RI`s cellular phone subscribers grow 51 pct

Jakarta (ANTARA News) - The number of cellular phone subscribers in Indonesia in 2007 rose 51 percent to 96.41 million from a year earlier, a minister said.

"The increase in the number of cellular phone and FWA (fixed wireless access) subscribers indicates that Indonesia has made remarkable achievement in catching up with other countries in the field of information and communication technology (ICT)," Communication and Information Minister Muhammad Nuh said at the launching of Indonesia ICT Outlook 2008 here Thursday.

The number of fixed wireless access and fixed phone subscribers increased to 11 million and 8.7 million respectively, he said.

The number of computer owners also rose to 2.5 million in 2007 from 1.8 million the year before, he said.

He said the number of registered Internet service users rose to 25 million in late last year from 20 million in 2006.

"It is for the first time the government officially launched the Indonesia ICT Outlook to know exactly the extent to which ICT has contributed to the country`s economic growth. The Indonesia ICT Outlook also serves as guidance for stakeholders to determine the direction of their business policies in the future," he said.

The ability to master ICT was a prerequisite to create an Indonesian community capable of boosting the economy and improving the people`s welfare, he said.

Hopefully, the Indonesia ICT Outlook would serve as an input for the global ICT rating agency to rank Indonesia, he said.

"For the umpteenth time Indonesia has been put in the lowest rank. Where did they obtain the data to do that?" he asked.

But more importantly, the Indonesia ICT Outlook 2008 was part of the government`s efforts to boost economic growth which would in the end improve the people`s welfare and reduce the number of jobless people, he said.

RI offers 'high investment return'

The Jakarta Post, Jakarta

Indonesia ranked fourth in countries with the highest return on equity in 2007 and is likely to perform better this year in line with other investment possibilities in Asia, Deutsche Bank said Wednesday.

The return on equity investment in the country averaged 54.1 percent thanks to the economy that grew by 6.3 percent last year, Deutsche Bank chief investment officer Chew Soon Gek told reporters in Jakarta.

"Indonesia's position comes after the China free area in third place with 66.2 percent, India in second place with 73.1 percent and China's domestic market at 96.6 percent," she said, citing reports from Bloomberg.

The equity returns in Indonesia, she said, were apparently higher than its "strong" regional counterparts such as Singapore with 28.3 percent and Japan with minus 4.1 percent.

The Asia region as a whole, excluding Japan, gave an average return of 40.5 percent, far above Europe with 14.4 percent.

Chew also said Asia would not be affected by the U.S.-led subprime mortgage crisis as the region now included emerging economies that helped to stabilize the global supply-demand chain, particularly China.

"We are positive the Asia equity market will promise better returns because their economies are improving and not much affected by the U.S. economic subprime crisis," she said

For this year, she recommended investments in agribusiness commodity futures, particularly those in soybean, corn and wheat.

"The improvement of the economic condition in Asia helped to improve people's purchasing power. This led to the higher demands for foods with high proteins. Thus, an increase of prices," she said.

For conservative investors with high yield expectations, she recommended gold and hedge funds -- an instrument to protect investment capital from inflation, global economic turmoil and the weakening of the U.S. dollar.

"The gold prices will likely hike up to US$1,000 per troy ounce in this twelve-month (period). That is why it's still profitable like it was last year," she said.

Last year, gold saw 31.4 percent in returns and international current prices stand at around $923 per troy ounce.

Chew said she recommended global investors put 20 percent of their capital in hedge funds to make sure all of their investment didn't slump if stock markets went down.

"Hedge fund returns are attractive and remain stable due to its favorable diversification," she said. (ind)

'Opinions carelessly expressed can hurt business environment'

Debnath Guharoy, Consultant, The Jakarta Post

It was a volatile seven days in Indonesia last week. Influenced by the stock-market roller-coasters around the world, the Jakarta stock market had its own fall and recovery. In another realm, a Garuda pilot was sentenced to 20 years for Munir's murder but Gus Dur reflected the views of many when he said the real killers were still at large.

The unnecessary development of the week, however, was General Djoko Santoso's comment that Indonesia wasn't ready for democracy.

Ever since the measurement was introduced three years ago, the Roy Morgan Good Governance monitor has reflected the people's resounding vote for democracy.

Since that time, around 70 percent of the population have consistently said they believed "democracy is working". The military general is obviously among the 30 percent who disagreed.

Ten years ago, the wisdom of Indonesia's generals facilitated a smooth transition of power from dictatorship to democracy. Since then, the collective efforts of the world's fifth largest population have made it a beacon for the Islamic world. The current President is a true believer of democratic principles, a conviction he often reiterates.

The conflicting view of his chosen commander, expressed and explained in public, is more than confusing. It has raised eyebrows, not just in Indonesia.

Several institutions and many of their associates make strenuous efforts to promote Indonesia to prospective investors around the world. One of the new attractions is Indonesia's successful record as a ten-year-old democracy.

If the armed forces are seen as anything other than a defender of democracy today, they will send shock-waves across the business community, internationally.

Not because businesses care too much about democracy itself, but because they know there is no going back to authoritarian rule again. The people would not accept a breach, endlessly. The turmoil in Pakistan today is living testimony.

Public servants accustomed to years of total authority can find the behavioral adjustments required by a democracy, difficult.

Though the armed forces are not public servants in the same way bureaucrats or politicians are, they cannot ignore the fact that their own welfare is also dependent on the efforts of the people. Everybody has a role, and a responsibility.

As Indonesia continues to consolidate its position in the free world and the global economy, the pain is being felt most of all by the humble worker. That includes the small business owner.

The necessary removal of subsidies and the impact on the price of fuel created an even greater burden on the vast majority of breadwinners. While the 17 percent inflation that was triggered in September 2005 is currently hovering around 6 percent, the price of essentials is continuing to hurt almost all Indonesians.

Most people have always led a modest life in Indonesia, but the struggle in recent times has become even harder.

Based on the national average, the Main Income Earner was barely able to meet the needs of his/her household, even before September 2005. Though many more are doing more than one job nowadays and there is a noticeable increase in the average earnings of Main Income Earners, they are still unable to take care of all the needs of their families.

Other members of the family, or the extended family, are now compelled to contribute. That is because the average household expenditure has also crept up at a level higher than income.

The two graphs are beginning to merge again, after two years. The two trendlines met at the Rp 800,000 mark in September 2005, crossed over and grew apart while they climbed. They merged again for the first time in September 2007 at around Rp 970,000.

The next few quarters will offer a better understanding of the alleviation, if the gap doesn't adversely widen again.

These observations are based on Roy Morgan Single Source, the country's largest syndicated survey with over 27,000 Indonesian respondents each year. The results are updated every 90 days.

While it is easy for affluent homes to take luxuries off the weekly shopping list, it is difficult for everybody else to eat less tahu. The longer term easing of the proverbial national belt can only happen with more jobs and higher earnings.

Investments, from within the country and from without, are essential prerequisites. Political stability is an equally important backdrop for investment.

In a democracy, the people expect the armed forces to be in a permanent state of readiness, a last resort in quelling disturbances or attending to emergencies beyond the capacity of the police.

To say or do anything that contradicts that role cannot be good for the stability of Indonesia's current democracy, its businesses or jobs.

The writer can be contacted at Debnath.Guharoy@roymorgan.com

Soeharto's legacy leaves key lessons in agribusiness

Andi Haswidi, The Jakarta Post, Jakarta

Amid the threat of global increases in food prices, lessons from the earlier stage of Soeharto's rule over the economy have become more relevant than ever, business leaders said.

Indonesian Chamber of Commerce and Industry chairman, Mohammad Hidayat said after Soeharto saved the country from soaring inflation rates at the end of Sukarno's presidency, he kept the country's economic growth steady, at an average of seven percent annually until the mid 80s.

Hidayat said, "He was right to focus on the agriculture industry and it's supporting industries as the locomotive for the country's economic growth".

He said the world now faced a threat from food-driven global inflation due to the growing demand from the emergence of new economies such as China and India.

So the current government administration should look to Soeharto's successes, particularly in the agriculture sector, Hidayat said.

"There are things that must be viewed under the current perspective.

"Nevertheless, learning from his concepts and implementation on the agriculture sector has become more important than ever."

Despite his iron first, Soeharto was able to implement all policies needed to achieve the food self-sufficiency target, Hidayat said.

Soeharto had also provided the necessary supporting infrastructure including irrigation, the establishment of the State Logistics Agency as the rice price controller, and the effective distribution of subsidies.

"What was amazing was how he managed to encourage farmers to take a role in policy implementation through giving them intensive training, ensuring their competitiveness and improving their livelihood."

Hidayat said Soeharto's economic successes faded after he shifted focus from agriculture development to the high technology sector, including the establishment of the country's first airplane producer Nurtanio under B.J. Habibie.

"After this time, his policies began to show weaknesses," he said.

Indonesian Employers Association chairman Sofyan Wanandi also praised Soeharto's early focus on the agriculture sector and said there had been "solid team work in Soeharto's cabinet".

"He backed his ministries during the policy implementation process," Sofyan said.

"This gave them strong political support in carrying out their duties, unlike what happens now."

With a solid cabinet, Soeharto was able to secure most of the targets set for his five-year short-term development plans, particularly those in the agriculture sector and supporting industries, Sofyan said.

He said externally Soeharto was able to maintain Indonesia's economic credibility in the face of global lenders and donor countries.

"This credibility saw Indonesia able to borrow money at a low rate with a long tenor.

"Most of our loans were above the 30 year period, some even with 10 years grace period."

With manageable liability on loans, Soeharto enjoyed much ease in managing the state budget, giving subsidies for industries and to keep the economic fundamentals on the right track, Sofyan said.

As an owner of a manufacturing company, Sofyan said he had once enjoyed the oil subsidies during Soeharto's era -- something that most analysts later said was counter-productive due to over dependency.

"In the long run, oil subsidies were not healthy. Nevertheless, back then, it was crucial to support our industries, which were still at the infant stage," Sofyan said.

Indonesia has lost its best son: president

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono said Indonesia had lost its best son with the demise of former president Soeharto, and called on the people to honestly appreciate his services to the state and nation.

"We have just lost our best son, a stalwart freedom fighter, a true soldier and a highly respected statesman," the president said at the former strongman`s funeral at the Astana Giribangun graveyard, Karanganyar district, Central Java, on Monday.

He said Indonesian people who had a clear heart and mind had to acknowledge that the Late Soeharto had contributed much to the state and nation.

The president said the Indonesian people should also be aware of the fact that as a human being and as leader of a nation, Soeharto was not free from mistakes and shortcomings.

"Nobody in this world is perfect. On this important occasion, I would like to appeal to all Indonesian people to pray for Soeharto so that his soul will rest in peace and be accepted at Allah`s side in accordance with his good deeds, dedication, struggle and sacrifices," he said.

Yudhoyono said that during his life, Soeharto had built up long careers in the military, in politics and the overnment.

When he was till young during the 1945-1959 physical struggle for independence, Soeharto consistently fought the colonial forces in defense of the state and nation`s sovereignty.

History had also recorded a number of monumental struggles he had waged together with other freedom fighters such as the General Attack of March 1, 1949 in which colonial troops were driven out of Yogyakarta city.

"This important event added enormous weight to Indonesia`s diplomacy to uphold its sovereignty," he said.

After the revolutionary period, the Late Soeharto was in 1962 assigned as commander of the `Mandala" Military Command to liberate West Irian through military operations, the president said.

He said, when Indonesia was paralyzed by a communist coup attempt in 1965, Soeharto once again stepped forward to safeguard the state and nation`s integrity, and restored order and security.

Yudhoyono also said that since he was installed as Indonesian president on March 27, 1968, Soeharto had consistently implemented national development on the basis of a trilogy - stability, growth and equitable distribution of the fruits of development.

Soeharto died on Sunday of multi-organ failure at Pertamina Hospital in South Jakarta at the age of 86 after being medically treated for 24 days. He was admitted to the hospital with anemia and severe edema.

World leaders praise stability Soeharto gave Indonesia

Jakarta (ANTARA News) - World leaders on Sunday praised the late Indonesian president Soeharto for the stability and growth he brought to the region but said serious rights abuses marred his long rule.

The former general, 86 when he died on Sunday, ruled with an iron fist for 32 years, allowing rapid development and holding together the diverse nation.

But his time in power, which ended in 1998 after mass protests, also witnessed corruption, massacres and human rights abuses, particularly in separatist hot spots such as Papua and East Timor.

"Former President Soeharto was one of the longest-serving heads of government of the last century and an influential figure in Australia's region and beyond," Australian Prime Minister Kevin Rudd was quoted by Reutersa as saying in a statement.

"The former president was also a controversial figure in respect of human rights and East Timor and many have disagreed with his approach," said Rudd, who praised Soeharto for modernising Indonesia and his efforts to forge a united region.

"Singapore would like to convey our deepest sympathies to the Indonesian people for their profound loss," a spokesman from Singapore's Ministry of Foreign Affairs said via email.

Prime Minister Abdullah Ahmad Badawi of Malaysia, another Muslim nation in the region, said Soeharto's death was a great loss to both countries.

"We pray to Allah to bless Pak Harto's soul and to place him among the blessed," Abdullah told reporters, using the popular name for Soeharto.

Stability, suffering

Former Malaysian prime minister Mahathir Mohamad, 82, whose time in office overlapped Soeharto's for nearly two decades, told the Bernama state news agency: "I regarded him as a friend of Malaysia and as a personal friend.

"Even though Indonesia was not an ideal democracy during Soeharto's time, the fact remained that he brought stability to Indonesia. Of course, there is a price to be paid," Mahathir said, acknowledging that some people had suffered under Soeharto's administration.

Mahathir said his country was indebted to Soeharto for his role in ending the Indonesian "Confrontation" against Malaysia.

Sukarno, Indonesia's first president, had declared a "Confrontation" against Malaysia in 1964, which then included Singapore along with the Borneo states of Sabah and Sarawak.

Sukarno believed all of Borneo belonged to Indonesia and announced his intention to arm a million leftist peasants and workers to do battle with Malaysia.

Dutch Foreign Minister Maxime Verhagen said: "Under Soeharto's rule, Indonesia experienced a period of relative stability. The economy grew strongly, notably in the 1980s.

After he stepped down, Indonesia democratically chose a new leader. That confirms that Indonesia is a democratic country where the people have the last word."

The Netherlands is Indonesia's former colonial master.

Japanese Prime Minister Yasuo Fukuda offered condolences via a telegram. Japan invaded and briefly overthrew Dutch rule during World War Two and is now a key investor in the nation.

Bangladesh described Soeharto's death as "the end of an era" but also noted the inconsistencies in his rule.

"Soeharto leaves behind a mixed bag of legacies, while his supporters see him as the father of development, his opponents describe him as dictatorial," said Iftekhar Ahmed Chowdhury, adviser on foreign affairs to Bangladesh's interim government.

Soeharto`s remains to be flown to Solo Monday morning

Jakarta (ANTARA News) - The mortal remains of former president Soeharto will be flown to Solo, Central Java, by a Hercules VVIP plane on Monday morning for burial at the Astana Giri Bangun graveyard in Karanganyar about 30 km southeast of Solo.

The plane will take off from Halim Perdanakusuma Air Base in Jakarta at 8.30 a.m.

Commander of the Halim Perdanakusuma Air Base Air Commodore Boy Sharil Qomar said a ceremony to pay last respects to Soeharto will be held at Adi Sumarmo Airport in Solo.

"No ceremony will be held at Halim Perdanakusuma Air Base to pay last respects to Soeharto and such a ceremony has been held at his Cendana residence," he said.

The deceased will be received in a military ceremony upon arrival at Adi Sumarmo Airport, he said.

"After the ceremony at Adi Sumarmo Airport, the deceased will be carried to the Astana Giri Bangun graveyard under escort of presidential guards and Central Java regional military command personnel," he said.

He said President Susilo Bambang Yudhoyono and Vice President Jusuf Kalla will arrive in Solo earlier to receive the deceased in a ceremony.

"The President is scheduled to leave for Solo at 6.30 a.m and the Vice President at 6 a.m," he said.

President Yudhoyono will fly to Solo by a Garuda Indonesia Boeing 737-500.

Minister/State Secretary Hatta Rajasa said President Yudhoyono lead the state funeral of former president Soeharto at the Astana Giri Bangun graveyard.

Meanwhile, House of Representatives (DPR) Chairman Agung Laksono will see off the deceased at Soeharto`s residence on Jalan Cendana, Central Jakarta, Hatta said.

Under Law No.7/1978, the state is responsible for the funeral of a former president, he said.

Based on Government Regulation No. 2/1990, the president in his capacity as the head of state shall instruct all government and private agencies, Indonesian missions abroad and the general public to hoist the Red-and-White half mast from January 27 through February 2 to mourn the former Indonesian second president`s death.

"Seven days are declared as national mourning days," he said.

Soeharto died on Sunday of multiple organ failure at Pertamina Hospital after more than three weeks of intensive medical treatment at the hospital. He was 86.

Top state officials and foreign dignitaries are expected to attend the state funeral, including Malaysian Deputy Prime Minister Najib Tun Razak, former prime minister Mahathir Muhammad, former East Timor president Xanana Gusmao, Singaporean Prime Minister Lee Hsien Loong and his deputy S Jayakumar, and former Philippine president Fidel Ramos.

In addition, all foreign ambassadors to Indonesia are expected to attend the state funeral.

On Sunday evening, tens of ranking officials and former officials paid their last respects to Soeharto at his Cendana residence.

Yudhoyono expresses sympathy over Soeharto`s death

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono here Sunday expressed deep sympathy over the death of former Indonesian president Soeharto.

President Yudhoyono as individual and on hehalf the country, government and people prayed for Soeharto in the hope Allah (God) would rest his soul.

Former President Soeharto (86) died of multiple organ failure on Sunday (Jan 27) at 13:10 after he had been treated at the Pertamina Hospital in South Jakarta since January 4, 2008.

The Indonesian second president was admitted to the Pertamina Hospital on Friday, January 4, 2008, for suffering from anemia and severe edema.

National mourning days declared to respect late Soeharto

Jakarta (ANTARA News) - Cabinet Secretary Sudi Silalahi announced here Sunday the national mourning days (7 days) of silence to respect late former president Soeharto who died of multiple organ failure on Sunday (Jan 27) at 1:30 p.m. at Pertamina Hospital in South Jakarta.

Indonesians are to observe seven days of silence starting on Sunday (Januray 27) to respect the late former president.

Crisis center a new approach to graft cases

The Jakarta Post, Jakarta

Dressel-WBD Crisis Center head Janto Wijaya said the organization hoped to set an example of the effective resolution of graft cases by hiring international lawyers and forensic investigators to solve the Dressel-WBD fraud case.

"This is the first time this kind of thing has been done in Indonesia," Janto said on Friday at a press conference in Jakarta.

"It is quite possible that this method could be used (by the administration) to deal with major graft cases, like BLBI (Bank Indonesia Liquidity Loan)," he said.

The crisis center -- comprising some of 7,000 victims of a fraud allegedly plotted by Dressel Investment Limited and its agent PT. Wahana Bersama Globalindo (WBG) -- recently signed a contract with Singapore-based Rajah & Tann Transnational Legal Solutions and KPMG International, an auditing company specializing in forensic investigations of corruption, money laundering and fraud cases.

The center is currently attempting to trace some US$395 million collected from around 10,000 investors throughout Indonesia, and return the money to its rightful owners.

Efforts to trace the embezzled money and return it to its rightful owners have so far been unsuccessful.

Indeed, efforts to curb corruption and trace the whereabouts of embezzled funds have been sporadic and unsuccessful in general in Indonesia, corruption monitoring organizations say.

The Gadjah Mada University Center for Anti-Corruption Studies (Pukat), in Yogyakarta, announced in its year-end analysis that 2007 was "the gloomiest year" in the fight against corruption.

The analysis showed Indonesia's law enforcement was only able to bring perpetrators of small-scale corruption at a regional level to justice, while leaving out the "big fish" in the central government.

Berlin-based Transparency International ranked Indonesia 143rd of 179 countries in terms of corruption, down 13 positions from 2006, with a perception index of 2.3.

Representatives of TI Indonesia along with Indonesia Corruption Watch and the Partnership for Governance Reform are currently attending a three-day forum in Sanur, Bali.

They are aiming to formulate proposals for the upcoming Conference of State Parties to the United Nations Convention Against Corruption (UNCAC) next week in Nusa Dua, Bali.

The forum said Thursday that a lack of coordination was hampering efforts to curb corruption, and that civil society groups were divided in fighting graft. (lva)

Indonesia`s former president Soeharto dies

Jakarta (ANTARA News) - Former President Soeharto (86) died on Sunday (Jan 27) at 13:10 after he was treated about two weeks at the Pertamina Hospital in South Jakarta.

The Indonesian second president was admitted to the Pertamina Hospital last Friday on January 4, 2008, for suffering from anemia and severe edema.

Soeharto began his New Order government after then President Soekarno authorized him in March 1966 to overcome the chaotic situation in the aftermath of the aborted Communist coup in 1965.

A special session of the provisional People`s Consultative Assembly (MPRS) in March 1967 appointed Soeharto acting president and he was officially sworn in Indonesia`s second president in March 1968.

Soeharto who was born in Kemusuk village, Yogyakarta, on June 8, 1921, ruled the country for 32 years through six consecutive general elections.

Between 1960 and 1965, the national economy grew merely by an average of 2.1 percent annually. The inflation rate reached over 250 percent in 1961-1965 and even jumped to 650 percent in 1966.

After the stabilization and rehabilitation drive carried out by the New Order in 1966 and 1968, economic growth reached an average of six percent.

Thus, in 1969, Soeharto began to implement his ideas to lift up the country from poverty through five-year development plans called "Repelita".

At the start of Repelita I, Indonesia`s per capita income stood at US$70, and Indonesia was rated as one of the poorest countries in the world.

About three decades later, the country`s per capita income went up to US$1,155 and Indonesia was regarded a middle income country. The economy grew convincingly by an average of seven to eight percent a year over a period of 25 years.

Entering the 80s and the 90s, the inflation rate was maintained at an average of 10 percent, and in 1996 it reached 6.5 percent.

The result of Soeharto`s economic programs made Indonesia which had been crippled by poverty in the previous three decades, one of the newly emerging economies in South East Asia.

The number of poor people declined from 60 percent in 1967 to 40 percent in 1980 and 21 percent or 37 million people in 1987. With a population of about 200 million, Indonesia was able to further reduce the number of its poor to 11.3 percent or 22.5 million in 1996.

The success of his economic development earned him the title "Bapak Pembangunan" (Father of Development) which was conferred on him by the People`s Consultative Assembly (MPR) in 1983 in recognition of his success.

Through diversification in the agricultural sector, Soeharto also succeeded in turning Indonesia from a rice-importing to a rice-exporting nation.

In 1980, Soeharto declared Indonesia self-sufficient in rice and traveled to Rome in 1985 to receive a crowning award from the Food and Agricultural Organization of the United Nations.

The New Order era leader resigned from the presidential post on May 21, 1998.

Capital market authority to review stock trading regulations

The Jakarta Post, Jakarta

Tuesday's free fall of share prices in Jakarta, caused by global panic selling for fears of a possible U.S. recession, has triggered a review of regulations reportedly prone to speculation.

Fuad Rahmany, head of the Capital Market and Non-Bank Financial Institution Supervisory Agency (Bapepam-LK), said Friday his office would prepare stricter regulations on short-selling and margin trading to help keep bargain-hunters from speculating in the market.

"We're scrutinizing the violators by doing sampling research," Fuad said.

"We will consider the sanctions after discovering the violators. We will probably suspend (their) licenses."

The Jakarta Composite Index plunged 191.36 points, or 7.7 percent, to close Tuesday at 2,294.52, its biggest drop since October 2002 when bombs exploded on the resort island of Bali. The stock market, however, has since recovered.

Margin trading occurs when investors make share transactions worth more than the funds deposited, while short-selling occurs when investors sell shares that do not actually belong to them. They usually "borrow" the shares from a broker and sell them, but the shares must later be bought back (hopefully at a lower price) and returned to the broker.

Margin trading is allowed as long as the excess amount of transactions is no more than the total amount of the deposits.

The sanctions against violators would be aimed at improving the discipline of market players and forcing them to comply with regulations.

Fuad said Bapepam had been monitoring all transactions to find out whether there were any violations.

To prevent share prices on the capital market from steep drops in the future, he also suggested securities firms improve their risk management by, among other things, improving their knowledge of their customers.

"When share prices are declining, for example, securities companies should not accept orders that may cause the prices to go down even further," Fuad said.

Fuad said traders should do their business in line with government regulations to avoid a market crash.

"Although prices have rebounded from Tuesday's plunge, we still have to stay alert. Traders should not be too aggressive," he added.

On Wednesday, the Jakarta Composite Index rebounded 181.75 points, or 7.9 percent to close at 2,476.27, its biggest one-day gain since June 8, 1999, after the U.S. Federal Reserve unexpectedly cut interest rates to shore up rocky investor confidence. (nkn)

We don't need new regions for now: President

Desy Nurhayati, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono and the Regional Representatives Council (DPD) have agreed the establishment of new provinces and new regions should wait at least a few months while the government evaluates whether the new regions would be of benefit to the local people.

After a meeting with the DPD at the State Palace on Friday, the President said it was not necessary for the House of Representatives to endorse bills on the formation of new regions for the time being.

"We need to formulate a master plan, including determining the exact timeframe to allow the formation of new regions, also by synchronizing with the schedule of the 2009 general election," Yudhoyono said.

"It is feared the formation of new regions may disrupt the current regional election areas that will be determined ... after the new election law takes effect."

DPD chairman Ginanjar Kartasasmita said new provinces and regencies should not be established before the upcoming election was completed.

"It would be better if the House delays endorsing the bills on new regions until 2009. Why should the bills be endorsed this year when the formation of new regions could only take place after the election?" he said.

"But we have yet to reach an agreement with the President about the timeframe," he added.

The House unanimously proposed its initiative to create eight new provinces and 13 new regencies during a plenary meeting earlier this week. Most of the new regions would be located in Papua and Sulawesi.

If the House approves the bills, Indonesia will have 41 provinces and over 500 regencies and municipalities.

In the regional autonomy era, a total of 173 new regions have been established.

Yudhoyono said the government was currently conducting an evaluation on several newly established regions to assess whether their formation had successfully improved the welfare of local people and benefited regions as a whole.

"The most important thing is we need to consider the main objective in establishing new regions, which is to benefit local people. If the establishment only brings setbacks for the people, it would be useless," he said.

Ginanjar said the results of the ongoing evaluation of several newly formed regions had revealed that some regions had failed to improve their conditions.

He said the failure was proven by stagnant growth in terms of the Human Development Index, as well as other parameters.

He did not elaborate further.

"The formation of new regions should not be conducted merely to accommodate certain interests in the regions. There are various aspects to consider, especially concerning the people's welfare," he said.

"It seems the formation of new regions only considers technical aspects and certain local interests."

China sticks to open market despite side effects

Tony Hotland, The Jakarta Post, Jakarta

China will stay with its current open market policy to spur growth despite severe income and regional development disparities and environmental destruction, among with other problems, a senior Chinese official said Friday.

ENTER THE DRAGONS: Jusuf Wanandi (right), executive director of the Centre for Strategic and International Studies (CSIS) greets Chen Xiwen (second left), China's vice minister of financial economic affairs, and Chinese ambassador Lam Lijun (left). The Chinese officials attended a seminar on the Chinese economic development at CSIS on Friday. (JP/J. Adigun)

"The policy isn't wrong or failing but it is relative. It was put in place to respond to growth problems at a specific stage. The question now is how to boost economic growth and at the same time stress social equity, justice and allocate income evenly," Chen Xiwen, the vice minister of the Communist Party of China's Central Leading Group for Financial and Economic Affairs, told The Jakarta Post after a discussion organized by the Centre for Strategic and International Studies.

Chen acknowledged the adverse effects of practicing a full-blown open market policy that are emerging in the world's most populous nation, but said the policy had been proven to work by China's steadfast double-digit economic growth and single-digit inflation rate.

He said he disagreed with suggestions that the Communist nation was in practice capitalist, defining it instead as "socialism with Chinese features".

"In pursuing the future, we give equal roles to both local and overseas capital. While we urge investors for investment, we also stress the social responsibility of the capital as well as equity and justice," said Chen.

To address income disparity between urban and rural areas, he said his government was providing jobs in cities and towns for farmers, estimated to cover 73 percent of China's 1.32 billion people, to earn more.

The government, he added, was also maximizing support for the farming sector by abolishing taxes on agriculture and pushing up subsidies.

Infrastructure projects, said Chen, were being allocated to rural parts of China to entice investment the way it did when it first embraced the open market policy.

"We are planning to achieve full modernization by 2050 when such economic disparities will be remarkably narrowed," he said.

He said China's trade volume with Indonesia was expected to continue growing given that the US$20 billion target, which both nations had expected to hit in 2008, was surpassed last year.

Based on Chinese trade statistics, bilateral trade between China and Indonesia stood at around $25 billion in 2007.

Currently, China is Indonesia's second largest trading partner behind Japan with extensive imports of natural resources.

Chen dismissed the possible adverse impacts of the imminent recession in the U.S., the world's most powerful economy, on China because of the relatively little activity in the U.S. mortgage system -- one key factor behind the economic slowdown.

"But of course we are watching the situation because any slowdown in the U.S. economy means a slowdown in every other market," he said.

China is enjoying a large trade surplus with the U.S. which is to be definitely affected if the U.S. heavily cuts back on imports.

President Yudhoyono to open UNCAC Meeting in Bali

Denpasar (ANTARA News) - To be accompanied by a number of United Indonesia Cabinet ministers, President Susilo Bambang Yudhoyono is scheduled to open the United Nations Convention against Corruption (UNCAC) in the island resort of Bali on Monday.

"The president and his entourage will arrive at Ngurah Rai international airport here on Sunday afternoon," Bali provincial administration spokesman Anak Agung Gede Bagus Netra said here on Saturday.

He said Bali Governor Dewa Beratha and a number of local officials would welcome the head of state at Ngurah Rai airport.

"Persident Yudhoyono on Monday will open the UNCAC meeting at an international hotel in Nusa Dua before returning to Jakarta on the same day," Agung Netra said.

The five-day conference of UNCAC will be held at Bali International Convention Center/BICC, Westin Resorts in Nusa Dua from January 28 to February 1, 2008.

Agung Netra said the conference would be attended by around 1,300 delegates from 140 countries, 284 non-governmental organizations, 21 national and international organizations, and covered by about 1,300 local and foreign journalists.

The UN Convention against Corruption was adapted by UN General Assembly on October 31, 2003. It entered into force on December 14, 2005, following the 30th ratification by Ecuador on September 15 at the 2005 World Summit.

For Bali, to host such an international event, Agung Netra said preparation, especially in relation with security, has been ripe for the conference.

Meanwhile, Bali Police Chief Insp. Gen. Paulus Purwoko said here on Friday that some 1,500 police, hundreds of military personnel would be deployed to help maintain the security during the conference.

He said the United Nations would also send at least 10 security officers headed by Hassan Rahimmy of Germany who has been in Bali for an inspection of a drill by security groups.

Dressel-WBD Crisis Center: The new way to solve graft cases?

JAKARTA (Jakarta Post) : Dressel-WBD Crisis Center head Janto Wijaya said the organization hoped to set an example of the effective resolution of graft cases by hiring international lawyers and forensic investigators to solve the Dressel-WBD fraud case.

"This is the first time this kind of thing has been done in Indonesia," Janto said on Friday at a press conference in Jakarta.

"It is quite possible that this method could be used (by the administration) to deal with major graft cases, like BLBI (Bank Indonesia Liquidity Loan)," he said.

The crisis center -- comprising some of 7,000 victims of a fraud allegedly plotted by Dressel Investment Limited and its agent PT. Wahana Bersama Globalindo (WBG) -- recently signed a contract with Singapore-based Rajah & Tann Transnational Legal Solutions and KPMG International, an auditing company specializing in forensic investigations of corruption, money laundering and fraud cases.

The center is currently attempting to trace some US$395 million collected from around 10,000 investors throughout Indonesia, and return the money to its rightful owners.

Efforts to trace the embezzled money and return it to its rightful owners have so far been unsuccessful. (lva)

Indonesia enjoys US$1.1 billion surplus balance of payments

Denpasar, Bali (ANTARA News) - Indonesia`s balance of payments experienced a surplus of US$1.1 billion in the third quarter of 2007, or much higher than the previous prediction of US$0.4 billion, a central bank official said here on Friday.

"The current account transactions positively contributed US$2.9 billion to the surplus in the balance of payments," Economic Research and Monetary Policy Affairs Director of Bank Indonesia (BI), Made Sukada, told a seminar here.

Sukada said that the positive development was also attributed to the good national exports which significantly also boosted the economic performance.

He said that various economic turbulences and the weakening of economies in industrialized countries brought changes to the orientation of regional export market in Asia and ASEAN in particular.

Sukada said that Indonesia also diversified its export destinations to China and India. Previously, Indonesia`s exports were focused on destinations in advanced nations.

In the meantime, capital and financial transactions suffered a deficit of US$0.7 billion, but the figure was smaller than that in the third quarter of 2006 which stood at US$1.2 billion.

The deficit was caused by increasing inflow of foreign investment and portfolio capital.

According to Sukada, the country`s foreign exchange reserves at the end of 2007 amounted to US$56.9 billion or equal to 5.7 months of imports and the government`s external debt payments.

Finance minister rejects calls to revise state budget assumptions

The Jakarta Post, Jakarta

Despite the fear that a possible U.S. recession could hurt the country's economic growth, the government says it will maintain the 2008 state budget assumptions.

"Basically, a state budget is made to direct a country's economy. It is not possible to change the state budget (assumptions) every time the country is facing economic uncertainty," Finance Minister Sri Mulyani Indrawati said Thursday.

She was speaking in response to calls by some economists that the government change its budget assumptions on fears a possible U.S recession would severely impact the country's economy.

On Tuesday, stock markets across the globe tumbled because of the fear of a U.S. recession. The Jakarta Composite Index fell the most in five years, plunging by 7.7 percent to close at 2,294.52, while the rupiah fell to Rp 9,475 against the dollar.

However, global stock markets have since recovered, rising Wednesday following an intervention by the U.S. Federal Reserve, which cut its interest rate to 3.5 percent from 4.25 percent.

At the close of trading Thursday, the rupiah was trading at Rp 9,388 against the U.S. dollar, while the Jakarta Composite Index was at 2,516.70, rising 1.6 percent from the previous day, AFP reported.

Earlier on Thursday, economist Fadhil Hasan of the Institute for Development Economics and Finance said the government should change its state budget assumptions soon, instead of waiting until July.

Under current regulations, the government reviews its state budget assumptions at the end of the first semester, considering factors such as expenditure and revenue, the deficit, global oil prices, the central bank's interest rate, inflation rate and the rupiah exchange rate.

The review is to ensure that the country's economy is on track.

If deemed necessary, budget revisions will be made, with the approval of the House of Representatives.

Economist M. Ikhsan Modjo said the government should revise the budget by cutting the fuel subsidy and allocating the money to ensure the supply of staple foodstuffs, which have experienced price rices in recent weeks.

Responding to the suggestions, Sri Mulyani said the government would continue to maintain the targets set out under the state budget.

"This does not mean that the government responds slowly, it is just that we need to study every policy, especially those relating to costs," she said.

"What is important is that we have to make sure that the budget deficit is below the line."

The government has projected a budget deficit at 1.7 percent of gross domestic product, or Rp 74 trillion. (adt)

Batam investors gone, factory workers hanging

Fadli, The Jakarta Post, Batam

Batam authorities said they have been unable to locate four foreign investors who have left the island and locked-up their businesses in the industrial estate, leaving more than 2,000 workers in uncertainty.

Their employees have filed complaints with local authorities, including the manpower and transmigration ministry office and the municipal legislative council.

They have asked for help to mediate the problem, but so far no positive response has been given.

PT Livatech Electronic and PT Polestar Plastic are the two foreign companies owned by Malaysian and Singaporean investors.

The companies locked out some 1,700 workers for unspecified reasons last month and this week.

The employees have several times staged massive rallies on the industrial estate to demand severance and service payments but they have to-date not met with management.

Chief of the Batam Industrial Development Authority Mustofa Wijaya said he had not received any reports on the two companies' lock-out.

Chief of the local manpower and transmigration office Rudy Syakirti said he had enhanced coordination efforts with the Batam authority, the local immigration office and the local police.

But he said the whereabouts of the two companies' owners, who are Malaysian and Singaporean citizens, have yet to be detected.

"We have never been asked to mediate the industrial disputes between the two companies and their workers," he said.

He said the two companies were locked out possibly because of the decreasing foreign orders, the hike in the monthly minimum wage and the high-cost economy.

In 2002, two other companies PT Singacom and PT Singamip which employed more than 480 workers were locked out and its Singaporean investors escaped obligations to pay severance payments and suspended monthly wages to their workers.

The recent exit of many companies from Batam and Bintan has affected the investment program despite the recent implementation of the free trade zone covering Bintan, Batam and Galang islands.

Rudy said employees had a right to receive severance and service payments if they were dismissed.

He said he would bring the lock-out cases to court to settle the labor problems.

"If the companies are declaring bankruptcy, their assets could be sold to pay the severance and service payments," he said.

Edwin Haryono, chairman of the local chapter of the Confederation of All-Indonesian Workers Union (KSPSI), called on the government and local authorities to be more selective in giving investment permits to foreign investors to prevent such cases.

"We don't know until when the workers will have to wait for word about their fate," Edwin said.

"We have a harsh labor law but it is found to be toothless."

He said Livatec was owned by Singapore's Goh Singhing, alias Jackson Goh, who was believed to have escaped before his factory stopped operation last month.

Japan's Panasonic bails out of Batam

The Jakarta Post

Japanese foreign investment venture PT Panasonic Battery Batam has pulled out of the country's free trade zone, Batam, shutting down all operations as of January 9, an official said.

Batam Industrial Development Authority (BIDA) public relations head Dwi Djoko Wiwoho said the company's management reported the closure Tuesday.

"The company claimed it wasn't getting enough orders and suffering from a lack of a competitive edge in the international market. The closure was purely a matter of their internal concerns."

Djoko said the company had sorted out its obligation to the workers as demanded by the law prior to closing down its factory -- which is pictured above as seen through the window of a car.

"There was no problem on the labor issue." Dwi said the departure of the battery factory was regrettable, but in terms its production, the type of nickel battery that the company made was outdated, as the market was now dominated by lithium models.

"As the authority I think we have been doing a good job. As to why they do not invest in lithium battery production, we do not know," he said.

Continuing a long-established decline, two manufacturing operations have exited Batam already this year, with Singapore venture PT Polestar Plastic Batam saying goodbye earlier this month.

Observations made the same day indicated there were no activities at three of the remaining 85 factories within the special industrial district, aside from the function of security guards posted outside. -- Fadli

Two legislators urge agriculture minister to resign

Jakarta (ANTARA News) - A House of Representatives (DPR) member representing the Nation`s Awakening Party (PBB) here Tuesday urged the Agriculture Minister to resign from his post because he had failed to create food resilience.

The PKB legislator, Ario Wijarnarko, was the second politician to make the demand after Tjahjo Kumolo, chairman of the Indonesian Democracy Party-Struggle (PDIP) faction in the House.

According to the news section of the House`s Secretariat General, Ario asked the minister to seriously tackle the current soybean scarcity.

He said he was dissappointed about the agriculure ministry because it had failed to protect domestic farmers and was instead supporting the idea of importing the commodity."This is strange, he is suporting the cartels, the importers," he said.

He said if the minister did not make serious efforts to achieve food resilience and was continuing to favor imports, he would take the initiative to launch an interpellation against the minister.

Separately, Tjahjo Kumolo had not only demanded the resignation of the agriculture minister but also of the trade minister.

"The two ministers should resign or be discharged by the president because after more than three years in office what they have managed to achieve is only total failure. If they are not dismissed, then it means the president himself has failed to lead his cabinet and improve its performance which should have favored the small people in accordance with his promises," Tjahjo said.

On the ground, the small people, farmers and fishermen in particular, had been made to bear endless suffering, Tjahjo said.

"The scarcity of kerosene, gas and now the soaring price of soybean, are these realities not proof of the present government`s failure to care for the small people?" he said.

Media reports help uncover corruption cases: KPK chief

The Jakarta Post, Jakarta

Media reports on alleged corruption cases can be a valid basis for law enforcers to start investigations, the head of Indonesia's anti-graft body says.

Antasari Azhar, chairman of the Corruption Eradication Commission (KPK), said media reports have contributed to the commission's probes of corruption allegations.

"One of our information sources for eradicating corruption is media reports," he said Tuesday, adding that other information sources included state intelligence, the Supreme Audit Agency (BPK) and public complaints.

"Therefore, I urge journalists not to be afraid of reporting corruption allegations because media coverage on corruption in one area could deter similar practices in other areas," he said.

Antasari cautioned, however, that the media should be aware of the proper legal terminology in order to avoid being sued for libel.

"In fact, not every bureaucrat is happy with critics," he said. He added that sometimes media reports resulted in journalists facing criminal charges after plaintiffs filed charges under the Criminal Code instead of the Press Law.

Antasari was speaking during a ceremony to install the Jakarta board of the Association of Indonesian Journalists for Reform (PWI-Reformasi). Also attending the ceremony was Iwan Piliang, the national coordinator of PWI-Reformasi.

Iwan said Indonesian journalists still faced the risk of being charged under the Criminal Code even if they were careful in reporting on corruption allegations.

He cited the example of Time magazine, which was ordered by the Supreme Court to pay US$105.2 million to former president Soeharto for defamation.

"In this case, we support Time because it acted in accordance with journalistic standards," he said.

Iwan expressed concern about the performance of the domestic media in covering corruption issues. "We are still weak in verification," he said, adding that he hoped his organization could contribute to improving the standard of journalism in the country.

Antasari said the media should follow all legal formalities to prevent journalists from facing criminal charges for libel.

"Reports should not consist of slander. Presumption of innocence must be the priority," he said.

He added that the media should be careful in referring to anybody's legal status in their reports. "The media should understand when to refer to somebody as a suspect, a convict or only as an information source."

Antasari acknowledged that he would not speak to the press when he was in the early stages of an investigation.

"In the early processes of an investigation, all people are still information sources. Mentioning their names to the media will only ruin their image publicly," he said, adding that he would speak to media only once the investigation was finished and he was ready to submit the results to prosecutors.

He said he was currently doing a media road show to build better synergy between the graft body and journalists. (alf)

Study warns RI is behind in development

The Jakarta Post, Jakarta

A recent study indicates that poverty alleviation programs will fall short of the United Nations Millennium Development Goals because they don't make capital and production means available to the poor.

"The government has been concentrating on providing the poor with cash, cheap rice and free schooling. This will help them survive on a daily basis, but it doesn't touch the real issues of poverty," Sugeng Bahagijo, a researcher with the Indonesian Movement for Anti-Impoverishment of People (GAPRI), told a forum on Tuesday.

GAPRI's Participatory Poverty Assessment is based on interviews with representatives from poor communities in 17 municipalities and regencies in Southeast Sulawesi, South Sulawesi, East Nusa Tenggara and Madura island in East Java.

According to Central Statistics Agency data, the national poverty rate stood at 16.68 percent, or 37.17 million people.

As such it lags behind the target of 11.6 percent or 26 million people set out in the government's mid-term development plan.

The plan was formulated in line with the MDGs, including the goal of reducing poverty to half of 1990 levels by 2015.

Sugeng said the government should provide assets, capital and the means of production to the poor because these were essential to enable self-sufficiency. Cash, cheap rice and free schooling, on the other hand, only addressed symptoms of poverty, he said.

"The government should ask why the poor can't afford to send their children to school or even to feed themselves. The roots of poverty lie in fact that the poor do not have access to capital or the means to develop small-scale businesses."

He added that the poor were trapped in a vicious circle of borrowing money from loan sharks because they couldn't provide collateral for bank loans.

"It's a vicious circle because the poor spend the money they earn to pay back their loans."

He said the government would not necessarily have to introduce new financing institutions to help the poor. Instead, he said, existing non-formal finance bodies could be modified. He gave as examples community-based banking groups and the arisan, a regular gathering at which every participant contributes a certain amount of money.

Sugeng also said the government should provide business management training to poor people because without it borrowed money would be harder to properly manage.

"Group control is also important to make sure the poor don't misuse the loans for other things," he said.

"We also need to protect the poor and help them brace against external changes which can affect their lives, such as the appropriation of their land or property."

Dwi Astuti, another GAPRI researcher, said the government should have seriously considered the voice of the poor in formulating poverty alleviation programs.

"The government tends to ignore the role of the poor in policy and this is dangerous because these policies can later turn out to miss the target," she said in the study.

Present at an event marking the completion of the study were former military chief Gen. (ret.) Wiranto, former House of Representatives speaker Akbar Tandjung and Democrat Party legislator Angelina Sondakh. (lln)