Determined to keep abreast of affairs throughout the country, President Susilo Bambang Yudhoyon has installed a 'situation room' at the Presidential Palace. (Antara Photo/Widodo S. Jusuf)

“ … Here is another one. A change in what Human nature will allow for government. "Careful, Kryon, don't talk about politics. You'll get in trouble." I won't get in trouble. I'm going to tell you to watch for leadership that cares about you. "You mean politics is going to change?" It already has. It's beginning. Watch for it. You're going to see a total phase-out of old energy dictatorships eventually. The potential is that you're going to see that before 2013.

They're going to fall over, you know, because the energy of the population will not sustain an old energy leader ..."
"Update on Current Events" – Jul 23, 2011 (Kryon channelled by Lee Carroll) - (Subjects: The Humanization of God, Gaia, Shift of Human Consciousness, 2012, Benevolent Design, Financial Institutes (Recession, System to Change ...), Water Cycle (Heat up, Mini Ice Ace, Oceans, Fish, Earthquakes ..), Nuclear Power Revealed, Geothermal Power, Hydro Power, Drinking Water from Seawater, No need for Oil as Much, Middle East in Peace, Persia/Iran Uprising, Muhammad, Israel, DNA, Two Dictators to fall soon, Africa, China, (Old) Souls, Species to go, Whales to Humans, Global Unity,..... etc.)
(Subjects: Who/What is Kryon ?, Egypt Uprising, Iran/Persia Uprising, Peace in Middle East without Israel actively involved, Muhammad, "Conceptual" Youth Revolution, "Conceptual" Managed Business, Internet, Social Media, News Media, Google, Bankers, Global Unity,..... etc.)
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Sunday, January 29, 2012

Dutch pension fund ABP sues Goldman Sachs

RNW, 28 January 2012

(Photo:ANP)
Dutch pension fund ABP is suing US investment bank Goldman Sachs for knowingly selling it junk mortgages and providing misleading information.

The ABP pension fund for government and education employees is the largest pension fund in the Netherlands and among the three largest in the world. Prior to the 2008 US mortgage and bank crisis, ABP invested large sums in bonds linked to US mortgages.

ABP accuses Goldman Sachs of misinforming the pension fund as to the credit worthiness of the bonds, which proved to be far riskier than the bank had suggested. This eventually caused ABP to suffer significant losses. ABP will not disclose the exact amount of the losses it suffered, a spokesperson announced on Saturday.


Friday, January 27, 2012

Indonesia's Culture of Corruption Exposed on Film

Jakarta Globe, Lisa Siregar, January 27, 2012

‘Kita versus Korupsi’ features four short films about corruption in everyday
 life. The film’s cast agreed to contribute their talents free of charge.
(Photo courtesy of Kita versus Korupsi)
 
            
Related articles

Every Indonesian knows that corruption is common for smoothing every bureaucratic process. You got a speeding ticket? Pay the officer. You want to renew your passport? Pay the immigration staff. You want to score a meeting with a very important person? Send the secretary a gift.

What Indonesians may not realize is that corruption is slowly becoming a culture.

“Today, people can no longer decide if a corrupt act is really corruption,” said Abduh Aziz, the secretary general of the Jakarta Arts Council and a film producer.

To highlight this cultural shift and nationwide problem, a group of filmmakers banded together to produce a collection of four short films running a total of 75 minutes.

With the help of Transparency International, the Corruption Eradication Commission (KPK), Management Systems International and the US Agency for International Development, four directors give their take on graft. They hope their collective endeavor will educate Indonesians on the harm that corruption inflicts on a society.

Entitled “Kita versus Korupsi” (“Us Against Corruption”), the film explains how corruption has rooted itself in everyday Indonesian life. The cast features popular actors and actresses, including Dominique Diyose, Tora Sudiro and Ringgo Agus Rahman. Noted scriptwriter Prima Rusdi was also involved as the project’s creative director.

“We hope the film will be able to speak about honesty and integrity,” Abduh said.

The idea behind the project came from Busyro Muqoddas. The former chief of the KPK knows better than most that corruption is a very complex issue here.

Corrupt dealings are a daily occurrence at nearly every level of government, and every case has a different motive. An even more worrying problem is that a study by the KPK has shown that more and more young officials are becoming corrupt. Busyro decided to launch a campaign to handle these problems after realizing that law enforcement alone was not enough to win the war against corruption.

“A corrupt person is a morally disabled person, so what we really need to do is reform the culture,” he said.

Busyro hopes the film will touch people’s consciences. He hopes that after seeing the film, people will be inspired to start a social movement to fight corruption at the grassroots level.

Film director Lasja F. Susatyo said that endless news reports about corruption had demoralized her. “We hear about corruption very often, but there’s nothing we can do about it,” she said. “We just get angry on Facebook and Twitter.”

Lasja and her friends share the KPK’s concerns that the younger generation is increasingly seeing corruption as normal and acceptable. Lasja, who also teaches at Paramadina University, once heard a student tell a friend that they should just accept corruption as a part of life.

“Maybe because the media always have these stories in the news, people are desensitized,” she said. “You don’t know what’s right and what’s wrong anymore.”

Lasja directed a 16-minute short called “Aku Padamu” (“I Am Into You”), which stars actors Nicholas Saputra and Revalina S. Temat. It follows the story of a couple who run away to be with each other. The problem is, they can’t get married because they don’t have the necessary letters and documents. The groom wants to bribe the officials, but the bride refuses. After all, the very reason they ran away is because her father is involved in a corruption case.

Each film examines a case of corruption in an everyday environment, such as in the family or at school.

Chairun Nissa’s 13-minute film is about a teacher and students and how they learn about good values. Ine Febriyanti and Emil Heradi finish out the directorial roster. Ine gives her take about a career woman who tries to avoid paying a bribe, while Emil’s film portrays someone who feels guilty for being corrupt.

Because it’s a serious, deep-rooted issue, Abduh wanted to make sure the team took the right approach for the films.

“We didn’t want to tell a story about huge corruption cases, because we already hear about these every day,” he said.

One goal is to educate Indonesian children, who often learn about corruption through family and school.

Abduh pointed out how students were encouraged to buy schoolbooks through their teachers. The teacher then earns a commission and gives the students better scores in return.

And many parents undoubtedly tell their teens to pay bribes to get identification cards or driver’s licenses.

“We see how corruption is being internalized by our children,” he said.

Abduh said the coalition received a lot of help in making the films, including from the actors, who did not receive payment for their contributions. The film crews also charged lower than normal rates and equipment was rented at discounted prices. Shooting took place over 14 days in November.

“Turns out, there are many people who want to speak about corruption,” Lasja said.

Every short film in the collection was inspired by true events. For Lasja, the film should highlight the underbelly of society. Everybody readily blames law enforcement in corruption cases, but nobody criticizes the values system, she said.

“Those who suffer the injustice of corruption may themselves be corrupt,” she said.

“We have become so impatient that we don’t invest our time in doing the right thing. Everyone wants privilege and to be treated like a VIP, but they don’t want to go through the process.”

The film premiered in Jakarta on Thursday and will be screened in an additional 17 cities. After each screening, Abduh plans to hold a discussion. Because the creators want to have personalized screenings for the film, it won’t necessarily be available in local cinemas.

Lasja said they hoped to work with local cinemas to provide free screenings, otherwise they would also try to collaborate with cultural centers or secure rooms and projectors where possible.

“We won’t sell tickets, so the film will be screened for free,” she said.

“Kita versus Korupsi” will also be available on YouTube and DVD after all the initial screenings are complete.

Thursday, January 26, 2012

Garuda wins "Indonesian most admired company award"

Antara News, Thu, January 26 2012

Surabaya, E Java (ANTARA News) - National flag carrier Garuda Indonesia has won an "Indonesian Most Admired Company Award" from Fortune Indonesia magazine for its success in implementing good corporate transformation program.

The award was an achievement the management of Garuda Indonesia could be proud of, Garuda technical and management director Hadinoto Soedigno said here on Wednesday.

"The achievement proves that all the efforts we have made to improve services and to conduct corporate transformation have given us good results, particularly the public`s positive perception and appreciation (of Garuda`s performance)," Hadinoto said in a press statement.

The magazine`s appreciation for Garuda`s transformation program was based on the results of a survey and research as well as on the public`s assessment of companies in Indonesia, he said.

"The assessment covered a number of aspects including leadership, management system, innovation, financial performance, corporate social responsibilities (CSR), human resources development, and development of managerial team," he said.

The award also went to other companies, including Unilever, Bank Mandiri, Telkom, Medco, BRI, Indosat, Aneka Tambang, and BCA.

Hadinoto said last year Garuda also won a number of awards from both national and international organizations in recognition of its achievement.

The awards included "Top Brand Award", "Indonesia Best Brand Award", "Annual Report Award", and "Good Corporate Governance/GCG Awards` from national organizations.

Also last year, Garuda won "World`s Most Improved Airline" from Skytrax London, an independent global airline rating agency, and "Airline Turnaround of the Year" from the Center of Asia Pacific Aviation (CAPA).

Editor: Heru

Wednesday, January 25, 2012

Davos Forum’s Global Elite Damaged by Year of Scandals

Jakarta Globe, Simon Kennedy, January 24, 2012


Employees install a sign for the World Economic Forum on the Congress
 Center in Davos, Switzerland, on Monday. Some 1,600 economic and political
 leaders, including 40 heads of states and governments, will converge at the chic
ski town for the 42nd edition of the five-day forum that opens today. (AFP Photo)
              
Related articles

Davos Man is approaching his annual Alpine get-together with humility after spending the past year getting fired, arrested, belittled and occupied.

When the World Economic Forum’s conference gets under way in the Swiss ski resort today, several past stars will be missing from the swirl of policy debates and cocktail parties.

News Corp. chairman Rupert Murdoch is embroiled in a phone hacking scandal. Oswald Gruebel quit as chief executive officer of UBS after a $2.3 billion loss from unauthorized trading. Philipp Hildebrand left the Swiss National Bank in a furor over his wife’s currency transactions. Dominique Strauss-Kahn resigned as International Monetary Fund managing director after sexual-assault charges, later dropped, were filed against him.

As “OccupyWEF” protesters build igloos under the eye of Swiss security forces, the leaders of this year’s Davos may try to profit from the mistakes of their predecessors by embracing transparency and ethics.

Citigroup CEO Vikram Pandit, a co-chairman of the meeting, is calling for the financial industry to be more open amid panel discussions with such titles as “Is 20th-century capitalism failing 21st-century society?”

“Davos Man has taken on the lessons of recent years and is asking how to do things differently,” said Richard Edelman, president and chief executive of public relations agency Edelman, who is attending the conference. Businesses and policy makers are having to “process accurately the vox populi.”

The need for them to do so is demonstrated by Edelman’s annual poll on trust, released on Monday in conjunction with the Davos meeting. Trust in government fell a record 9 percentage points to 43 percent, while faith in business slid to 53 percent from 56 percent.

The credibility of CEOs slid 12 points to 38 percent, the largest drop in nine years, and banks and financial services remained the two least trusted industries. The online survey questioned a total of 30,600 people in at least 25 countries from Oct. 10 to Nov. 30 last year.

“Davos Man is not this caricature of the rich and powerful person,” Klaus Schwab, founder of the forum, said on Monday.

“Davos Man is a person who, as I define it, should be concerned with the present state of the world and who should be ready to engage and contribute so that the state of the world is improved.”

The term “Davos Man” was created by the late Samuel Huntington, a professor at Harvard University in Cambridge, Massachusetts, to describe those with international visions who view governments’ only use as easing “the elite’s global operations.”

The 42nd annual meeting of the World Economic Forum embodies the “1 percent,” to use the phrase popularized by the young protesters who spent more than eight weeks occupying New York’s Zuccotti Park last year.

Among scheduled attendees are bank CEOs such as Pandit and Jamie Dimon of JPMorgan Chase and corporate chiefs Peter Voser of Royal Dutch Shell and Cisco Systems’ John Chambers. At least 70 billionaires are to be present, including investor George Soros and Microsoft founder Bill Gates. They will join about 2,600 other delegates discussing the world outlook.

The image of financial, corporate and governmental powers have taken a hit as the “occupy” protests, the Arab Spring uprisings and recent marches in Moscow highlighted rising unemployment and income inequality, said Tina Fordham, senior global political analyst at Citigroup and a member of the forum’s Global Agenda Council. It helps shape the forum’s work.

There is “a reduced willingness to tolerate the perceived excess of elites and the old social order, and heightened potential for protests to cause disruption, violence and pressure to alter the legislative agenda,” she said.

Not everyone has gotten the message. Three years after he used the Davos stage to pledge Russia wouldn’t turn toward “isolationism and unbridled economic egoism” and as he seeks to return to the presidency, Prime Minister Vladimir Putin is facing the biggest protests against his rule in 12 years. They were sparked by alleged fraud in the Dec. 4 parliamentary election, in which his United Russia party retained power.

In the financial world, Davos Man took a pay cut. Morgan Stanley CEO James Gorman, who is scheduled to attend the forum, had his 2011 pay reduced by 25 percent from a year earlier. Goldman Sachs cut average compensation and benefits expenses 21 percent in the same period.

Ian Bremmer, president of Eurasia, a New York-based investment consultancy, detects a generational transition. While Murdoch, 80, began posting on Twitter last month, it’s executives less than half his age who will be more alert to the demands of consumers and to accepting less privacy given the rise of social media, he said.

As younger leaders “start taking a role and grow in influence and importance, then you’ll see a different sensibility in terms of how they interact with the global public,” Bremmer said.

There will be plenty of room for them.

Murdoch is absent again. A year ago, he canceled his participation in a panel discussion at the forum as British police stepped up an investigation into phone-hacking allegations by News Corp. newspapers.

News Corp. spokesman Jack Horner said Murdoch was busy this year.

Gruebel, who two years ago was privately huddling in Davos with counterparts to discuss how to reassert their influence with regulators and governments, quit in September after UBS fell victim to a rogue trader.

High-profile locals are also missing from Davos this year. Hildebrand, who as a student worked in the resort as a bell boy and limousine driver, is a no-show after he resigned as SNB president this month. His credibility was questioned following the disclosure his wife bought $504,000 in the days before the SNB imposed a currency cap on the franc.

Two former Davos stars have been incarcerated in the past year. Strauss-Kahn, who as IMF chief used a Davos debate four years ago to push governments to ease fiscal policy, is back in Paris after being arrested in New York and charged with attempted rape and sexual assault.

Saif al-Islam Qaddafi, the son of the former Libyan dictator, was named a Young Global Leader at the forum in 2006. He was captured by rebels in November while trying to flee to Niger a month after his father was killed in Libya’s overthrow.

Some of the falls from grace reflect the aftershocks of the recent credit crisis and the resulting pushes for greater income and democratic equality, said Nariman Behravesh, chief economist at Englewood, Colorado-based IHS and a Davos delegate.

“Severe income disparity” was cited as one of the greatest threats to global prosperity over the next decade in the forum’s annual review of risks published on Jan. 11.

Organizers have made some nods to the emerging theme. The opening panel on capitalism in modern times will involve Bank of America CEO Brian Moynihan and Sharan Burrow, general secretary of the International Trade Union Confederation. Later in the week, the role of business in society will be discussed, as will whether banks are a cure or curse for the world economy.

“The focus on ethics and responsibility and social justice will be much greater this time around,” said Behravesh.

Bloomberg
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Friday, January 20, 2012

Special report: The missing BRIC in Indonesia's wall

Reuters, by Janeman Latul and Neil Chatterjee, Tanjung Raja Giham, Indonesia, Thu Jan 19, 2012

A worker uses pliers at the construction site of the Rasuna Epicentrum
 superblock in Jakarta in this September 29, 2010 file photo. Indonesia is
 getting major credit upgrades at a time when Western economies are\
getting downgrades. Moody's Investors Service on Wednesday returned the 
country to investment-grade level for the first time since the Asian
financial crisis. (Credit: Reuters/Beawiharta/Files)

(Reuters) - The Dutch were the last to build a railway in Indonesia and that was before World War Two. Their soldiers marched people off their land at gunpoint. The question of compensation did not arise.

Now, it's the Chinese that are coming to build a new railway in Indonesia. China Railway Group has been awarded a $4.8 billion contract to build and maintain the new line in southern Sumatra, which before Dutch colonial rule in the Indonesian archipelago was the centre of a Southeast Asian maritime empire that had thriving trade links with China, the Middle Kingdom.

The railway will run from the Tanjung Enim coal mine, the richest deposit in Indonesia, to a new port in the Sunda Strait, where what's left of the Krakatau volcano still puffs smoke after blowing its top in 1883.

From there, the coal will be shipped to the northern hemisphere to power China's industrial engine, part of a strategy of building infrastructure for resources that Beijing has employed successfully elsewhere in the world.

The quest is not as simple, or as brutal, as it was under colonial rule. Getting land, licenses and locals onboard requires a hearts-and-minds campaign and illustrates why, despite a return to investment grade, betting money on Southeast Asia's biggest economy isn't for the fainthearted.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Indonesia infrastructure video: link.reuters.com/ner95s

Graphic on Indonesia infrastructure projects: link.reuters.com/xuc26s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

INVESTMENT GRADE AGAIN

Ratings agencies have been raising Indonesia's credit rating at a time when they have been downgrading Western economies. On Wednesday, Moody's Investors Service returned Indonesia to investment grade for the first time since the Asian financial crisis in 1997-98.

Indonesia needed an International Monetary Fund bailout to recover from that crisis, but it avoided tumbling along with the world's largest economies and neighboring countries into a global recession in 2008-2009.

Now, helped by a global commodities boom, Indonesia is one of the fastest-growing countries in the G20, and could join Brazil, Russia, India and China -- the BRIC economies -- as the next emerging markets powerhouse. An estimated 35 million of its population of 240 million are now considered middle class.

Fitch Ratings brought Indonesia back to investment grade last month after 14 years of junk ratings, citing President Susilo Bambang Yudhoyono's efforts to kick-start infrastructure.

A long-awaited land acquisition law was passed on December 16, allowing Indonesia to accelerate road, port and airport projects, and could be a major turning point in the country's efforts to ignite an economic boom.

Investors, hungry to dig into the archipelago's vast deposits of oil, gas, and minerals, expect the land-acquisition law to spur government infrastructure projects. But it will be no help for private projects such as the Sumatra railway.

President Yudhoyono has pledged to double spending on roads, seaports and airports to $150 billion to help deliver average growth of 6.6 percent over the remainder of his term ending in 2014. Poor infrastructure is the biggest impediment to foreign direct investment and Yudhoyono hopes foreigners will pony up much of the money to improve it.

But Indonesia, which has had a feisty democracy since the fall of long-time autocrat Suharto in 1998, remains a stubbornly difficult country in which to do business, and Yudhoyono may find it easier to raise that kind of money than to spend it.

GREASING THE WHEELS

In a country where property deeds can be as scarce as snow, getting land and local permits is likely to remain the biggest impediment to investment.

A Reuters examination of the railway project in Sumatra shows that investing in projects in the provinces has become much harder than during the Suharto dictatorship, when Indonesia was last rated investment grade. Since then, Indonesia has decentralized much of its power. Now a myriad of local interests must be accommodated, inevitably causing delays.

That has been the case with the Sumatran railway, whose completion looks set to be pushed back at least three years to 2017, an executive at Indonesia's Rajawali Group, which is the majority owner of the rail project, told Reuters.

Investors in the project have had to pay off gangs, build swimming pools for the government, step around delicate religious sensibilities and try to overcome years of mistrust from locals, such as Sigurung in the village of Tanjung Raja Giham.

Sigurung is a 70-year-old village elder. Like most Indonesians, he uses one name. Sigurung remembers how Dutch soldiers intimidated his grandparents, driving them off their land, halfway between the mine and port to build the old railway to the coal mine back in 1914. They shot some residents before forcibly relocating the rest.

Sigurung is fine with the latest rail project -- as long as he gets paid for the land and his sons get jobs. Otherwise, there will be trouble, he vows.

"There will be no railway if you don't get permission from us. The Chinese can work in this area as long as they're nice to us. But if you don't give us work we will become thugs," he said with a disarming smile.

Indonesia lags its Southeast Asian neighbors in building highways, ports and power plants. The World Bank ranks it 75th on its Logistics Performance Index, well behind peers Thailand, the Philippines and Malaysia.

HISTORICAL DISTRUST

The 307-km (186 miles) Transpacific Railway runs from the coal mine to a new port near the provincial capital of Bandar Lampung on the Sunda Strait. The line would enable coal firm PT Bukit Asam to triple the output of its vast open-pit mine, under which lies enough coal to fuel China's current imports for about 15 years.

The project, which took six years just to get off the ground, will likely be delayed because of an issue with its coal license. This may worry stock investors who paid a big premium for shares in Bukit Asam, betting the railway will turn a medium-sized producer into a global heavyweight alongside Indonesia's Bumi Resources.

Chinese investors face their own host of issues in increasing exposure to the railway. With its banks financing the project, and China Railway building it, Chinese industry is expecting a huge bump in coal imports: as much as half the increased coal output is slated to go to China.

The Chinese have helped fund and build infrastructure projects in resource-rich countries from Myanmar to Zambia. But Indonesia has nursed a deep distrust of communism since a bloody, failed coup in 1965 by a pro-Beijing communist party, and populist resentment over local ethnic Chinese wealth.

"It's very difficult for foreign investors, particularly from China, to get assets in Indonesia," said Rudiantara, the chief of the development firm running the railway project, Bukit Asam TransPacific.

But with demand for investment growing, that may have begun to change. Indonesia is seeking $100 billion of private funding to overhaul its creaking transport network. Chinese Premier Wen Jiabao, on a visit to Jakarta last April, pledged $19 billion of investment credit for Indonesia, including $9 billion of soft and commercial loans for infrastructure development.

China Development Bank will lead the financing of the railway project, with money also coming from the world's biggest and fourth biggest lenders, ICBC and Bank of China.

PAVING THE WAY

Despite the delays, Rudiantara said the coal railway could become a blueprint for future Chinese investment and private infrastructure projects in Indonesia, the world's largest exporter of thermal coal.

Scribbling calculations and drawings on a giant whiteboard in the boardroom of his Jakarta office, he showed how the railway's route will shave hours off coal delivery times and drive a surge in the mine's output.

But he also acknowledged the challenges. "We call them the three Ls -- licenses, land and loans," Rudiantara said, adding he already had most of the licenses out of dozens needed from local and central government officials.

Indonesian bureaucracy has a reputation among foreign investors for being obstructive and corrupt. Even having local partners has not stopped many from pulling out of Indonesian projects to stem their losses.

"The issue is getting the right local partner," Rudiantara said. "China feels 'hey I have money, I have everything, you come to me, I'm not coming to you' ... The relationship really matters when you're dealing with the Chinese."

Getting the money was the easy part for Rudiantara, who is teaching his daughter Mandarin and who has a dragon embossed on his business card. At a business lunch with Chinese bank representatives he once got 10 basis points off the cost of a loan by agreeing to go to Beijing and sing karaoke songs in Mandarin, a former colleague said.

LAND ROVING

Getting the land is the last and highest hurdle, Rudiantara said. Few people have land rights documents in an archipelago of 17,000 islands with hundreds of tribes and ethnic groups, and conflicting claims can turn violent.

In one case, the landowner had been travelling for years and couldn't be reached, and for religious reasons his wife wouldn't speak to men without the approval of her husband. It took Rudiantara several months to resolve the issue through negotiation with her male relatives. In another, the chief of a Sumatran district sold off a chunk of land that wasn't his to a rival firm, leading to a drawn-out court battle that Bukit Asam lost.

Once a developer finds a landowner, negotiations over the acquisition price usually begin with only a vague sense of market value.

Rudiantara plans to swoop on the whole route at the same time with his team, to avoid the negotiations driving land price speculation further down the track. Prices of land along the route range from 100,000 rupiah per square meter to one million rupiah ($10 to $100), residents said.

"If there is not fair compensation there will be a riot and nobody will want to give up the land," said Sigurung's nephew Bumiputera, his comments incongruous with his sleepy village of ramshackle houses and rutted lanes 200 km (120 miles) from Bandar Lampung.

Rajawali Group has consulted universities on how best to approach local people from an ethno-cultural perspective. Its progress will be closely watched, given that many projects, such as another coal railway by Gulf-based investors MEC Holdings on Borneo island, have been held up for years over land acquisition. Success could spur a project to build another proposed railway on Sumatra to the north, which would take coal to India.

"This is a make-or-break infrastructure project for Indonesia," Rudiantara said.

SMOKING COAL

At Bukit Asam's mine operations in Tanjung Enim, huge yellow dump-trucks trundle along giant open pits stretching to the horizon, where wild elephants and tigers roam in the island's remaining jungles. Coal is stockpiled in mounds, smoking in places because of the tropical heat, before being sorted for grade and sent on conveyor belts to the rail line.

From this smoldering, grim place, Bukit Asam's former chief executive Sukrisno conducted a charm campaign with gift hampers of rice, sugar and cash for local residents.

Government officials are more costly. Sukrisno says the company refuses to give cash, but instead builds facilities, such as a 29 billion rupiah ($300,000) hospital and tennis courts used for the recent Southeast Asian Games in the provincial capital of Palembang.

"In the past three years we spent 35 billion rupiah ($3.8 million) to build a sports center in Muara Enim (town). Now they are asking for a swimming pool. I say ok, we'll provide it. They are also asking us to build an education centre," he said.

Since local governments spend almost nothing on local infrastructure, officials stand to benefit by taking advantage of "corporate social responsibility" (CSR) spending by companies such as Bukit Asam.

"We ask government officials how we can help via CSR in order to smoothen the process," said Sukrisno. "If CSR only builds facilities, like roads, the local people would not directly feel it, but if we give them packages then they're very happy."

Bukit Asam's mine workers, most of them hired locally, are also part of the campaign. A short drive from the moonscape of the open pits is a different world, where hundreds of whitewashed colonial houses with palm tree gardens provide accommodation for senior staff. Workers have access to a swimming pool, a basketball court, a soccer pitch and a golf course. The housing development has the feel of a university campus during summer break.

To build the railway, Bukit Asam and Rudiantara will have to stretch that kind of love along another 300 km of track.

KNIVES AT THE READY

The rust colored train cars on the existing Dutch-built railway, their bellies full of coal, shunt slowly away from the mine into a region of forest, lazy rivers and agriculture. The proposed new railway will take a shorter and quicker route to carry over twice as much coal, with capacity of 25 million tonnes a year.

The land is fertile. Cocoa and coffee grow in the thick, red, volcanic soil of the highlands, while lush rice paddies carpet the lowlands. Cash crop plantations producing rubber, clove and palm oil crowd the landscape towards the southern tip of the province.

With such abundance, it's easy to see why not everyone is so keen to give up their land.

"It's better to forego a watch than a machete," as one local saying goes. Sigurung's nephew Bumiputera carries a dagger with him every day.

"We want the company who builds the railway to be open in their approach and give us fair and honest explanations -- not sweet promises and then a stab in the back ... this will create danger," Bumiputera said.

Across the archipelago in the past year, disputes over development of resources have turned deadly. In northern Sumatra, a mob burned down the exploration camp of an Australian gold miner. In central Sulawesi province, local residents pushing for better public facilities attacked oil firms with Molotov cocktails, killing two and shutting a field's oil output for two weeks.

And in eastern Indonesia's Papua province, copper miner Freeport Indonesia's operations were paralyzed by a three-month strike that led to blockades, shootings and sabotage, as tribesmen armed with bows and arrows joined irate miners.

"I think there's real concern from local communities -- I don't think they're against development, but they want the development to be done in an equitable way," said Scott Poynton, chief executive of non-governmental organization The Forest Trust. Poynton suggested creating jobs and services, such as hospitals in remote communities, would help.

"There's a risk that these spats will grow," he said, after completing an eight-year project to remove guns from Java's teak forests.

It's difficult to even get to Sigurung's village without danger. Gangs of handkerchief-veiled bandits collect "road taxes" at obstacles on the narrow country roads.

A QUESTION OF TRUST

Before Rudiantara can speak to a villager about buying his land, he first has to get permission from the provincial governor, then the district chief, before tracking down the house of the village head and asking him to talk to a member of his clan.

Graft, being endemic in Indonesia, is a problem not only for the buyer, but also for the seller: corruption makes it difficult for residents to trust their leaders.

Residents along the rail route repeatedly told Reuters they suspect government officials and hereditary village chiefs will try to hoodwink them over land acquisition deals.

"We don't want any village head to become the point person on land talk. That shouldn't be done," said Bumiputera. "All of us should know the process and the pricing of any deal. They say they want to eradicate corruption, but here there's a lot of petty corruption."

In a sign of the likely disputes to come, Husni Thamrin, a fourth-generation head of several villages on the rail route, said that kind of individual deal-making could create a lot of local resentment, and that firms should go through the chiefs.

Either way, keeping the locals happy, from village communities to senior government mandarins, will be critical to the success of Indonesia's drive to overhaul its infrastructure.

"Don't think that just because we're poor and you're wealthy, that we're uneducated and you're well-educated, you can play with us," the village elder Sigurung said.

(Additional reporting by Mas Alina Arifin, Fathiya Dahrul and Dwi Prasetyo Budi Santosa; Editing by Bill Tarrant)

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Wednesday, January 18, 2012

Moody’s Salutes Bank Indonesia’s New Credit Card Restrictions

Jakarta Globe, Dion Bisara,  January 18, 2012

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International ratings agency Moody’s Investors Service says the central bank’s new rules on credit cards are positive for Indonesian banks and will help improve their underwriting standards and eventually the quality of the lenders’ assets.

Bank Indonesia issued new regulations on credit cards on Jan. 6. The new rules set the minimum monthly income for cardholders at Rp 3 million ($330) and the maximum credit limit at three times monthly income.

Anyone who make less than Rp 10 million a month is now only allowed to receive credit cards from two issuers. People who make more must be individually assessed by banks.

In a bid to avoid situations where cardholders are trapped in mounting debt, Bank Indonesia banned the use of credit cards to purchase items bought through loans, such as cars or houses.

Moody’s applauded the central bank’s move, saying the new rules would help manage risk in the fast-growing sector.

The new regulations, it said, will reduce lenders’ risk of giving credit card loans to low-income customers, allowing banks to improve the quality of the loans in their “credit card portfolios.”

“Among our rated Indonesian banks, those most affected are those most active in credit cards,” Moody’s said in a statement released on Monday.

These banks included Bank Mandiri, the country’s largest by assets, Bank Central Asia, Bank Negara Indonesia, CIMB Niaga and Bank Permata.

“We expect that these policies will help eventually lower the level of bad debt that the credit card segment currently carries, as well as the threat of future loan loss from lax underwriting practices,” Moody’s said.

Despite credit card lending making up less than 2 percent of the total loans made by the nation’s lenders, the ratings agency said, reliance on plastic has “increased sharply in recent years.”

It said the fast-rising figure reflected Indonesia’s growing middle-income population as well as “banks’ aggressive marketing campaigns.”

The use of credit cards by Indonesians has increased in the past two years. At the end of 2009 there were only 12 million credit cards in circulation; that was 13.6 million and 14.6 million at the end of 2010 and 2011, respectively.

The circulation numbers equate to an average of 100,000 new cards issued per month in 2011, doubling the average of 50,000 in 2009.


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Monday, January 16, 2012

Moratorium Demanded on All DPR Construction Projects

Jakarta Globe, Rizky Amelia, January 16, 2012


Indonesia Corruption Watch displays a toilet during a press conference on
Sunday to demand a moratorium on construction works in the House of
Representatives, including the planned Rp 2 billion renovation of lavatories
in one of its buildings. (JG Photo/Afriadi Hikmal).
 

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The fallout from a $2.2 million meeting room renovation project at the House of Representatives continued on Sunday as antigraft groups demanded it put down the hammers and open the books.

The Anti-Budget Mafia Coalition, which includes Indonesia Corruption Watch, said the construction projects taking place at the House of Representatives were not as open and transparent as they should be.

It demanded a moratorium on all construction and renovation work and an audit into the projects that had already taken place.

Apung Widadi, from the ICW, said with no one watching over the House on these projects, corruption was more likely. He said the Supreme Audit Agency (BPK) needed to take a close look at all the construction projects undertaken or planned for the House.

The group also called on the House Secretariat General and the Household Affairs Committee (BURT) to focus on building a transparent evaluation system for all projects at the legislature.

“While the BURT and the Secretariat General improve their performance, all projects at the DPR should be temporarily frozen, a moratorium imposed,” Apung said.

Coming on the heels of criticism over a Rp 2 billion ($220,000) plan to renovate the toilets at one of the buildings used by lawmakers, the House was found to have spent Rp 20 billion to renovated a relatively small meeting room to be used by the House Budget Committee. The House has already canceled a plan in the face of mounting public criticism to build a luxurious 36-story tower to house lawmakers’ offices.

The tower was originally expected to cost taxpayers Rp 1.8 trillion, but the price went down to Rp 700 billion before the plan was scrapped.

Apung said the coalition had asked the Corruption Eradication Commission (KPK) to investigate suspicions of graft in some of the House projects.

Indonesia Budget Center researcher Roy Salam did not mince words in talking about the meeting room project.

“This renovation stinks of corruption,” he said.

The tender selection, he said, was held twice, with 13 companies originally eligible to complete but later only state-owned Pembangunan Perumahan deemed eligible.

A second tender yielded three companies, including Pembangunan Perumahan, but the two other firms were dropped due to what were called “incomplete administrative documents.”

Roy said the all the paperwork should have been checked before the tender, not after.

Apung said the leadership of the House was to blame for failing to properly supervise all the institutions within the House, including the secretariat and the BURT.

He said this lack of supervision from the leadership, combined with the lack of transparency at the secretariat, created an atmosphere where corruption could thrive.

Roy added that the secretariat was obliged to publish tender documents. Failure to do so breaks several laws, including the Public Information Openness Law, the Law on State Finance and the Law on the State Treasury.

He said his institution would demand that the contract documents for the latest renovation project be made public.

“This will show just how much the state lost,” he said.

Apung said the Rp 20 billion price tag was too high. “Our estimate is that it should have only cost Rp 500 million,” he said.

Taslim Chaniago, a member of the House Budget Committee from the National Mandate Party (PAN), said on Friday that he was resigning from the committee in protest over the project.


A glimpse of the renovated House of Representatives Budget Committee
 meeting room in Jakarta on Wednesday. The renovation cost Rp 20 billion
($2.2 million) and has been criticized as a lavish expenditure. It comes on
the heels of a House plan for new toilet facilities that would have cost taxpayers
Rp 2 billion. (Antara Photo/Yudhi Mahatma)
  
   

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Sunday, January 15, 2012

Ratings agencies should not serve as crisis amplifier: China

English.news.cn, by Wang Fan,  2012-01-14                       

BEIJING, Jan. 14 (Xinhua) -- France was stripped of its triple-A credit rating on Friday in a swathe of downgrades in the eurozone, which dealt a blow to the eurozone members faltering in the debt crisis.

The Standard and Poor's (S&P) downgrade move, though containing some legitimate concerns, also raised fresh doubts over the credibility of ratings agencies.

France has been struggling to secure its top-notch rating for months. After several rounds of austerity packages and a massive economic overhaul, its overstretched public finances showed no clear signs of easing up.

From this perspective, S&P's downgrade is legitimate in some sense, but the timing is dubious.

Just one day ago, European shares and the euro rose on positive comments on the region's outlook from the European Central Bank and the news of a successful Spain's bond auction.

Meanwhile, ten-year bond spread of debt-ridden countries over that of German has also narrowed overtime, a key measure of investors confidence.

Spain, Italy and some peripheral countries have waken up to the severity of their structural flaws and introduced a flurry of financial measures to boost their productivity.

As crisis is showing tentative signs of receding, the S&P's overwhelming downgrade has once again weighed on the market and dented investors' confidence.

Having an estimated 95 percent of the global market for credit rating, the three ratings agencies - Moody's, S&P and Fitch Rating, played a pivot part in providing assessment of the ability of countries and companies to pay their debts.

For this reason, it is of great importance for them to be objective and professional in analyzing the market situation. Otherwise, their incorrect information on the credit risk will inflict catastrophic consequences on the global market.

The 2008 financial crisis has provided such a cautionary tale. It is the failure of ratings agencies to assess some risky financial products that contributed to the spread of the toxic assets and fuelled the global crisis.

Meanwhile, investors and markets should wane their over-reliance on assessment of the credit ratings agencies and make their own judgements about the market situation.

With great power comes with great responsibility. In this connection, the ratings agencies should use their power with caution to avoid becoming an ominous amplifier of the ongoing sovereign debt crisis in Europe.

As global investors should be warned about the major risks of the European debt mess, ratings agencies should also do their honest job and not repeat their past mistakes to win back the trust of global investors.

Editor: Fang Yang



New CEO S&P Douglas Peterson
(Former COO Citibank)

Former CEO S&P Deven Sharma