Domestic Issues.doc by censhunay


         Vol. IX No.02                                                                                        January 15, 2006


Domestic Issues .............................................................................................................................. 3
    POLITICAL ISSUES .................................................................................................................. 3
    1. Govt Makes Progress in Fighting Corruption: President ................................................... 3
    2. Supreme Judges Re-Selection Must be Based on Law, Says Bagir .................................. 3
    3. Parliament Urged to Uncover Corruption in Mining Sector .............................................. 4
    4. PDI-P to Become Unshakeable Party, its Chairperson Says ............................................. 4
    5. Parliament Optimistic About Govt. - GAM Peace Agreement.......................................... 5
    6. Indonesia Extends Aceh Monitoring Mission Term of Service......................................... 5
    7. Mily Supports Govt Plans to Build Domestic Strategic Industries.................................... 6

    ECONOMIC ISSUES .................................................................................................................. 6
    1. State's Income Rp495.4 Trillion, State's Spendings Rp509.4 Trillion............................... 6
    2. Govt to Approach Japanese Principals for Developing Business in Indonesia ................. 7
    3. Inflation Rate in 2005 Recorded at 17.11 Percent ............................................................. 8
    4. Govt Forms Monitoring Team for Projects with Foreign Loans ....................................... 8
    5. Non-Oil/Non-Gas Exports Estimated to Grow 7-13 Pct in 2006 ...................................... 9
    6. Govt to Import Rice to Protect People's Interest, Says VP ................................................ 9
    7. Oil Price in 2006 May Reach 60-65 US Dollars per Barrel ............................................ 10
    8. Bank Indonesia Optimistic Rupiah Continues to Strengthen .......................................... 10
    9. Producers Must Allocate Minimum of 25 Pct of Gas for Domestic Market ................... 11
    10. Govt Plans to Develop New FTZs in Other Regions....................................................... 11

    SOCIAL AND CULTURAL ISSUES ........................................................................................... 12
    1. Govt Forms National Commission for Handling Bird Flu .............................................. 12
    2. Foreign Tourists Visiting Bali in 2005 Below Target ..................................................... 12
    3. President to Attend National Press Day in Bandung ....................................................... 12
    4. Education Minister to Improve Educational Facility in Eight Provinces ........................ 13
    5. Merpati Provides Nine Planes to Serve Pioneer Routes .................................................. 13
    6. Merpati Airline to Reopen 40 Domestic Routes .............................................................. 14
    7. World Scouts Organization Secretary General Visits Indonesia ..................................... 14
    8. Air EFAtA to Serve Jakarta-Papua Route ....................................................................... 15
Regional/International Issues ..................................................................................................... 15
    1.      Belgium Donates US$9.5 Million for Aceh And Nias .................................................... 15
    2.      RI Interested in UN Peace-Building Commission Membership ...................................... 16
    3.      Japan, US to Provide Aid for Jember, Bandjarnegara Disaster Victims ......................... 17

Vol. XI No.02                                                                                  Indonesia Today

  4.   Asian Countries' Investment the Biggest in Indonesia .................................................... 17
  5.   RI, M'sia Agree to Avoid Double Taxation ..................................................................... 17
  6.   RI, M'sia Ink Cooperation Agreement in Business and Investment ................................ 18
  7.   RI, US to Re-Formulate Security Cooperation ................................................................ 18
  8.   Russian Parliamentary Delegation to Visit Indonesia ..................................................... 19
  9.   Sweden Thanks RI for Decision to Refill Ambassadorial Post ....................................... 19

                      Published by Indonesian Embassy in Kyiv, Ukraine
                               Nagornaya str, 27 “B”, Kyiv 04107
                              Tel. 206 54 46, 211 7633 Fax 206 54 40

Vol. XI No.02                                                                   Indonesia Today

    Domestic Issues                                   education were main pillars of human
                                                      resources development and therefore
 Political Issues                                    Indonesia needed to handle malnutrition
                                                      and the spread of various kinds of diseases
1. GOVT    MAKES    PROGRESS    IN                    such as polio, dengue fever, TBC,
                                                      HIV/AIDS and bird flu.
                                                         He said that food resilience must also be
                                                      maintained and improved, particularly with
    Cipanas, W Java - President Susilo
                                                      regard to the widespread of food scarcities
Bambang          Yudhoyono         said    the
                                                      and bad nutrition in East Nusa Tenggara
government's efforts to combat corruption
                                                      and Yahukimo district in Papua.
had made encouraging progress and had
                                                         The President said that the Indonesian
caused fear among government officials to
                                                      people were facing a number of challanges,
commit corruption.
                                                      opportunities, concern and hopes in 2006.
    "Reports which I received from various
                                                         "We have to face all these with
institutions in Jakarta and in provinces
                                                      optimism and hard work," he added.
indicated that fear of corruption sphere has
began to take shape, though not yet so
strong," the President said in his address            2. SUPREME JUDGES RE-SELECTION
welcoming the New Year at the                            MUST BE BASED ON LAW, SAYS
Presidential Palace here.                                BAGIR
    The President said that Police, The
Attorney General's office, the Corruption                Jakarta -         Supreme Court (MA)
Crimes Elimination Team and the                       Chairman Bagir Manan said a plan to
Corruption Eradication Commission have                conduct a re-selection of the court's judges
been       fighting       corruption     cases        must be based on valid regulations and
systematically.                                       laws.
    As a president, Yudhoyono also has                   "Just read the law on supreme judges, on
signed 63 letters for the investigation and           how they can quit or retire," Bagir said on
detention of state officials who are                  the sidelines of function to observe the 40th
suspected to have been involved in                    anniversary of Tritura (The People's Three
corruption cases.                                     Demands) attended by President Susilo
    The steps are proof of the changes that           Bambang Yudhoyono here Thursday (Jan
have been made. "In the past, it was very             05) .
rare for a state official such as a governor, a          Bagir refused to give further comment on
district head, a mayor and a legislator, to be        the plan to re-assess MA's 49 judges
taken to court and punished," the President           promoted by the Judicial Commission as
said.                                                 part of efforts to reform Indonesian courts.
    The progress that has been made is also              On report that the government would
seen in the enforcement of the law.                   issue a presidential decree in lieu of law
    Indonesia has moved forward in                    (Perppu) as a legal basis for the judges re-
upholding the laws as reflected in the                selection, Bagir said, issuing a Perppu is
judicial reforms, eradications of gambling,           the President authority. "The issuance of a
hoodlum, production and trafficking of                Perppu is the President's authority. So,
drugs and the combating of illegal logging,           don't ask me about it,"
illegal fishing and oil smuggling.                       Earlier on Wednesday, the Judicial
    "But it is not yet the time for us to feel        Commission disclosed its initiative to
satisfied. The great tasks still await us             conduct a re-selection on 49 supreme
ahead in years to come to step up the                 judges at the MA as part of efforts to
progress we have made," the President said.           reform the country's courtz.
    The President mentioned that health and              "In a bid to reform (Indonesian) courts,

Vol. XI No.02                                                                   Indonesia Today

we need to re-select Supreme Court judges                Surabaya - Former Speaker of the
who number 49. The selection must be                 People's Consultative Assembly (MPR)
based on clear, transparent and accountable          Amien Rais has urged the House of
criteria,"    Judicial Commission        chief       Representatives      (DPR)      to    uncover
Musyro Muqoddas said after a meeting                 corruption cases in the mining sector
with President Yudhoyono.                            involving hundreds of trillions of rupiahs.
   Basically, Muqoddas said, the President               Speaking to reporters after delivering an
had agreed to the idea and would issue a             Idul Adha sermon here on Tuesday, Amien
presidential decree in lieu of law in the near       said he was thinking about a very large-
future as a legal basis for the plan.                scale corruption scandal in the mining
   At the meeting, the President expressed           sector, far bigger than the abuse of Bank
concern about injustices in the country as           Indonesia liquidity assistance and other
were reflected in many court verdicts.               corruption cases.
   The President hoped for an integration                The House must be able to uncover the
between the Judicial Commission and                  corruption allegations in the mining sector,
related institutions to formulate an action          and not merely making a fuss about
plan for the creation of good governance.            President Yudhoyono's teleconference and
   Muqoddas said the bribery case in the             other small problems, he went on.
MA showed the weak management in                         The former MPR speaker cited three
courts, as the Supreme Court is the highest          points in connection with the corruption
judicial institution in the country.                 allegations in the mining sector: first,
   "We told the President, the key problem           foreign companies are generally reluctant to
is mismanagement and weak leadership in              pay tax, like Freeport and Newmont.
MA which is supposed to be a model for                   Second, ecological destruction in
the judicial bodies below it," Muqoddas              Timika had left 200 kms of barren and arid
said.                                                land in that region; third, Indonesia receives
   However, he added, there were still               only 15 percent of the gold, silver and
many judges who still have high integrity.           copper from the exploitation of deposits in
   The Commission hailed the President's             Timika, while the remaining 85 percent are
commitment not to intervene in the                   sent abroad, he explained.
judiciary.                                               The former chairman of the National
   It also disclosed its plan to establish           Mandate Party (PAN) also disclosed that he
networking in some provinces in order to             once visited Freeport in Tembagapura, but
open wider access for the public to share            at that time none of the Indonesian officials
information to the commission.                       knew the value of gold, silver and copper
   On Bagir's refusal to meet the                    found at that place as the result of the
commission's summons regarding to                    exploitation was never reported.
alleged bribery in MA, Muqoddas said, the
issue was not discussed in a specific way            4. PDI-P TO BECOME UNSHAKEABLE
with the President.                                     PARTY, ITS CHAIRPERSON SAYS
   The Judicial Commission would send its
second summons to Bagir Manan on                       Jakarta - The Indonesian Democratic
January 12.                                          Party of Struggle (PDI-P) will become an
   "I am optimistic that he will come to             ushakeable party through consolidation of
meet the second summons," he said.                   its ideology, optimum imporovemnt of its
                                                     igsorganizational structure and positive
                                                     dynamiism. its chairperson Megawati
3. PARLIAMENT URGED TO UNCOVER                       Soekarnoputri said here on Tuesday (Jan
   CORRUPTION IN MINING SECTOR                       10) evening.
                                                       Megawati made the statement at a

Vol. XI No.02                                                                   Indonesia Today

function mark PDI-P's 33rd anniversary.              granting of amnesty to the former GAM
  Present at the occasion were PDI-P                 members and the withdrawal of non-
general secretry Pramono Anung, Central              organic military members from Aceh
Executive Board chairman Sutjipto, chief             constitute a signal of the strong intention to
of PDI-P faction at the House of                     end the use of violence and arms in seeking
Representatives Tjahjo Kumolo and a                  solution to the Aceh conflict.
number of functionaries such as Panda                    The House of Representatives (DPR)
Nababan, Saban Sirait and Central                    hopes that in efforts to seek and keep
Kalimantan Governor Teras Nerang.                    peaceful condition in Aceh, the government
  Before thousands of party cadres and               will fully concentrate on economic
sympatisers, Megawati said the only                  development involving all people in the
guidebooks for the party's cadres are the            region, he said.
book about the birth of Pancasila (The five              The DPR believes that the active
basic principles of the Republic of                  participation of the local community in
Indonesia) on July 1,1945 and the one                speeding up development in Aceh will
about PDI-P's statutes.                              guarantee political stability in the region,
  "Only with those two books, PDI-P is               according to the House speaker.
ready to develop itself," said Megawati, the             The DPR and the government will
former Indonesian fifth president.                   thrash out the bill on the Aceh
   In her address, Megawati also reminded            administration, Agung disclosed, adding
her cadres and sympatizers that the party in         that the bill is part of the steps to
its struggle, also had its ups and downs,            implement the concept of the Unitary State
but they still have to go on supporting it.          of the Republic of Indonesia.

    Jakarta,      - House Speaker Agung
Laksono said here Thursday (Jan 12) that                Jakarta -The Indonesian government has
the signing of the peace agreement between           decided to extend the Aceh Monitoring
the Indonesian Government and the Free               Mission (AMM) term of service for three
Aceh Movement (GAM) on August 15,                    months after the end of its term of duty on
2005 has been followed by optimistic steps           next March 15, a minister said.
leading to a thorough settlement of the                 Foreign Affairs Minister Hassan
Aceh conflict.                                       Wirajuda made the remarks here on
    Speaking at a House plenary meeting, he          Saturday (Jan 14) after accompanying
pointed out that several crucial points such         President Susilo Bambang Yudhoyono,
as arms delivery by the GAM and the                  who received       Lars Danielson, State
dissolution of the so-called Aceh State              Minister of Sweden and special envoy of
Military (TNA) as the GAM military wing              the Swedish Prime Minister in the VIP
on Dec. 27, 2005 indicate the determination          room of Indonesia's airbase here.
to end the Aceh conflict peacefully.                    "During the early meeting, the President
    A body called the Aceh Transfer                  said that the Indonesian government has
Commission has been formed to act as a               decided to extend the AMM term of service
facilitator or to bridge former members of           for a three month period," Hassan said,
the GAM separatist movement to be back               adding that the AMM current term of
to their previous position as members of the         service is from September 15 until March
civil society so they can actively participate       15, 2006.
in development activities in Aceh, he said.             The AMM, led by its chairman Pieter
    In the government side, he said, that            Feith (from European Union) and its deputy

Vol. XI No.02                                                               Indonesia Today

chairman Nipat Thonglek from Thailand,            decided to procure light airplanes and
was initially established to monitor the          helicopters such as CN-235, Puma
implementation of the aspects of peace            helicopters and Super Puma helicopters
agreement recorded in the MOU which was           from PT DI," he said.
signed by the representative of Indonesian           In the meantime, spokesman of the
government and the former separatist Free         Navy Commodore Abdul Malik Yusuf said
Aceh Movement on August 15, 2005 in               that in order to support these strategic
Helsingki, Findland.                              industries, the Navy had decided to place
   Hassan has yet mentioned about the             orders with PT PAL for LPD and LST
reduction of the AMM's mandate and the            vessels.
number of its personnel, in regard to the            "We hope PT PAL would be able to
extending term of the service.                    meet our needs for these types of vessels,
   "As the AMM has conducted part of its          but we still have to import combat ships,
duties like handing over (destroying) the         such as corvettes," he added.
weapons of the separatist Free Aceh                  On Thursday, Navy Chief of Staff
Movement, so at the additional term of its        Admiral Slamet Soebjanto said that
service, the AMM does not need more               Indonesia was still having negotiations with
members," he said.                                Russia on the purchase of six submarines,
   According to him, during its next period       consisting of two 'Kilo'-type submarines
of service, the AMM will likely to monitor        and four 'Amur' class submarines.
the regional head elections.                         Jakarta was also ordering for corvettes
                                                  and destroyers from Russia.
                                                     "We used to have 12 submarines. We
7. MILY SUPPORTS GOVT PLANS TO                    hope we would still have the same number
   BUILD    DOMESTIC  STRATEGIC                   in the future. For the time being, however,
   INDUSTRIES                                     eight are enough," the Navy Chief said.

    Jakarta - The Indonesian Defence
Forces (TNI) supports the government's             Economic Issues
plan to develop and empower the country's
state-owned strategic industries such as          1. STATE'S INCOME RP495.4 TRILLION,
aircraft maker PT Dirgantara Indonesia               STATE'S    SPENDINGS     RP509.4
(DI), ship-building yard PT PAL and fire             TRILLION
arm manufacturer PT Pindad, a military
spokesman said here on Friday (Jan 06).               Jakarta - State's income and grants
   "We      in   principle   support    the       reached Rp495.4 trillion, which is 92 pct
government's plan to build and strengthen         of the projected in the Revised State
defense industries," TNI spokesman Col.           Budget II, while the state's expenditures
Ahmad Yani said.                                  reached Rp509.4 trillion, which is 90 pct
   He said TNI had used a lot of                  of the ceiling in the Revised State Budget
domestically made light arms, small calibre       II, and the budget deficit amounted to
amunitions and other types of light fire          Rp13.97 trillion, or 0.52 pct of the GDP.
arms.                                                 A press release of the Ministry of
   Spokesman of the Air Force Air                 Finance received by ANTARA on Monday
Commodore Sagom Tamboen meanwhile                 said that the relatively low state's income
said that PT DI had been able to supply the       and grants was caused by the failure in
Air Force with some airplanes and                 reaching the projected non-tax state
helicopters.                                      revenues from natural resources which
   "In order to support the development of        reached only Rp103.74 trillion, or 75 pct
domestic strategic industries, we have            of the amount in the Revised State Budget

Vol. XI No.02                                                                  Indonesia Today

II projected at Rp138.56 trillion.                      PRINCIPALS    FOR   DEVELOPING
     In the meantime, the spendings of the              BUSINESS IN INDONESIA
different ministries on the cost of
employees, goods purchases, capital and                  Jakarta - The Indonesian Government
social assistance amounted to Rp149.7                will approach and negotiate with Japanese
trillion, or 80 pct of the ceiling in the            principals or holders of Japanese trade-
Revised State Budget II set at Rp188.2               marks of the products of automotive as well
trillion.                                            as electronics industries for continuing the
     However, the budget deficit reaching            development of their business in Indonesia.
0.52 pct of the GDP is actually better than              Industry Minister Fahmi Idris disclosed
the target in the Revised State Budget II set        in Serang, Banten province, on Monday
at 0.9 pct, or Rp24.94 trillion.                     that he and Vice President Jusuf Kalla will
     The government used domestic and                visit Japan in mid January 2006 to meet
foreign funding to cover the budget deficit.         with Japanese principals. "I will persuade
Domestic funding amounted to Rp30.26                 Japanese principals to really use Indonesia
trillion, and net overseas funding reached           as a center of their production," Fahmi said.
minus Rp11.27 trillion.                                  For that purpose, he will discuss with
     Thus, the total funding amounted to             Japanese principals what they need to de-
Rp18.988 trillion, a budget funding                  velop their business in Indonesia and facili-
remainder (SILPA) of Rp 5.01 trillion by             ties they hope from the Indonesian Gov-
the end of 2005 which will be used for the           ernment to make Indonesia their production
purchase of goods and capital in 2006.               center.
     In the meantime, as the result of the               Fahmi expressed his appreciation of
postponement of the payment of the                   Japanese automotive companies, like Hon-
principle amount and interest of foreign             da, Yamaha and Suzuki, which have made
debts as the implementation of the                   Indonesia a basis of their production. "The
moratorium with the Paris Club, Rp17.2               government will also persuade Japanese
trillion could be set aside for use to finance       principals in the electronics industry to de-
the rehabilitation and reconstruction of             velop their business in Indonesia," he re-
Nanggroe Aceh Darussalam (NAD) and                   vealed.
Nias up till 2008.                                       He pointed out that Sanyo is currently
    Preparations for 2006 State Budget               facing various problems in its business, but
    On January 2, 2006, the ministers in the         the company manufactures compressors as
United Indonesia Cabinet will submit their           the most important component that can be
2006 Budget Implementation List (DIPA)               applied in various products of other com-
to the governors.                                    panies in the electronics industry like re-
    Besides the DIPA, the regional chiefs            frigerators and air conditioners.
will also receive a General Allocation Fund              The trouble Sanyo has encountered with
(DAU) and a Special Allocation Fund                  its compressor production has an adverse
(DAK) for the 2006 fiscal year.                      impact on the manufacture of compressor-
    There will be a total of 11,188 DIPA             based products by other companies, accord-
documents with a total of 19,500 work                ing to Fahmi. "Therefore, I will discuss
units and a budget ceiling of Rp204.24               with the Sanyo management to find out the
trillion.                                            support the Indonesian Government can
    The submittance of the DIPA, DAU,                give to enable this company to maintain its
and DAK, it is expected that all the budgets         operation and production," he said.
would have been realized on January 3,                   He vowed that the Indonesian Govern-
2006, in accordance with the 2006 State              ment will make every possible effort to
Budget.                                              help Sanyo and other Japanese principals


Vol. XI No.02                                                                    Indonesia Today

that are facing problems in their operation          foreign loans.
in Indonesia.                                           "If (the programs or projects) had not
                                                     been realized, we will the use of the fund
3. INFLATION RATE IN 2005 RECORDED                   for other purposes or we cancel it,"
   AT 17.11 PERCENT                                  Boediono said after an economic
                                                     coordination meeting here, Wednesday (Jan
    Jakarta - The Central Board of Statistics        03).
(BPS) has recorded the inflation rate from              He admitted that the realization of the
January to December 2005 at 17.11                    projects are facing specific problems such
percent, the same as the year-on-year rate           as in land clearance and local cost.
from December 2004 to December 2005.                    "To solve the problems, we need closer
    The biggest contribution to the inflation        coordination because sometimes the
rate has come from the sectors of housing            specific problems need an inter-
construction as well as water, electricity,          departmental solution," the minister said.
gas and fuel supplies, which reached 3.89               The foreign loans for the realization
percent in 2005, Head of the BPS Choiril             projects in 2006 amounted to Rp25 trillion,
Maksum told the press here Monday (Jan               not to mention Rp9.9 trillion for the
03).                                                 implementation of programs.
    He further disclosed that the city                  Boediono did not elaborate on the
transport fare and gasoline price                    projects and programs which are facing
contributed 2.79 percent and 2.61 percent            specific problems, saying that the
respectively to the national inflation rate in       monitoring team would evaluate the
2005.                                                projects.
    The board recorded a 0.04 percent                   "We wait for the team to work. We are
deflation rate in December 2005 due to               trying to reach the target, and that is why
decrease in the price index of the food              we form the special monitoring team,"
group by 1.34 percent and the education,             Boediono asserted.
recreation and sport group by 0.02 percent.             The team's members comprise officials
    A number of 25 out of the 45                     of the office of Coordinating Minister for
cities/towns covered in data collection by           Economic Affairs, National Development
the BPS showed deflation in 2005, and the            Planning Board (Bappenas), Finance
20 others indicated inflation. Padang                Ministry and related institutions.
recorded the highest deflation rate of 1.62             The meeting was the first coordination
percent and Samarinda showed the lowest              meeting pon macro-economy held in 2006
deflation rate of 0.01 percent.                      and the ministry would schedule such
    The highest inflation rate was recorded          meetings in the first week of every month.
at 3.23 percent in Banda Aceh, while the                The meeting is designed for an exchange
lowest inflation rate was registered at 0.04         of information among the cabinet's
percent in Pangkal Pinang and Serang-                economic team and determine necessary
Cilegon.                                             moves.
                                                        The meeting was also attended by the
4. GOVT FORMS MONITORING TEAM                        chief of the Central Bureau of Statistics
   FOR PROJECTS WITH FOREIGN                         (BPS) who reported the               inflation,
                                                     unemployment, exports and imports; the BI
                                                     Governor who reported the economic
                                                     situation, especially the monetary and
  Jakarta - Coordinating Minister for
                                                     financial sector; and the Finance Minister
Economic Affairs, Boediono said, the
                                                     who reported the fiscal aspect of the
government would form a special team to
monitor the realization of projects and              economic situation.
                                                        It was also attended by Industry Minister
implementation of programs funded by
                                                     Fahmi Idris, Trade Minister Mari Pangestu,

Vol. XI No.02                                                                   Indonesia Today

State Minister for State Enterprises                Oil (CPO), minerals and coal, garments,
Sugiharto, and State Minister for National          wood and pulp, as well as electronic goods.
Development Planning, Paskah Suzetta.                   "Performance in 2005 was good
   "They gave their views from each                 because commodities fetched good prices
aspects, and we process them into concrete          abroad " she said.
measures for this month, including the                  Meanwhile, performance in imports
preparation of a special team to monitor            during January - November of 2005 was
the realization of projects in the 2006 state       much as 26.8 percent meaning there was an
budget involving foreign loans," Boediono           improvement on import of capital goods
said.                                               and raw materials. "It shows a recovery in
                                                    investment," she said.
   2006                                                PEOPLE'S INTEREST, SAYS VP

    Jakarta - Trade Minister Mari Elka                  Jakarta - Vice President Jusuf Kalla
Pangestu estimates that growth in non-              said here Friday (Jan 06) the government
oil/non-gas exports in 2006 will reach 7-13         had decided to import 110,000 tons of rice
percent.                                            to defend the interests of poor people,
    "The target will be determined by               farmers and the Indonesian people as a
several things, among others things, the            whole.
development of commodity prices and                      He said the main purpose of the
demand abroad which is not as good as last          government's policy was to prevent a
year," he said here on Thursday (Jan 05).           situation where the people at large would
     She said the best prospects for exports        have to buy rice at an exorbitant price.
of Indonesia's non-oil/non-gas commodities               "If the rice price goes on a continuous
still lay in its four traditional markets,          spiral, the people and domestic farmers
namely the US, Japan, China and European            themselves will suffer," he said, adding that
Union.                                              therefore, the government needed to
     Apart from that, she said. Indonesia           intervene and take measues to ensure that
would also improve the volume of its                the rice price would remain within a
exports to East Asian countnries such as            reasonable range.
South Korea.                                            He said the price of medium-quality
     Meanwhile, the government would also           rice now stood at between Rp4,200 an
increase promotion, market identification           Rp5,000 per liter. "This is too high. If the
and commodity sectors in order to increase          government does not increase supply, the
the trade volume.                                   price will continouosly go up," he said.
     "We will also increase negotiations to             Commenting on reports that a number
expand our markets, among other things, by          of governors were opposed to the central
intensification of the Economic Partnership         government's rice import policy, Kalla said
Agreement (EPA) with Japan in 2006," she            all governors had to abide by national
said..                                              policy.
     Pangestu said export performance from              The government recently decided to
January to November 2005 was better than            import 110,000 tons of rice through the
the previous year, namely it hiked by 18.26         Logistics Agency (Bulog) to keep its rice
percent to 59.90 billion US dollars while in        stock at a safe level. It was estimated that at
2004 it was only 10.54 percent.                     the end of January the national rice stock
     The Trade Ministry recorded the                would stand at only 868,000 tons while the
increase in non-oil and non-gas export on           normal minmum was 1,000,000 tons.
several commodities such as Crude Palm                   Efforts were made to supplement the

Vol. XI No.02                                                                    Indonesia Today

national stock with domestic farmers' rice                 The world oil price, he said was
but their output up till Jan 4, 2006 was              mainly influenced by foundamental factors
estimated to reach only about 31,567 tons.            such as oil production either in OPEC or
                                                      non-OPEC countries which is higher than
7. OIL PRICE IN 2006 MAY REACH 60-65                  increase in demand.
   US DOLLARS PER BARREL                                   If the world oil price reached 56-57
                                                      US dollars per barrel, subsidized price of
    Jakarta - Indonesian observer of the oil          oil might be lowered, he said.
sector Kurtubi estimated that the
international oil price in 2006 would                 8. BANK   INDONESIA   OPTIMISTIC
remain high at 60-65 US dollars per                      RUPIAH     CONTINUES      TO
barrel.                                                  STRENGTHEN
    "The high world oil price is the result of
the still high increasing demand in 2006                  Jakarta - Bank Indonesia (central bank)
namely for 1.8-2 million barrels per day,             Gvernor Burhanuddin Abdullah said he
while supply had been inadequate," he said            was optimistic that the rupiah will continue
here on Friday (Jan 06).                              appreciating against the US dollar as the
    The increasing of demand, according               result of the substantial increase in the flow
Kurtubi, mainly came from the US which                of short-term funds and the relatively low
had recorded a high economic growth rate              monthly inflation rates.
in 2005.                                                  "We are very optimistic (about rupiah's
    Apart from that, the other countries              appreciation) as everything has been
whose oil consumption has also been                   running in accordance with the standing
increasing included China.                            procedures," Burhanuddin said here on
    "In 2006, while trying to reduce its oil          Friday (Jan 06).
consumption,      China's oil consumption                 The BI chief         made the remarks
remains very high reaching 500 thousand               commenting on the appreciation of the
barrels per day," he said.                            Indonesian currency by Rp250 to Rp 9,590
    According to him, the high oil                    per US dollar compared to its position last
consumption was not offset by oil supplies            week.
from      non-OPEC       (Organization      of            Current market conditions had triggered
Petroleum Exporting countries) members.               the rupiah's appreciation including the flow
     According to him, the oil supplies from          of short-term funds into             portfolio
non-OPEC countries reached not more than              investment.
1.2 million barrels per day, which is far less            "Although the long-term flow of funds
than increase in consumption which has                has yet to increase, the short-term flow of
reached 1.8-2 million barrels per day.                funds is showing very good signs of
     The increase in demand will cause                recovery," he said.
world oil consumption in 2006 to increase                 Speaking at a "banker's dinner" on
to 86 million barrels per day compared to             January 13, Bank Indonesia will issue
last year's 84 million barrels per day.               several new banking regulations.
     He said 30 million barrels would be                  Sharing     Burhanuddin        Abdullah's
supplied by OPEC countries each day.                  optimism, BI Deputy Governor Aslim
      However, Kurtubi's prediction on                Tadjuddin has said that that the rupiah
world oil price was different from that by            tended to strengthen in 2006 as the
Chairman of OPEC's Council of Governors               country's macro-economic outlook is fairly
Maizar Rahman on Thursday (Jan 5).                    favorable with the economic growth rate
      According to Maizar, the world oil              estimated to reach 5.0 to 5.6 percent.
price in 2006 may reach 56-57 US dollars                  Aslim said that the encouraging
per barrel.                                           prediction of the macro-economic condition
                                                      and crude oil price steady at US$28/barrel

Vol. XI No.02                                                                Indonesia Today

on the world market, Indonesia's foreign               "In a meeting with Vice President (Jusuf
exchange reserve would not be affected by          Kalla) in Jakarta on Saturday, some special
the pressure on the money market.                  issues have been discussed, among other
                                                   things, a plan to develop more FTZs in
9. PRODUCERS   MUST    ALLOCATE                    view of the potentials of some regions like
   MINIMUM OF 25 PCT OF GAS FOR                    Bojonegara," Minister of Industry Fahmi
   DOMESTIC MARKET                                 Idris in the company of Muhammad Sani,
                                                   deputy governor of Riau islands, told
   Jakarta - The government has required           businessmen here on Sunday (Jan 15).
producers to allocate a minimum of 25                  Apart from this, the minister said, the
percent of their products for domestic             government will also revise the investment
market, Energy and Mineral Resources               law to shorten the time needed for the
Minister, Purnomo Yusgiantoro said here,           issuance of an investment lisence from
Wednesday (Jan 11).                                eight months to not longer than one month.
   Purnomo said after witnessing the                   Riau islands governor, Ismeth Abdullah,
slaughtering of sacrifice livestock, the           told newsmen after a lunch with the
requirement is stipulated in the draft             minister, that the plan is good news not
amendment of law no.22/2001 on oil and             only to Batam, Karimun and Bintan which
gas.                                               had been granted a Bonded Zone Plus
   "For the remaining 75 percent of                status in Riau islands, but also to other
(production) volume, it will be up to the          towns like Bitung, Dumai and Bojonegara
producers whether they will allocate it to         as the future FTZs.
domestic or export market," he said.                   He hoped the House of Representatives
   Section 22 of law on oil and gas                (DPR) will be ready to discuss a FTZ bill
stipulated that a company must allocate a          which no longer involves Batam.
maximum of 25 percent of its oil and gas               The House approved a bill on Batam
production to meet domestic needs.                 island as FTZ in a plenary session in 2004,
   However, the Constitutional Court has           but President Megawati Soekarnoputri
annuled the section on ground sthat it has         refused to sign it.
violated the 1945 Constitution.                        On the government's plan to develop
   The ministry has to revise the law and          some regions with a FTZ model, Batam
now the draft amendment of the law has             island in particular, Kim Soo-il, a Korea
been submitted to the State Secretariat.           citizen who was appointed as Indonesian
   As a consequence of the requirement to          honorary consul, said on a different
meet domestic demand, if producers and             occasion that the government should
consumers failed to reach agreement on the         expedite the implementation of the plan.
price of gas, the government would provide             According to him, Batam has a strategic
an incentive or subsidy.                           location near Singapore as a well-
   "The price will be negotiated between           established country.
the producers and consumers. If there is no            "If an FTZ is introduced here, more and
deal, it will be referred back to the              more foreign tourists would come to Batam
government," Purnomo said.                         because products sold on the island are
                                                   more competitive than those in Singapore
10. GOVT PLANS TO DEVELOP NEW                      and Hong Kong," he added.
                                                       For South Korean investors, he said,
                                                   Batam has good business prospects because
                                                   the island enjoys        export-import tax
   Batam, - The Indonesian government
                                                   exemption and has become increasingly
plans to develop new Free Trade Zones
(FTZs) in other regions, a cabinet member          competitive in the ASEAN Free Trade
                                                       Over 800 foreign companies, including

Vol. XI No.02                                                                 Indonesia Today

six South Korean ones, operate in Batam            Indonesia's most famous tourist destination,
with a total investment of US$3.8 billion.         in 2005 was recorded at 1,389,675 people,
                                                   far below the country's target of 1.6
 Social and Cultural Issues                          In December 2005, 79,103 foreigners
                                                   visited the Island, an increase compared to
1. GOVT     FORMS     NATIONAL                     62,705 people in November, said a
   COMMISSION FOR HANDLING BIRD                    spokesman of Ngurah Rai Immigration
   FLU                                             Office Harsono here Monday (Jan 09).
                                                      Bali recorded the highest number of
   Jakarta - The government set up a               foreign visitors in 2004, which stood at
National Commission for Handling the               1,457,107 people.
Avian Influenza to organize activities of             He believed that the decrease in the
handling the epidemic.                             visitors' figures was mainly due to the
   "The organization will make some                terrorists' bomb attacks in Kuta and
improvements of the authority, relationship        Jimbaran on October 1, 2005.
and working mechanism between the                     Before the bombing, which killed around
central and provincial administrations as          50 people, the trend in the number of
well as the involvement of professional            foreign tourists visiting the island last year
workers in the different related sectors,"         had shown an upward trend, i.e. 101,931
Coordinating Minister of People's Welfare          people in January, 100,638 in February,
Aburizal Bakrie said here on Friday (Jan           117,149 people in March and 116,615
06).                                               people in April.
    Bakrie clarified the government's                 In May 2005, a total 116,615 foreign
decision after a coordination meeting on           visitors came to the island, 136,369 in June,
handling bird flu attended by Environment          158,453 in July, 157,229 in August, and
Minister Rachmat Witoelar, Agriculture             162,102 in September.
Minister Anton Apriyantono, and Chairman              Following the deadly bomb attacks, only
of the National Planning Board Paskah              81.109 foreign tourists visited Bali Island
Suzetta.                                           in October 2005.
    On the occasion, Aburizal said the                 Last year's foreign tourists staying on
commission would be run under the                  the island came among others from Japan
coordination of his office.                        around 310,000, Australia (around 250,000
    "Later , the National Commission will          people), Taiwan about 125,000, South
appoint an executive chairman who will             Korea 76,000, England 72,000, Germany
work full time," he said.                          71,000 and Malaysia 62,000.
     He said a small working group would               Following the first bomb attack in Bali
be set up to formulate a working plan on           in October 2002 which had killed around
budget details and implementation.                 200 people, many of them were
     Members of the organisation will              Australians, only a total of 999,029 foreign
comprise officials of          government          tourists visited the island in 2003,
institutions,       non       governmental         compared to 1,285,764 people in 2002,
organisations, professional groups, and            1,156,774 people in 2001 and 1,412,839
public figures.                                    people in 2000, said Harsono.

   IN 2005 BELOW TARGET                               PRESS DAY IN BANDUNG

   Surabaya (East Java) - The number of              Bandung - President Susilo Bambang
foreign tourists visiting Bali Island,             Yudhoyono is expected to attend the

Vol. XI No.02                                                                   Indonesia Today

celebration of the 22nd National Press Day           Sumatra, South Sumatra and South
or the 60th anniversary of the Indonesian            Sulawesi, Head of the Banten Education
Journalists Association (PWI) here                   Representative office Didi Supriadi said
scheduled for Feb. 2, 2006.                          here on Sunday (Jan 15).
    Chairman of the organizing committee                "To improve education facilities and
Usman Tiarsa R told the press here recently          infrastructures,      Education      Minister
that the peak ceremony commemorating the             Bambang Sudibyo has been scheduled to
22nd National Press Day and the60th                  conduct a road tour to Banten on January
anniversary of the PWI will take place the           23 for a meeting and talks with all district
Asia-Africa Building.                                heads in the province, heads of the district
    The appointment of Bandung as the host           level education representative offices," he
of this annual celebration is of great               said.
significance for people in this West Java               In the meeting, various problems will be
capital as journalists in this city pioneered        discussed especially anything relating to
publication 100 years ago by publishing a            the aspect of educational implementation
newspaper 'Medan Prijaji' with RM                    which has to do with facility and
Tirtodisurjo as chief editor and the owner           infrastructure in the process of learning and
of the publication company, according to             teaching in Banten.
Usman, who is also chairman of the West                 "The minister will also ask for all data on
Java branch of PWI.                                  students of elementry schools, yunior hight
    As part of the peak ceremony, the                schools, high schools and other vocational
President is scheduled to plant a tree at a          high schools. At present I am now
location to be determined later, and figures         preparing the needed data to be presented
of various community elements will follow            during the meeting later," Didi said.
by planting trees in several locations in the           Sharing similar opinion with Didi
city. The Indonesian Record Museum                   Supriadi was was Eko Endang Koswara,
(MURI) will specially record the moment              head of Banten province's adminstrative
of the mass planting of trees.                       affairs who said that the meeting initiated
    PWI Chairman Tarman Azzam said the               by the education minister would highlight
celebration will be highlighted by a seminar         on issue relating to education at elementry
on the development of state-owned                    and yunior high schools.
enterprises (BUMNs), an exhibition of the               In addition, the minister's talks with
press industry and a mass media convention           district heads and mayors and the governor
to be opened by Communications and                   of Baten will touch on the development of
Information Minister Sofyan Jalil. State             educational facilities and infrastructures
Minister of BUMNs is expected to attend              especially school buildings.
the seminar on BUMNs.                                   "On the occasion, the minister will likely
                                                     make a memorandum of understand (MoU)
4. EDUCATION MINISTER TO IMPROVE                     with district heads on the accelaration of
   EDUCATIONAL FACILITY IN EIGHT                     the construction and renovation of damaged
   PROVINCES                                         school buildings.
                                                        Based on available data, Edo added, the
   Serang - The government had put eight             number of damaged classes of school
provinces throughout the country that                buildings in Banten reached 23,680 units.
deserved to get special attention on how to             If the central government is able to
improve their educational facility and               renovate at least 8,000 units of class, the
infrastructure on the list of priority, an           rest could be the responsibility of district
official said.                                       administration offices to repair them, he
   The eight provinces were Banten, West             said.
Java, Central Java, East Java, Bali, North
                                                     5. MERPATI PROVIDES NINE PLANES

Vol. XI No.02                                                                    Indonesia Today

   TO SERVE PIONEER ROUTES                            pened," said Merpati's spokesman Jaka
                                                      Pujiyono here on Wednesday (Jan 11).
    Bandug - Merpati Nusantara Airlines                  Pujiyono said that the working capital of
(MNA) has provided nine Twin Otter                    Rp450 billion in the first step would be fo-
aircraft to serve pioneer routes like those           cused on the repaire of production equip-
for flights to certain destinations in Papua,         ment in order to promote service, among
Sulawesi, Maluku and Nusa Tenggara.                   other things, a number of Twin Otter air-
    MNA Managing Director Hotasi                      craft.
Nababan said here Tuesday (Jan 03) that                  Apart from that, the company has set
Merpati's planes will begin operating for             some targets, such as to reopen commercial
those pioneer routes in February 2006 to              and pioneer flights which had been aban-
speed up the development of isolated and              doned.
remote areas.                                            "For us, this year is an awakening year,
    There are many areas remaining                    we will try to make some improvement to
inaccessible through overland routes, and             increase our service and financial perfor-
flight routes are the only way to reach those         mance," Jaka said.
areas, he pointed out, adding that the                   According to him, the repaire of produc-
opening of the pioneer routes are expected            tion equipment was believed able to meet
to benefit people in those isolated or remote         the company's income target of Rp1.5 tril-
areas.                                                lion.
    Nababan conceded that the proceeds                   He explained that, the decline of the air-
from the operation of small planes of the             lines' income was caused by the many air-
Twin Otter type to serve pioneer routes are           line companies offering cheap air fares.
small, but the MNA is determined to open
isolated or remote areas to help the local            7. WORLD SCOUTS ORGANIZATION
people develop their areas.                              SECRETARY GENERAL   VISITS
    He disclosed that the cost of opening the            INDONESIA
planned pioneer routes is about Rp79
billion, partly will be derived from a                   Jakarta - World Organization of Scout
government loan. With the presence of the             Movements (WOSM) Secretary General
nine small planes, Merpati will have 29               Eduardo Missoni arrived in Jakarta on
units of aircraft of that type, he said.              Thursday (Jan 05) for a five-day visit
    Nababan cited 100 units as the ideal              during which he will among other things
number of small aircraft to serve various             observe the Community Development
pioneer routes in Indonesia. But the airlines         Camp (Comdeca) in Nanggroe Aceh
now has only 29 units, he added.                      Darussalam (NAD) province.
                                                         The scouts' activities in the Community
6. MERPATI AIRLINE TO REOPEN 40                       Development Camp themed "Aceh
   DOMESTIC ROUTES                                    Reconstruction" in Neuheun village, Aceh
                                                      Besar district, are also being participated in
   Jakarta - Indonesia's flag carrier Merpati         by scouts from Japan, Malaysia, Brunei
Airlines (PT.Merpati Nusantara) is deter-             Darussalam,      Australia,    France,     the
mined to reopen about 40 domestic routes              Netherlands, Singapore, Taiwan and Saudi
which have been closed in the last two                Arabia, information obtained from the
years , following to the disbursement of a            National Scouts Movement headquarters
working capital from the government total-            said here on Thursday.
ling Rp75 billion recently.                              Some of activities to be conducted by
   "At least in the first three months of this        scouts in the Comdeca from August 14
year, some 40 domestic routes will be reo-            through September 14, 2005 were a
                                                      regreening program over a distance of 7

Vol. XI No.02                                                                 Indonesia Today

kilometers from Krueng Raya village to               those offered by other operators.
Malahayati sea-port, play ground, program              He said besides for business reasons, Air
to rehabilitate fish ponds and reconstruction        Efata also had a mission of helping Papua
of nine libraries in Aceh, the western-most          grow by offering its flight services.
province of Indonesia.                                 Efata Air's majority shares are held by
    Aceh was devastated by a massive                 PT Tiara Markas and the rest by PT Arpeni
tsunami one year ago, causing the death              and former Papua governor Barnabas
and disappearance of hundreds of                     Suebu.
thousands of people.
    In addition, Eduardo was also scheduled
to visit the Bumi Perkemahan Kiarapayung                    Regional/International Issues
(Scouts Camping Ground) in Jatinangor,
West Java, which will be used for the                1. BELGIUM DONATES US$9.5 MILLION
National Scouts Jamboree next July.                     FOR ACEH AND NIAS
    The WOSM secretary general will also
visit     "Parung Farm" in Bogor, the                   Jakarta - The Belgian government has
information said, adding that Eduardo will           donated Euro 8 million or US$9.5 million
among other things be accompanied by                 in funds to the Multi Donor Fund (MDF)
Parni Hadi, deputy head of the National              which has been active in the reconstruction
Scouts Movement headquarters.                        and rehabilitation of Aceh and Nias since
                                                     the huge tsunami hit the two regions on
8. AIR EFATA TO SERVE JAKARTA-                       December 26, 2004.
   PAPUA ROUTE                                          In a statement made available here on
                                                     Wednesday, the contribution has increased
   Jakarta - A new private airline company           the amount of funds managed by the MDF
Efata Air will start serving the route from          to more than US$545 million.
Jakarta to eastern Papua on January 9                   The funds from donor countries and
fourteen times a week through Surabaya in            many international organizations were
East Java or Makassar in South Sulawesi.             intended to finance the rehabilitation and
    "The flights will last only four to five         reconstruction of     Aceh and Nias in
hours or even shorter than the flights by            cooperation with the Reconstruction and
other operators which normally take more             Rehabilitation Body (BRR).
than eight hours because of their stops in              Among those funding MDF programs
many cities," the president director of PT           are the European Commission, the
Efata Papua Airlines, Frank Taira Supit,             Netherlands, Britain, the World Bank,
told     newsmen on the sidelines of a               Norway, Denmark, Canada, Sweden, the
thanksgiving party to mark the start of the          Asian Development Bank, Germany, the
airliner's operation.                                United States, Finland, New Zealand and
   He said Efata Air using wide-bodied               Ireland.
aircraft like MD-88 would only make                     The MDF is managed by the World
transits in Makassar, Surabaya or Biak               Bank and directed by a steering committee
before reaching their final destinations in          consisting of the representatives of the
Jayapura and Timika in Papua.                        donor parties, the Indonesian government,
   "We are not a low cost carrier but a              non-governmental organizations and the
traditional one which puts forward good              United Nations.
service at a fair price," he said.                      Belgian Ambassador to Indonesia Hans
   He said Air Efata would sell its ticket to        Christian Kint said his country was very
Papua at only Rp1.6 million for the                  glad to join the MDF to help reconstruct
economy class, and Rp2.5 million for                 Aceh and Nias toward a better condition
deluxe efata class which was cheaper than            and cooperate with the Indonesian

Vol. XI No.02                                                                   Indonesia Today

government.                                          Movement (NAM) member countries have
   MDF Manager Joe Leitman, meanwhile,               also submitted a proposal to ensure a
said he welcomed the contribution from the           balanced membership composition to the
Belgium government.                                  UN General Assembly and thus the criteria
   MDF is now financing eight projects,              would not only be based on the member
including land ownership; development                countries' material contributions, he added.
projects in sub districts which financing the           The establishment of the commission
restoration of the infrastructure in some            was one of the agreements reached at the
6,000 villages across Aceh and Nias;                 UN Summit meeting last September and
poverty alleviation in the village area,             one of the outcomes of UN reform.
reconstruct and rehabilitate some 14,000                The commission will, among other
housing units.                                       things, adopt a comprehensive strategy in
   MDF specifically also donated US$15               the solution of problems of countries that
million as technical aid to BRR to enable            have just gone through a period of conflict,
the body to realize its programs, coordinate         namely problems that can be solved only
and control the reconstruction and                   through cooperation among politicians,
rehabilitation process in Aceh and Nias.             military, humanitarian workers and
   MDF has allocated some US$6 million               development actors.
to rehabilitate roads in the villages by                The commission will consist of 31
relying on local workers and another                 member-countries with certain criteria,
US$6.1 million, among others to train                namely seven from the United Nations
NGOs.                                                Security Council (UNSC), seven from the
   Five other projects awaiting approval             United Nations Economic and Social
are forests and environment (US$17.5                 Council (ECOSOC), five from among the
million); roads and bridges rehabilitation in        UN's biggest donor countries and five from
Lamno-Calang (US$11 million); flood                  countries making the biggest contributions
prevention measures in Aceh (US$4.5                  in terms of military and civilian personnel
million); marine logistics          (US$24.6         to UN missions.
million) and rehabilitation of ports (US$3.7            The other seven would be elected by the
million).                                            United Nations General Assembly by
                                                     considering the geographical factor and
2. RI INTERESTED         IN   UN PEACE-              experience of a nation in handling post-
   BUILDING                   COMMISSION             conflict problems.
   MEMBERSHIP                                           Rezlan said Indonesia deserved to have
                                                     a position in the commission for its activity
   New York - Indonesia is interested in             in the UN missions in Congo, Yugoslavia,
becoming a member of the United Nations              Georgia and Cambodia.
Peace-building Commission, a new body                   Indonesia, he said, had also played a
set up as a result of the UN reform process          role in facilitating peace negotiations in the
to promote peace in countries that have just         southern Philippines and has experience in
gone through a period of conflict.                   handling conflicts in Aceh and East Timor.
   "The Peace-building Commission has
been set up. The next step it is taking is
selecting its members, and Indonesia has
registered its wish to be one of the
commission's       members,"     Indonesian
Permanent Representative to the United
Nations Rezlan Izhar Jenie said here on
Wednesday (Jan 04).
   Indonesia and other Non-Aligned

Vol. XI No.02                                                                  Indonesia Today

   JEMBER,        BANDJARNEGARA                         THE BIGGEST IN INDONESIA
                                                        Jakarta - Chairman of the Coordinating
  Jakarta - The United States and Japan              Investment Board (BKPM) Muhammad
have pledged to provide relief aid for               Lutfi said the biggest investors in Indonesia
victims of floods and mudslides that                 in 2005 predominantly hailed from Asian
occurred in Jember district, East Java, last         countries such as South Korea, Malaysia,
Sunday (Jan 1, 2006) and in Banjarnegara             Singapore, China and Japan.
district, Central Java, last Wednesday (Jan             "Such a big investment of those Asian
3, 2006)                                             countries is expected to contribute to a
     The Japanese government's aid would             faster growth of Indonesian economy,
be worth Yen 13 million or about                     hopefully much better than what has been
US$112,069 million and consist of tents,             predicted," he said after witnessing the
blankets, plastic mats, and water containers,        increased investment of the South Korea-
according to a press statement issued by             based PT LG Elektronika Indonesia
the Japanese consulate general in Surabaya,          (LGEIN) here on Sunday (Jan 08).
here Friday (Jan 06).                                   South Korea was one of the biggest
  Meanwhile, the US government through               foreign investors in Indonesia with its
the US Agency for International                      machinary's components and textile
Development (USAID) would come up                    product, he cited.
with US$50,000 worth of aid.                            He, however, said the investment has yet
   The US asistance would be handed to the           to be followed by European investors for
Indonesian Red Cross (PMI) and intended              which their investment tends to decline.
to buy emergency relief goods such as                   He added BKPM would keep on
cooking equipment, tents and hygiene                 improving its service and facility to
equipment.                                           increase foreign investment at home which
  More than 100 people were killed, tens of          might contribute to the create of new job
others injured in flash floods and mudslides         opportunities.
which hit Jember last Sunday (Jan. 1, 2006)             The facility and security of investment
and Banjarnegara last Wednesday (Jan. 3,             were the main factor for investors to make
2006).                                               new investment, as BKPM would continue
     Search and Rescue (SAR) teams were              to provide access to foreign investors.
still searching for more bodies believed to
be still buried in mud in isolated areas             5. RI, M'SIA AGREE TO AVOID DOUBLE
where roads had been cut off.                           TAXATION
  President Susilo Bambang Yudhoyono
when visiting Jember, Thursday (Jan. 5)                 Bukit Tinggi, W Sumatra, - Indonesia
instructed regional government heads to              and Malaysia reached an agreement here on
prepare contingency plans to prevent more            Thursday (Jan 12) on avoiding double
fatalities.                                          taxation on individuals as well as on
  On Friday (Jan. 6), the President asked the        business companies.
local community in Jember to green the                  The agreement was laid down in a
areas which were denuded by the recent               memorandum of understanding signed on
flash floods and mudslides.                          the sidelines of a meeting between
   "In order to prevent natural disasters            Indonesian President Susilo Bambang
from recurring, bare land in disaster-hit            Yudhoyono and Malaysian Prime Minister
areas must be greened," said the President           Abdullah Badawi.
when visiting flood-hit Suci village, Jember            The two countries also agreed to
district.                                            cooperate in border control, business as

Vol. XI No.02                                                                  Indonesia Today

well as investment in various sectors.               billion.
   After the closed-door summit, Trade                     Apart from that, a Malaysian company
Minister Mari Elka Pangestu said that                has bought 10,000 hectares of land in Sei
avoidance of double taxation was                     Mawang, and 20,000 hectares in Sekadau,
commonly done by other countries. The                West Kalimantan province, to be developed
agreement was mutually beneficial to the             into plantations.
two countries because it could encourage                   "The project is still being assessed by
investment because Malaysian investors               the plantation companies of both sides in
would not be taxed twice.                            Kalimantan," said Seri Ahmad Sarji.
   In the meeting the two countries also                   The other cooperation program covers
agreed to cooperate in the sectors of oil and        the building of crude palm oil factories in
gas, infrastructure, plantation, trade and           Ketapang and Sanggau, West Kalimantan,
port management.                                     worth      30 million Malaysian ringgits
                                                     (approximately US$8 million).
6. RI,  M'SIA INK COOPERATION                              In the oil and gas sector, a Malaysian
   AGREEMENT IN BUSINESS AND                         company will build a 1.700-km             gas
   INVESTMENT                                        pipeline from East Kalimantan to Java
     Bukit Tinggi, W.Sumatra         - The                 Still another Malaysian company,
Indonesian and Malaysian governments                 PECD Berhard, on the occasion, signed a
agreed to establish cooperation in business          contract for the construction of a 165-km
and investment covering infrastructure,              gas pipeline from Sumatra Island to Java
plantations, crude palm oil plants, oil and          Island at a cost of US$140 million.
gas and energy.                                            Meanwhile, a Malaysian company has
     The signing of the        cooperation           offered to build a coal-fired power plant in
agreement was conducted at the Annual                Cirebon, West Java, worth US$600 million.
Summit between Indonesia and Malaysia in                   The company is also discussing a
Bukit Tinggi, West Sumatra province, on              cooperation with state run electricity
Thursday, in the presence of Indonesian              company PT.PLN in running the power
President Susilo Bambang Yudhoyono and               plant in South Sumatra worth US$200
Malaysian Prime Minister Datok Sri                   million.
Abdullah Ahmad Badawi and a number of                      Cooperation in running a coal-fired
ministers of both sides.                             power plant in Merak, Banten, worth
     The agreement was signed by                     US$30 million, is still being discussed.
Chairman of the Malaysia-Indonesia                          Malaysia is also planning to build a
Business Council (MIBC) Tan Sri Dato'                small CPO terminal in Ketapang district,
Seri Ahmad Sarji bin Abdul Hamid and                 West Kalimantan province,            worth 5
Chairman of Indonesia - Malaysia Business            million Malaysian ringgits (around US$ 1.3
Council (IMBC), Tanri Abeng.                         million).
     According to Tanri Abeng, the main
purpose of the deal was to continue                  7. RI, US TO RE-FORMULATE SECURITY
cooperation in business investment                      COOPERATION
including trade between the two sides.
     Therefore, the members of MIBC and                 Jakarta - Indonesia and the United States
IMBC could focus on certain sectors which            will re-evaluate their security cooperation
could be developed at the same time.                 following the lifting of the US arms
     Meanwhile, in his speech, Seri Ahmad            embargo in November especially in dealing
Sarji said five Malaysian companies had              with terrorism and security in the Malacca
participated in a bidding for six toll road          Strait and in Southeast Asia.
projects in Indonesia worth US$1.345                    "All the issues will be discussed in a

Vol. XI No.02                                                                   Indonesia Today

miniature Indonesia-United States Security           and others.
Dialogue (IUSSD) in Jakarta on January                   The military cooperation between the
20," the director general of defense strategy        Indonesian defense forces (TNI) and the
of the ministry of defense, Major General            US Pacific Command (US PACOM) since
Dadi Susanto, said at his office here on             1997 had been held under the USIBDD
Friday (Jan 13).                                     umbrella.
   He said the IUSSD was first held in                   He said the cooperation, part of the
Jakarta in 2002, followed later in                   Training an Exercise Working Group which
Washington DC and Jakarta. Various issues            was part of the USIBDD, had resumed in
linked to improvement of security                    2004 after it was frozen in 1997.
cooperation between the two countries                    He said in 2005 the US PACOM
including anticipating developments in               offered around 100 training programs and
regional and global strategic environments           discussions known as "Subject Matters
were discussed in the dialogues.                     Expert Exchanges". Out of the 100
   Following the lifting of the US arms              programs offered, the Indonesian defense
embargo on Indonesia in November, Dadi               forces also took 80 according to the
said, Indonesia and the US needed to                 country's interest.
review the form of security cooperation
most suitable to them.                               8. RUSSIAN        PARLIAMENTARY
    "This is what will be formulated in the             DELEGATION TO VISIT INDONESIA
mini-IUSSD on January 20, the result of
which would be used for discussion in the                Jakarta - A Russian         parliamentary
fourth IUSSD in the US in May," he said.             delegation led by Sergey M. Mironov will
    He said several issues that would be             pay a four-day visit to Indonesia starting
discussed in the mini-IUSSD included                 from January 15, 2006.
terrorism, security in the Malacca Strait,               Apart from reciprocating a visit made
regional security and others to improve the          by the Indonesian House of Representatives
security cooperation between the two                 (DPR), the Russian delegation will also
countries especially to speed up the                 attend the 14th Asia Pacific Parliamentary
restoration of the two countries' military           Forum (APPF) held here from January 15
relations.                                           to 20, 2006.
    In the informal meeting he said                      The delegation will also visit Singapore
Indonesia would urge the US to                       on the sidelines of its visit in Indonesia on
immediately restore the two countries'               Jan 17.
military relations by speeding up the                    During its visit to Indonesia, the Russian
withdrawal of spareparts for Indonesian              MPs will pay a courtecy call on President
jetfighters currently still being held in            Susilo Bambang Yudhoyono and meet
several countries as the result of the               House Speaker HR Agung Laksono,
embargo 12 years ago.                                Chairman of the People's Consultative
    "The US believes it is important to              Assembly (MPR) Hidayat Nur Wahid and
improve the security cooperation with                Chairman of the Regional Representatives
Indonesia especially with regard to fighting         Council (DPD) Ginandjar Kartasasmita.
terrorism in view of the country's strategic             The delegation is slated to meet other
location to create not only regional but also        delegations like those from Thailand and
global security," he said.                           Korea.
     Dadi said besides the mini-IUSSD, the
two countries also planned to hold a                 9. SWEDEN THANKS RI FOR DECISION
miniature US-Indonesia Bilateral Defense                TO REFILL AMBASSADORIAL POST
Dialogue (USIBDD) on the implementation
of the results of the IUSSD such as joint               Jakarta - The Swedish government has
exercises, education, operations, logistics

Vol. XI No.02                                                                Indonesia Today

thanked the Indonesian government for               fields.
deciding to refill its assadorial post in               Among the issues raised in the meeting
Stockholm after having left it vacant since         were democratization, good governance,
2002 in protest against Sweden's refusal to         anti-corruption efforts, economic and trade
take legal measures against leaders of the          relations, anti-terrorism campaign and the
separatist Free Aceh Movement(GAM)                  Aceh case, he said.
residing there.                                         He said the Swedish government was
     Swedish State Minister Lars Danielson,         eager to help create peace in Aceh and
who is also a special envoy of the Swedish          implement the peace deal between the
prime minister, made the statement of               Indonesian government and GAM by
thanks      when he met with Indonesian             providing financial aid or other forms of
Foreign Minister Hassan Wirajuda here on            assistance.
Saturday (Jan 14),         Foreign Ministry
spokesman Desra Percaya said.
     At the meeting, Wirajuda told his guest
that the Indonesian government would
station an ambassador to Sweden within the
next few months, Desra said.
    Wirajuda said recently the Indonesian
government was expected to post an
ambassador in Sweden in mid-2006 at the
latest as a follow up to the signing of a
peace deal with GAM last August 15.
    He said the government would submit
the names of a few candidates for the
ambassadorial post in Stockholm to the
House of Representatives (DPR) in
    He said the process to name and assign
the ambassadors would run for four months
after candiates had gone through several
selection phases, including an orientation
period, approval from foreign countries and
installation by the President.
    In 2002 and 2003, the Indonesian
government asked Stockholm to take legal
measures against the Hasan Tiro group
living in Sweden on the ground that the
GAM leaders were responsible for a
number of terror acts in Indonesia including
bombings in some regions that killed
dozens of people.
    In response, the Swedish government
said it could not take legal action against
Hasan Tiro and his followers who had
become Swedish citizens and were living in
Stockholm because they had not violated
any of the country's laws.
    Desra futher said the meeting between
Danielson and Wirajuda on Friday focused
on forging bilateral cooperation in all


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