The week in review: Fasting
amid price rises

The Jakarta Post | Editorial | Sun, July 14 2013, 11:00 AM

Hundreds of millions of Muslims began the annual fasting month earlier this week requiring them to refrain from consuming food and beverages from dawn until sunset.

The small disagreement over when the lunar-based fasting month begins — members of Islamic organization Muhammadiyah started fasting on Tuesday, one day earlier than the beginning of Ramadhan as declared by the government and most other Islamic organizations — will not mar the virtues of the holy month.

However, unlike last year, this year’s fasting month will surely be much harder for the majority of Muslims because of the unusually high increases in the prices of most basic commodities and services as the impact of the recent fuel-price rise takes its toll.

Indonesia, which has the world’s largest Muslim population, usually sees prices rise immediately prior to and during Ramadhan and Idul Fitri but the recent fuel-price increase has pushed the inflationary pressures much further.

While the fasting month requires Muslims to refrain from indulgence in bodily desires, the government appealed to suppliers and retailers not to excessively raise prices to offset the costlier fuel so as not to increase the burdens on the people during the fasting month and upcoming Idul Fitri celebrations.

Meanwhile, State Intelligence Agency (BIN) chief Marciano Norman called on mass organizations not to conduct illegal raids on people and places they deem as acting immorally in order to maintain social harmony and peace.

But Muslim hard-liners, affiliated with the Islam Defenders Front (FPI), have vowed to raid “sinful” bars amid rising intolerance. FPI leaders were quoted by newspapers as asserting that they will take firm action against the sale of alcohol, strip shows and prostitution and would send members to spy on sinful activities, pointing out that they would not hesitate to conduct their own raids if the police failed to uphold the law and maintain public order properly.

But Jakarta’s public order agency (Satpol PP) urged hard-liners to refrain from taking the law into their own hands, promising to conduct sweeps of Jakarta, targeting the 1,800 establishments subject to Ramadhan regulations. 

Almost 900 bars, nightclubs, massage parlors, pachinko parlors and pool halls have said they will remain closed for the entire month.

Without much fanfare, the House of Representatives enacted on Tuesday three pieces of legislation on the protection and empowerment of farmers and cattle breeders, the eradication of illegal logging and deforestation and aerospace management.

The most significant of the new laws is the one which will require the government to provide agricultural insurance for farmers to cover losses caused by crop failure due to natural disasters, pests, outbreaks of infectious plant disease or severe weather. 

The law will also protect local farmers from excessive foreign competition by restricting farm commodity imports whenever local supplies are adequate to meet domestic demand and limiting imports only through specific seaports.

The specific entry gateway ports for imports will be located far from the major producing areas of the imported commodities and will be equipped with quarantine facilities.

Regional development banks are required by the law to set up departments specializing in extending microloans to 
farmers and cattle breeders. 

The law also obliges the central government to set up a commodity fund to support the building of buffer stocks of particular commodities in a concerted bid to protect farmers from excessive price volatility.

In addition to the financial empowerment, the law also aims to give Indonesia’s estimated 41 million farmers greater political voice and lobbying power by increasing government support for farmers’ associations and cooperatives. .

The new law on the prevention and eradication of deforestation was billed as the most comprehensive legislation against all kinds of forest-related crimes. 

The House and government claimed that the new law would provide stronger legal foundations for law enforcers to cope with forestry crimes, and a deterrent effect to prevent new crimes. However, a coalition of environmental organizations and anticorruption activists has opposed the legislation, saying they will soon file for a judicial review of the law at the Constitutional Court.

Most obviously missing from the new law, according to green campaigners, are provisions on forest fires and slash-and-burn practices of the type that caused more than two weeks of heavy haze in Riau, Singapore and Malaysia last month. 

The coalition of NGOs asserted that the new law seemed to be completely decoupled from prevailing forestry-related laws and regulations and did not make clear distinction between indigenous and state forests.

The environmentalists claimed the new law instead added to the confusion of overlapping and conflicting regulations regarding forestry issues.

The House saw the enactment of the law on aerospace management as an important move to strengthen the government control of satellites which are essential for data gathering, including those on taxpayers and tax objects.

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View Point: Better regulation and protection for financial consumers

Vincent Lingga, Jakarta | Opinion | Sun, May 19 2013, 11:29 AM

Paper Edition | Page: 5

The seemingly endless string of financial scandals involving the sale of fraudulent investment products which has caused many small investors to lose their life savings has prompted the Financial Services Authority (OJK) to strengthen the mechanism of its financial consumer protection.

The latest cases of financial fraud using commodity (gold) trading as the underlying transaction seem to have jolted the OJK to realize how inadequate has been the regulatory framework and inter-ministerial coordination for financial consumer protection, while the average financial literacy of the rising middle class consumers remains very low.

Supervision coordination is indeed most imperative. The OJK oversees only investment and financial service products that it has licensed and has nothing to do with products linked to commodity trading.

Commodity trading, including the futures exchange, lies within the jurisdiction of the Ministry of Trade and with Bapeppti (the Commodity Futures Trading Regulatory Agency).

The problem though is that it is often extremely difficult, especially for uninitiated investors, to distinguish between investments linked to commodity trading and financial products.

The OJK, through its financial customer care (FCC), has stepped up a campaign to educate financial consumers and retail investors and has designed a new way for investment products to be sold in a concerted bid to drive shoddy and aggressive merchants out of the financial service industry.

It has set up a task force consisting of all law-enforcement agencies and various ministries to deal with bogus investment and fraudulent financial products.

In the year to date, OJK Chairman Muliaman Hadad said, the FCC received complaints about the sale of fraudulent investment products by 29 companies, all linked to gold and futures foreign exchange trading.

Last year, the number of complaints raised by financial service customers increased by more than 25 percent to almost 854,000.

In late 2008, hundreds of retail investors who bought Lehman Brothers structured investment products through Citibank Indonesia lost millions of dollars when the US investment bank went bankrupt.

But Citibank, in a good gesture to maintain its customer trust, last December reimbursed the Lehman note buyers with 70 percent of their original investment made in 2007 by buying back the Lehman notes at 70 cents to the dollar.

Hundreds of other retail investors got “burned” when the investment products issued by PT Antaboga Delta Sekuritas through Bank Century (now Bank Mutiara) turned out to be fraudulent.

Even the American government immediately set up a politically independent consumer financial protection agency after the 2008 global financial crisis, triggered by the Lehman Brothers bankruptcy, which caused millions of mortgage borrowers and retail investors to suffer big losses.

The OJK should indeed lead the protection of financial consumers because it will soon take over the oversight of the whole financial service industry and capital market, including banks.

The combination of poor financial consumer protection — caused by incompetent financial service oversight — and low financial literacy of most bank customers and retail investors has made it possible for Ponzi-scheme investments to operate for several years before being detected by regulatory agencies.

Rather than simply ensuring that consumers are provided with complete and accurate information, the OJK should also closely monitor companies to make sure that the right kinds of products are offered to the right kinds of people.

This activist approach is especially needed now when the risk of mis-selling and poor consumer choices is especially high.

With deposit interest rates at historic lows, many investors and savers who are searching for higher returns are turning to complex, poorly understood products, while banks and brokers are under heavy pressure to find new sources of revenue.

Many surveys have found that investors cannot be counted on to make rational choices and often make complex decisions contrary to their own interests because of their aversion to losses, so regulators should ban the sale of potentially harmful products.

Investors or financial product consumers in general are not always rational. Faced with complex decisions or too much information, they often default or they hide behind credit agencies.

Financial institutions therefore should be required to provide customers with simple, user-friendly product information, including “warnings” (risks) on complex investments.

Equally important is that bank tellers and other employees, except those in the wealth management department, should be barred from selling investment products or pushing customers toward representatives selling them.

The OJK or its FCC should conduct a nation-wide campaign to educate financial service customers to improve their financial literacy or their understanding of financial products and their ability and confidence to appreciate financial risks and opportunities, to make informed choices.

The core principle of this campaign is also a cornerstone of economic theory: Well-informed consumers make for vigorous competition and efficient markets.

This idea should be embodied in the design of the new regulatory and protection framework for financial consumers, focusing on improving the information that consumers get from banks and other financial institutions, so that they can do the same kind of comparison shopping as that for other consumer products.

In a complex and opaque industry such as finance, a strong regulator is essential to make sure that market participants are telling the truth. A strong supervisory body is crucial if people are going to have the confidence to invest.

The writer is senior editor at The Jakarta Post.

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RI commodities and infrastructure magnet for equipment suppliers

The Jakarta Post | Business | Tue, April 23 2013, 2:02 PM

Paper Edition | Page: 14

As the world’s 16th largest economy with an annual growth of more than 6 percent, Indonesia is predicted to become the third largest market for heavy equipment in Asia after China and India. It was simply the right decision for Bauma 2013 in Munich, the world’s largest heavy equipment fair, which ended Sunday, to make Indonesia its official partner country. Volvo Construction Equipment, one of the largest among the 3,300 exhibitors at the international fair, invited a group of journalists from Indonesia, including Vincent Linggafrom The Jakarta Post, to observe the massive display of power machines. Below is his report.

Indonesia took center stage at Bauma 2013 with a full-day conference where senior officials from the public works, transport, mining and finance ministries, along with the investment coordinating board briefed potential investors and international suppliers on the bright outlook of the heavy equipment market in Indonesia.

Back in February, Indonesia was, for the first time, selected as the guest country at the annual international trade fair in Basel, Switzerland.

In early March President Susilo Bambang Yudhoyono, accompanied by German Chancellor Angela Merkel, raised Indonesia’s global profile at the five-day Internationale Tourismus Borse (ITB) in Berlin, where it was also the official partner country.

But Indonesia’s “bing-bang” participation at Bauma 2013, the world’s largest heavy equipment fair, should top its string of global stage appearances.

Despite the mining and plantation sectors — which at the outset ignited the boom in the heavy equipment market — currently being in their down-cycle period, machine suppliers consider this a temporary phenomenon.

International suppliers remain upbeat about the future of the market, especially as demand from the construction sector had started heating up after the launch of the economic growth acceleration master plan, which needs more than US$460 billion investment in infrastructure alone within the next 10 years.

All major manufacturers of heavy equipment from the world, notably Europe, the United States, Japan, South Korea and China, displayed their machines within the 555,000-square-meter exhibition site.

But the Brussels-based Volvo Construction Equipment, the world’s third largest supplier, appeared to be the star among the exhibitors because last year alone the company released 60 new pieces of equipment, all employing new technology that makes the machines more fuel-efficient, more reliable and more environmentally friendly.

As Indonesia launched its 15-year master plan for the acceleration and expansion of Indonesian economic development (MP3EI) last year, which will require more than $460 billion in infrastructure development alone, Bauma 2013 was certainly the right place for public works officials to assess the latest technology available for the industry.

It is no wonder that Public Works Minister Djoko Kirmanto headed a large delegation to the exhibition. Besides delivering a speech as part of the Indonesian Day conference, Kirmanto also inspected displays at the huge fair.

 Volvo, which operates construction equipment manufacturing plants around the world, demonstrated for Kirmanto and his delegation the capability and performance of their equipment.

“I am impressed with the performance of your equipment,” Kirmanto told Volvo executive vice president Eberhard Wedekind.

Kirmanto also spontaneously asked Hediyanto Husaini, the director general for the construction development agency, to facilitate meetings between contractors in Indonesia and Volvo.

Danang Parikesit, special assistant to the minister, projected in a speech at the conference that Indonesian’s demand for heavy equipment for mining, plantation and construction, would increase from about 42,000 units last year to 50,500 this year.

The annual sales growth of more than 40 percent steadily booked over the past five years by publicly-traded PT Intraco Penta, the main distributor of Volvo heavy equipment, demonstrated the dynamic of the Indonesian market.

Parikesit estimated the value of construction contracts in the country to increase to $40.3 billion this year.

“Indonesia is a very important market for us and we remain upbeat about the market despite the current down-cycle,” noted Volvo CE president Pat Olney, pointing out that the emerging economies such as China, India, Indonesia and Latin America already accounted for more than 50 percent of Volvo equipment sales.

Olney’s optimism has strong foundations because much of the new investment projects approved by the Investment Coordinating Board over the past five years were for mining, tree plantations, property and infrastructure development projects such as toll-roads, bridges, seaports and airports.

Olney said that when it comes to mining, highway construction and maintenance Volvo CE offers an extensive product portfolio.

“We also keep ourselves updated of ideas from our customers and include their suggestions in our research to produce better machinery,” said Anders Larsson, Volvo CE executive vice president for research and technology.

Certainly, Volvo will have to compete fiercely with other major equipment suppliers as Caterpillar from the United States and Komatsu from Japan.

Petrus Halim, president of Intraco Penta (INTA), which has distributed Volvo equipment since the early 1980s, concurred, saying “it is not simply selling a machine but enlightening customers of the right economic concept of heavy equipment”.

The right investment concept is imperative because the prices of heavy equipment can range from tens of thousands to over a million dollars per unit, Halim said.

“We offer a total solution to our customers — not only in terms of operational reliability and operational life. We also tailor the schedule and method of payment to the cash-flow prospects of our customers,”
Halim added.

In addition, Intraco Penta operates about 40 branches around the country that serve as service and maintenance centers and depots for Volvo machinery spare parts.

“We reach out to our customers even in the remote areas, such as Kalimantan and Sulawesi, and go ‘all out’ to minimize the downtime of the heavy equipment we sell,” Halim said.

“Take for example, a coal mining firm that intends to buy our equipment but has difficulties in marketing their coal competitively. We can help this company to sell its coal because one of our subsidiaries is an independent power producer in Batam,” added Intraco’s finance director Fred Manibog.

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VIEW POINT: Our banks: Grossly inefficient, yet highly profitable

Do you know that our banks are among the most inefficient yet the most profitable in the ASEAN region?

Perusing the financial reports of the publicly-traded banks, one would see banks in Indonesia enjoying an average net interest margin of 5.53 percent or nearly twice that of their peers in other ASEAN countries.

What is strange is that their cost to income ratio stood at almost 80 percent as of January, compared to 40 to 60 percent in neighboring ASEAN countries, indicating operational inefficiency.

But how could such an anomaly have occurred, while the market is crowded with more than 120 city-based banks, not to mention hundreds of secondary banks in the rural areas? Oligopoly, says the government anti-monopoly watchdog (KPPU).

The KPPU told a hearing with the House of Representatives on Wednesday it had found strong indications of oligopolistic practices in the banking industry whereby the top 10 largest banks control almost 80 percent of the market, leaving the other 110 banks with the remaining 20 percent. 

Further analysis reveals that the five largest banks, of which four are state owned, control more than 60 percent of the banking market.

It was this oligopoly that had enabled the largest banks to control lending rates and keep their net interest margin — the difference between the lending rates banks charge to borrowers and the interest paid by banks to depositors — unusually high, according to KPPU chairman Nawir Messi.

The five largest banks, as the market leaders, control the deposit market and set the trends in lending rates, but the other 115 banks, due to their negligible market share and their small deposit base cannot do much to challenge the market leaders.

So the mid- and small-sized banks simply follow the leaders.

Leaders of the banks association (Perbanas), who also attended the hearing with the House, certainly rejected the observations of the KPPU, blaming the high lending rates in Indonesia on high inflation (5 percent a year), the vast areas across the world’s largest archipelago that have to be served with branches or ATM networks and high business risks.

The central bank’s benchmark interest rate currently stands at a historic low of 5.75 percent, but data at Bank Indonesia (BI) shows that the average interest rates for working capital, investment and consumer credit currently stand at 11.5 percent, 11.3 percent and 14.3 percent, respectively.

These rates are charged only on the prime customers. The interest burdens could exceed 30 percent for high-risk borrowers such as credit card holders and small- and medium-scale businesses.

Another glaring shortcoming is the fact that only about 4 percent of banks’ third-party funds are placed in the interbank market, while only the 10 largest banks enjoy excess liquidity.

This not only causes oligopoly in the market but also forces the other 110 banks to compete fiercely for deposits, offering depositors rates higher than the 5.5 interest ceiling set by the Deposit Insurance Corporation (DIC), thereby further contributing to raising interest rates.

BI deputy governor Halim Alamsyah has confirmed that competition to raise deposits has been so fierce lately that several banks have been luring depositors with interest rates higher than the ceiling of 5.5 percent set by the DIC, putting depositors at risk of losing their money.

The Deposit Insurance Law stipulates that any bank with savings or time deposit accounts offering interest rates higher than the maximum rate set by DIC would not be refunded if the bank went bust.

Extremely high lending rates, acutely inadequate infrastructure and grossly inefficient logistics systems have become a big disadvantage for businesses in Indonesia. 

The interest costs Indonesian businesses have to pay are twice as high as those charged on their counterparts in Malaysia, Thailand, Singapore and China. These high capital costs have deterred new investments because new businesses have to generate unusually high returns.

It is simply unfair and economically unwise to allow commercial banks to continue to enjoy net interest rate margins of 5 to 6 percent while a large chunk of their funds have been ploughed into the financial market. The government, if necessary, should pressure state banks, which still account for around 40 percent of the industry’s total assets, to act as the trend setters, leading credit expansion at reasonably low rates to the government-selected priority sectors.

Seen from their multiplier impact on the economy, it is much better for the state banks to significantly expand lending to the real sector at relatively low credit interest rates, rather than booking high profits but at the expense of economic growth. 

The government therefore should inject more competition into the banking industry by allowing mergers between mid-size banks to build up strong competitors to the five largest banks.

One way of doing this is by approving the planned merger between Singapore’s Bank DBS and Bank Danamon and the planned acquisition by Bank of Tokyo-Mitsubishi UFJ, the largest bank in Japan, of Bank Tabungan Pensiunan Nasional to build strong contenders to the top five players.

However, only jawboning banks to lower lending rates may compromise the quality of their risk management.

It is also imperative for the government to reduce the persistently high business risks by accelerating reform measures in the civil service, taxation, customs and legal sectors. Adverse business condition would expose businesses to high risks of debt default.

It would be better for banks’ credit risk management if BI kept improving the capacity of its credit bureau to provide lenders with more reliable, comprehensive information on debtors. 

The writer is senior editor at The Jakarta Post.

Vincent Lingga | Opinion | Sun, March 17 2013, 9:47 AM Paper Edition | Page: 5

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Singapore national eye center looks to closer ties with Indonesia

The Jakarta Post Body and Soul Wed, March 06 2013, 1:25 PM Paper Edition Page: 22

An eyeful: Doctor Donald Tan (left) operates on a patient at Singapore National Eye Center. The center is eyeing closer ties with Indonesia. (Courtesy of Singapore National Eye Center)
The Singapore National Eye Centre (SNEC) last week invited journalists from Indonesia, including Vincent Lingga from The Jakarta Post, for a two day visit and briefing from its renowned ophthalmologists. His report:

We happened to bump into Winawati Sutisna from Jakarta who was on a visit to the International Patient Service department at the SNEC to consult with an ophthalmologist about treatment for her 10-year old daughter’s strabismus, or squint-eye.
“I learnt from an ophthalmologist in Jakarta that the SNEC is the best place in the region to treat my daughter’s problem,” Winawati said.

She paid S$90 (US$72.30) for a consultation which she said was not much more than the fees charged by a senior ophthalmologist at a modern private eye hospital in Jakarta.
Winawati is just one of the tens of thousands of Indonesians seeking quality healthcare or simply having health checkups at government or private hospitals in Singapore.

The latest data from the health ministry shows that last year around 18,000 visitors from Indonesia went to Singapore for medical attention. That’s almost 50 percent of the total number of foreigners who travel to there for health services.

The Indonesian government has been trying to encourage private investment in healthcare, allowing foreigners to hold up to 100 percent equity in private hospitals in the hope that an increased foreign presence will motivate state hospitals to improve their services.

Despite this expansion, Indonesians who can afford it prefer to go abroad. They are the major contributors to medical tourism in neighboring countries, notably Singapore and Malaysia
According to the Mayapada Health Care group, Indonesians spend more than US$750 million annually to travel to Singapore, Malaysia or Australia for medical purposes.

As the most modern, well-equipped specialist in eye care in the region, the SNEC has become increasingly popular for Indonesians from cities other than Jakarta, which do not have modern eye hospitals.

Since its opening in 1990, the center has steadily expanded and now covers nine subspecialties: in cataract and comprehensive ophthalmology; corneal and external eye disease; glaucoma; immunology and vitreo-; neuro-ophthalmology; ocular inflammation; oculoplastic and aesthetic eyeplastic; paediatric ophthalmology and strabismus; and refractive surgery.

Last year alone, the SNEC managed 275,000 outpatient visits, 20,000 surgeries and more than 13,000 laser procedures.
Doctor Ho Ching Lin, head of the glaucoma department at the SNEC, said as the local and regional referral center for secondary and tertiary management of glaucoma, her department manages more than 40,000 glaucoma attendances annually.

“About 2,000 of them are visitors from Southeast Asia, including Indonesia,” Ho added.
SNEC Medical Director Donald Tan, however, did not see the increasing popularity of his center as a zero-sum game with eye care hospitals or clinics in Indonesia.

“The SNEC complements eye hospitals in Indonesia. We are actively involved in clinical trials and research into the causes and treatment of major eye conditions such as myopia and glaucoma.
“Thousands of ophthalmologists from the region, including Indonesia, have participated in SNEC courses and meetings, which are organized annually,” added Tan, who last year was elected as first non-American president of the US-based Cornea Society.

“I myself and several senior ophthalmologists from the SNEC have visited Indonesia often for lectures or conferences with Indonesian eye specialists. We also cooperate with several eye hospitals in Indonesia like the Jakarta Eye Center and the National Eye Center in Cicendo, Bandung,” Tan said.
SNEC ophthalmologists and eye specialists from the region regularly exchange views and best practices through the annual meetings of the Asian Association of Eye Hospitals.

The best competitive advantage of SNEC has is the Singapore Eye Research Institute (SERI), one of the largest eye and vision research institutes in the Asia Pacific region in terms of staff numbers, grant income, research initiatives and innovations and inventions.

SERI director Wong Tien Yin said the multi-ethnic composition of the Singapore population is really an advantage because therapies and diagnoses that have been developed in the West may not be directly
applicable to Asia.
“Its ability to test diagnostics and therapeutics with patients of three major ethnic groups positions makes SERI the eye laboratory for the whole Asian market,” Wong added

Research at SERI, which is attached to the SNEC complex, has helped the SNEC develop and apply new eye care services, for example, Lasik, a wonders of modern medicine and technology to improve vision and do away with spectacles or contact lenses.

Cataract extraction and intraocular lens implantation is the most common operation performed at the SNEC with more than 10,000 cataract procedures each year, by a team of over 55 full time ophthalmology specialists.

“Those who plan to have laser vision correction can now look forward to a new technique beyond LASIK, with the introduction of SNEC ReLEx,” said Cordelia Chan, head of the refractive surgery service.

Chan explained that unlike conventional LASIK which destroys the inner corneal tissues, the new procedure does not create a flap in the cornea and uses only one laser for the entire process, thereby resulting in a much stronger eye and less immediate postoperative discomfort and tearing.

Tan and his team have developed and patented a new technique for cornea transplants, which used to require at least 20 stitches and a recovery of six months. The new technique, called DMEK, already used worldwide, minimizes invasive corneal transplantation, thereby reducing damage to the new cornea’s cell.
An increasing number of middleclass and high-income Indonesians, especially those in the resource-rich provinces with direct flights to Singapore, look for quality healthcare in the city state, well known as providing the best healthcare center in Southeast Asia.

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APEC Summit will speed up economic integration

Vincent Lingga, Singapore Opinion Tue, February 26 2013, 9:01 AM  Paper Edition Page: 6

Economic and technical cooperation (Ecotech) and connectivity were predictably the most vigorously debated topics during the two-day conference of the Pacific Economic Cooperation Council (PECC) that ended here on Saturday.

The first Pacific community seminar was held in September 1980 in Canberra, Australia, on the initiative of Masayoshi Ohira and Malcolm Fraser, then prime ministers of Japan and Australia. PECC is a unique organization which embraces and respects diversity. The group actively pursues and promotes a sense of common purpose in a peaceful and prosperous Pacific community based on diversity. PECC has consistently advocated strategies which will help regional economies to reduce the wide gulf in standards of living between members.

PECC has demonstrated a sustained commitment to open regionalism. It works to reduce obstructions to the economic integration of Pacific economies, without trying to divert economic activity away from other economies outside the region.

Leaders of the Asia-Pacific Economic Cooperation (APEC) agreed at their 1994 summit in Bogor to launch what has since become known as the Bogor goals: free, open trade and investment in the region by 2020. Ecotech was set as the third pillar of the agreement, to ensure the goals were politically acceptable in developing members.
Ecotech programs provide APEC’s developing economies with technical assistance to gear them up for free, open trade and investment with the more developed members.

Almost 18 years after the roadmap for Ecotech was drawn up in Osaka, Japan, in 1995 and strengthened at the 1996 summit in Manila, most developing members are disillusioned over the very slow pace of Ecotech activities. They complain about an acute lack of focus and accuse the developed economies of too much emphasis on trade and investment liberalization.

Indonesia’s Tourism and Creative Economy Minister Mari Elka Pangestu warned participants at the conference on Saturday that Ecotech programs in capacity building should be stepped up.
The rationale, according to Jusuf Wanandi, cochair of the conference, is that since the levels of development in the 21 members are not equal, it is impossible to enforce the same rules and timetables with equanimity for all members.

PECC, which was set up in 1980, is a tripartite partnership of senior individuals from business and industry, government, academic and other intellectual circles from more than 23 countries in the Asia Pacific.

Thousands of Ecotech projects have been launched to gather and share information, for training and development of best practices. Ecotech projects, however, are thinly spread out across many areas, lack cohesion and often overlap with similar bilateral activities.

Given the non-binding nature of APEC and in view of the limited funding available, APEC needs to redesign these projects and develop models of best practices in capacity building. Members need to focus on areas which will provide the greatest contribution to economic integration.

One area which caught the attention of conference participants is small and medium enterprises (SMEs). In some APEC countries SMEs account for 90 percent of all businesses and employ as much as 60 percent of the workforce but generate only about 30 percent of exports.
Governments need to improve the business environments to help SME networking and develop strong export-driven companies.

Teng Theng Dar, the director of Business Compass Consultancy in Singapore, wants closer cooperation between SME development centers and higher learning institutions as one of the most effective ways of transferring business competence to SMEs.

The APEC ministerial meeting on SME development in Bali in September in the run up to the Bali summit in October should review capacity-building Ecotech programs and focus them on the business environment and networking.

Improved connectivity was set by an APEC meeting in Jakarta last month as one of the three top priorities, along with free trade and sustainable growth, and became a key theme of discussions at the PECC conference.

But while developing the basic infrastructure for physical connectivity is challenging enough, especially in Indonesia, physical infrastructure is not enough to guarantee economic integration.
Minister Mari, citing the bitter experiences of African countries, noted that regulatory reform, or what she termed as “behind-the-border” rules such as customs clearance and port capacity, is equally important.

ASEAN countries have experienced how non-tariff barriers to trade, notably in the areas of technical standards and customs services, have hindered progress toward economic integration.
Free trade is not only a matter of cutting or removing tariffs. Different standards and assessment practices; different product registration and labeling rules; duplicate testing for quality certification, all increases costs.

As is a regional transit system that requires repeated export, import and transshipment of goods at national borders.
The bulk of the work in developing institutional connectivity lies in regulatory reform which is the domain of governments, not Ecotech programs.

The writer is senior editor of The Jakarta Post.

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Commentary: Bank Indonesia bows to political pressure on DBS-Danamon deal

Vincent Lingga, The Jakarta Post | Commentary | Mon, December 03 2012, 10:08 AM

Paper Edition | Page: 2

Bank Indonesia (BI), the nation’s central bank and ostensibly an independent institution, effectively said on Friday that it had succumbed to political pressure when evaluating the application filed in April by DBS Bank in Singapore to acquire almost a 67.5 percent stake in Bank Danamon, Indonesia’s sixth-largest bank.

 BI Governor Darmin Nasution told reporters that the purchase, which has an estimated price tag of US$7.2 billion, had become a political issue and that the bank needed more consultations with the Singaporean central bank, the Monetary Authority of Singapore (MAS).

Nasution’s remarks, strange though not unexpected, indicate that he does not have the stomach to face a mounting nationalistic sentiment in the House of Representatives and among the nation’s largest domestic banks.

It is the job of politicians to set Bank Indonesia’s goals, one of which is the development of a strong banking sector. However, politicians should keep their noses out of the business of banks and leave BI, with its large pool of technocrats, to choose the tools it needs to achieve its goals.

What has happened has been quite different. Immediately after DBS chief Piyush Gupta, for the sake of transparency, revealed the planned acquisition in early April, state-owned Bank Mandiri and BNI, supported by narrow-minded lawmakers, exhorted Bank Indonesia to link its decision on the deal to concessions from MAS to allow freer expansion by Indonesian banks in Singapore.

True, for DBS, Southeast Asia’s largest bank, the acquisition represents a once-in-a-lifetime opportunity that is not available elsewhere in the region. DBS, faced with a mature market at home, needs to expand in Indonesia, Southeast Asia’s largest economy.

DBS will never be able to become a leading bank in Asia without having strong legs in Indonesia, India and Hong Kong. For DBS, the acquisition would give it access to Danamon’s 3,000-branch network that serves six million customers, which is larger than the entire population of Singapore.

In terms of ownership, the transaction will not bring about any fundamental changes, as both DBS and Danamon are by and large controlled by the Singaporean government investment company Temasek through subsidiaries.

BI did announce in July new regulations that limit single ownership of local banks to 40 percent for financial service companies, but the central bank still retained discretionary power to waive the general ownership caps if the acquiring banks have high levels of corporate governance and are in strong financial health.

If the central bank held to the objective of the new ownership cap rules — strengthening good governance at banks — then the DBS-Bank Danamon deal should have been approved, because both banks met the basic requirements.

However, it is regrettable that BI has not been sufficiently transparent about the benefits of the DBS-Danamon merger for improving competition in the banking market, which seems to have been gripped by an oligopoly of the nation’s five largest banks, three of which are state banks.

The central bank should have made clear the economic logic of the deal to politicians and the general public, and educated people as to how the merger would contribute to strengthening the banking sector and invigorating Indonesia’s economy, which is still largely under-banked.

Such transparency and public education would have helped improve public opinion and protected the central bank from political meddling.

Indonesia, especially its banking industry, will benefit greatly from the transfer of skills from the merger, not to mention from the external expertise in risk management and other best practices of good governance and access to a new big source of international financing.

Such strategic investors and owners as DBS, with good reputations and huge capital resources, would accelerate the operational restructuring of Bank Danamon to provide financial services, notably credit — the lifeblood of the economy — across the archipelago.

Even Thailand, South Korea and Malaysia, which like Indonesia were hit by the financial crisis in 1997, have acknowledged the immense potential benefits to the rehabilitation and development of their financial industry from the local entry of major international banks, with their solid reputations and strong capital.

Unfortunately, BI seemed to succumb to political noise about the issue of reciprocity, which sounds confusing.

Suppose Bank Mandiri, BNI or Bank Rakyat Indonesia were assessed by the MAS as qualified for receiving full banking licenses. Would it then be commercially feasible for them to open dozens of branches and an ATM network across Singapore?

Certainly not, because that does not make any sense at all. They would find it extremely difficult to gain a broad depositor base in such a mature market.

We welcome the recent package of BI regulations that tie domestic and foreign bank licenses and operation expansions in Indonesia to higher standards of capital and good corporate governance.

The regulations, which require foreign banks to gradually allocate at least 20 percent of their loan portfolios to small- and medium-scale enterprises within the next five years, will be a boon to the
economy.

However, blocking the inflow of fresh capital, technology and expertise to the banking industry — the heart of the economy — mainly for reason of reciprocity seems a highly emotional and political decision.

We don’t think that the MAS would lower its standards and soften the terms and conditions it has imposed on foreign banks simply as a quid-pro-quo for BI to approve the DBS-Danamon deal.

Such a compromise would smack of discrimination.

Similarly, BI would not soften its terms and conditions and lower its capital and governance standards so that banks from Laos, Cambodia or Myanmar, for example, could be issued operational licenses in
Indonesia.

It is still less than 15 months away from the legislative and presidential elections in 2014. However, BI, a supposedly politically independent body, is already showing weakness when facing political pressure.

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The week in review: Deadly intolerance

Vincent Lingga, The Jakarta Post | Editorial | Sun, September 02 2012, 10:20 AM

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Paper Edition | Page: 4

The Idul Fitri celebrations are supposed to be a week of mutual forgiveness and social reconciliation, but brutal attacks last Sunday claimed the lives of two members of a Shiite community, damaged dozens of houses and forced hundreds of people to flee and live in fear in Sampang on East Java’s Madura island, adding further evidence to claims that Indonesia is in danger of becoming a failed state.

It was quite ironic that the government seemed to only sit idly and watch violence against minorities continue, casting doubt over the sustainability of Indonesia’s pluralism.

Yet more tragically, was the blame game that soon followed the violence. President Susilo Bambang Yudhoyono blamed the intelligence community for its failure to detect the assault and criticized law enforcement for its weakness. Lawmakers lambasted the police’s inability to prevent such mob violence, while ministers criticized local leaders for their failure to maintain peace between their followers.

In the meantime, the victims now live miserably in makeshift shelters, uncertain about how they will be able to rebuild their homes. But as in most earlier instances of mob, communal and religious violence, the most offensive fact of the matter was the failure of the state and the ignorance of law enforcers to do their duty to protect citizens.

What made Sunday’s violence more absurd was that only last December, the same Shiite community in Sampang was brutally attacked, and while the perpetrator of the attack was eventually sentenced to three months in jail, the leader of the Shiite community was convicted on charges of blasphemy and sentenced to two years in prison.

In fact, human rights activist Usman Hamid quoted victims who confirmed that last Sunday’s attackers were the same people responsible for the violence last December.

Sadly, this is not the first instance of a weak government response to those who commit violence under the pretext of religious values and beliefs. We may still clearly remember the widely-shown video footage of the ruthless killing of three Ahmadiyah members at Cikeusik, Banten province, in February 2011. The killers were each only sentenced to between three and six months in jail, while Deden Sudjana, the Ahmadiyah security coordinator who almost lost his hand in the attack, was failed for six months for inciting the violence.

The recurrence of such an incident points to a darker context beyond weak leadership, widespread indifference to and the protection of minorities.

In another tragically strange move that may lead to further discrimination against Shia followers in Sampang, the government is considering a plan to relocate the group, saying that the move could prevent future attacks from the majority Sunni community.

It may not be an exaggeration to say that Indonesia’s pluralism is now facing a serious threat. The intrusion of radical ideologies has polarized and segregated society, as also evident in the Jakarta gubernatorial elections, where several prominent public figures have openly attacked candidates on the basis of religion and ethnicity.

The National Commission for Human Rights (Komnas HAM) said on Thursday that as many as 70 members of the Shiite community in Sampang were still missing and dozens of people were still hiding in the surrounding jungle.

Some 340 Shiites seeking refuge at Sampang Wijaya’s Kusuma Stadium were living in squalid conditions, packed like sardines, with poor sanitation and food, the commission added.

***

In another outburst of violence, one man was killed and another was left in a critical condition after a gangland brawl erupted over a disputed plot of land in West Jakarta on Wednesday. The conflict broke out as a group of men attempted to enter a plot of land and lay claim to it, setting off a clash with the gang entrusted to guard the plot. After a negotiated settlement fell apart, police officers shot two men who attempted to evade police capture as they raided the area.

The West Jakarta Police said 98 of more than 104 gang members arrested had been declared suspects.

***

Returning from their Idul Fitri vacation, House of Representatives lawmakers failed to live up to the basic value of the Islamic holiday and reform bad habits. Low turnout marked the first plenary session after a long recess on Wednesday, with only 315 out of 560 lawmakers in attendance. Prevalent absenteeism, which has come to characterize members of the House, was ironically clear as they celebrated the 67th anniversary of the legislative body.

So many times, the honorable, well-paid lawmakers have come under fire for their acute absenteeism, which has slowed the legislative process to a sluggish pace, but the criticism, if not chastisement, always falls on deaf ears.

The House also sparked a controversy this week with its deliberate procrastination in selecting new members of the Komnas HAM. The House’s failure to arrange candidate interviews as part of the selection process has forced the President to extend the term of office of the current commissioners. It may be premature to conclude that the House lacks a commitment to human rights, but its silence on a series of rights abuses plaguing the country recently says otherwise.

However, lawmakers deserve credit for unanimously passing the bill on the special status of Yogyakarta on Thursday. The endorsement marked an end to 11 years of uncertainty and polemics that soured ties between Jakarta and the sultanate city.

The bill reaffirms the role of the sultan as both the guardian of local culture and the governor without having to undergo the long, acrimonious and expensive process of running for office. The sultan’s eligibility to govern, however, must be verified by the provincial legislative council to uphold a system of checks and balances.

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The descent from developmental state into predatory state

Vincent Lingga, The Jakarta Post, Jakarta | Feature | Sun, August 12 2012, 12:18 PM

Paper Edition | Page: 6

Indonesia’s two longest-serving presidents, Sukarno and Soeharto, were both authoritarian and were both brought down by economic crises.

Bankrupt economies caused severe economic contraction and eventually led to political crisis and the ignominious downfall of Sukarno in 1966 after 21 years in power and Soeharto in 1998 after a reign of almost 32 years.

The difference, however, was that the mid-1960s crisis was caused by internal factors — gross economic mismanagement which led to an utter neglect of sound policies — while the crisis that started in late 1997 was precipitated by external factors — a sudden reversal in foreign investor sentiment wich triggered panic and massive capital flight.

These are some of the points from Indonesia’s Economy Since Independence, the latest book written by Thee Kian Wie, a senior economist at the Economic Research Center of the Indonesian Institute of Sciences (LIPI).

Thee says the crises, though different in their origins and manifestations, show the absolute necessity of good governance and strong institutions to establish and enforce basic rules on the government and the private sector.

An economy which rests only on one unsustainable institution — a strong, authoritarian president — is quite vulnerable to internal and external shocks.

Even though the book does not provide a thematic account of Indonesia’s modern economic history but is rather a short historical overview of Indonesia’s economy since independence, the 14 essays in the book still serve as a highly valuable record of Indonesia’s economic development process from independence to 2008.

This book should serve as a good reference for policy makers, analysts and economics students because the 14 papers form a condensed analytical record of Indonesia’s macro-economic and manufacturing development, pinpointing policy successes and failures over the past six decades.

 Thee shows how the affirmative (Benteng program) policy, launched soon after the nationalization of Dutch enterprises in 1950, to empower indigenous businesses with preferential treatment such as special import licenses and credits and foreign exchange at special rates, failed miserably due to corruption, collusion and nepotism.

He credits the 25 years of rapid and sustained growth during Soeharto’s administration to the ability of the economic technocrats to make use of the strong mandate they received from Soeharto to maintain macroeconomic stability through strict fiscal discipline.

But as the role and influence of the technocrats waned, fiscal discipline weakened under what Thee called the descent from developmental state into predatory state, mired once again in pervasive corruption, collusion and nepotism.

Indonesia, the book says, suffers from the natural-resource curse which also affected many other resource-rich countries such as the Netherlands.

The exploitation of natural-resource wealth encourages rent-seeking activities and reduces the return on human capital, thus diminishing incentives for educational attainment.

Resources, Thee argues, also promote the ascendance of a predatory state over the developmental state either through corruption related to resource rents or decline in the efficiency of policy and administration.

Half of the 307-page book is devoted to analyzing the policies of developing manufacturing industry and case studies on the process of technology transfers and the development of the wood, textile and garment and automobile parts industries.

 Thee traces the changes in the policies of manufacturing development from import substitution industries to meet the rapidly expanding domestic demand fueled by the oil booms of the 1970s into export-oriented industries to broaden the base of non-oil exports as oil exports declined.

 However, the global competitive environment for Indonesia’s manufacturing industries changed in the early 2000s after China’s dramatic rise as a formidable competitor in the world markets for manufactured exports and as an attractive place for foreign direct investment (FDI) and the emergence of global contract manufacturers in Singapore, Malaysia and Thailand.

 Thee sees the crucial role of FDI and visiting foreign buying agents in the transfer of technology to the manufacturing industry. The garment industry in Bali benefitted greatly from visiting foreign buying agents who provided advice and technical assistance in quality control and designs to meet consumer preferences overseas.

 However, Indonesia’s acute lack of absorptive capacity, notably the shortage of adequately trained and skilled manpower able to comprehend and master technologies has hampered the efficient transfer of technology through FDI to the country’s manufacturing industry.

The frequent changes in policy toward foreign investment also show that Indonesian policy makers have not had a clear idea of what they specifically expected from FDI.

The last chapter of the book on the development of the auto parts industry since 1974 should make for interesting reading by policy makers, analysts and economic students who have recently heard so much about the great enthusiasm for developing a national automobile.

This chapter analyzes why the policies for developing the automobile industry through the deletion program for commercial cars failed despite the fiscal incentives given to assembled cars with high local content.

 The low import tariffs and value-added tax imposed on components required for commercial vehicles failed to develop a local manufacturing base because there were too many car makes and models competiting in the limited domestic market while car manufacturing requires large economies of scale.

The government tried in 1981 to rationalize the industry by requiring car assemblers to reduce the number of makes and models locally assembled but this policy was strongly opposed by vested interests in the industry, thereby hindering the development of auto parts and components.

Car assemblers hesitated to develop long-term subcontracting relationships with auto parts suppliers because these suppliers, facing a segmented and relatively small domestic car market, were forced to supply several car assemblers in order to achieve economies of scale.

Indonesia’s economy since independence
Thee Kian Wie
ISEAS Publishing, 2012
307 pages

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Editorial: Bridge hangs in the balance

Vincent Lingga, The Jakarta Post | Editorial | Tue, August 07 2012, 7:49 AM

Paper Edition | Page: 6

We know that being indecisive has been one of the main hallmarks of Susilo Bambang Yudhoyono’s presidency.

Yet it is mind-boggling to observe Yudhoyono idly standing by, letting his ministers squabble in public over his decree on such a vital piece of infrastructure as the 28-kilometer Sunda Strait Bridge, which is planned to connect Java and Sumatra, the most developed and populated islands in this, the world’s largest archipelago.

The President has often talked eloquently about how connectivity is crucial to developing a superb logistics system, to ease the movement of people and goods and build up efficient distribution networks.

Yudhoyono should have immediately raised in the Cabinet Finance Minister Agus Martowardojo’s reservations about Presidential Decree No. 86/2011 that serves as the legal foundation for the US$10 billion Sunda Strait Bridge project and the strategic development of the southernmost areas of Sumatra and westernmost areas of Java.

The decree has gone through long, comprehensive and critical deliberations, as can be seen in its 33 articles, and the 30 months Yudhoyono took to make his decision after the government officially received the pre-feasibility study report from the initiator of the project, PT Graha Banten Lampung Sejahtera (GBLS), the consortium of Tommy Winata’s Artha Graha group and the Banten and Lampung provincial governments.

But Agus’ dissenting opinions should also be appreciated because errors can happen, some important legal aspects might have been overlooked, especially with regard to such a huge project that will require government guarantees.

The President should have led the Cabinet in analyzing and cross-checking as to whether his decree on the bridge project fully complied with the three other decrees he made earlier in 2005, 2010 and 2011 regarding public-private partnership (PPP) schemes in infrastructure development.

Of utmost importance is ensuring that the President’s decree does not provide a blank check to the private investors who will develop and operate the bridge and the related strategic industrial zones.

Making necessary improvements to the presidential decree would not be the end of the world. Nor would such changes severely damage the institution of the presidency.

 Only five months ago the President also issued a decree on divestment for foreign investors in mining to improve his earlier decree on the same matter enacted in early 2010.

But for Agus to continue publicly airing his dissenting opinions about the 2011 Presidential decree is also a futile way of improving policies. Such a renegade attitude could amount to little more than hitting his head against a brick wall.

In general, we think, the decree is already quite elaborate as regards the need for good governance in the project because the regulation has been designed to build a powerful internal-control mechanism to oversee the whole project right from its planning to its development and operation.

The decree requires the President to set up a governing council in charge of laying out the direction, policies and strategy for the development of the Sunda Strait Bridge and the industrial zones at its respective ends.

The governing council comprises 21 Cabinet ministers, the Indonesian Military (TNI) commander in chief, the chairman of the Investment Coordinating Board (BKPM), the chiefs of the National Police and the National Land Agency as well as the governors of Lampung and Banten.

 It is the governing council who will appoint the Executive Board that will be charged with implementing all the policies on the project and dealing with private investors under the PPP scheme.

Whatever amendments the government makes to the regulation on the massive project, there are several basic points that have to be factored into consideration.

First, the project is vitally important, second it may take more than 10 years to build and over 35 years for investors to recoup their investment, third, the government simply cannot afford to finance the project and it should therefore be implemented under the PPP scheme, given the economic and political risks and its vital function as a public service and fourth, the bridge and the industrial zones at either end of the bridge should be bundled into a single package to make them more attractive for private investors and lenders.

Of more importance is that regulations on the project should not lead to overkill as very few companies will be technically and financially capable of implementing the infrastructure project, given its size, the huge investment, the high technology and the long-payback period required.

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The week in review: Summits, pledges and reality

Vincent Lingga |The Jakarta Post | Editorial | Sun, 06/24/2012 7:18 AM 

Leaders of the G20 have pledged to take action to boost weakening world economic growth and support moves by eurozone countries to move toward a banking union to restore stability to the financial system, but they offered little new concrete aid.


The communiqué issued earlier this week after two days of talks in the Mexican resort of Los Cabos appeared to herald a shift in favor of the need to stimulate growth and will now put the focus on the summit of EU leaders later next week.

The G20 leaders appeared to recognize the risk that eurozone fears could spark turmoil across financial markets in the coming months, pledging to inject an extra US$456 billion into the International Monetary Fund to act as a firewall against further financial contagion.

They voiced support for the eurozone to take steps toward greater financial integration of the 17-member single-currency bloc, such as banking supervision, bank resolution and recapitalization, and deposit insurance.

The leaders vowed not to erect new trade barriers until 2014 to foster global growth.

However, the International Chamber of Commerce (ICC) strongly criticized the G20 leaders, pointing out that while the world economy was experiencing the worst crisis of the last 60 years, multilateral talks had stalled and protectionist measures had proliferated.

ICC Secretary General Jean-Guy Carrier quoted a research report of the Global Trade Alert during the G20 Business Summit in Los Cabos on Monday showing that the world’s richest developed and emerging economies had added about 225 protectionist measures over the past two years alone.

The rise in protectionist measures was also amply documented in recent detailed reports, prepared jointly by the World Trade Organization (WTO), the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD) at the request of the G20.

Anyway, most analysts have from the outset not put too much importance on the G20. After its widely recognized success as a fire fighter at the time of the financial crisis about three years ago, many observers have criticized the G20 forum mostly as a talking shop to let policymakers understand what their counterparts elsewhere are up to and why.

But then while there is a gap in global economic governance at leadership level, the G20 is still seen as best-placed to fill that space, one structure that people look to for guidance.

No wonder, many did not expect much from the gathering this week of global leaders, development experts, bankers, academics and activists in Rio de Janeiro held immediately after the G20 summit to celebrate the anniversary of the landmark Earth Summit of 1992.

The conference tried to address the linked problems of poverty, hunger, energy shortages and environmental degradation but the big gathering seemed to be overshadowed by economic and political crises around the world.

There are few expectations for concrete action or pledges of new aid to developing countries. The absence of key leaders from developed countries dashed the hopes for more concrete results.

Delegates said the constraints of the still-faltering global economy had dampened hopes and refueled the conflict between industrialized and developing countries that had hobbled international development and environment talks for years.

But Indonesia’s President Susilo Bambang Yudhoyono, one of the leaders attending the meeting, seemed not to be discouraged by the skeptics. He was instead still optimistic that the Rio summit would come out with a lot of firm action programs.

Yudhoyono briefed delegates from more than 190 countries on Indonesia’s programs to stop deforestation through a two-year moratorium on new permits for logging and exploitation of peat land in cooperation with the Norwegian government that pledged $1 billion in funding.

“We also launched a nationwide campaign to plant trees, which in the last two years have resulted in 3.2 billion trees being planted. We did this out of our own volition, but we also expect the world to support our efforts beyond rhetoric and finger pointing,” he said.

However, most environmental NGOs in Indonesia criticized Indonesia’s poor progress in reforming its forestry sector as deforestation has continued, thereby jeopardizing its campaign to reduce carbon emissions by 26 percent by 2020.

Even Norway’s Environment Minister Bard Vegar Solhjell was quoted by Reuters as observing that the moratorium itself would not be sufficient to achieve Indonesia’s climate change mitigation.

The $1 billion Norway has promised under the deal is contingent on policy change and proven emissions reductions from the forestry sector.

The conference, formally titled the Conference on Sustainable Development, but more popularly known as Rio+20, tried tackling big questions such as protecting the world’s forests and fisheries, weaning the world off fossil fuels and encouraging farming and economic growth that does not destroy the natural environment.

As Indonesia participated in the two important summits abroad, the nation witnessed an Indonesian Air Force Fokker F-27 aircraft crashing into the ground at the Rajawali military housing complex, near the Halim Perdanakusuma Airbase in East Jakarta on Thursday afternoon. All seven crew members and three civilians on the ground died.

Also on Thursday, the West Jakarta District Court handed down a 20-year prison sentence to Umar Patek for illegal possession of firearms and explosive devices and chemicals, premeditated murder in the 2002 Bali bombing and the 2000 Christmas Eve church bombings in Jakarta.

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