[Marinir] Indonesia Digest No.35.05 ; 5 - 10 - '05

[Hong Gie]

INDONESIA DIGEST

Indonesia's complex Issues in a Nutshell
By Ms. Wuryastuti Sunario
Published by: TBSC-Strategic Communication
No.: 35.05 - Dated: 5 October 2005
In this issue:

BREAKING NEWS:

YET AGAIN, BALI ROCKED BY DEADLY BLASTS
MAIN FEATURE:

FUEL RATES UP MUCH HIGHER THAN ANTICIPATED

NEWS AND BACKGROUND:

1.      Tourism and Transportation
Palembang International Airport inaugurated

2.      The Economy, Trade and Industry
Additional Power on Java-Bali grid
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BREAKING NEWS:

YET AGAIN, BALI ROCKED BY DEADLY BLASTS

Within 24 hours of the Bali explosions - that yet again happened on a
crowded Saturday evening the first of October, - the Bali Police, under
Inspector General Mangku Pastika succeeded to pinpoint the source of the
blasts and the alleged perpetrators.

Without any attempt at refining his descriptions of the gruesome details,
Insp. General Mangku Pastika explained to the packed press conference that
the Police had found proof that the three blasts - two at the Jimbaran bay
and one in the crowded Kuta square area - were the deeds of three suicide
bombers whose shattered and scattered remains were found at the sites.  The
Police were certain that these were suicide bombers since their heads were
found flung some 25 meters away from the explosion point, and only their
hands and feet were intact. Their entire torsos were shattered, with bits of
flesh found splattered all over the place. Wiring was found around parts of
their bodies, and high explosive TNT powder stuck on their remains. These
proofs indicate that the bombers had the explosives attached around their
midriff, either in the inside pockets of jackets or vests, or had carried
them in backpacks. The bombs are estimated to have weighed less than 10 kg.
They could have been remotely detonated, or the bombers themselves could
have pulled the detonator.  Seen from their faces, Police estimate their age
to be between 20 to 25 years.

And, to complete the gory picture, the Police showed the press, photographs
of the three severed heads of the alleged bombers with eyes still wide open.

Also, a video was shown, where one alleged bomber at the Kuta square was
followed entering the R.aja's café, then turned left among seated diners,
making his way towards  a stairway, then a blast and flash ripped the café,
coming from that side of the room.

Who are the suicide bombers? Who are the masterminds?

Who are these three bombers? Police said that that motives and masterminds
behind the bombings are still being investigated. However, seen from their
modus operandi, Gen. Mangku Pastika surmises that this is similar to methods
used by the first Bali bombings in October 2002 (so, are likely related.
ed.). The present bombs were expected to have been put together outside
Bali, but were carried in from one of the neighbouring islands, he said. The
contents of the bombs this time, however, was even more deadly since they
were stuffed with ball bearings and shrapnel. It was also clear that this
time the bombs were not planted nor were they transported in a car since no
crater was found at any of the explosion sites. Police believe that the
three did not work alone but are expected to have worked in groups.
Therefore, passengers leaving Bali to Java at Gilimanuk or to Lombok were
thoroughly checked and scrutinized.

To help Police arrest the criminals in the shortest possible time, the
Police have urged the press to distribute the photographs as widely as
possible. The Police have also distributed postcards of the heads of the
suicide bombers, asking anyone who can identify any of them or who has been
in recent contact with them to immediately dial the Police hotline number.

In the latest developments, Police scouring the bomb sites found proof that
the three explosions were, indeed, related. Not only that the bombs exploded
within minutes of each other, but at all three sites were found identical
wiring, shreds of jackets and knapsack, and two wallets were also found.

The three blasts at Jimbaran and Kuta had killed 26 people and injured 95
said the Police at first. However, Monday night Police corrected this
statement, saying that 24 persons were killed, 14 of whom are Indonesians.
The first count was based on body bags sent to the morgue of the Sanglah
hospital, but later doctors confirmed that a number of bags containing body
parts proved to belong to a number of those already identified.   Two of the
dead identified were Australians, one Japanese, and the remainder still
unidentifiable. A daughter of a Member of Parliament was among the victims,
while the youngest victim was a six-year old Indonesian boy from Bandung.

What had happened?

It was last Saturday evening, 1st. October, just before seven, (Jakarta is
one hour behind Bali), when a friend called that bombs had again ripped the
island of Bali. As a travel agent she had tourist groups in Bali and the
tour leader had informed her of the blast.  No breaking news had yet
appeared on TV. It only came a quarter of an hour later: bombs had yet again
ripped through Bali's tourist centers of Jimbaran and Kuta, at the time
crowded with Saturday evening strollers and diners.
Although rumours continued that more than six explosions had occurred, with
one at Nusa Dua and one at the Hard Rock Café at Kuta, the Police later
confirmed that two bombs had exploded at the Jimbaran beach near the Four
Season Hotel, - where rows of stalls selling fresh barbequed seafood on the
beach have made this a favourite dining area especially for Indonesians and
foreign tourists. A third bomb had exploded at the R.aja's Café second
floor, at the Kuta Town square, another favourite Saturday evening hang-out
for family dining and shopping. The first bomb at Jimbaran exploded at 18.45
Bali time, located by the Nyoman café, and the other exploded soon after at
the Menega café, some 100 meters away from Nyoman café.

Indonesian President Susilo Bambang Yudhoyono in Jakarta immediately held a
Cabinet meeting of Ministers in charge of Security, and later announced that
the blasts were "clearly an act of terrorism. Strict measures will be taken
to thoroughly investigate the blasts, and those responsible will be brought
to justice." The next day the President flew to Bali to personally visit the
bomb sites and receive first hand reports. He then visited the injured in
hospital. On Monday afternoon, two days after the bomb blast, the President'
s schedule was already filled with a bilateral meeting with Singapore's
Prime Minister Lee Hsien Loong at Tampaksiring, Bali.

Bali returns to normal

The expected exodus of tourists from the island of Bali , fortunately, did
not materialize, and, although beaches and shopping centers looked quieter
than usual, life on Bali seemed to pick up almost immediately.

The tourist industry, however, is bracing for a wave of cancellations,
worrying that the end of the year peak season with its anticipated holiday
rush at Idul Fitri, Christmas and New Year may turn out to be a wash-out.
And, this time around, the Indonesian domestic market, that saved Bali's
tourism after the 2002 bombing, may not even be there to help out, since so
many Indonesians were killed this time.

Coordinating Minister for the Economy, Aburizal Bakrie told a meeting of
donor countries that should Bali's tourism drop by 25% as a result of the
bombs, Indonesia's economic growth  could suffer a setback of  0.25% - 0.3%,
but should the drop proof to be as  much as 50% , then this would reduce
growth by 0.5% - 0.6%.
(Sources: Media Indonesia, Kompas,Bisnis Indonesia,SCTV)         (Tuti
Sunario)
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MAIN FEATURE:

FUEL RATES UP MUCH HIGHER THAN ANTICIPATED

The government's fuel hike announced to start 1 October was widely feared to
create disturbances among the population. However, the bombs that exploded
on Saturday, killing 24 Indonesians and tourists, had moved the story down
to second place in the mass media. Huge demonstrations and protests that
were planned for the following days also fell flat and fizzled out
naturally, as the general public was still mourning over the victims of the
Bali bombs.

Despite this, Indonesians are visibly suffering under the huge increases,
not earlier anticipated. Government officials had repeatedly affirmed that
in the first phase prices would rise by between 50% to 80% at the most.

But when in the first few minutes of Saturday, 1st. October, just after
midnight, Coordinating Minister for the Economy, Aburizal Bakrie, announced
the actual increases that were determined by the government, to start the
same instant, the nation was stunned. Premium fuel was up by 87.5%, Solar
diesel by 105% and Kerosene for households up a huge 186%!

The day before, President Yudhoyono had appealed to leaders and the public
for their understanding that this was a most bitter decision for the
government to take, but that there was no other option open but to increase
fuel rates. This was caused by the escalating world oil prices, and in
efforts to redirect fuel subsidies to the poor rather than to provide direct
fuel subsidies that only benefited the very rich. In response, Parliament by
majority vote agreed to the revised budget. But the huge increases took all
by surprise, including Members of Parliament.

Premium was up from Rp. 2,400/liter to Rp. 4,500; solar diesel from Rp.
2,100/liter to Rp. 4,300/liter and Kerosene from Rp. 700 to Rp. 2,000/liter.
Media Indonesia compares this to the price of Premium around the region as
follows: In Singapore premium costs
Rp. 10,800/liter; in Malaysia Rp.4,900; Thailand Rp. 6,600; the Philippines
Rp. 5,900.; Vietnam Rp. 6,300; and Myanmar Rp. 3,900/liter; and Cambodia Rp.
8,900 (translated from local currency into Rupiah).

While most can accept the new subsidized price of premium, the public
questions the excessively high increase in kerosene, which, nota bene, is
used by most poor households in the country. Moreover, the Rp. 2000/liter
price is obtainable only at Pertamina's main distributors.
By the time kerosene reaches the village level, the retail price has reached
Rp. 2,500 to Rp. 3,000/liter. Worse still, kerosene is now harder to get, so
that again the general households suffer by having to fork out more for
kerosene for cooking.

On its side, Pertamina officials blame the situation to the huge disparity
in price between subsidized kerosene and kerosene for industrial use. In
September, when the price was
Rp. 700/liter, kerosene for industry was Rp. 5,600. In October with the
official subsidized price at Rp. 2,000/liter, the same kerosene costs Ro,
6,200 for industry use.

As a result, many kerosene retailers have sprung up overnight. When a hawker
buys 10 jerry cans of Rp. 700 per liter at the distributor, just across the
road an industry buyer is already waiting to pay him anywhere between Rp.
3,500 - Rp. 4,000/liter, which deal offers huge benefits for both parties.

Another problem is the hefty increase in the price of solar diesel. This
type of fuel is used by fishermen and small scale miners. With the increase,
many fishermen have stopped entirely from setting out to sea.

Donor Countries support Government's policy

In its report to donor countries in CGI the government said that before the
latest  (controversial) policy, research showed that 83% of direct fuel
subsidies was enjoyed by 60% of  the largest income group in Indonesia.
Whereas, 40% of the lowest income group received only 17% benefit of such
subsidies. Therefore, the government has re-channeled part of the subsidies
to give money direct to 15.5 million poor households, each receiving Rp.
100,000 per month, per household.

In response, IMF Senior Representative in Jakarta, Stephen Schwartz, said
that the international organization supports the government's policy to
adjust domestic fuel prices to world market rates. Nonetheless, Schwartz
expects that the government will face a number of short term challenges
affecting inflation and economic growth. However, through good monetary
policies and compensation to the poor, in the long term, the government will
be able to further develop the country with clearer vision, including better
and more efficient utilization of resources and energy.

Some of the short term challenges faced will include management of fiscal
policies, and the continued efforts at reform of the investment climate
through tax amendments and a Bill on Investments.
(Sources: Media Indonesia, Bisnis Indonesia)        (Tuti Sunario)
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NEWS AND BACKGROUND:

1.   Tourism and Transportation:

Palembang International Airport inaugurated

On Tuesday, 27 September, President Yudhoyono inaugurated the Sultan Machmud
Badaruddin (SMB) II International Airport at Palembang, South Sumatra. In
his address the President urges that the airport be well-maintained so as to
continue to give a positive impression to passengers arriving at the
province.

Earlier, Transportation Minister Hatta Rajasa reported that the landing
strip of the Palembang airport measures 2,500 meters by 45 meter, and is
able to receive A300-300 aircraft, while the three-storey terminal can
handle 1.3 million passengers yearly. The airport's apron is 54,700 sq.
meters, its cargo terminal 1,800 sq. meters and the airport has
refrigerating capacity for one million tons per year. The parking lot can
accommodate 400 cars.

Construction was financed from Japanese loan of 3.394 billion Japanese yen
and Rp. 356.37 billion from the Budget. Additionally, construction received
consultation funds of 853.4 million yen and Rp. 10,9 billion.

Further, Minister Hatta Rajasa said that for 2005 the government has
allocated funds for the upgrading of 48 airports, bearing in mind in
particular to safeguard international flights, while in 2006 his department
will repair 34 airports and extend landing strips at 28 airports.

On air-traffic growth in Indonesia, in the year 2000 the number of
passengers in Indonesia was 7.6 million passengers, which increased to 24
million in 2004, and
30 million in 2005. While anticipating the holiday season at the end of the
Ramadhan fasting month this October, Minister Rajasa expects air-passengers
to increase by 35% from 1.3 million in 2004 to 1.9 million in 2005.

2.      The Economy, Trade and Industry:

2,600 MW Additional power on Java-Bali grid

Starting the end of 2005 and early 2006, the Java-Bali power grid will have
additional 2,600 Megawatt power to distribute to these two most densely
populated islands.  Electricity will be generated by the steam-powered
electricity plant at Karangkadri, Cilacap, Central Java, generating 2 x 300
MW of electric power, to become operational in December 2005; the steam
powered plant at Tajung Jati B, at Jepara also in Central Java, to generate
2 x 5,600 MW, and the gas-powered plant at Suralaya, to start operations in
January 2006, said Central Java Division Manager for Marketing Strategy of
PLN, Haryanto, recently.

No hitches are foreseen in connection with the transmission of the Suralaya
power to start operations in January 2006, but problems are still expected
with the Tanjung Jati B plant in Jepara, since the transmission network for
500 kilovolt from Jepara to Ungaran has been protested by local communities,
who have objected to the construction of the extra high power transmission
over their villages, for both health and safety reasons.


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