North Sumatra Home to Country’s Most Corrupt Officials: Watchdog

Jakarta Globe, Nivell Rayda, February 23, 2011          

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The country’s leading antigraft watchdog has released new figures on corruption in the regions for 2010, and the news is not good for North Sumatra and East Kalimantan.

Medan, the capital of North Sumatra. The province is the
most corrupt  in Indonesia, according to figures compiled by
Indonesia Corruption Watch. (Antara Photo/File) 

Agus Sunaryanto, head of the investigation unit at Indonesia Corruption Watch, said on Wednesday that based on the number of graft cases involving government officials, North Sumatra was the most corrupt province in the country.

The organization recorded 64 corruption scandals involving North Sumatra government officials at the provincial and district levels last year.

“North Sumatra’s provincial administration has to pay serious attention to corruption practices [involving government officials] plaguing the province,” Agus said. “The government must establish greater transparency and impose strict monitoring in regard to the use of its coffers.”

He added that losses incurred from graft in the province amounted to Rp 288 billion ($32.5 million) over the year.

One of the more prominent examples of corruption in the province was the case of North Sumatra Governor Syamsul Arifin, who was arrested in October in connection with alleged graft committed while he was head of Lankat district.

And in 2008, the Corruption Eradication Commission (KPK) arrested Abdillah, the mayor of the provincial capital, Medan, and his deputy, Ramli Lubis, for two cases of graft.

North Sumatra administration spokesman Edi Sofyan denied the government had failed to carry out reform in the province.

“Just the opposite, actually,” Edi said. “The high number of cases [in North Sumatra] shows that we are serious about tackling corruption.”

Data recorded by the ICW showed there were 448 corruption scandals involving local officials nationwide last year, with 176 cases recorded during the first six months.

“In the first half of 2010, state losses caused by corruption nationwide amounted to Rp 2.1 trillion,” Agus said.

“In the second half of the year, losses amounted to Rp 1.5 trillion. The trend is worrying. These figures suggest that law enforcers tend to touch on only petty corruption cases.”

According to ICW records, East Kalimantan suffered the greatest losses of the nation’s provinces to corruption in the second half of 2010 at Rp 601 billion. This figure came from just two cases that were handled by local law-enforcement agencies during the period.

East Kalimantan was followed by Jakarta, which recorded Rp 200 billion in state losses from six separate corruption scandals.

Gamawan Fauzi, the minister of home affairs, has painted a bleak picture of the country’s regional heads, saying too many have been implicated in graft scandals.

“Among the 155 regional heads who have been named graft suspects, at least 17 of them are [current and former] governors,” Gamawan said during a meeting with Committee I of the Regional Representatives Council (DPD).

In November, Transparency International Indonesia named Cirebon in West Java and Pekanbaru in Riau as the most corrupt cities in Indonesia. The results were based on the organization’s most comprehensive survey yet, which polled 9,237 members of the business community in 50 cities.

The two cities tied in last year’s Corruption Perception Index with a score of just 3.61, with 10 being the cleanest.

“Reports from local and national media on both cities are filled with cases of corruption,” researcher Frenky Simanjuntak said. “This has affected the perception of businesses operating there.”

Medan scored 4.65 in the Transparency International survey, ranking 22 out of 50 cities.

Indonesia Loses Out to Turkey in Conference BRIC Poll

Jakarta Globe, February 22, 2011

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If participants at an investors’ conference held by Royal Bank of Scotland Plc had there way, it would be Turkey and not Indonesia to be the next country to join the BRIC group of emerging-markets economies, which includes Brazil, Russia, India and China.

In a vote by 100 conference participants, 35 percent of respondents favored Turkey, with 23 percent and 16 percent favoring Indonesian and Mexico respectively, according to an e-mailed summary of the results from RBS on Tuesday.

The respondents who favored Turkey cited “its strong growth and its geostrategic importance at the crossroads of Europe and Asia,” RBS said.

Turkey was also voted the country with the strongest credit-growth potential, with 41 percent of the vote, before Argentina, which received a 20 percent backing, RBS said.

Participants, however, voiced “concerns about Turkey’s large current account deficit and its vulnerability to high oil prices,” RBS said.

Some investors said in a debate that Turkey “could replace Russia, which was referred to as a ‘one trick pony’ commodity play by some participants,” according to RBS.

Bloomberg

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Indonesia expects G20 meeting to press food speculators

Antara News, Wed, February 16 2011

Jakarta (ANTARA News) - Finance Minister Agus Martowardojo has expressed hope the upcoming G-20 meeting in Paris will be able to put pressure on financial and non-financial companies that have so far been speculating on the global food market.

The Chicago Board of Trade is the nerve
center for global futures contracts. "The Cost
of Greed – Speculators in the Global Food
Crisis"

"We want the G-20 forum to give such pressure so there will no longer be financial and non-financial companies speculating on the global food market," he said here on Wednesday.

Martowardojo is scheduled to attend the meeting of G-20 finance ministers and central bank governors in Paris on February 18-19.

So far, many speculative activities such as futures transactions had led to a surge in global demand for food commodities and caused their prices to increase steadily, he said.

"The activities include futures trading. Normally, financial and non-financial companies can be engaged in forward buy and forward sale. They can also enter futures transactions without underlying transactions. These can cause high demand and raise prices," he said.

In addition, the meeting would hopefully agree on the formation of special funds to increase the productivity of food crops as part of efforts to prevent food instability from worsening further, he said.

"We want the G20 forum to agree on special funds to develop food productivity. On the other hand, we want to send a short-term signal to financial and non-financial companies that have so far been speculating on the food market not to worsen the current food instability caused by the climate change," he said.

Editor: Suryanto

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Freeport urged to end scrap iron monopoly

The Jakarta Post, Jakarta | Mon, 02/21/2011

The Association of Indonesian Waste Management Companies (APLI) has urged PT Freeport Indonesia to end a monopoly in its scrap iron business in Papua.

Over the past few years, all of the company’s scrap iron has been managed by CV Putra Otomona from the Kamoro tribe, APLI Papua chairman Andreas Anggaibak said in Timika.

This could spark jealousy among those who had been unable to obtain its scrap iron, Andreas said Monday as quoted by kompas.com.

He urged Freeport to allow other companies to get its scrap iron, especially those run by the people of the Amungme and Kamoro tribes, the traditional owners of land where Freeport operates.

According to the head of the Kamaro Tribe Traditional Council (Lemasko), Laurents Paterpauw, the council had not received any money from CV Putra Otomona in relation to its scrap iron sales.

Many parties wanted to obtain scrap iron from PT Freeport because it is a lucrative business, he said.

Maligned at Home, Bakrie Group Is the Face of Indonesia Inc. Around the World

Jakarta Globe, February 18, 2011

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At a lecture by a European leader in Singapore several years ago, a Western member of the audience expressed almost devout anguish over China’s economic clout in world affairs given its problems with democracy and human rights at home.

The statesman asked the young man what he did for a living. The man replied that he worked in a company. The statesman asked: “And is your company run on biblical principles?” As laughter rippled through the audience, the statesman looked at the hapless questioner intently and then softened his voice.

He had no doubt that the man ran his family on biblical principles, but business was another matter. Just as the two could be kept separate, it was perfectly legitimate to have concerns over China’s political and social policies, but those concerns did not justify existential alarm over its role in world affairs.

The company formed by the union of Bumi Resources and

Berau Coal Energy is looking to acquire coal mines around

the world and become a global giant, investor Nathaniel

Rothschild, left, said on Friday, Dec 17, 2010.

I was not present at the lecture, but heard this anecdote from a friend. I was reminded about it during the predictable aftermath of the Bakrie Group joining forces with Rothschild in November to consolidate its influence in Indonesia’s coal sector. Here was an Indonesian company that had struck a world-class deal to advance the interests of its country, the world’s largest exporter of thermal coal.

Yet some responses to the deal were hardly joyous. “Coal is so popular that it makes for odd bedfellows,” The Economist declared with wry disdain.

Since company patriarch Aburizal Bakrie “is not universally loved in his homeland,” Nat Rothschild “should prepare for a bumpy mix of politics and business,” it added. Where Rothschild is concerned, that piece of advice is gratuitous, if not presumptuous: The banking dynasty did not become a dynasty without understanding the business of politics.

But it is the Bakrie Group which is the real target of the barb. Many commentators, both in Indonesia and abroad, have developed a professional interest in worrying about its continued ascendancy given the controversies that surround it.

Holding the company up to the highest principles, they wonder righteously whether its prominence might not be dangerous for Indonesia — when the truth is that no company that operates profitably on earth would be willing to have its bottom line judged by such exacting principles.

Admittedly, the Bakrie Group is no stranger to controversy, ranging from tax-evasion charges, which it denies, to its contested responsibility for a disastrous mud volcano in 2006.

However, what gives its detractors their heavy ammunition is that Aburizal is also chairman of Golkar, the ruling party during President Suharto’s regime that is now a member of President Susilo Bambang Yudhoyono’s governing coalition.

Aburizal has been accused of using his political connections to advance his business interests, in a coded reference to the persisting culture of the Suharto years, when the company flourished because of the state patronage with which the Indonesian strongman buttressed his rule.

The critics have a point, but the point is neither here nor there.

The Bakries thrived under the patronage system, but they were not the only corporate entity to do so. No business of any note succeeded in that system or era unless it played by the rules. What is important is that the group continued to flourish after Suharto, overcoming market setbacks in the vastly different environment of the maturing democracy that Indonesia is today.

The Bakrie Group is a national enterprise. From its origins in Sumatra in 1942, when Achmad Bakrie — Aburizal’s father — set up a little trading house that dealt in coffee, rubber and pepper, the group’s trajectory has run parallel to Indonesia’s own evolution from a poor agricultural country to a regional economic power.

The conglomerate today combines its expertise in agriculture with extensive interests in real estate, trade, shipping, banking, insurance, media, manufacturing, construction and mining.

The fact that it is a pribumi — indigenously owned — company symbolizes the reach of native business skills that, having crawled out of colonial rule, have taken the highway to modernization and now globalization.

It is because of this success that the Bakries have become a national enterprise, and not the other way around. Thus, when Indonesia has come to the group’s rescue, it has done no more than what other states have done for their own national enterprises, including in advanced democracies.

American protection for Chevron in the face of the Chinese takeover plan is a case in point. Some national enterprises are simply too big to fail.

That is the business of politics. To pretend otherwise is to live in an imaginary world.

As the group looks ahead, it is becoming a bridge for Indonesia to a globalizing world.

China, which leads the pack in chasing the future, acknowledged the Bakries’ worth when it signed a $1.9 billion loan agreement with Bumi Resources using its sovereign wealth fund, the China Investment Corporation, in October 2009.

In Indonesia, the Bakries represent the cutting edge of business. Products developed and manufactured by Bakrie & Brothers, the holding firm for the group, are an essential component of infrastructure and telecommunications systems in Australia, Brunei, Canada, China, Dubai, England, Egypt, France, Germany, Iran, Italy, Japan, Kuwait, Malaysia, Mexico, the Netherlands, the Philippines, Singapore, the United States, Uzbekistan and Vietnam.

The group is to Indonesia what companies like Tata and Reliance are to India: the interface between a locally grown company that is a national asset, and the globalizing business environment in which nations are obliged to operate.

Such companies think locally but act globally, with calm, confidence and elan. In a rising Asia, they are signposts to the future.

Derwin Pereira heads Pereira International, a Singapore-based consulting firm. He can be reached at derwin.pereira@pereiraintl.com. This article first appeared in the Business Times.

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Chief justice: All provinces will have corruption courts by year end

The Jakarta Post, Jakarta | Thu, 02/17/2011

Corruption courts will be established in the capital cities of all 33 Indonesian provinces by the end of this year, Chief justice Harifin A Tumpa says.

Six judges specializing in corruption will be assigned to each province; two will work at the high court and four in its district court, Tumpa said in Bandalampung on Wednesday evening, as quoted by Antara.

The corruption courts would hold trial hearings and have their secretariats at existing district courts, he said.

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Police Must Reveal Fat Bank Accounts Data: Commission

Jakarta Globe, Ismira Lutfia | February 09, 2011

The Information Commission ruled on Tuesday that data on the 17 suspiciously large bank accounts of senior police officers could be deemed of public interest and hence must be made available to the public.

However, police said immediately after the ruling that they would appeal to the State Administrative Court.

The ruling was made in a non-litigation adjudication hearing filed last September by Indonesia Corruption Watch against the National Police after the latter refused to release details of their investigation into the accounts.

“The Information Commission has decided to grant the plaintiff’s motion in full and rules that the information containing data and figures of the 17 bank accounts belonging to police officers is open information,” Ahmad Alamsyah Saragih, the commission chairman, said at the hearing at the Constitutional Court building in Jakarta.

Abdul Rahman Ma’mun, a commission member, said that if police refuse to hand over the information after the verdict becomes legally binding — which happens if neither of the parties involved files an appeal within 14 days of the ruling — ICW could file a criminal suit that could see the police officials in charge of submitting the information face up to a year in prison.

Brig. Gen. Iza Fadri, head of the National Police’s legal bureau, said that while the police respected the Information Commission’s decision, they disagreed with its argument that disclosing information such as the bank account holders’ names and the exact amount in the accounts would not violate the privacy of the account holders.

“This is not a final verdict,” he said. “The interpretation [of the 2008 Freedom of Information Law] can vary, so we’ll have it verified again.”

The police had argued in the hearing that disclosing any information about the accounts would disrupt their probe into the case.

However, the court said it could not support that line of reasoning because the police had already conducted an internal affairs investigation into the account holders and cleared them of any wrongdoing in connection with the accounts.

Tama Satrya Langkun, the ICW researcher who helped bring the issue to the fore, said the antigraft watchdog would wait and see if police would really file an appeal. He said that even if they did not, the subsequent legal moves to get them to disclose the data could be complicated if they refused to comply.

“We certainly can’t file a criminal complaint against the National Police with the police, so we’d have to file an appeal instead,” Tama said.

In June, the weekly magazine Tempo — based on suspicious transactions noted by the Financial Transaction Reports and Analysis Center (PPATK) — ran an in-depth report about the accounts as its cover story.

The Tempo office was firebombed by attackers shortly after the publication of the fat bank account issue, just days after Tama was assaulted by a group of unknown assailants.

No arrests have been made in either of these cases.

The National Police have since said irregularities were only found in three of the 17 bank accounts and that it had taken action against those implicated.

The three accounts that were found to be “improper” belonged to officers already convicted or on trial in other criminal cases.

In December, National Police Chief Gen. Timur Pradopo announced the case of the suspicious bank accounts was closed and would not be reopened.

Economy grows as expected: minister

Antara News, Tue, February 08 2011

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Jakarta (ANTARA News) - Finance Minister Agus Martowardojo said the country`s economic growth at 6.1 percent in 2010 pleased the government as it had exceeded the 5.8 percent assumed in the state budget.

"We hail the outcome. Indeed we had hoped it would surpass six percent and it did, and even reached 6.1 percent. This means that the outcome was higher then the targeted 5.8 percent," the minister said here on Monday.

He said the growth in 2010 was good and had met expectations thanks to growth in domestic consumption, investment and exports.

"Household consumption growth was high and we also see other factors such as investment and exports. And exports got more support because the prices of several other commodities increased. It seems that this factor played a role in the fourth quarter of 2010," the minister said.

He said there were several matters that needed to be improved by the government, particularly in the consumption sector such as accelerating the absorption of the budget so that the growth target for 2011 which was set at 6.4 percent could be achieved.

Editor: B Kunto Wibisono

Indonesia's economy grows at fastest rate since 2004

BBC News, 7 February 2011 

Indonesia's economy grew at its fastest annual rate for six years in 2010, driven by consumer spending and investment.

Car sales, seen as an indicator of consumer
demand, were up in 2010

Gross domestic product was 6.1% higher in 2010 than in the previous year, the statistical office said.

Growth was given an unexpected boost in the final three months of the year, figures showed.

Analysts said the speed of growth may lift inflation at a time when high food prices were already hurting consumers.

Last week the central bank raised interest rates for the first time in two years in an attempt to slow price growth.

Indonesia's main cost of borrowing rose a quarter of a percentage point to 6.75%.

Higher rates?

Analysts said that the better-than-expected GDP figures may increase calls for interest rates to rise further in coming months, not least because they also expect economic growth to continue.

Helping drive growth will be steady consumer spending and companies investing in their businesses to fund expansion.

"Growth in first quarter this year will be positive amid soaring inflation as many companies will spend capital for investment purposes," said Eric Sugandi, an economist at Standard Chartered Bank.

RI posts US$ 22b trade surplus in 2010

The Jakarta Post, Jakarta | Tue, 02/01/2011

Indonesia posted a trade surplus of US$22.12 billion (nearly Rp 200 trillion) last year with imports growing faster than exports, the latest data from the Central Statistics Agency (BPS) shows.

According to data published Tuesday, exports grew 35.4 percent throughout 2010, to $157.73 billion, while imports grew faster at 40 percent in the same period to $135.61 billion.

“It’s not a problem that our imports grew faster than exports. What matters is that we could maintain the trade surplus, because it will go to our foreign exchange reserves,” BPS chairman Rusman Heriawan said recently.

Japan, China and the United States remained Indonesia’s biggest export destinations, while most of the import products that were shipped into Indonesia came from China, Japan and Singapore.

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