ARE MUSLIMS ALLOWED TO PRACTICE YOGA?

By Andi Abdussalam

 

Jakarta, Nov 29 (ANTARA) - A report that Malaysia's Islamic regulatory body MFKM has banned the practice of Yoga by Muslims has stirred up some public debate in Indonesia, the country with the largest Muslim population in the world.

        In Indonesia, where over 80 percent of its 220 million population) profess Islam, yoga is a popular exercise to maintain physical and mental fitness. Many Muslims have joined yoga clubs for the exercises. Indonesian Islamic body MUI has yet taken a decision but says it will look into the matter to decide whether Yoga practice corrupts Muslims' faith.

        AP quoted MUI cleric Ma'ruf as saying Thursday Indonesia's Ulema Council was trying to determine if the ancient Indian practice could corrupt the faith of believers. If the answer is yes, a non-binding edict prohibiting the practice could be issued next month.

        In the face of possible edict to be passed next month by the MUI, Dr Somvir, chairman of the Bali-India Yoga Foundation called on yoga practitioners to remain calm. Dr Somvir, a philosopher and a Yogi from India who teaches spiritual tourism at Denasar-based University of Udhayana, said interfaith leaders in Indonesia would not be affected by negative reports on Yoga.

        "Yoga lovers hold peace and interfaith religious harmony in their highest esteem," he said.

        According to a report by DPA last weekend, Malaysia's Islamic regulating council had issued an edict banning Muslims from practicing yoga.

        The National Fatwa Council issued the ban, saying the practice of yoga involved physical movements, worship and the utterance of chants which were prohibited in Islam.

        Yoga, which originated in India but is widely practiced around the world, is popular among Malaysia's multiracial population. Muslims make up two-thirds of the country's 27 million population.

        The debate was sparked recently when a lecturer of the National University of Malaysia, Zakaria Stapa, said that yoga, which is based on Hindu elements, could affect the faith of Muslims who practice it.

        Indonesian cleric Havizh Ustman who chairs MUI's West Java branch said Muslims could practice yoga as long as it did not involve `syirik' (recognizing other deities beside Allah) elements. "Yoga is an exercise of the body so there is no problem in doing such body workouts," he said.

        The Muslim cleric said there were lots of body exercises apart from Yoga such as martial arts, gymnastics and so forth. "If yoga involves `syirik' elements, it must be banned. But then, even sitting on a prayer rug must also be banned if it involves syirik," he said.

        Ustman said as far as the principles of Islamic law was concerned, Muslims were allowed to do all things that were not explicitly forbidden in any of the verses or articles of Islamic law. "Therefore, Muslims are free to practice yoga as long as it does not involve `syirik," he said.

        About the fact that yoga contained elements of Hinduism and the possibility that such body movements as closing the eyes and controlling the rhythm of one's breath could compromise a person's Muslim faith, he said Muslims could do the exercises while filling their mind with `dzikir' (chants of confession of faith in Allah).

        The Islamic body in neighboring Malaysia had issued the ban - but Muslims there have also been told they can perform yoga as long as they refrain from chanting religious mantras.

        According to Dr Somvir , yoga was a method to improve people's physical, mental and moral conditions so that they could live a healthy life in carrying out their duties without the need to suffer from depression and stress.

        He said yoga had became a practice before the Aryan race came to settle in the Himalayan region. It involves the movements of the body, pranic exercises and the observance of the names of God based on practitioners' respective faith. Yoga never aimed to influence a person to embrace a certain religion.

        Therefore, according to a report, yoga has become a kind of a lifestyle in the world. It has spread in both the Muslim and non-Muslim worlds. As it is a life style that promotes a person's health , yoga clubs and exercise centers have been growing rapidly in Saudi Arabia and the United Arab Emirates.

        In Iran, a country known as a "hard-line" Muslim nation, yoga is also very popular. Even yoga classes for children are to be found there. The same happened in Indonesia. Senior lawyer and presidential adviser Adnan Buyung Nasution is also said to be an avid yoga practitioner to help maintain his health.

        It is in this respect that the Bali-India Foundation devotes itself to help promote healthy life in Indonesia. It will establish cooperation with a number of hospitals in Bali Province to teach yoga to patients and their relatives.

        "Documents of the cooperation agreement with a number of hospitals such as Medistra Hospital have been signed, and hopefully they can be implemented soon," Dr Somvir, the foundation's chairman, said.

        Yoga meditation could help speed up health recovery of patients, he said.

        In addition to hospitals on Bali Island, the foundation has also given yoga exercises to employees of state telecommunication company PT Telkom and state electricity company PT PLN.

        After joining yoga lessons for three months, some 80 percent of cancer, fever, flu and stress patients recovered, he said.

        In order to promote the healing method through yoga, Bali will host an International Yoga Festival next March which will be attended by one thousand yoga instructors from many countries in the world.

        "The festival will be held in Bali for about one week, from March 3 to 10, 2009," Dr Somvir said. ***7*** (T.A014/A/HAJM/17:55/A/O001)29-11-2008 18:25:40

GOVT EVENTUALLY REVISES DECREE ON MINIMUM WAGES

By Andi Abdussalam

 

Jakarta, Nov 28 (ANTARA) - After a series of protests by workers, the government eventually decided to revise a controversial article in a joint ministerial (SKB) decree on laborer's provincial minimum wages (UMR).

        "The revision is expected to eliminate misunderstanding by a number of parties about the provision on minimum wages in the decree," Manpower and Transmigration Minister Erman Suparno said.

        Article 3 of the decree initially put a clause: "Governors should fix a provincial minimum wage at a rate not exceeding national economic growth rate."

        Now the clause is revised to read: "Governors should take into considerations the inflation rates in their respective regions when they decide rate of the provincial minimum wage."

        The joint ministerial decree by the ministers of manpower, of trade, of industry and of home affairs was issued recently in an effort to anticipate the impact of global financial crisis.

        "The decree was issued as a safety net and as protection for workers from the possibility of massive layoffs as a result of the global economic crisis," Erman Suparno said.

        Article 1 of the decree stipulated that if a business sector was badly affected by the global economic crisis, the Wage Affairs Council and the regional administrations were given rooms to re-negotiate the regional minimum wage rate.

        "This provision will be applied in an emergency situation. So, a decision must be made by involving both the managements and workers. It is a bipartite meeting," he said.

        However the decree has sparked a series of demonstrations by workers alleging that it was issued to protect employers.

        Chairman of the Indonesian National Workers Struggle Front (FNPBI), Dominggus Oktavianus, alleged that the issuance of the SKB was equal to shifting companies' financial burden to workers.

        The SKB also stipulated that UMRs were to be determined in negotiations in bipartite forums involving only representatives of the government and employers.

        The negotiation process in bipartite forums had the potential to set the UMR based on the market mechanism which meant that workers and their families would not be able to meet their daily needs.

        The minister said that article 3 of the ministerial decree was often misunderstood as if companies were prohibited from raising the provincial minimum wages (UMR) in 2009.

        Actually, he said, the authority to decide the UMR rate is in the hands of the regional administrations and the regional councils for wage affairs.

        In response to nation-wide protests from workers against the decree, the government eventually bows to their demand.

        "The president has provided directives that we should secure the economic growth momentum and respond to the people's aspirations," the minister said.

        On Wednesday, Minister Suparno said the government would not revise the decree because it protect workers from massive layoffs.

        "The decree is a safety net so that massive layoffs would not take place," the minister said during a visit to an Islamic boarding school in Purworejo on Wednesday.

        Actually, the decree was issued after passing through a coordinative meeting which involved several relevant parties, particularly the bipartite body which consisted of employers and labor unions.

        Yet, after facing mounting resistance from various workers' associations and a call from the House of Representatives (DPR) to revoke the decree, the government eventually decided to revise article 3 of the decree.

        "Ideally, the decree should be revoked, but with the revision of its article 3 it is basically the same as lifting it," DPR Chairman Agung Laksono said on Friday.

        He said that he could understand the government's step in revising the decree instead of revoking it but suggested that the government learn a lesson from the controversial decree in taking a policy.

        The DPR in a leadership meeting on Tuesday (Nov. 25) called on the government to lift the decree because it had sparked strong reactions from workers and had the potential to create insecurity among the people.

        Until Friday, no much response to the government decision had been reported.

        The Indonesian Entrepreneurs Association (APINDO) of Purbalingga district in Central Java hailed the revision of article 3 of the decree.

        "We basically agree with and welcome the revision of the decree as long as it is done in good faith and it is not against the law," APKINDO chairman Saryono said on Friday.

        He said that APKINDO would follow what had been decided by the government, in this case the governor of Central Java, Bibit Waluyo, with regard to the regional minimum wages. (T.A014/A/HAJM/A/s012 28-11-2008 22:06:12

INDONESIAN WORKERS FACING MASSIVE LAYOFFS

By Andi Abdussalam

Jakarta, Nov 25 (ANTARA) - Hundreds of thousands of Indonesian workers at home and abroad are facing the threat of losing their jobs as a result of the global financial crisis. At home about 200,000 will likely be laid off shortly. In Malaysia, the main destination of Indonesian migrant workers, at least 300 thousands are facing the same fate, while hundreds of others are waiting repatriation from Kuwait.

        "We have to make all-out efforts to prevent massive layoffs," General Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Ms Hidayat said on Monday. He said he had witnessed that the economic recession in the United States had really taken place. Thus, labor intensive industries at home need to make all-out efforts in order to prevent massive layoffs.

        In Malaysia about 300 thoussand Indonesian migrant workers are facing the same fate. According to Indonesian Ambassador to Malaysia Dai Bachtiar, about 300 thousand Indonesian workers (TKIs) would likely face layoffs due to the on-going global economic recession.

        "I am concern with Indonesian workers employed in Malaysian companies whose number reaches 300 thousands," the ambassador said. According to him, the impact of the global economic crisis has not yet been felt by most of Indonesian migrant workers who are bound with work contracts. But workers at Malaysian companies will face the impact if demand for the companies' production fall.

        Therefore the ambassador expressed concern over Indonesian workers at Malaysian companies. Those working as domestic helpers and are bound by work contracts will not be much affected. "But this all will depend on the policy of the Malaysian government," the ambassador said.

        In the meantime, at least 380 Indonesian migrant workers are facing repatriation in Kuwait. They are now placed at the Indonesian embassy. They are among Indonesian problematic workers in that country.

        In order to help their repatriation, Moh Jumhur Hidayat, Head of National Workers Protection and Placement Overseas (BNP2TKI), flew to Kuwait to meet the problematic TKIs.

        Luckily, the Kuwait Union of Domestic Labor Office (KUODLO) has promised to help repatriate about 380 problematic Indonesian workers now being placed at the Indonesian Embassy.

        KUODLO chairman Fadel Mohammed Al Sharaf said it was ready to help. "We are ready to provide assistance," Al Sharaf said in a meeting with Jumhur in Kuwait on Monday night.

        In the January-July 2008 period, according to the Indonesian embassy, 12,205 Indonesian workers had been placed in Kuwait, the third biggest after Saudi Arabia which has 75,770, and the United Arab Emirates 14,191 in the same period.

        At home, Indonesian companies have begun entering the difficult phase. Kadin chairman for fiscal and monetary affairs Bambang Soesatyo said on Tuesday that about 200,000 workers will be laid off in the coming six months in Indonesia as a result of the financial crisis. Many businesses in December 2008 are likely to announce minus profits.

        Kadin General Chairman MS Hidayat said that labor-intensive companies had sent signals of layoffs. "This begins with placing workers at home because demand for products had been declining. This trend will increase next January where labor intensive industries have to be safeguarded," Hidyat said.

        Attention must also be given to exporter companies as the main foreign exchange earners so that they would not be affected by the rupiah depreciation and would survive the 2009 crisis.

        One of the factors that had begun to affect businesses is the depreciation of the rupiah against foreign currencies, the US dollar in particular. The rupiah has fallen to Rp12,000 per US dollar, even it happened to touch the Rp13,200 level.

        The depreciation of the rupiah to the Rp13,200 per US dollar was the weakest one since the 1998 financial crisis when it was recorded at Rp16,800 per US dollar.

        On the layoff issue, Bambang said the weakening of the rupiah hampered companies to boost their production. At the same time, demand for goods abroad was also declining.

        Bambang said goods purchase contracts were to expire in December and many of them were not likely to be extended. Therefore, the number of trade contracts next year was expected to decline. As a result, production of goods at home would also drop.

        The solution that could be made, he sad, was to generate infrastructure development to accommodate workers. The funds for infrastructure development are however taken from the state budget, whose absorption is rather slow.

        "Up to November 2008, the absorption of the state budget was only 60 percent. About 90 percent of the state budget is kept in banks," he said.

        The other solution, he said, was to increase cuts in the price of premium gasoline from Rp500 per liter to Rp1,500 per liter. The diesel oil price also needed to be cut by Rp1,000 per liter. "A cut to that extent will be significant in raising the purchasing power of the people," he added

        Even though many workers are facing layoffs, those working with crude palm oil industries still could breathe fresh wind. Palm oil industry workers could still be safeguarded from layoffs despite the fact that demand for crude palm oil (CPO) has been declining since the second semester of 2008.

       "I don't think it is that easy for industries to lay off their workers because it would neither that easy for them to find suitable workers when the economic crisis has recovered," General Chairman of the Indonesian Oil Palm Businessmen Association (Gapki), Akmaluddin Hasibuan said.

        He said that industries needed to carry out capital restructuring if they lay off their workers. Over the past few months, CPO industries have been facing difficulties due to the global financial crisis that had spread to various parts of the world.

        Hasibuan said that layoffs is possible if the capital structure of industries was not strong. He said that factors in other countries should also be taken into account. "If the composition of the funds is 90 percent from banking credits, the industries concerned will face problems because they would bear a too heavy burden," he said. ***4*** (T.A014/HNG/A/E002) (T.A014/A/A014/A/E002) 25-11-2008 22:17:31

BI'S CALL FOR DOLLAR SELLING A GOOD OR BAD SIGNAL?

By Andi Abdussalam

        Jakarta, Nov 19 (ANTARA) - Bank Indonesia (BI)'s appeal to the public to sell their dollars in order to help offset the rupiah depreciation may prove to be counterproductive and encourage market players to adversely hunt the greenback, observers say.

        BI made the call so that those keeping dollars would enjoy a gain from the margin as now the rupiah has reached its lowest level of Rp12,000 per US dollar.

        "The people will not sell their dollar only because they could already enjoy a high gain. The BI call could adversely lead people to keep their dollars and wait for higher gains," Dradjad Wibowo of Commission XI of the House of Repesentatives (DPR) which deals with financial affairs, said here on Wednesday.

        He said that the BI statement could serve as a signal that BI's role as monetary authority began to weaken. "In a war there is no room for weakness," Wibowo said

        Dradjad Wibowo's opinion was supported by Bambang Soesatyo of the Indonesian Chamber of Commerce and Industry (Kadin).

        "We could understand the BI appeal which was aimed at creating mutual benefits among the dollar keepers and the BI because it could increase the central bank's reserves but it was announced not in the correct time," he said

        He said that Bank Indonesia (BI)'s call on the public to release their US dollars was a bad signal and counterproductive because it would trigger speculative buying of the currency.

        "This afternoon, capital owners increased their dollar hunting activity in anticipation of the worst impact of the rupiah's depreciation," Bambang Soesatyo said.

        The rupiah fell to Rp12,000 per US dollar on Wednesday afternoon after perching at a level of between Rp11,500 and Rp11,900 for a while, following mounting market pressure.

        The rupiah in the Jakarta interbank spot market traded at Rp12,000/12,028 per US dollar, down 75 points from Rp11,925/12,100 in the market's closing a day earlier.

        The Kadin official said that BI, in its capacity as the central bank, should not make a statement calling on the public to release their dollars because the local and international markets were facing US dollar scarcities.

        The BI call could be construed that the present rupiah exchange rate at between Rp11,000 and Rp12,000 against the greenback had reached an equilibrium point in the current financial crisis.

        "This means that now is the time for dollar keepers to take a profit because the rupiah depreciation has already reached its peak. But the fact explains to us that the BI call is an indication that BI has panicked because its foreign exchange reserves began to be running short," he added.

        BI's foreign exchange reserves have dropped to US$50.5 billion from US$60 billion in July after it has intervened in the market to neutralize the drop of the rupiah.

        Economic observer Tony A Prasetyantono said the BI call would not be effective to withstand the downturn in the rupiah value.

        "The appeal is not effective but as BI governor, Boediono has the moral obligation to ask the people to sell their dollars," he said.

        BI at present is facing a disadvantageous situation because its efforts to carry out continuous market intervention would deplete its foreign exchange reserves which in the present level had been on the brink of a critical condition.

        He said that what was needed now was not a monetary maneuver but a blanket guarantee. "This would be effective in offsetting the rupiah's fall," Prasetyantono said.

        In the meantime, state-owned BNI chief economist A Tony Prasetyantono said the BI call was actually a step to influence the market conditions.

        "However, I am convinced that BI was aware of the ineffectiveness of its call. However, the BI governor must do it because he already had tried other ways but the rupiah still continued to weaken," he said.

        BI has taken several steps such as raising its benchmark interest rate and carrying out market intervention at the risk of its declining foreign exchange reserves.

        However, Bambang Soesatyo of Kadin hoped that BI would lower its benchmark interest rate (BI Rate) so that the existing commercial banks would prepare to lower their interest rates to boost the provision of working capital credits and ignite investment.

        Besides, BI needs government assistance in the form of a blanket guarantee. Unluckily, the government is still refusing to provide it for banks' deposits, he added.

        Bank BRI Director Sulaiman Arif Arianto said meanwhile that the BI call was an appropriate step, though it was actually ineffective.

        "In the current situation BI has taken the correct step because it serves not only as a rigid monetary authority but also as an institution trying its best to educate the people," he said.(T.A014/HNG/A/H-YH)   (T.A014/A/A014/A/H-YH) 20-11-2008 00:01:30

RI WORKING ALL-OUT TO PREVENT ENTRY OF ILLEGAL GOODS

By Andi Abdussalam

Jakarta, Nov 18 (ANTARA) - Indonesia is now making all-out efforts to ward off a possible influx of illegal imports amid the global financial crisis.

        While centralizing the entry points of imports, strictly supervising the flow of commodities and restricting the importation of certain goods, the government is also closing at least 46 seaports scattered across the country's archipelagic territory comprising 17,000 islands.

        The government intends to centralize the points of entry of foreign-made goods susceptible to smuggling in order to simplify their supervision.

        "I want the customs directorate general to secure import activities and consider the possibility of centralizing the points of entry of certain commodities," Finance Minister Sri Mulyani said.

        She said the certain commodities she meant were those easily smuggled into the country such as electronics and textiles.

        Indonesia is losing US$600 million annually in unpaid taxes on illegally imported textiles and textile products.

        Therefore, the government will restrict the importation of certain commodities and centralize the entry points of imports.

        The decision to restrict imports was taken as part of the government's ten-point policy to cope with the current financial turmoil, which was announced in a limited cabinet meeting last month.

        Commodities whose imports will be restricted are garments, electronics, food, drinks, toys, and footwear. These goods can only be imported by licensed/authorized importers on condition the goods have been verified at their ports of origin.

        Besides, their entry points are also centralized in five main seaports. Centralizing the points of entry for those goods meant they could be imported only through certain ports in Indonesia.

        Imported commodities will be unloaded only at certain designated ports, namely Tanjung Priok in Jakarta, Tanjung Emas port in Semarang (Central Java), Tanjung Perak port in Surabaya (East Java), Belawan port in Medan (North Sumatra), Makassar port in South Sulawesi, and at two airports, namely Soekarno-Hatta and Juanda aiports.

        In the meantime, the Ministry of Transportation ordered the closing of 46 unofficial seaports which were believed to have been used as entry points for smuggled goods.

        "We are ready to close about 46 seaports," Transportation Minister Jusman Syafii Djamal told the press on Monday.

        The minister said most of the ports were located in Riau Islands and Batam. He had ordered port administrators of Belawan, Tanjung Priok, Tanjung Perak and Makassar to take firm actions and close illegal ports in their respective areas.

        Belawan port administrator Jimmy Nikijuluw said he was ready to close illegal ports in his area. "It is just a matter of time. We are going to close them," he said.

        Sea Director General Sunarjo said meanwhile port administors were working hard to collect data for closing the ports. "They are collecting data and will soon take action", he said.

        Aside from the government's efforts in closing illegal seaports, the Directorate General of Customs and Excise is also ready to anticipate the influx of illegal imports in the current global economic meltdown.

        Director General of Customs and Excise Anwar Suprijadi stated his office and its units in the field was ready to anticipate illegally imported goods from the US and Europe in the wake of the monetary crisis in those two parts of the world.

        "The customs office has anticipated the illegally imported products including those ordered from the US and Europe," Suprijadi said.

        Since the outbreak of the global financial crisis, many product orders from the US and Europe had been canceled.

        Thus, concern has arisen that canceled exports to the US and Europe are being diverted to Indonesia. The government is urged to take strategic steps and increase supervision over the possible entry into Indonesia of illegal textile and textile-products.

        "There are many countries which export textile and textile products to the United States. With the closure of the export market in the United States, it is not impossible the exporting countries will divert their exports illegally to Indonesia," Ina Primiana of the University of Padjadjaran said.

        The United States has been the main textile and textile product market of producer countries in Asia and Europe.

        With the drop in textile and textile product transactions in the United States, the producer countries would divert their exports to new markets, and Indonesia with its large population would obviously become their target.

        Accordng to Benny Soetrisno, chairman of the Indonesian Textile Producers Association (API), the increasing inflow of illegal textile and textile products was causing the Indoensian state a loss of about Rp600 million per annum.

        Therefore, the entry points of imports must be centralized so that goods entering the country would be supervised easily. The five main ports will serve as the main entry points.

        "Goods arriving at other ports will not be allowed in. So, for instance, any foreign-made textile shipment entering through other ports will be considered illegal and this will simplify supervision," Minister Mulyani said.

        The minister said reducing illegal imports and smuggling was a step to anticipate a glut in imported goods as a consequence of shrinking world markets.

        In order to carry out supervision in the country's territorial waters which cover at least 17,000 islands, the government is to establish a sea and coast guard force.

        "If everything runs as planned, we will have set up the Indonesia Sea and Coast Guard at the end of 2009," Transportation Minister Jusman Syafii Djamal said. (T.A014/A/HAJM/A/S012) 18-11-2008 14:58:44

FULL GUARANTEE ON BANK DEPOSITS NEEDED TO PREVENT CAPITAL OUTFLOW

By Andi Abdussalam

Jakarta, Nov 15 (ANTARA) - Bankers and businessmen have called on the government to provide a full blanket guarantee on bank deposits in order to maintain the stability of banks' liquidity and prevent capital from flowing out of the country in the current financial crisis.

        Indonesian banks currently hold a total of about Rp600 trillion in third party funds which have the potential to be transferred overseas when financial turmoil happens at home because they are not covered by a blanket guarantee.

        When the global financial crisis was at its worst recently, the government only raised the ceiling amount of its deposit guarantee to Rp2 billion from Rp100 million previously to bolster confidence in the financial sector.

        There are about 77 million deposit accounts in the country, including that of the Indonesian Retailers Bond (ORI), according to legislator Zulkifli Hasan of the National Mandate Party (PAN) recently.

        He said that based on PAN studies, about 90 percent of the 77 million accounts belonged to depositors with money less than Rp2.5 billion each.

        According to a report by the Jakarta Post recently the Rp2 billion guarantee covered 99.92 percent of depositors but most people seemed to forget that the remaining 0.08 percent accounted for nearly 40 percent of all third party funds totaling Rp1,520 trillion.

        In the current financial crisis, about Rp600 trillion in funds which are not guaranteed are at very high risk of being moved to safer places.

        After all, neighboring countries such as Malaysia and Singapore have decided to provide a full blanket guarantee on deposits.

        "Singapore, Malaysia and Hong Kong have provided blanket guarantees on deposits. Indonesia should also have done it," State Banks Association (HIMBARA) Chairman Agus M said.

        Therefore, HIMBARA called on the government to provide full blanket guarantee on banks' third party funds and inter-bank money market lending (PUAB).

        The same idea was also expressed by the chairman of the Association of Young Indonesian Entrepreneurs (HIPMI), Erwin Aksa who asked the government to provide a full blanket guarantee on deposits in banks so that the funds will remain in the banks and the interest rates on credit can be lowered.

        "Right now banks are facing liquidity problems," he said here on Friday.

        The government had so far only guaranteed deposits amounting to a maximum of Rp2 billion and this was inadequate, he said.

        He said because no full blanket guarantee was given, some big clients had transferred their deposits to other countries such as Singapore, Hong Kong and Australia that were providing full guarantees.

        As a result, he said, banks faced liquidity problems as incoming funds were small while banks had to continue distributing credits based on previous agreements. He said right now the incoming funds were smaller than credits.

        To lure people, banks were now increasing their interest rates but they also had to raise credit interest rates as well, he said. The lending rates were now quite high at 18 to 19 percent a year, causing difficulties to businessmen.

        The withdrawal of public funds could of course be prevented if they are covered by blanket guarantee. It would also encourage bank to lower their interest rates.

        Chairman of the Indonesian Chamber of Commerce and Industry (KADIN) MS Hidayat said 15 large banks will cut their lending rates by 2-3 percent if the government provides a full guarantee on all bank deposits.

        "Fifteen banks have agreed to cut their lending rates by 2-3 percent on condition the government provides a full guarantee on bank deposits and I urge the government to do so," he said.

        He said the government should guarantee all bank deposits in any amount instead of limiting the guaranteed amount of deposits to Rp2 billion

        "This will not only eliminate people's worries about depositing funds in domestic banks nor also prevent capital outflow. As such, the source of funds in domestic banks will grow," he said.

        Meanwhile, Lippo Group chairman Mochtar Riady said the government needed to provide a full blanket guarantee in order to create financial stability at home and to prevent capital outflow.

        He said that a blanket guarantee would make depositors feel more secure. "Singapore has provided a full blanket guarantee while Indonesia only provides a guarantee on deposits of up to Rp2 billion. Thus, money will flee to Singapore," Riady said.

        In spite of the possible outflow, National Development Planning Minister/National Development Planning Board (Beppenas) chairman Paskah Suzetta said the government would provide a blanket guarantee or full guarantee only if there was a systemic financial crisis which posed a threat to the national economy.

        "The government has yet to see any systemic crisis so that if a full guarantee is provided now it is feared that it will create moral hazard in its implementation," the minister said.

        Yet, in case there is a systemic banking crisis, the government will wait for inputs from the Saving Guarantor Institution (LPS) to decide the type and the provision of a guarantee. (A014/A/HAJM/A/S012) 15-11-2008 21:27:47

THOUSANDS ARRESTED IN NATION-WIDE ANTIHOODLUM OPERATIONS

By Andi Abdussalam

      Jakarta, Nov 12 (ANTARA) - Indonesian security officers have arrested more than 3,000 hoodlums following an order from National Police Chief General Bambang Hendarso Danuri early this month to launch a nation-wide crack down on gangsters who had caused public unrest.

        "Police will act firmly against hoodlums, no matter who they are, including those who are backed by individual police or military personnel," the head of criminal investigation department of the National Police Headquarters, Insp Gen. Susno Duaji, said.

        Until last weekend, a total of 3,184 goons had been arrested. After questioning, however, only 369 were detained for further legal process. They were involved in cases of extortion, robbery, snatcher actions and other street crimes.

        Police confiscated as evidence Rp9.7 million in cash, two firearms, 20 sharp weapons, two motor vehicles, nails and other objects used to commit crimes.

        Duaji said police would continue to crack down on hoodlums who extorted people for money in the streets, at traffic lights, in public transport vehicles, at bus terminals and other public places.

        He said street criminals included those who scratched the surface of car bodies, `kapak merah' (red axe) muggers and debt collectors who used force against debtors.

        Therefore, debt collectors were advised not to resort to threats or violence against the persons from whom they had to ask for money because it was categorized as a crime.

        "Debt collectors are allowed to ask people to pay their debts in a good way but if they resort to verbal threats or violent actions, police will arrest them," Duaji said.

        Firm actions would also be taken against those who ask people to pay for unrequested security guard services in public places such as in 'mikrolet' minibuses, taxis and at bus stops.

        Initially, the operations to crack down on hoodlums were launched only in five police regions -- in the provinces of North Sumatra, Central Java, Yogyakarta, East Java and Jakarta.

        However, the areas of anti-hoodlum operations were later expanded to all police regions in the country as there was increasing demand from the public who claimed they felt constantly threatened by the presence of hoodlums.

        "All regional police headquarters are ordered to launch the operations. The operations will be expanded and launched by all regional police units, not only by those in the five provinces. We have sent telegrams to them to carry out the operations," Police Chief General Bambang Hendarso Danuri said last week.

        In order to support the operations againt hoodlums, the National Police Headquarters set up two teams for each regional police unit led by an officer with the rank of senior commissioner.

        "If need be, we will add reinforcement teams from the 'Gegana' (bomb squad) and Mobile Brigade units. This is to anticipate the hoodlums' strength," he said.

        Duaji said police would continue to carry out anti-gangster operations until the public felt secure.

        The Indonesia Police Watch (IPW) expressed support for the police moves to fight street gangsters in the country.

        "The IPW supports police efforts to eliminate unrest created by hoodlums. The operations should not be carried out in a certain period only but also on a routine basis," IPW chairman Neta S Pane said.

        Pane said at the beginning of Gen. Sutanto's term as National Police Chief, police also launched similar operations but it lasted only for two months. After the operations were stopped, street gangsters appeared again.

        While supporting the police moves, IPW also raised concern that the operations could revive the practice of killing of hoodlums in extra-judicial ways, dubbed in local term as `Petrus' in the 1980s.

        "The crack down orders on street gangsters could be misunderstood by officers in the field which could lead to the petrus practice," Pane said.

        Therefore, the police's criminal investigation department should provide a clear operational standard so that the order can be understood correctly by lower rank and file in the field.

        "Moreover, I have heard a statement of a police chief of a certain region who has issued a shoot-on-the spot order," Pane said.

        However, Pane said, she had not seen so far any deviations made by officers in the field, particularly with regard to the petrus practice.

        In the 1981-1983 period, the government adopted a short-cut policy by fielding teams to locate or pursue suspected hoodlums and shoot them to death on the spot in an effort to improve security in the streets. It was believed that hundreds of hoodlums died in this way with their dead bodies left uncared for at the scene of their execution.

        In response to the IPW concern, Susno Duaji said the operations launched by police now would not turn into a 'petrus' operation.

        "This operation is not carried out mysteriously. It is open. There is no need to launch it secretly," the police chief investigator said.

        He said that the public should not worry that police's operations would lead to the petrus practice.

        "We are arresting gangsters based on the law and in line with violations they have committed. If no evidence on their crimes is found, they will be released after 24 hours," Duaji said.(T.A014/A/HAJM/21:10/A/H-YH) 12-11-2008 21:13:57

LAST TWO MONTHS THIS YEAR 'INJURY TIME' FOR VIY 2008

By Andi Abdusslam

      Jakarta, Nov 11 (ANTARA) - With the end of 2008 less than two months away, and the total number of foreign tourist arrivals so far only recorded at 4.57 million, there is rising concern that the 'Visit Indonesia Year 2008' target of attracting seven million foreign visitors may not be achieved.

        Yet, Tourism and Culture Minister Jero Wacik says the remaining two months in this year is comparable to the injury time in soccer matches where hard work will be decisive in determining the end-result. So, he expressed optimism that the VIY 2008 target will be reached.

        Fearing a possible backlash of the execution of Bali bombing death-row convicts Amrozi et al and the impact of the global financial crisis, tourism industries at home are questioning the possibility of reaching the target of seven million tourist arrivals.

        "This month, the number of foreign tourist arrivals has fallen quite steeply because tourists are afraid that the execution of Amrozi et al will spark unrest," the chairman of the Association of Indonesian Tour and Travel Agencies (ASITA), Ben Sukma, said.

        Sukma predicted the number of foreign tourist arrivals in November would decline by 30 percent. "The decline in the number of foreign tourist arrivals could reach 30 percent this month," he said.

        The ASITA chairman's prediction was based on the fact that the decline in the number of foreign tourist arrivals was felt almost in all tourist destinations in Java, particularly in Yogyakarta, Solo and Bandung, as well as in Bali.

        He said that if up to November 15, the inflow of foreign tourists had remained low, it would indicate that the target of seven million tourists would not be achieved.

        "We will wait until November 15. If the small arrival number remains unchanged, the country will not achieve the target. The optimal figure that could be expected is 6.3 million or 5.8 million at the lowest," he said.

        Besides pessimistic voices about the VIY target, there were also optimistic views.

        About a possible backlash of the Bali bombers' execution, an observer said, just as had happened with previous executions, the event would sink into oblivion soon enough.

        In fact, he said, with the Bali bombers' execution, tourist destinations in the country, particularly the Indonesian tourist resort province of Bali, will again enjoy increasing visits by foreign tourists.

        The world, including the Australian people who lost 88 of their compatriots in the Bali bombings in 2002, will soon forget the execution so that Bali is expected to see an increased number of holiday makers during this year's X'mas and the 2009 New Year.

        "Thank God, the execution was done eight weeks before the peak of the year end holiday season. It seems that Bali will be very busy receiving an increased number of foreign tourists because in a few days from now the public will have forgotten the execution," Bali's tourism observer I Nyoman Darma Putra said.

        Putra, who is the author of "Tourism, Development and Terrorism in Bali" said in the next two days, Indonesia, particularly Bali, would be completely safe from terrorist attacks.

        "If nothing happens in the next few days, Australian tourists who were worried about security in Bali after the Australian government issued a travel warning, are expected to spend their holidays in Bali at the year end," he said.

        In the meantime, the chairman of the Indonesia Conference and Convention Association (INCCA), Iqbal Allan Abdullah, predicted that this year about 6 to 6.5 million foreign tourists would arrive in Indonesia.

        "This figure, if achieved, will be a good achievement because it means a relatively high increase, namely about 12.3 percent, compared with the figure a year earlier," he said.

        Tourism and Culture Minister Jero Wacik continues to be optimistic that the target of seven million foreign tourist arrivals this year will be achieved.

        The minister said his optimism was based on mathematical and rational calculations. Last year, when various accidents related to tourism occurred, it turned out that the number of foreign tourists visiting Indonesia had remained high, reaching 5.5 million and contributing US$5.3 million to the country's foreign exchange earnings.

        The minister said that if provisional statistical data was taken into account, the number of foreign tourist arrivals in Indonesia this year will reach a figure between 6.4 million and 6.6 million.

        The cumulative number of foreign visitors from January to September 2008 was recorded at 4.57 million. This represented an increase of 12.19 percent compared with that in a corresponding period in 2007.

        "If the average number of foreign visitors is 600,000 a month, there will be 1.8 million arrivals in the September-December 2008 period so that it is estimated that at the end of the VIY 2008, the number of foreign tourist arrivals will total 6.4 million," the minister said.

        This meant that the VIY 2008 target will be achieved. The government has set a VIY 2008 target within a range of three grades, namely 7 million (optimistic target), 6.5 million (moderate) and 6 million (pessimistic target).

        Yet, the target of seven million remains a priority.

        "The last two months of the Visit Indonesia Year 2008 program can be compared to the 'injury time' in soccer matches. So we should utilize this remaining time in the best possible way because it will be decisive in determining the end-result," the minister said. ***3*** (T.A014/A/HAJM/A/S012) 11-11-2008 18:59:33

SECURITY TIGHTENED IN BALI AFTER AMROZI'S EXECUTION

By Andi Abdussalam

      Jakarta, Nov 9 (ANTARA) - The local authorities tightened security in the Indonesian tourist resort island of Bali following the execution very early on Sunday of three death-row convicts Amrozi, Mukhlas alias Ali Ghufron and Imam Samudra, who bombed the island of god in 2002 killing at least 202 people.

        "Military and police personnel will continue to stay alert in order to maintain security in Bali," Udayana Regional Military Commander Maj. Gen. Hotmangaradja Panjaitan said on Sunday.

        He said as a destination of world tourists and scene of the bombing in 2002, Bali had to be safeguarded so that foreign visitors would feel secure and comfortable.

        Panjaitan expressed hope that the execution of the three Bali bombers would not create hatred among the bombers' supporters and relatives because the execution was carried out based on the legal process.

        Amrozi, Mukhlas and Imam Samudra, who had been in death row since 2003, were executed by a firing squad in Nusa Kambangan, Cilacap district, Central Java, at the wee hours on Sunday.

        In the meantime, Bali Regional Police Chief Insp. Gen. T Ashikin Husein said he had ordered his rank and file to tighten control over ships coming in and going out of the tourist resort island.

        "I have ordered police personnel to increase supervision and tightly control the flow of ships and cargo in the Bali waters," the regional police chief said.

        He said that the tight control had to be carried out in anticipation of undesired happenings after the execution of the three death-row convicts who played the key roles in the Bali bombing.

        "With the execution of the three convicts, Bali remains on alert. After all, Bali has suffered major bombings twice," the Bali regional police said.

        It is feared that parties unsatisfied with the execution would cause security disturbance as a criminologist warned that new problems could arise in the post-execution period.

        "The several times delay of the Bali bombers' execution has given a chance to public controversies to arise which could create a new problem," legal expert and criminologist Adrianus Meliala of the University of Indonesia said.

        He said the Attorney General's Office (AGO) should have learned a lesson from the case of Fabianus Tibo et al, which sparked controversies and caused new problems. The execution of Tibo was delayed so it gave a chance to the public to raise controversies.

        "The government, in this case the AGO, should have taken a lesson from the controversies arising before Tibo's execution because it took too long for the government to carry out the capital punishment," Meliala said referring to the convict in the Poso conflict.

        Likewise, it took about five years for the government to carry out the execution of Amrozi et al after the Denpasar district court sentenced them to death in 2003.

        But a Democrat Party executive said the government was right in its step with regard to the execution. "The government has made the right decision," Deputy Chairman of the Democrat Party faction in the House, Sutan Bathoegana, said.

        The execution has taken a long process because security officers were willing to uncover terrorist network in the country so that it could be nabbed in the bud.

        Bathoegana, who is also a member of the House of Representatives (DPR)'s Commission VII which deals with energy affairs, said that the government's step to delay the execution was proven to be effective in uncovering the terrorist network.

        "The shooting to death of the terrorist network leader Dr Azhari, is an example of the effective approach," he added.

        Besides, security officers also succeeded in uncovering the terrorist network in Palembang, South Sumatra, as well in Pelumpang near the state-owned oil company Pertamina's installations in North Jakarta, recently.

        "The uncovering of the network in Pelumpang is a big achievement because the terrorists were already close to a vital installation facility, namely the Pertamina installations," he said.

        Against a possible backlash, an observer however said the execution of Amrozi et al, like the previous executions, would soon also sink into oblivion. With the execution, Bali will again enjoy increasing foreign tourist arrivals.

        The world, including the Australian people who saw 88 of their compatriots killed in the bombing, will soon forget the execution so that Bali is expected to be busily visited by holiday makers during this year's X'mas and the 2009 New Year.

        "Thank God, the execution is done eight weeks before the peak of the holiday season at year-end. It seems that Bali will be busily receiving the increasing number of foreign tourists because in a few days to come the public will soon forget the execution," Bali's tourism observer I Nyoman Darma Putra said

        Putra, who is the author of "Tourism, Development and Terrorism in Bali" said in the next two days, Indonesia, particularly Bali, would be completely safe from terrorist attacks.

        This safe condition would have a positive impact on the country's tourism, he said.

        "If nothing happens in the next few days, Australian tourists who were worried about security in Bali after the Australian government issued a travel warning, are expected to spend their holidays in Bali at the year end," he said. (T.A014/A/HNG/A/s012) 09-11-2008 22:52:13

GOVT LOWERS PREMIUM GASOLINE PRICE

By Andi Abdussalam

      Jakarta, Nov 7 (ANTARA) - After various calls and public pressures, the government finally decided on Thursday to lower the price of subsidized premium gasoline from Rp6,000 to Rp5,500 per liter effective on December 1, 2008.

        But observers said the government's decision did not significantly benefit small people as it did not lower the price of diesel oil which is consumed by people of lower layers such as fishermen.

        The government's decision to cut the price of subsidized premium gasoline was announced by Acting Coordinating Minister for Economic Affairs Sri Mulyani, accompanied by Energy and Mineral Resources Minister Purnomo Yusgiantoro, at the Presidential Office on Thursday evening.

        "The government has decided to cut premium gasoline price by Rp500 per liter from the present Rp6,000 per liter to Rp5,500 per liter. This indicates the government's commitment to reducing the people's burden with various instruments and resources it owns," the minister said.

        The government made the decision in response to the people's aspirations developing in society and the downturn in world crude prices over the last several months which have reached US$65 a barrel.

        Besides, the decision is also to respond to the on-going global financial crisis that has weakened the country's economy so that the people's ensuing burden would be reduced and neutralized.

        The government hopes that the decision to lower the gasoline price would raised their purchasing power, boost business world activities and to withstand the cycle of economic meltdown as a result of the world crisis.

        "In the implementation of the policy, the government will carry out monthly evaluations on various indicators that affect domestic fuel oil prices such as world crude oil prices, exchange currency rates and fuel oil consumptions," Sri Mulyani, who is also finance minister, said.

        In spite of cutting down gasoline price by Rp500, the government will still allocate a fuel oil subsidy worth Rp57.6 trillion with the assumption of oil price at US$80 per barrel.

        "At present range of crude price in the world market at US$65 per barrel, the government has enough ability to manage the 2009 state budget," she said.

        Before making the decision, the government has taken into account various inputs from the public and evaluated the ability of the 2008 state budget and the 2009 one, according to Mulyani.

        "Monthly fluctuations of premium gasoline prices have reflected the average price of the fuel commodity but our budget, particularly the 2009 state budget is still able to fund it," Mulyani said.

        The government, of course, will continue to consult with the House of Representatives (DPR) on matters relating to fuel oil subsidy allocations, particularly its impact on the 2009 state budget.

        Therefore, the government's policy to lower the gasoline price will be based on monthly evaluation and on the budget available.

        "The reminder of this year's budget is only enough to lower the price of subsidized premium gasoline," Director General for Oil and Gas Affairs Evita Legowo said.

        Previously, Evita Legowo said that the realization of subsidized budget up to October this year had reached Rp130 trillion, exceeding the subsidy target set at the 2008 revised budget at Rp126 trillion.

        The fuel oil subsidy will increase by Rp3 trillion if subsidized fuel price is cut by about Rp500-Rp800 per liter this year.

        The government will make adjustments to premium gasoline price each month following its policy on Thursday to lower the price of the fuel oil from Rp6,000 per liter to Rp5,500 per liter effective as of December 1, 2008, a minister said.

        Minister for Energy and Mineral Resources Purnomo Yusgiantoro said that the price adjustment would be made each month in line with the developments of the world crude prices.

        "There will be adjustment and price announcement each month. Evaluation will be made based on the Indonesian Crude Price (ICP)," the minister said.

        He said that the reduction by Rp500 per liter was arrived at after taking into account the tax cut of subsidized premium gasoline.

        With the price reduction, he said, the government has to provide Rp750 billion subsidy in December 2008 with a sale projection of 1.5 million kiloliters.

        However, the price cut by Rp500 of subsidized premium from Rp6,000 per liter to Rp5,500 per liter is considered unable to provide positive impact for small people.

        Economic observer Aviliani said that the government policy which lowered only the price of subsidized gasoline would be enjoyed by people of the middle class who owned motor vehicles.

        "The effect on the poor who actually deserve the benefits of subsidized fuel oils is not so significant," she said.

        She said that the policy would neither able to improve the purchasing power of the people because industries would not going to lower goods prices.

        Likewise, public transportation fares would not experience a downturn either after fuel oil prices were raised in May 2008.

        "The reduction of subsidized premium gasoline price will not have impact at all on commodity prices and transportation costs," she said.

        The Organization of Land Transportation Owners (Organda) has said it was not able to reduce their transportation fares following the government's policy to cut the gasoline price.

        "What is lowered by the government is the price of premium gasoline while most of public transportation vehicles use automotive diesel oil," Organda Chairman Murphy Hutagalung said. ***3*** (T.A014/A/O001/A/O001)  07-11-2008 12:10:21

BI GIVING CAUTIOUS RESPONSE TO LOWER INFLATION RATE

By Andi Abdussalam

       Jakarta, Nov 5 (ANTARA) - Bank Indonesia (BI/the central bank) is giving cautious response to calls that it should lower its present 9.5 percent benchmark interest rate as inflation has dropped in October to 0.45 percent.

        "It seems that inflation will be lower in the coming months. The low inflation in October is encouraging but a close observation must be made. Of course, BI will respond to it," BI Senior Deputy Governor Miranda S Goeltom said.

        She said that BI would pay close attention to the downturn of the inflation which dropped to 0.45 percent in October from 0.97 percent in the previous month.

        "If low inflation continues we can conclude that pressures have declined. It should be kept in mind, however, that one-month inflation rate cannot represent its rate for the whole months of the year," the BI senior deputy governor said.

        Following the inflation decline in October, business players called on the central bank to lower its reference rate in order to provide businesses with access to capital and to move the wheel of the real sector.

        Research analyst of PT Sinarmas Sekuritas, Alfiansyah, said Bank Indonesia should take the October inflation rate into consideration to lower its key rate so that the distribution of bank credits could be normalized and the real sector could be activated.

        The Central Bureau of Statistics (BPS) announced on Monday the October inflation rate had dropped to 0.45 percent from 0.97 percent in the preceding month.

        The rate of inflation from January to October meanwhile was recorded at 10.96 percent and year-on-year inflation at 11.77 percent.

        Deputy Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for taxation and fiscal system Haryadi Sukamdani said now was the time for Bank Indonesia to lower its benchmark interest rate from 9.5 percent to 6-8 percent.

        "We are calling on BI to cut its interest reference rate. It should be lowered again to the 6-8 level. I don't know how BI will do it but an interest rate of over 9 percent is not good," Sukamdani said.

        He said that banks now should take relaxation steps owing to the fact that BI had successfully overcome the liquidity problem by issuing a short-term funding facility (FPJP) regulation.

        "Banks should take a relaxation step because a high interest rate would endanger the real sector if they continue to maintain a high rate," he said.

        Last week, young Indonesian businessmen also called the central bank to cut its benchmark interest rate by at least 50 basis points in the next two months.

        The cut in the key rate, locally known as BI Rate, would stimulate banks to lower their lending rates by 2-3 percent, Chairman of the Young Indonesian Businessmen Association (HIPMI) Erwin Aksa said over the weekend.

        "Hopefully, the cut in the key rate will give the business world access to capital and banks will no longer be afraid of non-performing loans," he said.

        He said BI Rate which currently stood at 9.50 percent was too high, depriving the business world of access to low interest credits to finance their businesses.

        In the meantime, Chief economist of Standard Chartered Bank (SCB), Fauzi Ichsan, predicted that Bank Indonesia will not cut its benchmark rate in the near future although the inflation rate last October had dropped to below the September 2008 figure.

        "The central bank usually lowers its reference rate three months after bank interest rates have increased. BI raised its benchmark only last month. So, for the time being it will be difficult for the bank to lower the benchmark rate now. Moreover, the rupiah's exchange rate is still unstable," Fauzi Ichsan said.

        Fauzi Ichsan said that other countries like the United States and European countries had begun lowering their interest rates because they were experiencing a condition of economic recession. Indonesia could not do that because it was experiencing a recession.

        "Indonesia is not experiencing a recession. Its inflation rate is still a double-digit figure while the rupiah's exchange rate is still unstable. If the rupiah continues to plunge it will fuel inflation due to imported inflation," the SCB economist said.

        He said that though the inflation rate has dropped in October, it had not yet reached the expected level.

        "We predict that BI will maintain its rate now or even raise it by 25 basis points. It is unlikely for it to lower its reference interest rate now," he added.

        Yet, BI would take into account inflationary pressures to respond to calls for lowering of its benchmark rate.

        "We need more data on the inflation developments," Miranda S Goeltom said.

        The central bank senior deputy governor, however, expressed optimism that inflation in the country would be more controllable in the coming months because global inflation was now experiencing a downward trend.

        "It seems global inflation is showing a downturn trend which means that global pressures are also decreasing. We hope that inflation will also be declining in the future," she said.  (T.A014/A/O001/A/O001) 05-11-2008 09:55:08

GOVT FAILS TO SAFEGUARD INDOVER BANK

By Andi Abdussalam

Jakarta, Nov 2 (ANTARA) - The Indonesische Overseeze Bank (Invover Bank), a Netherlands-based subsidiary of Bank Indonesia (BI/central bank) is facing liquidation after the Indonesian government failed to meet the October 31 deadline set by the Dutch central bank for a fresh fund injection.

         The Indonesian central bank's senior deputy governor, Miranda S Goeltom, said in a press conference over the weekend that BI could not inject fresh funds into the BI subsidiary because no official approval was received from the House of Representatives (DPR) until the end of the deadline.

         Indover Bank had been frozen by a court of law in the Netherlands on October 7, 2008, after the bank failed to meet its  obligations worth US$92 million.

         Goeltom said that the House Commission XI in charge of financial affairs had only stated that it had no objection to BI bailing out the bank but no decision on the matter was made in a House plenary meeting.

         The Indonesian government had previously sought a 546 million euro  bailout   for the ailing Indover Bank. After  a two-hour closed-door meeting with BI Governor Boediono and Finance Minister Sri Mulyani early this week, the House of Representatives agreed to a 546 million euro bailout or about RP7 trillion to rescue Indover Bank.

         However, BI could not provide a fund infusion without a written approval from the DPR.

         "Bank Indonesia could not put additional capital into Indover Bank because it had received no approval from the DPR until October 30," Goeltom said.

         Legislator Dradjad H. Wibowo of the House's commission XI said previously a fresh capital injection required written approval from the House.

         For  the failure to secure a written approval from the DPR, Bank Indonesia decided not to inject funds into Indover Bank to bail it out from bankruptcy.

         Besides facing liquidation, the ailing bank is also facing auditing for alleged misappropriation. Calls for investigation into possible irregularities with the banks have also been raised since recently.

         On Sunday, economic observer Ichsanuddin Noorsy said that the Corruption Eradication Commission (KPK) had to investigate the bank although BI had decided to stop its efforts to bail it out.

         "If an attempt is made by the KPK to investigate it for a fraud suspicion reason it would prove that the current United Indonesia Cabinet ministers are cleaner than those of the previous governments," Ichsanuddin Noorsy, said.

         A legislator of the Democrat Party, Vera Febyanti, suspected that irregularities had caused a problem to the bank, calling for an investigation of Indover for an alleged financial scam that had brought it to the bankruptcy.

         "Indover must be investigated because many irregularities and instances of embezzlement with legal implications have happened in its operations. Criminal acts have been committed," Very Febyanti said on the sidelines of a working meeting of the House of Representatives (DPR), BI and the government.

         In response to the calls for investigation into the case, Goeltom said BI was ready to be audited in connection with the case. "We are ready to be audited, be it an ordinary audit or an investigation by independent auditors, including BPK," she said.

         Bank Indonesia Governor Boediono agreed that an investigation on Indover Bank should be conducted to uncover financial irregularities in the bank.

         "We do agree with the investigation. A probe needs to be conducted," Boediono said after the closed-door meeting with Commission XI of the House of Representatives (DPR) at Parliament Building.

         "The details of the investigation can be determined later on," he added.

          Meanwhile, about the funds of some Indonesian banks that had been put in Indover Bank, Miranda Goeltom said that it would be settled. It is predicted the amount of the funds reached millions of US dollars.

         A curator appointed by Bank Indonesia is currently handling the settlement of Indover bank problems and in carrying out its task fully adhering to the rules the Netherlands.

         "For the settlement of the bank, BI is now cooperating with a curator appointed by the Dutch central bank," Goeltom said.

         Miranda Goeltom said that BI would take responsibility for the losses suffered by banks exposed to Indover.

         Local banks such as Bank Mandiri, Bank Rakyat Indonsia and Bank Lippo have recently announced their Indover landing exposure worth to be in excess of US$50 million, according to a report by the Jakarta Post.

         Bank Negara Indonesia (BNI) president director Gotot M. Suwondo and Bank Rakyat president director Sofyan Basyir said they regretted Indover's liquidation but could do nothing about it.

         "We regret the decision. But we have to accept it," Sofyan said.

         Gatot said BNI would add to its reserves as it braces for the impact of the Indover fallout, adding BNI's expose to Indover was relatively small.

         BI deputy governor Mulyaman D Hadad meanwhile said he would set up a team to study the impact of Indover's bankruptcy both on financial affairs and on banks.

 (T.A014/A/HNG/A/S012)  02-11-2008 23:08:55