[Marinir] Indonesia Digest No: 44.05 ; 22-12-'05

[Yap Hong Gie]

INDONESIA DIGEST

Indonesia's complex Issues in a Nutshell
By: Ms. Wuryastuti Sunario
Published by: TBSC-Strategic Communication
No.: 44.05 - Dated: 22 December 2005


We wish all our Christian Readers: God's Peace and Blessing this Christmas
Season


In this issue:

MAIN FEATURE:

PRESIDENT YUDHOYONO CALLS FOR CONCERTED SYNERGY IN JUSTICE REFORM

NEWS AND BACKGROUND:

1.      Tourism and Transportation:
Airlines protest AWAIR name change as violation of cabotage

2.      The Economy, Trade and Industry
Developing Bali: Agriculture, Culture and Tourism Intrinsically wrought
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MAIN FEATURE:

PRESIDENT YUDHOYONO CALLS FOR CONCERTED SYNERGY IN JUSTICE REFORM

On Tuesday, 20 December, President Yudhoyono made a somewhat surprising
visit to the Supreme Court. His purpose: to launch Indonesia's Justice
Reform movement. Present that early morning, however, were all elements from
the Justice sector. Attending were the Chief Justice and judges from the
Supreme Court, the High Court, and District Courts, the Attorney General,
the Chief of Police and Police leadership, the Anti-Corruption Commission,
top officials from the Ministry of Law and Human Rights as well as Members
of Parliament in charge of Legal Reform, and the Ministers of Finance, and
of National Planning. During his one hour long speech the President
expounded his vision on how he saw the Indonesia's Justice Reform should be
implemented.

In his introduction, however, the President alerted that this visit to the
Office of the Supreme Court should not be construed as intervention by the
President in the justice system. He came to the Court, said Yudhoyono, to
lay the groundwork for an ensuing tradition of open and transparent
communication among all sub-sectors, necessary to establish the longed for
national justice. This communication, he continued, must include members in
the Executive, the Judiciary and the Legislative branches of State as well
as the general public.

For, in order to establish a credible Justice Sector, all elements in this
sector - from the Police, the Judiciary, the Executive, the Legislative
Branch, defense lawyers, the Anti-Corruption Commission to the National
Ombudsman - all must work together in close linkage with
one another, as links in a continuous chain: where each link has its own
purview and responsibilities, and each respecting the others' functions.
Therefore, for this chain to become strong, none of the links may be allowed
to go rusty or weak, for this rusty link determines the strength of the
entire chain. Thus the weakest point in the system may eventually cause the
breakdown of the entire system.

In his speech, the President divided his vision into three main topics,
these are (1) The Grand National Reform, which also includes Justice Reform;
(2) Indonesia's position in the world today, and how the world regards the
enforcement of justice and law in Indonesia, and (3) Justice Reform as an
inseparable part of Good Governance.

Indonesia has taken the resolve to embark on the large national agenda of
Reform and democratization, which includes the attainment of Peace, Justice,
Democracy and Prosperity, said Yudhoyono. In these efforts, Truth and
Justice form integral and inseparable parts of  all sectors of development.
Thus, as example, in economic reform, the Legal and Justice Reform are top
priority, needed to create the right and a fair investment climate since
investors need assurances on the proper enforcement of rules and regulations
as well as the consistent application of the law. Furthermore, in Public
Welfare, in the implementation of policies to  provide subsidies for the
poor in the form of funds, basic health and education services, the law and
law enforcement have most important roles to play, to ensure that such
subsidies do indeed reach those who are entitled to receive them.

Further, on the subject of how the world regards the enforcement of the law
and the legal system in Indonesia, the President admits that a great deal
must still be done to gain the respect of the world community. In this
regard, Yudhoyono contends that the world is in a continuous state of flux.
There is no permanent World Order, he mentioned.  There is only a permanent
World Order-in-the-Making, as we have witnessed this past century with the
experience of two World Wars, followed by the Cold War Order, then the Post
Cold War era and now the Post 9/11 order.

In all this flux, nonetheless, one reality remains clear, and that is that
countries will compete with each other, but at the same time, countries are
also forced to cooperate with one another. In this global game, then,
Indonesia must not lag behind and become the loser. On the contrary,
Indonesia must strive to be included among the winners. However, to be
competitive, Indonesia needs legal certainty, adequate resources and
capacity building, which includes the development of human capital. And this
is the duty of those charged with Justice Reform to ensure the development
of such legal framework and credibility.

Therefore, Justice Reform must be undertaken through Good Governance in
order to ensure that Indonesia reaches this goal. What are the main
principles of Good Governance?
These are, said the President, the following: (1) Integrity of institutions
and personalities in the Justice sector that creates credibility and
respect; (2) Transparency in execution; (3) Capable human capital - which
includes the need for capacity building, and competency; (4)
Accountability - where each Rupiah must be accounted for, and (5) Resources:
these include Operational funding, proper and adequate salary system; and
the widespread use of Information Technology (IT).
Finally, on the subject of the Anti-Corruption drive, the President
recounted how during the
APEC meeting in Chile, he felt as if Indonesia - and himself representing
Indonesia as Head of State - was put to shame and placed on the hot seat
when the conversation at the main table with President Bush, President Hu
Jintao, PM Junichiro Koizumi turned to the subject of anti-corruption drive.
Singapore's Prime Minister, Lee Hsien Loong as well as the Leader of
Hongkong explained at length how they each had managed to clean up their
states from corruption. It was at this point that Yudhoyono said that he was
most determined that Indonesia's image of being among the most corrupt
countries in the world must change.

This year at the APEC meeting in Busan, Yudhoyono continued, Indonesia's
image had, thank God, somewhat improved. For, we had just raided one of the
largest narcotics factories in South East Asia, and the Police had just
slain terrorist leader Azahari. Also Indonesia had brought to trial more
than sixty of its government officials, from Governors, District Heads,
Members of National and Local Parliaments and others. But this, the
President admits is merely the beginning. Much more must still be done.

Therefore, looking ahead, the Prevention of Corruption must be top priority
in the Agenda of Justice Reform.This needs to be done through procedures
following Good Governance as outlined above. Moreover, Law enforcement must
be done consistently with fairness and openness. On the other hand, the
public must also be made aware of the role that society has to play in the
enforcement of just Law and the establishment of Truth and Justice. Lastly
there must be continuous institution building in this sector. All of the
above are aimed to create public trust in credible and capable Justice
institutions.

Finally, therefore, in response to accusations as if Indonesia's Justice
System is now totally corrupt, the President called on all responsible in
the Justice Sector to improve each institution and function, and work hard,
together, in total synergy. For, such accusations must not be fought with
words only, but must be proven wrong through real deeds and visible actions.

(Source: TVRI)                                          (Tuti Sunario)
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NEWS AND BACKGROUND:

1.      Tourism and Transportation:

Airlines protest AWAIR name change as violation of cabotage

On 12 December, with fanfare, the new logo of the revamped AWAIR - now
injected with US$10 million investment by Malaysian owner Tony Fernandes of
Air Asia - was launched at Cengkareng airport, Jakarta. To everyone's
surprise, however, the Airbus A320 used, unveiled the airline's brand new
livery: AirAsia.com. This change in name and logo immediately elicited
protests from the airline world. Tengku Burhanuddin, Secretary General of
INACA, Indonesia's Airlines Association, called the operation a violation of
cabotage rights - the right to fly domestic routes - , while airline civil
society, PAUKI, protested that this was a violation of Indonesia's
sovereignty over national air space.

Nonetheless, in response and in defense of the operation license issued by
his Department,, Transportation Minister, Hatta Rajasa, commented that in
accordance to Indonesia's Investment Law, foreign investors are allowed to
own 49% shares in airlines. If anyone, however, could prove that the Air
Asia - AWAIR joint venture violated this stipulation, the company's
operation rights could be revoked.

In response to the airline's change in name and livery, Tony Fernandes, on
his part defended this as the use of brand name similar to any franchise.
Like Starbucks and McDonald, whose brand names are widely used in all of its
outlets in Indonesia, AWAIR planes should equally be allowed to carry the
brand name Air Asia.

AWAIR was an ailing, almost defunct Indonesian domestic airline, that had
not operated for over 30 months. To revive the company, it seems that Mr.
Widjaja (a.k.a A Ciu) President Director of Musica Studios had taken over
31% of AWAIR shares, while 20% shares are owned by the family Pin Harris.
Meanwhile, with its fresh investments, Air Asia now owns 49% of the revamped
company shares, reports Bisnis Indonesia of 20 December.

>From reading about the controversy in the press, lawyers have commented,
that there seems to be misinterpretations and misapplications of
stipulations that affect the kind of business entity as used in the contract
between Air Asia and AWAIR.  If the jointly established company came under
Direct Foreign Investment, then the joint venture should register as a brand
new company, with a new company name.  In this case, as a foreign company,
the airline has no cabotage rights in Indonesian territory or air space. If,
however, it has registered under Domestic Investment, which it apparently
has, then the stipulation of 49% foreign and 51% domestic shares in
investments prevails. And, as domestic investment, the airline does
naturally have cabotage rights. The third question that emerges is, does
such a company have the right to change its livery or brand name from its
original Indonesian company name, to adopt the brand and name of the foreign
investor company, as in a Franchise?

This, apparently, is a different question altogether. A franchise is a
business agreement between two parties, where the Indonesian company retains
its name but pays royalties to the franchise owner for the use of its brand,
goods and services. Such was the case with the agreement between the former
Hotel Indonesia International and the Sheraton Hotels, for example.

Therefore, the question that remains is, how can foreign origin investments
in shares and share-holdership be allowed to change (include or mutate into.
Ed.) a franchise agreement? In such a case, foreign investor can easily
benefit from hard-earned domestic rights on routes and cabotage, while at
the same time be allowed to use its brand name under franchise. When
allowed, then certainly, many more companies will follow suit, ince this
becomes an easy way out to increase market access and market share into
Indonesia.

Seen in this light, then,  the protests launched by INACA and PAUKI are well
founded, namely that through such process, Indonesia's precious sovereignty
and rights over our hard-earned air space, may all too soon be taken over by
capitally powerful private foreign investors.

This controversy rages in the midst of more acute airline competition both
nationally as well as internationally, where Indonesian domestic airlines
are still suffering under the heavy yoke of not only forced increases in
operational costs through sky-rocketing jet-fuel prices, but also from the
debilitating effects of terrorism in Indonesia, the repercussions of last
year's tsunami, the threat of the avian influenza, and especially caused by
the latest bombings in Bali.

2.      The Economy, Trade and Industry

Developing Bali: Agriculture, Culture and Tourism Intrinsically wrought

Bagus Sudibya, Bali Tourism Board Chairman and Chair of the Association of
Indonesia Travel & Tour Agents (ASITA) recently warned that one of the
fundamental weaknesses in Bali's current course of development is the
absence of a master zoning plan, reports balidiscovery.com.  The resulting
laissez faire approach to development amidst the glamorous backdrop of
international tourism on the island has had the ironic effect of seeing
Bali's reserve of agricultural lands steadily diminish as people sell their
land to make way for hotels, strip malls, villas and other tourist
developments.

Bagus Sudibya, therefore, called for better conservation of Bali's
preciously limited resources of land, natural forests, and water to ensure
that the island's culture is preserved and in order for its main industry of
tourism to become truly sustainable.

Are Agriculture and Tourism at War with Each Other?

According to Sudibya, Bali's culture is inextricably intertwined with the
survival and prosperity of Bali's traditional agricultural society.
Agriculture, and by extension the island's traditional culture, will not
survive without a careful stewardship of Bali's forests, water and land by
the present generation (italics by Digest editor)

Bemoaning the lack of proper official attention and concern for Bali's
agricultural sector, Sudibya pointed to the example of Vietnam where the
national government actively supports agriculture by encouraging production,
providing umbrella protection to farmers in years of bad crops, and
guaranteeing that agricultural produce sells at prices that sustain a
reasonable living standard for farmers. The experience of Indonesian farmers
represents the opposite end of the spectrum to the very positive role played
by Vietnam's Government, explained Sudibya.

Supporting Sudibya's arguments carried in the Indonesian-language Bali Post,
is the opinion of community leader Agung Alit who suggested tourism has much
to answer for in the current poor state of Bali's agriculture. Farmers,
unable to meet the rapidly rising costs of fertilizers vis-à-vis the very
low price paid for their produce, are also haunted by the always looming
risk of a failed crop and terrifying prophecy of famine certain to follow.
The community activist cited this situation as the underlying reasons
explaining why Balinese youth are no longer drawn to farming, often seeking
to sell ancestral lands to the highest bidder.

Alit went on to point to the growing popularity of free trade regimes as yet
another factor contributing to the ongoing marginalization of Bali's
farmers, concludes the balidiscovery.com article.

In a report compiled by the World Bank and UNDP one year after the first
Bali bombing in 2002, the international organizations warned that Bali's
economy must be urgently diversified. At this moment the island's total
economy is overly dependent on tourism. The agricultural sector should be
given more attention to ensure the sustainable development of Bali's
economy, culture as well as tourism.


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