Business as usual in Indonesia despite the fall of Soeharto

By Djamester A. Simarmata, Jakarta Post

Most of Indonesia's fiscal problems are inherited from previous governments, especially from the Soeharto era. Off-budget hijinks were rampant during that period, as in the case of the foundations established by Soeharto, his family, his cronies and the military.

The fall of the Soeharto regime sparked new hope for improvement in the general welfare, stemming from better governance and better management of the country's economy as a whole. There were growing demands for transparency and good governance.

Soeharto's "one-man show" style was considered a barrier to good governance. The flow of information was very limited, especially in terms of government affairs. There were widespread cases of government expenditures not being documented in the state budget.

There was very little accountability and transparency, both on the revenue and the spending sides. There was a "dark side" of the state budget, where a significant proportion of government expenses and revenues went unrecorded.

Soeharto's methods of financing his various foundations were questionable. It was not even clear whether institutions such as the Supersemar foundation, Dakab, and others, were public or private.

Unfortunately, the latest report on the Observance of the Code of Good Practices on Fiscal Transparency from the International Monetary Fund (IMF) shows that, despite the hopes for reform, business as usual persists in Indonesia.

As a member of the IMF, Indonesia is committed to observing the code in its fiscal affairs. It consists of four pillars, namely: Clarity of Roles and Responsibilities; Public Availability of Information; Open Budget Preparation, Execution and Reporting; and the Assurance of Integrity.

According to the IMF's evaluation, publicly available fiscal data in Indonesia does not contain sufficient information on extra-budgetary issues. These include regional development and investment funds, housing funds, foundations, cooperatives, extra-budgetary funds for the sub-national level of government, and other items.

Furthermore, the report noted weaknesses in the fiscal regime in the oil and gas sector. Due to the important position of oil and gas in state revenues, there should be appropriate public disclosure of oil revenue and costs, as well as the taxation system and the calculation of oil profits. Since 29 percent of state revenue in 2006 will be from oil and gas, transparency in this sector is a must.

The report acknowledges several advances in fiscal reforms, especially the passage of the laws regarding state finances, the treasury, and the supreme audit board. How-ever, corruption has flourished at regional and local levels since the enactment of the autonomy law, both in executive and legislative bodies. This is proof of the deteriorating climate in the whole body of the bureaucracy.

The status of the Teperum housing fund created in 1993 raises some questions, because it is not formally classified as a pension program. It is financed by compulsory deductions from public servants' salaries. The funds can be withdrawn when a civil servant retires, but without interest. The program has remained off-budget. Such practices violate principles of good public fund management in terms of accountability and transparency. They constitute corruption.

Another important revelation from the IMF's report is that the Indonesian Military (TNI ) and National Police are continuing their old practice of using cooperatives and foundations to raise money from the public. These remain off-budget. Unfortunately such practices can also be found at other ministries and state agencies.

In the TNI's case, these practices violate a 2004 law stating that all TNI business must be transferred to the government. This is only one of the appropriate laws and regulations that has not been implemented. The persistence of such practices in the military proves the unwillingness of the institution to reform its businesses.

The creation of bank accounts for many public officials for the operational budgets of ministries and public institutions is another worrisome practice. The bank accounts remain in the names of officials even after they no longer hold the posts or even after their deaths. This indicates the widespread disorder of fiscal affairs in Indonesia.

The question begs to be asked, why were these accounts created in the names of the officials concerned, and not in the name of the institution? For instance, the question of recent personal accounts for high-ranking police officials has not been clarified. This once again throws the credibility of these institutions into doubt.

Given the seriousness of these off-budget problems, the House of Representatives must take action to solve them. The government can contribute to the effort by raising these issues in public and practicing transparency in its fiscal matters.

These problems are even more serious in light of a recent Merrill Lynch report. It found that a third of the wealthiest individuals in Singapore are Indonesians from the ranks of active and retired high-ranking officials and businesspeople.

The writer is a lecturer at the faculty of economy, University of Indonesia.

Thousands of Indonesian mudflow victims protest

SURABAYA, Indonesia, Nov 27 (Reuters) - Thousands of Indonesians blocked a key road on Java island with truckloads of sand on Monday to press the operator of an exploratory oil well spewing torrents of mud to pay more compensation.

Some 10,000 people have been displaced and entire villages inundated by the mud that has flowed since a drilling accident in May, causing an unfolding environmental disaster in the Sidoarjo area, near Indonesia's second largest city of Surabaya.

"We are here to claim our rights as Indonesian citizens. A few days ago, we not only lost our houses but also our paddy fields and all the infrastructure because of Lapindo," Muhammad Kudori, a representative for the protesters, said after meeting top local officials and the head of the operator of the oil well.

The Banjar Panji well was operated by Indonesia's Lapindo Brantas, a unit of PT Energi Mega Persada , partly owned by the Bakrie Group, which is controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie.

The firm has denied the mud flow is directly linked to the drilling operation.

So far the company has offered a monthly stipend of 300,000 rupiah ($32.86) to villagers who have lost their houses and rent for new accommodation. It has also set aside 6.9 billion rupiah to cover agricultural losses over the next few years.

Anger has been mounting in the area with the hot mud gushing at a rate of 50,000 cubic metres (1.75 million cubic feet) a day from the well despite several government contingency plans to plug the leak.

Many of the protesters who gathered outside the Sidoarjo regent's office had lost their homes and fields in the past week because of the mudflow, which was also blamed for a gas pipeline explosion in the area last Wednesday that killed 11 people.

"I agree with your demand on the compensation of houses and buildings," Basuki Hadimulyo, managing head of a national task force formed by the government to tackle the mudflow, said.

"I will fight for your rights in Jakarta."

In the middle of negotiations, the representatives of the victims walked out as national team could not guarantee the compensation they demanded.

The protesters blocked a road connecting Surabaya with northern cities of East Java with three trucks of sand.

Several experts have said the mudflow could have been triggered by a crack about 6,000 feet (1,800 metres) deep inside the well.

Fed Cup: Indonesia to pay US$ 39,000 fine

JAKARTA, Nov. 16 (Xinhua): Indonesia must pay a fine of more than US$ 30,000 to the International Tennis Federation for its refusal to play Israel at the Fed Cup women's team tournament in Tel Aviv in July.

The Indonesian Tennis Association has confirmed it received an email from Fed Cup Executive Director, Juan Margets, about the penalty, The Jakarta Post newspaper reported Thursday.

The Fed Cup Committee decided to fine Indonesia at its meeting on Sept. 15.

Indonesia must pay 20,000 dollars of the fine to the host, Israel, 6,600 dollars to the ITF to compensate for its preparations for the match and 5,000 dollars to the ITF for refusing to play.

Worse still, Indonesia will also be barred from taking part in the 2007 Fed Cup competition. The country is given until December 20 to appeal against the decision.

Indonesia, which has no diplomatic relations with Israel, decided to withdraw from the Fed Cup match against Israel to show solidarity with Palestine following Israeli attacks on the Gaza Strip.

Due to its refusal, Indonesia lost its spot in the World Group two and will have to play in Asia/Oceania Zone Group two in 2008.

Suspect admits Poso murders role

A suspected Muslim militant has admitted he was involved in the 2005 beheading of three Christian schoolgirls in Indonesia's Sulawesi.

Hasanuddin, 34, told a Jakarta court he helped plan the attack but he rejected allegations he masterminded it.

He said he wanted to avenge the deaths of Muslims killed during religious violence in the country, the world's most populous Muslim nation.

He and two other suspects could be sentenced to death if found guilty.

The murders shocked Indonesia and threatened to reignite violence between Sulawesi's Muslims and Christians, which has continued despite a 2002 peace deal.

'Revenge'

"I was indeed involved in the beheadings," Hasanuddin told the court.

"With honesty and sincerity coming from my heart, I ask for forgiveness from the families of the victims. I promise to never repeat it again," he said, according to the Reuters news agency.


VIOLENT PAST
Previously known as Celebes, Sulawesi is Indonesia's fourth largest island
80% of residents are Muslim, while 17% are Christian
A December 1998 brawl in Poso led to months of religious violence in which hundreds died


"But we did it because authorities did nothing about massacres of Muslims."

Prosecutors accused Hasanuddin of masterminding the attack.

They said two other defendants - Lilik Purnomo and Irwanto Irano - were following his orders when they helped carry out the attack.

A defence lawyer for the two said they could not accept the charges as they were not based on facts.

Several others who took part in the ambush remain at large.

The three schoolgirls were attacked as they walked to the private Christian school near their home in the town of Poso, in central Sulawesi.

One of their heads was discovered outside a church.

Sulawesi has long been the scene of violent attacks between Christians and Muslims.

Tensions have risen in recent weeks following the execution of three Christian militants in September, for attacks against Muslims in 2000.

More than 1,000 people are believed to have been killed during two years of violence triggered by a brawl between Christian and Muslim gangs in December 1998.

Indonesia's historic botanical gardens dug up to make helipad for US president

Workers are digging up a patch of historic botanical gardens near Indonesia's capital to make a helipad for U.S. President George W. Bush's arrival later this month, adding to anger at his planned trip.

The chief of the vast garden, built in 1817, said he had initially rejected the plan to allow Bush to land there amid fears that wind generated by his chopper would damage the park's trees, plants and orchids.

"At the very least, the branches and twigs will break," Sujati Budi Suseteyo told the Media Indonesia daily.

Bush is tentatively scheduled to visit Indonesia — the world's most populous Muslim nation and a close ally in Washington's war on terror — on Nov. 20, upon his return from the Asia-Pacific Economic Cooperation meeting in Vietnam.

He will fly to the gardens in Bogor, a hilltop city on the southern outskirts of the capital Jakarta, via helicopter from the country's main international airport. He will then hold talks with President Susilo Bambang Yudhoyono in an adjoining palace.

The country's largest opposition party, the Indonesian Democratic Party of Struggle, said in a statement allowing Bush to land in the park was "neglecting the country's environmental heritage at the expense of political considerations."

Media reports say much of Bogor will be declared off-limits to residents during the meeting.

"Why must Bush be treated like some sort of god?" said Amien Rais, the head of an Islamic-leaning political party, state news Antara reported. "Just meet him at the airport, serve him up some tasty fried rice, a cup of hot coffee, speak with him as needed and then invite him to return home."

Several Muslim groups are vowing to protest the trip by Bush, who is unpopular among many people because of the U.S.-led wars against Afghanistan and Iraq and a perception his proclaimed war on terror unfairly targets Muslims.

Indonesia has been hit by a series of terrorist attacks targeting Western interests since 2002, with suicide bombings on the resort island of Bali and in Jakarta together killing more than 240 people.

The government has arrested hundreds of Islamic militants, winning praise from Washington, which last year rewarded it by lifting a six-year arms embargo imposed after Indonesian troops went on a deadly rampage in East Timor.

A spokesman for Yudhoyono said Tuesday that the two leaders would discuss U.S. investment in Indonesia, and would boost cooperation in health care and education. Terrorism may also be brought up on the sidelines of the talks, officials have said.

Arrests over violence in Sulawesi

Fifteen Muslim men have been arrested in connection with a spate of attacks on the Indonesian island of Sulawesi in recent years, police say.
The attacks include the beheading of three Christian schoolgirls last year and the bombing of two markets in 2004.

Sporadic attacks between Sulawesi's Muslims and Christians have continued despite a peace deal signed four years ago that put an end to fighting.

There has been a surge in attacks in the province in recent weeks.

The men were arrested after an eight-month investigation, police said. Another 29 suspects are still at large.

VIOLENT PAST
Previously known as Celebes, Sulawesi is Indonesia's fourth largest island
80% of residents are Muslim, while 17% are Christian
A December 1998 brawl in Poso led to months of religious violence in which hundreds died


They are suspected of being involved in 13 separate attacks between 2001 and 2006.

These include the beheading and mutilation of three teenage girls who were attacked on their way to school near the city of Poso, in eastern Sulawesi, in October 2005.

The recent rise in tension on Sulawesi has been attributed by many to the execution of three Christians in September for their role in the province's long-running conflict, the BBC's Lucy Williamson in Jakarta says.

But others say it is the heavy presence - and behaviour - of the security forces which is fuelling the unrest, she adds.

Indonesian Vice-President Yusuf Kalla is in the province this week to meet religious leaders and try and ease the tensions.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/asia-pacific/6101680.stm