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American Indonesian

Chamber of Commerce

�for business and understanding�

 

 

To: All Members and Friends

From: Wayne Forrest, Executive Director

 

 

Daley Event Postponed Again

The forces of Mother Nature conspired against AICC's October 16 meeting with Matthew Daley, Deputy Assistant Secretary of State for East Asia.  Storms grounded flights from Washington to NY.  Daley has offered to return November 14 and we are determining if we can hold the event on this date.

 

Bali Bombings

The Indonesian police, assisted by investigative teams from several countries including the US (FBI), have not issued any conclusions nor offered any direct evidence linking the explosions to any specific group.

 

Indonesia's top security ministers have linked the bombing to Al Qaeda but not yet to Jemaah Islamiyah, the organization thought by the US, Singapore, and Malaysia to behind bombings or bomb attempts throughout the region. The group's leader, the cleric Abu Bakar Bashir, has not been arrested and is openly denouncing the US as being behind the blasts.  Public opinion is divided in Indonesia with some leading newspapers editorializing that the US, CIA, or another country could have been behind the bombings to justify accusations that Indonesia was a base for terrorism. And there are the voices that say the "enemy is within", perhaps rogue elements of the military.  Similar speculation greeted the murders of Freeport Indonesia employees in Papua in late August.  We pray the police can do their jobs accurately and expeditiously, but we have to acknowledge that this has not always been the case. It may well end up that we have to live with a gray, not a black and white, result.

 

Evidence of C4 plastic explosives and remarks by Omar Farouq, a captured Al Qaeda operative, that individuals connected with Jemaah Islamiyah had paid for explosives purchased from the Indonesian military in past years, increase the suspicion on the group.  Indonesia's Minister of Politics and Security has maintained that although its past leaders are in the country, "as an organization, Jemaah Islamiyah doesn't exist in Indonesia." US officials, including Secretary of State Powell and President Bush continue to publicly demonstrate frustration with the Indonesian government's unwillingness to act on intelligence shared by the US.  The implication is that there is sufficient evidence to make arrests. `And I hope I hear the resolve of a leader that recognizes that any time terrorists take hold in a country it is going to weaken the country itself... There has to be a firm and deliberate desire to find the killers before they kill somebody else.'' Bush said Monday.

 

Those of us who have met senior US officials over the last year know that Indonesia has not been well regarded on the issue of support for the US "war on terrorism" but there is sympathy in our government for the unique case of the country as the largest Muslim democracy.  Several officials have made the point that US policy towards the country could change in a potentially negative direction should it be learned that a major terrorist strike emanated from the country.   Whether or not the Bali attack qualifies as one is not yet clear.  However, it does seem clear that the US is expecting action.

 

It may have received some when Laskar Jihad, a militant Islamic organization, announced a few days ago it was disbanding in what may have been a preemptive move to avoid arrests.  Furthermore, President Megawati is actively seeking emergency powers to take preventive measures against terrorist threats without compromising the democratic reforms ushered in since 1999.  A debate on the precise nature of the powers has begun and some sources said she could get them by Saturday.  Lastly, according to NY Times Online edition, 10/16, "this morning, the Minister for Politics and Security Affairs, Susilo Bambang Yudhoyono, said that Indonesia had to "respect and believe" assertions that Jemaah Islamiyah was part of "an international terrorist network." He added that Indonesia "cannot disagree" with the views of Singapore and Malaysia that Jemaah Islamiyah was a terrorist group.  Indonesia, it may be inferred, is looking for ways to move against these groups without appearing to have done so at the request of the US.

 

Meanwhile, on Monday the US Embassy took the unusual step of ordering 100's of dependents and staff to leave Indonesia. AICC has not heard of exits of expatriate staff in Jakarta, although in the past the exit of Embassy staff and dependents did trip some corporate policies that require US nationals to leave the country.  Usually in this situation, other foreign nationals and Indonesians continue day to day management.   Most US firms, especially those in the energy industry, are operating normally, although with increased security.

 

It may be important to note that the initial travel advisory issued by the US Embassy has been altered slightly. The change reads a bit "softer".  Rather than saying that Americans "are urged to depart", the new language says that Americans "should... consider departing".   You can read the full text at www.usembassyjakarta.org.

 

The economic implications of the attack are not yet clear and its been my sense that a lot of uninformed speculation has already occurred.  For example, it is hard to believe that  "Indonesia is finished, why would anyone invest here now" as Aburizal Bakrie, Chairman of the Indonesian Chamber of Commerce, remarked. Surely he was hurt and frustrated, but the Indonesian economy has many fundamental strengths that provide a degree of resilience: large domestic market; diversity of exports including natural resources, agricultural commodities and light manufactured products; fertile land, low household energy costs. Surely, tourism will take a short term hit, already several conferences and tours have cancelled but PATA, (Pacific Area Travel Agents) intends to hold its annual meeting in Bali in April. Its also natural to expect that investment may be slow to return until the government can provide a more confident stance that terrorists within the country are being dealt with.  But IMF economist Ken Rogoff, interviewed recently by the Singapore Times, said that studies had shown that against a potential GDP growth rate of 3 to 3.5 per cent for the US economy, 'a sustained adverse security situation might have an impact of one quarter of one per cent'. Echoing Rogoff, Lehman has cut its 2002 growth forecast for Indonesia to 3.3 percent from 3.5 percent and its 2003 forecast to 4.0 percent from 4.5 percent. These are tough numbers but not destabilizing.   High energy prices are enabling Bank Indonesia to intervene and the rupiah has held steady around 9200.  If the government's approach to terrorism raises confidence and if it implements rational economic policies, the mid to long term outlook should remain bright for business.

 

The annual donor's meetings (CGI) have been rescheduled from October 28, 2002 until early next year allowing embassies and donor nations to concentrate on the immediate aftermath of the Bali tragedy.  However, informal meetings will take place at the end of this month to assess Indonesia's external financing needs leading into 2003.

 

Members interested to donate to a relief effort in Bali for victims and medical personnel should look at the following website: www.casalunabali.com/relief.  A long term resident in Bali writes that cash is needed to replenish medical supplies and for food and other costs to sustain hospital personnel and an army of volunteers pitching in to help survivors and the families of victims.