TABLE OF CONTENTS

NEWS & ISSUES

* Government denies whitewashing poverty situation
in speech

* Man killed in fight with police

* Test case for TNI chief

* Bombing season is back, warns expert

ACEH

* Sharia police raid UN diplomatic compound in
Aceh

* Four feted for Aceh peace role

* Aceh’s former rebels demand justice

WEST PAPUA

* Arrest warrant for Papua activist

* Rights violations getting worse in Papua:
Observer

LAPINDO MUD DISASTER

* Hot mud gushes, runs rings around Sidoarjo

* Bakrie’s conflict of interest

* Lapindo hires pros to clean up its image

* NU divided, dragged into the Lapindo dilemma

* Victims can’t afford to forget mud

* Sidoarjo contains the mud to ’Bermuda Triangle’

* Children most disadvantaged

* Mudflow victims demand compensation

* Arrest Lapindo bosses, seize their assets, NGOs
say

HUMAN RIGHTS/LAW

* Government dragging its feet on freedom to
information

* Court wrong to reject plea: lawyers for death
row Indonesians

* House members vow to pursue bill outlawing
discrimination

* Regions ’fail’ to fund women’s empowerment

LABOUR ISSUES

* Illegal migrant workers tell tales of hope and
disappointment

* The real state of the nation is 40 million
jobless!

* Unemployment explosion imminent, analyst warns

WAR ON CORRUPTION

* For some NGOs, another disaster means new flashy
cars

* Education ministry needs to improve
transparency: ICW

ENVIRONMENT

* Malaysia urges Indonesia to tackle haze problem

* Fires continue raging in Kalimantan forests

HEALTH & EDUCATION

* Ignorance hampers Indonesia’s bird flu fight

* 14 provinces classified as ’leprosy endemic’

ECONOMY & INVESTMENT

* Autonomy going too far: SBY

* A conservative budget

* FDI inflows remain disappointing

* 2007 privatization target is Rp3 Trillion

 NEWS & ISSUES

Government denies whitewashing poverty situation
in speech

Jakarta Post - August 23, 2006

Jakarta — The government is standing firm against
allegations it attempted to whitewash the reality
of poverty and unemployment in the country in
President Susilo Bambang Yudhoyono’s
state-of-the-nation address last week.

With backing from the Central Statistics Agency
(BPS), whose head was summoned to a Cabinet
meeting here Tuesday, the government said the data
presented in the Aug. 16 speech was the most
recent published by the agency from September
2005.

"It was the latest data, and the President could
not have any newer because the BPS will only
release it next month," said Cabinet Secretary
Yusril Ihza Mahendra.

BPS head Rusman Heriawan said Yudhoyono had since
questioned him due to the clamor of allegations
the almost year-old statistics were used to
present a disingenuously positive view of his
administration’s achievements.

Yudhoyono later instructed the agency to in the
future release data months before the presentation
of the draft state budget for the following year.

Yusril said the President would not present the
data again Wednesday when delivering a state
address before the Regional Representatives
Council (DPD). The speech will instead focus on
regional autonomy and development, the minister
added.

Meanwhile, the House of Representatives plans to
summon relevant ministers and Rusman for
clarification about the data.

The chairman of House Commission VI on trade and
industry, Didiek J. Rachbini, said Tuesday that
government officials would be held accountable for
withholding actual data in the 2007 state budget
proposal made before the House plenary session.

"We will need them to clarify how old data could
make its way into the President’s state address."
He also vowed that his commission would carefully
scrutinize all government data in the future.

Critics charge that Yudhoyono was wrong when he
said that the poverty rate dropped from 23.4
percent in 1999 to 16 percent in late 2005.

It was later found that the 16 percent figure was
from late 2004. Analysts estimate that there was
in fact an increase in the number of people living
below the poverty line due to fuel price hikes in
2005 Conservative estimates put the poverty rate
at 18.5 percent.

State Minister for National Development Planning
Paskah Suzetta has argued there was no attempt by
the government to manipulate data because it was
the most recent from the BPS.

As for new data from the results of the nationwide
social and economic survey (Susenas) for 2005,
Paskah said it would only be available in
September.

In the speech, Yudhoyono also claimed that his
administration managed to reduce unemployment from
11.2 percent in November 2005 to 10.4 percent in
early 2006. Labor experts pointed out he referred
only to “open” unemployment — those of working
age actively seeking employment — without
revealing the bleak overall situation of the huge
number of underemployed in the 220 million
population.

---

Man killed in fight with police

Jakarta Post - August 22, 2006

Ambon, Maluku — Angry residents attacked a police
post in Nusaniwe, Ambon, with stones Saturday upon
learning a man was killed in a fight with police.

The dead man, identified as Denny Leuwol, had been
in Nusaniwe to join Independence Day celebrations.
His friend, Oni Siwabessy, was seriously injured
in the incident. A second group of residents
protested at the provincial police headquarters.

"The three officers who were involved in the
brutality have been detained. If they are found
guilty, they will be punished in line with the
prevailing laws," Maluku Police chief Brig. Gen.
Guntur Gatot Setyawan said.

Guntur said the suspects had been on duty at the
time of the incident and could be discharged.

The protesting residents said the fight started
after Denny’s motorbike crashed into the officers’
car, while the officers said Denny had challenged
them.

"The case demands serious attention. The police
should not protect guilty officers," said Hans
Manuhutu, who comes from Denny’s village.

---

Test case for TNI chief

Jakarta Post - August 19, 2006

Soeryo Winoto, Jakarta — Many had doubted Air
Chief Marshal Djoko Suyanto’s capabilities of
overseeing all the armed forces, especially the
Army, before he was appointed as Indonesian
Military (TNI) commander early this year.

Skepticism was understandable, given the fact that
Army soldiers make up the majority of TNI
personnel and that the Army was dominant in
Indonesian politics in the past.

While many people were still linking Suyanto’s
rise to the TNI’s top post with the history of
sharp rivalry between the Army and Air Force in
the 1960s, the new military commander went through
his early tests in office with optimism.

His initiative to invite his predecessors,
including Gen. (ret) Wiranto, for a get-together,
was a strategic approach that gave him access to
senior Army officers. Gradually, skepticism over
Suyanto’s ability to build trust with the Army
faded.

However, the people are again starting to doubt he
is capable of overseeing the Army, following the
finding of an arms stash at the house of deceased
Army Brig. Gen. Koesmayadi in Jakarta on June 25.
Koesmayadi, who had been the deputy to the
assistant for logistics to the Army chief, was
close to former Army chief Gen. Ryamizard Ryacudu,
one of Suyanto’s competitors for the TNI’s top
job.

Suyanto has not been convincing in certain
statements made to the media explaining how and
why Koesmayadi had been hoarding 185 arms, 43 of
which were nonstandard issue. The TNI chief’s
cautiousness has put him in a difficult situation
as many believe he knows the truth behind the
situation. Therefore, the investigators’
explanation that the arms were stashed at
Koesmayadi’s house just because he was an avid
arms collector was met with questions and
cynicism.

Strangely, the investigation revealed Koesmayadi
had been obsessed with the idea of opening an arms
museum.

Suyanto had earlier revealed that the probe into
Koesmayadi’s case had been completed after a total
of 132 people, including a four-star general, were
thoroughly questioned. He said the probes were not
supposed to find them guilty, but expected that
legal proceedings had to go on.

Military Police chief Maj. Gen. Hendardji Supandji
told a press briefing early this month that
Koesmayadi and his son-in-law had failed to follow
the standard procedures for possessing weapons.

According to Hendardji, Koesmayadi had illegally
sourced some of the guns and stored them at one of
his houses in Ancol, North Jakarta, while his
son-in-law, an officer in the presidential details
unit, was blamed for moving the arms from
Koesmayadi’s residence in South Jakarta.

Later the investigative team disclosed that
Koesmayadi had ordered the purchase of 60 arms
through six procurements from March to May 2006.
The team also found 23 arms procurements from
March to October 2004 in the supply of 623 rifles,
16 live grenades and more than 9,000 ammunitions.
The most interesting part of this affair is that
the TNI admitted to all the arms purchases.

The investigation also identified a ring of 11
people, including Koesmayadi and his son-in-law.

Army chief of staff Gen. Djoko Santoso has also
disclosed that two Italians and a South African
national were among the group suspected to have
known about the affair.

Soon after the revelation of the arms stash at
Koesmayadi’s residence, speculation was rife among
the people. Some said a coup attempt could be
behind the arms stash. Others said it was solid
evidence of illicit businesses involving the Army.

Those with common sense will ask if Koesmayadi
really collected weapons for a hobby or dreamed of
opening a museum? Is such an explanation
acceptable and not an insult to the intelligence?

Would Koesmayadi’s obsession with opening an arms
museum have remained a secret had the Military
Police not looked into the case? What would have
happened if Koesmayadi had lived? Would the arms
stash have remained undiscovered?

Common people view the Koesmayadi affair as a
small part of a big scenario, which could be a
lucrative business involving Army officers. And it
is TNI chief Suyanto who is responsible for
shedding some light on the mystery. He must prove
his capability by “breaking” the circle. The
Koesmayadi affair is indeed a real test for
Suyanto.

After the House approved his nomination as TNI
chief early in February, Suyanto told The Jakarta
Post: "There is the possibility that my knowledge
of the Army or Navy is not that deep compared to
theirs, because I am an Air Force man....."

It is time for Suyanto to prove that his knowledge
and control of the Army is adequate, and to show
he has the courage to bring clarity to the
Koesmayadi affair — even though, which is most
likely, he will have to rock the boat.

[The author is a staff writer of The Jakarta Post.
He can be reached at soeryo thejakartapost.com.]

---

Bombing season is back, warns expert

Sydney Morning Herald - August 17, 2006

A terrorism researcher has warned of a new
“bombing season” in Indonesia, as Islamic
militants seek to repeat a pattern established
since October 2002 of attacking Western targets
between August and October.

The International Crisis Group’s Sidney Jones, who
is based in Jakarta, said she had initially
dismissed speculation about a specific season for
attacks against foreigners, preferring to think
the attackers had simply "done it when they got
around to it".

But documents seized after the second Bali bombing
last October had confirmed that the terrorist
network had sought to continue a pattern.

"It turns out in [one] document that they did
actually plan a once-a-year spectacular
operation," Ms Jones told the Australian Institute
of International Affairs yesterday. "This means
that even now, though they are under such extreme
pressure... they may well try again simply because
it’s so important to have one of these a year."

The apparent pattern has included the use of
suicide backpack bombs against Western tourists at
Bali’s Jimbaran Bay in October last year, the
bombing of the Australian embassy in Jakarta in
September 2004, the attack against the JW Marriott
Hotel in Jakarta in August 2003 and the first Bali
bombing in October 2002.

Ms Jones said investigations since last year’s
backpack bomb attacks had revealed the planners
had "more volunteers for suicide missions than
they could use". Indonesian terrorist networks
employed a “’cynical selection process” in which
they looked for "certain kinds of personality
types and exploit them to bring people on board".

Ms Jones said that the efforts of Indonesian
police, and the killing or capture of leaders from
the organisation Jemaah Islamiah in recent years,
had weakened terrorism in Indonesia but not
stopped it. Instead, splinter groups had formed
and were increasingly likely to act on their own.

 ACEH

Sharia police raid UN diplomatic compound in Aceh

Deutsche Presse Agentur - August 23, 2006

Jakarta — The United Nations has lodged a
complaint after Muslim morality police in
Indonesia’s tsunami-ravaged Aceh province broke
into a UN diplomatic compound and peered through
windows at sleeping foreign diplomats, an official
confirmed Wednesday.

The late-night raid, which violated international
conventions on diplomatic privilege and immunity,
was the latest incident involving Aceh’s
controversial “Sharia police,” who have illegally
detained women for not wearing headscarves and
publicly flogged people for drinking alcohol.

The incident occurred at 11 p.m. last Thursday
night when 30 men, both Sharia officers and
regular city policemen, forced their way into the
compound of the World Food Programme (WFP) in
Banda Aceh, the provincial capital, despite
protests from UN guards.

"It’s a violation of diplomatic rules — a clear
violation," Barry Cane, a WFP spokesman, told
Deutsche Presse-Agentur dpa. Cane said the Sharia
police, who are civil servants charged with
enforcing a controversial Islamic law statute in
Aceh, wandered around the compound, which contains
both offices and residences for foreign UN
workers.

He acknowledged that the policemen peered into the
bedroom windows of UN diplomats while they were
sleeping. “I don’t even want to speculate” on
their motives, Cane said, although another foreign
aid worker familiar with the raid told dpa they
were hoping to catch the Westerners drinking at
their private bar.

"The matter was taken up with the provincial
government, which apologized," Cane said, adding
that a UN security official was in Aceh
investigating the incident, and that the WFP filed
a protest with the Aceh police department.

However, Cane said the WFP remained concerned that
the Sharia police, who are apparently operating
out of control of any authority in Aceh, would
attempt to raid the compound again, even though
they know it’s a diplomatic mission protected by
international convention.

The Indonesian parliament allowed Aceh to
implement Sharia, or Islamic law, in 2003, despite
the rest of the Muslim-majority nation being
secular. Since then, the Sharia police have become
a law unto themselves, dragging women off of
motorcycles and out of hotel lobbies for not
wearing headscarves, making lewd sexual
references, and illegally detaining them.

The group’s antics have infuriated both Acehnese
citizens and foreign relief agencies, which are
spending billions of dollars helping Aceh recover
from the 2004 Asian tsunami as well as a
recently-finished 29-year separatist war.

It remains unknown why the UN or Indonesia’s
Foreign Ministry did not publicly acknowledge the
incident, which occurred on the country’s August
17 Independence Day. "No one wants to make a big
deal about it publicly at the moment," one UN
official, speaking on background, told dpa. "It’s
a very sensitive issue, but there was no attempt
to cover it up."

Sharia police officials in Aceh could not be
reached for comment.

---

Four feted for Aceh peace role

Jakarta Post - August 19, 2006

Tony Hotland, Jakarta — President Susilo Bambang
Yudhoyono conferred honorary state medals Friday
to former Finnish president Martti Ahtisaari and
three other foreigners for their role in bringing
peace to Aceh.

They were either involved in mediating the
Memorandum of Understanding between the central
government and the Free Aceh Movement (GAM),
signed on Aug. 15 last year to end a decades-long
armed conflict, or monitoring its implementation.

No GAM representatives were present at the
ceremony at Merdeka Palace.

Yudhoyono conferred the country’s most prestigious
honor, the Bintang Republik Indonesia Utama, on
Ahtisaari, the chairman of Helsinki-based Crisis
Management Initiative (shown above). He was
honored for facilitating the MOU and enhancing
ties between Indonesia and his homeland.

The Bintang Jasa Utama honor was granted to Dutch
diplomat Pieter Feith and Thailand’s Lt. Gen.
Nipat Thonglek (second and third from left in the
line) for their role as the chief and deputy of
the Aceh Monitoring Mission (AMM) respectively.

AMM consists of monitors from members of the
Association of Southeast Asian Nations and the
European Union who ensure the peace deal is
carried out and also settle disputes.

The President also presented the Bintang Jasa
Pratama medal to Juha Christensen (fourth in
line), who brokered the peace talks and later
became the special adviser to AMM.

"I hope you will accept this honorary medal as a
symbol of friendship, respect and gratitude from
the people of Indonesia," Yudhoyono told Ahtisaari
after expressing his gratitude to all the
recipients.

Yudhoyono also praised the work of the AMM in
ensuring that the details of the agreement were
complied with.

Ahtisaari, speaking on behalf of the other
recipients, said he believed nothing would have
been accomplished without the commitment to peace
from the former enemies. "And I will come back to
see how things go. I feel like a godfather here,
and a godfather has responsibilities," he said.

---

Aceh’s former rebels demand justice

Courier Mail (Australia) - August 19, 2006

Marianne Kearney, Jakarta — Former Acehnese
rebels are calling for rights abusers from the
province’s civil war to be put on trial.

They argue that the thousands of people who were
tortured during the 29-year conflict are a ticking
time bomb that could disrupt the peace deal signed
a year ago.

The retired guerillas point out that the peace
deal promised to bring perpetrators of the abuses
to court. They say Jakarta’s refusal to establish
such a tribunal is a violation of the agreement.

"There should be some kind of justice for the
perpetrators — it should apply to both sides
because the peace accord promised peace for all
with dignity," said Bakhtiar Abdullah, spokesman
for the Free Aceh Movement (GAM).

Mr Abdullah says GAM will not take up arms again.
But he fears now that Aceh is experiencing peace,
thousands of traumatised people no longer
intimidated by the military will demand justice.

"Abuses were carried out with impunity, there are
around 20,000 to 50,000 people who suffered gross
human rights abuses,“he said.”We have documents
to prove people were raped and abducted."

This week hundreds of people carrying placards
saying "we have been tortured, we are traumatised
and we can’t stand any more" called on the
Government to withdraw all soldiers from the
province.

Teugku Ahmad Haikal, a rights activist, said
frustration with the peace deal, particularly with
the establishment of a new military command in
Aceh, could become explosive.

Jakarta withdrew over 30,000 troops last year as
part of the agreement but several thousand remain
in the province.

 WEST PAPUA

Arrest warrant for Papua activist

Jakarta Post - August 24, 2006

Jayapura — Police in Papua have issued an arrest
warrant for Jefri Pagawak, a local activist wanted
for allegedly masterminding violent demonstrations
throughout the province.

The order came after Jefri eluded police who tried
to arrest him in Timika on Tuesday night.

Papua police chief Insp. Gen. Tommy Jacobus said
Jefri was wanted for organizing protests in the
provincial capital Jayapura and Timika demanding
the closure of mining giant PT Freeport Indonesia.

The most violent protest happened in Abepura, on
the outskirts of Jayapura, on March 16, 2006, when
four police officers and a soldier were killed.

Mimika police precinct chief Snr. Cmsr. Jimmy
Tuilan said while Jefri managed to escape, the
police arrested two of the suspect’s accomplices.

---

Rights violations getting worse in Papua: Observer

Jakarta Post - August 23, 2006

Nethy Dharma Somba, Jayapura — The level of human
rights violations in Papua has increased in recent
years, according to one observer, who asked the
international community to do more for the
province.

"Systematic human rights violations continue
taking place in Papua every year," Rev. Dora
Balubun said Monday during a discussion at the
Jayapura Diocese office with Chris Sidoti,
director of the Geneva-based International Human
Rights Service.

Dora said the latest example occurred in Abepura
in March, when security officers allegedly
assaulted students. The incident he was referring
to followed a clash between security officers and
protesters demanding the closure of the PT
Freeport Indonesia gold and copper mine. In that
clash three policemen and a member of the Air
Force were beaten to death.

Dora, who serves parishioners in conflict areas,
attributed some of the alleged rights violations
in Papua to the unclear political status of the
province, and the manner in which Papua became
part of Indonesia.

He said while the government insisted Papua was an
integral part of the country, many Papuans felt
their land had been hijacked by Indonesia through
a legally flawed referendum.

"That’s why many Papuans feel as if they are not
part of Indonesia. And as long as the problem of
the political status of Papua is not
comprehensively settled, human rights violations
will continue to take place," he said.

Each time Papuans demand their rights, Dora
alleged, they are branded as separatists who must
be eliminated.

"A number of human rights violations have started
with (Papuans) demanding their rights, like the
Wasior case where Papuans demanded their customary
right to manage their natural resources," Dora
said.

Instead of responding to the demand, paramilitary
police officers silenced the people by accusing
them of threatening the state’s sovereignty, Dora
said. He added that the incident in Abepura also
began with a demand by Papuans for their rights.

The authorities’ effort to silence any demand by
the people for their rights constitutes an effort
to kill the country’s blossoming democracy, Dora
claimed.

Meanwhile, Chris Sidoti said the issue of human
rights violations in Papua earned little attention
internationally because of the perception the
violations were not on the same level as what was
seen in Aceh for decades.

To force the international community to respond to
events in Papua, he said, rights campaigners
should incessantly and aggressively raise the
issue.

However, Papua Police chief Insp. Gen. Tommy
Yacobus denied Tuesday the human rights situation
in the province was worsening. He said claims
about an increase in the level of rights
violations were the result of misunderstandings
about what constituted a violation.

"Due to different perceptions, what is classified
as a human rights violation here is not classified
as one in the international world," Tommy said.

Citing an example, he said hitting someone was
considered to be a human rights violation in
Papua, but in reality it was a normal crime.

"How come human rights campaigners here classify
the Abepura incident, in which four of my
subordinates were killed, as a human rights
violation?" he asked. The officer brushed off the
critics and rights campaigners, saying they first
had to understand what constituted a rights
violation and what did not.

 LAPINDO MUD DISASTER

Hot mud gushes, runs rings around Sidoarjo

Jakarta Post - August 24, 2006

The mudflow disaster in Porong, Sidoarjo, East
Java, has implicated many parties, not only
Lapindo and the Bakrie family, but also the
country’s largest Muslim organization Nahdlatul
Ulama and some media companies. The Jakarta Post’s
Riyadi Suparno, assisted by our journalists in
East Java Indra Harsaputra and ID Nugroho,
investigated the intricate relationship of those
parties in the handling of the disaster. What
follows are their reports.

The million dollar question is: which company has
been the most talked about in East Java over the
past two months?

The answer is Lapindo Brantas Inc., a company
controlled by the Bakrie family. This oil and gas
company became so popular — or unpopular — by
triggering the uncontrolled gushing of hot mud in
Porong, Sidoarjo, East Java.

The mudflow, which began slowly on May 29 — which
is why the company initially played it down — is
becoming bigger each day. It now spouts 50,000
cubic meters of hot mud a day, submerging rice
fields and four villages, and making 10,000
villagers homeless.

The problem grew when the mud submerged the
turnpike linking Surabaya and the eastern part of
East Java. The closure of the turnpike caused
massive traffic jams, delaying travel and
deliveries.

When the turnpike was elevated, and protected with
sand-and-stone walls, the mud breached the walls
in other areas, flooding more villages, and even
closing the Porong main road and railway link.

The villagers have nothing kind to say about
Lapindo. They spell out their displeasure for
everyone to see in the graffiti on their walls,
through demonstrations and in some cases by
forcefully breaching the walls holding back the
mud.

They have also demonstrated on the main street of
Porong, demanding that Lapindo’s license be
revoked and its executives prosecuted.

Initially, Lapindo claimed it was not responsible
for the mudflow because the mud was not gushing
out from its wells. However, Lapindo’s partner in
the Brantas block accused Lapindo of "gross
negligence" for not setting casing on at the depth
of 8,500 feet at Banjar Panji I well, where the
mudflow originated.

Although the exact cause of the mudflow is not yet
known, all parties are pointing the finger at
Lapindo.

The police were quick to question those involved
in the drilling activities that caused the
uncontrolled mudflow, and named nine people
suspects.

They include Imam Agustino, the president of
Lapindo; Nur Rochmat Sawulo, drilling share
service vice president of PT Energi Mega Persada,
a shareholder in Lapindo; and Yenny Nawawi, the
president of PT Medici Citra Nusa, a contractor of
Lapindo. The other six are drilling executive
staff. All suspects could face between five and 15
years’ jail if found guilty. But the police
stopped there. No progress has been reported.

In addition, a number of organizations have
planned to launch a class action against Lapindo,
on behalf of the victims. They include the
country’s largest Muslim organization, Nahdlatul
Ulama (NU), and the East Java office of the
Indonesian Forum for the Environment (Walhi). But
the NU is not entirely sure it will go ahead with
the class action because, according to an NU
activist, NU leaders have received money from the
Bakrie family, which essentially owns Lapindo.

"Just call it a bad day for us. This is indeed the
risk that any drilling entails," Imam Agustino
said recently, referring to the May 29 accident.

Lapindo itself has been trying hard to solve the
multifaceted problems. The company has spent
billions of rupiah on efforts to stop the mudflow,
manage the growing amount of mud and to compensate
the victims.

It established three teams to handle the problems.
The first team, led by Lapindo itself, is trying
to find ways to stop the mud gushing. Despite its
efforts, however, it has not been able to stop the
mudflow.

The second team, led by the State Ministry for the
Environment, is dealing with the management of the
hot mud, which keeps increasing every day. The
team has decided to separate the water from the
solid substances in the mud, treat the water and
dump it in the sea. As for the solid substances,
no decision has been made.

The third team, led by the Sidoarjo
administration, is addressing social problems,
including providing shelter for the victims,
distributing assistance and finding permanent
solutions for the victims, either by relocating
them to safer places or compensating them for
their losses so they can rebuild their lives.

To contain the impacts of the disaster, Lapindo is
spreading money among a number of institutions,
including the local military to help build the
embankment and evacuate the victims and the
Sidoarjo administration which is trying to meet
victims’ immediate needs as well as financing
needs of groups that are assisting the victims.

As things progress, however, the money has worked
its way in to the pockets of some environmental
activists and non-governmental organizations in
the regency, so that they will be more cooperative
and not so “vocal,” according to one activist.

"They are operating so cleverly, leaving no stone
unturned. Most parties will get assistance so that
they will not be so vocal against Lapindo," said
environmental activist Satrijo Wiweko.

He suspected that some media in East Java had also
received “assistance” so that their reports would
not be too hard on Lapindo and local
administrations.

Lapindo’s East Java general manager Rawindra
denied the accusation, saying that it worked in
cooperation with all parties, with the Sidoarjo
administration as the central point of
coordination. Rawindra refused to respond to the
accusations, saying that the company would rather
focus its attention on helping the victims.

To anticipate the coming of the fasting month, the
company is helping the victims relocate from
Porong market, where they have been living for the
past two months, to rented houses. The company has
given each family Rp 5 million for two years’ rent
and Rp 500,000 for moving costs, with a Rp 300,000
monthly food allowance per head per month for the
next six months.

A number of villagers, however, describe the
compensation as inadequate. Mahmudah,
Renokenongo’s village chief, acknowledged that
almost half of the mudflow victims in his area had
refused the allowances.

"They have not yet accepted the money and I don’t
blame them because it’s their right to decide,"
Mahmudah told The Jakarta Post. Some of those
turning down the compensation have staged a
protest at the Pasar Baru refugee camp and a
demonstration on Porong’s main road.

"Many things go beyond the value of money, such as
the threat hanging over our heads that the hot mud
could burst out anytime and flood our homes," said
a refugee in a protest rally.

---

Bakrie’s conflict of interest

Jakarta Post - August 24, 2006

There is plenty of mud to go around in Sidoarjo,
but the one party that looks set to come out of
this disaster looking the dirtiest is the powerful
Bakrie family.

Much of the blame for the disaster has fallen on
the family, with Vice President Jusuf Kalla going
so far as publicly demanding the family bear all
the costs arising from the mudflow.

To its credit, the family, through Aburizal
Bakrie, the coordinating minister for the people’s
welfare, has promised to pay for the disaster,
though it remains to be seen whether it will live
up to this promise.

So, just how exactly are the Bakries connected to
this muddy business in Sidoarjo?

According to media reports and information from
Lapindo Brantas Inc., the company that drilled the
gas well from which the mud is spewing, the Bakrie
family’s involvement in the Sidoarjo disaster is
multipronged.

The family is involved through the owner of the
project, Lapindo Brantas, Inc. and through the
contractor for the project, Alton International
Indonesia.

Lapindo Brantas holds 50 percent ownership of the
Brantas gas block in Sidoarjo, which it bought
from Huffco of United States in 1996. Other
shareholders are publicly listed local energy
company PT Medco Energy (32 percent) and Santos
Ltd of Australia (18 percent).

Lapindo itself is 100 percent owned by publicly
listed oil and gas company PT Energy Mega Persada
(EMP), which is 63.53 percent controlled by the
Bakrie family, 3.11 percent by Rennier AR Latief,
2.18 percent by Julianto Benhayudi and 31.18
percent by the investing public.

According to Warta Ekonomi, Alton International
Indonesia (AII), which won a US$24 million
contract from Lapindo, has a connection with
Bakrie and Rennier, who is currently a
commissioner at EMP. Before serving as a
commissioner, Rennier was president of EMP and
chief executive officer of Lapindo.

AII is owned by Alton International Singapore
(AIS), based in Singapore, and PT Medici Citra
Nusantara. AIS is controlled by Singapore-based
Federal International Ltd., in which Syailendra
Surmansyah Bakrie and Nancy Urania Rachman Latief
are shareholders.

In February, both Syailendra and Nancy increased
their stakes in Federal International to 12.33
percent and 12.29 percent, respectively. Who are
Syailendra and Nancy? Syailendra is the son of
Indra U. Bakrie, the younger brother of Aburizal
Bakrie, and Nancy is the wife of Rennier Latief.

These conflicts of interest in the Lapindo project
only surfaced after the sludge began spewing from
Lapindo’s gas well at the end of May. Otherwise,
all these cozy business relationships would have
gone unnoticed, like so much mud buried deep
beneath the ground.

---

Lapindo hires pros to clean up its image

Jakarta Post - August 24, 2006

Lapindo Brantas Inc., a unit under the Bakrie
family, has responded to the unprecedented
ecological disaster originating from its gas well
by going on a public relations charm offensive
aimed at cleaning up its image.

For the most part, the company’s efforts seem to
have paid off. In the first month of the disaster
in Sidoarjo, Lapindo was receiving most of the
blame for the mudflow. Both the media and the
public were accusing the company of bringing
misery to thousands of people with its drilling
activities. Seemingly sealing the company’s fate,
several of its executives were named as suspects
by the police for negligence leading to the
mudflow.

However, as the disaster entered its second month
a different image of Lapindo was being projected,
at least in the media. Now Lapindo was being
painted as a responsible company that was taking
care of the victims of the mudflow and providing
them with compensation, all the while making every
effort to stem the flow of mud.

This drastic change no doubt has much to do with
the company’s hiring of professional image
builders and the strong political clout of its
main shareholder, a company linked to the Bakrie
family, including Coordinating Minister for the
People’s Welfare Aburizal Bakrie.

"If Lapindo had no political clout, it would have
been finished in a matter of weeks because of this
mudflow brouhaha," said Henry Subiyakto, a
lecturer at Airlangga University in Surabaya and
also head of the Surabaya Media Consumer
Foundation.

Among the image specialists hired by Lapindo, or
its shareholder, are several former journalists
and media specialists. Henry says he was
approached about joining the team responsible for
improving Lapindo’s image and that of the Bakrie
family.

This team of professionals has made a concerted
effort to polish Lapindo’s image, lobbying owners
of media companies in East Java and journalists
covering the mudflow story, and also helping set
up a media center in Sidoarjo town hall.

The media center provides daily updates about the
handling of the mudflow and its victims. It must
be said that the center is fairly objective,
covering demonstrations by victims and their
demands for compensation.

The center provides free Internet access,
telephone use and printing and photocopying
facilities for members of the media. Not only
that, according to one source, the media center
also provides a “supplemental income” for
journalists.

Lapindo denied that it is financing the media
center. But one source said that while the company
did not finance the center directly, it channeled
the money through the local government.

East Java Information and Communication Agency
(Infokom) head Suwanto acknowledged the role of
Lapindo in the establishment of the media center,
but denied that the company provided any financial
support for its operation.

"Lapindo only provides photocopy machines, paper
and lunch. Everything else is financed by Infokom
East Java," Suwanto told The Jakarta Post. He
added that the center was established on a direct
order from East Java Governor Imam Utomo.

---

NU divided, dragged into the Lapindo dilemma

Jakarta Post - August 24, 2006

Sidoarjo in East Java is the base for the
country’s largest Muslim organization, Nahdlatul
Ulama (NU). It is therefore not surprising that
the organization spearheaded a move to help people
displaced by the mudflow launch a class action
suit against Lapindo, the company whose mining
activities triggered the mudflow.

However, there are indications that NU now wishes
to bury the issue of the class action suit. This
has angered NU youth activists who suspect that NU
leaders dropped the plan after they received
funding from the Bakrie family, the owners of
Lapindo.

According to the chairman of the NU Human Resource
Development and Study Institute in Sidoarjo, Ahmad
Firdausi Ali, the Bakrie family extended Rp 1
billion to NU leaders during the NU national
conference in Surabaya in June. The mudflow
disaster began on May 29.

On top of that, he said, NU chairman Hasyim Muzadi
also received money from Aburizal Bakrie, to help
Lapindo victims, the amount of which was never
disclosed.

But this claim was rejected by a spokesman for
Aburizal Bakrie, who said that Aburizal might have
extended financial help to NU for the conference
in Surabaya, but that he never gave assistance to
NU or NU leaders to help people affected by the
mudflow in Sidoarjo.

However, indications that NU leaders were using
Lapindo money to assist the mudflow victims were
strong, according to Fatihul Faizun from the
Nahdliyin Working Group in Sidoarjo.

Faizun suspected that as NU Sidoarjo refused to
take any money from Lapindo, Hasyim channeled the
money through former executives of NU Sidoarjo
branch office, who then established an independent
command post to help the victims.

This command post conducted various humanitarian
activities, ranging from the distribution of food
to the establishment of monitoring posts around
the mud ponds, manned 24 hours a day.

NU Sidoarjo office itself established its own
command post for the victims, with fewer
activities, because of a lack of funding. "We have
our own command post, and we are not connected
with this independent command post," Gus Abdi
Manaf, executive chairman of NU Sidoarjo, told The
Jakarta Post.

Interestingly, when Hasyim first visited the
mudflow victims, he stopped by the independent
command post, and not the official NU command
post. As a result, NU youth activists demonstrated
against Hasyim’s visit to the independent command
post.

The people displaced by the mudflow, who were
already mad at Lapindo, were angered by news that
NU took money from Lapindo, and some of them went
to the independent command post and tore down a
tent there.

Earlier this week, when the division within NU
Sidoarjo was widening, Hasyim visited the NU
command post. It is unclear where NU will stand in
the future with regards to Lapindo.

---

Victims can’t afford to forget mud

Jakarta Post - August 24, 2006

“The dam’s breaking... it’s collapsing...,” a
resident of Siring, Porong, Sidoarjo, shouted as
he noticed hot mud flowing toward his house last
week.

Hundreds of people living near the walls holding
back the mudflow were sent scurrying in fear to
Porong’s main road, effectively blocking the road
linking Surabaya and the eastern part of East
Java.

Dressed in rags and mud stained, villagers of all
ages raced to reach the road, seen as a safe mud-
free place, clutching anything worth salvaging
like important documents, school uniforms and
kitchen utensils. Parents carried their children
on their backs, willing them to stay calm.

The walls, which are holding back more than four
million cubic meters of mud have been collapsing
here and there as they are not strong enough to
contain the increasing amount of mud, estimated at
an additional 50,000 cu m per day. Damage to the
walls has panicked the community living near the
huge mud ponds, which now cover 180 hectares, and
may soon double to 360 hectares.

Locals are worried about their safety and anxious
over not only blistered skin due to the heat of
the mud, which has reached 60 degrees centigrade,
but also damaged property resulting from hot mud
inundation.

"All we can do now is to save ourselves and our
most prized belongings. We would have carried our
whole house had we been able to pull it up," said
Suwarno, a Siring villager.

Though he originally refused to take refuge
because he was confident in the capabilities of
the joint team handling the mudflow, doubt began
to set in when he saw the walls were higher than
his house. Then the dam started cracking and hot
mud flowed into Siring.

There was also an atmosphere of fear in the
villages of Jatirejo, Ronokenongo and Kedungbendo
as their dams developed fissures. In Jatirejo, the
dark gray mud spread extensively over places
previously unaffected. Locals were particularly
worried when it crept over the railway tracks
running through the village. "The mud could cause
a train accident," Jatirejo villager Haryadi
pointed out.

In Jatirejo, dozens of cows owned by the Agil
Hasan Al Syadili Islamic boarding school had to be
evacuated for fear that dehydration would kill
them. "The cows, which were one of the school’s
main income sources can’t be milked for the
moment," school principal Gus Maksum Zubair told
The Jakarta Post.

The school, which has about 200 students, also
found its 2.5 hectares of paddy fields flooded by
hot mud. "Our students have been sent home for a
while. Some staff members have stayed behind to
take care of the school," Gus Maksum said.

More than 9,000 displaced people from the four
inundated villages are now being accommodated in
Pasar Baru Porong, Sidoarjo, five kilometers from
the hot mud source. The neatly arranged barracks,
originally designed as a public market and
terminal, are increasingly packed with the growing
number of refugees moving in from mud covered
areas.

The 9,000 refugees have to share 282 kiosks in
Pasar Baru, each measuring four by six meters with
five families and their possessions, separated
from one another only by curtains. To shower, they
have to wait their turn as there are only 109
bathrooms available.

This situation has gone from bad to worse as there
is no certainty about the fate of the mudflow
victims, while the mud continues gushing, ruining
all that it touches.

---

Sidoarjo contains the mud to ’Bermuda Triangle’

Jakarta Post - August 24, 2006

While no one knows when the hot mud in Sidoarjo
regency will stop gushing from the bowels of the
earth, efforts have to be made to handle the
increasing volume of the sludge so that it does
not endanger the lives of people living nearby or
damage the environment.

The amount of mud keeps increasing every day, with
an additional 50,000 cubic meters a day. With the
increasing amount of sludge, the levees that were
holding back the mud have collapsed in several
places.

The mud has reached 4 million cubic meters,
according to experts at the Surabaya Institute of
Technology (ITS).

A joint team tasked with handling the mud plans to
double the size of the existing ponds of some 180
hectares to around 360 hectares, and also build
stronger levees around the ponds to accommodate
the expanding mud, which has reached 7 million
cubic meters, according to experts deployed at the
scene.

The expansion of the ponds and the strengthening
of the walls, according to Aris Setyadi from the
Public Works Ministry, are precautionary measures
ahead of the rainy season, which is expected to
start in November.

Meanwhile, Sidoarjo Regent Win Hendrarso said the
enlargement of the ponds would mean a total of
seven villages in three districts, all in his
regency, would have to be submerged. They are
Jatirejo, Mindi and Renokenongo — all in Porong
district — Besuki, Pejarakan and Kedung
Cangkringin in Jabon district — and Kedung Bendo
in Tanggulanin district.

"What can we do? Rather than allowing the mud to
spill over into more areas, we decided to submerge
those villages. We hope this problem will not drag
on too long," Win said. He explained that the
ponds would form a triangle. "Just like the
Bermuda Triangle," he said, jokingly.

With the increasing amount of sludge in the pond,
the government has granted permission to Lapindo
Brantas Inc., the company whose drilling
activities caused the mudflow, to separate the
water from the mud and dump the water into the sea
— some 17 kilometers away — provided that the
water is treated to remove any toxic substances.

According to experts, 70 percent of the mud is
water, and therefore, separating the water from
the solid substance and dumping the water into the
sea would help reduce the danger of the mud to the
people nearby.

However, several environmental activists as well
as farmers in Sidoarjo, especially fishermen and
shrimp farmers, have rejected the idea, arguing
that it would destroy the sea ecosystem and would
eventually affect the income of the fishermen and
shrimp farmers.

Ali Subhan, an environmental activist and a shrimp
farmer himself, argued that the news that Lapindo
had polluted the area with the mudflow had
prompted shrimp importers in Europe to stop buying
shrimps from Sidoarjo, the only area in the
country to obtain a certificate for organic shrimp
farming.

"Moreover, if they learn of the plan to dump the
mud water in the Porong river or in the sea, it
could be the end of our shrimp business," he said.

Even if no one rejects Lapindo’s planned disposal
of the mud, the company faces the daunting task of
treating the huge amount of mud by separating the
water from the solid matter. It would require a
lot of investment to build facilities to separate
the water, to treat it and then pipe it into the
sea.

The solid waste would pose another problem.
Experts have been marshaled to research the
possible use of the mud as a building material,
and the results so far seem positive. However, the
company is uncertain whether or not the solid mud
contains toxic substances.

"If it contains toxic substances, we have no idea
as yet what do to with it. Hopefully, it will be
safe enough for people to use it as a building
material or other purposes," said Rawindra,
Lapindo general manager for East Java.

---

Children most disadvantaged

Jakarta Post - August 24, 2006

"Dear Lapindo, I hope to go home soon I’m tired of
living in the barracks. Will you be cleaning up
the mud right away?"

Twelve-year-old refugee Macmudiono wrote this
letter to Lapindo Brantas Inc, the company that
brought mud and misery to Porong, Sidoarjo in East
Java. He won first place in a recent contest held
by Surabaya’s Community Care Foundation for the
best letter to Lapindo.

Macmudiono and the hundreds of other children
displaced from their homes by the spreading hot
mud just want things to return to normal, so they
can play in their backyards, ride their bikes
through the paddy fields and climb trees.

Since May 29, when hot mud abruptly gushed out of
a plot of land owned by Probo Sutejo, a resident
of Jatirejo village, Porong Sidoarjo, East Java,
and began to flow over rural settlements, the life
of the local children has changed.

Children unaccustomed to aggression have observed
their communities change. Tolerance levels have
dropped and tempers run high among the mudflow
victims. Residents of neighboring villages have
become protective of their property and suspicious
of everyone.

"They carry not only sticks and stones but also
sharp weapons. They fight against anyone who is
perceived as a threat, regardless of whether they
were previously friends," said Yuliani, a legal
and policy staffer at the East Java office of the
Indonesian Forum for the Environment (Walhi), who
provides advocacy for locals.

Five clashes have occurred between people from
mud-hit villages within the past two-and-a-half
months following the hot mud eruption. On the eve
of Independence Day on Aug. 17 three people were
injured in an inter-village brawl.

The mudflow victims also vented their anger by
obstructing access to the Surabaya-Gempol
turnpike, which resulted in the closure of a
section of the road. They staged a demonstration,
assailing security guards and Lapindo with
accusations.

The walls of shelters in Siring village are
covered with graffiti. "Beware, Lapindo’s brokers
at large," is scribbled in a corner and in clumsy
painted letters, "F@@@ you Lapindo, the state’s
dog.“”They are still too young to understand what’s
going on, but the are the one’s who are suffering
the most. Now my kids are familiar with the dirty
words uttered by some residents," said Siti, a
Besuki villager.

Siti brought her two-year-old along to the
Surabaya-Gempol turnpike protest, while her two
other children stayed behind at the refugee camp
in Porong market.

Thousands of children live in the refugee camp,
with three to five families sharing a four-by-six
meter kiosk that has been converted into sleeping
quarters. It is not unusual for 10 children to be
sleeping together with their families.

Sleep is often interrupted and it is almost
impossible to study. The day before Independence
Day, six-year old Ika was stuck in a stuffy room
with no television or radio. "I remember last
year’s celebrations in my village. It was so much
fun. But everything is boring here," she said.

Windiarti Rahayu, 13, hopes to return to her high
school in Porong soon, but the building is now
submerged in hot mud up to its roof tiles. "I’m
sick of the sound of angry words. My parents have
sour faces, too. I want to live a normal life and
study in a calm environment,“she said.”I apologize to the public for this misfortune. We
will strive hard to do no harm to any party in
this case. In fact, we have no intention to cause
any trouble to village people," said Imam
Agustino, the general manager of Lapindo Brantas
Inc, to the Post.

Ahmad Firdausi Ali, the chairman of the human
resources development and analysis body of
Nahdlatul Ulama (NU) in Sidoarjo, said that
Lapindo’s apology fell short of satisfactory
because it ignored the basic rights of mudflow
victims, including shelter, education and
employment.

He said the company must compensate the people,
and return things to the way they were. And most
of all, Lapindo must act right now, for the
children’s sake.

---

Mudflow victims demand compensation

Jakarta Post - August 23, 2006

Indra Harsaputra and ID Nugroho, Sidoarjo —
Thousands of people displaced by the mudflow
disaster in East Java held protests in two
affected areas Tuesday to demand compensation
commensurate with their losses.

Several protesters showed their frustration by
covering themselves in the mud that has gushed
from an exploration well accident in Sidoarjo
regency since May 29.

“We’re not eels which can live in mud,” said a
villager of Kedung Bendo, Hadi Purnomo, one of
around 3,000 people rallying near the local
administration building. "We’re humans with a
right to live. Our children need to go to school
and live in peace."

The turnpike connecting the provincial capital of
Surabaya to Gempol town was closed for several
minutes when protesters from the Besuki area
blocked traffic. Alternating lanes are being
closed for the ongoing work of raising two
kilometers of the worst-hit section to prevent mud
flowing onto the turnpike.

The company which operates the well, Lapindo
Brantas Inc., has begun to distribute compensation
to affected families, consisting of Rp 5 million
(US$551.5) for rent for two years, Rp 500,000 for
moving costs and Rp 300,000 per head per month.
Many residents have rejected the offer as
inadequate for their needs.

On Tuesday, East Java Police chief Insp. Gen.
Herman Surjadi Sumawiredja said the deployment of
police personnel in affected areas was a
“persuasive” action to prevent outbreaks of
violence among residents. "We’re all suffering
here," he said.

Protests have taken place almost on a daily basis.
On Tuesday demonstrators reiterated accusations
that the local authorities were being bribed by
Lapindo, partly owned by the family of Aburizal
Bakrie, who is the coordinating minister for the
people’s welfare.

"The mud will stop when corruption stops in the
bureaucracy,“one of the posters said.”I am not a puppet of Lapindo," Sidoarjo deputy
regent Saiful Illah assured residents at the
legislative council hall. "In the name of Allah I
have not committed corruption.

"I could be hit by a car if I’m lying. Everything
I’m doing is for the victims." He added the
regency would give full support to residents if
they wished to sue Lapindo.

"We’re now prioritizing prevention measures before
the rainy season comes (forecast for November) by
building disposal systems and strengthening the
ponds."

Lapindo is paying for all contingency measures,
such as the preparation of a new dam to accomodate
the daily increase of the mudflow, estimated to
reach at least 4 million cubic meters by the end
of the month.

Victims are divided about the appropriate
measures. Thousands have demanded an immediate end
to the inundation of populated areas by diverting
the untreated mud into the sea. However, the
fishing community has raised concerns about the
future of thousands of shrimp farms in Sidoarjo.

---

Arrest Lapindo bosses, seize their assets, NGOs
say

Jakarta Post - August 19, 2006

Hera Diani, Jakarta — Activists demanded Friday
that authorities revoke the license of PT Lapindo
Brantas Inc., arrest its shareholders, and
confiscate their assets, in connection with the
gas well that has unleashed a barrage of hot toxic
mud on Sidoarjo, East Java.

In a joint press conference, an alliance of
environmental, human rights, consumer rights,
mining and legal aid activists urged police to
arrest and investigate the commissioners and
directors of Lapindo and its owners.

The 1997 law on environmental management, they
said, clearly states that a company can be held
responsible for environmental destruction.

"This case should be treated as a corporate crime
instead of an individual crime. Therefore, all the
commissioners and directors, not just of Lapindo
but of all its shareholders, including BP Migas,
should be arrested. All of the assets should be
confiscated and used for compensation," said
Chalid Muhammad of the Indonesian Forum for the
Environment (Walhi).

The charges against the corporations, he said,
would serve as a good signal to businesses to be
more responsible instead of focusing on profit
alone.

More than two months after the mud began flowing
in Sidoarjo, sludge continues to stream into the
neighborhoods, inundating more than 200 hectares
of land and effectively closing the Sidoarjo-
Surabaya expressway.

Chalid said the company had not pledged to settle
the case, but there were strong indications that
it would pass along its responsibility to the
state.

"It’s been over two months but there is no sign of
experts and equipment mobilization able to stop
the mudflow. Now, the company has even warned that
the mud will spread to a wider area, and thus the
flow has to be diverted into the river,“he said.”It’s impossible to redirect the flow to the river
because the sludge is too thick. It seems that the
company wants to shift the issue from ecological
destruction to trivial matters like where to
redirect the mud stream," Chalid said.

Rafendi Djamin of the Indonesian NGO Coalition for
International Human Rights Advocacy said Lapindo
has not only violated environmental rights, but
human rights related to the economy, society and
culture, as well as civil and political rights.

"The government has just ratified an international
convention on economic, social and cultural
rights. The state has committed a crime by showing
no political will to make arrests and to charge
the company," he said.

The company, he alleged, has warned the mudflow
victims not to file civil and criminal suits,
saying they would not receive compensation if they
did.

Chalid said the alliance would sue the company and
its shareholders, and is now calculating the
losses associated with the mudflow, which have
been estimated at roughly Rp 300 trillion.

"The company has simplified the calculation of
compensation. It has told people that the company
has suffered huge losses and is on the brink of
bankruptcy," he said.

 HUMAN RIGHTS/LAW

Government dragging its feet on freedom to
information

Jakarta Post - August 24, 2006

Warief Djajanto Basorie, Jakarta — The prime
indicator of whether Indonesia is making strides
toward greater freedom of information is the
process at the House of Representatives
surrounding the Freedom of Information Bill.
Deliberation of the bill finally began on March 7,
2006, over five years after it was submitted in
November 2001.

The freedom of information lobby has faced foot-
dragging and barriers orchestrated by elements
both inside and outside the government, who look
at the bill with disdain. The nay-sayers
apparently view the bill as a hindrance to
executive affairs and dismiss the big picture of
what an eventual freedom of information act can do
to advance democracy. Further, the government has
conferred the bill step-child status by paying
more attention to a rival bill that could
undermine freedom of information.

In the deliberations, the minister of
communications and information and the minister of
justice and human rights represent the government.
The government has made plain what its interests
and priorities are, a position that dismays
freedom of information advocates. In the opening
March 7 hearing, Information Minister Sofyan
Djalil proposed that the deliberation of the State
Secrets Bill should come first to prevent
classified information from being leaked.

"Information on certain issues such as security
and foreign policy are generally classified," he
said. In response, activists have called for the
state secrets and freedom of information bills to
be combined for efficiency, but the government has
rejected the idea, saying a separate state secrets
act can put a damper on leaks.

What concerns freedom of information advocates
about the bill on state secrets? A state secrets
act operates on the paradigm of maximum exemption
and minimum disclosure, whereas a freedom of
information act seeks maximum disclosure and
minimum exemption, explains Agus Sudibyo,
coordinator of the Freedom of Information
Coalition, a lobby actively advocating the Freedom
of Information Bill.

Sofyan further expressed his misgivings about the
bill on freedom of information by hinting that if
the law was not written properly, it could lead to
"the misuse of information for a goal that is
against the law".

The chair of House Commission I for defense and
information, Theo Sambuaga of the nominally pro-
government Golkar, the largest party in the House,
countered that freedom of information is
guaranteed in the Constitution. The future law is
meant to assure the principle of transparency in
public policy making and as a means for imposing a
system of checks and balances on the system, he
argued.

The lack of executive enthusiasm to push for the
bill is apparently and partly because of the fear
among officials and politicians that it would
allow greater latitude for the media and non-
governmental organizations to expose public
misdeeds. Public office holders, be they Cabinet
members, legislators or judges, are resentful when
they get bad press.

Although freedom of information is guaranteed in
Article 28F of the 1945 Constitution and in the
1999 Press Law, there are moves to check the
press. A government review of the Criminal Code
led by former justice minister Muladi drafted new
and stronger provisions on defamation, an act that
would cap if not criminalizes criticism.

Press Council member Leo Batubara cites 49
articles in the draft Criminal Code that could
land journalists in prison. For example, Article
271 of the draft Code states that an exaggerated
or incomplete news report that results in a
disturbance is a criminal offense that carries a
maximum jail sentence of one year.

The draft of the amended Criminal Code has been
completed. Muladi has submitted it to Justice and
Human Rights Minister Hamid Awaluddin. If the
President approves and signs it, the Criminal Code
Bill will be submitted to the House.

If reining in the press was not enough, the
government wants to restrain access to public
information. This intent is reflected in its
position in the House hearings on the Freedom of
Information Bill. The government’s list of demands
includes a change in the name of the bill. At
present it is the RUU Kebebasan Memperoleh
Informasi Publik, or the Freedom to Obtain Public
Information Bill. The government also wants state
and local government-owned enterprises exempted
from obligatory disclosures of financial
information.

It rejects the establishment of an information
commission whose job is to settle information
access disputes. It wants to restrict the rights
of foreign nationals to access information. It
also demands a five-year grace period before the
law takes full effect from when the bill is
passed. This means that if the bill is passed in
2006, it won’t come into force until 2011, two
years after the end of the current term of
President Susilo Bambang Yudhoyono.

Although the government appears to be protective
of its executive privilege as the custodian of
public information, it should be given credit for
being accessible in other ways. The present
government has gradually changed from the
monolithic closed bureaucracy of Soeharto’s New
Order from 1966-1998.

For sure the Internet has become a useful
information tool. More and more public offices
have set up their own websites. Yudhoyono has
launched a presidential website,
www.presidensby.info. It allows visitors to look
at his current schedule, speeches, ideas, media
coverage, and offers downloadable official
documents issued under his name. The latter are
government regulations, presidential regulations,
presidential decisions and presidential
instructions.

One piece of relevant information it does not
give, however, is the organizational setup of the
presidential office. Vice President Jusuf Kalla
has his own website, www.setwapres.go.id, that
shows the structure of his office. According to
the website, the VP has five deputies: political,
economic, welfare, government and development
surveillance, and administrative affairs.

Beyond the capital, local governments down to the
city and regency level have websites offering
public service information and local investment
opportunities.

Looking ahead, the litmus test to the people’s
right to know is how accommodating the government
is in enacting a freedom of information law that
puts public interest first. In seeking that
accommodation, the pro-information front,
particularly the Freedom of Information Coalition,
a grouping of more than 30 national and local
NGOs, must scale up its lobbying. Seminars,
meetings with lawmakers and government leaders,
public discussions and opinion articles in the
mainstream media require constant working and
reworking if the mind-set is to change.

[This article is based on a paper presented at the
Access to Information in Southeast Asia workshop,
held by the Southeast Asia Press Alliance and
Friedrich Ebert Stiftung in Bangkok on Aug. 22-24.
The author teaches journalism at Dr. Soetomo Press
Institute in Jakarta and wrote the Indonesia
country chapter, Free but still in the Dark, for
the 2001 study The Right to Know: Access to
Information in Southeast Asia.]

---

Court wrong to reject plea: lawyers for death row
Indonesians

Agence France Presse - August 23, 2006

Palu — Lawyers for three Indonesian Christians on
death row say the Supreme Court had exceeded its
authority by refusing to process their second
demand for presidential clemency.

Lawyer Roy Rening said that the local district
court in Palu, Central Sulawesi, had informed the
team of lawyers that the Supreme Court declined to
forward a second demand for a presidential pardon.

"The Supreme Court has certainly exceeded its
authority and we will prepare legal moves against
this," Rening told AFP.

He did not give further details on the plan but
said that the Supreme Court’s duty was only to
make recommendations to the president on a demand
for clemency, not hinder it.

"The court should only forward the demand and
accompany it with their recommendation. Only the
president has the authority to decide on whether
to grant or refuse clemency," Rening said.

The three — Fabianus Tibo, Dominggus da Silva and
Marianus Riwu — were convicted in 2001 of
inciting violence against Muslims in religiously-
divided Central Sulawesi, but their case has been
widely criticised for being unfair.

The president has already refused them clemency
and they had been due to face the firing squad on
August 12 until they were given a last minute
reprieve. Officials have said their executions may
now take place at any time.

Meanwhile about 30 protesters from several Islamic
groups staged a small protest Wednesday urging
officials in Palu to execute the trio immediately.

They also urged authorities to arrest Reverend
Reynaldi Damanik, head of the Protestant church
synod in Central Sulawesi, for allegedly making
statements that could fuel further unrest in the
region.

Christians across the country have held protests
to demand that the death sentences on the three
are not be carried out, saying that their trial
had been unfair.

Clashes between Muslims and Christians in 2000 and
2001 in Central Sulawesi province left more than
1,000 dead. A government-brokered peace accord at
the end of 2001 largely ended widespread unrest,
but intermittent violence has persisted.

Indonesia is the world’s largest Muslim-populated
nation but Christians and Muslims live in roughly
equal numbers in parts of Sulawesi.

---

House members vow to pursue bill outlawing
discrimination

Jakarta Post - August 22, 2006

M. Taufiqurrahman, Jakarta — A bill aimed at
outlawing racial and ethnic discrimination has
gained a new lease on life, with members of the
House of Representatives special committee
resisting attempts to kill it off.

Deputy committee chairman Mufid Busyairi of the
National Awakening Party (PKB) said efforts to
derail the bill have been met with strong
resistance from committee members.

Last month, the same group of lawmakers decided to
halt discussions on the bill, bowing to a
suggestion from the House legal division that
numerous existing laws already regulated the
issue. "A number of committee members have
steadfastly opposed efforts to drop the bill,"
Mufid told The Jakarta Post on Monday.

Mufid said the lawmakers’ opposition would make a
difference only if a House plenary session agreed
with their recommendation to pursue the bill’s
deliberation. "It is the House plenary session
that has the final say on whether or not the bill
will continue being deliberated," he said.

The committee is also awaiting a reply from a
letter it wrote to the Justice and Human Rights
Ministry asking the government to appoint
representatives to discuss the bill.

In the most recent committee meeting, a number of
lawmakers, including those from the Prosperous
Justice Party (PKS) faction and the Democrat
Party, spoke out emotionally against a proposal to
drop the bill.

One lawmaker went further by alleging a conspiracy
to kill off the discussion of the bill. A number
of institutions including the National Commission
on Human Rights (Komnas HAM) and the Indonesian
Ulema Council (MUI) have dismissed the
significance of adopting a new law to outlaw
ethnic and racial discrimination.

Komnas HAM was concerned that the bill, if passed
into law, would diminish its role in hearing
complaints concerning discrimination cases. The
MUI has alleged that the bill would favor
Indonesia’s minority groups.

A study by the House legal division found the
bill’s provisions overlapped with articles in the
existing law on human rights as well as numerous
stipulations of United Nations covenants already
ratified by Indonesia.

Advocates of the bill, on the other hand, have
stressed the importance of a separate law against
discrimination. "We need a unified law to tackle
all types of discrimination. The existing
regulations are still not enough," Swandy Sihotang
of the Indonesian Movement Against Discrimination
(Gandi) said.

---

Regions ’fail’ to fund women’s empowerment

Jakarta Post - August 19, 2006

Adisti Sukma Sawitri, Jakarta — Activists say
women are still not treated as equals in many
regions, since governments allocate comparatively
small amounts of money to empower them and improve
their quality of life.

A recent study conducted by the Women’s Journal
Foundation found lack of transparency and an
insufficient commitment to public welfare led
local administrations to skew spending toward
bureaucrats and other prominent community members.

The Surakarta administration in Central Java, for
example, allocated Rp 3 billion (US$329,670) for
the city’s soccer team. By contrast, it earmarked
only Rp 154 million for women and children from
its health budget. The Bantul administration in
Yogyakarta allocated Rp 1.1 billion to finance a
tennis tournament.

"When it comes to women and children they (local
administrations) always have an excuse for not
taking care of them," foundation executive
director Adriana Venny told a seminar Tuesday on
gender perspectives in budget allocations.

She said the situation is especially unfair since
some regions, particularly Bantul, receive most of
their local revenue from health contributions from
families.

The budgets appear to violate the central
government’s policy requiring regions to allocate
at least five percent of their spending to empower
and protect women and children.

However, since the implementation of regional
autonomy in 2001, the central government is not
allowed to intervene in drawing up budgets at the
regional level, except for certain policies
related to macroeconomics, religion, defense and
foreign affairs.

Another study conducted jointly by the Women’s
Research Institute and the Center for Regional
Studies and Information (Pattiro) found regions
allocated 2.5 percent of their budgets or less for
women and children. The survey was carried out in
Kendal and Surakarta, both in Central Java;
Kupang, East Nusa Tenggara; Banyuwangi, East Java;
Makassar, South Sulawesi; Mataram, West Nusa
Tenggara; and several other cities.

National Development Planning Agency deputy head
for finance Lukita Dinarsyah Tuwo said the problem
was bureaucrats’ lack of openness about budgets,
as well as the failure of local people to
scrutinize government spending.

"Local administrations generally do not feel the
need to report budget allocations to the public,
while the people don’t know that it is their right
to know where their tax money goes," he said.

Women’s activist Nunik Sriyuningsih, from
Semarang, Central Java, said even female
councilors at the provincial level are often
apathetic about the issue. This contributed to the
women and children being overlooked in budget
allocations, she added.

Despite all of these problems, Pattiro researcher
Maya Rosanty said the central government has shown
good will in promoting better budget mechanisms.
The Home Affairs Ministry has been moving ahead
with the government’s plan to change regional
budget structuring, applying a performance-based
budget allocation mechanism.

Under the new mechanism, several key indicators
would control budget disbursement by bureaucrats,
and misallocation could lead to an audit. "We can
use this opportunity to push local administrations
to pay more attention to the public welfare, but
this will only be possible if we (the public) show
them that we do care about budget allocations,"
Maya said.

 LABOUR ISSUES

Illegal migrant workers tell tales of hope and
disappointment

Jakarta Post - August 22, 2006

Fadli, Tanjung Pinang — Illegal immigrant worker
Ahmad Affandi recently landed back at Tanjung
Pinang’s Sri Bintan Pura Port with nothing more
than the shirt on his back.

Since that morning when the 35-year-old left from
the repatriation terminal in Johor Bahru,
Malaysia, he had only eaten a single piece of
bread and drank one bottle of cheap water.

Ahmad and his wife, Aminah Tunjahro, 27, first set
foot on Malaysian soil in February, placing their
only 11-year-old child in the care of Ahmad’s
parents back home in Madura, East Java.

They only had one thing in mind, to seek a better
life. Neither of them were discouraged by the
prospect of being caught and deported by Malaysian
authorities, which have been cracking down on
illegal aliens for the past few years.

After only six months of working, Ahmad was caught
by officials and jailed for several months before
being sent back home along with his wife and 637
other Indonesians.

Ahmad said he spent Rp 3.2 million (US$347) to
arrange for a passport, exit tax and
transportation using the services of an illegal
employment agent. He entered the country by boat
on a tourist visa with about 60 other people.

"I took the ’project boat’, a term used for boats
carrying illegal migrant workers with a guarantee
they enter Malaysia without going through
complicated immigration procedures,“Ahmad said.”But upon arriving in Malaysia, they are on their
own."

In early July, he was caught by the Malaysian
police while working as a construction laborer at
the Damansara Perdana housing complex in Kuala
Lumpur.

The project boats take a different route than
those plied by the regular ferries from Batam,
Tanjung Pinang and Tanjung Balai Karimun. The
normal boats stop in Johor state’s Pasir Gudang
and Stulang Laut ports, while the illegal boats
stop in Plunggur.

At this entry point the “passengers” are
guaranteed relaxed immigration procedures. Most
importantly, they don’t have to present customs
officials evidence they possess at least RM 1,000
(Rp 2.47 million), the normal criteria to weed out
illegals from legitimate tourists.

Fifteen-year-old Jayadi from Lombok had been
working as a coconut peeler in a plantation in
Johor. "I had to work there to supplement the
family income back home. We are poor and have
nothing. I went there with borrowed money," said
Jayadi, who only finished elementary school on the
island.

With only two shirts and a pair of pants, the
teenager left for Malaysia early this year through
Batam. He too was recruited by an illegal
employment agent and his elder brother arranged
for his departure.

Jayadi worked as a husker earning RM30 for every
1,000 coconuts he peeled. However, after being
employed for just under six months, he too was
caught by a unit tasked to round up illegal
immigrants in Malaysia and deported with Ahmad.

The two also did time in Kajang prison near Kuala
Lumpur for working without a permit. However, this
punishment did not discourage them from returning
to Malaysia.

"I still want to return to Malaysia because of the
better salary there compared to that in Indonesia.
I want to buy a farm for my parents," Jayadi said.

The Malaysian government now regularly repatriates
illegal immigrants through Tanjung Pinang port.
Hundreds of tired-looking people squatting in
lines like prisoners of war and carrying plastic
bags stuffed with their few belongings are a
common sight.

Based on data from the Tanjung Pinang Manpower
Office, the number of deported illegals streaming
into the port has steadily increased since October
2004, when the city became a repatriation point
for migrant workers.

In 2005, 12,000 illegal immigrants, mostly men,
were repatriated through Tanjung Pinang, while
12,000 more were waiting in quarantine between
January and July this year.

Tanjung Pinang Illegal Immigrants task force
secretary Agus Guntur told The Jakarta Post that
the number of people deported was getting larger
as Malaysian investigations became more
sophisticated.

Every illegal immigrant repatriated to Tanjung
Pinang spends one night in a quarantine hall which
can accommodate around 600 people, before they are
organized according to their places of origin.

"We don’t have any budget to handle the returning
illegal immigrants, so preparations are meager.
Our workers deal with the returning batch
voluntarily, without any budget allocations," Agus
said.

Despite the illegal migration problem, which has
been frequently acknowledged by Indonesian and
Malaysian governments, Riau Islands manpower
office head Azman Taufik claimed the office had
found few indications of illegal migrants
departing from the province’s ports.

"Please report them to me if there is proof. Just
report the situation and describe it to us, so
we’ll take stern action," Azman told the Post. He
said he was unsure of the exact number of
employment agencies operating in the Riau Islands.
There are estimated to be around 1.9 million
Indonesian migrants working legally in Malaysia.

In Johor state, of the 280,000-strong foreign
workforce, 210,000 are Indonesians.

---

The real state of the nation is 40 million
jobless!

Jakarta Post - August 18, 2006

Endy M. Bayuni, Jakarta — The real state of the
nation, supposedly the content of Tuesday’s speech
by President Susilo Bambang Yudhoyono, could have
been summarized in just 10 words: Over 40 million
people in Indonesia are out of work.

In his two-hour speech before the House of
Representatives, which was broadcast live
nationally, the President gave us a rundown of the
challenges facing the country, and how he and his
government intends to overcome them.

Delivered on the eve of Indonesia’s 61^st
Independence Day, the speech was nothing more than
a list of things to do. It lacked focus on the
biggest problem of all, and thereby vision and
direction about where this nation is heading.

No. It’s not terrorism or even natural disasters
and their handling that should consume our
attention the most. It’s not the threat to our
nation’s pluralism, either, although this could
easily come a distant second.

When all things are considered, unemployment must
count as the biggest and foremost problem that
this nation, with government leadership, needs to
tackle seriously in the coming years.

The President in his speech put the jobless rate
at 10.4 percent, down from 11.2 percent a year
ago. But he was referring to what officials
conveniently define as “open unemployment”: People
of working age who are actively seeking work.

The use of this definition, a practice dating back
to the Soeharto years, is clearly designed to
mislead the public and thus spare the government
from having to address the issue completely.

The penchant for using percentages rather than
absolute numbers is also designed to make
Indonesia’s unemployment record look decent as it
puts us on par with many developing and developed
countries. But let’s not forget that even 10.4
percent of the workforce in Indonesia amounts to a
staggering figure of more than 10 million people.

Rubbing salt into the wound, the government
statisticians who compile the unemployment figures
define a person as having a gainful employment if
he or she works for more than two hours a week.

Indonesia’s unemployment figure is certainly far
higher than the government would have us believe.
One figure that has been suggested as representing
the true level of unemployment (including
underemployment) in Indonesia is 40 million. This
is the figure that many government agencies and
international organizations refer to.

Even then, we are still probably understating the
problem. One only needs to look around. Unless you
are a close or distant relative of the Soeharto
clan, you will likely have a brother or sister, a
nephew or niece, or someone close who is
unemployed. And most likely, they have been
without work for some time with little prospect of
finding a job anytime soon. But one should not
dwell too much on numbers and definitions. Suffice
to say that there are a hell of a lot of people
without jobs, enough to put the problem at the top
of the list in any speech addressing the state of
the nation for years to come.

Most of the other problems Indonesia faces can be
traced to unemployment: mass poverty, lack of
access to healthcare and education, soaring crime
rates, and even some incidences of communal
unrest. Some of these problems would be
significantly alleviated or even disappear if we
could create more jobs, put money in people’s
pockets and restore their dignity.

Because of our failure to tackle the roots of the
problem, the government ends up paying huge
subsidies on healthcare, schooling, rice rations,
fuel and other basic needs.

More and more, we seem to be giving people the
fish rather than the fishing rod. Just think of
the contribution to the economy (or as economists
say, to our gross domestic product) if all of
these 40 million people were gainfully employed.
Instead, these jobless men and women have become a
taxing burden on the working population.

This was only President Yudhoyono’s second state-
of-the-nation address since taking the helm in
2004. Once again, he failed to capitalize on the
high level of goodwill and patriotic sentiment
prevailing among people celebrating Independence
Day this week.

He could have learned from many great orators of
the past, including our own Sukarno, on how to use
such grand occasions as an Independence Day to
inspire and mobilize people to rally behind them
and their visions, and to support their policies.

The problem of unemployment is for the nation
together to tackle. It is not the responsibility
of the government alone, but the President is
expected to provide the necessary leadership and
direction. This he did not do this week, in spite
of the opportunity presented.

[The writer is chief editor of The Jakarta Post.]

---

Unemployment explosion imminent, analyst warns

Jakarta Post - August 19, 2006

Ridwan Max Sijabat, Jakarta — President Susilo
Bambang Yudhoyono’s claim that his administration
has made substantial inroads against unemployment
is misleading and fails to recognize the urgent
need for job creation, an analyst said Friday.

Former manpower minister Bomer Pasaribu argued
there was actually the imminent danger of an
unemployment explosion unless concerted efforts
were made to develop the real sector.

"I don’t know why the President claimed to have
successfully reduced the unemployment rate when
the number of poor families has been on the rise,"
the lecturer in labor economy at the Bogor
Institute of Agriculture told The Jakarta Post
here Friday.

"The President has acknowledged the number of poor
families has increased to 19.2 million so far this
August from 17.8 million in January."

In Wednesday’s state-of-the-nation address before
the House of Representatives, the President
claimed the government succeeded in bringing down
the open unemployment rate from 11.2 percent in
December 2005 to 10.4 percent.

The director of the Center for Labor Development
Studies said that with the double digit
unemployment rate, the country would be saddled by
soaring jobless and poverty numbers. He feared the
situation would worsen in the next three years
unless economic policy was revised in favor of the
poor.

"The poverty explosion is indicated by the
increase in the number of poor people from 17.8
million in January to 19.2 million in August, or
almost 38 percent of the total 52.3 million
families, meaning the unemployment rate is also
increasing because poverty and unemployment are
two sides of the same coin. And this is a serious
problem."

Bomer argued unemployment would continue to
increase because the Yudhoyono administration had
failed to make major breakthroughs to attract more
foreign investment in the real sector and
accelerate economic growth.

To cope with unemployment and poverty, he added,
the government should promote a pro-poor economic
and investment policy, as well as revitalize the
agriculture and marine sectors and small and
medium-size enterprises to generate more jobs and
income for poor citizens.

"Almost all irrigation facilities in rice-
producing areas in Java and Sumatra, which were
constructed during the colonial and the New Order
eras, need major renovation, while the marine
sector which has great potential to create job
opportunities has yet to be developed."

Bomer was pessimistic the government would be able
to create 2.8 million new jobs in 2007 with the Rp
43 trillion allocated to help small and medium
enterprises.

The secretary-general of the Indonesian Employers
Association (Apindo), Djimanto, also believed it
would be difficult for the country to achieve its
6.3 percent growth target and job creation goals
with the uncertain investment climate and
ineffective leadership.

"The unemployment rate will increase because few
of the 2.3 million new labor force could be
absorbed by the job market." The targets could
only be reached if national leaders were firm in
taking concrete actions to repair the investment
climate and encouraged all employees to work
harder, Djimanto said.

 WAR ON CORRUPTION

For some NGOs, another disaster means new flashy
cars

Jakarta Post - August 24, 2006

Adisti Sukma Sawitri, Depok — NGO activists are
treating reconstruction projects as “battlefields”
to compete for donor funding and misuse it for
their own benefit, leaving locals to fend for
themselves, a top UN officer says.

"It is common for me to see them benefit from
disaster recovery projects: Another project,
another new flashy car for each of them," the head
of the UN Office for the Coordination of
Humanitarian Affairs (OCHA), Puji Pujiono, said
Wednesday in his keynote speech at a disaster
management workshop for activists in Depok, West
Java.

Although he said he believed only some activists
were corrupt, he urged all NGOs in Indonesia to
improve their professionalism or lose the trust of
donors.

Puji refused to name specific NGOs or reveal the
number of local and foreign activists who had
embezzled disaster funds, saying he could not be
sure whether they were currently involved in
disaster areas in Aceh, Nias, Yogyakarta, and
Central Java.

"There are so many of them. Each time a disaster
happens, many people come immediately, claiming
they want to help local people. We (the UN) can’t
do anything about this because only the government
has the authority to control these NGOs," he said.

The public has grown increasingly suspicious of
graft among both local and international non-
profits. These misgivings are stimulated by the
disorganized delivery of services in disaster
areas. Some areas have made great progress toward
recovery, while others are getting little or no
support.

Complaints of poorly managed NGO projects first
came from the head of the Aceh and Nias
Rehabilitation and Reconstruction Agency (BRR),
Kuntoro Mangkusubroto, who was disappointed when
some international NGOs failed to achieve their
targets for housing construction in the region
last March. The most recent case involved two
domestic NGOs, which were reported to the police
for graft.

The coordinator of Indonesia’s NGO Coalition for
International Human Rights Advocacy, Rafendi
Djamin, said international NGOs were more prone to
embezzlement because they were “untouchable” under
the country’s Criminal Code.

"BRR is the only agency that has some authority
over them because it issues work permits for
them," he said. He said he hoped that with the
recent ratification of the UN Convention Against
Corruption, the government would show more concern
about such issues.

---

Education ministry needs to improve transparency:
ICW

Jakarta Post - August 22, 2006

Adisti Sukma Sawitri, Jakarta — Corruption
watchdogs say there is no point in increasing the
national education budget to the constitutionally
required 20 percent of total spending until
corruption in the sector is dealt with.

"We are pretty disappointed to know that the
education budget is still below 20 percent of the
whole budget, but we also can’t be sure that a
larger budget would lead to better quality
education," Indonesian Corruption Watch (ICW)
researcher Ade Irawan said.

The government unveiled the 2007 draft state
budget last week when President Susilo Bambang
Yudhoyono delivered his state of the nation
address at the House of Representatives.

In the draft, the government proposes only Rp 51
trillion (US$5.6 billion) or 10.2 percent of the
total budget for education.

Last year, the government had committed to raising
the spending to 14.7 percent in 2007, as part of
staged increase rising to 17.5 percent in 2008 and
20.1 percent in 2009.

However, this fiscal year, the government
allocated only 9.1 percent of the state budget for
education, below the promised 11 percent. Several
ICW studies, meanwhile, have shown that corruption
is rife in education ministry projects.

"Based on our monitoring, about 20 percent of the
current Rp 43 trillion budget, is controlled by
the ministry’s headquarters in Jakarta. Budget
allocations are not made publicly," Ade said.

ICW studies in 11 regions, including Garut in West
Java, Sumba in West Nusa Tenggara, and Makassar in
South Sulawesi, show that only 20 percent of
operational budgets transferred from the ministry
are used for teaching activities.

The rest of the funds are given to sub-district
offices because principals in each region need
good reports from regional officials to keep their
jobs.

State University of Jakarta (UNJ) education expert
Lodi Paat said that cleaning up the management of
the existing money was more important than
increasing the budget.

"If they get bigger budgets but fail to manage
them properly, it will not lead to any improvement
in the quality of education," he said.

Ade said the ministry should be more transparent
when allocating budgets. "The public must be given
the chance to participate in, or at least to know
about the budgeting process, to keep it
accountable," he said.

 ENVIRONMENT

Malaysia urges Indonesia to tackle haze problem

Agence France Presse - August 21, 2006

Kuala Lumpur — Malaysia has urged Indonesia to
tackle the forest fires it blames for the choking
haze that has engulfed the region.

Deputy Prime Minister Najib Razak said cooperation
was ongoing with Indonesia over forest fires on
Indonesia’s Sumatra island and Kalimantan on
Borneo island, but placed responsibility squarely
on Jakarta’s shoulders.

"As far as we are concerned, there is not much
that we can do about the Indonesian fires," Najib
was quoted as saying in the New Straits Times.
"Our ability to resolve the problem will largely
depend on the determination of the Indonesian
government to address the matter. This will be our
major challenge."

Air quality in parts of Malaysia’s eastern Sarawak
state on Borneo last week deteriorated to
unhealthy levels, prompting authorities to
distribute face masks amid a sharp rise in
conjunctivitis and respiratory infections.

The state got a bit of a reprieve over the weekend
after rain cleared the air, returning air quality
to moderate levels. Western parts of peninsular
Malaysia have also seen intermittent haze in
recent weeks.

Burning in Indonesia — and in some parts of
Malaysia — to clear land for crops causes an
annual haze that afflicts Malaysia, Singapore and
Thailand as well as Indonesia itself.

In July, Malaysia and Indonesia said they would
join forces to stamp out open burning in oil palm
plantations.

Indonesia has outlawed land clearing by fire and
has vowed to punish offenders, but weak
enforcement means the ban is largely ignored.

---

Fires continue raging in Kalimantan forests

Jakarta Post - August 18, 2006

Tb. Arie Rukmantara, Palangkaraya — While
millions of people celebrated the country’s 61^st
Independence Day on Thursday, firefighters were
busy battling flames in Central Kalimantan.
Firefighter Aliansyah said it was worth missing
the holiday so that he and around 200 others in
the province could try to contain the blazes,
which reached the capital, Palangkaraya.

“The celebration will go on with or without me,”
the 42-year-old said. "But if I fail to put out
the flames, the whole province will have to put up
with haze for months until the rainy season
comes." Firefighters have been battling the
blazes, which have ravaged some 25 hectares of
peatland on the outskirts of Palangkaraya, since
Monday.

The firefighters were pessimistic they would be
able to contain the flames, saying they had
insufficient personnel for the task. "It will take
one hour just to extinguish fires destroying 100
square meters of forest. When will all the blazes
stop if only 12 men are fighting the flames?" he
said.

The Forestry Ministry’s satellite images have
detected more than 3,500 “hot spots” in Sumatra
and Borneo, including in the Malaysian areas of
Borneo, Sabah and Serawak.

Riau and Jambi provinces have the most hot spots
in Sumatra, with each recording more than 300.
West and Central Kalimantan are the hardest-hit in
Borneo, with almost 2,000 and over 500 hot spots,
respectively.

The Forestry Ministry’s Central Kalimantan Natural
Resources Conservation Office (BKSDA) reported
Wednesday that hot spots were increasing in nearly
all of the 13 municipalities in Central
Kalimantan. It said visibility had been reduced to
between 50 and 100 meters in the morning.

The lack of human resources is not the only
problem. Due to a prolonged drought, firefighters
are having problems finding enough water to
extinguish the blazes.

"Many waterways here are dry, or contain only a
small amount of water. That’s why it takes so long
for us to put out the fires," Nandang, another
fire fighter, said.

Andreas Dodi Permana, a data analyst with BKSDA,
said more than 90 percent of the fires were on
privately owned land, while the rest were on
concessionaire plantations.

Dodi said the regional administration hesitated to
take legal action against perpetrators due to the
absence of regulations and the difficulty of
proving responsibility.

Kalimantan farmers prefer to set fires to clear
land for planting, rather than hire people to cut
bushes and trees.

"Rather than pay Rp 50,000 (about 60 US cents) for
one worker per day to clear their land, they
prefer to buy a gallon of gasoline, because
burning wood is much quicker," he said.

 HEALTH & EDUCATION

Ignorance hampers Indonesia’s bird flu fight

Reuters - August 24, 2006

Ahmad Pathoni, Jakarta — Caswali has sold live
chickens in a crowded traditional market in the
Indonesian capital for over 10 years, but he has
never been given any information on how to prevent
bird flu.

"I’ve only heard of bird flu from the news on
television. But I’m not afraid as my chickens are
healthy. I and hundreds of chicken traders I know
have never been infected by bird flu," said the
47-year-old as he slaughtered a live chicken.
"Everybody’s life or death has been pre-ordained
by Allah."

Bird flu may be endemic in poultry in most parts
of Indonesia, but experts say public ignorance,
official ineptitude and lack of funds are to blame
for the mounting human deaths from the virus in
the sprawling archipelago.

Indonesia has so far recorded 46 bird flu deaths,
the highest in the world, but stamping out the
virus is a tough job in the country of 220 million
where keeping chickens, ducks and geese is a way
of life and allowing the animals to roam freely
natural.

Indonesia has launched a campaign to spread
awareness about bird flu and has opted for
selective culling, but Lo Wing-lok, an infectious
disease expert in Hong Kong, said Indonesia’s
sprawling geography and public ignorance meant
controlling the disease was an uphill battle.

"It is very difficult to get people to cooperate,
some don’t believe that bird flu is really
serious, some delay treatment because they don’t
want to get stigmatized, some are even thinking of
suing the government."

The problem was highlighted when an Indonesian
teenager refused to be hospitalized this month
despite testing positive for bird flu and in
another case three ministers visiting a bird-flu
stricken district were jostled by villagers who
tried to rip off their protective masks.

Some farmers accuse the government of spreading
rumors about bird flu to obtain foreign money and
have protested by eating raw chicken meat.

Culling

Unlike in countries like Vietnam, culling poultry
is not easy in Indonesia either because of fierce
opposition from farmers and the logistical
difficulties with millions of backyard fowl.
Farmers oppose culling because of the low
compensation they get for their birds. A full-
grown chicken costs 35,000 rupiah in Jakarta, but
the government only offers between 10,000-12,500
for each culled fowl.

Although bird flu remains essentially an animal
disease, experts fear it could mutate into a form
that can pass easily among humans, killing
millions.

New fears that the virus had mutated into a form
that can easily pass between humans arose this
month after a series of confirmed or suspected
cases in West Java’s remote Cikelet village, where
bird flu is rife in poultry.

The World Health Organization (WHO) said there is
no evidence that human-to-human transmission has
occurred in the area, but experts say what is most
worrying is how human cases are often shrouded in
mystery with officials unable to say whether the
virus is in the environment or how widely it has
spread — which means H5N1 outbreaks in poultry
essentially go uncontrolled.

Marthen Malelo, a virologist at the Bogor
Institute of Agriculture, said the government’s
initial response to the bird flu outbreak was
sluggish. "Because the government’s action was
tardy, bird flu is now out of control. It’s now
widespread and we don’t have enough vaccines to
carry out a massive vaccination drive," said
Malelo, who first discovered bird flu in poultry
in Indonesia.

The government has defended its efforts, saying it
had killed almost 29 million chickens, vaccinated
268 million others and spent about $50 million
despite financial constraints.

Indonesia has not received “a single cent” from
$1.9 billion pledged by international donors at a
conference in Beijing in January, Welfare Minister
Aburizal Bakrie said this month.

Experts say the government, which has allocated
$57.4 million this year to stamp out the bird flu
virus, should set aside more funds to compensate
farmers whose poultry is culled.

Most donor funds are focused on preventing bird
flu in humans and no resources are allocated for
procurement of vaccines and compensation for
farmers whose poultry is culled, said Louise F.
Scura, World Development Sector Coordinator at the
World Bank.

"As long as the bird flu virus is circulating in
poultry, we will continue to have sporadic human
cases. And to detect outbreaks in poultry, we need
to have resources to vaccinate and cull," Scura
said. "Vaccinating 10 percent of your poultry
isn’t going to help. And we can’t expect farmers
to voluntarily have their chickens culled without
compensation," Scura told reporters.

[Additional reporting by Tan Ee Lyn in Hong Kong.]

---

14 provinces classified as ’leprosy endemic’

Tempo Interactive - August 18, 2006

Indra Manenda Rossi, Jakarta — The Department of
Health has reported that until 2006 14 provinces
have been classified as ’leprosy endemic’ based on
the high rate of death caused by the chronic
disease. However, funds for handling the disease
are said to be insufficient.

"In fact, the death rate in the areas is extremely
large," Kristina Widaningrum, the Section Head of
Standardizing and Partnership of the Directorate
of Leprosy and Frambosia Eradication at the
Department of Health, said during a session of
conveying information about Infectious Disease
Eradication Wednesday (16/8) in Jakarta.

According to Kristina, the 14 provinces are
Nanggroe Aceh Darussalam, West Java, Central Java,
East java, South Kalimantan, East Nusa Tenggara,
South Sulawesi, Central Sulawesi, Gorontalo,
South-East Sulawesi, North Sulawesi, North Maluku,
Maluku and Papua. All of these regions are rife
with the disease by virtue of several factors:
nutrition, geographical position, people’s
awareness and the number of medical personnel.

In fact, according to Kristina, fund allocation
for handling leprosy will amount to Rp3 billion
this year. Actually, Kristina said, based on the
existing endemic areas, they will need Rp10
billion each year. The funds will only be utilized
for operational costs. The lack of funds will be
covered by relief aid of contributing countries
totaling Rp7.9 billion. "Foreign aid will be
utilized for purchasing medicines and medical
equipment in the regions," Kristina remarked.

Leprosy is an infectious disease attacking the
edge of the nerves of organs. Based on the World
Health Organization’s data, Indonesia’s cases of
leprosy is positioned in the top three among Asian
countries under India and Nepal.

 ECONOMY & INVESTMENT

Autonomy going too far: SBY

Jakarta Post - August 24, 2006

M. Taufiqurrahman, Jakarta — The central
government believes excesses in the implementation
of regional autonomy are scaring away foreign
investment.

President Susilo Bambang Yudhoyono said Wednesday
that local governments had imposed a slew of local
taxes burdensome to investors since the onset of
decentralization.

"All this has given rise to a high-cost economy
that will sap the competitiveness of the region in
both the national and global context," Yudhoyono
said before the annual plenary session of the
Regional Representatives Council (DPD).

Also present in the plenary session were governors
and regents from throughout the country.

Yudhoyono said the central government was now
reviewing the bulk of bylaws on taxation which
contradicted the 2000 Law on tax and local levies
and would revoke them if necessary. He also called
on local governments to desist from imposing such
bylaws.

Yudhoyono also focused on the unchecked division
of provinces and regencies as another negative
effect of regional autonomy.

An evaluation by the central government, he added,
showed that new administrations failed to improve
their services to the public, and Jakarta often
had to intervene to cover outstanding expenses.
"This will only add more burden to the state
budget," he said.

The central government is currently drawing up a
regulation that would freeze regional divisions.

This is not the first time the President has
expressed his misgivings about the implementation
of autonomy. Last May, he debated with the
nation’s governors about the amount of power that
should be ceded to local administrations.

The governors, who were members of the Association
of Indonesian Provincial Administrations, said
they were disappointed by the central’s
government’s reluctance to give more authority to
them. Responding to the criticism, Yudhoyono said
that more power meant more responsibility for
local administrations.

Critics contend the central government’s
reluctance to devolve its powers extends to the
distribution of increasing funding to local
administrations. In the budget proposal for 2007,
the central government earmarked Rp 250 trillion
for local administrations, up 14 percent from Rp
220 trillion this year.

DPD Speaker Ginandjar Kartasasmita countered that
it was the bulk of regulations produced by the
central government that hampered local
administrations from exercising their powers.

Ginandjar said currently there were 25 regulations
covering numerous sectors that contradicted the
regional autonomy law. "We expect the central
government to give an example of how to draw up
regulations that are consistent with the regional
autonomy principles," he said.

---

A conservative budget

Jakarta Post - August 18, 2006

Politicians may consider President Susilo Bambang
Yudhoyono’s state budget proposal for 2007 a
boring document, devoid of bold fiscal measures
and without any frills at all.

But it is precisely the conservative assumptions
used in the planned budget that will reassure the
market that there are unlikely to be any painful
amendments midway through the next fiscal year.

As a communication system for providing signals
about spending behavior, prices, priorities,
intentions and commitments, the 2007 budget plan
reflects adequate public expenditure management.

It will focus spending on sectors directly related
to human resource development, the improvement of
public service delivery, physical infrastructure
as well as good governance through an increase in
the salaries of civil servants and members of the
armed forces. The budget also will continue fiscal
consolidation by cutting the fiscal deficit to 0.9
percent of gross domestic product.

The assumptions on key sectors such as an average
rupiah exchange rate of Rp 9,300, an oil price of
US$65 a barrel, inflation at 6.5 percent and a
benchmark short-term interest rate of 8.5 percent
are realistic enough to allow for good fiscal
management.

These assumptions are strikingly different from
the 2006 budget proposal which had to be revised
extensively before it was finally approved by the
House of Representatives in late October, 2005.

The 24 percent increase envisaged in income tax
receipts is not too optimistic if it is set
against the economic growth target of 6.3 percent
but on the condition that the taxpayer base should
be broadened significantly.

On the other hand, the 8 percent decline projected
in non-tax revenues should be welcomed as this
means that state companies will no longer be
squeezed to allocate a greater portion of their
profits for dividend pay out. This policy will
thus allow them to reinvest a good portion of
their earnings for future growth.

The proposed increase of only 8 percent in total
spending to Rp 746.5 trillion (US$80 billion) is
conservative enough to signal that the total
amount of money the government will spend will be
closely aligned to what is affordable over the
2007 fiscal year.

The central government will account for more than
66 percent of the planned total spending and
regional administrations for the remainder. But
the real significance of the central government’s
spending will not be as high as the nominal sum
indicates because more than half of that amount
will be spent on debt servicing and fuel and
electricity subsidies.

Even though total government debt ratio against
gross domestic product has fallen sharply to 41
percent this year, the rigors of debt will still
be a big burden on next year’s budget.

Domestic and foreign debt servicing (including
amortization) will account for almost 19 percent
of total spending. No wonder, the official capital
account will still suffer a net resource outflow
next year. But this burdensome payment will
further reduce the government debt ratio to a mere
37 percent later next year, making the debt burden
much more sustainable and reducing the country’s
sovereign risks.

The government wisely decided to avoid the risk of
further turbulence of inflationary pressure and
instead opted to increase fuel and electricity
subsidies to Rp 109.7 trillion or almost 15
percent of the planned total spending.

Even though the budget allocates Rp 138 trillion
for the procurement of services and goods,
including capital goods, the overall impact of the
2007 state budget will still be contractive on the
economy because of the stepped up tax-collection
effort and bigger spending on subsidies and debt
servicing.

Hence, private investment and exports should
expand significantly to become the locomotive of
economic growth. New investment will most likely
run at a much higher pace because the high degree
of predictability provided by the more realistic
budget plan will allow for efficient and effective
implementation of policies and programs.

A budget system, however capable, is not self-
contained, it does not operate in a vacuum, as it
will be adversely affected by multiple, converging
uncertainties, entrenched patterns of expenditure,
inflation and structural imbalances between
expectations and resources.

The proposed 2007 budget seems to be designed to
cope with these realities.

---

FDI inflows remain disappointing

Jakarta Post - August 19, 2006

Urip Hudiono, Jakarta — Foreign investment still
appears to be in the doldrums, with the second
half of the year starting off to a 24 percent
decline in direct foreign investment compared with
the same period last year.

Realized overseas investment by the end of July
only amounted to a disappointing $3.71 billion
involving a total of 563 projects, the Investment
Coordinating Board (BKPM) reported earlier this
week, as compared to 567 projects worth $4.9
billion a year earlier.

This represents a reversal of the 12 percent
growth in actual FDI achieved during 2005’s first
seven months compared with the same period of
2004.

The alarm bells had already been sounded in the
first half of the year, when realized overseas
investment rose by barely 5 percent to $3.5
billion.

The good news from the BKPM’s latest investment
figures is that realized FDI projects between
January and the end of July created a total of
154,335 jobs as compared to 94,336 in the same
period last year.

Actual domestic investment between January and
July, meanwhile, grew by 18 percent to stand at Rp
11.46 trillion (US$1.2 billion) involving 104
projects, compared with Rp 9.69 trillion involving
137 projects during the same period last year.

Foreign investors have mainly been putting their
money into the metal, machinery and electronics
sector (61 projects valued at $816.4 million), the
paper and printing sector (11 projects valued at
$439.3 million) and the textile sector (16
projects valued at $375.3 million).

Meanwhile, local investors promoted 16 projects
worth Rp 3.14 trillion in the metal, machinery and
electronics sector, 12 worth Rp 2.05 trillion in
the food processing sector, and 16 worth Rp 1.6
trillion in the services sector.

In total, actual overseas and domestic investment
up until the end of July stood at Rp 45.22
trillion, a 16 percent decline from the same
period last year. Overall realized investment
provided jobs for a total of 198,029 workers,
significantly higher than last year’s 160,421.

The government is hoping for Rp 132 trillion in
realized investment this year, although it sees
total investment growing by only 7.7 percent this
year — another decline from the 9.9 percent
growth recorded in 2005 and 14.1 percent in 2004
— although hopes are high for an 11.8 percent
rebound in 2007.

The BKPM’s data excludes investment in the oil,
gas and mining industries, the banking and finance
sector, and the capital markets, which are handled
by other government agencies.

Corruption, red-tape and woefully deficient
infrastructure have been undermining Indonesia’s
efforts to lure back overseas investment, which
peaked at $39.66 billion in 1995, before
collapsing to $13.64 billion following the 1997-
1998 Asian financial crisis.

Investment looks set to remain slow for the rest
of 2006, with investors thinking twice before
expanding their businesses in Indonesia’s
potentially huge market given that purchasing
power is still low as a result of high inflation
and interest rates.

The government recently announced a package of
policies to tackle the problems in the investment
sector, but had only managed to complete 23 of the
85 outlined policies as of the end of May.

---

2007 privatization target is Rp3 Trillion

Tempo Interactive - August 18, 2006

Marlina MS, Jakarta — The government is targeting
state revenue of privatization activities to reach
Rp3 trillion by next year.

State-Owned Enterprises Minister Sugiharto is
optimistic that the target can be reached taking
into account the 139 state-owned enterprises
(SOEs) that are now ready to be privatized. "So,
there will be no excuses that the target cannot be
reached," he said Wednesday (16/8) in Jakarta.

President Susilo Bambang Yudhoyono said in his
speech, delivered before a plenary session of the
People’s Consultative Assembly/the House of
Representatives, yesterday (17/8) that one of the
alternatives of budget financing, the basis of
which is domestic income, plans to reach Rp51.3
trillion and has privatization as its source.

According to President Susilo Bambang Yudhoyono,
the financing source of privatization has been
planned at its lowest level because the government
has realized that the privatization program should
not be solely aimed at meeting the financing of a
budget deficit. "However, the most important issue
is an attempt to improve and to increase the SOEs’
performance, as Law Number 19/2003 concerning SOEs
points out," he said.