INFID
INFID | TAPAK Ambon | AKUI
| PosKo Zwolle | Diverse Artikelen
Title
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Short News Overview.
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No
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80
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Period
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22 February 2002 - 28 February
2002
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INFID Related Issues
Debt
Indonesia is expected to clinch $6 billion of debt relief from the Paris Club
of creditors when the group meets in April, but less clear is what strings
will be attached. The debt -- which covers principal and for the first time
interest falls due between April this year and December 2003 and around 50
percent is owed to Jakarta's biggest creditor and strategic ally Japan. Japan
has already shown tacit support for the rescheduling, which would give the
giant debt-weary nation some much needed fiscal breathing space and help it
meet vital targets including a budget deficit of 2.5 percent of gross
domestic product (GDP). Indonesia's debt levels ballooned after the Asian
financial crisis in the late 1990s, expanding total foreign debts to around
$133 billion or close to 100 percent of GDP. If successful, the next round of
Paris Club talks would lead to Indonesia's third debt restructuring since the
crisis.
The IMF says the $6 billion deal, combined with donor support, would bolster
Jakarta's 2002 budget by some 67.2 trillion rupiah ($6.60 billion) -- the
equivalent of around 20 percent of domestic budget revenue sources. The
creditor group of 19 countries will likely grill Indonesia over its
half-hearted reform efforts and make big stipulations in return for the debt
relief. Also important will be a controversial debt deal involving politically
well-connected former bank owners and some $13 billion they owe the state. A
team of senior IMF officials has asked the government to come up with a
"clear strategy" on the ex-bankers' debt deal but it is unclear
whether Jakarta will do so in time for the April meeting.
Meanwhile, a quarterly review on the development issues meeting of
representatives from the Consultative Group on Indonesia (CGI) on Feb. 20
painted an upbeat picture of the Indonesian economy, which may well add oil
to the machinery during the talks with the Paris Club of creditor nations.
However, the CGI also called for more concrete reform actions over the next
few months to bolster confidence in the country’s economy and the government.
Securing a positive note on macroeconomic stability increases chances for
Indonesia to receive lighter rescheduling terms for its debts. Unlike
Pakistan, whose role in supporting the U.S.-led war in Afghanistan had earned
it a generous Paris Club deal according to analysts, Indonesia's position is seen
as more difficult. The government foot dragging on a number of reform areas
such as justice and forestry, have been a constant hindrance to talks at both
the CGI and the Paris Club. Another fallout from the slow reforms, is that
investors shy away from Indonesia as they seek security for their
investments. The World Bank said progress was underway, but added that CGI
donor countries agreed that concrete actions were still needed. While slow
reforms may undermine Indonesia's position at the Paris Club, strong support
so far from the International Monetary Fund (IMF) may be a stronger
determinant. To a large extent, the Paris Club makes its decisions based on
inputs from the IMF.
Sources: Reuters 21/02, JP 2602
FSPC
The controversial policy of the powerful Financial Sector Policy Committee
(FSPC) to ease the repayment terms for the huge debts owed by former bank
owners implies that the life of the Indonesian Bank Restructuring Agency
(IBRA) would have to be extended for at least another six years, according to
State Minister for National Development Planning Kwik Kian Gie. IBRA, which
first proposed the new debt settlement scheme, is supposed to end its
six-year mandate in 2004. The FSPC, which groups senior economic ministers
led by Co-ordinating Minister for the Economy Dorodjatun Kuntjoro-Tjakti and
has the final say on major debt restructuring policies, decided late last
year to extend the repayment period for the debts from four to ten years with
interest rates being lowered to a minimum of nine percent. But the policy has
raised controversy as critics said that the government was being soft on bad
debtors. The government injected more than Rp138 trillion (about US$413
billion) in bailout funds in the wake of the 1998 financial crisis to help
the banks stay afloat. The government has discussed the FSPC policy at
several cabinet meetings but has failed to reach a final conclusion. Three
senior ministers have been assigned to review the policy. Kwik has been a
strong critic of the FSPC policy on the debt extension plan.
Elsewhere, Kwik also expressed his doubts about the authenticity of an
intelligence document, circulated by IBRA chairman I Putu Gede Ary Suta at a
cabinet meeting, which supported the agency-proposed debt extension plan. The
report, reportedly drafted by the National Intelligence Body (BIN), said the
debt settlement scheme would benefit the economy as a whole, as it would
allow companies to keep operating and generating income, while at the same
time creating job opportunities. But Kwik said that the report did not carry
the signature of BIN's chief Hendroprijono. Press reports had earlier quoted
the BIN report as saying that the debt extension plan could trigger social
unrest as it ran contrary to society's sense of justice.
In another occasion, Daniel Citrin, IMF’s top Indonesia official, said
Indonesia’s inability to force some of the country's largest debtors to pay
up the US$12 billion (S$22 billion) they owe the government could hold up
further disbursements from IMF. He said that he was unable to recommend to
the Fund's board on the disbursement of the next tranche under the US$5
billion loan agreement due to uncertainty surrounding the recovery of the
debts. Under the Master Sales and Acquisition Agreement (MSAA) signed in
1998, the debtors agreed to transfer assets and cash to the Indonesian Bank
Restructuring Agency to cover the money the central bank poured into banks
owned by them and to escape criminal prosecution. But, apart from the Salim
Group, none of the other debtors have lived up to their side of the bargain.
The MSAA stipulates that the government take legal action against
uncooperative debtors but so far no one has been brought to court.
Source: JP 26/02, BT 22/02
Privatisation
Speaker of the People’s Consultative Assembly Amien Rais has expressed fears
a privatisation programme will turn Indonesia into a "nation of
coolies", using the term referring to unskilled native labourers in East
Asia. The privatisation programme, seen by international lenders as a key part
of economic reforms, is already faltering amid opposition from some sections
of the public. Rais said on Feb. 20 that selling all state-owned companies
was unpatriotic, un-nationalistic and completely wrong. He said millions of
hectares of palm-oil plantations in Sumatra were now owned by a Malaysian
company and the situation would worsen if the government sold its 51-percent
stake in PT Semen Gresik to Mexican cement company Cemex. He said he would
urge members of the House of Representatives to stop the planned sale of
Semen Gresik. Last November the government, bowing to regional pressure, said
it would only go ahead with a partial privatisation of Semen Gresik, the
country's largest cement producer. But the announcement failed to mollify
objectors.
The World Bank has warned Jakarta to overrule provincial government attempts
to take over Semen Gresik's local affiliates or put its future asset sales at
risk. This year's budget envisages a deficit of Rp42.134 trillion, equivalent
to 2.5 percent of gross domestic product. To help cover the shortfall, a
privatisation programme is scheduled to contribute Rp3.952 trillion. Asset
sales by the Indonesian Bank Restructuring Agency are to generate Rp19.548
trillion and the rest is due to come from foreign financing. Among impending
asset sales is that of Bank Central Asia, the country's largest private
retail bank. An official of the bank's labour union said 80 percent of the
employees would go on strike if the sale went ahead. Leading bidders are
British-based Standard Chartered and a consortium led by US investment firm
Farallon Capital, which have passed the first evaluation round for candidate
buyers this week.
Decentralisation: Indonesia’s privatisation nightmare: http://infid.ngonet.be/privatisationnightmare.html
Source: AFP 21/02, TI 28/02
General News
Obituary
Senior human rights activist Haji Johannes Cornelis Princen (76) passed away
on Feb.22 in his house on Jl. Arjuna III No. 24, Pisangan Baru, Utan Kayu
Selatan in East Jakarta after suffering a stroke. He is survived by his wife,
Sri Mulyati and four children. Among those who attended his burial were
activists and law practitioners such as Luhut Pangaribuan, Muchtar Pakpahan,
Hariman Siregar, Jopy Lasut and Gurmilang Kartasasmita. Also paying their
respects at the burial were military veterans and friends from the movements
of 1945, 1966 and 1974.
Princen, a recipient of the prestigious Yap Thiam Hien Human Rights Award in
1992, had an extraordinary life history. Born in The Hague on November 21,
1925, Princen, who had an extensive military background, was once an economic
councillor of Teppemaand Vargroup
Groothandel voor Chemische Producten in The Hague in 1942. He joined Stoottroepen Regiment Brabant and
worked for the Bureau voor Nationale
Veiligheid in 1945. He was once imprisoned in a German concentration camp
and was moved to seven cities in Europe.
Princen, who was a member of the Netherland's military unit KNIL, switched
sides to join the Indonesian guerrilla fighters during Indonesia's struggle
for independence against the Dutch. He also joined the West Java's Siliwangi
Long March in 1948 and was awarded the Guerrilla Star from Indonesia's first
president Sukarno on October 5, 1949. Due to his rebellious nature and unique
passion for defending human rights, however, Princen was arrested many times
under Sukarno and then Soeharto's administration, including during the 1974
Malari incident. Princen became a legislator in 1956 and became chairman of
the Human Rights Defender Institution (LPHAM) in 1966. He was also among the
founders of the Foundation of the Indonesian Legal Aid Institute (YLBHI) in
the early 1970's and was also a journalist for Netherlands Radio and several
Dutch newspapers in Indonesia. He also founded the Merdeka Labor Union
(Serikat Buruh Merdeka) in early 1990. Among his prominent publications was
his book "Riwayat Hidup di Negeri
Belanda" (My Life History in the Netherlands) which was published in
Dutch in 1989. The book drew controversy at the time within the Dutch
community.
"We will miss him deeply ... a person of such fine quality, rich life
experience and persistence in defending his belief in human rights,"
Munir, Princen's young colleague of the Commission for Missing Persons and
Victims and Violence (Kontras), said over the phone on Feb.22.
Source: JP 23/02
War on Terror
South East Asia sizes up Indonesia’s tussle with terrorism with understanding
but the pointed refrain is: Jakarta should take more action. Analysts,
academics and parliamentarians in Malaysia, the Philippines, Thailand and
Indonesia say that there exists less sympathy for Indonesia’s claim that it
lacks proof of terrorist activity. It invites the retort that what is lacking
is the willingness to dig up proof and even the ability to do so, they said.
Professor Julkipli Wadi of the University of the Philippines-Asian Studies
Centre, Prof P. Ramasamy of University Kebangsaan Malaysia and Mr Kobsak
Chutikul, a Thai MP shared the same opinion that Indonesia’s response to
terrorism has been mild.
The mild response can perhaps be explained by some Indonesians' disbelief
that sophisticated terrorist networks could exist in a nation known for its
tolerant religious temper. Said Mr Jacob Tobing, a legislator for the
Indonesian Democratic Party-Struggle: "I doubt that there are terrorist
groups in Indonesia that can organise sophisticated attacks like September
11." As sceptical was Mr Daniel Dhakidae, a political analyst in
Jakarta. But he conceded: "It is, however, possible that international
terrorists hide here." Others readily allowed the possibility of terror
cells, especially given the weak law and order situation.
By the Western definition, terrorism involves exclusive groups, violence and
militant Muslims, said Mr Hamid Awaluddin, a member of Indonesia's General
Election Committee. "All these elements exist in Indonesia -- we have
violence from communal or sectarian clashes, we have exclusive fringe groups
of puritanical young Muslims. This can easily lead to perception that we
harbour terrorist groups."
Meanwhile, Singapore’s Senior Minister Lee Kuan Yew remark on terrorism in
Indonesia has sparked demonstrations outside the Singaporean Embassy in
Jakarta. On Feb. 25, some 100 members of the militant Islamic Defenders Front
(FPI) and Laskar Mujahidin marched outside the embassy, angrily demanding
that Indonesia sever ties. Some 300 members of Hizbut Tahrir Indonesia (HTI) and
the Islamic Youth Movement (GPI) urged Lee on Feb.15 to retract his
statements and apologise to the Indonesian people. Failure to do so would be
met with a continuation of anti-Singapore demonstrations in the capital, they
said. HTI spokesman Ismail Yusdanto said that Lee's assertions about terror
groups operating out of Indonesia, coupled with Singapore authorities'
allegation that Mujahidin Council Chief Abu Bakar Ba'asyir was linked to
international radical cells, were unsubstantiated.
Source: ST 23/02, JP 27/02
Abbreviations
AFP Agence France Presse
BT Business Times (Singapore)
JP The Jakarta Post
TI Tempo Interaktif
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