New Zealand Fund Pulls Freeport Investment, Cites Papua Rights Offenses

Jakarta Globe, Jonathan Vit, September 27, 2012

An aerial view of a giant mine run by US firm Freeport-McMoran Cooper & Gold,
 at the Grassberg mining operation, in Indonesia's Papua province in this July 2005
file photo. (Reuters Photo/Stringer) 

        

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New Zealand’s public pension fund pulled more than $1 million in investment from Freeport-McMoRan Copper & Gold over allegations of human rights offenses committed by security forces around the company’s controversial Grasberg mine in Papua.

The $15.7 billion New Zealand Superannuation Fund announced on Wednesday that it would cease investment in four companies that violate international ethics standards.

The fund raised concerns over “breaches of human rights standards by security forces around the Grasberg mine, and concerns over requirements for direct payments to government security forces by the company in at least two countries in which it operates.”

Indonesian security forces have a heavy presence in the restive province, where police and the Indonesian Military (TNI) are ostensibly suppressing a decades-long insurgency waged by members of the Free Papua Movement (OPM).

But Human Rights Watch, citing leaked military documents, has alleged that security forces have targeted everyone from tribal leaders to political activists in Papua. Security forces routinely suppress pro-independence groups in the province, jailing those caught flying the “Morning Star” flag for treason and killing local leaders suspected of being separatists, like Reverend Kinderman Gire and Mako Tabuni, of the West Papua National Committee (KNPB).

Security forces hired by Freeport’s local subsidiary also engage in regular firefights with unknown gunmen along a road leading to the mine in Timika, Mimika district. The OPM operates from a base in Puncak Jaya, near the Grasberg mine.

The fund concluded that while Freeport’s human rights policies have improved in recent years, the activities of the government forces it employs are beyond the company’s control.

“This limits the effectiveness of further engagement with the company,” the fund said in a statement.

Human Rights Watch applauded the move, calling it “a sound decision indeed.”

“Businesses are getting more and more conscious about human rights abuses,” said Andreas Harsono, a researcher with HRW. “Sound businesses do care about human rights.”

The Ministry of Defense declined to comment on the move. Papua Police, local representatives of the TNI and Freeport Indonesia were unavailable for comment by deadline.

The fund had $1,062,061 in holdings in Freeport as of June 30.

Japan’s Tokyo Electric Power Company, China’s Zijin Mining Group and construction and defense firm KBR were also dropped from the fund’s portfolio.

All four were dropped after the fund decided that they were unlikely to affect any change in their policies.

“In making a decision to exclude a company from our portfolio, one of the tests we apply is whether engagement with the company might realistically lead to sufficient improvements,” the fund said. “We have come to the conclusion that further engagement by the Fund with these companies is not likely to be effective.

“We would rather focus our efforts on companies where we believe we can make a difference.”

The fund’s equity portfolio includes shares in more than 6,500 companies. It manages the government pension fund available for all New Zealand residents 65 and older.

Freeport, which runs the largest copper mine in the world at Grasberg, has a market capitalization of $37.29 billion and pulled in $3.17 billion in net income last year.

Seventy-three percent of its shares are held by institutions and mutual funds.

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PNG's Nationwide Microbank Signs Up 100,000th Customer

Asian Development Bank, 31 May 2011

MANILA, PHILIPPINES - Papua New Guinea's (PNG) Nationwide Microbank has signed up its 100,000th customer, highlighting the ongoing demand for quality and accessible banking services in the country.

The landmark bank account was opened by Tommie Seriate, a 49-year-old widow and mother of four from the Unggai Bena District of the Eastern Highlands Province.

"I am so happy and glad that I made the right decision to open an account with Nationwide Microbank," said Ms Seriate. "They made it so simple to open a savings account."

To make a living, Ms Seriate operates a small coffee garden in a remote part of the Eastern Highlands Province, some two hours by road north of Goroka, the provincial capital. She had previously tried to open a bank account with two commercial banks without success.

Nationwide Microbank (formerly Wau Microbank) was established in 2004 as a pilot scheme under the ADB Microfinance and Employment Project. The project was implemented between 2002 and 2010 with a $9.6 million concessional loan from ADB to the Government of PNG and a grant from the Australian Agency for International Development (AusAID). It laid the foundation of a growing microfinance sector in PNG, through extensive training of staff and the development of appropriate products.

"Giving individuals and small firms access to the finance and banking services they need encourages entrepreneurship which ultimately helps boost economic growth for the country as a whole," said Eugenue Zhukov, Regional Director of ADB's office in Australia.

Although no official data exists, ADB estimates that only 15% of the PNG population has access to formal or informal banking facilities, lower still in rural parts of the country. This means that small firms are unable to get the finance they need to expand and individuals are unable to either borrow to meet their financial needs or securely save their earnings.

"Nationwide Microbank continues its efforts to ensure that the people of Papua New Guinea have access to relevant and affordable financial services," said Tony Westaway, Nationwide Microbank's Managing Director. "We are ‘banking the un-banked', an achievement that would not have been possible without the ongoing support from the Asian Development Bank and the Pacific Financial Inclusion Programme (PFIP)."

In order to further expand its reach into rural areas and make its services even more accessible to clients, Nationwide Microbank is developing a "branchless" banking strategy, with support from PFIP and ADB, which will offer financial services through the use of mobile phones and other wireless technology. The aim is to enable clients to use their bank accounts without needing to travel to a bank branch, a journey that can be both costly and time-consuming from remote parts of the country.

PFIP is a Pacific-wide program that is helping to provide sustainable financial services to low income households. It is funded by the UN Capital Development Fund, AusAID, the European Union, and the United Nations Development Programme (UNDP). PFIP operates from the UNDP Pacific Centre in Fiji.

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‘Development funds for Papua among the highest’

The Jakarta Post, N | Thu, 07/29/2010 11:00 PM

President Susilo Bambang Yudhoyono called on Thursday for an audit of the disbursement of the state budget for the development of Papua island, saying that the achievement of the development on the island was far from satisfying.

“I think it would be important for us to conduct an audit on the special autonomy region development fund of Papua. I have received many letters, even accusing of our [Jakarta] carelessness for, among others, the lack of Papua’s development fund,” he said at the Presidential Palace on Thursday.

The President said that the progress of the two provinces in Papua should be far better than what were seen today because the government’s spending for the development in the two provinces were among the highest in the country.

Among the country’s 33 provinces, he said, Papua and West Papua provinces have the largest per capita development spending. “If there is no improvement there, then we have to know, why?” he said.

Papua Asks Freeport Indonesia For Help Buying Stake in Mine

Jakarta Globe, Reva Sasistiya, March 16, 2010

Papua’s provincial government wants to receive a larger share of the royalties from the massive Grasberg gold and copper mine to help it buy a 9.36 percent stake in the mine’s operator — PT Freeport Indonesia.

Agus Sumule, an economic adviser to the Papua governor, said on Tuesday that Papua planned to fund the purchase of the stake, worth an estimated $1 billion, through bank loans. A greater share of the royalties would strengthen Papua’s balance sheet and help it raise the money, he said.

“We want to boost our fiscal performance before we apply for the loans,” Agus said.

Papua currently receives 6 percent of the taxes and other financial obligations that Freeport Indonesia, the domestic subsidiary of US-based Freeport-McMoRan Copper & Gold, pays to the central government. Last year, Freeport Indonesia paid $1.4 billion to central government. Papua received $84 million.

Agus said Papua’s provincial government had proposed to the Finance Ministry and the House of Representatives that its share of the revenue be increased from 6 percent to 30 percent.

Should the proposal be approved, Papua could start paying for the coveted stake in installments, he said.

The value of the stake has been estimated at $1 billion, but it fluctuates according to Freeport-McMoRan’s share price, Agus said.

“To acquire the stake we need a lot of money,” he said.

Meanwhile, Agus said the Papuan government had not been approached by state-owned nickel miner PT Aneka Tambang (Antam), or the central government, about Papua and Antam jointly buying the Freeport stake.

In December, Investor Daily Indonesia, quoting Antam president director Alwyn Syah Loebis, reported that Papua might join forces with Antam to buy the Freeport Indonesia stake.

However, Agus said on Tuesday that Papua was more interested in buying the stake itself.

Earlier this month, Papua signed a memorandum of understanding with Freeport Indonesia about acquiring the stake. Freeport Indonesia spokesman Budiman Moerdijat said at the time that Freeport hoped to sell the stake by the end of this year.

The central government already owns a 9.36 percent stake in Freeport Indonesia. Deputy State-Owned Enterprises Minister Sahala Lumban Gaol said earlier this month that the central government was reviewing a plan to increase its stake and had submitted a proposal to Freeport Indonesia.

“The government will look thoroughly at the cost and benefits of the plan before making any decision,” Sahala said, adding that it had yet to decide how big an additional stake it wanted to buy.

Govt to set up three SEZs for agribusiness

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Sat, 02/06/2010 1:03 PM | Business

The government is aiming to attract less than Rp 100 trillion (US$10.6 billion) in investment through the development of three special economic zones (SEZs) producing agricultural products this year.

The three zones will be located in Medan, North Sumatra, in Dumai, Riau, and in Merauke, Papua, Vice Agriculture Minister Bayu Krisnamurthi said Friday at the Coordinating Economic Ministry.

Medan, which produces crude palm oil (CPO), may attract Rp 12.5 trillion in investment, he said. "PT Perkebunan Nusantara III will provide 800 billion in initial investment."

Dumai needs Rp 20 trillion in investment for CPO production, Rp 2.5 trillion to come from PT Wilmar International Ltd., Bayu added.

"We want to increase CPO production, and raise CPO's added value by developing downstream industries. The SEZ approach is used to make private investors interested in developing downstream industries in a zone by using existing raw materials," he said.

Indonesia wants to develop half-processed goods to be sold abroad rather than sell raw materials.

Bayu said Indonesia expects to produce 40 million tons of CPO in 2020, almost double from 20 million tons targeted this year.

Merauke needs Rp 60 trillion in investment to become a food estate, producing various agriculture products, said Bayu.

"We're preparing land of 1.62 million hectares, suitable for food estate. But we initiate by developing from 500,000 hectares. In the first year we will start from 100,000 hectares," he said.

Bayu said the government would help develop supporting infrastructure in Merauke to ensure the region is ideal as an economic zone and viable for both domestic and foreign investment.

"Merauke is still *underdeveloped* so it needs a large initial investment of between Rp 2.5 trillion and Rp 3 trillion," Bayu said, adding that 32 investors from domestic and abroad such as the Middle East, Japan, Brazil and China were interested.

Vice President Boediono said Thursday the government would closely look at spatial planning to ensure more land for agricultural use, according to the Indonesian Chamber of Commerce and Industry.

Research from the Agriculture Ministry shows Indonesia has 190 million hectares of land, 101 million suitable for agricultural use. Now 64 million hectares is used for farming.

President Susilo Bambang Yudhoyono said the government would focus on 10 strategic and key commodities to feed Indonesia and the world.

Coordinating Economic Minister Hatta Rajasa said the government would cooperate with regional governments to build infrastructure in the three zones.

"Investment appetite is high. I am positive in 2010 investment will grow," he said, adding that the government has met with representatives from Japan and the US.

According to the National Development Planning Agency (Bappenas), Indonesia has identified six economic corridors - Eastern Sumatra-Northwestern Java, Northern Java, Kalimantan, Western Sulawesi, East Java-Bali-East Nusa Tenggara and Papua - to be developed through public-private partnerships.

Each corridor has its own focus industries.

Bappenas said Indonesia would need almost Rp 2,000 trillion in investment between 2010 and 2014 for infrastructure development.

Up to 10 women in Cabinet would be enough: SBY

Erwida Maulia, The Jakarta Post, Jakarta | Tue, 12/01/2009 12:02 PM

Pain has a voice: Yosefa Alongma of Papua, a victim of violence against women, shares her sorrow during a ceremony to mark the 10th anniversary of the National Commission on Violence Against Women at the BPPT building, Jakarta on Monday. JP/Wendra Ajistyatama

The President said he hopes for more women in the Cabinet, adding that they were often “more reliable”.

“We now have five women out of 34 ministers in the Cabinet. The ratio is of course still far from enough, so in the future I hope there will be six, seven… and even 10 female ministers; then we will consider it enough,” President Susilo Bambang Yudhoyono said Monday.

For the first time, state oil company Pertamina is headed by a woman, Karen Agustiawan, “and now many ambassadors and business leaders are women,” he added, addressing the commemoration of the 10th anniversary of the National Commission on Violence against Women.

Since Sunday the Commission held a two-day event on the issue, in conjunction with the international 16 days of action against women, from Nov. 25 to Dec. 10, which is International Human Rights Day.

The President cited how women were less corrupt then men, the reason why the government is prioritizing women as recipients of its Rp 100 trillion (US$10.6 billion) soft loan program.

“We have prepared Rp 100 trillion for soft loans, and will prioritize the funds to be managed by women. Women rarely fail, don’t easily waste money, and are seldom involved in corrupt practices,” he said.

The President cited the example of the soft loan program initiated by Nobel laureate Muhammad Yunus in Bangladesh where 97 percent of the funds were disbursed to women.

He added the government’s missions for the country’s women were aimed at “protecting, promoting and empowering” them.

Meanwhile, Commission chairwoman Kamala Chandrakirana urged the government to take “special measures” to support and empower female victims of violence.She also called for the revocation of regulations “bracing stigmas against and violating rights of women”.

Activists have criticized all regional regulations deemed to discriminate against women including those in the Aceh province, which is authorized to issue Islamic sharia laws.

The commission “hopes the government will build a legal system that provides justice for women and is sensitive to their problems… and that the government will improve its capacity in implementing the 1984 Law on the Ratification of Convention on the Elimination of All Forms of Discrimination Against Women,” Kamala said.

The anniversary was also attended by former president B. J. Habibie, who established the commission during his brief term in 1999.

Benny K. Harman, head of the House of Representatives’ Commission III, which oversees law, rights and security issues, said it would involve the women’s commission more often to ensure women’s voices were heard in the legislative process.

Among other testimonies from women, a member of the minority Ahmadiyah school of Islam in Kuningan, West Java, Uminah said tearfully that all they wanted was legal recognition of their marriages.

“We have to find authorities willing to legalize our marriages when we are not even entitled to identity cards unless we renounce our faith.”

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Save the planet

The Jakarta Post, Tue, 12/01/2009 7:52 PM | Jakarta

First Lady Ani Bambang Yudhoyono and State Women’s Empowerment Minister Linda Agum Gumelar plant a tree in Lake Situ Cikaret, Bogor on Tuesday. Participants from seven women’s organizations planted 1,000 trees around the site. (JP/Theresia Sufa)

With Overdue Help, East Can Rise Again

The Jakarta Globe

Workers haul bags of cement at Sunda Kelapa port in north Jakarta on Tuesday. The Indonesian economy is estimated to have expanded 4.3 percent this year. (Photo: Bagus Indahono, EPA)

It is hard to imagine that more than two centuries ago the Dutch traded Manhattan to the British for Ambon, which like many of the islands that would eventually become part of eastern Indonesia was thriving on the nutmeg and clove trade while Manhattan was a barren piece of land.

How times have changed. Eastern Indonesia is today virtually cut off from the world while Manhattan is arguably the center of the financial world. Nusa Tenggara, Maluku and Papua, which make up eastern Indonesia, are among the most backward regions of the country. According to a 2007 World Bank report, this region has far lower levels of access and assets compared to Java-Bali or even Sumatra and Kalimantan. It also suffers from lower returns on education and far higher levels of informal employment. Its remoteness translates into lower levels of access to basic services and infrastructure.

In a nutshell, this means that eastern Indonesia has been neglected by the central government for much of the country’s history. Its people suffer silently, devoid of political and economic power despite the rich potential the region offers in terms of tourism and the marine industry.

It is thus heartening to note that Vice President-elect Boediono is on a swing through the region to explore new development models and study viable infrastructure projects. The noted economist visited Ambon before flying on to Papua. Accompanied by transportation experts, he is on a fact-finding mission to develop this forgotten part of the country.

So far the projects on the table include ports, airports, roads and highways. The vice president-elect should add schools, power stations and tourism infrastructure to create both human capital and greater economic opportunities for residents.

Better infrastructure, more schools and hospitals will attract private investment into the region. Entrepreneurs will risk capital if they know new opportunities might open up. This will create jobs and raise the overall standard of living for people who currently survive primarily on agriculture.

Improving economic opportunities will translate into narrowing the income and poverty gap between eastern Indonesia and the rest of the country. It will also expand the national economy as new areas open up and more wealth is created. The people of eastern Indonesia deserve the opportunity to improve their lives. They have been neglected for too long, but with a growing economy they too should receive a share of the economic pie.

Regional development disparities are a salient feature of poverty in Indonesia. The people of eastern Indonesia may not be starving but neither do they have access to the services that make up modern life.

Economic growth has been and will continue to be fundamental to reducing poverty in Indonesia, and no matter where citizens live in this vast country, if given the right opportunities they will strive to improve their lives.

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Indonesia Lacks International Law Experts

Thursday, 19 March, 2009 | 18:43 WIB

TEMPO Interactive, Bandung:Indonesia still lacks a good number of international law experts and practitioners. “There are no more than five people,” said foreign minister, Hassan Wirajuda, speaking at an annual lecture commemorating the 80th birthday of former foreign minister Mochtar Kusumaatmadja, in Bandung yesterday. As a consequence, the Foreign Affairs Department is having difficulties managing transnational and human rights issues.

According to Wirajuda, there are three issues that must be faced in the future, namely, water, international trade and human rights. With the current crop of diplomats, the priority of Indonesia’s foreign relations in the past eight years has been maritime and land border issues with 10 countries, such as Malaysia, Singapore and Papua New Guinea.

ANWAR SISWADI

West Sumba teacher takes home Kalpataru award

M. Taufiqurrahman, The Jakarta Post, Jakarta

Like Sysiphus of Greek mythology, who relentlessly carries a rock uphill, West Sumba native Elan Wukak Victor has for years carried out a similarly endless task, growing trees on rocks.

The 63-year-old English teacher started by encouraging his pupils to grow trees in their schoolyard, an idea he took from school to school.

And after 30 years, Elan has planted 400,000 trees, distributed 100,000 seeds to 23 green community groups he helped set up as well as built 81 water reservoirs across Waikabubak, a barren, hilly village in West Sumba, East Nusa Tenggara.

Elan's hard work paid off on Wednesday, when he, along with 11 other environmental activists, was awarded a Kalpataru, the highest award for environmentalists in Indonesia.

Elan won in environmental conservation pioneer category, together with Amandus Kaize from Merauke, Papua, and village head Slamet Tugiyanto from Magelang, Central Java.

Kaize was honored for his efforts to grow a rare variety of plants in a protected forest controlled by his tribal community, while Slamet won for promoting multiple crops among local farmers.

One notable figure who also won the award was former West Java governor Solichin Gautama Purwanegara, for his campaign against illegal logging and on the regreening of community-controlled forests in nine regencies in West Java.

Apart from the Kalpataru awards given to environmental activists, the government has handed out Adipura awards to cities that strive to promote cleanliness.

This year, the government gave the awards to 84 cities throughout the country. More than 300 cities were nominated for the Adipura awards this year.

All five municipalities in Jakarta won Kalpatarus in the category of metropolitan city. Other cities in the category which won Kalpataru are Palembang in South Sumatra and Surabaya in East Java.

Jakarta's gain, however, was at the loss of other cities in the greater Jakarta area such as Bekasi, Bogor and Tangerang. None of these cities won Adipura in this year's contest.

Other cities which also won Adipura include Padang (West Sumatra), Yogyakarta, Denpasar (Bali), Malang (East Java) and Pekanbaru (Riau).

President Susilo Bambang Yudhoyono said in his speech before presenting the two awards that the Indonesian people did not have to wait for people in other countries to save the environment.

"Let us save the earth together with other people in this world," Yudhoyono said.

The President also called on local governments to take environmental protection into account when making policy.

He also reiterated his statement about the need to prepare for global warming's fallout.

Yudhoyono said that global warming would have a disastrous impact on Indonesia as an archipelagic country, as the rising of sea levels would drown many of the country's small islands.

"The time is high for us to find a breakthrough and brace for global warming," he said.

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.

Freeport reaches agreement with Indonesian miners

Jakarta (ANTARA News) - Thousands of mine workers in Indonesia's remote Papua province on Sunday returned to work after a subsidiary of US firm Freeport McMoRan agreed to salary and benefit demands, a labour activist said.

"We finally reached an agreement last night at around 11:00 pm (1500 GMT) and today all workers who are on shift have returned to work," said Penina arma, the secretary general of Tongi Papua, a non-governmental organisation involved in the three-day protest and the negotiations.

More than 2,000 workers from the giant gold and copper Grasberg mine started protesting peacefully Tuesday at the headquarters of PT Freeport Indonesia, which operates the mine, just outside the town of Timika.

The protracted dispute centres on demands for higher wages, improved welfare, and better access to higher-level jobs for Papuan workers.

The rally helped push world copper prices to 8,000 dollars a tonne amid concerns disruptions could lead to a drop in stockpiles of the metal.

Karma said that the agreement had been reached with the executives of Freeport Indonesia and there was no reason to take the dispute further.

The protestors had initially demanded a teleconference with Freeport McMoRan executives in the United States.

Mine workers had demanded a minimum monthly wage of at least 3.2 million rupiah (352 dollars). The negotiations finally settled on a range of 3.1 to 3.6 million rupiah, Karma told AFP.

'Sleeping giant' Papua unveils major development programs

Nethy Dharma Somba, The Jakarta Post, Jayapura

The Papua provincial administration will focus its development programs on rural areas where the largest number of poor live, the governor said Thursday.

Governor Barnabas Suebu said 80 percent of Papuans live in remote villages in poor conditions, if not absolute poverty.

He said the administration would provide each of the 2,700 villages in Papua province and 1,164 villages in West Papua province with Rp 100 million (about US$11,100). "This is not a gift from Santa Claus, it must be accounted for."

The Papua administration currently oversees autonomy funds for both Papua and West Papua provinces.

Before receiving the funds, villages must specify their needs and outline planned development programs, as well as detailing plans for supervising the use of the money.

Some of the main goals of the village development program are improving nutrition, education, health, local economies and infrastructure in the villages, as well as addressing issues such as gender equality, sustainable forest management and law and justice.

To finance the program, Suebu has shaken up the provincial budget. In the previous budget, 70 percent of funds were allocated for the state apparatus, 20 percent for infrastructure and public spending and the remaining 10 percent for rural development. In the new-look budget, the funds for the state apparatus have been slashed to 27 percent, while 25 percent will go for infrastructure and public spending and 45 percent for rural development.

The province also has launched a major infrastructure project, called the integrated transportation network. Under this project, the administration will build seaports, airports and a modern highway system, at a total cost of between Rp 50 trillion and Rp 100 trillion. Funding for the work will come from both the state and provincial budgets, as well as from overseas grants.

Suebu said a modern transportation system would spur economic growth in villages.

"Our farmers have to sell their products in the city, but to do this they have to pay a lot for transportation, which cuts their profit. That's a major drawback of a poor transportation system," he said.

The governor said the highway construction would begin this year, starting with the 3,000 kilometer Trans-Papua highway, which will connect Papua and West Papua at a cost of Rp 30 trillion.

To save costs, the project will make use of tailings from the PT Freeport mining company, with the end result expected to be of similar quality as concrete roads.

Suebu said with an integrated transportation network, isolated areas would be opened and more investors would come and awaken the "sleeping giant". "This is what we call the new Papua, a prosperous Papua," said the governor.

Among Papua's abundant natural wealth are proven gold and copper reserves of 2.5 billion tons in the PT Freeport mining concession area, 540 million cubic meters of potential commercial timber, nine million hectares of forest conversion areas for large-scale plantations, 2,000 miles of coastline, a sea area of 220,000 square km and 1.3 million tons of potential fishery products per year.

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.

Govt to maximize 'local potentials' in building power plants

JAKARTA (Antara): The government will maximize the use of local resources in building coal-fired power plants outside Java currently in bidding process, a senior official at the Ministry of Energy and Mineral Resources said Tuesday.

"The local potentials include goods, manpower as well as funding," said the ministry's director general of electricity and energy utilization J Purwono.

"We will ask the contractors to use local resources including machineries, construction materials and manpower although the funding come from foreign sources, which usually are binding ones," he added.

Purwono pointed to the construction of a foreign-funded 7 megawatts (MW) coal-fired power plant which could use up to 30 percent of local content.

He also called local financial institutions to be proactive in funding power plant projects saying it could be a market for local lenders.

"Indonesian banks should also compete to finance power projects. Don't be passive," he said.

The government has announced on Dec. 19 a tender for the construction of 25 coal-fired power plants outside Java.

Four power plants will have the capacity of 100 to 200 MW to be built in Aceh, North Sumatra, West Sumatra and Lampung provinces.

Another four power plants with 50-65 MW of capacity slated for West Kalimantan, South Kalimantan, Central Kalimantan and South Sulawesi provinces.

There are also 17 plants with smaller capacities of 7 to 25 MW scattered nation wide in Bangka Belitung, Riau, Riau Islands, West Kalimantan, Maluku, North Maluku, Papua, East Nusa Tenggara,West Nusa Tenggara, Gorontalo, Southeast Sulawesi and North Sulawesi provinces.

These power plants are part of the government's plan to generate additional 10,000 MW of electricity by 2009.

As for Java island, the government has started bidding process for 10 power plants. Seven power plants will the capacity of 300 to 400 MW while the remaining three with 600 to 700 MW of capacity.