[Marinir] Indonesia Digest No: 36.05 ; 11-10-'05

[Hong Gie]

INDONESIA DIGEST
Indonesia's complex Issues in a Nutshell
By: Ms. Wuryastuti Sunario
Published by: TBSC-Strategic Communication
No.: 36.05 - Dated: 11 October 2005

Our deepest condolences and sympathies go to the victims of South-Asia's
giant earthquake

In this issue:

MAIN FEATURE:

NEW INVESTMENTS IN OIL REFINERIES AND RENEWABLE ENERGY

NEWS AND BACKGROUND:

1.      Tourism and Transportation
Government bans operation of B737-200 aircraft
SilkAir adds flights to Surabaya as Garuda plans to reopen routes to Europe
Post Bali Bombs, Garuda increases flights to Lombok

2.      Health, Culture and the Environment
Indonesia's Tsunami Early Warning System (TEWS) installed

3.      The Economy, Trade and Industry
Star TV takes up stake in Indonesia's ANTV

4.      Politics and Security
Nation-wide Manhunt for Suspected Bali bombers
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MAIN FEATURE:

RENEWED INVESTMENTS IN OIL REFINERIES AND RENEWABLE ENERGY

In view of fast escalating world oil prices and increasingly scarce oil
resources, Indonesia has  prepared a National Energy Plan which outlines in
detail,  a road map for the development of various types of energy,
including alternative and renewable energy, said Minister for Energy and
Mining, Purnomo Yusgiantoro recently in an interview with the Kompas daily
(7/10/2005).The Plan is also a response to protests on domestic fuel price
increases on the one hand, and reduced output of old oil wells operating in
different parts of the country.

The government's first priority will be to issue a Presidential Instruction
soon on biofuel, that offers incentives to develop bio diesel, and
instructions to relevant cabinet ministers to follow up on policies.

Second, is the use of coal briquettes, which is already on the upswing.
Today's national capacity stands at 120,000 tons per day, however, in fact
only 20,000 tons are used daily. Benefits on the price structure have
already made this a popular alternative source of energy for industry to
develop and use. More electricity power generators are already using coal,
as the use of oil for power plants will decline. Meanwhile, new plants
operating on alternative energy will soon come on line. The steam generated
power plant at Cilacap, producing 2 x 3000 MW will come on stream this year,
and the Cilegon and Tanjung Jati B plants in 2007.

Nonetheless, problems still exist to popularize the use of coal briquettes
for households and transportation. Coal briquettes for households need
special ovens, which will be developed by small and medium-scale companies,
while the use of coal as car fuel needs to be liquefied. For this purpose a
plant in the region of Bangko in South Sumatera has been prepared, to
produce liquefied coal at a capacity of 125,000 barrels per day. There is,
however, still resistance on the part of consumers to use liquid coal as
fuel, since people are concerned that there are not sufficient refueling
stations available when needed. Therefore, cars need to install converter
kits that allow fuel tanks to accept both petrol as well as liquid coal.

Considering the above, the government has changed its energy policy from the
former top- down and product orientated policy to being more
consumer-oriented. If earlier the government was more involved on the supply
side, including the exploration of oil wells, gas and coal mines, now this
has changed to policies to diversify and conserve energy, which all depend
on public and consumer needs. There is, for example, still resistance in
Bali to the operation of an electricity power plant generated by earth's
heat.

In future, therefore, the government foresees that 32% of Indonesia's power
needs will be generated from coal, 30% from gas, 26% from oil, and only 5%
from other sources, such as from micro-energy sources, earth's heat,
nuclear, wind and solar power. Although 5% seems a small share, but even
when this can be met, it is already an achievement by itself.

New Oil Refineries to operate soon

Meanwhile, the government has granted licenses to four companies to operate
oil refineries, aimed to reduce government's need to import fuel. Three will
operate on oil, while one on LNG. The four companies, as reported by Bisnis
Indonesia are: PT Hemoco Selayar, which plans to operate a refinery on the
island of Selayar, South Sulawesi, able to produce refined fuel to a
capacity of between 250,000 - 300,000 barrels a day; PT Petro Muta,
producing 500,000 barrels/day,  and PT Intan Jaya Mandiri to produce 300,000
barrels/day.  Whereas, the LNG plant license has been awarded to Pacific Oil
and Gas Indonesia that plans to build a train of refineries in East
Kalimantan.

In the latest development, PT Intanjaya Agromegah Abadi has signed a
Memorandum of Understanding with President Director of US based Interglobal
Technologies, Michael Edward, to build a refinery within five years,
starting this year, to produce LPG, petrochecmical naphta, regular gasoline,
jet fuel, solar, asphalt and sulphur, and able to supply these products to
countries in the Asia-Pacific as well as produce these for domestic needs.
The project will be located at Tanjung Sauh, Batam, to allow for easy access
and distribution from the Middle East to Asia-Pacific Countries and to
domestic destinations. Each company will have a 50% share in investments,
while construction will use 30% local content and employ 5,000 persons. The
Batam refinery is then expected to produce commercially as from 2010,
employing between 750 to 1,000 staff for its operation.

(Sources: Kompas daily and Bisnis Indonesia)        (Tuti Sunario)
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NEWS AND BACKGROUND:

1.   Tourism and Transportation:

Government bans operation of B737-200 aircraft

To take effect on 7 December 2005, the government will ban the operation of
Boeing 737-200 aircraft in the country, and aircraft having registered over
70,000 cycles, or are older than 35 years, said Transport Minister, Hatta
Rajasa recently. The ruling comes in the wake of the B737-200 Mandala
airline crash in Medan that killed the present and the previous Governor of
North Sumatra.   Data at the Department show that of total aircrafts
operated by all of Indonesia's airlines, there are four B737-200 and one
Fokker 28 MK4000 still in operation that must be replaced by December.
Whereas, aircraft operated by foreign airlines flying into Indonesian
airspace may not exceed 50,000 cycles.

On its side, Boeing's Senior Vice-President Sales Commercial Airplanes, Dr.
Dinesh A. Keskar confirmed that the company has recommended that airlines no
longer operate the B737-200 series since they are oil guzzlers, need
expensive repairs and are, therefore, no longer efficient. Boeing has
produced new generation aircraft that are more efficient in the use of
energy. For that reason, Keskar said that Boeing does not object to the ban
of this B737-200 aircraft in Indonesia, since as regulator, Indonesia
possesses the authority to do so.

SilkAir adds flights to Surabaya as Garuda plans to reopen routes to Europe

Starting 30 October, SilkAir will take over the Singapore-Surabaya route
from Singapore Airline. The airline will serve this sector twice daily, up
from SQ's six times weekly flights, reports Bisnis Indonesia. Surabaya will
be the seventh's Indonesian city flown by the airline  next to Medan,
Palembang, Solo, Lombok, Manado and Balikpapan.

Separately, Transportation Minister Hatta Rajasa added that traffic volume
from Singapore to Jakarta, Surabaya and Denpasar, Bali will be increased by
15%, while Indonesia's airlines will be given the right to fly beyond
Singapore to nine destinations in Asia and five in Europe. The agreement is
in anticipation of Garuda Indonesia resuming its services to Europe.

On the other hand, Expert Staff of the Department, Cucuk Suryosuprodjo
regrets that Indonesia's airlines have been slow in filling the traffic rate
(frequencies) from Indonesian cities to Singapore and beyond. Up to date
less than 50% of allowable frequency has been utilized, said Suryosuprodjo.
Conversely, Singapore has managed to almost fill its capacity to the limit,
and, therefore, the government has had no other option but to add to
Singapore's airlines, 15% traffic rate to four Indonesian cities, among
which are Jakarta, Surabaya and Denpasar, Bali. The Department has taken
this policy to enable the country to achieve the tourism target of 6 million
tourist arrivals in 2005.

Post Bali bombing, Garuda increases flights to Lombok

General Manager Garuda in Lombok , I Wayan Subagia, informs that starting 27
October Garuda will inaugurate the airline's six times weekly flights from
Jakarta to Mataram on the island of Lombok.  The flight will depart Jakarta
at 18.30 and return from Mataram the next day at 06.00 am.

>From 30 October onwards, Garuda will also serve Lombok from Bali, flying
from Ampenan, Lombok, to Denpasar, Bali , at 16.50 local time daily and
returning to Ampenan at 18.00 daily.

Its Surabaya-Lombok flights will also increase from twice to three times
daily.
The flights are expected to generate business opportunities for Lombok and
the Nusatenggara islands, while Lombok's exports fresh vegetables to Bali,
such as watercress, chilli and cashew nut.

Meanwhile, in the aftermath of the recent Bali bombs, Garuda Indonesia is
pessimistic that the airline can now break even between its income and
operational costs for 2005. Finance Director, Alex Maneklaran said that
realistically, Garuda will only be capable of reducing losses compared to
last year, that amounted to Rp. 811 billion.

Maneklaran said that immediately after the 1st. October bombs in Bali, the
airline received 20% cancellations from Japan and 15% from Perth, Australia
with destination Bali. Should this trend continue until the end of the year,
this will mean that its peak season sale may turn out to be disappointing.

Separately, Singapore Airlines PR Manager in Jakarta, Glory Henriette, said
that the airline has received a substantial number of cancellations from
Japan and Europe, which trend may continue until the end of the year.
Nonetheless, SQ flights to Bali continue as per normal.


2.   Health, Culture and the Environment

Indonesia's Tsunami Early Warning System (TEWS) installed

With the arrival of two tsunami-monitoring buoys in Indonesia, - donated by
the government of Germany,-  Indonesia will soon have installed a Tsunami
Early Warning System (TEWS) for the country, said Assistant Deputy to the
Minister of Research and Technology, Dr. Idwan Suhardi. The two buoys are
part of a  45 million Euros assistance from Germany for a period of five
years, that includes the provision of equipment, installation of the early
warning system as well as the training of personnel to operate the system.

The two buoys to which are attached 10 Ocean Bottom Pressure Sensors (OBPS)
will be placed along the coast off Padang, West Sumatra on 28 October, just
where the Eurasia plate meets the Indo-Australia plate. It was along this
stretch that giant earthquakes generated the Indian Ocean tsunami last
December.

Expected to be completely installed before the end of the year, Indonesia's
Tsunami Early Warning System comprises 28 stations, 16 of which are built
through international assistance. By utilizing the global positioning
system, Indonesia's TEWS can accurately locate the epicenter of earthquakes,
their depth, scale of power, nearest cities to be effected, the maximum
height of waves in case of a tsunami, the time needed for the tsunami to
reach shore, and the nearest evacuation points, - all within the span of
five to ten minutes after a quake.

And, in order that the message may reach the population in the shortest
possible time, TEWS is connected to information networks of government
institutions in charge of disasters. The Meteorological Department will
immediately contact concerned institutions by short message (SMS) through a
database of cellular phone numbers, that will further relay the information
automatically by e-mail to the printed media, radio and Television channels.

The early warning system will thus allow time for the public to escape to
safer ground, especially in the case of a tsunami. In this context,
therefore, the public is urged to draw up a map of tsunami danger zones in
the area, outline paths for evacuation, and continue to provide training
programs for staff and communities so that they keep on continued alert.


The Economy, Trade and Industry

Star TV takes 20% stake in Indonesia's ANTV
Star TV, Rupert Murdoch's Asian broadcaster, is reported to have acquired a
strategic stake in ANTV, an Indonesian television network, securing a place
in one of Asia's fastest-growing markets, the two companies said.
Star TV, a satellite and cable operator based in Hong Kong, will buy 20
percent of the national network ANTV, giving it a firmer foothold in
Indonesia, Asia's third most populous country. Today, Star TV pay-television
services are already available on cable and satellite in Indonesia.
ANTV is owned by the Bakrie family, Aburizal Bakrie is the present
Coordinating Minister for the Economy. ANTV has promised to improve the
quality of news broadcasts and secure their independence. ANTV executives
said that control over programming, particularly news content, would remain
in Indonesian hands.
"This is good for both parties, good for the country," said Anin Bakrie, who
heads ANTV and is the eldest son of Minister Aburizal Bakrie. "Star-TV is
bringing in a lot of experience from the international market." But he added
that Star was intent on supporting the growth of "local expertise and
content."
Jannie Poon, a spokeswoman for Star, said, "This brings us the opportunity
to learn from a local partner in Indonesia." She added that Star intended to
be a "low key" investor and that "control remains with ANTV."
Mr. Bakrie declined to disclose what Star paid, but analysts said it was
probably well below $20 million.
Star TV already broadcasts 50 television services in Asia in eight
languages, with China and India among the markets. In Indonesia's crowded
television market, ANTV is a low-ranked but promising partner. Its share of
Indonesia's 180 million viewers has crept up to 5 percent from 2.5 percent
in the last three years. The network generally rates as the country's eighth
most popular service.


3. Politics and Security

·   National manhunt for suspected Bali bombers

Post Bali bombings on 1 October, the national Police began a nation-wide
manhunt, staging road blocks at strategic highways on Java and Sumatra,
thoroughly checking all passengers and boots of cars and motorbikes. These
blocks are placed particularly in the provinces of Central Java, Banten
(west of Jakarta) and Lampung (southern-most province on Sumatra - just
across Java), where the Police suspect the alleged bombers to originate.
Imam Samudra, the first Bali bomb coordinator, hails from Banten. Air
passengers arriving in Makassar (South Sulawesi) and Manado (North
Sulawesi)- Indonesia's province adjacent to the Southern Philippines,-  as
well as incoming and outgoing passengers to and from Batam and Tanjung
Pinang,  are also thoroughly inspected.

Most sought fugitives are Dr. Azahari and Noordin M. Top, two Malaysians who
the Police believe to be the masterminds and planners behind the bombings.
There are not only the latest ones in Bali, but also the 2002 bombings, as
well as those at Jakarta's Marriott Hotel and in front of the Australian
Embassy. Also still at large is Dulmatin, believed to be the chemical bomb
expert of the group.

In Bali, Police have already interviewed more than 230 witnesses in
connection with the bombs that exploded at three locations there. Police
have scoured room-rentals where informers said that they had seen the
bombers prior to 1 October, and have widely distributed posters and
postcards of the severed heads of the three alleged bombers found at the
bomb-sites, as well as of suspected the three masterminds. These have also
been shown to the Bali bombers, Amrozi and Imam Samudra, now awaiting
execution in Bali. But both confessed not to know the bombers.  If this is
true, then this means that the bombers belong to a new generation of
recruits. And therefore, until today, the Police are still unable to
positively identify the names of the three bombers.

Meanwhile, in Jakarta, security is at top alert. In a speech delivered
during Indonesia's Armed Forces Day on 5 October, President Yudhoyono has
asked the military to step in to strengthen efforts by the Police in the
fight against terrorism. While everyone agrees that the Military must assist
the Police in the fight against terrorism, however, how exactly this will be
done is still very controversial.

In the meantime, doctors at the Sanglah Hospital in Bali have identified all
victims of the Bali blasts. They also include three Australians, who have
been transported back to Australia. In a Jakarta hospital, the seriously
wounded cashier of the Raja's restaurant, brought here for operations,
finally succumbed because of complications, adding to the number of
casualties. And, a woman wounded in the blast is feared to become deaf for
life.

Whereas, in response to the request made by Australia's Foreign Minister,
Alexander Downer, that Indonesia ban the Jemaah Islamiyah, Vice-President
Jusuf Kalla explains that Indonesia has never recognized JI, and can,
therefore, not ban its existence. This was underscored by Coordinating
Minister for Politics and Security, Admiral Widodo, who added that despite
this fact, the Indonesian government is determined to fight all types of
terrorism, under whatever guise or organization.

While, in view of the third year commemoration of the Bali blast on 12
October 2002, all entry points to Bali are now closely guarded.

For your comments and further inquiries, please e-mail to:
tbsc-strategy at indo.net.id