INFID, May 18, 2006
INFID's Short News Overview No. VII/06: May 12-18, 2006
Debt and Poverty
Govt urged to immediately repay IMF's $7.8b standby loan
Koalisi Anti Utang (KAU, Anti Debt Coalition) urged the government on May 16 to
immediately repay the US$7.8 billion standby loan extended to Indonesia by the
International Monetary Fund (IMF), and to stop borrowing from the Consultative Group
on Indonesia (CGI) in order to reduce pressure from foreign institutions and
dependence on foreign debt.
"The main reason that the government must repay its debt to the IMF is because it
does not provide any contribution to the country's real sector. The money is only used
as a backup for the foreign exchange reserves," argued the leader of KAU, Kusfiardi.
"With foreign exchange reserves currently standing at $43 billion, the country is well
able to repay the loan at once," he added. As they now stand, the reserves were
adequate to pay for five months of imports. Kusfiardi said that by repaying the loan,
the government could save $335.4 million in annual interest payments.
"With the IMF's annual interest of 4.3 percent, the country has to pay $335.4 million
per annum on interest alone. If one dollar is worth Rp 8,500, this is the equivalent of
Rp 2.85 trillion a year, or Rp 7.8 billion a day," Kusfiardi said.
"The government could use this money to support the country's real sector, especially
small and medium enterprises, as well as to increase funding for other sectors, such
as education and health."
The country's foreign debt, including that owed to the IMF, stood at $365.88 billion as
of 2005, with $100.32 billion already repaid, he added.
Another way to help the country reduce dependence on foreign debt, according to the
coalition, would be for the government to declare a moratorium. The coalition also
urged the government not to accept any new loans from international institutions,
including the CGI, a grouping of creditor countries and international agencies. The
group holds annual meetings to determine the amount of development aid in the form
of loans and grants to be extended to Indonesia following an assessment of the
country's economic progress and financing needs.
IMF senior representative in Jakarta Stephen Schwartz said earlier that Indonesia can
afford to repay its debt to the International Monetary Fund (IMF) ahead of schedule,
given the country's improved economy and foreign exchange reserves. He cited the
strength of Indonesia's economic recovery and the significant rise in its foreign
exchange reserves as reasons for considering an early repayment. Indonesia left the
IMF's loan assistance program in 2003 with a debt of 9. 8 bln usd, which it must
repay by 2010. Legislators and some government officials have called for an early debt
repayment, citing the stronger rupiah and a sharp rise in forex reserves. Bank
Indonesia's forex reserves stood at 42.81 bln usd at the end of April, up 23 pct from
the 34.72 bln usd recorded at the end of last year. Foreign investors' growing
confidence in the Indonesian economy is among the factors behind the surge in
capital inflow, the central bank has said.
Source: JP 18/05, XFN-ASIA via COMTEX 09/05
Civilian Supremacy
TNI may give up 6 business ventures by year end
The Indonesian Military (TNI) may hand over to the state six out of about 200 ventures
it manages by the end of this year, part of a five-year plan to withdraw from business
activities, a government minister said. The rest may be wound up or turned into
cooperatives or non-profit organizations, Defense Minister Juwono Sudarsono said on
May 9.
TNI has a business empire which includes golf courses, luxury hotels, building
companies and fish sellers. Legislation passed in 2004 required the military to end
business ventures within five years.
"Of about 200, probably five or six can survive as real companies and be transferred to
the state enterprises ministry by the end of this year," Juwono said, declining to name
the companies.
Said Didu, the top bureaucrat at the State Enterprises Ministry, is leading a team that
is reviewing the status of the businesses, he said.
The Army's Kartika Eka Paksi foundation owns hotels including Kartika Plaza Hotel in
Bali, while state-own PT Dirgantara Indonesia -- maker of small planes and
helicopters-- was pioneered by the Air Force.
Separately, Juwono said the government is allocating about US$50 million to buy
spare parts from the U.S. for its C-130 Hercules transport aircraft. The spare-part
"purchase is needed to upgrade 11 of 21 planes so they can fly again," said Juwono.
The military said last year it plans to form a holding entity to run cooperatives and
other non-profit organizations under its management. A cooperative is an organization
whose members pool resources to achieve a common goal such as running a
business.
Military related article:
Jakarta fights graft in weapons contract:
http://www.infid.be/military_weapons_contract.htm.
Source: Bloomberg 10/05
General News
Hassan to U.S. to assure supply of military equipment
Foreign Minister Hassan Wirayuda will visit the United States this week, where he is
expected to talk up Indonesia's improved human rights record and seek assurances
on the supply of military equipment from the U.S., a senior official at the Foreign
Ministry said on May 16.
The director for North and Central American affairs at the Foreign Ministry, Harri
Purwanto, said the visit was part of efforts to boost Indonesia's military capability by
capitalizing on Jakarta's improved military ties with the U.S.
He said the visit also would strengthen the strategic partnership between Indonesia
and the U.S. by defining common interests and working toward them.
The United States imposed restrictions on military sales and cooperation with
Indonesia over concerns about rights abuses committed by the Indonesian armed
forces in Timor Leste (formerly East Timor) in 1991. The U.S. Congress imposed
various restrictions on military ties with Indonesia since 1992.
The ban forced Indonesia to look for new arms suppliers and the country purchased
four Sukhoi jets from Russia last year, and also has bought military equipment from
"gray markets".
However, considering Indonesia is a strategic partner in the war against terrorism, last
November the U.S State Department issued a waiver removing all remaining
congressional restrictions on U.S. military assistance to Indonesia.
In February, the Bush administration proposed an increase in foreign military financing
for Indonesia. Two months ago, Rice said during a visit to Jakarta that Indonesia had
made progress in combating military corruption. As part of these closer ties, a senior
Indonesian Military delegation was dispatched to Washington to discuss defense and
security.
Also, Indonesia was recently voted onto the newly established UN Human Rights
Council, with the country claiming its membership was proof the international
community recognized its progress in protecting human rights. But for some in
Indonesia, the Americans are not moving quickly enough.
On April 9, known arms suppliers for the Indonesian Military and two Indonesian Air
Force officers were arrested by the FBI when they allegedly tried to make an illegal
US$40 million arms purchase from an unnamed U.S. company The subsequent
indictment said the group went to Honolulu to buy 245 air-to-air Sidewinder missiles,
882 Heckler & Koch MP5 guns, 880 HK 9mm handguns, 16 HK sniper rifles, 5,000
rounds of ammunition and an aviation radar system.
Source: JP 17/05
Students stage anti-Suharto protests
Protesters burned effigies of Indonesia's former dictator Suharto who remained
hospitalized in critical condition on May 15 and demanded that the government
reverse a decision to drop corruption charges.
Dozens of students and human rights activists gathered in the capital with signs that
said "Suharto does not deserve amnesty," "Bloodsucker," and "Stealing people's
money for 32 years." Similar rallies were held near his upscale residence in Jakarta,
and in at least three other cities across the sprawling archipelago, with some people
burning pictures of the 84-year-old former president.
The Attorney General on May 12 dropped charges against Suharto accused of
embezzling US$600 million (euro470 million) from the country's coffers before his
ouster in 1998 citing his poor health.
Indonesian prosecutors Monday handed a letter to former president Soeharto
confirming that the investigation into his corruption case has been dropped.
The ailing former president, who is being treated in a hospital here after a colon
surgery, could not receive the letter himself but his oldest daughter Siti Hardiyanti
Rukmana, popularly known as Tutut, accepted the formal notification on his behalf.
Related articles:
Double standard on Suharto: http://www.infid.be/suharto_double_standard.htm.
Indonesia state prosecutor drops Suharto charges:
http://www.infid.be/suharto_dropped.htm.
Source: AP 15/05
Aceh
AMM to stay until September
The European Union has agreed to extend the mandate of a peace monitoring mission
in Indonesia's Aceh for three months until September, the mission said on May 12.
Indonesia had requested an extension for the Aceh Monitoring Mission (AMM),
composed of personnel from the EU and five regional states, to enable it to oversee
local elections in August.
The AMM which was due to leave Aceh on June 15 will now depart "no later than 15
September," it said in a statement.
"The parties to the Helsinki MoU (memorandum of understanding) are aware that this
extension must be the last one," it said, referring to the deal thrashed out between
rebel separatists and Jakarta signed in Finland last year. "Consequently, it is now
incumbent upon the government and the parliament of Indonesia to ensure that the
Law on the Governing of Aceh is enacted as soon as possible," it said.
Parliament is currently debating the law, which will provide the province with
wide-ranging autonomy and pave the way for elections in line with the peace deal. The
government has already missed a tentative deadline of March 31 for passing the law,
but officials have said they hoped it would pass this month.
Nearly 200 monitors were initially stationed in Aceh after the pact was signed last
August, but about 100 left in March when the mission was scaled back.
Aceh related article:
Women in Aceh Facing Human Rights Violations:
http://www.infid.be/aceh_women_facing.htm.
Commission accuses media of objectifying women in Aceh:
http://www.infid.be/aceh_women_object.htm.
Source: AFP 12/05
Papua
Indonesia govt may renegotiate Freeport contract on Papua mine
Following a string of sometimes violent protests by residents of Papua province
against PT Freeport Indonesia, a local unit of U.S. mining giant Freeport-McMoran
Copper & Gold Inc., the government is considering renegotiating the company's
working contract.
The renegotiation is likely to begin in the next two months after the government
finalizes an evaluation of the firm's operation and its contributions to the local
community, Energy and Mineral Resource Minister Purnomo Yusgiantoro said
recently.
He reiterated that the government was currently evaluating the company's overall
production level and mining process, community development programs,
environmental management, contributions to the state and security affairs. The
evaluation will take around two months, after which the government will evaluate in
detail the company's working contract, with input from the Papua administration.
Papuans have long requested what they deem to be a fair split of the profits earned by
Freeport from mining gold and copper at its Grasberg mine, located in the mountains
near Timika regency. Grasberg is the world's largest gold and second largest copper
mine. Papuans also have urged the government and Freeport to show a greater
commitment to environmental protection, as well as to boosting economic
development in the country's easternmost province.
Freeport is currently under the spotlight over allegations that is has polluted the
environment and paid millions of dollars in illegal fees to the Indonesian Military for
securing the company's operations in Papua.
Just recently, a House of Representatives-sanctioned team confirmed earlier findings
that the tailing system used by Freeport at its mine has caused severe damage to the
environment by simply disposing of hazardous waste in nearby streams.
Environmental group Greenomics Indonesia estimated that repairing the damage to
the rivers would cost the company around US$7.5 billion based on current
international standards.
Freeport has repeatedly said the company has complied with all of the country's
environmental regulations.
Related article:
Lawmakers confirm report of pollution at Freeport:
http://www.infid.be/freeport_pollution.htm.
Source: JP 15/05
Abbreviations
AFP Agence France-Presse
AP Associated Press
JP The Jakarta Post
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