Edition : May 2010
From the Editor
Foreign debt is still being an obstacle
on Indonesian development.
Eventhough the government always
states that Indonesia foreign debt is
safe with ratio 30% per GDP, but
payment burden that should be
covered by Indonesian people is still
high.
Furthermore, there are problems
about debt management that have
not reflected effectiveness principles,
especially on development. Many
debts are used by many actors to
gain their own interest.
SNO May edition is trying to not achieve the maximum benefits as planned.
describe debt problem faced by
Indonesia, with bilateral debt from
Germany and Norway as example.
Don Marut’s article (Executive
Director of INFID) becomes headline
news in this edition. The others news
are Indonesia’s challenges to
achieve MDGs targets.
Have a nice reading!
HEADLINE NEWS
Foreign debt ‘mafia’?
Written by Don Marut
The Jakarta Post, 05/09/2010 - President Susilo Bambang Yudhoyono
assigned the judicial mafia taskforce to pay attention to certain areas
susceptible to corruption such as the police, the judiciary, the Attorney
General’s Office, illegal logging, tax evasion and land ownership.
Observers said that there should be special attention paid to foreign
debt corruption. Is there really foreign debt corruption?
A study by the National Development Planning Agency (Bappenas) on
“the Strategy to Promote the Performance of Foreign Aid” (2004) found
indications of project-seeking activities both by
donor agencies and government agencies implementing loan-funded
projects. The study revealed that although there were some successful
projects, the absorption level was still low and many of the projects did
There were two main causes why the loan-funded projects could not
achieve the maximum benefits. First, the ownership of the implementing
agency was low, or they had no sense of responsibility for the success
of the project. Second, there were mutual interests between the staff of
the implementing government agencies and the staff working in the
donor agencies. The staff in the government agencies needed foreign
funds for projects in their ministries in order to get more budget
allocated as matching funds from the annual state budget. The bigger
the budget allocation meant more income for the staff in the ministries.
On the other hand, the staff in the creditor agencies needed more loans
for Indonesia. The more loans there were, the more the overhead costs
for the creditor agencies would be, which meant job security for the staff
in the creditor agencies. The additional or higher income for the
government staff and the job security for the staff in the creditor
agencies to some extent become the major purpose of the contract for
new loans, rather than for promoting economic growth and poverty
reduction in Indonesia.
Foreign loans also involved brokers that were suspected of being
involved in illegal activities, and companies that did not perform
according to the contracts. The following cases are two of many cases
that are suspected as involving the “mafia” in the contract and its
implementation. First, the German warship debt. In 1992, Indonesia
purchased 39 ex-East Germany warships from Germany. The warships
were old and designed for cold water and short-range operations. To
purchase and repair (in fact, totally overhaul) these old and almost
wrecked ships, Indonesia signed several loan contracts with Germany.
The reparation and overhaul of most parts of the ships were done in
Germany and in Indonesia. During the contract process, Indonesia and
Germany used third parties. The broker from Germany was later found
to be involved in various illegal activities related to public funds fraud
and the illegal weapons trade. Various researches and public media
 investigations, both in Germany and in Indonesia, proved that these
ships were not needed by the Indonesian Navy, as a modern Navy. The
victims in the case were the three national news weeklies in Indonesia
(Tempo, Editor and Detik) that exposed the unusual transactions, which
were banned in 1994. Until now, Indonesia is still paying the debt to
Germany, while only few of the ships are still used by Indonesian Navy,
though with low operational capacity. The Indonesian people have had
to relinquish opportunities to enjoy a better life since the government
has had to repay the debts incurred by irresponsible actors from both
countries.

Second, the Norwegian wave power plant on Baron Beach. In 1994, the
Indonesia and Norwegian governments signed a loan contract for
developing a wave power plant on Baron Beach, Yogyakarta. The
implementer of the project was a Norwegian company, called Indonor.
The government of Indonesia borrowed money from Norwegian
government to pay the Norwegian company to implement the project.
The implementing agency from Indonesian side was the Agency for the
Assessment and Application of Technology (BPPT). The BPPT paid the
total amount to Indonor but, in fact, there was no project at all
implemented in the field. Up to now there has been no indication of any
activity on the development of a wave power plant on Baron Beach,
although the project has been counted as completed. Today, the
Indonesian government is paying the debt, with interest, to Norway, for
a project that never existed.

There are many other cases that indicate fraud and the involvement of
a “mafia” in the area of foreign debt, both from the Indonesian side and
the creditor agencies side. As a result, the poor of Indonesia have to
sacrifice opportunities to climb out of poverty, misery and destitution,
since the government budgets that are expected to support their efforts
to be free from poverty are used to repay the foreign debts that have no
relation at all with the national development agenda. These cases show
that there are foreign loans that are made not to support development
programs, but to fulfill the business interests of the “mafias”, both from
creditors’ side and the Indonesian government side. The actors from the
creditors’ side do not care whether the debts violate the rights of the
people in the debtor countries; they care only about the job security of
the agency’s staff and the profits for the “mafias”. If the governments do
not cancel these debts, it will mean that the governments too are
protecting the “mafias”.

The writer, the executive director of the International NGO Forum on

Indonesian Development (INFID), is doing research and advocacy on
foreign debt and economic justice.

Study on Is Indonesian’s Debt to Norway Illegitimate?

INDONESIA UP DATE

MDGs ACHIEVEMENT
 Maternal health targets hard to accomplish
The Jakarta Post, 04/14/2010 - To achieve improved maternal health, in pursuit of the Millennium
Development Goals (MDGs) involves overcoming several hurdles, with the maternal mortality rate still at
2.28 per 1,000 live births. The National Development Planning Agency aims at 1.02 per 1,000 by 2015. Nina
Sardjunani, National Development Planning Agency deputy minister for human resources and cultural
affairs, said that this fifth objective as part of the MDG cluster of social objectives could not be achieved by
2015. “The target to reduce maternal mortality rates by three-quarters between 1990 and 2015 is off track,”
she said on Monday during a public discussion on MDGs in Jakarta. The high maternal mortality rate in
Indonesia is caused by several factors, including the fact that delivery is not always handled by professional
health workers and gender inequality. Other factors cited as causing the high maternal mortality are lack of
transportation, lack of easy access to proper facilities, giving birth too often or at too young an age, and the
patriarchal attitudes entrenched in the culture.

Full Text (The original text is in Indonesian Language)

Thousands people in East Sumba are threatened by starvation

Tempo Interaktif, 03/19/2010 -”Thousands people in East Sumba Regency, East Nusa Tenggara, are
threatened by starvation. The cause of starvation is harvest failure that happened in 121 villages,” said East
Sumba Regent, Gideon Mblijora, in Kupang, Friday (19/3). 2010 identification told us that 121 villages will
experience food scarcity. This disaster happened because of low rainfall. “The last rainy day was on the end
of January,” said Gideon.

Full Text (The original text is in Indonesian language)

Corruption Crushes Indonesia's NTT - Out of 105 corruption cases, only 18 of them were
brought to court.

Viva News, 05/10/2010 - The Indonesian Corruption Watch (ICW) urged the Anti-graft Commission (KPK)
and the Law Mafia Eradication Task Force to probe into an alleged corruption case in East Nusa Tenggara
(NTT). “[Corruption] is the one that has destroyed NTT,” ICW Coordinator Danang Widoyoko said in Jakarta
on Sunday, May 9. The International Director for NGO Forum on Indonesian Development Don K Marut said
out of 105 corruption cases, only 18 of them were brought to court. “KPK and the Law Mafia Eradication Task
Force haven’t stepped into NTT. Hopefully it would be able to get to officials in Jakarta,” he said. Meanwhile,
Widoyoko assumed it is the corruption allegation that puts NTT in the 31st position in the list of 33 provinces
with the highest level of prosperity. Marut said there were three parties responsible for the downfall, which
are the bureaucracy, the authorities and the contractors. The bureaucracy and the authorities were said to be
having worked together with the contractors for personal gain. “Regional projects were later hampered
because all they could think about is themselves,” he said. According to him, one of the indications is the high
infant mortality rate in the province. “If Indonesia wants to lower the rate, they should start from NTT”. The
mortality rate in NTT has reached 31 for every a thousand deliveries. The number is higher than the national
average rate of 27 for every a thousand births. The data obtained by the Indonesian Budget Center (IBC)
shows the Provincial Budget of NTT was not used for goods and public services-related activities. “Fifty-nine
percent of the budget was spent on things that are irrelevant to goods and public services program,” IBC
Director Roy Salam said.

Full Text
DEMOCRACY AND HUMAN RIGHTS

23 NGOs strive for dispersing Satpol PP

Primair Online, 17/04/2010. 23 NGOs that gather together as Komite Pembubaran Satpol PP strive for
dispersing Satpol PP because of violence during condemning poor-people. Riot between Satpol PP and
Koja (Tanjung Priok) people several days ago become the main case that used for reference. “During their
action, Satpol PP is prefer to serve investors that build commercial infrastructure, so that they have to
condemn people and public infrastructure,” said Agi Fariaksa, Komite Pembubaran Satpol PP spokesman
from LBH in press conference in Kontras Office, Jakarta, Saturday (17/04). Komite Pembubaran Satpol
PP consists of ANBTI, ARMP, Arus Pelangi, Bingkai Merah, Hammurabi, IKOHI Jabodetabek,
Imparsial, INFID, JCSC, JRMK, Kasum, KM Raya, Kontras, KPI, KSMT, LBH Apik, LBH Jakarta, PRP
Jakarta, Sebaja, Sebumi, Senja, SRMI, and UPCI.

Full text : (The original text is in Indonesian language)

NGO Urges US Government Not To Lift Kopassus Embargo

The Jakarta Globe, 13/03/2010. Human Rights Watch has called on the US government to rethink any
plans to lift a 12-year ban on training the Indonesian Army’s Special Forces, stressing that training should
only be conducted if Indonesia takes sufficient steps toward accountability and reform to deter future
abuses. The entire Kopassus unit is banned from receiving US military education or training, following
allegations of their involvement in a number of atrocities in restive provinces. The ban will only be lifted if
the government takes adequate legal steps to deal with the officers allegedly involved in human rights
abuses. However, Leahy was quoted by the Washington Post as saying that: “we know there are some
who favor resuming aid to Kopassus, but US law requires the government of Indonesia to take effective
measures to bring Kopassus members to justice.”

Full text :

INFID ACTIVITIES

Discussion : “Indonesia – US Relationship During Obama Administration”

INFID, with United States of America Embassy Jakarta,

held discussion in INFID office on 14 April 2010.
Participants of this discussion are NGOs from different
background and media. Topic of the discussion is
“Indonesia – US Relationship during Obama
Administration”. Mr. Sheldon W. Simon, from Arizona
State University, and Mr. Michael Anderson, from the
embassy office, are speakers of this discussion.

Speakers discussed about Indonesia – USA

relationship from Indonesia independence until present
(2010). This long period is divided into three main
periods: Indonesia independence and Renville
Declaration, during Soeharto administration, and after
Soeharto administration (reformation era).

There are many statements, questions, and also

recommendations from participants during discussion.
Those are covered discussion about projection of the
future Indonesia – USA relationship, Indonesia – USA
relationship in military, how to fight against terrorism
and its threats to democracy, migrant worker, Obama’s
plan to visit Indonesia, and US’ economy interest in
Indonesia.

Workshop : Open Forum on CSO Development Effectiveness, Yogyakarta 3 – 5 Mei 2010

As a part of global consultation, Indonesia held consultation in Yogyakarta in 3-5 May 2010 by INFID,
INDIES, AGRA, and YAKKUM. Consultation was attended by many organizations from various sectors, such
as transparency, gender, health, and also populist organization like farmers and doctor. The main objective of
this event is to formulate development effectiveness principles based on CSO’s perspective. In 3 and 4 May
2010, participants have identified principles and values that become base for CSO activities. The agenda of
the third day is multistakeholder dialog between CSOs, government representatives, and some donor
agencies. The main goal of dialog is to make an open communication space about development
effectiveness, especially in Indonesia.

INFID stands for the International NGO Forum on Indonesian Development and was established in June 1985.

INFID is an open and pluralistic network of NGOs from Indonesian and various member countries of the Consultative Group for
Indonesian (CGI) as well as of International organization with an interest in and commitment to Indonesia

More information please visit: www.infid.org