Get password
   
Search Product
Please select
 
Services
Product Categories
Message Board
Partners




Co-Funded

more details..

INDONESIA WELCOMES THE NEW YEAR WITH ‘MIXED FEELINGS”


Tuesday January 09, 2007

Indonesia rang in the year 2007 with “mixed feelings”, as aptly described by President Yudhoyono when opening the first day of trading of the Jakarta Stock Exchange on 2 January.

Although the public was initially buoyed by the peaceful end of the year celebrations throughout the country, and prospects of a better new year economically, yet the many human tragedies that occurred, caused by the changing climate and the onset of the rainy season have quickly dampened this joyful mood. 

First there was the good news: Peace reigned over the country through to the end of the year, as people of various religions observed appropriate ceremonies and rites and expressed happiness at the close of the year 2006, welcoming 2007. On Christmas Eve and on Christmas day, Protestant and Catholic churches were packed. These churches were guarded not only by Police but also by members of church congregations, and assisted by Muslim youth guards to prevent unwanted incidents. On 31 December, which this year fell together with the Moslem Eid-ul Adha, police were again deployed at full alert at churches and mosques. After the Eid prayers towards the evening, Indonesians of all religious backgrounds mingled to jointly welcome the new year with music and fireworks. There was again the feeling of togetherness regardless of religious backgrounds.  


The second positive news was that Indonesia’s macro-economy had kept improving at a steady pace. The Jakarta Stock Exchange index recorded its highest position ever at 1,836; the Rupiah managed to strengthen, even surpassing the psychological mark of Rp. 9,000 to the US dollar but today stands at Rp. 9,020 to the US dollar, while Bank Indonesia again lowered its benchmark interest rate with 25 points to 9.5 percent. Whilst, inflation had been pressed down to 6.6% in 2006, down from 17.1% the year before in 2005.    Finance Minister Mulyani, however, conceded that Indonesia’s economic target of 6.5% growth for the year had not been achieved, since growth had reached 5.5% only. Despite all this, 2007 looks optimistic. 

Extreme bad weather sinks ferry, and Adam Air B 737-400 disappears mysteriously

On the other hand, there was the bad news: extreme and rapidly changing weather conditions had caused many disasters. As the weather moved from a long dry season to a belated rainy season, this sudden weather transition caused havoc and destruction, ranging from cyclones to flash floods and massive erosions on land. Large tracts of Central Aceh, Riau and Bengkulu in Sumatra, and parts of Kalimantan were inundated, forcing thousands to evacuate and a number of people were reportedly drowned or missing. 

On 31 December high waves tilted and sunk the ferry Senopati Nusantara near the Central Java town of Rembang. The ship was sailing between Kalimantan and Central Java carrying over 600 passengers and heavy cargo on board. Nine days of scouring the seas, search and rescue teams managed to retrieve 245 passengers from the sea, although 11 were reported dead. Meanwhile, the remaining 400 passengers are expected to have been trapped and had drowned within the wreckage of the sunken ferry. Strong winds, unusually high two meter waves and continued bad weather in the past weeks have made diving for survivals impossible. Those lucky passengers who had managed to keep afloat for days on the Java sea were finally salvaged, having drifted far eastwards, from across the town of Rembang all the way to the eastern-most tip of Madura island facing the town of Sumenep, and even further away towards north Bali. 

Then, on the very first day of 2007, a Boeing 737-400 with 96 passengers and 6 crew disappeared from the radar screen at Makassar, South Sulawesi. The plane, operated by Indonesia’s LCC Adam Air, was on a routine direct flight from Surabaya in East Java to Manado in North Sulawesi – some 2 hours 40 minutes flying time –, and had mysteriously disappeared from the radar screen at Makassar airport at around 14.00 hrs. local time. The pilot had last reported experiencing strong, 80 mph cross winds, at an altitude of 35,000 ft. above sea-level, and had flown some one hour from Surabaya. Its position was then estimated to be near the West Sulawesi town of Polewali.

However, after seven days of intensive scouring on land and at sea as well as through reconnaissance aircraft sorties around the area where the plane was last detected on radar, not one single trace had been found of the missing plane nor its passengers. A full nine days into its disappearance, the ill-fated plane with 102 persons on board is still mysteriously missing. 
On 2 January, boosted by reports given by the villagers that they had seen a plane going down behind the mountains, and that 12 persons were reportedly alive, entire rescue teams were immediately deployed to scour the high, sometimes inaccessible mountain terrain, to reach the identified location. However, by nightfall that day, the teams had to report that they found nil at the indicated location. They seemed to have followed a wild goose chase, having lost some precious 24 hours in the search.

All-out efforts made to rescue Ferry survivors and locate ill-fated plane
 
Meanwhile, President Yudhoyono instructed that search and rescue efforts of both the sunken ferry Senopati Nusantara as well as the ill-fated Adam Air KI-574 flight should not be limited to the normal seven days, but that both are to be extended maximum time for the search, utilizing maximum resources.

Meantime, also, Singapore offered Fokker-50 planes and personnel to help in the search. This plane is equipped with infrared equipment to detect hot spots on the surface of the sea or on land. And, as among the missing passengers are listed three Americans of an Oregon family, the US government also sent a search team to assist, comprising members from the US National Transportation Safety Board, the Federal Aviation Administration, Boeing co. and General Electric.  On Tuesday, 9 January, the fully advanced technology equipped US Navy Ship Mary Sears is expected to reach Makassar to scour and map the seabed along the Makassar Straits, where experts believe the plane had disappeared.

Meanwhile, three Indonesian navy vessels and more Indonesian planes and helicopters had untiringly flown over large areas, in response to information received from villagers or fishermen, who could report possible sites where a plane was seen in distress. The area searched today covers a radius of 120 nautical miles from the spot where the plane is believed to have gone down. Overland, this area covers the terrain between Polewali and Mamasa in Tanatoraja , Majene and Mamuju.  Furthermore, teams were also sent more northerly to scour the coast around the district of Bolaang Mongondouw. Next, a Lion Air plane that had reported having received distress signals further east by the Banda Sea in the Moluccas as it flew across the area, was immediately followed up by more search teams sent. But all to no avail. No visible sign has so far been detected of the missing plane.

To further convince relatives of those missing on board of the Adam Air plane that conscientious efforts are being made by the authorities, the Indonesian Air Force invited anxiously waiting relatives to join in the search. These then had to concede that the area to be covered was both very wide, weather conditions were constantly changing, and the mountains extremely rugged. 
 
And until today, as air, land and sea rescues are continuously operated searching for the Adam Air plane along the Makassar Straits, - that deep trench that separates Kalimantan from Sulawesi, or indeed separates the continents of Asia and Australia -  other teams are at the same time kept busy along the Java Sea to Bali to find survivors of the sunken ferry.
 In the latest development, the Indonesian navy ship KR Fatahillah reported on 8 January that its sonar had detected large chunks of metal some 1,500 meters below the surface of the sea around Mamuju. This finding coincides with reports given by a fisherman that on 1 January he saw a bluish plane that seemed in distress flying low around the seas of Mamuju. It then disappeared behind thick clouds, only to be followed by a loud explosion. As the Fatahillah does not have the equipment to investigate its finding closer, the US Navy Ship Mary Sears is expected to confirm whether these chunks are indeed debris of the ill-fated plane. It is hoped that its finds may finally reveal the mystery of what happened to Adam Air plane KI-574. 

 2007 Economic Outlook remains Optimistic, despite 2006 below target growth

As to economic development, in his article in the Kompas daily on the 2007 Economic Outlook, Analyst Tony Prasetiantono of the University of Gajah Mada and Chief Adviser to Bank BNI expressed optimism that this year Indonesia’s economy will fare better.

Prasetiantono explained that in 2005, as the government raised fuel prices by 100 percent, this caused inflation to climb to 17.5% that year, significantly depleting consumers’ buying power. And, since consumption contributes a hefty 62% to Indonesia’s GDP, the contraction experienced in people’s buying power in turn impacted significantly on the economy. Other contributors to GDP in 2005, says Tony Prasetiantono, were investments, contributing 10%, government spending 8%, and trade balance18%. Therefore, Prasetiantono believes that Indonesia’s consumption-driven economy will not change drastically in the short term.

Weak consumption, he continued, is indicated by reduced spending on the purchase of new cars, which is its benchmark indicator. In 2005, the sale of new cars reached a record 533,000 units, however, in 2006 this number dropped drastically by more than 40% to some 300,000 units only. This fact caused banks to curtail credits for fear of non-performing loans. Only 62% of third party bank deposits then were channeled to loans, while the remainder was placed in other portfolios, such as Bank Indonesia Certificates and government bonds. Which partially explains why the real sector has remained stagnant so far, impacting on the capacity of the private sector to provide jobs.  
 
Therefore, Prastetianto concludes, the 2006 inflation rate of 6.6% - which is far removed from the 17.1% inflation of 2005, a stable rupiah which is supported by strong foreign currency reserves that allowed the government to clear its debts to the IMF, and most impressive export results of near to US$ 100 billion in 2006 –  all these are indications that 2007 will be a better year economically, says Prasetiantono.

There, of course, remain major drawbacks. In Investments, the government must clear issues that are outside the financial sector per se, including the issues of legal certainty, availability of required power and infrastructure, the complicated structure of the bureaucracy as a result of excessive euphoria with regional autonomy, and last but not least, the revision of the present Labour Law, which is seen by investors as a major disincentive to investing in Indonesia. 

And, therefore, with major improvements to the above setting, economic growth in 2007 should reach at least 6%.

And since in 2006 economic growth could absorb only some 1.1 million of the 2.1 million employment seekers, then with improved growth in 2007 the economy should be able to absorb more, including the 1 million of new job seekers who have remained unemployed last year.

Therefore, although economic growth should improve this year, it is expected that unemployment will still remain a problematic issue that needs to be resolved in the near future.

(Sources: Kompas daily, SCTV, MetroTV, RCTI)     (Tuti Sunario)