[Marinir] Indonesia Digest No: 42.05 ; 04-12-'05

[Yap Hong Gie]

INDONESIA DIGEST

Indonesia's complex Issues in a Nutshell
By: Ms. Wurastuti Sunario
Published by: TBSC-Strategic Communication
No.: 42.05 - Dated: 4 December 2005

In this issue:

MAIN FEATURE:

ASEAN POINT-TO-POINT UNRESTRICTED FLIGHTS URGED BEFORE END 2006

NEWS AND BACKGROUND:

1.      Tourism and Transportation:
Garuda restructures Debts, Batam hotels to retrench staff
November Air passengers decline by 19.31%

2.      Health, Culture and the Environment:
·         Indonesia's Kimia Farma licensed to produce Tamiflu

3.      The Economy, Trade and Industry
·         Singapore finally publishes Trade Data with Indonesia
·         Ground breaking for construction of Lombok International Airport

4.      Politics and Security
All Jakarta hotels, shopping centers and public buildings must install
CCTVs; Bali beaches step up vigilance through CCTV
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MAIN FEATURE

ASEAN POINT-TO-POINT UNRESTRICTED FLIGHTS URGED BEFORE END 2006

The Singapore Straits Times of 26 November reported that ASEAN Transport
ministers from 10 states in South East Asia have agreed to adopt a Singapore
suggestion to lift restrictions of regional airline flights starting the end
of 2006, earlier than the formerly agreed start in 2008. The Proposal was
adopted at the 11th. ASEAN Transport Ministers Meeting in Vientiane, Laos
the week before.

When endorsed by each government, airlines will be allowed unlimited point
to point flights between capital cities, for example, between Singapore and
Kuala Lumpur or
Bangkok to Manila, which would offer more choice to passengers, and help
reduce airfares. This would mean for example, that "Singapore Airlines can
pick up passengers in Kuala Lumpur and then fly to Bangkok or any other
ASEAN destination, but not to a destination outside the region", reported
the Straits Times.  ASEAN's longer term goal, however, is for a limited open
skies agreement between all cities in member countries by 2010.

Singapore's Transport Minister said that "This would facilitate more flights
and improve intra-ASEAN connectivity, thereby boosting ASEAN's
attractiveness as a tourist destination and strengthening its economic
competitiveness. It would also signal ASEAN's growing commitment to
fast-track economic integration and build investor confidence".

In 2005, a record 44 million travelers visited ASEAN, up 35% from 2003.

>From Jakarta, Bisnis Indonesia reports that the Indonesian government will
urge that Singapore allow more Indonesian air carriers to fly from and to
Singapore and on to third country destinations and continents beyond Asia
through Singapore. Both requests have not been approved by Singapore.
Meanwhile, Singapore has asked Indonesia to allow its low-cost carriers to
fly from Singapore to Jakarta, Medan, Surabaya and Denpasar (Bali).

Meantime, LCC Lion Air PR Director, Hasyim A Alhabsi announced that the
airline plans to fly to four overseas points starting mid 2006, these are
from Jakarta to Madras (India), Beijing, Hongkong and Bangkok, and before
the end of the year, Lion Air also plans to serve the Denpasar (Bali)-Perth
route.

The airline has ordered eight B 737-900 ER aircrafts for 2007 to add to its
present fleet of 36 aircrafts.

(Sources: Singapore Straits Times, Bisnis Indonesia)    (Tuti Sunario)
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NEWS AND BACKGROUND:

Tourism and Transportation:

Garuda restructures Debts, Batam hotels retrench staff

The damage wreaked by the bombs that were exploded by suicide bombers in
Jimbaran and Kuta, Bali, on 1 October, and its after effects on the tourist
industry can now be quantified: Balidiscovery.com last week informed that
October 2005 foreign direct arrivals to Bali declined 36.83% against the
near-record-breaking October reached one year before in 2004 (128,399
visitors).


Most cancellations were made by tourists in the Asia-Pacific and ASEAN
region.
The Asia Pacific market declined 46.11% in October 2005 (44,569) as compared
to the same month in 2004 (82,703), led by the Australians, with figures
down 50.19%, followed closely by the Japanese down 48.26%. The South Korean
market dropped 46.75% while the Taiwanese sank 37.40%. Moreover, the ASEAN
market fell 51.98% for October 2005 (4,618) as compared to October 2004
(9,617). Malaysians dropped 56.91% month on month from one year before while
the Singaporeans declined 42.63%.


Meanwhile, Garuda Indonesia CEO Emirsyah Satar reported that in October, as
a direct result of the bombs, the airline similarly suffered a drop of 35%
in passengers from Australia and New Zealand, 45% in passengers from Japan
and Korea, and 20% from the USA and similarly from China against loads in
September.  The domestic market to Bali has also dropped between 15% to 30%,
said Emirsyah.

For this reason, Garuda reduced its 27 weekly flights to Australia to 17
weekly, with corresponding cuts in flights from Japan and Korea. However,
the airline is confident that December figures will look rosier, and has
therefore added 14,000 seats from and to Bali, both domestically, as well as
from Japan and Korea.

Nonetheless, Garuda has had to scale down its expected returns for the year.
If beforehand the airline hoped to cut losses to half of that suffered in
2004 , of Rp. 811 billion, Emirsyah estimates that this target may now not
be attainable. Therefore, Garuda now hopes to restructure its outstanding
debts of US$800 million, and to cut costs. One way to reduce overhead costs,
Garuda now plans to move its head office in Central Jakarta to the
Sukarno-Hatta airport in Cengkareng.

Another expected casualty from the bombings are hotels in Batam. Chairman of
the Batam Hotel Association, Urmy Sungkar, expects that with escalating
overhead costs on the one hand and declining visitor arrivals, the island
hotels together are expected to retrench no less than 5,000 staff. Average
hotel occupancy here has declined from 90% earlier to 60%-70% in city
hotels, and 30% in resort hotels.

Besides affected by the bombs, Batam arrivals has also dropped from the time
that gambling was forcibly banned from the island, and hotels must now spend
higher overheads because of the steep rise in fuel rates as well as the
planned increase in minimum monthly wages that has been urged by the unions,
to rise to an expected
Rp. 800,000 to Rp. 900,000/month.


October Air Passengers Decline 19.31%

The National Statistics Bureau informs that data on Indonesian domestic air
passengers for October declined by 1.77 million passengers or down 19.31%
compared to September 2005. Passengers from Bali declined by 36.57%, from
Macassar, South Sulawesi, down 23.35%, from Surabaya down 22.78%, Jakarta's
Soekarno-Hatta airport registered
-19.43%, and similarly from Medan down 19.01%.

International outbound passengers in October also declined by 10.84%, or
less 460,600 passengers compared to the previous month of September.

The significant drop in air passengers is surmised caused by the vast hike
in fuel prices and the bombing at Jimbaran and Kuta on 1 October.



Health, Culture and the Environment:

Indonesia's Kimia Farma licensed to produce Tamiflu

Indonesia has received special rights from Roche pharmaceutical to produce
Tamiflu, the anti-viral medicine recommended for the treatment of avian
influenza, announced President Yudhoyono in Jakarta recently. Production in
Indonesia is entrusted to Kimia Farma. "How much Tamiflu will be made will
be adjusted to prevailing need or a minimum of 10 percent of the country's
total population of 220 million," said Health Minister, Siti Fadillah Supari
to the Antara news agency.
 The Minister, however, reminded the population that Tamiflu is effective
only when taken within 24 hours of contracting the disease, not later. In
the meantime, US company Baxter has allowed Indonesia's Bio Farma to produce
under license vaccines against to ward avian flu.
Meanwhile, Indonesia and Singapore have signed an agreement to carry out a
pilot project in Indonesia, putting in place a surveillance and control
system to tackle any widespread avian flu outbreak, the Singapore Straits
Times of 26 November reports . The agreement is a follow-up to a meeting
between President Yudhoyono and Singapore's Prime Minister, Lee Hsien Loong
on the sidelines of the APEC Meeting in Busan, South Korea. Both countries
have also agreed to seek the participation of other partners, such as the
United States, Japan, the Netherlands and the World Helath to be involved in
the project.

The package presented by Singapore, as explained by Singapore's Health
Minister, Khaw Boon Wan, includes assistance in capacity building in
veterinary and public health, covering training and technical support to
help Indonesia in surveillance, outbreak management, diagnostics and
infection control. Singapore will also provide 5,000 doses of antiviral
medication or Tamiflu, 5,000 sets of personal protective equipment for
Indonesian health-care workers and 5,000 rapid diagnostic kits.

A team of Indonesian officials and experts would visit Singapore to attend
courses on the different aspects of tackling the bird flu, such as
surveillance and control.

Indonesia has just reported the eighth death from avian flu among its
patients.

The Economy, Trade and Industry

Singapore finally publishes Trade Data with Indonesia

For the first time since 1963, Singapore has finally issued data on its
Trade with Indonesia. As a consequence, Indonesia has now emerged as
Singapore's sixth largest trading partner last year - up from the seventh
spot - after a missing ingredient in the two-way trade figures with
South-east Asia's largest economy was publicly released for the first time
since 1963, reported the Singapore Straits Times of 26 November.

This new data is for re-exports from Singapore to Indonesia, that refers to
goods such as electronic components that arrive in Singapore from, say
China, and are then re-packaged, for example, and "re-exported" to
Indonesia.

Last year, the value of these re-exports from Singapore was US$10.9 billion.
This figure swung Singapore's trade balance with Indonesia, from US$ 1.6
billion deficit to a US$9.3 billion surplus.

Indonesia has long complained that Singapore's trade figures showed huge
discrepancies. Two years ago, then Trade Minister Rini Soewandi publicly
demanded that Singapore release bilateral trade data, alleging that
smuggling was the reason for the gap in figures. However, Singapore
contends, that Singapore's extensive re-exports may be the reason for the
discrepancy, because the way Singapore compiled trade data, said the Straits
Times.

Singapore Prime Minister Lee Hsien Loong had informed Indonesia's President
Yudhoyono that Singapore will publish detailed breakdown of its trade with
Indonesia starting from January.

Ground breaking for construction of Lombok International Airport

After a long delay of ten years, the Lombok International Airport has
finally started construction. Ground breaking was commenced by Minister for
Transportation, M. Hatta Rajasa on 30 November amidst demonstrations by
protesting farmers. Farmers told reporters that they were not against the
construction of the airport as such, but were most unhappy with amounts paid
for their plots of land used for the airport project.

In his address, Minister Rajasa explained that Lombok island's present
airport at Selaparang is at near full capacity as the airport now handles
800,000 passengers yearly. Besides, the present runway of 2,100 meters by 40
meters only allows landing of B 737-400. Whereas, the Lombok International
Airport will have a runway length of 2,750 meters by 45 meters, and able to
receive B747-400 to Airbus 330 aircrafts.

Investment for the first phase is Rp.625 billion. Further funding is
expected to be generated from the sale to the private sector of the present
Selaparang airport for construction of real estate or other purposes.


Politics and Security

All Jakarta hotels, shopping centers and public buildings must install
CCTVs; Bali beaches step up vigilance through CCTV

One month after the raid on the hide-out of top terrorist Azahari at the
resort of Batu in East Java, the Police together with other security
personnel have relentlessly kept up their hunt for terrorists networks along
the length and breadth of the Indonesian islands. In the process, not only
were a number of suspects arrested, but Police also found evidence in the
form of maps, plans, a video, ammunition, bombs, and other illegal weapons
in homes of suspects, revealing that terrorists are planning more attacks in
the country.

If in the first Bali bombing the terrorists used car-bombs, in the second
attack they switched tactics to individual bombs attached to suicide
bombers. Now, however, documents showed that their plans have switched to
sniping at Jakarta intersections that are notorious as most often jammed.

Of the four suspects arrested who are alleged to be involved in the most
recent bombing in Bali, the latest suspect, known as Dwi Widiyanto, or
Wiwid, is another terrorist prepared for suicide bombing, said Bali's Police
spokesman, Commissioner Reniban.  Besides having been acquainted with
Azahari, Wiwid also knew of the plan to detonate bombs at Jimbaran and Bali,
said other suspect arrested, Arif Sulchanudin.

Following instructions issued by President Yudhoyono, the Indonesian
military, TNI, and military Intelligence have now also become involved in
the hunt for terrorists, with chief target, fellow Malaysian terrorist,
Noordin M. Top, who, until today is still at large, Total vigilance has been
stepped up, especially in view of the coming Christmas and New Year
celebrations.

In Bali, villages have set up their own security units. Hotels along beaches
have also agreed to install Closed Circuit TV's for 24 hours surveillance.
Small "melati" hotels have also been instructed to jointly step up security
of their common entry lanes and plots. Home-stays, a number of which in the
past were unwittingly rented out to the terrorists, must now register all
their guests, and include in their reports, the photographs and fingerprints
of tenants.

Meanwhile in Jakarta, Chief of Jakarta Police, Inspector General Firman
Gani, has issued instruction that all owners of public buildings, hotels,
apartments, shopping centers and malls, and strategic projects install CCTV,
starting from 30 November. Owners are also obliged to submit all recordings
to the Police when requested for investigation.

Additionally, Police Inspector General Firman Gani has also urged for urgent
legislation that companies offering prepaying cards for cell phones register
the name and all particulars of the person under whose name the number is
used.
Up to now, telecommunication companies offering prepaying cards do not
register buyers. Terrorists have used this system to communicate with one
another and the Police have thus been unable to pin down the terrorists who
have used the number.


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tbsc-strategy at indo.net.id