[Nasional-e] IBRAHIM ISA - SELECTED INDONESIAN NEWS, 14 FEBRT. 2003.= EXPORT COSTS; PAPUA; ACEH PEACE; PRIVATIZATION=

[IBRAHIM BRAMIJN]

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EXPORT COSTS WILL 'SOAR' IF WAR IN IRAQ BREAKS OUT
HOUSE ENDORSES DIVISION OF PAPUA PROVINCE
GOVERNMENT WARNS GAM OF BREAKDOWN IN PEACE PROCESS
NGO WARNS OF UNRESTRAINED PRIVATIZATION OF PUBLIC SERVICE
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EXPORT COSTS WILL 'SOAR' IF WAR IN IRAQ BREAKS OUT
Rendi A. Witular, The Jakarta Post, Jakarta, 14 FEBR 03

The cost of shipping exports to the Middle East, Europe and Africa will soar
by at least 35 percent if a war against Iraq comes to pass, according to an
expert.

Indonesian Shipowners' Association (INSA) chairman Barens Th. Saragih told
The Jakarta Post on Thursday that the higher costs would result from
increased operating costs and war-risk surcharges imposed by shipping
companies.

"For the shipping charges alone, which now range between US$1,100-1,200 per
20-foot container, the increase will be around 15 percent, while for the
war-risk surcharge, shipping companies will add about $50-150 per
twenty-foot container," said Barens.

The increase in shipping costs was unavoidable as most ships had to sail by
longer routes to avoid passing the Suez Canal for fear of being hit by stray
missiles as the canal was located only about 650 kilometers from Iraq.

Thus, cargo ships would have to sail past South Africa en route for Europe,
which would take much longer.

Meanwhile, shipping companies would impose various surcharges if the U.S.
attacked Iraq. The war-risk surcharge for shipments to Egypt and Israel
would be $50 per 20-foot container and $100 per 40-foot container, $24 and
$48 respectively per 20 and 40-footer for Syria and Lebanon, $40 and $80
respectively per 20 and 40-footer for Algeria, $75 and $150 respectively per
20 and 40-footer for Libya, and $125 and $250 respectively per 20 and
40-footer for Europe.

The higher shipping costs would adversely impact on the country's already
fragile export industry.

Local businessmen have said the looming U.S.-Iraq war has already dealt a
blow to the country's exports, causing worries that Indonesia will not be
able to reach its export growth target this year.

Many buyers in Europe, Africa and the Middle East have started canceling
orders for the country's prime manufacturing commodities, such as textiles
and footwear.

Europe, the Middle East and Africa together contribute to around 50 percent
of the country's total exports, which last year reached $57 billion.

On average, Indonesia's exports each year to Europe are worth more than $8.5
billion, the Middle East about $11 billion and Africa about $1 billion.*-**
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HOUSE ENDORSES DIVISION OF PAPUA PROVINCE
Kurniawan Hari and Fabiola Desy Unidjaja, The Jakarta Post, Jakarta, 14 FEB
03

The House of Representatives (DPR) endorsed on Thursday the government's
controversial move to divide Papua into three provinces, thus giving more
legitimacy to the government in moving ahead with the plan despite strong
opposition from Papuans.

The House's approval was given after a closed-door meeting attended by
leaders of the nine factions in the House, leaders of the House defense
commission and home affairs commission, and Papua-born legislators Ruben
Gobay, Alex Hasegem and Simon Patrice Morin.

House Speaker Akbar Tandjung said that the government's move was only giving
effect to Law No. 45/1999 on the partition of Papua into three provinces.

He claimed that Law No. 45/1999 did not contravene Law No. 21/2001 on
special autonomy for Papua.

"Both laws are valid ... This means that the division of (Papua) province is
acceptable," Akbar said after the meeting.

During the meeting, legislator Effendi Choirie from the National Awakening
Party and independent legislator Astrid S. Susanto urged the House to oppose
the government's plan as it was opposed by many Papuans and could worsen the
separatist problem.

However, other legislators, including legislator Sabam Sirait from the
Indonesian Democratic Party of Struggle and former chairman of the House
committee that deliberated Law No. 21/2001, gave their support.

Sabam, for instance, contended that Papua was four times bigger than Java
island and, therefore, its division into three provinces was needed to boost
development there.

Over the past days, the Papuan legislators have strongly criticized the
government for dividing Papua into three provinces, but on Thursday the very
same legislators expressed their agreement to the division.

The House's endorsement has given a boost to the government, with Minister
of Home Affairs Hari Sabarno insisting that Papua had been legally spit into
three provinces since the president signed Law No. 45/1995.

"The split-up was decided before the issuance of the special autonomy law.
It's a fait accompli and the present government is simply giving effect to
the law," he remarked.

The minister, nevertheless, gave assurances that the special autonomy law
would be implemented in all of the three new provinces and that the revenue
from Papua's natural resources would be fairly distributed among them.

"The public should not worry about their welfare after the split as the
central government will ensure a fair distribution of revenues," Hari added.

He also disclosed that he would visit Papua later this month to inaugurate
14 new regencies in the province and discuss the split with local
administrations there.

"It should be underlined that it will be difficult to manage 28 regencies
under the umbrella of one province," the minister said before attending a
limited cabinet meeting on Papua.

The House on Thursday also recommended that the government hold regular
consultations with House to discuss the implementation of the law on special
autonomy for Papua.

It also urged the government to issue a decree on the establishment of the
Papua People's Assembly as mandated by the autonomy law. This assembly would
need to be consulted by the central government on any important decisions
regarding Papua. ***
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GOVERNMENT WARNS GAM OF BREAKDOWN IN PEACE PROCESS
Fabiola Desy Unidjaja and Nani Farida, The Jakarta Post, Jakarta/Banda Aceh,
14 FEBR 03.
The Indonesian government warned the Free Aceh Movement (GAM) of a total
breakdown in the peace deal as both sides failed to build mutual confidence
in implementing the cessation of hostilities agreement they signed two
months ago to end 26 years of hostility.

Accusing GAM of disseminating lies among the people, Coordinating Minister
for Political and Security Affairs Susilo Bambang Yudhoyono said the
government was preparing a contingency plan if the cessation of hostilities
agreement that was signed in Geneva on Dec. 9, 2002, fell apart.

"The government cannot say the deal has failed but it will require a total
conversion (by both sides) to save the peace agreement," he said after a
meeting with President Megawati Soekarnoputri at the Presidential Palace
here on Thursday.

Susilo, who returned from a three-day visit to Aceh on Wednesday, accused
the separatist rebels of spreading the lie among the Acehnese that the peace
deal would end with a referendum for independence.

"If we see that the agreement is failing, of course we will take contingency
steps to maintain national unity," he said.

Since the signing of the cessation of hostilities agreement, both the rebels
and the military have been found to have violated the deal.

The Joint Security Committee (JSC), a tripartite body supervising the peace
deal, recently declared that GAM had committed two very serious violations
of the agreement, while the military had committed a minor violation. In
addition, there has been an increase in the number of complaints of
extortion by both rebels and security personnel of mining companies,
traders, businesspeople and villagers.

Susilo also said the five-month demilitarization process was a crucial
period for GAM to show its commitment to the peace deal.

"We urge GAM to truly lay down its weapons, stop violating the agreement and
halt its political and military activities," the minister said.

According to the peace agreement, during the demilitarization process GAM is
to lay down its arms and store them in secret locations supervised by the
Henry Dunant Centre (HDC), while the military pulls back its soldiers from
the province in phases.

The police are required to redeploy their Mobile Brigade personnel as a
defensive force rather than a combat force.

In Banda Aceh, GAM deputy prime minister Malik Mahmud said GAM was committed
to complying with the cessation of hostilities agreement and that rebels
were laying down their weapons as part of the demilitarization process.

He called on Jakarta to honor the peace agreement "and stop making
statements that are contrary to the agreement".

According to the peace agreement facilitated by the Geneva-based HDC, the
Acehnese people, represented by their political leaders, including GAM, will
hold an all-inclusive dialog to begin building a democratic administration,
including preparing for fair and democratic gubernatorial and regental
elections.

HDC chief David Gorman said the demilitarization process had yet to begin as
the two side were still discussing the mechanisms for storing GAM's weapons
and for the redeployment of security personnel.

Gorman said the parties were currently discussing credible measures to
ensure that GAM rebels were laying down their arms.

He said GAM had to be prepared for HDC inspections to guarantee the rebels
were not retaking the weapons they had surrendered. ***
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NGO WARNS OF UNRESTRAINED PRIVATIZATION OF PUBLIC SERVICE
The Jakarta Post, Jakarta, 14 FEB 03.

Selling state companies that provide public services may help Indonesia's
economic reforms, but not necessarily the public who must let private
companies treat them as consumers and the service as commodities, according
to a report by a non-government organization.

Business Watch Indonesia (BWI) issued on Thursday its study on Indonesia's
privatization program in the sectors of water, energy and health. But BWI
pointed to more fundamental problems behind the privatization drive as a
result of how the World Trade Organization (WTO) shaped global trade.

Testing the argument that privatization benefits consumers with lower prices
and better services, BWI's report found that this had not been the case in
Indonesia so far. The trend of privatization could likely be the opposite,
it warned.

"Privatization sharpens and creates what is called 'an access divided
society,' a society that is divided based on its ability to access public
services that should have been accessible for everyone with the same
opportunity," the report said.

Indonesia's privatization program began even before the 1997 economic crisis
left the government with no choice but to deregulate and invite private
capital into public sectors.

What began at a cautious pace, had to be pushed faster under the economic
reforms program with the supervision of the International Monetary Fund
(IMF).

BWI said that pressure made it difficult for the privatization program to
balance the public's interests with that of private firms entering the state
sectors.

An important downside effect of the privatization program was the full cost
recovery principle, which requires the market to cover the cost of producing
the service.

In Indonesia, the economic crisis sapped the government's ability to meet
the growing demand for public services due to its unrestrained population
growth.

Local government-owned water company, PDAM, has been selling water at prices
below the production costs and must survive on subsidies.

Since private companies have entered the sector, demands have risen for the
fees to be increased in order to improve services and infrastructure.

In the energy sector, subsidies provide the public with modest electric
prices, but independent power producers have said they could not invest in
more power capacity unless there is a price increase.

Indonesia's privatization of the health sector developed through
decentralization, said BWI.

It said that the central government delegating its powers to local
government required hospitals to become self sufficient.

"Through the concept of decentralization, it's just a matter of time before
the entrance of the private sector. Because hospitals cannot become
autonomous without a sound financial structure," its report said.

BWI attributed the pitfalls behind the privatization drive to WTO's failure
to distinguish commercial and non-commercial services. This had the
consequence that public services, even the most basic ones, were labeled as
commodities subject to market forces.

And instead of competing with one another to drive prices down, BWI said,
private companies here tended to work in collusion to control the price they
charge to consumers.

The report referred to cases in other countries where privatization had not
yet brought about lower prices or better services.

BWI said Indonesia's reliance on foreign debt was a problem in assuring that
the privatization program developed in conjunction with the public's
interest. ***

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