LARGER BUDGET NEEDED TO STOP ACCIDENTS WITH AGING MILY PLANES

By Andi Abdussalam

      Jakarta, May 22 (ANTARA) - The crash of a Hercules C-130 of the Indonesian Air Force (TNI AU) in Magetan district, East Java, which killed about 100 military personnel and civilian passengers on Wednesday has prompted many quarters to urge the government to provide a special budget for the maintenance and rejuvenation of the Indonesian Defense Forces (TNI)'s main armament system (Alutsista).

        "This is another accident of a series of airplane mishaps experienced by the TNI-AU. The government should now make a special budget for the purchase of TNI-AU equipment so that such an accident will not recur," Priyo Budi Santoso, chairman of the Golkar Party faction in the House of Representatives (DPR), said.

        Purchased during the era of armed forces commander general M Jusuf in the 1980s, much of the military equipment owned by the TNI is now aging and in need of rejuvenation or replacement. In the past five months, at least six military plane accidents have happened.

        The frequent accidents, according to Hidayat Nur Wahid, chairman of the People's Consultative Assembly (MPR), is a reminder to state institutions about the need to make follow-up efforts.

        According to Vice President Jusuf Kalla, the crash of a Hercules C-130 in East Java could have been caused by lack of maintenance as a result of shortage of funds to finance the maintenance of the TNI's Alutsista equipment.

        "This is the result of the inadequate budget portion for our Alutsista equipment," Kalla said. He said that most of the TNI's military armament was aging as it was bought during the era of the Late General M Jusuf.

        He said that in the future the budget needs of the TNI should be met. "The budget needs of the TNI to procure or maintain its Alutsista will be met immediately. I guarantee that," the vice president, who is also taking part as a presidential aspirant of the Golkar Party in the upcoming July 8, 2009 presidential race, said.

        Therefore, Prio Budi Santoso promised to do his best to draw up a special budget for the reugenration of the TNI's armament.

        Pressure on the government that it should set aside special budget to build the country's military equipment also came from the Indonesian Islamic Students Association (HMI). It said that the government should not ignore the need for a sufficient defense budget because otherwise the safety of TNI personnel would be put at risk and the strategic efforts to safeguard the integrity of the country would be constricted.

        "It is not appropriate for the government to provide a budget in the form of recap bonds for banks from the state budget while failing to provide a strategic defense budget for the TNI," Arif Mustofa, chairman of the executive board of HMI, said.

        In the meantime, Yusron Ihza Mahendra, deputy chairman of House Commission I for defense affairs, said the funds made available for the defense budget and the maintenance of the country's main armament system were too small so that the TNI had been facing a lot of crucial problems such as a series of airplane accidents.

        "The causes of Hercules crash in East Java have yet to be revealed but this should not necessarily lead the government to ignore the fact that the defense budget is too small," Yusron Ihza Mahendra said.

        He said as a deputy chairman of Commission I, he often chaired House hearings on the military budget and knew well the details and amounts of the allocated funds for the defense system.

        "For 2009, the ministry of defense proposed a minimum defense budget amounting to Rp127 trillion, but the government approved only Rp33.6 trillion, or about 16 percent," Mahendra said. Of the approved budget, some Rp27 trillion were allocated for defense personnel's salaries and office costs so that the remaining one which was used to rejuvenate and finance the maintenance of the country's Alutsista, became too small.

        The Commission I deputy chairman said that with the frequent airplane accidents the government should have learned a lesson and should not kick a fuss only when an accident had taken place.

        Mahendra even suggested that Indonesia produced its own equipment rather than importing it. "It is true we are not yet able to produce a Hercules plane. But we actually are able to produce other kinds of Alutsista equipment to support the need of the Air Force, Navy and Army such as armored vehicles, helicopters and other equipment.

        According to a report in April last year, about 70 percent of the country's military armaments were aging and the TNI was putting to rest a number of its obsolete main armaments, including planes, ships and helicopters aged more than 30 years.

        It was predicted that in the coming ten years the maintenance of TNI's armaments would cost Rp93.87 trillion (US$10.203 billion), of which Rp41.9 trillion (UA$4.5 billion) for the air force's armaments.

        In the 2005-2024 period, the Air Force was planning to replace its combat and logistics (transport) planes which have been used for about 20 to 30 years, such as the OV-10 Broncos (already grounded), Hawk MK-53, F-5 Tigers and F-16 Fighting Falcons.

        Within the period, the air force is also planning to add four batteries of airborne attack deterrence, three mission and reconnaissance planes and the procurement of arms such as missiles, and warplane ammunition and armaments.***1*** (T.A014/A/HAJM/15:55/O001) (T.A014/A/A014/A/O001) 22-05-2009 15:51:52

PRESIDENTIAL CANDIDATES AVOID NEO-LIB LABEL IN FACE OF POLLS

By Andi Abdussalam

         Jakarta, May 21 (ANTARA) - These days the liberalism-based market mechanism has all of a sudden become the most 'dreadful' economic label for some quarters in Indonesia in the run-up to the upcoming July 8, 2009 presidential race.

        Presidential aspirants are trying to convince the public that they are advocates of pro-people economy. This is because economic demagogues and anti-neo-lib demonstrators have 'opened' fire at a vice presidential hopeful whom they believed to be an accessory to neo-liberal economy.

        The naming of Boediono, a true professional and a technocrat, as a vice presidential candidate by Democratic Party presidential hopeful Susilo Bambang Yudhoyono (SBY) was met with resistance and rallies. "Boediono, No! Budi Anduk Yes," one of the banners read, referring to comedian Budi Anduk.

        Apparently, Boediono, who was the central bank governor and finished his doctorate degree in Wharton School University of Pennsylvania, the United States, was seen as a pro-liberalism economist.

        Opposition to liberal economic concept prompted presidential candidates to explain their pro-people economic programs. In the coming presidential polls, there are three presidential tickets.

        Besides SBY-Boediono pair, Golkar Party Chairman Jusuf Kalla pairs up with Wiranto (JK-WIN). Wiranto is the general chairman of the People's Conscience Party (Hanura). The other pair is Mega-Pro which sees the combination of Megawati Soekarnoputri, leader of the Indonesian Democratic Party of Struggle (PDIP) and Prabowo Subianto, chairman of the Greater Indonesia Movement Party (Gerindra).

        The SBY-Boediono pair denied it had adopted neo-liberalism concept. "We do not adopt neo-liberalism. Many people talk about neo-liberalism but they do not understand what it is," he said when he spoke to a dialog organized by the Indonesian Chamber of Commerce and Industry (Kadin).

        His running mate Boediono also rejected the neo-lib label. "I want to argue and protest allegations that I am a pro-western economist. I am an Indonesian economist. I pursue studies in any region in Indonesia. So there is no need to label me as a pro-Western economist. Indonesia is my motherland," Boediono said.

        According to Yudhoyono, who is also incumbent president, in the past five years of his government, his administration had carried out many market interventions without merely leaving the problem to multinational companies.

        He said he was not a man who only wanted to achieve economic growth as high as possible while ignoring equitable distribution to the people. He admitted he did not believe the economic theory of trickle down effect where economic growth would start from the upper class and then trickle down to the people of lower economic class.

        "That does not work in developing countries. In the future there should be no longer a growth in part but in other part there people are only waiting for assistance," he said.

        Likewise, Boediono rejected allegations that he was a pro-liberalism economist. He said he was very sad to hear the allegations because throughout his long career he had been serving the nation.

        "So, I will say that national economic resilience is a strong economic form which will continue to be given attention to. In the current globalized world we have to develop pillars which support national economic resilience," he said.

        Yet, according to DR Marzuki DEA of the Makassar-based Unversity of Hasanuddin, it could be observed that Yudhoyono in the past five years of his government relied much on foreign assistance and tended to produce policies that supported middle and upper scale businesses.

        Economic analyst Revrisond Bawir of the University of Airlangga said Yudhoyono relied much on external debts. Indonesia external debts which fell due in 2009 amounted to US$6,485 million. It increased three-folds compared with those maturing in 2008.

        In this case, Yudhoyono and Kalla have a lot of different views over the economic policies. That's why, both of them could not be united not only because of political reasons but also of different views over economic policies, Marzuki said.

        He said Yudhoyono saw Boediono as a person who was able to translate his economic vision and mission. "Boediono is more able to translate Yudhoyono's economic ideas which tend to carry out liberal economy on the assumption that with liberal economy poverty and unemployment could be overcome," Marzuki DEA said.

        Kalla, who is currently vice president, is opposed to dependence too much on foreign capital and advocated the development of a self-reliant national economy. "We can be self-reliant because we are able and rich in natural resources. So far, we have not yet used our own capabilities to exploit our own natural resources," Kalla said.

        He said so far Indonesia had depended too much on foreigners. The development of airports in the country in the past 60 years, for example, were still carried out by contractors from Japan and France. Besides, the competitive edges of local products also needed to be improved so that they would be able to compete with imported ones.

        Basically, according to economic analyst Fadhil Hasan of the Institute for Development of Economics and Finance (Indef), Kalla's economic mission is to promote the nation's competitive, fair and reliant economy. This concept will further be translated into the reinforcement of micro-small and medium business programs and of food resilience and land reform.

        "The idea is that it would be different from the present condition where the distribution of equitable economic gains is not created and the income gap is still widening," Fadhil Hasan said.

        In the meantime, he said, Megawati who paired with Prabowo Subianto would promote extremely pro-people economy and would take radical steps in improving the welfare of fisherman, farmers and low income people.***1*** (T.A014/A/H-NG/A/S012)

        (T.A014/A/A014/A/S012) 21-05-2009 21:41:06

GOVT TO FINISH CALCULATION OF NEWMONE DIVESTMENT

 By Andi Abdussalam

Jakarta, May 19 (ANTARA) - The government is resolved to finish calculating the value of PT Newmont Nusa Tenggra (NNT) assets this week so that an agreement can be reached with the giant mining firm on the price at which it is to acquire MNT shares this month.

        "The government team will calculate the value of the company's mineral reserves, assets and financial conditions. We will use the result of our calculation as a reference in negotiations with NNT," Director General for Mineral Resources, Coal and Geothermal Bambang Setiawan said here on Tuesday.

        NNT, which operates the Batu Hijau mine, Indonesia's second-largest copper mine located in Nusa Tenggara, is now under a divestment process of 31 percent of its shares where 3 percent must be offered to the government for 2006, and 7 percent for each year from 2007 though 2010.

        The government and NNT have reached an agreement for the divestment of 3 percent worth US$109 million of the company's share for 2006 with assets valued at US$3.63 billion, and 7 percent worth US$282 million for 2007 with assets accounting for US$4.03 billion.

        However both sides are still negotiating the divestment of 7 percent of NTT stake for 2008 and 2009 respectively. In order to determine the 7 percent divestment prices for 2008 and 2009, the government and the company have to agree the values of its assets.

        NNT has offered the government a seven percent divestment price of US$426 million for 2008 with assets worth US$6.09 billion, and a seven percent divestment price of US$348 million for 2009 with assets worth US$4.97 billion.

        The government team has met with NNT twice to discuss the divestment price of the mining firm. In the first meeting on April 24, 2009, NNT foreign stakeholders claimed the company had assets worth a total of US$4.97 billion in 2009.

        With assets worth US$4.97 billion, the price of seven percent of the stake in the divestment of the firm in 2009 would reach US$348 million. This figure still constituted a proposal by NNT.

        In the second meeting of the team on May 8, 2009, the government discussed the NNT's price proposal.

        However, mining observers said NNT's claim of its assets was overvalued. "The value of NNT assets is not that high," Pri Agung Rakhmanto who is executive director of ReforMiner Institute, said recently.

        He said that based on the annual report of NNT in 2008, the value of total assets of Newmont Mining Corporation (NMC) --the holding company of NNT-- was only US$15.839 billion. The value of NMC's assets in Indonesia, including that of NNT and PT Newmont Minahasa Raya (NMR), is about 17 percent (of the US$15.839 billion).

        "With that reference, the combined value of NNT and NMR's assets is only about US$2.693 billion," Rakhmanto said. International Arbitration

        Last year, NNT and the government went through an international arbitration procedure following a dispute on how to implement the divestment scheme.

        According to a 1986 contract, Newmont must gradually sell a total of 31 percent of its stake in NNT to the government or local parties it appoints by 2010. Of these stakes, 3 percent must be offered to the government in 2006, and 7 percent each year in 2007 through 2010.

        The government accused the company of breach of contract for failing to meet the March 3 deadline to divest a 10 percent stake, a charge denied by the company at the time.

        By the end of 2007, according to the contract, the foreign shareholders were supposed to have sold 10 percent of their stake in NTT, which they failed to do.

        The court ruled in favor of the Indonesian government. Under the decision of the international arbitration court, Newmont is required to sell 17 percent of its stake which was supposed to be carried out in the 2006-2008 period.

        In addition, Newmont will also sell 14 percent of its stake allocated for 2009 and 2010, bringing the total of shares Newmont has to sell to 31 percent.

        In order to implement the divestment, the government has set up a team in charge of calculating NNT's share values.

        The mandatory 17 percent consisted of shares for 2006, 2007 and 2008. The government and NNT have agreed divestment price of three percent stake in 2006 valued at US$109 million with assets worth US$3.63 billion and seven percent stake in 2007 worth US$282 million with assets accounting for US$4.03 billion.

        The government and NNT are still negotiating the divestment price of seven percent stake for 2008 and 2009.

        NNT has offered a price of the seven percent stake for 2008 at US$426 million with assets accounting for US$6.09 billion and seven percent at US$348 million for 2009 with assets worth US$4.97 billion.

        The government recently indicated it wanted that NNT should put one value on its assets for 2008 and 2009 to show up real value of its shares.

        Bambang Setiawan, said that based on a single value for Newmont assets, the government could move forward to assess a real price of the NNT shares.

        "Newmont gives us different values for NNT's assets in 2008 and in 2009. We want them to come up with a single value, meaning one value for 2008 and 2009 assets," Bambang Setiawan said.***2*** (T.A014/A/HAJM/19:45/a014 ) (T.A014/A/A014/A/A014) 19-05-2009 20:39:11

RI'S POLICIES UNLIKELY TO CHANGE NO MATTER WHO GOVERNS

By Andi Abdussalam

Jakarta, May 18 (ANTARA) - After they registered at the General Elections Commission (KPU) on Saturday (May 16, 2009), there are now three official pairs of presidential and vice presidential candidates who are ready to compete in the upcoming presidential race on July 8, 2009.

        The first pair to register was JK-WIN, or incumbent vice president Jusuf Kalla with his running mate Wiranto, who is chairman of the People's Conscience Party (Hanura).

        Coming to the KPU to register after the JK-WIN was Mega-Pro pair, which is a combination of Megawati Soekarnoputri, chairperson of the Indonesian Democratic Party of Struggle (PDIP) and Prabowo Subianto, chairman of the Greater Indonesia Movement Party (Gerindra).

        The last to register on the same day was SBY-Berboedi, which saw incumbent president Susilo Bambang Yudhoyono to pair up with Boediono, who is the central bank governor.

        Observers viewed the SBY-Berboedi pair will pursue liberal economic policies. Boediono was believed by the public as a noted neo-lib economist, thus facing strong resistance, though Boediono denied this.

        On the other hand, the Mega-Pro pair is seen by the public as a pair who would pursue pro-people economic policies, orienting its economic development to micro-economic businesses for improving the welfare of farmers and fisherman.

        In the middle of the two is the JK-WIN pair who will pursue pro-people economic policies but would not be too protective to liberal economy.

        However, economic observer FX Sugianto of the Diponegoro University in Semarang said recently that Indonesia's economic policies would unlikely change significantly in the next government, no matter who would govern.

        "In the upcoming presidential race, candidates like Yudhoyono, Kalla and Subianto are keys to economic policy making. Kalla is likely to continue his more-or-less liberal economic policy while Yudhoyono and Subianto actually shared the view of developing pro-people economy," he said.

        In the meantime, economic analyst Aviliani said that incumbent president Yudhoyono has so far not yet reflected his economic policy in the country's micro economic development.

        "This is because the government has to carry out laws that were drafted in line with the policies of the International Monetary Funds (IMF)," Aviliani said in a talk-show with TVone on Monday.

        According to FX Sugianto, If Yudhoyono is re-elected, the economic policies he will take will not change. Most likely he will focus on the development of micro-small and medium scale businesses and on the agriculture.

        In the meantime, even though he is only a vice president if elected, Prabowo Subianto will play important roles in making and in implementing economic policies. "If he is elected to the vice presidency, he will act as the key player in directing the economic policies which would be implemented, particularly the economic programs he had offered during the elections campaigns," Sugianto said.

        During the legislative election campaigns, Prabowo Subianto offered pro-people economic concepts.

        Sugianto said that basically the economic concepts of Yudhoyono and Prabowo Subianto did not differ too much. "They both supported the people's economy and have greater intention to the agricultural sector," he said.

        He said it seemed that Subianto and Yudhoyono would optimize the domestic market so that the two would not have too much difference with regard to the economic development at home.

        However, when it comes to matters on foreign economic polices the two would show different policies. Subianto tended to adopt extreme steps in avoiding foreign influence. "Subianto will face a strong 'stream' because so far Indonesia adopted economic policies which are not too different from the liberal international economic policies," he said.

        In the meantime, the direction of the economy under Kalla who is current vice president, could now be seen, and if elected president in the coming presidential polls the economic policies he would take would unlikely change either. "Kalla tended to adopt economic policies which are liberal in nature," Sugianto said.

        He said that Kalla's character as a businessman would influence the economic policies he was adopting. "Kalla's economic policies tend to take side with big businesses and his influence in taking the economic policies would be greater than his running mate Wiranto," he added.

        But according to Aviliani, with Boediono as his running mate, Yudhoyono tended to develop macro and liberal economic policies. This is partly because a number of laws on economy were drafted in line with the directions of IMF. In the meantime, Kalla would pursue an economic policy line between that of Yudhoyono (liberal) and of Subianto (focused on people economy).

        Boediono who was picked by Yudhoyono as his running mate was opposed by certain quarters as he was seen as neo-lib economist. According to San Afri Awang, chief of the People's Economic Study Center of the Gajah Mada University, SBY needed Boediono's thoughts to contribute to the government economy.

        "Yudhoyono considers Boediono as a person who is able to provide thoughts in the development of Indonesia economy that would bring Indonesia to regaining its reliant and sovereign economy," Awang said.

        Therefore, the groups of people who disliked Boediono should press him to develop economy which was pro to the people, he added. ***1*** (T.A014/A/HAJM/A/E002) (T.A014/A/A014/A/E002) 18-05-2009 22:07:39

SOME OBSERVERS GIVE THUMBS DOWN TO BOEDIONO

By Andi Abdussalam

Jakarta, May 14 (ANTARA) - Democratic Party (PD) chief patron Susilo Bambang Yudhoyono (SBY) has reportedly decided to pick Bank Indonesia (BI) Governor Boediono as his running mate in the upcoming July 8 2009 presidential polls.

        The PD presidential hopeful's decision to run with Boediono, a true professional and technocrat, has sparked resistance from cadres of political parties in the PD-led coalition.

        Cadres of the pro-SBY political parties said Yudhoyono's running mate should come from political parties or one who had political support. Observers share this opinion.

        "Boediono is not the best candidate for SBY to run with. He should have picked up a figure from political party circles so that his government would have strong support from parliament," Alfitri, political observer of the Palembang-based University of Sriwijaya, said on Wednesday.

        He said that with their present culture the Indonesian people could not yet accept a president or vice president who came from non-political party circles.

        After all, in the political aspect, the naming of Boediono was not right because SBY did not take into account the consideration of the outside-Java representation.

        "SBY and Boediono are from Java. In the political point of view, this is not good because it would not win the sympathy from people outside Java," political analyst of the University of Benkulu Ardilafiza said.

        On the chance of Yudhoyono to win the presidential polls if he goes ahead with Boediono, Ardilafiza said that if the PD-led coalition remains solid with the existing political party supporters, he had a big chance to win it.

        The political parties which had joined the PD-led coalition are the Prosperous Justice Party (PKS), the United Development Party (PPP), the National Mandate Party (PAN) and the National Awakening Party (PKB). These parties resisted on Tuesday Yudhoyono's choice of Boediono, except PKB.

        In the eyes of businessmen, Boediono is also not the best choice.

        Boediono is not the right man to serve as vice president although he is an expert on economic affairs.

        "From the macro point of view, Jusuf Kalla is better. (Boediono) may lack the courage to face the coalition of parties and legislators in the House because he has no political party support," Sofjan Wanandi, chairman of the Indonesian Entrepreneurs Association (APINDO), said.

        He said that Boediono shared a similar character with Susilo Bambang Yudhoyono. He tends to always adopt a wait-and-see attitude. "It is difficult for businessmen to meet him. He also tends to keep things himself," Wanandi said.

        He said the appointment of Jusuf Kalla as vice president in 2004 was different from the selection of Boediono. Kalla signed a contract with Yudhoyono first on what he was going to do as vice president so that he became an active vice president.

        He said that as a technocrat Boediono was the best because he had good experience and was an expert in monetary affairs but as a vice president his capabilities were rather questionable whether he would be active or not, or he would serve as a 'spare tire' such as the vice presidents during the era of president Soeharto.

        According to Secretary General of the Inland Waterway Transport Services Association (Gapsasdap) Luthfi Syarief, Boediono, in his capacity as bank regulator was less firm. However if Boediono accompanies Yudhoyono as his vice president, the results of his work would be seen only after the government issued economic policies favorable to market players, and all these would depend on the national political situation.

        "If the political situation is unstable, market players will pursue a prudent attitude. Economic policies could not be separated from political matters," he said.

        Therefore, it was too early to judge whether the SBY-Boediono ticket was pro-market or not before they had become a real pair.

        What is obvious is that whoever the president or vice president, parliamentary support would have a high influence. "So, everything must be conducive first before the market reacts," he added.

        A different opinion was expressed by economic observer Emilia Hamzah of the University of Jambi. She said that Susilo Bambang Yudhoyono and Boediono if they paired up as presidential ticket will be able to reduce wasteful budget spending and restore Indonesia's economy.

        "Boediono is a seasoned financial negotiator who is well-known in the economic world and believed to be able to reduce wasteful budget spending and to restore the country's economy," she said.

        She said that Indonesia was now facing economic and poverty problems so that the naming of Boediono as a vice presidential candidate was expected to reinforce the president's economic team.

        Boediono who is known to have produced a lot of people's economic concepts, if he wins the presidential polls, will of course take sides with the people.

        The Bank Indonesia (BI) governor is also experienced as he was once finance minister, head of the National Development Planning Board and now governor of the central bank, she said.

        She said that Boediono adopted a very efficient attitude so that his leadership was believed to be able to offset inefficiency and reduce wasteful budget spending.

        Therefore, according to political observer Arbi Sanit of the University of Indonesia, Boediono is the correct figure to pair up with Yudhoyono.

        "I think, Yudhoyono has made a smart choice because his government would become more able to face the impact of global economic crisis," Arbi Sanit said. ***1*** (T.A014/A/H-NG/A014 ) (T.A014/A/A014/A/A014) 14-05-2009 00:53:37

PRO-YUDHOYONO PARTIES QUESTION HIS PLAN TO PICK BOEDIONO

BY Andi Abdussalam

Jakarta, May 12 (ANTARA) - Amid his efforts to approach the Indonesian Democratic Party of Struggle (PDIP) and reports that he is going to pick Boediono as his running mate in the upcoming presidential race, Democratic Party (PD) chief patron Susilo Bambang Yudhoyono (SBY) is facing a threat of reduced support from party cadres in his coalition.

        Cadres of political parties which built a coalition with the PD are questioning Yudhoyono's reported plan to pick Boediono, governor of Bank Indonesia (BI/the central bank) as his running mate, a move seen by many quarters as an attempt to approach PDIP.

        "The emergence of Boediono is feared to dampen the spirit of political party cadres (in SBY's Democratic Party coalition)," secretary general of the National Mandate Party (PAN) Zulkifli Hasan, said.

        So far, PAN has been one of the political parties that have aligned themselves with Yudhoyono's Democratic Party. The other parties are the Prosperous Justice Party (PKS), the National Awakening Party (PKB) and the United Development Party (PPP).

        On Tuesday, a number of lawmakers in the House of Representatives who are also cadres of political parties supporting Yudhoyono's coalition held a meeting at the parliament building to discuss Yudhoyono's reported plan to run with Boediono.

        The meeting was attended by chairman of PKS faction in the DPR Mahfudz Siddiq, PKS Secretary General Anis Matta, PPP faction chairman Lukman Hakim Saefuddin, PAN faction chairman who is also PAN secretary general M Najib and deputy secretary general of PKB Imam Nachrowi.

        "We are surprised by the information (that Yudhoyono is to pick Boediono as his running mate) because we were not consulted in the first place," Mahfudz Siddiq said. He said he heared the information on Monday.

        He said that he was also surprised to learn about the discourse about a coalition between the PD and PDIP. Political parties which have previously built a coalition with the PD also did not have any complete information from the Democratic Party's plan to coalesce with PDIP.

        "We learnt about the discourse from media reports and on the road. What kind of coalition is this? After all, Boediono was reportedly endorsed by PDIP," Mahfudz said.

        According to Mahfudz, the present conditions hampered the direction of the coalition which had just been built where Yudhoyono since the beginning had talked about the desired format and clear rules based on political contracts and common platform.

        In the meantime, Anis Matta said his side had received an invitation from SBY for the declaration of the presidential ticket on May 15 though the would-be vice residential candidate issue was not yet clear.

        Therefore, PKS and other political parties supporting Yudhoyono needed to take an attitude if Yudhoyono proceeded with his plan on Boediono's vice presidential candidacy without consulting political parties in the coalition.

        Associate chairman of PKS Mahfudz Siddiq said SBY's signal to pick Boediono indicated the weakness of communications and coalition now being built together with the Democratic Party (PD).

        "This is an indication that the coalescing process is not smooth and proceeding in one direction only. PKS was not asked to discuss the matter," Mahfudz Siddiq.

        He said that PKS would soon adopt an attitude together with other parties which had joined the PD coalition, namely PAN, PKB and PPP.

        According to secretary general of the National Mandate Party (PAN) Zulkifli Hasan, the emergence of Boediono is feared to dampen the spirit of political party cadres in SBY's Democratic Party coalition.

        Zulkifli said PAN cadre Hatta Rajasa, who is also minister/state secretary had told him that Yudhoyono had decided to pick Boediono as his running mate.

        Recently, PAN at its recent national working meeting in Yogyakarta recommended that Rajasa be proposed as a vice presidential candidate to pair with Yudhoyono. Thus, he was surprised when he heard that Boediono would be chosen as Yudhoyono's running mate.

        He said that the change in the map of would-be vice presidential candidate for Yudhoyono from Hatta Rajasa to Boediono had reduced PAN cadre's enthusiasm to fight for SBY's victory in the coming presidential elections.

        Zulkifli said PAN would hold a meeting soon to formulate its attitude towards Yudhoyono's plan (to pick Boediono). "We will meet again to determine PAN's stance after the signal that Rajasa is not to become SBY's vice presidential candidate," he added.

        The same thing was also expressed by Mahfudz Siddiq. He said his party had not decided whether to continue or to pull out of the coalition with the Democratic Party.

        Mahfudz said that if PDIP joined the coalition and SBY really embraced Boediono, PKS would surely question it. "Yudhoyono has always said that the coalition he was to build was a coalition with political parties which had the same political platform," he added.

        "So, we will question whether this coalition is based on political platform or on safeguarding interest only," he said.

        Imam Nachrowi of the the PKB said political parties which form the coalition should be consulted before a decision was to be taken. PKB wanted to build harmonious relations before the presidential elections were held.

        "Yet, the situation has turned like this even before the presidential elections are held. What would it be like later on?" he questioned.

        Lukaman Hakim meanwhile said that a decision on the vice presidential candidate was in the hands of the presidential candidate but PPP had firmly suggested that vice presidential candidate should be taken from political parties.

        "Our constituents also question the reason for picking up Boediono. So, it would be better for Yudhoyono to explained whether r this issue is true or not," he added. ***1*** (T.A014/A/HAJM/21:10/H-YH) (T.A014/A/A014/A/H-YH) 12-05-2009 21:07:45

WORLD OCEAN CONFERENCE TO TRY SAVING LIVES OF COALTAL PEOPLE

By Andi Abdussalam

Jakarta, May 11 (ANTARA) - The ongoing World Ocean Conference (WOC) in Manado, North Sulawesi, will formulate efforts to save not only the seas and marine resources but also the lives of people living in coastal areas.

        "The adaptation and mitigation framework that the meeting will formulate is aimed at safeguarding not only the seas and the resources they hold but also the lives of people living in coastal areas," Indonesian Minister for Maritime and Fisheries Affairs Freddy Number said when opening a WOC senior officials' meeting in Manado on Monday.

        People living in coastal areas of small islands in developing countries are groups of settlers whose lives are seriously threatened by the impact of climate change such as the rising sea surface.

        "The rise in the sea surface will submerge some of the outlaying islands, while climate change will also affect the conditions of sea water and the marine biota population ," the minister said.

        In this case archipelagic countries and nations with vast coastal areas should cooperate in increasing the people's understanding of the relations between the climate change and the sea and their impact on the ecosystem, bio-diversity and coastal community living in small developing countries.

        The need to safeguard the people in coastal areas from the impact of climate change was also expressed by Moses Murihungurire, director for resources management of the Namiban Ministry of Maritime and Fisheries, and Gabriella Bianchi, senior officer of the Food and Agriculture Organization (FAO).

        Both shared the opinion that the dynamic change of ecosystem as a result of climate change affected people in coastal areas whose life and protein need depended on the sea resources.

        Excessive exploitation of sea resources by human beings also caused the ecosystem to undergo changes. "For this purpose, ecosystem-based fishery management needed to be applied," Bianchi said.

        The ecosystem-based management is basically an integrated fishery management applied by taking into account the sustainability of the ecosystem.

        With fishery management model that takes into account the sea ecosystem balance the people, particularly those living in the coastal areas, would be able to utilize sea resources without harming their sustainability.

        In order to adopt a comprehensive formula, the participation of the people living in the coastal areas is needed. Chairman of the WOC Senior Officials' Meeting (SOM) chairman Eddy Pratomo said meanwhile that a formulation would be sought to involve farmers and people living in coastal areas in future forums like WOC.

        "We have yet to involve them, but the time will come when we seek a formulation to involve farmers and people in coastal areas in future forums like WOC," Pratomo said at a press conference at the Grand Kawanua Convention Center.

        He said the first WOC this time was specialized for government representatives to obtain political support from WOC participating countries.

        "We have a common understanding that people at coastal areas are affected by climate change at sea," Pratomo said.

        According to Achim Steiner, executive Director of the UN Environment Programme (UNEP), the world's oceans and seas are now understood to be the biggest sink of greenhouse gases from the burning of fossil fuels.

        Indeed experts now estimate that up to 40 per cent of the C02 entering the atmosphere is being cycled through the marine environment playing a crucial role in moderating climate change.

        But experts are warning that the marine realm cannot continue to soak up man-made pollution forever without consequences. Many marine living creatures from corals and crabs to plankton at the base of the food chain need seawater that is alkali to build their skeletons.

        The average pH of water at the ocean's surface has now fallen from 8.16 to 8.05 since the beginning of the Industrial Revolution - small falls, but with potentially huge impacts if this continues.

        Steiner said the governments must affirm their determination to 'Seal the Deal' in Copenhagen at the UN climate convention meeting in order to begin steering the world onto a low carbon course.

        "We have to improve the health of our oceans. They have to be as fit and resilient as possible, so that they can cope with the climate change burden-- so they can continue to provide us with food and the myriad of other economically-important services," he wrote to ANTARA.

        This means governments have to urgently address the multiple challenges weakening our seas, from land based pollution and discharges from ships up to overexploitation of the globe's.

        In its efforts to overcome the problem of sea resources, Indonesia, in its part, cooperated with the National Oceanic and Atmospheric Administration (NOAA).

        Cooperation between the Indonesian Maritime and Fisheries Affairs Ministry (DKP) and the NOAA maritime issues, which will require funds amounting to US$12 million, will be focused on four sub-working groups.

        DKP Secretary General Widi Agoes Partikno said both sides will discuss the four sub-groups of work, namely coastal area and marine resources management, marine and climate change, fisheries and marine explorations.

        "For the cooperation in 2009 we have funds valued at US$2 million and in 2010 there will be five to ten million dollars," said.

        He said that DKP and NOAA had signed in 2007 a memorandum of understanding of cooperation for the implementation of work frames in four sub-working groups.

        In the fields of fisheries, the cooperation would be expanded to cooperation on port preparation, guidance on fishery product quality, hazard analysis critical control point (HACCP) training and marketing.

        Cooperation on marine explorations will focus on the study of seabed lines to know whether or not they contain oil or other mineral elements.

        "In carrying out the cooperation, we are looking forward to 25 or 50 years ahead," he said.***3*** (T.A014/A/HAJM/A/E002)

ICW, LAWMAKERS AT ODD OVER ANTI-GRAFT BODY ISSUES

By Andi Abdussalam

Jakarta, May 9 (ANTARA) - The Indonesian Corruption Watch (ICW) says that lawmakers must have misinterpreted the law when they questioned the validity of decisions to be taken by the collective leadership of the Corruption Eradication Commission (KPK).

        House's Commission III for legal affairs in a meeting on Thursday with KPK asked the collective leadership of the anti-graft body not take principle decisions after the suspension of its chief for alleged involvement in the murder of Nasrudin Zulkarnaen, director of PT Putra Rajawali Banjaran (PRB) last March.

        During the meeting Commission III lawmakers questioned the validity of KPK decisions, particularly those related to investigations and prosecutions because Antasari Azhar, its chief, has been suspended and detained by police on murder charges.

        The anti-graft body has been led by the collective leadership of its four deputies since Antasari Azhar was named a suspect early this month in the murder of Zulkarnaen.

        The lawmakers argued that Article 21 of Law No. 30 / 2002 on KPK stipulated that the KPK leadership consisted of one chairperson and four deputies. Therefore, the KPK should only perform its preventive functions and delay all its enforcement activities, including investigations and prosecutions.

        ICW Coordinator Danang Widoyoko said the lawmakers misinterpreted article 21 of the law which they took as a reason to question the validity of decisions by KPK collective leadership of four deputies.

        "Article 21 of the law basically only stipulates KPK's institutional structure and leadership elements," Danang Widoyoko said on Friday. The article has no direct relations with the decisions of KPK collective leadership as questioned by the lawmakers.

        Commission III member Eva Kusuma Sundari of the Indonesian Democratic Party (PDIP) faction, said that the KPK collective leadership which now consisted of only four deputies would face a technical problem in taking a decision.

        "The number chairman and deputies in KPK leadership is made odd in order to smooth a decision making process through voting when it faces a deadlock," she said.

        Lukman Hakim Syarifuddin of the United Development Party (PPP) faction argued that the KPK should not make any principle decisions before the elements of its leadership were completed. This is to avoid a KPK decision with legal flaws.

        He said that KPK should wait for a decision which permanently discharged Antasari Azhar as its chief, or wait for the absence from office of the suspended KPK chief for three-consecutive months.

        The ICW is suspicious why the lawmakers are so aggressive in questioning the validity of KPK collective leadership after its chief Antasari Azhar was suspended in connection with the murder charges.

        The non-governmental organization expressed its rejection of any form of political intervention into the anti-graft body.

        "ICW rejects all forms of political intervention which try to weaken KPK," Danang Widoyoko said.

        He said that there seemed to be other interest of the lawmakers why they were so aggressive to question the validity of the collective leadership decisions.

        The ICW coordinator said that the calls by Commission III members during Thursday's hearing that KPK should delay all forms of investigations until the KPK leadership had complete five members could be categorized as an effort to weaken the anti-graft body.

        "Why don't they let the KPK work as usual and resume its investigation," he said. He called on the four KPK deputies, namely Chandra M Hamzah, Bibit Samad Rianto, Haryono Umar and H Jasin, to continue KPK's agenda in fighting corruption, including investigating an alleged bribery case in the selection of Bank Indonesia's Senior Deputy Miranda Swaray Gultom.

        KPK deputy chairman Bibit Samad Rianto meanwhile said KPK had to remain operating, adding corruption eradication operations could be hindered if the present KPK leaders were not allowed to make decisions.

        On a separate occasion, presidential special staff for legal affairs Denny Indrayana said that actually the problem of vacancy in the KPK chairmanship could be settled internally by the rest four KPK leaders without necessarily conducting selection.

        "I think because KPK is an independent state commission and coincidentally no law regulates the case it is better if we refer it to internal mechanism within KPK so that its independence is safeguarded and operations run smoothly," he said

        House Speaker Agung Laksono also voiced the same thing asking the KPK to continue its investigations without the need to be hindered by the legal case that befell its chairman Antasari Azhar.

        "The House appeals to the KPK leadership to continue its jobs and function as usual," Agung Laksono said.

        He said that he had received a report from Commission III chairman Trimedya Panjaitan on the results of the commission's hearing with KPK on Thursday.

        "We agree to make public the House stance with regard to the matter, namely to ask the KPK to carry out its strategic and important tasks based on the people's mandate in fighting corruption crimes," Agung Laksono aid. ***4*** (T.A014/A/HAJM/12:30/a/f001) (T.A014/A/A014/A/F001) 09-05-2009 12:28:51

SPECULATION ARISING ON PDIP-PD COALITION ATTEMPT

 By Andi Abdussalam

Jakarta, May 7 (ANTARA) - Speculations are now arising that the Indonesian Democratic Party of Struggle (PDIP) and the Democratic Party (PD) are approaching each other to build a coalition, but leaders of both parties have denied it.

        Public speculation arose following a visit to PDIP leader Megawati Soekarnoputri by Minister/State Secretary Hatta Rajasa on Wednesday which was seen as part of an approach by President Susilo Bambang Yudhoyono, the PD's chief patron, to cooperate with the PDIP.

        "There is no special political deal between the PD and PDIP now," PD associate chairman Andi Mallarangeng said after attending a discussion on democracy here on Thursday.

        The same denial was also made by PDIP secretary general Pramono Anung Wibowo. "They only discussed matters which are more important to the interest of the people and the nation than mere a matter of who would be presidential and vice presidential candidates in the upcoming July 8 2009 presidential race," Anung said.

        According to Andi Mallarangeng, his party up to now has no special political deal with the Indonesian Democratic Party of Struggle (PDIP). However, he said that his party was pursuing open doors for a coalition with any political parties.

        "The Democratic Party is a friend of all political parties, including PDIP. We always open our arms for all parties so that there would be no enemies, only friends," he said.

        The Democratic Party is always open to reconciliation. "If their leaders are ready to reconcile, the people will be happy," he added. For this purpose, the Democratic Party would always build a communication with other parties to develop an effective government, Andi said.

        In the meantime, PDIP secretary general Pramono Anung denied that the meeting between Megawati and Hatta Radjasa discussed a chance for a PDIP cadre to become a vice presidential candidate for the Democratic Party.

        PDIP admitted it was witnessing in recent days intensive political lobbying by a number of political parties in the runup to the nomination their presidential and vice presidential tickets. "We are also having such lobbying with a number of political parties through closed-door meetings. In this way, we can discuss many issues with other political party leaders," he said.

        He said that apart from the Greater Indonesia Movement Party (Gerindra), PDIP would also build political communications with other parties in an effort to find the best step and decision in the face of the upcoming presidential polls.

        Anung said that up to now, PDIP was still consistent with the results of its congress and national working meeting to nominate one name as a presidential hopeful, namely PDIP leader Megawati Soekarnoputri. Thus, he denied that PDIP was preparing an alternative candidate.

        "Up to now, there is no other scenario. PDIP continues to support Megawati's presidential candidacy in the coming presidential race," he said.

        Media reports said that PDIP and PD were approaching with each other to explore a coalition. Three names were offered to be selected as a vice presidential candidate to accompany Yudhyono as his running mate, namely Puan Maharani (daughter of Megawati), Pramono Anung Wibowo and Boediono (now governor of the central bank).

        It was also speculated that a position as member of presidential advisory council was offered to Megawati Soekarnoputri while Tuafiq Kiemas (PDIP chief patron) was offered a position as chairman of the People's Consultative Assembly (MPR). Besides, the PD also offered six cabinet ministerial posts for other PDIP cadres.

        In response to the public speculation, secretary of PDIP faction in the House of Representatives Ganjar Pranowo said he had no knowledge about the matter but had learned it from newspapers. He said if the report was true it must still be an idea, as a decision had to be taken in a national leadership meeting.

        The possibility of PDIP and PD to coalesce was also refuted by Wiranto, chairman of the People's Conscience Party (Hanura). PDIP will be consistent with its stand to remain as opposition in parliament and would not coalesce with PD, Wiranto who is also vice presidential hopeful of the Golkar Party and Hanura said.

        "Meetings and political communications are normal things in politics. PDIP is still consistent with its stand to become an opposition in parliament," Wiranto said referring to Megawati - Hatta meeting on Wednesday.

        He said that PIDP, Golkar, Hanura, Gerindra and other parties had agreed to build a grand coalition in parliament and there was no information yet that PDIP had quit the coalition. "If PDIP quit the grand coalition and intended to join the Democratic Party, it has to let us know first. But up to now, PDIP is still consistent with the grand coalition," he said.

        According to Ganjar Pranowo, secretary of PDIP faction in the House, it is difficult to unite PDIP chairperson Megawati Soekarnoputri and Democratic Party Advisory Board chairman Susilo Bambang Yudhoyono but political interests could well become an overriding factor.

        After all, PD admitted that it never considered PDIP as an "enemy" but as a "sparring partner" in building democracy and promoting the nation's progress. Anas Urbaningrum, another PD associate chairman for political affairs, said his party had always been pursuing an "open door" policy towards other parties.

        "Therefore, communication between PD and PDIP figures had never been cut off although there is political competition between the two parties," he said. ***1*** (T.A014/H-NG/A/H-YH) (T.A014/A/A014/A/H-YH) 07-05-2009 23:21:25

BANKS ORDERED TO CUT LENDING RATES

By Andi Abdussalam

Jakarta, May 7 (ANTTARA) - Amid calls by businesses and economic observers for significant cuts in banks' lending rates, the government ordered state-owned banks to lower the interest rates of their credits in order to stimulate the real sector.

        Acting Coordinating Minister for Economic Affairs Sri Mulyani Indrawati has said banks which have been operating efficiently should lower their lending rates because Bank Indonesia (BI/the central bank) has cut its benchmark rate. "We emphasize that state banks whose balance sheets are good and efficient should lower the interest rates of their credits," the minister said.

        The government's instruction on state banks came up amid calls by businesses that banks should cut their lending rates following BI's step on Tuesday to lower its benchmark rate by 0.25 basis points to 7.25 percent.

        Businesses grouped in the Indonesian Chamber of Commerce and Industry (Kadin) hope that the central bank's key rate cut would be followed by signification reduction in banks' lending rates in order to generate the performance of businesses in the real sector.

        "Business community hopes a significant cut scale in the banks' lending rate,"Kandin's chairman for Permanent Trade Committee, Bambang Soesatyo said.

        However, he has doubts that the BI rate cut would be able to drive down banks' lending rates in the country, owing to the fact that the central bank has aggressively cut its rate several times in the past four months but it has no significant impact on the lowering of lending rates.

        "We have doubts because a series of BI rate cuts failed to bring banks interest rates down," Bambang Soesatyo said.

        Therefore, economic observer Umar Juoro of the Center for Information and Development Studies (Cides) said that BI must urge banks to lower their lending rates after it had cut its key rate by 0.25 basis points to 7.25 percent.

        "BI must aggressively persuade banks so that they would cut their lending rates," Umar Juoro, said.

        BI's board of governors in its meeting on Tuesday decided to cut the central bank benchmark rate to 7.25 percent from the previous month's rate of 7.50 percent.

        The banking lending rates at present still range at 13-14 percent, which indicates a wide spread between them and the BI benchmark rate. The interest rate reference is at 13.79 percent with a difference spread of 600 basis points of the BI benchmark.

        For this purpose, the government should provide stimulation or guarantee for certain economic activities so that the chance for credit extension would become bigger. The government, for example, could take over the problem of land clearance for an infrastructure project so that banks would disburse their credits soon.

        "In this way, and with the purchasing power of the people still high, the development of the real sector would be boosted soon," he said.

        In the meantime, Minister for State Enterprises Sofyan Djalil said that State-owned banks cannot dictate their will to the market mechanism with regard to interest rates.

        "Let banks interest rates develop based on the market mechanism. State banks cannot dictate their will on interest rates to the market," the minister.

        However, he said that state banks would be able to adjust their rates to BI policies. They would cut their interest rates but it would depend on the macro or monetary policies adopted by Bank Indonesia.

        "Bank Indonesia has done its job well. If it cuts the interest rate of its certificates (SBI), banks' interest rates will also follow," he said.

        The government on Wednesday instructed state-owned banks which had efficient and good balance sheets to lower the interest rates of their credits. With BI cutting its benchmark by 0.25 basis points to 7.25 percent, banks which have been efficient should also lower the interest rate of their credits.

        Finance Minister Sri Mulyani said there was no difference between state banks and commercial banks. They were expected to lower their interest after the central bank cut its key rate on Tuesday.

        She said that if economic risks were not too bad, banks did not need to set too much reserves so that they would have enough room to lower the interest rate of their credits.

        After all, the BI's move to cut its key rate to 7.25 percent would boost funds into the productive sector. "What we hope with BI cutting its benchmark rate is its follow-up effect," the minister said.

        She said that if a bank had a healthy financial balance sheet as indicated in the decline in the interest rate of its deposit, it would have a room to adjust its cost of lending or the interest rate of its credits.***2*** (T.A014/A/HAJM/19:10/a014) (T.A014/A/A014/A/A014) 07-05-2009 19:06:01

BANKS NOT LIKELY TO CUT LENDING RATE SOON

By Andi Abdussalam

Jakarta, May 5 (ANTARA) - Banks are unlikely to lower their lending rates in the near future despite the fact that Bank Indonesia (BI) once again cut its benchmark rate by 0.25 basis points to 7.25 percent on Tuesday, another step which saw the central bank's aggressive steps which have since January cut 200 basis points or 2.0 percent of its key rate.

        The aggressive steps by BI are expected to help drive down banking credits in order to stimulate development of the real sector amid the economic downturn. However, banks are unlikely to lower their lending rates in the near future.

        "Banks will lower their interest rates on credits or savings only if economic growth and investment in the country have improved," economic analyst of state-owned bank Bank BIN Muhammad Alfatih said.

        Alfatih made remarks in response to a call on Tuesday asking the government to exert pressure on banks to lower their interest rates following the BI's step in cutting its benchmark rate. Secretary general of the Islamic Economists Association (IAEI), Agustianto urged the government to force banks to lower their lending rates.

        "Banks should not enjoy the BI rate cut only while refusing to lower their interest rates on credits," he said. His organization supported the BI's step in lowering its benchmark rate because it would help to move the real sector where many small people were doing business.

        The IAEI even hoped BI would continue to lower its rate to six or five percent. He said the BI's step in cutting its key interest rate had not yet been effective as it was not followed by banks which were still imposing high interest rates.

        If banks are ready to lower their lending rates, the real sector could be developed. "The government is expected to force banks to do so," he said.

        However, monetary analyst John Tafbu Ritonga, who is also dean of North Sumatra University's School of Economics, said that the government could not force banks because banks had to cover the costs they had incurred previously.

        Although the BI Rate has dropped, third party funds deposited at banks now were collected when the BI benchmark rate was still high.

        Based on this fact, banks should regain the costs they had incurred to pay in interest on their clients' deposits.

        But a call by the government on banks to lower their interest rates could be fulfilled if there was an advantageous solution such as the readiness of the government to bear the risks of micro-business credits and part of the interest rates of certain business credits.

        "If there is such a solution the government can urge banks to lower their interest rates," he said.

        Basically, banks support lower banks' lending rates. Retail Banking Director of Bank Mega, Kostaman Thayib said that lower bank lending rates would help the people, businessmen and the banks themselves.

        "This is a good step as it will reduce non-performing loans (NPL) and benefit the banking sector," he said.

        Therefore, Muhammad Alfatih said a number of banks would follow the BI to cut their interest rates, if investment and economic growth improved.

        "Banks still see there are investment risks so that they have yet to cut their interest rates," he said.

        He said that fears of economic growth which was not yet stable could add risks to banks' business. After all, there were a number of conventional banks whose conditions were not yet conducive to lowering interest rates.

        Besides, he said, the BI Rate cut by 0.25 basis points would generate stocks market and bonds trade. "This condition would provide strength for the stock market. This would invite more foreign funds into the stock market," he said

        According to economic analyst Ryan Kiryantono, the decision on Tuesday of BI to cut its BI Rate by 0.25 basis points will give a positive sentiment to the market.

        "The BI benchmark rate reduction will give a positive sentiment to the stock exchange and money market because it is predicted it would lead to the lowering of banks' lending interest rates as expected by the business world," he said.

        The interest rate cut is in line with the present improving macro-economic conditions where the stocks market was gaining strength while the rupiah currency was appreciating to below Rp10,500 per US dollar.

        Inflationary pressure is also slackening where in April the country experienced a deflation of 0.31 percent and its foreign exchange reserves have also increased by 1.85 billion dollars to 56.67 billion dollars.

        Factors that affected inflation have also reduced their pressures, such as the low world crude price at 48 dollars per barrel, the grand harvest and the decline in imports. All this has helped the lowering of the BI benchmark rate.

        "If in months ahead inflation remains low, BI will have a big chance to lower its rate to seven percent later this year," he said.

        The board of governors of Bank Indonesia decided on Tuesday to lower its benchmark rate (BI Rate) by 25 basis points to 7.25 percent. Since December 2008, the BI rate has been cut by 225 basis points to 7.25 percent. ***2*** (T.A014/A/HAJM/20:10/A/H-YH)

        (T.A014/A/A014/A/H-YH) 05-05-2009 21:01:29

POLITICAL ELITES ABANDON FUNDAMENTAL VALUES

By Andi Abdussalam

Jakarta, May 4 (ANTARA) - Indonesian politics today is lacking in fundamental values as most political party leaders are adopting pragmatism to grab power for short-term interests, political analysts say.

        Internal rifts within political parties also happen not because of strategic matters but because of bickering over how to coalesce and to nominate a cadre for a presidential or even a vice presidential position.

        "Therefore, the political elites now produce mere rhetoric instead of strategic ideas and thoughts, indicating how they have put aside fundamental values," Rocky Gerung of the University of Indonesia (UI) said.

        It turns out that the number of genuine political players in the country is small as what the political elites are concerned about today in forming coalitions -- a phenomenon basically reflecting pragmatism where fundamental values have been forgotten, Roceky Gerung said.

        The almost one-month long activities of political party leaders in building what they called political communications has basically given birth to two main coalitions.

        The two coalitions are that between the Democratic Party and the National Mandate Party (PAN) and the grand coalition in parliament sponsored by the Indonesian Democratic Party-Struggle (PDIP) and the Golkar Party.

        Widely expected to be the winner of the upcoming presidential race in July 8, 2009, the Democratic Party with incumbent President Susilo Bambang Yudhohono as its presidential hopeful, had won about 20 percent of the recent legislative elections.

        Even now, at least three political parties are vying for the vice presidential candidate post to accompany Yudhoyono as his running mate.

        Golkar, which initially eyed the vice presidential post with Yudhoyono, officially declared its chairman Jusuf Kalla as its presidential hopeful. Kalla picked Wiranto of the People's Conscience Party (Hanura) as his running mate.

        The Democratic Party has nominated Yudhoyono as its presidential hopeful and will announce its vice presidential candidate later. PDIP is also almost certain to nominate its own presidential ticket.

        Thus, there would be three presidential/vice presidential pair candidates to contest the July 8, 2009 presidential race. However, observers have doubts about the solidness of the grand coalition.

        Political analyst Nehemian Lawalata said he had doubts over the seriousness of parties in the grand coalition in nominating their presidential and vice presidential candidates.

        "I am afraid that they will withdraw in the runup to the registration of presidential pairs," he said.

        In the meantime, Arie Sujito of the University of Gajah Mada (UGM) said the political elites had been very busy engaging in political transactions after seeing the results of the quick counts by survey institutions.

        "Political party elites, after seeing the results of the quick counts looked as if were losing their sense and were busy trying to make political transactions. They forgot what the people actually wanted from them," he said.

        He said the political party elites should first study what was desired by the people before they decided their directions and steps.

        "The steps of the political party elites are often not in line with political realities," Arie Sujito said.

        He said the National Mandate Party (PAN) which decided to coalesce with the Democratic Party in its meeting recently and nominated its cadre as vice presidential candidate was influenced by the results of the quick counts, where the Democratic Party seemed to be victorious.

        "When it saw the results of the quick counts which were not favorable for PAN, it decided to join forces with the likely winner," he added.

        After all, PAN chairman Sutrisno Bachir had earlier shown his intention to coalesce with PDIP while its senior cadre Amin Rais desired to coalesce with the Democratic Party.

        "In the runup to declaration of the grand coalition in parliament, Sutrisno Bachir, who had the ambition to become the presidential candidate of the coalition, turned out not to be reckoned," he said.

        Now that PAN has joined a coalition with the Democratic Party, it could invite a big question among the people because so far Amien Rais was known to be a critic of Yudhoyono's policies.

        "The people can now have an adverse opinion about Amien Rais who used to be critical of Yudhoyono," Sujito said.

        In the meantime, the solidness of the grand coalition whose declaration last week was read by Greater Indonesia Movement Party (Gerindra) chairman Prabowo Subiyanto, is also doubted.

        "There is no guarantee that the grand coalition would remain solid," Widhya Bagja, a socio-political observer, said.

        The declaration of the grand coalition among others contained the commitment of all members to maintaining the integrity of the Unitary State of Indonesia and maintain the country's economic sovereignty for the welfare of the people.

        It also included a commitment to developing political party institutions as a pillar of democracy. The grand coalition in parliament consisted of Golkar, PDIP, Gerindra, Hanura, National Ulemas Awakening Party (PKNU), Prosperous Peace Party (PDS), Labor Party, the Indonesian United Ummah Party (PPNUI) and Reform Stars Party (BPR). The United Development Party (PPP) initially included in the grand coalition but later decided to quick.

        Political parties which have confirmed to coalesce with the Democratic Party of Yudhoyono are the Prosperous Justice Party (PKS), the National Awakening Party (PKB) and PAN. The PPP is widely expected to Yudhoyono.

        However, Tommy Susu of the Widya Mandira Catholic University in Kupang, said that the maneuvers of political elites in building strength in the parliament and in winning presidential and vice presidential candidate positions gave specific spectrum to the development of democracy in Indonesia.

        "The political conditions built by political elites are still within the healthy and ethical corridor of democracy," he said. ***1*** (T.A014/A/HAJM/A/E002) (T.A014/A/A014/A/E002) 05-05-2009 00:25:37

POLITICAL ELITES ABONDAN FUNDAMENTAL VALUES

By Andi Abdussalam

Jakarta, May 4 (ANTARA) - Indonesian politics today is lacking in fundamental values as most political party leaders are adopting pragmatism to grab power for short-term interests, political analysts say.

        Internal rifts within political parties also happen not because of strategic matters but because of bickering over how to coalesce and to nominate a cadre for a presidential or even a vice presidential position.

        "Therefore, the political elites now produce mere rhetoric instead of strategic ideas and thoughts, indicating how they have put aside fundamental values," Rocky Gerung of the University of Indonesia (UI) said.

        It turns out that the number of genuine political players in the country is small as what the political elites are concerned about today in forming coalitions -- a phenomenon basically reflecting pragmatism where fundamental values have been forgotten, Roceky Gerung said.

        The almost one-month long activities of political party leaders in building what they called political communications has basically given birth to two main coalitions.

        The two coalitions are that between the Democratic Party and the National Mandate Party (PAN) and the grand coalition in parliament sponsored by the Indonesian Democratic Party-Struggle (PDIP) and the Golkar Party.

        Widely expected to be the winner of the upcoming presidential race in July 8, 2009, the Democratic Party with incumbent President Susilo Bambang Yudhohono as its presidential hopeful, had won about 20 percent of the recent legislative elections.

        Even now, at least three political parties are vying for the vice presidential candidate post to accompany Yudhoyono as his running mate.

        Golkar, which initially eyed the vice presidential post with Yudhoyono, officially declared its chairman Jusuf Kalla as its presidential hopeful. Kalla picked Wiranto of the People's Conscience Party (Hanura) as his running mate.

        The Democratic Party has nominated Yudhoyono as its presidential hopeful and will announce its vice presidential candidate later. PDIP is also almost certain to nominate its own presidential ticket.

        Thus, there would be three presidential/vice presidential pair candidates to contest the July 8, 2009 presidential race. However, observers have doubts about the solidness of the grand coalition.

        Political analyst Nehemian Lawalata said he had doubts over the seriousness of parties in the grand coalition in nominating their presidential and vice presidential candidates.

        "I am afraid that they will withdraw in the runup to the registration of presidential pairs," he said.

        In the meantime, Arie Sujito of the University of Gajah Mada (UGM) said the political elites had been very busy engaging in political transactions after seeing the results of the quick counts by survey institutions.

        "Political party elites, after seeing the results of the quick counts looked as if were losing their sense and were busy trying to make political transactions. They forgot what the people actually wanted from them," he said.

        He said the political party elites should first study what was desired by the people before they decided their directions and steps.

        "The steps of the political party elites are often not in line with political realities," Arie Sujito said.

        He said the National Mandate Party (PAN) which decided to coalesce with the Democratic Party in its meeting recently and nominated its cadre as vice presidential candidate was influenced by the results of the quick counts, where the Democratic Party seemed to be victorious.

        "When it saw the results of the quick counts which were not favorable for PAN, it decided to join forces with the likely winner," he added.

        After all, PAN chairman Sutrisno Bachir had earlier shown his intention to coalesce with PDIP while its senior cadre Amin Rais desired to coalesce with the Democratic Party.

        "In the runup to declaration of the grand coalition in parliament, Sutrisno Bachir, who had the ambition to become the presidential candidate of the coalition, turned out not to be reckoned," he said.

        Now that PAN has joined a coalition with the Democratic Party, it could invite a big question among the people because so far Amien Rais was known to be a critic of Yudhoyono's policies.

        "The people can now have an adverse opinion about Amien Rais who used to be critical of Yudhoyono," Sujito said.

        In the meantime, the solidness of the grand coalition whose declaration last week was read by Greater Indonesia Movement Party (Gerindra) chairman Prabowo Subiyanto, is also doubted.

        "There is no guarantee that the grand coalition would remain solid," Widhya Bagja, a socio-political observer, said.

        The declaration of the grand coalition among others contained the commitment of all members to maintaining the integrity of the Unitary State of Indonesia and maintain the country's economic sovereignty for the welfare of the people.

        It also included a commitment to developing political party institutions as a pillar of democracy. The grand coalition in parliament consisted of Golkar, PDIP, Gerindra, Hanura, National Ulemas Awakening Party (PKNU), Prosperous Peace Party (PDS), Labor Party, the Indonesian United Ummah Party (PPNUI) and Reform Stars Party (BPR). The United Development Party (PPP) initially included in the grand coalition but later decided to quick.

        Political parties which have confirmed to coalesce with the Democratic Party of Yudhoyono are the Prosperous Justice Party (PKS), the National Awakening Party (PKB) and PAN. The PPP is widely expected to Yudhoyono.

        However, Tommy Susu of the Widya Mandira Catholic University in Kupang, said that the maneuvers of political elites in building strength in the parliament and in winning presidential and vice presidential candidate positions gave specific spectrum to the development of democracy in Indonesia.

        "The political conditions built by political elites are still within the healthy and ethical corridor of democracy," he said. ***1*** (T.A014/A/HAJM/A/E002) (T.A014/A/A014/A/E002) 05-05-2009 00:25:37

GOLKAR PLAGUED BY INTERNAL RIFTS OVER COALITION

By Andi Abdussalam

Jakarta, May 3 (ANTARA) - The Golkar Party is now facing internal rifts between its central executive board and regional branches over a stand the former New Order political machine should take with regard to coalition and presidential/vice presidential candidacy for the upcoming July 8, 2009 presidential elections.

        Before last April 9 legislative elections, Golkar General Chairman Jusuf Kalla (JK) faced pressures from regional branches that Golkar should nominate its own presidential hopeful.

        Now, he is facing another round of pressures from district branches that it should coalesce with and offer its vice presidential candidate to the Democratic Party.

        The Democratic Party, of which incumbent President Susilo Bambang Yudhoyono (SBY) is chief patron, is the winner with 20 percent of the votes of the April 9 legislative elections based on exit polls organized by a number of survey institutions. Golkar, winner of the 2004 legislative elections, finished third with about 14 percent of the votes.

        Incumbent Vice President Jusuf Kalla, who bowed to regional branches' pressures and announced his readiness during the recent election campaigns to run for presidency, officially declared on Friday Wiranto of the People's Conscience Party (Hanura) as his running mate in the next presidential race.

        Kalla, who long before the election campaigns, has expressed his willingness to maintain his duet with Yudhoyono, was given last week the mandate by Golkar special national leadership meeting to build political communications with other political parties to form a coalition and decide a presidential/vice presidential candidate pair.

        However, the Golkar chairman is now facing internal rifts between those supporting his presidential bid and those pressing for coalescing again with the Democratic Party.

        "We have to admit that there are factions within Golkar which are unsatisfied with the declaration of JK-Wiranto presidential candidate pair. This is a kind of 'star wars' within the party elite over an attempt to abort the decision," Zainal Bintang, founder of the 'JK 4 President' said Saturday night.

        Zaenal Bintang, a leader of the MKGR, a mess organization affiliated to Golkar, said that Golkar had to work hard to overcome the internal rifts and offset the impact of the the 'star wars.'

        He said that dissatisfactions aroused not only within Golkar but also outside the party, namely those who wanted to take advantage of Golkar as a 'riding horse'. Bintang, who is also a compartment chairman of Golkar said that Golkar's decision to declare its presidential and vice presidential pair needed to be safeguarded.

        "Kalla has to conduct a road-show to regions immediately to unite the heart and thoughts of Golkar's cadres in all layers. His visit to potential cadres in the regions is the best way to build strengths," Bintang said.

        He said that Kalla should not be careless because cadres who were disappointed were strong. "They continue to build consolidation and strength and try to capitalize on Kalla's weaknesses," Bintang Added.

        Irsyad Sudiro, a senior cadre of Golkar, also aired the same voice. He said that there were cadres who were unsatisfied with the declaration of Kalla and Wiranto as Golkar's presidential and vice presidential candidates for the upcoming presidential contest.

        "Not all aspirations in the district level want Golkar to nominate its own presidential hopeful," Sudiro said. He said that with winning only about 14 percent of the votes in the April 9 legislative elections, Golkar had no enough chance to win the presidential elections. Therefore, some Golkar cadres want that Golkar should coalesce with the Democratic Party and continue its SBY-JK duet for the second term.

        Sudiro, who is also a chairman of the House of Board of Ethics, said that he himself was one of the cadres who wanted Golkar to maintain its coalition with the Democratic Party because a coalition with it had a big chance to win the presidential elections.

        "For sure, not all elements within Golkar are willing to accept the JK-Wiranto duet but the JK-SBY instead," Sudiro said.

        However, in get-together with the leaders of Golkar Party's district-level branches in Makassar, South Sulawesi on Saturday, Kalla revealed why he decided to part the Democratic Party and broke with Yudhoyono.

        "As many as three times, I told President Yudhoyono that Golkar still wanted to remain a partner, but every time the answer was yes, we will be together, no clear answer. If it's yes, then say yes. If it's no, then say no. So it meant, well, let us just part. Golkar is not begging for any position," Kalla said.

        He said that Yudhoyono even set certain conditions. "I have been serving as his vice president, still he set conditions. This was just a way to say no, meaning there was no sincerity. We, Golkar, felt our self-respect was compromised," Kalla said.

        Because Golkar felt it was being belittled, Golkar eventually decided to separate from the Democratic Party, he said.

        He reminded that when a cadre of the Democratic Party sometime in the past said Golkar would only be able to win 2.5 percent of the legislative elections, Golkar felt it was being belittled.

        Therefore, all provincial branches of Golkar at that time asked him to move forward as a presidential hopeful. "Because Golkar felt its dignity was being offended, I could not reject pressures from provincial branches who wanted to nominate me. If I reject it, it will cause divisions within Golkar," he said.

        Now however, Kalla is facing many obstacles posed by the people within as well as outside the Golkar Party in his bid to run for president.

        "Certain elements in the party claiming to represent Golkar's 320 district branches are against my bid. But when I checked, they only proved to represent themselves, somebody had paid them. I ordered the police to arrest those people who had misused the party's name," Kalla said.***1*** (T.A014/A/H-NG/a014)

BANKS' LENDING ACTIVITY STILL LOW

By Andi Abdussalam

Jakarta, May 2 (ANTARA) - Banks' lending activity in the country is still low because banks are still reluctant to aggressively provide credits for fear of non-performing loans while demand for credits is also declining due to the impact of the world economic crisis which also affects Indonesia.

        "A recent survey on banks indicated weak credit demand and lack of interest of banks to provide credits," director of banking arrangement and research affairs of Bank Indonesia (BI/the central bank), Halim Alamsyah, said early this week.

        Demand for credits is weakening as the global economic crisis has weakened the country's economy as reflected in the slowing down of Indonesia's export-import activities and low people's purchasing power.

        In the meantime, banks are being discouraged to aggressively provide credits in face of increasing credit risks and become more prudent in channeling credits amid the economic crisis.

        As a consequence of low demand for loans and credit contraction, third party funds continue to accumulate and grow at banks in the last several months. This is also due to the fact that deposit interest rates are still attractive to depositors and their confidence in banks is relatively high.

        "In a condition like this where uncertainties are high, banks prefer to maintain their financial soundness," Alamsyah said. He hoped that banking business would return to normal in the second semester of this year.

        In an effort to reinvigorate the banking business, banks have to cut their lending rates and lower deposit interest. In this case, it is expected that state-owned banks would pioneer the lowering of their interest rate where private banks would follow suit.

        However, State Enterprises Minister Sofyan Djalil said his ministry could not force state-owned banks to lower their interest rates because it was a matter in which each bank could have its own considerations.

        "That's the banks' affair, and if they are forced (to cut interest rates), state-owned banks will lose their competitiveness," Djalil said recently. Banks so far have cut their interest rates only slightly following the decision of Bank Indonesia (BI) to lower its benchmark (BI Rate) further.

        The central bank since January this year has cut a total of 175 basis points or 1.75 percent of its benchmark rate to 7.5 percent. However, responses of other banks are still slow. Since January banks have only cut about 0.05 percent of their interest rates.

        After all, banks are also unable to lower their rates because depositors, particularly the big ones, still ask for high interest, which if not fulfilled would remove their funds to other interesting places.

        In order to help lower lending rates, businessmen saving funds at banks should not ask for a deposit interest rate above the 7.75 percent guaranteed by the government.

        "Businessmen would always ask for a low interest rate when they borrow money and a high one when they save it. Please you conglomerates should not ask for high saving interest rates so that lending rate could be lowered," president director of state-owned Bank BRI Sudaryanto Sudargo said.

        He said that demand for high saving interest by big-time businessmen was the main cause why the lending rates so far were going down very slowly, in spite of the fact that Bank Indonesia BI had aggressively lowered its benchmark rate. This caused fund costs to remain high.

        Competition among banks to maintain high interest rates is also fueled by the issuance by the government of state debentures (SUN) and Islamic bonds (Sukuk) which carry an interest rate of 10-12 percent. This created difficulties for banks to lower their deposit interest rates.

        It is expected, however that BI would continue to cut its benchmark which analysts predict would reach 6.5 percent at the end of this year. Moreover, the country has undergone deflation. The Central Board of Statistics (BPS) announced on Friday that the country had experienced a 0.13 percent deflation in April 2009.

        In this regard, state-owned Bank BNI will soon respond to the positive trend by planning to cut its deposit interest rates in the first semester of this year.

        "We hope this year that our net interest margin (NIM) would be lower than that of last year, namely from 6.3 percent to a range of 5.5-6.0 percent," Bank BNI President Director Gatot Suwondo said on the sidelines of the annual meeting of the Asian Development Bank (ADB) in Bali on Saturday.

        He said that BI rate could reach 7.0 percent up to the end of the year and this would drive down banks interest rates. In the meantime, Bank BNI's Treasury and International Affairs Director, Bien Subiantoro said BNI had plans to cut the interest rate of consumer credits first from 16 percent to 14 percent before it cut its corporate credits from 13 percent to 11 percent.

        "We hope the interest rates would have been lowered in the first semester of this year," he said.***1*** (T.A014/A/HAJM/14:15/a/f001) (T.A014/A/A014/A/F001) 02-05-2009 14:30:56