Govt urged to audit Freeport Indonesia

Antara News, Mon, October 31 2011

 He said not only Freeport workers but also local community members especially the six tribes living in the Timika region had experienced injustices and not enjoyed any welfare.

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Jakarta (ANTARA News) - A non-governmental organization (NGO) here has urged the government to conduct an audit on PT Freeport Indonesia`s finances in connection with the company`s failure to care for the welfare of its employees and local community members.

"I recommend an immediate audit of PT Freeport Indonesia by a presidential team or a team from the House of Representatives (DPR) as this problem is very serious in view of the number of employees that reaches 22,000 excluding their family members that reach tens of thousands. My proposal is to set up a special committee to ensure the serious handling of the problem," the coordinator of the Commission for Missing Persons and Victims of Violence (Kontras), Hariz Azhar, said here on Monday.

He said not only Freeport workers but also local community members especially the six tribes living in the Timika region had experienced injustices and not enjoyed any welfare.

Therefore, he said an "extraordinary" team needed to be set up to evaluate and find out why PT Freeport Indonesia had failed to improve its workers welfare and to meet its social corporate responsibility obligations.

He said the team was also expected to be able to determine why security authorities had failed to unveil the many shooting incidents that had happened in the region and caused insecurity among the local people as well as Freeport workers.

The team should also be able to ascertain whether Freeport had paid been paying its taxes properly considering that convicted tax man Gayus Tambunan had mentioned the company`s name in his case.

"That must be uncovered and the investigation must be continued," he said.

The Freeport case has happened many times raising a question if the government really wants to settle it, he said.

"Seeing the sheer number of its workers and their family members this is a national problem, a patriotism problem. So if the government wants to prove its nationalism, support the workers," he said.

He said if it is PT Freeport that the government supports it will be the government that is anti-nationalist," he said.

Kontras along with TLBHI and the Cooperation Forum of Papua Non-Governmental Organizations had earlier condemned PT Freeport for having used the police as a shield against its own workers.

It also criticized the company for refusing to sign a new collective labor agreement with the workers and also ridiculed the police for giving an ultimatum to the workers to stop their strike.

He said the strike was called because the workers wished to improve their welfare by changing provisions in the collective labor agreement including raising their wages, YLBHI deputy chairman Alvon Kurnia Palma said.

Based on Law Number 21 of 2000 labor unions have the right to conclude collective labor agreements with employers and Article 27 states labor unions are obliged to protect and defend their members from human rights violations and fight in their interest and the welfare of their members and families.

Alvon said the profits made by the company had been very huge while only a small part of it had been given to the workers. In view of that it was logical that the workers had asked for a raise.

The Mimika police chief, Deny Edward Siregar, had ordered the Freeport workers to stop their strike at Check Point I at Mile 28, Mile 27 and Gorong-gorong in Timika and open access so far blocked by the workers.

Editor: Heru

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Freeport Gave Police Tens of Millions for 'Meal Money'

Jakarta Globe, Farouk Arnaz,  October 28, 2011

Armed police officers patrol the streets of Jayapura, Papua on Monday.
 The National Police Chief Gen. Timur Pradopo admits on Friday that his
 officers in the restive region receive fund, which he dubs as 'meal money,' from
PT Freeport Indonesia. (Antara Photo)  

      

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The National Police Chief said on Friday that tens of million of dollars funneled to his institution by mining giant Freeport Indonesia were disbursed as “meal money” and hardship duty funds for officers stationed at the Grasberg mine in Timika, Papua.

Gen. Timur Pradopo denied that the payments — totalling at least $74 million between 1995 and 2010 — were used to pay for security around the strike-hit mine, where eight people have been killed this month in car ambushes and police clashes

“All operations, security operations projects, are funded by the state. If the people whom we give protection to give meal money directly to the our officers, I think it is accountable,” Timur said.

His denial was in response to a statement by Freeport, published on its Web site, that the mining company gave $64 million in support costs for “government provided security” between 1995 and 2004. The company says it has continued to supply funds to the government since then, paying out $10 million in 2009 alone.

Timur said that the money was given by the National Police to officers directly in the field, and that the payments had never been discussed with any other government body.

He insisted, however, that the funds had been carefully tracked internally.

“The money was audited, just ask the [National Police’s] Operational Assistant [about the amount of the money],” Timur said, adding that there would be no sanctions for officers who had received the hardship duty funds from Freeport.

“Once again, it is an additional fund because the situation is difficult there. It is just an operational fund, just like any other operations,” he said.

Asked whether he was concerned if the “meal money” would affect the ability of his officers to remain objective during the frequent disputes between locals and the mine, Timur only replied: “Once again, it happens in the field and the fund is given directly to the officers to fulfill the needs of a hard life.”

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Indonesia Approves New Regulator to Oversee Banks

Jakarta Globe, Aditya Suharmoko, October 27, 2011

Bank Indonesia Governor Darmin Nasution. Indonesia’s House of
Representatives on Thursday approved a long-delayed bill creating
a new regulator to oversee a growing financial industry in Southeast
Asia’s largest economy, part of global efforts to ward off future bank
collapses. (Antara Photo) 

       

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Indonesia’s House of Representatives on Thursday approved a long-delayed bill creating a new regulator to oversee a growing financial industry in Southeast Asia’s largest economy, part of global efforts to ward off future bank collapses.

The new regulator, to be known as the OJK, will take over the supervision of banks, brokerages and insurance firms from the central bank and capital market watchdog Bapepam-LK starting from 2013.

OJK, or Otoritas Jasa Keuangan, translates into Financial Services Authority and is modeled after UK’s FSA.

The move to create the OJK came about to avoid a repeat of the 1997/98 financial crisis which resulted in the collapse of many Indonesian banks.

Analysts say Bank Indonesia has improved banking supervision in recent years, and some were skeptical whether the OJK could do a better job at a time of global economic uncertainty caused by the festering euro zone and US debt crisis. 

“The banking sector is confused on why the OJK should be founded because Bank Indonesia’s supervision is good ... Our banks have the strongest financial indicators in Southeast Asia due to Bank Indonesia’s role,” said Juniman, an economist at Bank Internasional Indonesia (BII) in Jakarta. “This is a political decision.”

In the 2008 credit crisis, Indonesia’s banks were well capitalized and mostly escaped unscathed, though the government bailed out one small lender over fraud, creating a political storm that later brought down the then-finance minister.

Indonesia is currently the only emerging market in Asia with almost no ownership limits on banks. It is one of Asia’s most fragmented banking markets, and foreign lenders control about a quarter of the country’s outstanding loans.

The bill creating the OJK was meant to be approved last year, but lawmakers had been wrangling over the composition of its nine-member board of commissioners.

They agreed last week that one board seat will be allocated for both the central bank and the finance ministry, while seven other seats require parliamentary approval, according to the draft of the bill.

The commissioners, who will have a five-year term, should not hold other posts in financial institutions or political parties to ensure independency, according to a draft of the bill seen by Reuters.

“The OJK is outside the government, which means the OJK is not under the government’s authority,” finance minister Agus Martowardojo told the House in a speech on Thursday.

The bill stipulates the creation of a forum to manage a crisis, whose members would include the finance minister, the central bank governor and OJK’s head of commissioners.

Bank Indonesia has been reluctant to relinquish its supervisory role over commercial banks on fears this will reduce its effectiveness in policy making, especially at times of crisis.

“What’s important is for the supervision of systemically important banks -- if possible we won’t need to ask for permission from the OJK to do this,” said central bank spokesman Difi A. Johansyah.  

The OJK will also be responsible for grant banking licenses, currently authorized by the central bank, according to the draft. Indonesia’s central bank has temporarily barred takeovers in the banking sector, citing upcoming ownership rules, which sowed uncertainty about the regulatory environment and has already scuttled some cross-border deals.

Reuters

Indonesia on Right Track for Growth, ‘Dr. Doom’ Says

Jakarta Globe, Shirley Christie, October 25, 2011

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Nouriel Roubini, the American economist labeled “Dr. Doom” for his tendency to make dire predictions, on Monday took a sunnier stance toward Indonesia, saying its economy was moving on the right track.

“Indonesia is among the developing nations whose economies are growing at the fastest pace in the world,” said Roubini, the chairman of Roubini Global Economics.

He added that the key to strong growth was domestic consumption, especially in light of the present world economic crisis.

“Indonesia and India, which have domestic consumption accounting for 50 percent to 60 percent of their gross domestic product, have a better chance to have more balanced and long-term growth,’’ Roubini said in a seminar organized by Indonesia’s Investment Coordinating Board (BKPM).

For Indonesia, domestic consumption accounts for about 58 percent of its GDP, while exports account for 29 percent and investment makes up 15 percent.

Roubini, a professor of economics at the Stern School of Business at New York University, said he preferred to be seen as a realist rather than a doom-monger. He accurately predicted the collapse of the US housing market and warned of the 2008 global recession.

He said that growth in investments, exports and domestic consumption needed to be proportionate for balanced growth.

During the 2008 crisis, Indonesia’s economy was one of the few in emerging nations that managed to stay in the black. Indonesia’s economy, which is forecast to expand by 6.5 percent this year, grew by 4.6 percent in 2008, while Singapore, Malaysia and Thailand contracted.

But Roubini also said that despite the growth of consumption in Asia, including in China and India, the level was still far from that in the United States.

Although there was now a shift in global macroeconomic perspectives, with the United States, Europe and Japan no longer the main engine of growth, their influence would remain strong.

The economies of Asia, Latin America, Central America and the Middle East are increasingly playing a larger role as the engine of global growth, too. A multipolar world with competing centers of power and economic growth will emerge, requiring greater cooperation and coordination, Roubini said.

He also stressed that if the knife-edge economic situation in Europe descended into full-blown crisis, the impact on the global economy would be more severe than many predict.

He said that the key was not seeking to avoid a crisis through financial engineering, but rather sustainable economic growth. Such growth will maintain social and political stability and help to repay debt.

He has said that there is a 50 percent chance that the United States, Britain and the euro zone will fall into another recession in the next 12 months.

Leaders of the Group of 20 nations (G-20), which includes Indonesia, will meet in France next month to discuss Europe’s problems, which have shaken global equity markets and clouded growth prospects.

Experts Snub IMF Call to Up BI Rate

Jakarta Globe, Dion Bisara, October 23, 2011

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• BI Likely Will Keep Key Interest Rate Steady: Analysts 10:04pm Oct 9, 2011

Economists say Bank Indonesia should not bow to the International Monetary Fund’s suggestion late last week that the central bank should raise its key interest rate to counter accelerating inflation next year.

Indonesian economists contacted by the Jakarta Globe on Sunday said inflation was less of a concern than ensuring growth remained on track.

The IMF said on Friday that BI should be ready to tighten monetary policy because the government’s plan to reduce energy subsidies could push inflation above the central bank’s target — 4 percent to 6 percent this year —and as credit growth accelerates.

“BI will need to contain inflationary expectations and limit second-round effects from energy price increases,” the IMF said in its annual review of Indonesia’s economy. The IMF projected Indonesian inflation at around 6.5 percent in 2012, given the government’s plan to cut electricity subsidies.

The central bank, betting on weaker prices for commodities, estimates inflation at below 5 percent next year, which prompted it to cut the benchmark rate by 25 basis points to 6.5 percent on Oct. 11. Inflation in September slowed to 4.61 percent from 4.79 percent in August.

Despite concerns of a pick-up in inflation, Indonesia’s economy is solid, the IMF said, and a slump in the global economy would be needed to shake up the country’s growth momentum. Indonesia’s government forecasts economic growth to accelerate to 6.7 percent in 2012 from 6.5 percent this year. In 2010 the economy expanded 6.2 percent.

“Therefore, there is little risk that monetary policy tightening will cause an unintended economic downturn,” the fund said.

However, economists highlighted that IMF has been incorrect so many times about projected growth in the largest economy in Southeast Asia.

“We have our own considerations and priorities, which I think BI has captured well in its latest rate-cut policy,” said Purbaya Yudhi Sadewa of the Danareksa Research Institute.

“The IMF had advised the same thing back in 2008, which we didn’t heed. It turn out we did alright, so I don’t believe we have to listen this time,” he said.

In December 2008, the central bank had reduced the rate, despite IMF advice to raise it.

Inflation has been historically high for Indonesia, yet the nation’s economy manages to grow, at least in recent years.

In 2008, when the global financial crisis was starting to affect Indonesia, the country’s inflation rate was above 11 percent, but the economy grew at a 6.1 percent pace.

BI cut its rate in December 2008 and the nation’s economy expanded by 4.5 percent in 2009. Indonesia was among just a handful countries to grow that year, Purbaya said,

He said next year’s inflation would be tame, at between 5 percent and 5.5 percent, as the global economic slowdown would result in weak prices for commodities such as crude oil.

Ahmad Erani Yustika, an economist at the Institute for Development of Economics and Finance, feared the IMF was acting on behalf of developed countries and big investment funds.

“I think they just want high-yield instruments to park their money next year,” Erani said.

“However, I think there’s room for BI to lower its interest rate further.”

Occupy Jakarta Starts Off Slowly

Jakarta Globe, Anita Rachman, October 19, 2011

A small group of protesters gathered in front of the Indonesia Stock
 Exchange (IDX) on Wednesday to take part in 'Occupy Jakarta,' following
similar economic protests around the world. (JG Photo)

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It’s official. Today marked the kick off of the Indonesian version of Occupy Wall Street: Occupy Jakarta.

A small number of people gathered in front of the Indonesia Stock Exchange’s building on Wednesday morning, putting up a banner calling on people to wake up and realize that the end of capitalism is near.

One of the initiators, Bob Sulaiman Effendi, said the movement is aimed at asking the middle class to care about today’s economic conditions, including the severe crisis that hit the West.

“Capitalism has failed,” Bob, who is a director of an international oil company based in Jakarta, said. “If we look at the world, many countries are now thinking of what new system they can apply. But why are we not? While in fact our founding fathers had already set it — it is Pancasila.”

The opening of Occupy Jakarta was marked by Bob reading Pancasila, the state ideology.

Bob said China and Russia are now doing fine because they do not fully rely on capitalism, but socialism-capitalism. According to Bob, Pancasila’s core concept is socialism-capitalism, because it puts the public’s interests above all.

Sari Putri, another Occupy Jakarta activist and a nutrition expert from an international school in Jakarta, said the movement is a continuous one and will not stop today.

“We need to tell people who are not yet aware of today’s economic problems,” she said. “The middle class will suffer the most once the economic crisis hits Indonesia.”

She said people better realize that the crisis will eventually hit Indonesia.

“We have been blinded by capitalism, with the system that so easily gives you loans. How many cars in Jakarta do you think are all paid? Many of them are under loans.”

No more than 20 people have gathered so far. But Sari said although they are still small, they won’t stop fighting and raising awareness.

Pitono Adhi, a writer, told the Jakarta Globe he came to the kick off because he belongs to the 99% majority, not the 1% wealthy.

"Occupy Wall Street was also supported by a small number of people, but then it grew bigger. It doesn't matter that we are still small," he said.

He said he found out about the event from Facebook and Twitter.

More people are expected to join, including the director of the Jakarta Legal Aid Foundation and some public lawyers.

Indonesia Vows Corruption Crackdown in Cabinet Reshuffle

Jakarta Globe, October 19, 2011

Indonesian President Susilo Bambang Yudhoyono vowed to root out
 corruption as he swore new ministers into his cabinet on Wednesday, in a
bid to boost investor confidence and dismal approval ratings. (Antara Photo) 

     

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Indonesian President Susilo Bambang Yudhoyono vowed to root out corruption as he swore new ministers into his cabinet on Wednesday, in a bid to boost investor confidence and dismal approval ratings.

The long-awaited cabinet reshuffle included leadership changes in 12 of the country’s 34 ministries, focussed on improving economic management in a nation hampered by poor infrastructure and endemic graft.

“Whatever happens, corruption eradication should be our main agenda. It’s not fair if we work day and night to improve the welfare of the people if state money is stolen by a few irresponsible people,” Yudhoyono said.

He added that the reshuffle was aimed at ensuring Indonesia’s resilience to global economic turmoil in the United States and Europe, and pledged to balance the national budget by 2014, his final year as president.

The president’s key appointment was the new trade minister Gita Wirjawan, a respected former investment banker likely to support bureaucratic reform in the sprawling Asian archipelago of some 240 million people.

But Indonesian analysts said the new appointments announced Tuesday were unlikely to improve economic mismanagement.

“By and large the reshuffle is not going to make a huge impact on investment. The government has only three more years in its term, and having new ministers coming in is not necessarily going to be efficient,” Standard Chartered economist Fauzi Ichsan said.

Indonesia is a member of the G20 group of leading economies and has one of the fastest growing economies in the world, with growth expected to top six percent this year.

Yet it is befuddled by red tape, mired in corruption and its ports, roads and airports are hopelessly inadequate for the pace of growth it hopes to sustain in coming years, according to investors and analysts.

The government last year announced plans to spend 140 billion dollars on infrastructure until 2014, more than half of which would have to come from the private sector.

Prominent political analyst Arbi Sanit blasted Yudhoyono’s cabinet shake-up as cosmetic.

“He’s a coward. He’s too afraid of offending political parties by sacking under-performing ministers,” he told AFP.

“The new ministers are all low-profile people. There are better people out there but he chose them because they are able to compromise to serve his interests,” Sanit added.

The president has been battling to improve his plunging approval rating which hit a seven-year low this month to 42.6 percent, down from 60.7 percent this time last year, according to the Indonesia Survey Institute.

Yudhoyono’s critics say he has lost control of the parliament, which has failed to create effective policy this term, and that he too often kowtows to coalition parties with conflicting agendas.

In 2009, the president won a landslide election on the back of a fervent corruption-fighting first term, which saw some senior officials and wealthy businesspeople put behind bars.

But Yudhoyono’s critics say the president has gone soft on corruption in his second term, stymied by scandals implicating party members, including the vice president.

Agence France-Presse

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SBY appoints 5 new ministers in ongoing reshuffle

Nani Afrida, The Jakarta Post, Jakarta, Mon, 10/17/2011

One down: President Susilo Bambang Yudhoyono (left), accompanied by
 State Secretary Sudi Silalahi, briefs reporters at the Presidential Office
 on Monday in regards to the resignation of Public Housing Minister Suharso
 Monoarfa. Suharso tendered his resignation on Monday amid the President's
plan to reshuffle Cabinet. Antara/Widodo S. Jusuf

President Susilo Bambang Yudhoyono on Monday summoned six figures who he will likely appoint to key government positions in the ongoing Cabinet reshuffle, the results of which are due to be officially announced on Tuesday evening.

The six were:

1. Gita Wirjawan, to become trade minister replacing Mari Elka Pangestu.

Gita is currently the Investment Coordinating Board (BKPM) chief.

2. Amir Syamsuddin, to become the law and human rights minister, replacing Patrialis Akbar.

Amir is currently the secretary of the Democratic Party board of patrons.

3. Dahlan Iskan, to become state-owned enterprises minister, replacing Mustafa Abubakar.

Dahlan currently serves as the president director of state electricity company PT PLN.

4. Azwar Abubakar, to become the state administrative reforms minister, replacing EE Mangindaan.

Azwar is a lawmaker at the House of Representatives' Commission I overseeing information and foreign affairs, and is the former Aceh deputy governor.

5. Djan Faridz, to become the new public housing minister, replacing Suharso Monoarfa who has resigned.

Djan is a Regional Representatives Council member representing Jakarta, and is currently running for Jakarta governor.

6. Jakarta Military commander Gen. Marciano Norman, to become the head of  State Intelegence Agency (BIN), replacing Gen. Sutanto.

The candidates will have to undergo medical examinations on Tuesday before being officially named new members of the Cabinet.

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Bakrie & Brothers Races to Quiet Fears of a Default

Jakarta Globe, Faisal Maliki Baskoro & Francezka Nangoy, October 10, 2011

Since Bakrie & Brothers secured $1.34 billion in loans from Credit Suisse
in March, its share price has fallen 23 percent. (Reuters Photo/Yusuf Ahmad)

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Bakrie & Brothers, the holding company of the Bakrie Group, has denied speculation that the company is unable to pay its debts and is on the verge of default.

Eddy Soeparno, Bakrie & Brothers’ finance director, said on Monday that the company was not on the verge of or in default and was considering repaying or restructuring its $597 million loan facility arranged by Credit Suisse “in due course.”

“BNBR is not in default and we are evaluating options to settle our debt,” he said.

Eddy refused to comment on whether Bakrie & Brothers was going to sell its ownership in Bumi Plc to Glencore International, the world’s largest publicly traded commodities supplier, as a way to help settle its debt, which is due in March 2012.

Citing an unnamed source close to the matter, Bisnis Indonesia reported on Monday that Glencore was considering purchasing a minority stake in Bumi Plc through the purchase of $2.01 billion in convertible bonds to be issued by Bumi Plc.

That would serve as the payment for the purchase of a 75.1 percent stake in Bumi Resources Minerals, a subsidiary of coal miner Bumi Resources, the newspaper said.

Dileep Srivastava, Bumi Resources’ investor relations director, said all of the reports were just speculation.

“Bumi Plc is a holding company that owns three of the world’s best thermal coal assets in Indonesia. All are presently outperforming operationally. Therefore, what the family does with their holdings is a non-issue,” he said in a statement.

He said the key issue was the declining economies in the Europe and the United States and had nothing to do with the Bakries or Bumi Resources.

“Because of these assets, international investors in Bumi Plc should be able to weather the market storm better than the others,” Dileep said.

Investor reaction to the reports was relatively muted. Bakrie & Brothers fell 1.9 percent to Rp 51 while Bumi Resources lost 0.5 percent to Rp 1,920 on the Indonesia Stock Exchange on Monday. In London trading, Bumi Plc gained 2.4 percent to 720 pence.

The Bakrie family has been using its assets as collateral for loans, and it has formed alliances in order to help repay some of its debts.

Bakrie & Brothers put its 47 percent ownership in London-based Bumi Plc, previously known as Vallar, as collateral for $1.34 billion in syndicated loans arranged by Credit Suisse on March 2. The $597 million loan in dispute is the first tranche of the $1.34 billion.

Since Bakrie & Brothers signed the loan agreement with Credit Suisse, its shares have fallen 23 percent.

Bakrie Group and the Rothschild banking dynasty made alliances in November 2010 for Vallar to receive a 25 percent ownership in Bumi Resources and a 75 percent stake in Berau Coal Energy, another coal miner. In exchange, Bakrie Group owns 54.6 percent in the combined Bumi Plc.

The Financial Times cited unidentified sources close to the matter on Oct. 6 as saying that repayment on the loan, due in March 2012, had been brought forward because the value of Bumi Plc was no longer enough to cover it.

Amid the speculation surrounding the companies and a possible default, two brokerages maintained their buy recommendation on Bakrie & Brothers and Bumi Resources.

“It was not known whether the aim of the sale of Bumi Plc was to repay the debt,” Samuel Sekuritas Indonesia, a local brokerage, said in its daily stock market notes on Monday.

It gave a “speculative buy” recommendation on Bakrie & Brothers after reviewing a statement from the company to the Indonesia Stock Exchange that it was not going into default for its loans.

Kim Eng Securities maintained a buy recommendation on Bumi Resources with a target price of Rp 3,100, reflecting an 11.8 price-to-earning ratio for 2011.

Additional reporting by Muhamad Al Azhari

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Indonesia President 'Declares War' on the Loss of State Funds

Jakarta Globe, Arientha Primanita & Rizky Amelia, October 10, 2011

President Susilo Bambang Yudhoyono, third right, and Ibu Ani, third left,
attending the wedding of the son of politician Amien Rais, far right, in Jakarta
 over the weekend. In the wake of a damning report from the Supreme
 Audit Agency that says the state is losing trillions of rupiah in unnecessary
 expenses, Yudhoyono has vowed to put a stop to excessive spending at ministries,
regional governments and state-owned enterprises. (Antara Photo)

  

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In the wake of a damning report from the Supreme Audit Agency that says the state is losing trillions of rupiah in unnecessary expenses, President Susilo Bambang Yudhoyono has vowed to put a stop to excessive spending at ministries, regional governments and state-owned enterprises.

“The party is over,” presidential advisor Daniel Sparingga said. “SBY is declaring war on the loss of state funds.”

In a recent meeting, the president instructed his staff to formulate a plan for more effective and efficient spending, Daniel said.

“It won’t be easy, but the president has made his decision. It is a daunting challenge, but people’s expectations are far too great to ignore,” he said. “All institutions will be asked to make the changes immediately.”

Last week, the audit agency, also known as the BPK, told a hearing committee at the House of Representatives that it had discovered potential state losses of Rp 26.68 trillion ($3 billion) in audits for the first half of the year.

During its biannual audit program, the agency found 11,430 cases of irregularities, including 3,463 in which the BPK deemed regulations had been violated, which amounted to potential losses of Rp 7.71 trillion.

The remainder of the cases did not violate any regulation but were deemed to be examples of ineffective or inefficient spending. They amounted to Rp 18.96 trillion.

Analysts have also criticized the government for spending too much on the operational costs of public buildings and individual salaries, preventing the funds from being invested into improving infrastructure.

House Speaker Marzuki Alie called for a bigger role for the State Development Finance Comptroller (BPKP), which he said was acting as the government’s financial consultant.

“The role of the BPKP must be returned to its original function as the government’s internal financial supervisor,” said Marzuki, a member of the Democratic Party.

“The revitalization of the BPKP is vital for the prevention of corruption. If [corruption] prevention increases, then the need for enforcement will diminish.”

Corruption Eradication Commission (KPK) deputy chairman Bibit Samad Riyanto said inspectorate generals at various ministries must be given wider independence and more authority to conduct more effective supervision into state spending.

The president, however, supports increased external oversight from civil society groups, Sparingga said.

“We openly invite people to take an active role in influencing all government institutions and officials from the central to regional levels. It is time for change,” he said.

“The president will ensure that all public officials’ power and authority will only be used for the good of the people.”

The BPK examined the financial records of 208 agencies fromlast semester — 61 in the central government and 92 from regional administrations.

The BPK generated a total of 191,757 recommendations for agencies under scrutiny.

“There will be monitoring to see that the recommendations are carried out and the state losses compensated, as well as further scrutiny,” BPK chairman Hadi Purnomo said.

Since 2003, the BPK has found 305 cases of possible criminal violations, leading to state losses amounting to Rp 33.63 trillion.

Some 166 cases have since been taken over by the National Police, the Attorney General’s Office and the KPK.

RIM cancels investment in RI due to misleading info: Govt

The JakartaPost, Jakarta | Thu, 10/06/2011

BlackBerry producer Research in Motion (RIM) has canceled its investment plan in Indonesia due to misleading information that says it will have to pay tax in both Indonesia and Canada.

“That’s wrong. There is cooperation between Indonesia and Canada so that Canadian firms will not be taxed twice,” Edy Putra Irawady, deputy coordinating economic minister for trade and industry, said as quoted by tempointeraktif.com on Thursday.

“I asked RIM, why didn’t you ask the Indonesian government about this? That was your fatal mistake.”

RIM has reportedly decided to invest in Malaysia.

Dollars stuffed in fruit box put Indonesia president on the spot

Reuters, by Karima Anjani, JAKARTA, Wed Oct 5, 2011

JAKARTA (Reuters)- The multimillion-dollar project in Indonesia's remote West Papua province had noble ambitions: resettle migrant workers so they can forge a better life in one of the world's most populous countries.

But after thousands of dollars in bribes were found stuffed in a fruit box at the Manpower Ministry, the project has become a symbol of President Susilo Bambang Yudhoyono's struggle to deliver the "shock therapy" he promised in 2004 to rid Southeast Asia's biggest economy of endemic graft.

It now threatens to bring down members of his cabinet and could damage his own Democrat Party.

With a population of 238 million and swelling investment, Indonesia is set to become one of the world's biggest economies.

Marble-walled shopping malls are sprouting from traffic-choked streets, selling Louis Vuitton and Prada handbags. Growth, projected at about 6.6 percent this year, is among the best in the G20 club of leading economies.

Yet corruption remains pervasive, sowing doubt over whether Yudhoyono can make good on other reforms aimed at sustaining Indonesia as one of the world's hottest developing markets.

"When foreign investors see unethical behavior and corruption, they appreciate it when there's an immediate and clear response," said Shubham Chaudhuri, the World Bank's senior economist in Jakarta.

In the capital's gritty streets, graft is a popular subject -- and a growing source of resentment.

"If this country wants to move forward, we need an iron-fist leader who is brave enough to stand up against corruption," said Zulkifli, a 34-year-old office worker who like many Indonesians uses one name.

In the West Papua case, the manpower and finance ministries and a powerful parliamentary budget committee are being investigated over alleged kickbacks from PT Alam Jaya Papua, which won a tender for the project. Investigators are examining whether a total 500 billion rupiah ($56 million) in projects is tainted.

The company has acknowledged giving money to Manpower Ministry officials.

TAKING A TOLL

The scandals are taking their toll. Concerns over his handling of corruption is blamed in part for the 40 point tumble to 51 percent in Yudhoyono's approval rating since his re-election to a second and final five-year term in 2009, an Indo Barometer poll showed last month.

Executives surveyed in the World Economic Forum's Global Competitiveness Report 2011-12 said corruption remained "the most problematic factor for doing business" in Indonesia despite a half-decade campaign to stamp it out.

Graft allegations against Indonesian politicians, including those in Yudhoyono's Democrat Party, have sidelined many of his legislative priorities.

As scandals grab headlines and lead nightly news broadcasts, speculation is growing of an imminent cabinet reshuffle in Yudhoyono's coalition before he finishes the second year of his current term on October 20.

"AMBIGUOUS" PARLIAMENT

The West Papua scandal bears striking similarities to other cases tackled by a six-year-old Corruption Eradication Commission. Known as KPK, it spares few, targeting judges, millionaires and members of parliament, even a Yudhoyono inlaw.

An account manager at an Indonesian company, who declined to be identified because of the sensitivity of the subject, told Reuters he came to a parliamentary office a few weeks ago to deliver a bribe hidden in a box of KFC, a practice that he described as relatively common.

"I came to parliament to meet a member of a budget team and bring 35 million rupiah ($3,900) in two boxes of KFC in order to get him to approve one of my clients," he said.

In 2010 alone, the corruption commission investigated more than 170 cases involving legislators and officials who siphoned an estimated 2.5 trillion rupiah ($280 million) from state revenue. About 190 billion rupiah ($21 million) was returned, according to KPK data.

STRONG OPPOSITION

But its successes have drawn unrelenting opposition, and it is unclear how far it can go.

For the past two weeks, leaders in parliament have sharply criticized the commission for what they see as an attempt to meddle in the assembly's work. Last week, lawmakers refused to meet commission investigators, holding up deliberations over the 2012 budget unless they backed off. The lawmakers finally relented after a week-long impasse.

The House of Representatives law commission this week accused the KPK of politicizing graft cases, neglecting those related to Yudhoyono's party, including dragging its heels in investigating Democrat Party Treasurer Muhammad Nazaruddin who is suspected of accepting bribes.

"Parliament is being ambiguous," said Abdullah Rahman, head of the political corruption division at Indonesia Corruption Watch, the country's leading anti-graft organization.

"On the one hand they say they want to be part of the battle, but when the KPK requests information, they immediately show strong resistance," he said.

In the West Papua case, commission officials seized 1.5 billion rupiah ($168,600) in cash found crammed inside a fruit box at the Manpower Ministry. It had been delivered to two ministry officials by a businesswoman whose company won the tender. Investigators describe the money as a "bonus" provided by the company in return for securing the project.

In recent days, Finance Minister Agus Martowardojo has been called in as a witness in the case and speculation is growing Manpower Minister Muhaimin Iskandar, leader of the National Awakening Party, will lose his job in a cabinet reshuffle, although he has denied involvement.

"I never gave an order (to accept bribes)," said Muhaimin.

The finance minister is adamant he is clean. "If some say the finance minister got fees from this, I'd like to say...I am not even dreaming about it," he told reporters on Wednesday.

"MEDIA SENSATION"

The case is another test of the commission's graft-busting credentials. Two of its leaders have been accused of abuse of power. They were later vindicated when wiretaps played in court proved they were framed by police and corrupt businessmen.

But many Indonesians felt Yudhoyono was slow to defend the top graft-busters.

A survey by Indonesia Survey Circle this month showed four out of five of 1,200 people surveyed did not trust politicians due to corruption. In the past six years, trust in Indonesia's elected leaders has dropped to 23.4 percent from 44.2 percent.

Graft watchdog Transparency International's corruption perception index showed no improvement for Indonesia last year, ranking it 110th overall, the same as Gabon, Bolivia, Kosovo and Solomon Islands. That compares to Southeast Asian peers Thailand in 78th place, Malaysia at 56th and Singapore at joint first.

Despite slower-than-expected reforms, Indonesia is "moving in the right direction as the business sector continues to be active and the country has shown good growth," said Andri Manuwoto, a senior analyst at CastleAsia, a consulting firm guiding outside investors with advice about political risk.

"It's not going to happen overnight," Manuwoto said. "It may take generations, but KPK has done impressive work so far."

(Additional reporting by Rieka Rahadiana, Adriana Nina Kusuma and Janeman Latul; Editing by Jason Szep and Jonathan Thatcher)