VZCZCXRO1442
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1015/01 1440037
ZNR UUUUU ZZH
R 230037Z MAY 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 9081
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/USDA WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 2005
RUEHBJ/AMEMBASSY BEIJING 5065
RUEHBY/AMEMBASSY CANBERRA 2539
RUEHUL/AMEMBASSY SEOUL 4613
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 001015 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EAP/MTS AND EB/IFD/OMA 
TREASURY FOR IA-SETH SEARLS AND JWEEKS 
SINGAPORE FOR SBAKER 
TOKYO FOR MGREWE 
COMMERCE FOR 4430/KELLY 
DEPARTMENT PASS FEDERAL RESERVE SAN FRANCISCO FOR TCURRAN 
DEPARTMENT PASS EXIM BANK 
USDA/FAS/OA YOST, MILLER, JACKSON 
USDA/FAS/OCRA CRIKER, HIGGISTON, RADLER 
USDA/FAS/OGA CHAUDRY, DWYER 
 
E.O. 12598: N/A 
TAGS: EFIN EAGR ECON PGOV ID
SUBJECT: AMBASSADOR MARCIEL DISCUSSES ASEAN, ECONOMY 
 
REF: Jakarta 914 
 
¶1. (SBU) Summary.  During their May 8 meeting, ASEAN Secretary 
General Surin Pitsuwan told Ambassador Marciel that getting relief 
to the Burmese people as soon as possible is his top priority. 
Marciel emphasized that the United States government's focus is to 
get aid to those in need and that the United States will work with 
the international community to accomplish this goal.  Marciel also 
met with a group of leading economists to discuss current economic 
conditions and policy challenges in Indonesia.  The primary focus of 
the discussion was the impact of rising food and fuel prices on 
Indonesia.  The economists stressed the importance of attracting 
investment to the rural sector in order to reduce poverty and allow 
a greater portion of the Indonesian population to benefit from 
rising food prices. End Summary. 
 
 
Secretary General Focused on Burma Assistance 
--------------------------------------------- 
 
¶2. (SBU) During their May 8 meeting, ASEAN Secretary General Surin 
Pitsuwan told Ambassador Marciel that getting relief to the Burmese 
people as soon as possible is his top priority.  Surin stressed the 
need for all governments and relief organizations to think 
creatively about ways to get aid flowing to people in need.  Marciel 
emphasized that the Unites States government's focus is to get aid 
to those in need and that the United States will work with the 
international community to accomplish this goal.  Marciel noted that 
the United States had already provided satellite imaging technology 
to the Government of Burma and had helicopters in the region for a 
training exercise that the U.S. government could divert to Burma for 
relief work (reftel). 
 
¶3. (SBU) Marciel and Surin also discussed broader ASEAN-U.S. 
cooperation.  Surin expressed appreciation to the U.S. for 
appointing an Ambassador for ASEAN Affairs.  He hoped other nations 
would follow the U.S. example.  Surin also expressed his 
appreciation for U.S. technical assistance to ASEAN to help it 
achieve the goal of becoming one economic community by 2015.  Surin 
plans to focus on promoting public awareness of the benefits of 
ASEAN within the member countries in the coming years.  Marciel 
noted the there is tremendous bipartisan support for increasing U.S. 
engagement with ASEAN.  Marciel also asked Surin to think about 
whether ASEAN might be able to play a role in monitoring, formally 
or informally, Hmong repatriated back to Laos.  Surin noted that 
this is a complex and long standing issue that will take time to 
resolve. 
 
Economists Focus on Food and Fuel Crisis 
---------------------------------------- 
 
¶4. (SBU) Ambassadors Marciel and Hume met with leading local 
economists to discuss current economic conditions and policy 
challenges in Indonesia on May 8.  The primary focus of the 
discussion was the impact of rising food and fuel prices on 
Indonesia.  The economists believe that the price of rice is the key 
political tipping point in Indonesia, given that roughly 50 percent 
of the population spends a quarter to a third of their income on 
rice.  They predict that Indonesia will need to import rice in late 
2008 or early 2009, potentially sending rice prices to all time 
highs in advance of the April parliamentary elections. 
 
¶5. (SBU) Most Indonesian farmers remain net rice consumers and the 
rural and urban poor are extremely vulnerable to increases in rice 
and other food prices.  Neil McCullough of the Asia Foundation 
criticized the government for failing to make agriculture investment 
a priority in the wake of the 1997-98 financial crisis.  He noted 
that there has been no significant innovation in farming in 
Indonesia in the last 15 years.  Decentralization has further 
undermined Indonesia's agriculture extension services, which are 
critical to bringing new technology and market information to 
farmers, according to the economists.  University of Indonesia 
 
JAKARTA 00001015  002 OF 002 
 
 
academic and government advisor Chatib Basri pointed out that the 
government is acutely aware of the impact of rising food and fuel 
prices on the poor.  He asserted that the government created the 
plan to partially remove fuel subsidies to take pressure off the 
budget and to justify introducing a large cash transfer program to 
poor families to offset the rising price of food and other consumer 
products. 
 
¶6. (SBU) Attracting investment to the rural sector in order to 
reduce poverty and allow a greater number of Indonesian farmers to 
take advantage of rising food prices should be a government 
priority, according to the economists.  They expressed hope that 
local elections would penalize leaders who fail to attract 
investment and new jobs to their areas.  The economists cited the 
example of Vietnam, where competition among local political leaders 
has led to a vast improvement in the investment environment across 
the country, as a model for Indonesia.  The experts also stressed 
the role of the central government in building better infrastructure 
in rural communities.  Although spending on social programs such as 
health and education can be effective at the local level, 
infrastructure spending is more difficult to develop on a small 
scale.  Decentralization has significantly lowered the pool of funds 
available for infrastructure investment in Indonesia, according to 
the economists attending the discussion. 
 
¶7.  (U) DAS Marciel approved this message. 
 
HUME