Nusa Tenggara, poverty, along with a lack of education and employment opportunities, pushes children into sexual exploitation, she said.

The children of impoverished families are soft targets for sexual predators, who promise them financial assistance. "More access to education and employment will prevent youngsters from entering the sex trade," she said.

Anneka Farrington from Child Wise Australia, a non-profit organization funded by AusAid, urged Indonesia to improve its legal system's handling of child exploitation cases to prevent sexual offenders from escaping the law.

She said Australia had enforced an extraterritorial child exploitation law in 1994. Under the law, any Australian citizen found guilty of sex offenses against a minor in any country will face heavy punishment, and those who have evaded prosecution overseas will face it in Australia. A total of 23 cases have been processed since the law's enactment.

She added that Singapore had recently imposed a similar law. Upon its announcement, it was reported that there was a slight increase in tourists traveling from Batam Island in Indonesia to Singapore and vice versa. The number of guests at Batam's bars and restaurants has dropped almost 50 percent since.

Australia, Britain and Canada, along with several other countries, have promised to share information on child sex offenders traveling to Indonesia and other countries. Britain provides background information, bios and photographs of offenders through a web site.

To track the on-line activities of child sex predators, Microsoft has worked with the Indonesian and Canadian police to develop special software to deal with online child exploitation.

"This will be a huge step for world government, law enforcers and the information technology industry to jointly combat this serious crime," said Katharine Bolstick, senior director of Microsoft's Legal Department in Asia and Greater China.

Using the software, police and experts can easily share data and information on every on-line action against children. "The world of sex offenders will become so narrow both in the real and cyber worlds. Legal enforcers will hunt them wherever they are," Bolstick said.

State Minister for Women's Empowerment Mutia Hatta Swasono has reminded the government and related agencies of the implementation of plans to establish two pilot projects for child sex tourism-free zones in Bali and Batam Islands in 2003. A special task force handling child exploitation was established in 2003, but its reports were never published.

Indonesia has also ratified the United Nation's Convention on Child Protection and has a strong Law on Child Protection. Indonesian children are all entitled to protection against any form of exploitation. The reality on the ground, however, is far from the ideals set forth in legalese. – Rita A. Widiadana and Wasti Atmodjo

 Islam/religion

Fundamentalism still major danger in 2007

Jakarta Post - January 5, 2007

Ary Hermawan, Jakarta – The government failed to address a range of rights abuses related to religious fundamentalism last year and its inaction means sectarian violence will likely remain a threat to national development, a rights watchdog says.

In its annual human rights report, Imparsial said Thursday that in the past year the government did little to anticipate or respond to local bylaws that discriminated against women and militant groups that targeted religious minorities.

"It failed in part to understand the dangers posed by religious fundamentalism to human rights and democracy," Imparsial executive director Rachlan Nashidik said. "It also underestimated (fundamentalism's) revival," he said.

The group recorded at least 14 major cases of rights violations triggered by religious intolerance in 2006.

Last March, two churches in Bogor, West Java, were forced to shut down by local residents, who alleged they were illegal. This action was officially endorsed by local authorities.

On Feb. 4, dozens of Ahmadiyah followers in Mataram, West Nusa Tenggara, were driven out of their homes after local villagers torched their houses. Police did nothing to protect the group. Ahmadiyah was later declared a heretical Islamic sect by the Indonesian Ulema Council.

In June, Jakarta spiritual leader Lia Eden, who claimed to have received revelations from the Archangel Gabriel, was sentenced to two years' prison for blasphemy against Islam. In early January, a man in West Sulawesi was jailed for six months for whistling while performing his daily Islamic prayers.

Many local governments also passed sharia-inspired bylaws, which moderate Muslims and human rights activists have criticized for discriminating against Muslim women and those of other faiths.

Imparsial listed at least 30 local ordinances issued between 2001 and 2006 that were in violation of citizens' constitutionally guaranteed civil rights.

Meanwhile, lawmakers in the West Java city of Depok are drafting a repressive anti-vice bylaw, despite protests from rights groups and feminists, Rachland said. "I don't know why the Home Ministry doesn't do anything to address this matter," he said.

The police have refused to clamp down on the illegal violent actions of militants, while the Home Ministry has said it lacks the powers to control law-making in the regions, he said.

Despite this, the ministry has cooperated with the Justice and Human Rights Ministry to evaluate problematic bylaws and supervise the drafting of new ones.

Muslim scholar Ihsan Ali Fauzi of the Paramadina Foundation said religious violence would pose a major threat to the nation's stable democracy, unless the government got tough on "hate speeches" delivered by hardline preachers.

"Similar laws have been applied in Western countries like the United States and Britain," he said.

Poor 'sold short' on day of sacrifice

Jakarta Post - January 2, 2007

Jakarta – Thousands of the city's poorest people left dissatisfied Monday after queuing since early morning for free meat at Istiqal Grand Mosque. They were promised two kilograms of meat each, but received less than half a kg.

The majority of Muslims here celebrated Idul Adha on Sunday.

The distribution of meat to the poor traditionally follows Idul Adha prayers, but was delayed to allow for extra preparation time. "We give coupon holders first priority. So far the distribution process is running smoothly," said mosque spokesman Didi Hadian as quoted by Detikcom.

Didi did not say why the packages of meat were smaller than expected. The meat was distributed at counters, which served five people at a time.

"Forget the two kilograms. We didn't get any meat at all – it's all bone," said Nur Effendi who had traveled from Cililitan in East Jakarta to the mosque in Central Jakarta.

Sutijah, a street vendor, was similarly displeased. "Last year, I got two or three kilograms," she said.

In previous years, the mosque gave the task of slaughtering the cows and goats to traders and butchers, who also distributed the meat. This year, a team from the mosque handled the process. Dozens of animals were sacrificed and the meat distributed among 5,000 people.

 Economy & investment

Consumer confidence continues to creep upward on improved economy

Jakarta Post - January 8, 2007

Jakarta – A survey from Australian research firm Roy Morgan has found that most Indonesian consumers are predicting better economic prospects for 2007.

A total of 6,312 people were interviewed for the July-September 2006 quarter.

Forty percent of consumers surveyed said they expected to be financially better off within the next 12 months. Only 12 percent of respondents expected to be worse off. The number of upbeat consumers is up three percentage points from last year's second quarter.

The survey also found that most Indonesians still look positively to the long-term future, with 81 percent expecting good financial conditions over the next five years. Only 18 percent felt otherwise.

Overall, Indonesia's consumer confidence rating for the July- September 2006 period improved marginally. It is now 110.4, up 1.1 points from the previous quarter. The nation's rating is, however, still 8.8 points lower than for the corresponding 2005 period.

Roy Morgan also found that at the time of polling, 34 percent of Indonesian consumers believed they were worse off than at the same period 12 months earlier. Twenty percent said they were better off.

Meanwhile, consumer demand proved to be lackluster, with only 25 percent of respondents believing it to be a good time to buy major household items. Sixty-nine percent still considered it a bad time to buy.

"While demand has recovered for most products and services, there is a lack of excitement and enthusiasm in every sector of the consumer marketplace," Roy Morgan's regional director for Asia, Debnath Guharoy, said.

"Demand for motorcycles and domestic appliances remains strong, confirming the wealth of the middle class. However, interest in cellular phones and the Internet isn't growing as rapidly as expected," he said. "Also, the rising price of rice has taken it off the table for many of the weakest sections of society."

Roy Morgan surveys more than 6,000 people, aged 14 and above, across Indonesia each quarter. "The statistical reliability of 6,000 respondents every quarter cannot be easily challenged," Guharoy said.

Indonesia is now showing signs of macroeconomic improvement, with on-year inflation clocking in at 6.6 percent by 2006's end. Although this is lower than the forecasted 8 percent, it missed the revised 6 percent due to a spike in rice prices in December. Inflation slowed to 6.29 percent in October, down from 14.55 percent in September.

Bank Indonesia's key rate was cut to 9.75 percent by the end of last year, while lower inflation and reduced interest rates helped spur Indonesia's consumer-driven economy.

On the whole, the country's economic growth is continuing its rebound, and was up 0.4 percent to 5.5 percent by last year's third quarter. It may miss the 6 percent full-year estimate, however, with the government expecting growth at 6.3 percent for 2007.

Yogya companies losing out to cheaper Chinese products

Jakarta Post - January 5, 2007

Slamet Susanto, Yogyakarta – Small-scale aluminum casting producers in Yogyakarta are on the brink of collapse, losing out to a boom in Chinese products and handicapped by limited access to capital.

The industry produces kitchen utensils such as pots, pans and woks, as well as sports-styled wheels for cars.

The chairman of the Yogyakarta Aluminum Casting Association, Beni Hendra, called on the government to help through protective measures and other steps.

"Our innovative products, such as aluminum sports rims, have lost in competition with Chinese products due to their cheaper prices. This needs serious attention from the government," said Beni.

He added that local aluminum casting companies had trouble expanding because they typically found it difficult to get bank loans. As a result, 80 percent of the 65 companies in the area are now in critical condition.

"We hope bank loan procedures will be simplified so that we can expand our businesses," said Beni.

He also suggested the government help them with training programs so that they could acquire the necessary knowledge and skills to compete in the global market.

Yogyakarta Governor Sri Sultan Hamengkubuwono X, when handing over Rp 350 million (US$39,000) in assistance to revive the industry recently, urged aluminum casting producers in Yogyakarta to continue improving the quality of their products.

"We hope that aluminum products from Yogyakarta are able to meet quality standards, from raw materials to the finishing process, in order to flourish and absorb the local workforce," he said.

He encouraged the companies to use technology to make the production process more precise and to track their businesses carefully in order improve their performance against the competition.

Exports hit $8.02 billion in November, highest level in history

Jakarta Post - January 3, 2007

Andi Haswidi, Jakarta – The country's exports broke yet another record in November at US$8.92 billion, the Central Statistics Agency (BPS) reported Tuesday, adding weight to predictions that full-year exports will hit $100 billion for the first time.

"According to our records, the $8.92 billion recorded in November, which is slightly higher than the figure for August, is the highest in the history of this republic," BPS director Rusman Heriawan said Tuesday.

Rusman said that the total value of exports in November was 2.37 percent higher than in October, and 29.59 percent higher than in November 2005.

The increase, Rusman said, was due to higher oil and gas exports, up by 10.48 percent from $1.58 billion to $1.75 billion, and higher non-oil and gas exports, up 0.57 percent from $7.13 billion to $7.17 billion.

Within the oil and gas export sector, crude oil exports jumped by 51.34 percent to $697.7 million in November. "However, an increase in value did not happen in the gas sector as the total value of gas exports decreased by 3.9 percent to $776.9 million," Rusman explained.

The main markets for Indonesia's exports remained the same as in previous months, with Japan topping the list followed by the United States, Singapore, China, Malaysia, South Korea and the European Union.

Cumulatively, the country's exports from January to November reached $91.19 billion, up 17.61 percent compared to the same period in 2005.

"I cannot say whether total exports will total $100 billion by the end of December, but I can say that if we want to reach that figure, than all we need is around $8.8 billion in exports in December," Rusman said.

"From our experience between 1997 and 2005, December's exports are usually higher than November's. So you can decide for yourself whether 2006's export will reach $100 billion or not."

The increase in exports in December, as shown by trends in previous years, is due to higher demand from foreign countries, especially those in the northern hemisphere in the face of winter and the Christmas celebrations, which in turn push up demand for commodities from Indonesia.

As for imports, the BPS figures show that the country's total imports in November were worth $5.86 billion, an increase of 30.3 percent compared to October.

"The total value of imports between January and November reached Rp 56.06 billion, an increase of 6.14 percent compared to the same period in 2005, when the equivalent figure was $52.8 billion," he said.

Japan was the largest exporter to Indonesia between January and November with a total value of $5.01 billion, with China second on $4.99 billion and the US third on $3.69 billion.

"In December, we saw a 5.53 percent increase in raw materials and a 10.36 percent increase in capital goods, as opposed to imports of consumer goods in the previous six months," Rusman said. "This means that we will see an increase in local production in the first quarter of 2007," he concluded.

On the same occasion, Rusman announced the results of the BPS 2006 economic census on companies and businesses, saying that about 43 percent of the country's businesses, excluding farming, operated without a permanent place of business.

"Most of these businesses are informal ones, such as those run by street vendors. This is the main characteristic of our country's economy."

Minimarkets forcing us out, say angry shopkeepers

Jakarta Post - January 2, 2007

Jakarta – The growing number of minimarkets and convenience stores in Jakarta is forcing many small-scale traders out of business.

"I lost most of my customers when a minimarket opened up right in front of this market (Bintang Mas market in Kemanggisan, West Jakarta) a few months ago," Lilis, a shopkeeper, said Wednesday.

After receiving a number of complaints from traders like Lilis, who have suffered financial losses due to the proximity of minimarkets to traditional markets, the Jakarta administration has decided to ban the establishment of new minimarkets in the city through Gubernatorial Decree No.115/2006.

"We are trying to temporarily stop issuing licenses for the establishment of minimarkets, because there are too many such shops opening up, Subaning Rustriantono, the head of the city administration's small and medium enterprises and market activities division, was quoted as saying by weekly business tabloid Kontan.

There are at least two convenience stores in many neighborhoods – mostly franchised minimarkets – often just a few hundreds meters away from each other. The rights to operate a francise usually cost some Rp 300 million (about US$32,000)

According to data from AC Nielsen, in 2005 two of the nations major retail chains experienced growth of more than 20 percent in their number of outlets.

Alfamart had 1,263 outlets last year, 22 percent higher than 973 in the previous year, while Indomaret recorded a 29 percent growth in the number of shops to 1,420 in 2005 from 1,001 in 2004.

With such growth, the market share of traditional stores, currently at 70 percent, is predicted to drop by 2 percent per year.

"We are very disappointed with the governor's instruction, it is not fair to implement a regulation for one side only," Tutum Rahanta, the secretary-general of the Indonesian Retailers Association, told The Jakarta Post on Wednesday. He said the ban would not only seriously impact traders but leave consumers with less options.

Rather than restricting the number of minimarkets in the city, Tutum said the city administration should better regulate operations in the retail sector.

"Convenience stores are a new form of the old stores we established through trial and error. If the government intends to improve small- and medium-scale enterprises, we can help them by providing assistance."

He said that even after the economic crisis hit the country in 1997, the retail sector had continued to prosper. "We have proven that we can improve our performance without government interference," he said.

An operational manager of one of the major retail chains, who asked not to be named, said the government should focus more on quality control management at the existing stores, rather than preventing the establishment of more minimarkets.

"The problem is the conventional shops are not willing to improve their services and quality," he said.

 Opinion & analysis

Classic rivalry

Jakarta Post Editorial - January 9, 2007

The nation's commitment to civil society is being tested again as the debate intensifies over the bill on national security, which includes a major revamp of the National Police.

Public caution and openness in the bill's deliberation are needed to make sure the resulting law does not restore control over domestic security to the Indonesian Military (TNI).

For 32 years Soeharto used the military's sociopolitical functions quite effectively as a machine to maintain his power. After his fall in 1998 the nation pledged that the TNI would oversee only defense and external security affairs, while the police would handle domestic security and public order.

The public discourse changed considerably when TNI Commander Air Marshal Djoko Suyanto lashed out at the police for trying to retain their authority in security affairs, which he called "a big mistake".

For the police, the problem primarily arises from an article that stipulates the police would come under the supervision of a ministry, likely either home or justice. The other source of the dispute lies in the drafting process, which police leaders say did not involve them. The draft law is sponsored by the Ministry of Defense.

To counter the move, the National Police will draft an alternative bill, which would maintain the force's direct supervision by the president.

Advocates of the national security bill, including Defense Minister Juwono Sudarsono, envision a professional police force which is no longer attached to the president. As in many democracies, the national or federal police would fall under the auspices of a ministry and their chief would not be a political appointee.

They say the organizational overhaul of the police is a logical consequence of the People's Consultative Assembly Decree in 2000 that defined the division of labor between the police and the military. The 2004 defense law, in accordance with the decree, laid the foundation for the military's supervision under the Defense Ministry. Many say the law is a manifestation of the reform within the military.

Professionalism is at stake when the police chief, as well as the TNI chief, directly answers to the President, as it opens up opportunities for abuses of power by the ruling regime as evident during the New Order.

The possibilities are still there despite the reform movement. This became apparent in 2004 when the Banyumas police chief lost his job for allegedly campaigning for the re-election of president Megawati Soekarnoputri. More serious abuses are very likely to happen as the National Police, unlike the TNI, enjoy the luxury of formulating and executing policies and managing their own budget. As if to confirm the damage the police could do, the Governance Assessment Survey recently released by Yogyakarta's Gadjah Mada University found the public felt the police were Indonesia's most graft-ridden public agency.

Modern countries, including neighboring Australia, opt to decentralize their police forces and limit the enforcement powers of the national police to national (federal) laws. For practical reasons, individual states or provinces run their own police forces to enforce laws within their own boundaries, since they deal with public order on daily basis.

On top of that, security is the responsibility of every citizen, in accordance with the Constitution. The police themselves cannot handle security alone, although their success in uncovering the masterminds of a series of terror attacks in the past few years deserves recognition. In many cases, particularly when it comes to armed violence, the police need assistance from the military.

But the objection of the police to the national security bill cannot be ignored. Placing the National Police under the Home Ministry, for example, may disrupt unity within the force and wreak havoc on national security as the regional police will think and act locally.

The police are facing their toughest challenge now that the country, and the rest of the world, is dealing with cross- boundary crimes, such as terrorism, money laundering, human, arms and drug trafficking. To fight such crimes, the National Police require adequate authority.

It's highly recommended, therefore, that the government invite the police, more scholars and experts as well as the general public to refine the bill before sending it to the House of Representatives. The debate over the bill should not be reduced to a continuation of the classic rivalry between the TNI and the police, nor should it reopen the military's path to security jobs.

It's imperative, too, in order to help build a strong civil society, that the bill provide a bigger role to the community.

Sharia-inspired bylaws the scourge of democracy?

Jakarta Post - January 2, 2007

Muhammad Qodari, Jakarta – It has been more than eight years since the country began the transition to democracy, but the Indonesian political elite's understanding of democracy is still procedural rather than substantial. To the elite, democracy is not ultimately understood as a system that guarantees civil rights such as individual freedom and equality, but as a means to achieve power and further the political agendas of powerful groups.

This is indicated by two events. First, at the national level, the attempt to draw up the anti-pornography law was heavily influenced by the values of a particular religion, Islam. Second, a number of local bylaws inspired by Islamic law, or sharia, have been passed.

In Bulukumba, South Sulawesi, Bylaw No. 4/2003 stipulates that civil servants must wear Muslim attire. In Padang, West Sumatra, the mayor released Instruction No. 451.422/Binsos-III/2005 on a Muslim dress code for schoolchildren.

The anti-porn bill and the sharia-based bylaws have sparked political and social tension in society. Heated debates drag on at the House of Representatives, in the media and in public. Demonstrations have been staged by those opposed to and in support of the porn bill and the bylaws.

It can be predicted that the porn bill will create problems if implemented. Articles regulating dress, for example, will not be easily enforced in certain areas in Indonesia, such as Papua. Even in Java, there are places where people bathe in public places such as rivers. Will they be considered as violating the law for their traditions and habits?

The bill is also seen by many as discriminating against women. Many of articles assume that the way women dress is the source of moral degradation and sexual crimes.

In the meantime, the passage of sharia-inspired bylaws has proven to be hazardous to social harmony. The Padang mayor's instruction on student dress, for example, has caused widespread anxiety among non-Muslims, Sudiarto, who teaches Islam at Don Bosco Catholic School in Padang, told the Liberal Islam Network in an interview.

Although the instruction only obliges Muslim female students to wear a jilbab (headscarf), in practice non-Muslim female students who do not wear a headscarf face the question: Why aren't you following the instruction?

This question arises because the instruction suggests that non- Muslim female students don the jilbab as well. This is obviously against the values of democracy. The use of religious symbols is a reflection of one's faith. A bylaw suggesting someone wear the religious symbols of another faith is a form of coercion by the state.

In 2007 it is expected that the debate over the anti-pornography bill will resume in the House. What are the chances the draft will be passed into law? That possibility is quite large, if we look at the positions of the major political parties in the parliament. Only the Indonesian Democratic Party of Struggle (PDIP) faction has openly opposed the draft law. It is unclear the exact positions of Golkar and the Democrat Party, but they seem to be leaning toward approval. Islamic parties such as the United Development Party (PPP) and the Prosperous Justice Party (PKS) are of course in favor of the draft.

According to the Constitution, a law must be approved by both the executive and the legislative branches. In this case, it is important to know President Susilo Bambang Yudhoyono's position on the bill. His stance will be determined by two factors: First, his need to win sympathy and support from political parties and the people. Second, his background as a military figure trained under the doctrine of Bhinneka Tunggal Ika (Unity in Diversity).

It will not be an easy decision for Yudhoyono. If he opposes the bill, he may face resistance not only from Muslim parties, but possibly from his Vice President, Jusuf Kalla, who once expressed his support for the draft law. Kalla is crucial not only because of his position as Vice President, but also because he chairs Golkar, which controls the largest number of seats in the House.

And if Yudhoyono opposes the bill it could spark tension within his Democrat Party, as the head of the committee debating the porn bill is party member Balkan Kaplale.

The President's political standing also will determine the future of local sharia-inspired bylaws. The 2004 law on regional administrations stipulates that the president can annul any bylaw which goes against the public's interests or runs counter to higher regulations.

So far, however, Yudhoyono has not explicitly expressed his opinion on the sharia-inspired bylaws. There are concerns that if Yudhoyono fails to make a firm decision soon, more and more sharia bylaws will be enacted in other regencies or provinces. Most of these bylaws are found in regencies in three provinces: West Java, West Sumatra and South Sulawesi. (Sharia also is enforced in Aceh, but the province is excluded from this analysis due to its special historical, cultural and political background.)

Other provinces where we might expect to see sharia bylaws passed at the regency level are Banten, East Java and South Kalimantan, where Islam has a strong cultural foundation.

One of the reasons for the rising tide of sharia-inspired bylaws is the significant electoral power of Muslim parties such as the PKS. While the total percentage of votes won by Islamic political parties may not have increased from the 1999 to the 2004 elections, the total percentage is still quite significant. The combined votes of Islamist parties such as the PKS, PPP, PBR (Reform Star Party), PBB (Crescent Star Party) was around 20 percent. If the PKB (National Awakening Party) and PAN (National Mandate Party) are considered Muslim-based parties, the combined votes would be around 40 percent.

Another reason is the support from Muslim communities in Indonesia. The strength of support varies from one region to another, but a number of national surveys in the last few years found there is a significant portion of the population which supports the Islamist agenda.

The Indonesian Survey Circle confirmed the trend in a survey in August 2006. There are three types of Islamist laws: civil, criminal and constitutional. Regarding civil laws, 59 percent of respondents agree with the implementation of Islamic-oriented laws, 60 percent supported laws on entitlement based on Islamic norms and 76 percent demanded a law on haj affairs.

When it comes to criminal and constitutional laws, 77 percent of respondents opposed cutting off the hands of thieves, 56 percent were against caning and 63 percent rejected stoning adulterers.

Other studies in the late 1990s and early 2000s found a trend of the "santrinisasi" (Islamization) of Indonesian Muslims, in the sense that they are now more willing and diligent in practicing religious rituals.

We understand that political parties need to gain the sympathy of Muslim voters. However, as a democracy where various ethnic and religious groups live, political parties must produce laws that do not discriminate against any group in society.

[The writer is executive director of Indo Barometer (IB), a research and communications firm in Jakarta.]

Indonesian reform, economy at crossroads

Asia Times - January 2, 2007

Bill Guerin, Jakarta – Indonesia is on the upswing, with strong export and economic growth combining to drive the Jakarta Stock Exchange Index up by more than 55%, accounting for the world's third-best stock-market performance in 2006.

That good news was underpinned by surprisingly strong political stability and improved macroeconomic fundamentals, seemingly flouting the country's recent reputation as a haven for international terrorists and economic mismanagement. So can the perennial sick man of Southeast Asia maintain the positive momentum into 2007?

Consensus forecasts indicate that the Indonesian economy, driven by stronger private consumption and buoyed by lower interest rates, should grow between 5.5% and 6% this year. Exports were the highest ever recorded at US$8.92 billion, as the country cashed in on high global prices for energy and natural resources. Full-year exports in 2005 were on course to hit a whopping $100 billion.

A series of interest-rate cuts, a strengthening of the local currency and a steady decline in monthly inflation rates helped to pump up the Indonesian bourse. Those big gains were attended by strong performances of several listed blue-chip state-owned enterprises, including Bank BRI, Mandiri and Telkom. Despite dipping nearly 4% on Wednesday's news of new foreign-investment curbs in Thailand, financial analysts believe the stock market is primed for another bumper year.

Improving economic fundamentals is a big part of Indonesia's good news story. Government policymakers have recently reined in galloping inflation, which was a moderate 6.6% last year, a striking improvement on the runaway 17.1% recorded in 2005. At the same time, the local currency, the rupiah, strengthened against the US dollar in line with other regional currencies, appreciating from 9,823 to the dollar last January to 9,034 by year's end.

Aggressive monetary loosening, where the central bank cut its key interest rate eight times from May to year's end, brought the benchmark rate down from 12.75% to 9.5% and contributed largely to stock-market optimism. In line with the improving fundamentals, investment-approval figures last year were also substantially up.

Recent figures from the Investment Coordinating Board (BKPM) show that approvals of foreign direct investment rose 18% to $13.9 billion over the same period in 2005, with approvals from neighboring Malaysia topping the list with $2.2 billion committed. Likewise, domestic-investment approvals were up almost 300% to Rp157.5 trillion (about $17.37 billion).

Cloudy investment horizon

But that's where the clouds re-enter Indonesia's investment horizon. Actual realized foreign investment, as opposed to investment approvals, dropped by 46% year on year, falling from $8.67 billion in 2005 to $4.69 billion last year. Despite a highly touted new Economic Partnership Agreement with Japan, Indonesia's main foreign investment source, total Japanese investment from January to November 2006 dropped dramatically to $430 million, down 61% over the same period in 2005. Realized investment from China, which is currently on a global spending spree trying to secure energy resources, was also surprisingly down by 43% year on year to $114.8 million.

Muhammad Lutfi, head of the BKPM, told local media last month that the dip in Japanese sentiment was a reflection of investor concerns about the uncertain legal environment, a prohibitive tax regime, and lack of infrastructure and quality workers. Central- bank governor Burhanuddin Abdullah recently echoed that assessment, warning that despite improved macroeconomic indicators, there were still substantial "structural problems" with the economy, including bureaucratic hassles, poor infrastructure and low productivity.

Those high-risk perceptions among foreign investors were reinforced in October, when the government unexpectedly terminated US oil-and-gas giant ExxonMobil's 1995 contract to operate a 222-trillion-cubic-foot block of natural gas in Natuna in the South China Sea. State-owned oil giant Pertamina had a 24% stake in the block, while Exxon had maintained a 76% holding.

ExxonMobil said the contract allowed for two more years, and talks about extending those rights are set to commence this month. Energy Minister Purnomo Yusgiantoro hinted at the government's position when he told reporters last week that he wanted to "maximize" Natuna's production and that Pertamina should have "more share" in the joint venture.

In a similarly arbitrary government move, Vice President Josef Kalla called on US mining giant Freeport McMoRan Cooper & Gold, by far Indonesia's largest taxpayer, to triple the amount of revenues it is now contractually obliged to share with the government, on the odd logic that world prices for ores had recently jumped.

The slow pace of economic reforms, including delays in passing new tax and investment laws, continue to dampen the business and investment climate and undermine the government's ability to create badly needed jobs. Meanwhile, proposed business-friendly amendments, backed by the government, to the 2003 Labor Law were abandoned because of strong trade-union opposition, which led to nationwide protests.

Underlying weakness in the banking sector also remains a cause for concern. Nearly a decade after the 1997-98 Asian financial crisis blew holes through most Indonesian banks' balance sheets, after rounds and rounds of debt restructuring, non-performing loans (NPLs) still account for 16% of all credits outstanding in the banking system. That high ratio continues to discourage banks from issuing new loans.

Rather, many leading banks prefer to park their funds at the central bank, where they can earn no-risk 12% returns. According to remarks made by Vice President Kalla at a seminar last month on bureaucratic reform, many bankers fear signing off on new loans because of post-crisis laws that allow for imprisonment of credit officers if the loans eventually go sour.

The expanding role of the banking system in provision of financing is a key factor in macroeconomic predictions, with credit expansion in 2007 forecast at 15% to 18%. However, with NPLs still a major problem, bank lending grew by a mere 7.3% from January to September last year.

At the same time, undercapitalized Indonesian banks are opening new opportunities for foreign investors. Three small and medium- sized Indonesian banks were snapped up by foreign investors in 2006, including Bank Indomex, which was bought by the State Bank of India, Bank Haga, and Bank Hagakita, which was purchased by the Netherlands-based Rabo Bank.

Meanwhile, the Industrial and Commercial Bank of China (ICBC), the world's second-largest bank by market value, is in talks to acquire a 90% stake in Bank Halim – owned by Rachman Halim, whose family owns Gudang Garam, Indonesia's biggest cigarette maker. If the deal goes through, it would represent ICBC's first acquisition of a financial institution outside of China.

Waning terror threat

Coordinating Minister for Security, Political and Legal Affairs Widodo Adi Sucipto told reporters last week that terror attacks in 2006 were reduced both in effectiveness and number. In 2005, 19 terrorist-related bombings killed 49 and injured 183. Although Indonesia was still hit by at least 17 bombings in 2006, only four people were injured and there were no associated deaths, he said. Widodo also said there were a number of terrorists still at large and emphasized that strengthening national security would create an environment conducive to economic growth.

The terrorist threat, particularly attacks that targeted foreign interests, including the 2003 bombings of the Marriott Hotel in Jakarta and a botched attempt in 2004 to hit the Australian Embassy, had badly undermined foreign investor confidence in the government's ability to protect their interests. Under President Susilo Bambang Yudhoyono, Indonesia has redoubled its efforts to ferret out Muslim radicals.

His government has imprisoned or killed hundreds of terror suspects since taking office, winning plaudits from the United States, which was previously critical of Jakarta's perceived half-hearted efforts to curb radical anti-Western elements. Washington, meanwhile, has apparently rewarded those efforts through a yet-to-be-negotiated bilateral free-trade agreement.

Yudhoyono has also arguably maintained his clean-hands reputation as an honest broker throughout his more than two years in power. For instance, his decision to make Lapindo Brantas pay Rp3.8 trillion to cover the costs associated with a gas-drilling accident that resulted in an unprecedented toxic mudflow that inundated villages and transportation infrastructure came at the expense of the politically powerful Bakrie family. (Aburizal Bakrie is currently, and perhaps ironically, coordinating minister for welfare.)

That said, the early release from prison of Tommy Suharto, the son of former president Suharto who was sentenced to 15 years in 2002 for masterminding the murder of a judge, fleeing justice, and illegal possession of firearms, explosives and ammunition, was seen as a major setback to those fighting for judicial reform. The slain man, justice Syafiuddin Kartasasmita, had earlier found Tommy guilty of corruption and punished him with a 15-year sentence.

Still, the improving macroeconomic picture has provided few openings for the political opposition to criticize the president and his government's economic policies. That's significant, as Indonesia this year enters the beginning of a new election cycle, with general elections due in 2009. Yudhoyono's administration had promised to cut the national poverty rate, now hovering around 16%, by half by the time his term is up. So far, no noticeable progress has been made on that front, as the World Bank estimates that some 42% of the country's 220 million people earn only $1-$2 per day.

Those still-dismal figures and the government's inability to translate buoyant economic growth into more jobs could become politically potent issues at the next polls. So, too, could opposition charges that his government has not done enough to clean up endemic official corruption. Vice President Kalla is on record as saying last month that the government's current anti- graft drive actually obstructs the functioning of the economy, by making state officials, fearing possible allegations of corruption, hesitant to make important decisions.

How much political capital Yudhoyono might be willing to expend to address the still-many structural and legal problems holding back the Indonesian economy is very much a wild card. What is clear is that Yudhoyono still faces plenty of important reform issues that, if faithfully pursued, would go a long way toward knocking Indonesia into a more stable and upward economic trajectory.

[Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has been in Indonesia for more than 20 years, mostly in journalism and editorial positions. He specializes in Indonesian political, business and economic analysis, and hosts a weekly television political talk show, Face to Face, broadcast on two Indonesia-based satellite channels. He can be reached at softsell@prima.net.id.]

Ups and downs for Indonesian airlines

Asia Times - January 3, 2007

David Fullbrook – Cutthroat cost competition, overcrowded airports and perennial safety concerns, including a tragic accident involving an aged plane that killed at least 90 people on Monday, would on the surface seem to conspire against the prospects of Indonesia's historically up-and-down aviation industry.

But rapid deregulation has initiated an aviation boom, with growth prospects buoyant enough to hold and draw big new foreign investors to Indonesia's opening skies. Nineteen different domestic carriers are competing for an estimated 34 million passengers per year, according to Indonesia's Directorate General of Air Communication. The agency predicts 54 million air travelers will buckle up annually by 2010, skyrocketing from the mere 6.4 million who traveled in 1999.

By comparison, India, with four times Indonesia's population but comparatively heaps more red tape, is currently looking at only 27 million air passengers annually. If Jakarta finally sorts out some of the economy's biggest problems, such as expensive energy and a half-drawn investment picture, as it promises, traffic could grow even faster. With incomes rising and migration increasing there is huge scope for demand to grow, aviation analysts say.

Intense competition, which has sliced average ticket prices, has left many Indonesian airliners struggling to turn profits as they sell seats below cost to undercut their rivals. "The reality in Indonesia is that some airlines have managed their inventory well so they can lower fares, but there are also many other airlines that are offering fares that are not sustainable, especially with high oil prices," said Lim Liang Song, principal of Indigo Partners, a private-equity fund that recently invested in an Indonesian airline.

Half of Indonesia's estimated 262 airliners are at least 20 years old. Such aircraft require more maintenance checks to comply with international safety regulations and use at least 25% more fuel than new aircraft. Indonesian safety authorities have banned airlines from importing any more aircraft more than 20 years old. They have also stepped up inspections in recent years, worried that airlines may be cutting corners in maintenance or using fake parts to keep ticket prices low.

Accident-prone carriers

Still, a string of tragic accidents raises new safety concerns and questions about whether Indonesia's airline industry has opened too much, too fast. An Adam Air Boeing 737 crashed on Sulawesi island on Monday, killing at least 90 of the 102 passengers. The plane had reportedly flown 45,371 hours in its 17-year life, according to news reports.

It's not the first time tragedy has touched Indonesia's airline industry. A Mandala Airlines Boeing 737 crashed shortly after takeoff from Medan, killing 143 people; that jet had flown more than 50,000 hours in 24 years. A similarly well-used Lion Airlines Boeing MD-82 crash-landed at Solo, killing 25 of the 141 people on board in November 2004 after having notched up 43,940 landings in 56,674 flight hours. While the Mandala and Adam crashes are under investigation, weather was blamed for the Lion crash. However, some independent experts remain circumspect because corruption is rampant in Indonesia and government regulatory departments are often underfunded and understaffed. Airlines, especially smaller carriers, also face a high turnover of pilots and engineers who can find better offers and employment security with larger airlines or further abroad in India and the Middle East, where aviation is also booming.

Indonesian airlines "have used a lot of the older narrow-body equipment for their expansion. This is very expensive; to replace their fleets is going to take a significant investment. How many airlines can do that? Lion, Garuda? But they're limited in how much they can take on," said an executive of aircraft manufacturer Embraer.

Moreover, Indonesia, like China, has yet to effectively dismantle a state-sanctioned monopoly on air fuel that makes prices higher than in other countries in the region. Rising fuel prices are but one part of a complex competitive vice squeezing Indonesian carriers. Breakneck expansion is swamping Indonesia's major airports, where overcrowding and delayed departures have become the norm. That has likewise increased carriers' costs and prevented some players from opening new routes. Jakarta's Cengkareng Airport is currently running at 50% above capacity.

Furthermore, many smaller airports servicing far-flung provincial islands are only equipped for day flights by small aircraft that increasingly are not economic in the current competitive environment. Airport-capacity issues are just one reason airliners in Indonesia typically fly six or seven hours a day, compared with at least 10 hours low-cost carriers generally aim to fly daily to make money.

This was less of an issue three or four years ago because aircraft lease prices were at rock-bottom after the industry globally entered a severe recession triggered by the terrorist attacks on the US in September 2001. That price plunge came shortly after the Indonesian government finally began deregulating the airline industry in late 1999.

Ready for take off

With about 230 million Indonesians scattered across a 5,000- kilometer-wide archipelago stuck with slow, crowded and accident-prone buses, trains and ships, or pricey flights courtesy of a handful of airlines connected to cronies of former dictator Suharto and the military, budget airlines were prime to take off in Indonesia.

The worldwide airline industry is thriving again as lease prices have sharply risen, but for Indonesia that has made fleet expansion or replacement more costly. And increasingly those costs cannot be recouped through higher ticket prices because of the market's intense price competition. And pressure to replace aged aircraft will become more severe for all airlines using second-hand aircraft after Monday's Adam Air crash.

Unfortunately, Indonesian airlines face greater costs than other regional countries in funding aircraft replacement or expansion. Many foreign lenders consider Indonesia, and by association its airlines, a risky investment, so they charge higher interest rates to accommodate the risk premium. Indonesian airlines are also locked out of corporate bond markets for similar reasons.

"Access to capital will be a major issue for private carriers going forward," said Derek Sadubin, an analyst with the Center for Asia-Pacific Aviation. "At least some of them are looking to list offshore or, as in the case of Mandala, to go for private equity."

Adam Air, after reportedly turning down offers from Qantas Airways and private-equity outfit Texas Pacific Group, is now considering an initial public offering in Singapore for 2008. Those foreign approaches apparently foundered because Adam's owners refused to give up management control. It's unclear if those plans will change after the adverse publicity generated by the carrier's accident.

Still, foreign interest in the market remains strong. Malaysian low-cost pioneer AirAsia bought defunct carrier Air Wagon International in 2004, which went bankrupt in 2002. Unlike Malaysia and Thailand, where AirAsia has thrived, Indonesia has been a tough slog for the budget carrier. With only six aircraft, compared with 12 in Thailand, AirAsia remains a small carrier in Indonesia.

Indigo, a private-equity fund closely linked to Texas Pacific and which counts among its investors Singapore government investment fund Temasek, bought a 49% stake in Mandala from Cardig, an aviation engineering, cargo and support services firm, in September. Mandala was sold by the military to Cardig in 2005. In 2004, Indigo launched Wizz Airlines in Hungary and Tiger Airways in Singapore.

Indigo is now recruiting new management for Mandala and has started replacing the old fuel-guzzling Boeing 737s with more efficient, modern Airbus A320s. "We are in discussion with several lessors for aircraft for 2007 and 2008. I think in three to four years we hope to see an airline with 20 or 30 aircraft. That would be just about right in terms of the growth in demand in the coming years," said Lim.

Indonesia's overcrowded and underdeveloped airports are also a prime opportunity for foreign investors. In India, for example, foreigners have become key players in the privatizations of Delhi and Mumbai airports, and the redevelopment of airports elsewhere such as Bangalore. However, foreign interest has remained lukewarm while the Indonesian government reviews its privatization plans and foreign-investment laws.

Ambitious expansions

Despite these hurdles, the two largest private carriers, Adam and Lion, each with about 30 aircraft, have inked ambitious expansion plans. Adam has recently ordered 30 Airbus A320s, while Lion, whose current aircraft are on average 17 years old, with an order for 60 aircraft is the launch customer for Boeing's new 737- 900ER. New aircraft obviously require less maintenance and crucially use less fuel than the old Boeing 727s, 737s and MD-80s most Indonesian airlines use. They will also help Adam to restore credibility about its safety standards after the accident involving an aged aircraft.

They also continue to add routes and increase services, moving into higher-yielding, but thinner, secondary routes where minnow carriers hide, unable to bear the competition of trunk routes. Following Adam and Lion are mid-sized airlines Batavia, Jatayu and Sriwijaya, with a dozen aircraft each. Despite the scrum, there remains plenty of scope for expansion. "There is no airline yet that can be said to be truly a pan-Indonesia airline. They either settle on a handful of major routes or a niche region, without the frequency or network you would expect," said Lim.

Some carriers, like Adam and Lion, are trying to stand out from the pack through better service, frequent-flyer programs and lounges. Adam, for example, has been serving McDonald's food on some flights. "The focus of passenger demand will be on service levels. That's when a sustainable fundamental product differentiation will be essential. I think the focus will have to be on building brand loyal customers," said the Embraer executive.

With competition intensifying and price pressures increasing bankruptcies, common since deregulation began, will continue. Bouraq, a large legacy carrier from the Suharto days, called it a day last May. Competition is unlikely to ease, however. "This is never a static industry, so that a shakeout at this early stage in the Indonesian market's expansion will only be a temporary rest. The upside potential is so great that there will be waves of new entry over coming years as the economy expands," said Peter Harbison, managing director of the Center for Asia-Pacific Aviation.

Foreign players such as Indigo and AirAsia do not necessarily have an edge over Indonesian incumbents, some industry analysts contend. Political connections remain important in the industry. Lion's commissioner, Halim Kalla, is the brother of Jusuf Kalla, Indonesia's vice president. Adam's chairman, on the other hand, is Agung Laksono, Speaker of the House of Representatives.

"It's a very high-growth market, but I don't think the government is going to give it carte blanche because of Garuda, political linkages and stuff like that. I don't think they want people like [Air Asia's] Tony Fernandes running over the top of the market, controlling it. If anybody's going to end up running a lot of it it's going to be an Indonesian carrier," said an aviation analyst with investment bank JPMorgan.

Or foreigners that choose the right Indonesian partner. Those that do thrive on the back of this huge market will likely be well placed to expand in Southeast Asia as governments slowly trim the red tape that restricts regional flights and household incomes rise in the years ahead. For that reason alone anybody serious about building a regional airline in Southeast Asia has to hold his breath, close his eyes and take the plunge into Indonesia's wild and wooly aviation.


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