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Chaos erupts in parliamentary over whether to file criminal charges against the Finance Minister and VP for their controversial Bank Century bailout. Landslides flood cities, displacing tens of thousands. The military raids a possible al Qaeda training camp in Aceh. The government will consolidate state-owned companies. The new investment minister suggests a tax holiday. And a wild rhino successfully mates in captivity, only the fourth to do so.
Top News: A meeting of Indonesia’s parliament to debate the results of an investigation into the financial bailout of a small bank during the height of the global financial crisis erupted into chaos March 2.
The investigation has pitted the country’s reform movement against established business leaders and politicians from the days of Suharto, the country’s former authoritarian ruler.
Opposition parties have called for a criminal investigation into Finance Minister Sri Mulyani and Vice President Boediono, previously governor of Bank Indonesia, for their decision to bailout Bank Century in 2008 and their subsequent management of the bailout funds, which ballooned to more than $700 million, or ten times its originally budgeted amount.
Investors have been following the investigation closely, fearing the result could lead to the dismissal of the country’s two most respected, and investor-friendly, financial technocrats.
The debate March 2 was intended to decide whether or not a criminal investigation by law enforcement agencies should go forward, but no consensus was reached. A vote is expected to take place on March 3. Several opposition lawmakers, however, demanded the vote take place immediately on March 2. When the house chairman refused, lawmakers crashed the podium, reached for his gavel and called for the chairman’s dismissal.
One opposition lawmaker flung a water bottle at the chairman and another was nearly punched. Security guards entered the fray, holding irate lawmakers back to break up the scuffle. The chairman then adjourned the meeting indefinitely.
Yudhoyono threw his support behind his vice president and finance minister during a meeting of bankers on March 1, pointing to the country’s positive economic outlook as evidence that the two had done their jobs well.
The Indonesian public, initially outraged by the bailout, has grown increasingly weary of the prolonged political drama. Protests outside the parliament building on March 2 turned violent as protesters tried to close off the street using large coils of barbed wire. Some protesters then started throwing bricks at police, who responded with tear gas and water cannons.
Outside of the ongoing Jakarta soap opera, Indonesians across the archipelago are suffering from persistent rains, floods and landslides. More than 40 people were killed after a landslide dislodged on Feb. 24 from a nearby hillside and crashed through a tea plantation. Several other landslides in Java have also resulted in casualties. Flooding in Bandung, a major city in West Java, has displaced tens of thousands.
The Indonesian military raided a suspected terrorist training camp in Aceh on Feb. 23, arresting four men and killing one bystander. Police said there were about 50 men hiding out in the camp, many of them armed with assault rifles. Most of the militants managed to escape, fleeing into the dense forest.
Police were quick to associate the militant group with Jemaah Islamiyah, the Southeast Asian terror network affiliated with al-Qaeda. But some analysts thought they could be an offshoot of the Free Aceh Movement, a separatist group that was thought to have disarmed and disbanded following a 2005 peace agreement.
My own sources in Aceh say they could have simply been well-armed illegal loggers and marijuana growers. More to come on this.
Money: Last year, Indonesia’s state-owned enterprises accounted for almost half of the country’s Gross Domestic Product. But corruption and mismanagement have long hurt their performance. Now the Indonesian government has jump-started efforts to increase their efficiency. At the heart of the plan is consolidating the companies – there are currently 141 state-owned enterprises which control assets of almost $230 billion. But the process, like much of the country’s reform efforts, is slow-going.
The highly respected new minister for coordinating investment, Gita Wirjawan, has proposed targeted tax holidays as a way to spur investment and growth. The proposal, unsurprisingly, was met with opposition, which Wirjawan chalked up to the country’s lingering nationalism and a political attempt to win votes.
Wirjawan points to China and Vietnam as examples of countries where tax holidays have helped bring in investment. Those two countries, he said, have been offering tax holidays for 20 years and is big part of the reason for their growth.
For your information: The Indonesian government is seeking investors for a planned bridge to connect Java and Sumatra.
Elsewhere: The father of a victim from the 2002 Bali bombings has teamed up with the island’s governor and several business leaders to try and convince the owner of the land where the bombings took place to turn the plot into a small park that can be used for “quiet contemplation.”
The land, however, is smack in the middle of one of the seediest, and busiest, streets in South Bali, where loud partiers regularly traipse up and down in search of drinks, drugs and dates. Still, a park would be a nice change from the endless bars and clubs that have almost totally obliterated any sense of peace or spirituality along this stretch that the Island of Gods is famous for.
A rare wild Sumatran Rhino has successfully mated and will give birth in May within an Indonesian wildlife sanctuary. It is only the fourth Rhino to be born in captivity in more than a century, scientists said.