ICW Reports a Corruption Indication of Rp300 Billion in Aceh

Tempo Interactive, Thursday, 01 April, 2010 | 15:52 WIB

TEMPO Interactive, Jakarta:Indonesia Corruption Watch (ICW), an anticorruption NGO, reported an indication of corruption in Aceh to the Commission of Corruption Eradication yesterday.

Agus Sunaryanto, the Head of the ICW Investigation Division, along with the Aceh Anticorruption Movement and the Aceh Transparency Society said that there were five cases of corruption in Aceh with a state loss amounting to Rp341.94 billion.

The five cases, Agus continued, are namely the case of state asset selling in the form of heavy equipment in North Aceh, a direct appointment of the Sabang development project, the procurement of CT Scan in Zainal Abidin General Hospital.

From the five cases, ICW assumes that there are 39 Aceh officials implicated.

Because of this, they are pushing the KPK to take over the case from the Aceh police.

Gustidha

Indonesian president woos voters in tense Aceh

Reuters, Ed Davies, 3:57am EDT

Indonesian President Susilo Bambang Yudhoyono (L), accompanied by First Lady Kristiani Yudhoyono, speaks to his Democratic party supporters during a rally in Banda Aceh, Aceh province March 29, 2009. (REUTERS/Supri)

BANDA ACEH, Indonesia (Reuters) - President Susilo Bambang Yudhoyono praised on Sunday the rebuilding of Aceh and played down concerns over a peace deal in the province, as he highlighted Indonesia's stability ahead of polls next month.

Tensions have risen in the province in recent months with a number of attacks on members of Aceh parties blamed by some on disgruntled elements of the Indonesian military concerned that some former rebels have not dropped separatist aims.

Yudhoyono, who is seeking a second term in office, has visited Aceh twice in two months and has a key stake in ensuring the peace deal struck during his administration after the devastating 2004 tsunami remains on track.

"I hope peace and order will persist here because we don't want any more conflict," he told a campaign rally for his Democrat Party on a rain-soaked field besides a sports stadium in the provincial capital of the staunchly Muslim province of 4 million.

Parliamentary elections kick off on April 9 followed by a key presidential vote on July 8. The polls will be key to dictating the pace of further reform in Southeast Asia's biggest economy.

Yudhoyono, who has been zig-zagging across the sprawling archipelago in the past few weeks to campaign, has also been trying to sell his government's success lifting economic growth, tackling poverty and fighting endemic graft.

Along with tee-shirts and other handouts, political rallies in Indonesia often use popular local singers, sometimes wearing sexy tight-fitting outfits, to drum up crowds.

In Aceh, the only province officially allowed to follow sharia law in secular Indonesia, the campaign rally was a little more reserved and started with a recital from the Koran.

But the crowd, separated between men and head-scarfed women, began dancing and yelling as more local acts took to the stage. Water jets from fire hoses sporadically rained down to keep people cool under a blazing sun.

NEW HOMES, ROADS

Along with national parties, six local parties in Aceh including one formed by former rebels will contest the election.

Yudhoyono, 59, a former general known by his initials SBY, and his Democrat Party are currently well ahead in national polls, although local parties are expected to do well in Aceh.

Aceh, an area rich in resources ranging from gas to coffee lying on the tip of Sumatra, suffered from three decades of bloody separatist conflict between the secessionist Free Aceh Movement (GAM) and the Indonesian armed forces.

But the December 2004 tsunami in which 170,000 people in Aceh died or went missing proved a shove for both sides to reach a peace agreement in 2005 giving it special status.

Yudhoyono reeled out a series of numbers highlighting the reconstruction of Aceh by the government and donors including 134,000 new homes, 3,600 km (2,237 miles) of roads and 20 ports. "Do you know why the world joined to help? Because Aceh is now peaceful," he told the crowd of flag-waving supporters during an intermission between local singers.

Most analysts do not see the peace deal in imminent danger, but there has been a pick up in violence in recent months, including murky shootings and grenade attacks.

"As political tensions have risen in Aceh, hostility between GAM and the TNI (Indonesian military) is at its highest point since the MOU was signed," the International Crisis Group said in a report last week, referring to a memorandum of understanding signed by GAM and the government in the 2005 peace accord.

Stability in Aceh is particularly crucial now since it needs to attract more investment as the government winds down the state reconstruction agency set up to rebuild the province after the tsunami and channel billions of dollars from donors.

The government also wants to use the Aceh model to resolve another long-running separatist conflict in the eastern area of Papua after recently opening talks with an exiled rebel leader.

(Additional reporting by Reza Munawir and Karima Anjani in Jakarta; Editing by David Fox)

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Election 2009 Campaigns

Microfinance sector can learn from the Aceh experience

The Jakarta Post, JAKARTA | Mon, 02/16/2009 11:04 AM

Successful pilot projects on sustainable microfinance for small and medium enterprises (SMEs), launched in Aceh since its recovery from the devastating 2004 tsunami, can serve as a role model for the promotion of SMEs in other provinces, experts urged in a seminar last week.

“If it worked in Aceh, it should work elsewhere,” said Mariano A. Cordero, team leader for the Asian Development Bank’s (ADB) livelihood and microfinance subprojects, during a seminar, “Creating Sustainable Micro and Small Enterprises Financial Services” on Friday.

The seminar was part of a two-day exhibition themed “Celebration of Humanity” which the Reconstruction and Rehabilitation Agency (BRR) for Aceh and Nias’ organized in conjunction with the approaching end of its mandate.

The one-day seminar featured speakers from BRR, ADB, the German Association for Technical Cooperation (GTZ), small rural government-run banks or Bank Perkreditan Rakyat (BPRs), and the Regional Development Bank (BPD) of Aceh and Nias, North Sumatra.

BRR’s fact sheet estimates 100,000 SMEs were destroyed or damaged by the tsunami in December 2004.

The disaster also destroyed around 20,000 hectares of fish farms and 60,000 hectares of farmland.

Mariano said principles of microfinance had been implemented successfully, even though Aceh suffered from severe disaster conditions in the wake of the tsunami disaster, but another challenge soon arose.

“A second wave of tsunamis swamped Aceh in the form of unhealthy credit. Forty to 50 donor organizations hand out substantially subsidized credit and grants, even though conditions in the disaster areas were starting to get back to normal,” he said.

He said financial institutions in Aceh needed help to improve and increase their capacity rather than more funds. Donor and government aid was more urgently required in technical assistance and in developing policies which help fledgling credit institutions.

Among ADB’s missions in Aceh has been to create sustainable SMEs in cooperation with 20 private and government BPRs, BPD Aceh and Nias and with the state financing and investment firm PT Permodalan Nasional Madani (PNM).

“Indonesia has more than 3,000 BPRs and 26 BPDs, with the latter having more than 1,000 branches across the country. These are the institutions you can set up in Aceh and elsewhere,” Mariano said.

ADB’s steps to improve microfinance in Aceh included merging 12 BPRs into one bank with 12 branches, upgrading information technology in 18 BPR offices, and training and mentoring BPD Aceh’s loan officer in managing farming and fishery portfolios.

Addie Permono, a team leader for the BRR project, said the ADB had disbursed $10 million in grants with an absorption rateof 80 percent since 2006.

The BPD Aceh data shows that as of last December, the pilot project in Aceh has successfully drawn 360 commercial microfinance customers, and 970 “grassroot” microfinance customers.

Meanwhile, the bank also managed to disburse Rp 3.22 billion ($273,700) in loans to the microfinance commercial sector of which only 0.5 percent were unrecoverable. It disbursed another Rp 2.05 billion to grassroots microfinance sector, none of which were non-performing.

Commercial microfinance customers are individuals or companies with a minimum of one year of business experience and maximum revenue of Rp 300 million per year.

Grassroots microfinance loan customers are from low-income households who run productive businesses. Only households with monthly incomes under Rp 2 million are eligible for credit.

ADB’s strategy in cooperating with local banks to improve the SME sector can be applied to the microfinance sector across Indonesia.

“From the Aceh experience, we have learned that building the capacity of financial institutions, focusing on long-term plans, and creating sustainable microfinance services are what we need to improve SMEs,” said Mariano.

The BRR’s fact sheet shows the agency spent $6.7 billion out of the pledged $7.2 billion for reconstruction and rehabilitation projects.

The funds comprised $2.21 billion from the Indonesian government, $2.2 billion from NGOs, and $2.4 billion from donor countries.

As of the end of last December, $5.4 billion had been disbursed, while the disbursed national budget reached Rp 23.83 trillion. (fmb)

Allianz sees big growth in RI, Asia-Pacific

Rita A. Widiadana, The Jakarta Post, Nusa Dua

Germany-based insurance and financial services provider Allianz Group sees its businesses in Asia-Pacific growing rapidly this year on the back of the region's robust economy, with China and India serving as the driving forces.

"Allianz Group has seen a strong performance in the Asia-Pacific region and worldwide," said Dr. Werner Zedelius, a member of the Board of Directors of Allianze SE, during his closing address to a meeting of the CEOs of Allianz offices in the Asia-Pacific countries Wednesday. The meeting was held in Nusa Dua, Bali.

The company's growth written premium (GWP) income in Asia increased about 70 percent. However, "even if we exclude China and India, growth is still very high at 24 percent," Zedelius said.

Worldwide, the group booked an operating profit of 10.386 billion euros in 2006 as compared to 8.003 billion euros in 2005, while 2006 net income amounted to 7.02 billion euros.

In the Asia-Pacific region, Allianz operates in 14 countries, including China, India, Singapore and Indonesia.

Bruce Bowers, Allianz's CEO Asia Pacific, said that the company had great belief in the region's potential. "We have been a long-time investor in the region and we believe and are very optimistic about economic conditions here."

Allianz Group first set up shop in Indonesia in 1981.

Eight years later, Allianz established PT Asuransi Allianz Utama as a general insurance provider. In l996, Allianz set up PT Asuransi Allianz Life Indonesia, which offers life and health insurance, savings and pension plans.

"As a whole, Allianz Life Indonesia has had an excellent year, and in the first quarter of 2007, our profit more than doubled compared to the same period last year," explained Jens Reisch, president director of PT Asuransi Allianz Life Indonesia.

As of the end of December 2006, Allianz Life had achieved GWP income of Rp 1.3 trillion with 360,000 policyholders. Currently, it has 80 agency offices in 44 cities and regions around the country, including Bali.

"We plan to open new offices in Banda Aceh and Ambon soon," Reisch said.

Meanwhile, PT Asuransi Allianz Utama Indonesia has 38,000 customers with GWP income of Rp 615 billion as of the end of 2006.

For Allianz Utama, the first quarter of 2007 was overshadowed by a number of natural disasters that resulted in a significant rise in claims.

"We have gone through hard times in this first quarter, such as the floods in Jakarta and other calamities," said Victor Sandjaja, president director of Allianz Utama.

"But we are now on the right track with our premiums target as our GWP increased by more than 5 percent during the first quarter compared to the same period last year, generating Rp 3 billion in profit before tax," Sandjaja said.

Swedish businesspeople wish to invest in Aceh

Banda Aceh (ANTARA News) - Swedish businesspeople grouped in the Swedish Trade Council have expressed interest in investment in Aceh province, Aceh-Nias Reconstruction and Rehabilitation Board (BRR) spokesman Mirza Kemala said here on Tuesday.

He said the Swedish businessmen expressed their interest to BRR chief Kuntoro Mangkusubroto during a visit to Sweden over the weekend.

While in Sweden, Kuntoro Mangkusubroto met with deputy head of the Asia Department at the Swedish International Development Agency (SIDA) Anne Hoglund.

Kuntoro also met with a number of Swedish officials to express gratitude on behalf of the Aceh people and Indonesian government for the Swedish government`s involvement in the Aceh reconstruction process in the wake of the devastating tsunami on December 26, 2004.

Mirza Kemala said that in the meeting with SIDA, the Swedish businesspeople asked a lot of questions about the latest developments in Aceh.

"They would like to know more about security assurance and the possible impact of the Muslim Syariah law on their business later in Aceh," Mirza said.

He added that SIDA also expressed delight over the significant progress of the reconstruction process in the province.

Sweden was one of the European countries which donated about US$42 million for the Aceh and Nias reconstruction program.

More money for remote areas next year, says minister

Ary Hermawan, The Jakarta Post, Jakarta

The Transportation Ministry will focus its capital spending on remote and disaster-hit areas in 2008, with Rp 3 trillion (US$333 million) having been set aside to build and expand airports and seaports in Papua, Maluku and North Sumatra.

According to the ministry's 2008 business plan, these development projects are based on the assumption that the ministry will get Rp 15 trillion next year, a 49 percent increase over its budget for this year.

"We will distribute the funds proportionately to those provinces ... infrastructure development in Papua and West Irian Jaya has been identified as a priority," Transportation Minister Hatta Radjasa said last week.

The ministry will allocate Rp 1 trillion for expanding existing ports and airports, and building new ones in the two eastern provinces. "This is one of the biggest items," Hatta said. It includes the expansion of seven strategic ports in Papua at a cost of Rp 86 billion.

The construction of more seaports and the provision of more ferries archipelagic provinces, such as Maluku, North Maluku, East Nusa Tenggara and North Sulawesi, would also be prioritized so as to shorten travel times in these regions.

"Especially in Maluku, it can involve a month's wait for a ship from one island to another at the moment," Hatta said. The ministry plans to allocate Rp 239 billion on the development of the sea-transportation sector in the province.

Another large chunk of the money will be spent on the construction of the new Kualanamu Airport in North Sumatra (Rp 930 billion) and Lombok Baru Airport (Rp 515 billion) in West Nusa Tenggara, and on expanding Hasanuddin Airport, which will cost about Rp 491 billion.

The ministry will continue funding the construction of the Kualanamu Airport and Hasanuddin Airport through 2009, Hatta added.

The ministry's plan also states that it will provide Rp 200 billion for the expansion or construction of 27 small airports in remote and disaster-hit areas, including Banda Aceh, Nias, Meulaboh, Nunukan, Atambua, Alor, Tanah Merah and Nabire.

Hatta said capital expenditure in the transportation sector would be aimed at supporting economic growth.

"Transportation is the backbone of the economy as it has an important role to play in reducing the costs of distribution in every industry," he said.

Aceh province moves to exploit natural-resource potential

Andi Haswidi, The Jakarta Post, Banda Aceh

Aceh is a province that is blessed by abundant natural resources and wealth that have long lain undeveloped due to a 32-year insurgency that only recently came to an end.

Now, in a new era of peace and development after the long years of civil unrest and the 2004 tsunami disaster, the opportunities for business appear almost endless in the country's westernmost province.

The region is blessed with bountiful mineral, energy, marine, agricultural and plantation resources that are now open to new investment.

According to a recent report from the Energy and Mineral Resources Ministry, the province holds an estimated 20 million tons of gold, 600 million tons of copper, 32 million tons of platinum, 32 million tons of mercury, 53,000 tons of lead, 350,000 tons of iron ore, 6.4 million tons of iron sand and 600 million tons of molybdenum.

On top of all that, it also boasts some 114 billion tons of coal reserves.

"The mining and energy potentials described by the report illustrate just how big the opportunities are. And almost all of these resources have never been touched before due to the long years of conflict," Aceh Investor Outreach Office director Syafruddin Chan told The Jakarta Post in Banda Aceh on Wednesday.

The mining and energy sectors should serve as the locomotive to get the province's economic growth back on track. Things have already started to move thanks to the Rp 60 trillion (about US$6.6 billion) being invested in rehabilitation projects.

But there is a growing concern that the provincial economy could grind to a virtual halt again after the rehabilitation work by the Aceh and Nias Rehabilitation and Reconstruction Agency (BRR) is completed in 2009.

"We are currently focusing on agricultural and marine products as regards developing the province's economy. However, in the future, the most promising sector will be energy and minerals, such as coal," BRR economics and business deputy Said Faisal Baabud told the Post earlier this week.

Aceh Governor Irwandi Yusuf has acknowledged the importance of mineral resources in the provincial economic plan, despite their adverse consequences for the environment.

In order to minimize destructive environmental impacts, the provincial administration has introduced tight licensing procedures for mining operations.

"We have received a lot of mining exploration proposals, but so far have only licensed three companies," he said as quoted by the local Serambi daily in its Wednesday edition.

In the agricultural sector, key commodities grown in the province include rice, corn, soybeans, nuts, sweet potatoes and other edible tubers.

In 2005 alone, only a year after the tsunami disaster, the rice fields of Aceh produced 1.4 million tons of the national staple. In the same year, Aceh also produced 59,370 tons of Arabica and Robusta coffee, 250,000 tons of crude palm oil (CPO) and 78,031 tons of rubber.

The potential of the marine and fisheries industry in Aceh has yet to be developed. The province has a coastline extending to 1,600 square kilometers, and an exclusive economic zone (ZEE) of 534,520 square kilometers. In all, the province has the potential to produce 173,045 tons of fisheries products per year, excluding the ZEE.

With the help of the World Bank's private sector development firm, the International Finance Corporation (IFC), the province has begun to promote the farming of what are touted to be the world's best black tiger shrimps. Production currently amounts to about 8,000 tons per year, and the industry has the potential to generate annual foreign exchange earnings of up to $50 million.

Investment procedures in Aceh have also been simplified through the establishment of the Aceh One-Stop Investment Service (KPTSP). Business permits can now be processed in 7 working days under normal circumstances, and in one or two days in special cases if all the requirements have been satisfied.

"Aceh is now in need of foreign investors to bring in the capital and the technological know-how to help increase the value of our products. For those who invest a minimum of Rp 5 billion, we are ready to exempt them from paying local taxes," KPTSP director Said Yulizal promised.

For some early birds, the promise of more relaxed investment procedures has been too good to miss. Since it was set up two months ago, the KPTSP has issued more than 1,000 business permits to local and foreign investors.

Aceh opens new office to attract investors

Andi Haswidi, The Jakarta Post, Aceh

The Nangroe Aceh Darussalam provincial government has stepped up its efforts to strengthen the region's fragile economy by launching an "Investor Outreach Office" (IOO) on Monday to attract foreign investors.

"We are now officially open for business and are opening our doors to investment for the benefit and welfare of the people of Aceh," Deputy Governor Muhammad Nazar said during the ceremony to mark to launching of the IOO.

Nazar said that until recently Aceh had been focusing on rehabilitating the region following the long period of civil unrest, and the 2004 tsunami disaster. However, the province was now aiming for more sustainable economic development through cooperation with both local and overseas firms.

The IOO's main functions would be to generate investment, to provide a one-stop information service, business matchmaking assistance, assistance with regulatory requirements and aftercare service to investors, and to play a policy-advocacy role.

Apart from the provincial government, the creation of the IOO also involved other agencies, including the Aceh and Nias Rehabilitation and Reconstruction Agency (BRR), Aceh Investment Coordinating Board (BKPMD) and the World Bank's private sector development arm, the International Finance Corporation (IFC).

In its operations, the IOO would collaborate closely with the BKPMD, Aceh Chamber of Commerce and other institutions, both domestic and foreign, with information on the IOO available online at www.investinaceh.org.

IFC business enabling operations officer Greg Elms said that the IFC had already started to put Aceh on the investor interest map.

"Aceh's IOO is truly the first of its kind anywhere in Indonesia. The secret of this model is the marriage of a government mandate to increase investment, together with sales, marketing and customer-service expertise from the private sector," he explained.

He added that the IFC's cumulative investment in Indonesia had reached US$2.3 billion for 84 projects over 35 years. New commitments were currently averaging $250 million per year.

During its launching ceremony, the IOO signed seven memorandums of understanding on cooperation and promotion programs with the British Chamber of Commerce, Germany's EKONID, the European Chamber of Commerce, the Canadian Chamber of Commerce, the Netherlands' INA, Malaysia's MCJ and Norway's NIA.

The IOO also signed an agreement with Australia's THP Group, which promised to secure 2 Australian investments involving a total of US$3 million.

As part of its promotional program, the IOO together with other relevant institutions will host the Aceh Merchants Seminar in May and June, and the first-ever Aceh Investment Summit later this year.

Following the tsunami disaster, there have been large inflows of foreign funds in the form of aid to rehabilitate infrastructure and other assets. An IFC study found that about 78 percent of the losses were suffered by the private sector.

In April 2005, the BRR was established as the authority responsible for carrying out the rehabilitation work, and is expected to complete its mandate in April 2009. The BRR is responsible for managing a total of between Rp 60 trillion and Rp 80 trillion in rehabilitation funds, with about Rp 21 trillion provided by the national budget, and the rest by mostly overseas donors. For this year, total BRR spending is expected to amount to about Rp 23.5 trillion.

Concerns have been voiced that the province has become too dependent on massive inflows of foreign aid, and that a sudden halt to this could severely impact on its weak economy.

Speaking to The Jakarta Post earlier, BRR deputy for economics and business Said Faisal Baabud said that the BRR would focus in 2007 on strengthening the social economy through increased investment in projects that would increase the value of Acehese products in various sectors, particularly the agricultural and fisheries sectors. This would involve collaboration with local and foreign investors so that the province could lessen its dependence on other provinces and on foreign aid.

"Aceh's experience in interacting with the international community is one of its strongest assets, which will help a great deal in the endeavor," he said.

Japan extending yen 200 million grant to boost RI food production

Jakarta (ANTARA News) - The Japanese governemnt is extendng a Yen 200 million (Rp15.86 billion or US$ 1.72 million) grant to Indonesia in support of efforts to increase food production and alleviate poverty in the agricultural sector.

Diplomatic notes on the grant were exchanged and signed here Monday by Japanese Ambassador to Indonesia Shin Ebihara and Director General for Asia-Pacific and Africa at the Foreign Ministry Primo Alui Joelianto.

A statement fom the Japanse Embasssy said the grant in aid was intended for indigent farmers and given under the "Second Kennedy Round (2KR)".

The Indonesian government had asked the Japanese government for 2KR aid to buy potassium chloride fertilizer (MOP) that is not available in Indonesia.

The Indonesian government would sell the fertilizer at a low price to farmers in Nanggroe Aceh Darussalam (NAD) living in areas where the poverty rate is still high as a consequence of the Dec 2004 earthquake and tsunami.

The proceeds from the fertilizer sales would be used to support small-scale farmers and alleviate poverty.

Poverty alleviation is one of the main pillars of Japan`s strategy in providing ODA (Official Development Assistance) to Indonesia.

As one of Indonesia`s main development cooperation partners, the Japanese governemnt was committed to cooperating closely with the Indonesian government to achieve certain poverty alleviation targets, the embassy said in its statement.

Bank Indonesia Applies National Clearing System

Arief Ardiansyah, TEMPO Interactive - 2007-03-05 09:58

Palembang, 02 March, 2007 (TEMPO Interactive) -: Bank indonesia will apply the national clearing system all over indonesia by the end of 2007. “Funds transfer that people perform can be completed on the same day,” said Deputy Governor of Bank Indonesia. Budi Rochadi in Palembang.

During the authentication of the clearing system in Palembang yesterday, Budi said that Bank Indonesia has recorded a clearing transaction of Rp4.7 trillion during early 2007. Of the amount, Rp4.5 trillion was processed through the national clearing system of Bank Indonesia.

Bank Indonesia has inaugurated clearing areas at six offices of Bank Indonesia: Palembang, Bandar Lampung, Bengkulu, Jambi, Palangkaraya and Lhokseumawe.

Banks to help debtors affected by floods

Jakarta (ANTARA News) - Banks will help debtors affected by recent floods in Jakarta that have paralyzed production in some industries.

"We have already coordinated with Bank Indonesia (the central bank) about it. In principle we all will help them," the general chairman of the National Banking Association (Perbanas), Sigit Pramono, said here on Sunday.

He said that he had already written to Perbanas members to make an inventory of, verify and identify the debtors` problems to determine the form of assistance for them.

"We hope we could report the result of the inventory to Bank Indonesia within a week for the bank to decide the assistance," he said.

He said the assistance could be extension of grace period or an interest cut or even writing off of interest.

"We still need some time to determine the form of assistance," he said, adding that debtors now were still unable to tell how much they had lost," he said.

He said the national banks had actually had an experience in such a case namely when they helped debtors in disaster-hit Aceh and Yogyakarta so the pattern for it was actually already available.

Bank Indonesia spokesman Budi Mulya said based on central bank regulations debtors in regions hit by disasters were entitled to getting special treatment and therefore they would receive relief assistance.

Lafarge stays on in post-tsunami RI to rebuild facilities

Abdul Khalik, The Jakarta Post, Jakarta

Even though its production facilities were ruined and 182 employees killed or missing after the tsunami that devastated Aceh on December 26, 2004, France-based company Lafarge, which owns PT Semen Andalas Indonesia, has opted to stay in the province.

The world's largest cement producer officially opened a cement packing terminal there last week as part of its post-tsunami recovery projects. These also include the construction of an upgraded cement plant and coal-fired power plant.

The company will spend a total of US$150 million for the project, making it the largest industrial investor in Aceh.

Below are excerpts from an interview with PT Semen Andalas president director Marcel Cobuz about the company's plans and expectations for running a business in Indonesia, especially in still-recovering Aceh.

Lafarge is probably one of the foreign companies hit hardest by the tsunami, Why did Lafarge decide to stay on in the province?

First of all, Lafarge has a strategy of maintaining a good balance of its presence between mature markets, such as Western Europe and Japan, and developing markets, such as Asia and the Pacific region. So, we give a lot of attention to Asia, particularly Southeast Asia. We are almost everywhere in the region. We are present in Malaysia, the Philippines, Bangladesh, India, China, South Korea, and Japan. And this trend will continue.

Of course, even before tsunami, we were quite small in Indonesia. But how else you can start or get a foothold in a market and test the appetite of customers for new products than to start a small operation and grow bigger.

The tsunami was an unfortunate event, leaving a lot of bad impacts. We lost over 180 employees and all of our industrial assets and the plant -- the only manufacturing facility we had in the country. But we got back on our feet quickly. First, we ran logistical efforts to help rebuild Aceh and provide logistical supplies. In fact, we were able to supply cement a couple of weeks after the tsunami.

After the tsunami, we had to think about how to maintain our market share and how to supply cement to our customers. We are fortunate enough to have a plant in Langkawi, Malaysia, to supply North Sumatra and Aceh. And we will continue to do so until our plant in Lhok Nga is completed sometime next year to supply our markets, which are mainly in Aceh, North Sumatra, and the Riau mainland and islands.

How is progress going on the plant reconstruction?

An investment budget of US$150 million has been approved to finance plant reconstruction, while an initial bridging loan of US$30 million from Citigroup has been leveraged to start the project. The new cement plant, which will have a production capacity of about 1.6 million tons a year, is expected to be fully built by the end of 2007 and will be commissioned in early 2008. We are just completing our fourth terminal in Dumai in Riau, and constructing our port in Lhoknga.

Today, we are importing 1.3 million tons of cement from Langkawi and channeling them through our four terminals in Lhoknga in Aceh, Batam in Riau, Belawan in North Sumatra, and Dumai terminal. We have approximately 35 percent of market share in our markets, which comprise Aceh, North Sumatra, and Riau.

What about the issue that the government will tax the proceeds of your insurance claim?

Our capacity depends very much on our financial capability. For instance, if the insurance claim is going to be taxed, then of course that will limit our investment capability. Look, we've already lost the plant and we hope our insurance claim will not be taxed. We are now discussing the issue with the Ministry of Finance, the Aceh governor, and the Investment Coordinating Board (BKPM). We hope we can find a proper solution on the issue by the end of January.

Do you have a legal basis for this?

Yes, the President of Indonesia has issued a post-tsunami presidential decree allowing tax exemptions in order to improve the business environment in Aceh. We believe we qualify for such an incentive.

Are there any new plans for expansion -- for instance, a new plant in North Sumatra? What about the failed attempt to acquire Semen Gresik?

Lafarge is a big international player. We keep on eye on many possible developments, not only the PT Semen Gresik acquisition. For the time being, what I can tell you is that we want to focus on the reconstruction of our state-of-the-art plant in Aceh. But we also see some other developments in Sumatra. Many things will happen in the future. North Sumatra, for instance, has a good potential market. Today, we don't see much infrastructure work but there are plans to build a new airport, expand Belawan port and do other infrastructure projects. So, a lot of cement will be needed, and we want to play an important role.

Speaking of political conditions in Aceh, how do you see the election of Irwandy Yusuf as Aceh governor?

I believe the business environment in Aceh will improve. First, anyone who becomes Aceh governor will realize that without infrastructure, educational development and a sound business environment, this region will be forced to depend on subsidies. We believe that by supporting the business environment, more and more revenues will be generated in the form of local taxes and central government taxes. That investment will create jobs and reduce unemployment, which is high in Indonesia. It will also create welfare and boost other businesses. There will be a full chain of value creation.

All in all, we believe in local autonomy. Whoever is in the decision-making position, they have only one option, which is to give incentives to foreign and local investors to put their money in the province.

Do you have any suggestions on what Aceh or Indonesia in general can do to attract more investment?

I think foreign investors want stability -- economic and political stability. Macroeconomic stability is one of the fundamentals that should be in place. Indonesia has proved over the past two years that its macroeconomic fundamentals are improving. The inflation rate is dropping towards single digits while economic growth is quite high. Foreign currency reserves are quite strong, and the level of debt allows the government to be flexible. I think the fundamentals are there, but we need political willingness to improve the business environment, fight corruption, and allow incentives.

Above all, we need some success stories, since the more success stories are available, the more foreign investment comes in. You see, foreign investors like the rainmakers. They look at Lafarge and other pioneers, and if they think these companies have success stories then they will follow.

UNICEF Opens 227 Child Care Centers In Indonesia

January 26, 2007 4:26 p.m. EST

Siddique Islam - All Headline News South East Asia Correspondent

New York, NY (AHN) - The United Nations Children's Fund (UNICEF) has completed construction of the first of the 227 mother-and-child health centers in Indonesia's tsunami-devastated Aceh province and earthquake-hit Nias Island.

"Through these family health and development centers, mothers, children and babies will have immediate and full-time access to professional midwives, specialized infant health care and learning and development activities," UNICEF's Chief of Field Office in Aceh Edouard Beigbeder says.

"This is a brand new facility for the community. It's not replacing something; it's giving the community something they didn't have before. Strengthening community-based health systems will have a long-lasting impact on child survival and development and will help facilitate Aceh and Nias' recovery, rehabilitation and development."

UNICEF has set aside $11 million for the construction of the centers, in addition to $90 million for the construction of more than 300 permanent schools. The campaign also marks the first time UNICEF has taken on a construction role.

Indonesia was the worst-hit of the dozen Indian Ocean nations that were struck by the earthquake and ensuing tsunami on 26 December 2004, accounting for some two thirds of the death toll of more than 200,000, with over half a million others left homeless.

Data to determine government's gas policy to be issued soon

The Jakarta Post, Jakarta

Long-awaited projections of the country's long-term gas supply and needs will be issued later this month, providing the government with reliable figures on whether or not it should go ahead with its liquefied natural gas (LNG) export policy and interisland gas pipeline projects.

"I hope the preparation of the gas supply and needs projections will be completed this month," the Energy and Mineral Resources Ministry's director general of oil and gas, Luluk Sumiarso, told the Suara Pembaruan daily Wednesday.

He said that the gas projections would provide information on proven gas reserves and potential demand in nine gas-producing provinces, including Nanggroe Aceh Darussalam, North Sumatra, South Sumatra, Jambi, West Java, Central Java, East Java, East Kalimantan and Papua.

"The data will be used as the basis for deciding whether or not we will go ahead with the plan to build a gas pipeline linking East Kalimantan and Central Java, and to determine our future export policy," he said.

PT Bakrie & Brothers won tenders from the downstream oil and gas industry regulator, BPH Migas, in July to build and operate the 1,115-km pipeline linking East Kalimantan and Central Java.

However, the construction of the $1.26 billion pipeline project has been delayed due to a lack of gas supplies.

Current gas production in East Kalimantan is only enough to supply the PT Badak NGL liquefied natural gas plant, the country's largest LNG producer.

Energy and Mineral Resources Minister Purnomo Yusgiantoro had said that the fate of the pipeline project would be determined after the issuance of the gas supply projections.

Purnomo said that the government might also choose to use LNG tankers, instead of building pipelines, to overcome gas shortages in Java.

Due to the decline in gas production, the government had planned to cut LNG exports by 19 percent to Japan, South Korea and Taiwan this year.

Indonesia may ship 19.4 million metric tons of LNG this year, less than the contracted 24 million tons. Pertamina is also negotiating the postponement or replacement by other producers of 36 cargoes from the Badak plant and 22 from Aceh-based LNG producer PT Arun NGL.

Luluk said the government was still committed to exporting LNG based on existing contracts, even if there was a shortage of gas supplies at home.

The gas supply projections will only affect future export policy, he said.

According to figures issued by the Energy and Mineral Resources Ministry, Indonesia's total gas reserves stood at 187.1 trillion standard cubic feet (TSCF) last year, up from 185.8 TSCF in 2005.

Last year, Indonesia produced a total of 8.10 billion standard cubic feet per day. About 54 percent of the total gas production was exported, mostly in the form of LNG. The remaining 46 percent was sold on the domestic market.

Indonesia rushes relief to flood-ravaged Sumatra island

The Associated Press

Published: December 24, 2006, The International Herald Tribune

BANDA ACEH, Indonesia: Indonesia rushed tents, food and other emergency aid to flood-ravaged parts of Sumatra island on Monday while the United Nations pledged US$2 million (€1.5 million) for survivors.

Soldiers loaded the aid into a military cargo plane in the capital, Jakarta.

It will be distributed by helicopters because the floods — triggered by days of heavy rain — have washed away roads and bridges in the worst hit area of Tamiyang in eastern Aceh province, said Syamsul Maarif, the executive director of the National Coordination Body for Disaster Response.

An aerial view from an aid flight over the region on Sunday showed many houses submerged, while only the roofs of others were visible. Some families were trapped on the roofs of their homes.

The death toll was at least 87, with dozens others reported missing, while some 110,000 people have been forced to flee their homes and are now staying in tents, government buildings or with relatives, said Burhanuddin, an Aceh government spokesman who goes by a single name.

Government seismologist Ahmad Zakir said rain had now stopped falling over the affected regions, but said light drizzle was a possibility later Monday.

The U.N. said it would provide an initial US$2 million (€1.5 million) in emergency relief to the region from its Central Emergency Response Fund.

Aceh was the region worst hit by the 2004 Asian tsunami, but this week's flooding was in areas unaffected by that disaster.

Germany swaps $24m debt for education in Yogyakarta

Urip Hudiono, The Jakarta Post, Jakarta

The German government has provided a 20-million-euro (US$24-million) debt swap to Indonesia to support the rehabilitation of schools in Yogyakarta and Central Java that were devastated by an earthquake earlier this year.

Germany has also provided another 6 million euros in additional grants, bringing the total amount of money involved to 26 million euros, for post-tsunami housing reconstruction in Aceh and Nias.

The agreement on the debt swap and grant was signed Monday between the Finance Ministry's director general for debt management, Rahmat Waluyanto, and German Development Bank (KfW) vice president for Asia Pacific, Hans-Peter Mssig.

The debt swap is the fourth and last tranche of earlier schemes that Germany provided to Indonesia, worth some 93.6 million euros so far.

In 2004, Germany provided 25 million euro in a debt swap for nature scheme to enhance the environmental awareness of SMEs and the protection of natural parks, following a debt swap worth 23 million euros earlier the same year for improving junior high school education in eastern Indonesia, and 25.6 million euros in 2002 for elementary education.

Under the latest debt swap scheme, Germany will cancel up to 20 million euros of debt after Indonesia sets aside half of the amount for rebuilding 213 primary and junior high schools in Yogyakarta and Central Java.

Indonesia's total debt to Germany stands at some 1.1 billion euros. Current project loans include 443.5 million euros for transportation, health, education, the environment and telecommunications.

Germany's grants for the post-tsunami reconstruction work in Aceh and Nias, meanwhile, totaled 250 million euros.

Rahmat welcomed the debt swap schemes, saying they were a mutually beneficial solution to the debt problem. The government will remain prudent in managing the country's debt, he said, and will only accept other debt swap schemes whose terms and conditions are feasible.

Mssig said that although the latest debt swap scheme was the last in the series, Germany might consider future ones following an assessment of their benefits to the welfare-improvement effort in Indonesia.

Other creditor countries have also been considering debt swap schemes for Indonesia, although no progress on these has been made to date.

New York Sisters Rebuild Indonesian Town Destroyed by Tsunami

Wednesday December 13, 2:16 pm ET

51 Homes, Water System, Market, Women's Center Rise on Site of Destroyed Village in Aceh Province. Mark Second Anniversary of Deadly Catastrophe With Pledge to Expand Their Work

NEW YORK, Dec. 13 /PRNewswire/ -- Two New York-based sisters with long experience working and living in Indonesia have rebuilt a town in Aceh province devastated by the 2004 tsunami and are now turning their attentions to rebuilding surrounding towns.

Sara Fraad Henderson, later joined by her sister, Martha Fraad Haffey, spent several hundred thousand dollars of their own money to set up Building Bridges to the Future, which in the aftermath of the tsunami "adopted" the town of Rumpet, located in the Lamno subdistrict about 95 miles west of the provincial capital of Banda Aceh. The village, which once had 500 residents, was left with 170 survivors after the tsunami.

"I couldn't stand by and do nothing when people in Aceh were in such desperate straits," said Henderson, a grandmother who spent 16 years as a banker in Jakarta. "We've completed our work in Rumpet but there are so many others who need the same kind of help and we want to provide that."

Under the rebuilding wing headed by Henderson, 51 homes and a women's center have been built in Rumpet to provide housing for remaining villagers whose homes and livelihoods were wiped out by the tsunami. A nearby local market was rebuilt. A well water system with five distribution points from which to draw the water is at the completion point, and work has begun to assist villagers in purchasing land to rebuild six additional villages in the Lamno subdistrict of Aceh Jaya. Land purchase is complete in one of those villages, and the goal is to complete the land purchases by the end of 2007.

Under the social work wing headed by Haffey, a scholarship program has been established to provide training for community activists and child welfare specialists in conjunction with programs in about 30 colleges and universities around Indonesia, centered in the capital of Jakarta. Already five scholarships, at a total cost of about $4,000, have been funded. In addition, Haffey is seeking to work with publishers and others to translate basic social work texts into the Indonesian language to allow that training to go forward.

They have spent about $500,000 so far, including about $200,000 of their own money, and want to expand their work.

Every dollar donated to Building Bridges to the Future goes for direct assistance, as Henderson and Haffey personally underwrite all administrative costs.

Information on their work is available at http://www.buildingbridgestothefuture.org.

Land titles in Aceh: So much hope, but more action needed

Andrew Steer and Jean Breteche, Jakarta / The Jakarta Post

There is much in the reconstruction of Aceh and Nias that is going very well. In all, some US$6 billion has been allocated to projects within two years in a reconstruction program that has impressed the world.

As co-Chairs of the Multi-Donor Fund for Aceh and Nias, we are proud to be associated with highly successful program in housing, infrastructure, waste management and community development. But there is one important program that we are supporting that is, so far, failing to live up to its earlier high hopes.

Secure land-rights provide the corner-stone on which communities will rebuild their homes and livelihoods. They provide a solid, legal foundation for spatial planning, reconstruction and long-term economic development. Recognizing their importance, the Multi-Donor Fund allocated $28 million for the Reconstruction of Aceh Land Administration Project (RALAS), hoping it would be a shining example of how communities could "build back better."

The funds help the National Land Agency (BPN) recreate land records destroyed by the tsunami, salvage those which can be, and build capacity for the creation of a new, modern land records system. Under the project some 600,000 land parcels are to be titled, many for the first time ever, since less than 20 percent of land owners in Aceh had legal title prior to the tsunami.

This will enable citizens to use their land as collateral for financing homes and businesses, and thereby unlock substantial dormant capital for thousands of poor families struggling to rebuild their shattered lives.

Fifteen donors have contributed $650 million for the Multi-donor fund for Aceh and Nias, the largest post-disaster fund in the world. Donors include the European Commission, Netherlands, UK, World Bank, Norway, Denmark, Canada, Sweden, Asian Development Bank, Germany, United States, Belgium, Finland, New Zealand and Ireland.

Linking land titling to post-disaster reconstruction in Aceh was a much-admired innovation on the part of the Government, and is being widely watched around the world. Indeed, leaders from several countries have highlighted the importance of this initiative. These include former U.S. President Bill Clinton (Special Envoy for the Tsunami), Hernando de Soto (the father of modern thinking of property rights for the poor), President Paul Wolfowitz of the World Bank and Agnes van Ardenne, the Netherlands Minister for Development Cooperation.

So far, thousands of Acehnese have had their land ownership officially surveyed and adjudicated and their ownership rights publicly notified and confirmed, but they are still waiting to receive their title certificates. While field-based teams have very capably surveyed and adjudicated over 120,000 parcels of land, this work has not yet been transformed into titles due to a range of bureaucratic obstacles.

As of today only 7,700 titles have been distributed to tsunami survivors. As of this writing, some 20,000 land titles are actually lying ready for distribution, all the paper work complete, yet they remain stuck in the system due to simple administrative bottlenecks that could be resolved with decisive action.

For half of these titles, all that remains is for the title certificate to be signed by the Land Office Heads in Aceh. The other half of the certificates, which are already signed, only need to be handed to the land owners.

There is nothing inherently difficult about solving the problem. Indeed, under a similar land titling project financed by the World Bank in other parts of Indonesia, BPN has managed to distribute 365,000 titles in some provinces in almost the same period. It is simply necessary to give greater energy and priority to the task.

This weekend President Clinton will raise the issue of land titles in Aceh. We pray that this gesture will be accompanied by renewed energy and action in the program as a whole, so that those who have suffered so much will be empowered to live more dignified and prosperous lives.

Jean Breteche is Ambassador of the European Commission in Indonesia, and Andrew Steer is Director of the World Bank in Indonesia.