The Indonesian Embassy, Bi Weekly Bulletin. Issue I/02 5 February 2007

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2 TABLE OF CONTENTS POLITICS GOVT FOCUSES ON IMPROVING THREE SECTORS: PRESIDENT 1 ECONOMY RI TO TARGET US$9 BILLION INCOME FROM NON-OIL/NON-GAS EXPORTS IN PRESIDENT: INDONESIAN ECONOMY SHOULD NOT BE TAKEN HOSTAGE BY HUGE DEBTS 2 INDONESIA'S EXPORTS REACHED OVER US$100 BILLION IN SOCIETY & CULTURE NATIONAL EDUCATION MINISTER LAUNCHES LANGUAGE VILLAGE NEAR BOROBUDUR TEMPLE 4 RECONSTRUCTION OF SCHOOL BUILDINGS IN ACEH TO BE COMPLETED BY INTERNATIONAL INDONESIA, FRANCE EXTEND COOPERATION IN IMPROVING ACCESS TO HEALTH SERVICES 5 INDONESIA, NORWAY PREPARE MEDIA DIALOG 5 OTHERS SAUDI GOVT ALLOCATES $2 MILLION FOR MOSQUE REHABILITATION IN ACEH 6 EDITORIAL CHINA WINS HEARTS IN SE ASIA 6

3 POLITICS GOVT FOCUSES ON IMPROVING THREE SECTORS: PRESIDENT Jakarta - President Susilo Bambang Yudhoyono said the government is focusing on alleviating poverty, developing the national economy and encouraging the nation's self reliance. "What we are doing and will do in the near future are to improve the people's welfare, firstly, by alleviating poverty and reducing unemployment; and secondly, by restoring the national economy, particularly that related to efforts to attract investments and boost the real sector," the president said in his stateof-the-nation address marking the start of the year at the presidential palace here. Of equal importance was to build the nation's self reliance in the fields of economy, foreign policies and state defense which must be strengthened in the context of the globalized international relations, he said. "The self-reliance means that we must not be dependent on other nations for our future," he added. He said among the efforts the government would continue to make in 2007 would be extending direct cash allowance (BLT) to some 500,000 poor families in 348 sub districts in five districts in seven provinces, distributing subsidized rice for the poor (Raskin), providing school assistance (BOS) and free health services at public health service posts (Puskesmas) and hospitals, building low-cost houses for the people in the low income bracket, and giving micro-credits and rotating fund to cooperatives and small-scale businesses. He added the government would also increase the welfare of civil servants and members of the Indonesian Military and Police. On the economic development, he said the government would try hard to increase the economic growth to above 6 percent per year. He said the economic growth in 2005 and 2006 came close to the pre-crisis level of 5.6 percent per year. The president noted that nine serious obstacles had led to low investment inflows, including high lending rates, uncompetitive taxation system, lengthy procedure of licensing investment proposals, lack of legal certainty and poor security. The other obstacles were related to political stability, infrastructure, and contradictory bylaws, he added. (ANTARA) ECONOMY RI TO TARGET US$9 BILLION INCOME FROM NON-OIL/NON-GAS EXPORTS IN 2010 Jakarta - Indonesia will target a 100 percent increase in its export of nonoil/non-gas commodities to US$9 billion in 2010 following the signing of details of the Japan-Indonesia Economic Partnership Agreement (JIEPA) in March or April this year, an industrial official said. "In 2010, non-oil/non-gas exports should record a two-fold increase from the figure in 2005 which only stood at US$4.5 billion," Achdiat Atmawinata, a senior adviser on industrial infrastructure enhancement to the Industry Minister, told ANTARA here. 1

4 He said such an increase in nonoil/non-gas exports would be of great significance to Indonesia, especially in improving the performance of domestic industries in penetrating the non-tariff barrier-packed Japanese market. So far, Achdiat added, Indonesian exports to Japan were dominated by oil and gas products such as LNG. Of the total of US$20.7 billion Indonesia was earning from exports, only US$4.5 billion came from non-oil/non-gas exports. In the meantime, Indonesia's nonoil/non-gas exports to Japan were dominated by manufactured products of high quality. But some the lowtechnology exports included primary agricultural, fishery and forestry products. Achdiat said his side hoped JIEPA would not only open markets for the two countries but also enhance Japan's role in helping industries in Indonesia to improve their capability in getting more access not only to Japan's market but also to the global market. The effort to enhance the capability, he added, was more directed at improving domestic industrial progress in fulfilling efficiency, quality and ontime delivery standards. "JIEPA is actually an asymmetric partnership, because there is such a difference between Japan's high technological know-how and Indonesia's. Hence, we only hope that Japan will also help improve industrial capability in Indonesia," he said. (ANTARA) PRESIDENT: INDONESIAN ECONOMY SHOULD NOT BE TAKEN HOSTAGE BY HUGE DEBTS Jakarta - President Susilo Bambang Yudhoyono said in a condition of selfsufficiency, the Indonesian economy should not be taken hostage by huge debts nor should the country be dictated by third parties in its economic development policies and programs. "With the awareness and full of calculations, we thus accelerate the settlement of our debts amounting to US$ 7 billion to the IMF (International Monetary Fund) in 2006, four years ahead of the scheduled time," the head of state said when delivering an earlyyear speech at the State Palace. The president pointed out that despite the settlement of the debts to the IMF, the country's foreign exchange reserves had remained strong, namely, amounting to about US$42 billion, the highest in the history of the Indonesian economy. With the settlement of the debts to the IMF, Indonesia was now an equal partner to the international financial institution like other countries which are not assisted by the fund, he said. "We are no longer bound in the Post- Program Monitoring in which the IMF still had a supervisory role in the programs and implementation of our economic development in the past," the president said. In addition, the head of state said the government had also decided to dissolve the Consultative Group on Indonesia (CGI) program. "I'm of the opinion that it is high time for us to design and decide our own economic programs by ourselves and freely and independently choose financial sources for our development without consultations with countries or international institutions grouped in the CGI forum," he said. If there is a talk between Indonesia and one or two of them, it will be done bilaterally by consistently maintaining 2

5 transparency and independence in negotiations with them, the president said. Thus, the chief executive said Indonesia would be really independent in setting agendas and priorities in the budget allocation as well as deciding financial sources and implementing what had been planned. Yudhoyono further said Indonesia continued efforts to reduce the amount of debts and the ratio between debts and the national income. "The economy will not be sound if the ratio between debts and the Gross Domestic Product (GDP) is still high. Thank God, we managed to reduce the ratio between debts and GDP from 56.9 percent in 2004 to 48.1 percent in 2005 and to 42.1 percent in 2006," he noted. The figures are better than those in Malaysia, Thailand and the Philippines, he said, adding that in the future Indonesia would try to reduce the ratio again to 35 percent or even lower. If the target is reached, Indonesia can be free from the status of a country with big debts, he added. In addition to the declining ratio of debts, Indonesia would also have more varieties of financial sources, he said. Indonesia's dependence on foreign debts has been reducing. The financial sources would be extended to avoid budget risks from the fluctuating exchange rates of currencies, interest rates and roll-over risk. The healthier and stronger state budget which is resistant to fluctuation would be one of important elements in our economy," the head of state said. "With this spirit, we will make up our budget in order to reduce the components of debt repayment and subsidies which are not productive and unnecessary so that our state budget would be stronger and we could allocate bigger budget to different development sectors particularly in the effort to improve human quality and increase welfare for the Indonesian people," he said. He said independence in the economic sector did not mean that Indonesia would isolate itself from cooperation and partnership with other countries and international institutions. In the current global economic era, we have to be able to take biggest advantage and benefits for the national economy, he said. Thus, Indonesia should maintain the regional economic cooperation in the frameworks of ASEAN (Association of Southeast Asian Nations) and APEC (Asia Pacific Economic Cooperation) as well as cooperation with Europe and Middle Eastern countries, he said. (ANTARA) INDONESIA'S EXPORTS REACHED OVER US$100 BILLION IN 2006 Jakarta - The Central Bureau of Statistics (BPS) said Indonesia's exports had reached US$9.5 billion in December 2006 bringing the figure on the January-December period in 2006 to US$ billion or an increase by percent compared to a corresponding period in "Exports reached the psychological level of US$9 billion for the first time in the country's history," BPS Chief Rusman Heriawan said. He said the country's imports in December 2006 reached US$4.94 billion bringing the figure for the January- December period in 2006 to US$61.08 billion, or an increase of 5.85 percent compared to a corresponding period a year earlier. 3

6 Indonesia enjoyed an international trade surplus of US$39.61 billion. December's exports rose by 6.43 percent compared to November's. If compared to December 2005, it increased by percent. Rusman further said December's non-oil/non-gas exports had reached US$7.62 billion or an increase by 6.26 percent compared to Novermber's. If compared to December 2005, it rose by percent. Overall, Indonesia's non-oil/non-gas exports in the January-December period in 2006 reached US$79.50 billion or an increase by percent compared to the corresponding period a year earlier. Commodities like rubber, rubber goods, metals, fats, vegetable and animal oils, CPO, copper, steel and paper contributed to the increase in the overall export figure. Oil and gas exports also increased in December It was caused by an increase in crude oil exports by percent to US$794.3 million and in gas exports by percent to US$869.4 million. But export of processed oil dropped by percent to US$210.7 million. "The Indonesian crude oil price in the global market rose to dollars per barrel in December 2006 from dollars in November 2006," Rusman said. (ANTARA) SOCIETY & CULTURE NATIONAL EDUCATION MINISTER LAUNCHES LANGUAGE VILLAGE NEAR BOROBUDUR TEMPLE Magelang, C Java - Minister of National Education Bambang Sudibyo has launched a Language Village in Ngargogondo, a small village in Magelang district, Central Java province, around three kilometers southeast of Borobudur Temple. "I hope Ngargogondo village is good and would serve as a model for other villages. We will support it. But if (the village) forgets the Indonesian and Javanese languages, we will stop the assistance," the minister flanked by Singgih Sanyoto, head of the Magelang district administration, said. He also said the development of the village as a Language Village was expected to support the tourism area of Borobudur Temple. According to him, tourists came to Borobudur Temple because they wanted to see the rich Javanese culture. If the local people forgot their culture, he said, tourists would have no interest in coming there. "Borobudur Temple is still a symbol of the Javanese culture if the people reserve it," Bambang added. He said he welcomed the Language Village because it is an indication of the local people's awareness and revival of the importance of communications in the current modern era. The minister held a dialog with a number of people who wished to learn English. (ANTARA) RECONSTRUCTION OF SCHOOL BUILDINGS IN ACEH TO BE COMPLETED BY 2008 Banda Aceh - The rehabilitation and reconstruction of school buildings damaged by the earthquake and tsunami on December 26 in 2004 in some districts/municipalities in Nanggroe Aceh Darussalam is expected to be completed by 2008, a local education official said. 4

7 "We have set the target for completing the rehabilitation and reconstruction of damaged school buildings and their re-opening at some time in 2008," head of the local education office Anas M Adam said. To date, he added, two years after the tsunami, some 400 school buildings had been rehabilitated and reconstructed with assistance from several local and foreign donors and institutions, besides the Aceh and Nias Rehabilitation and Reconstruction Agency (BRR). (ANTARA) INTERNATIONAL INDONESIA, FRANCE EXTEND COOPERATION IN IMPROVING ACCESS TO HEALTH SERVICES Jakarta - Indonesia and France have agreed to extend their cooperation in the improvement of access to health services, which has been going on since November 2001, a senior official said. The cooperation in the field of health access services had involved the Indonesian Ministry of Health and the French non-governmental organization Medecins Du Monde, Director General for Public Health Development Sri Astuti Suparmanto said. She said the extension of the cooperation for another three years covered efforts to provide basic health access services, the development of health reproduction status and improvement in the health services for mothers and children. The director general said that the Health Ministry and the Medecins Du Monde had previously carried out three main projects, among others, emergency project which directly provided emergency medical assistance, distribution of medicines, clear water supplies and vaccination. Other projects included rehabilitation projects with main activities in improving health and social structure and the restoration of the physical and psychological conditions of natural disasters' victims. "The rehabilitation project is part of the emergency project with a period of six months to three years," the director general said. (ANTARA) INDONESIA, NORWAY PREPARE MEDIA DIALOG Yogyakarta - Indonesian and Norwegian journalists and media professionals met for a two-day meeting in Yogyakarta to prepare for the second Global Inter-Media Dialog in Oslo later this year. The meeting's organizers hoped to capitalize on a successful inaugural gathering in Bali last year. Foreign Ministry officials from the two countries were also present to facilitate the meeting and to choose a theme for the second gathering and formulate a list of speakers and invitees. The first meeting in Bali saw the presence of 80 journalists and media professionals from around the world. It took place against the backdrop of the Danish cartoon controversy, which triggered massive protests in the Muslim world in early The Bali meeting agreed on the need for the media to be more culturally sensitive in the face of an increasingly connected and interdependent world. It fell short, however, of endorsing a global code of ethics for the media. The roles of government officials from Norway and Indonesia were limited 5

8 to facilitating the meeting. It was left to journalists and media professionals to determine the agenda of the Oslo meeting. Foreign Ministry secretary general Imron Cotan and deputy director of the Norwegian Ministry of Foreign Affairs Tine Morck Smith opened the meeting. They were accompanied by the Indonesian Ambassador to Norway, Retno L.P. Marsudi, and the director for public diplomacy at the Foreign Ministry, Umar Hadi. Also at the meeting were Bambang Harymurti of Indonesia's Tempo group and Siri Lill Mannes, a Norwegian TV news anchor. Representatives from New Zealand, Belgium and Russia were also present. (THE JAKARTA POST) The Saudi government would directly supervise the use of fund for the project which was due to start this year, he said. "Not only the mosque rehabilitation but also other post-tsunami humanitarian projects funded by the Saudi government are subject to supervision to ensure that the people of Aceh will enjoy the projects in the long run," he said. He said the Saudi government would always help Aceh in the aftermath of an 8.9 magnitude undersea earthquake and subsequent tsunami that killed more than 190,000 people on December 26, The Saudi government was considering channeling humanitarian aid worth US$50 million for different sectors of development in Aceh, he said. (ANTARA) OTHERS SAUDI GOVT ALLOCATES $2 MILLION FOR MOSQUE REHABILITATION IN ACEH Banda Aceh, Aceh - The Saudi government has set aside US$2 million in fund for rehabilitation of Baiturrahman Grand Mosque in tsunami-devastated Banda Aceh city, an official said. The fund was the Saudi people's donations channeled through the Islamic Development Bank (IDB), Saudi Charity Campaign (SCC) director Muhammad Ibrahim Al-Khalaf said after signing a memorandum of understanding on rehabilitation of the mosque here. The fund would be channeled in two stages with each phase of the rehabilitation project receiving US$1 million, he said. CHINA WINS HEARTS IN SE ASIA I. Wibowo, Jakarta EDITORIAL Relations between China and several Southeast Asian nations have been fast improving. ASEAN leaders now regularly speak highly of China, and of the nation's recent successes. This positive atmosphere was unheard of 10 years ago. During his visit to Laos in 2000, Chinese president Jiang Zemin received a very warm welcome, in which "banners were hung across the capital lauding Jiang, and endless banquets were held in his honor". This scene was replicated in Cambodia, where over 200,000 cheering schoolchildren welcomed Jiang's motorcade. 6

9 In the early '90s, Cambodia opposed China's involvement with the Khmer Rouge. While Myanmar, suffering from an embargo implemented by Western nations, showed its gratitude to China for its support by bettering economic and political ties between the nations. Thailand is no exception from this pattern. A long-time British and U.S. ally, the nation now considers its diplomatic relationship with China -- along with India -- essential to furthering its own position in Asia. Vietnam has been at war with China since 1979, but from 1991, when diplomatic relations between the nations were restored, Vietnam's relations with China have continued to improve. In February 2002 the two nations proposed the "Four good themes": good neighbors, good friends, good camaraderie and good partners. As a result, Cambodia, Laos, Myanmar, Thailand and Vietnam, which all hug the Mekong River, have benefited tremendously from trade with China. Under the framework of the Greater Mekong Sub-region (GMS), China has implemented a development program in the Mekong Basin. It has been noticeable that China has paid great attention to this region through aidgiving. It is within the Mekong area that China's soft power is most evident. Similar trends have been evidenced in Malaysia, Singapore, the Philippines and Indonesia. Malaysia, under Dr. Mahathir, has developed a close relationship with China, and at both economic and diplomatic levels the two countries are on good terms. Singapore remains a "natural friend" of China as the majority of the citystate's population are of Chinese descent. Although their relationship was strained during the '70s, as of 1990 it has been reinvigorated by increased trade and two-way visits from the nations' leaders. Meanwhile, relations between China and the Philippines have been caught in a dangerous dispute over Mischief Reef. Yet, in the past five years, relations between the two countries have been bettered due to high-level exchanges. The Philippines have also received a loan of US$500 million to build railroads. Relations between Indonesia and China suffered after a diplomatic breakup lasting 32 years. Yet, over the past eight years, Indonesia and China have worked to better this situation. Visits by leaders of the two countries have been more frequent, while exports and imports have grown. When the Asian financial crisis hit Indonesia, China also increased its assistance to the region. In addition to US$400 million in stand-by loans as part of an IMF rescue package, China also increased its export credit facilities by $200 million. During the 2004 tsunami disaster, China was among the first of nations to provide not only financial assistance to Indonesia, but also medical assistance. Throughout Joseph Nye's term in office, China increased its "soft power". This differs from "hard power" in that soft power does not rely on military strength to subjugate a country, but rather on values and culture. If power is defined as a means to acquire the intended result, then soft power is still within this boundary of definition, except that it rejects the use of force or violence. "A country may obtain the outcome it wants in world politics because other countries -- admiring its values, emulating its example, aspiring to its level of prosperity and openness -- want to follow it," Nye says. The increase in China's soft power is evident among the various cultures to 7

10 which citizens of ASEAN nations belong. One observer said, "Chinese culture, cuisine, calligraphy, cinema, curios, art, acupuncture, herbal, medicine and fashion fads have penetrated into regional culture." He also says Chinese films, pop-music and film stars, such a Gong Li and Zhang Ziyi, are now extremely popular among Southeast Asia's youth. Mainland Chinese brands such as Hai'er, TCL and Huawei have also become increasingly popular in many Southeast Asian societies. According to a poll conducted in Thailand in 2003, 76 percent of respondents considered China to be Thailand's closest friend. The writer is the head of the Center for Chinese Studies at the University of Indonesia. (The Jakarta Post) 8