VZCZCXYZ0016
PP RUEHWEB

DE RUEHJA #1901/01 3211100
ZNR UUUUU ZZH
P 171100Z NOV 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 3848
INFO RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/USDOC WASHDC 1583
RUEAIIA/CIA WASHDC

UNCLAS JAKARTA 001901 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EAP/MTS, EEB, OES, INL, S/CT, ECA, USAID 
TREASURY FOR IA - T.RAND 
ENERGY FOR PI-32 CUTLER AND COLOMBO 
USTR FOR EHLERS 
COMMERCE FOR 4430 NADJMI 
USAID FOR DEPUTY ASSISTANT ADMINISTRATOR ASIA MARGOT ELLIS 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN ETRD EINV ENRG KCOR PREL PTER SENV
ID 
 
SUBJECT:  INDONESIA'S 100-DAY PLAN: 15 PRIORITY PROGRAMS 
 
¶1. (SBU) Summary:  President Susilo Bambang Yudhoyono (SBY) has 
identified 15 priority programs for his second administration in the 
government's 100-day plan.  The heated dispute between Indonesia's 
police, Attorney General's Office and the Corruption Eradication 
Commission (KPK) prompted the president to move countering 
corruption and combating legal mafias to the top of his 100-day 
list.  Two other notable priorities include establishing a new 
Counter-Terrorism Coordinating Agency and streamlining land 
acquisition regulations to facilitate stalled infrastructure 
development.  Several of the 15 priority programs may facilitate our 
continuing efforts to build a broad-based partnership to advance 
progress on shared challenges such as global climate change, food 
security and reform in education and health.  End summary. 
 
Removing Constraints to Higher Growth 
- - - - - - - - - - - - - - - - - - - 
 
¶2. (SBU) The SBY-Boediono administration began work on an initial 
100-day plan for the new administration in the weeks before the 
inauguration.  Advisors close to Vice President Boediono worked to 
identify low-hanging fruit which could be harvested early and 
longer-term action needed to remove bottlenecks in physical 
infrastructure, soft infrastructure (including bureaucratic reform), 
social infrastructure (including providing a stronger social safety 
net with better targeting), and creative infrastructure.  A 
three-day National Summit held October 29-31 launched a wider 
discussion between national and regional governments, the private 
sector and a variety of academic and other experts regarding 
national priorities, primarily relating to economic development. 
Significant consensus exists on the need to remove key obstacles to 
higher economic growth, such as inadequate infrastructure, weakness 
in governance and an educational system which does not provide the 
results needed to compete in a global economy.  The current 
corruption-related political controversy has, however, shifted 
public attention away from SBY's wider economic growth agenda to the 
need for governance reform. 
 
Plan's Details Still Emerging 
- - - - - - - - - - - - - - - 
 
¶3. (SBU) Coordinating and line ministers are currently developing 
the government's first 100-day plan, and more comprehensive one and 
five-year plans.  Details which have emerged so far indicate a 
variety of planned actions, including establishing a new 
Counter-Terrorism Coordinating Agency, revising government laws and 
regulations to streamline land acquisition for public projects, and 
increasing operation of port and customs services to 24 hours per 
day.  The Presidential Work Unit, headed by Kuntoro Mangkusubroto, 
is responsible for monitoring progress on implementation of the 
100-day plan.  Analysts have said some elements of the plan are 
promising steps to address impediments to clean governance and 
higher growth.  However, they caution that other suggested measures 
remain vague, could deter investment and/or will require significant 
political support that may not be forthcoming. 
 
President's 15 Priorities for 100-Day Plans 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶4. (U) President Yudhoyono announced fifteen priorities for his 
second administration's 100-day plan:  combating legal mafias in all 
state institutions and law enforcement agencies; revitalizing the 
defense industry; overcoming terrorism; providing electricity; food 
production and security; revitalizing fertilizer and sugar 
industries; rectifying inconsistencies in land-use and spatial 
planning; developing infrastructure; empowering small, medium and 
micro-enterprises; financing investment and development; climate 
change and the environment; reforming health services; reforming 
education; preparedness of disaster relief; and improving synergy 
between the central and regional governments.  Brief overviews below 
describe possible opportunities for advancing U.S. interests in 
these areas. 
 
Priority Areas:  An Overview 
- - - - - - - - - - - - - - - 
 
¶5. (SBU) COMBATING "LEGAL MAFIAS":  President SBY, who was reelected 
partly on his positive reform record, immediately made combating 
'legal mafias' his top priority for his first 100 days in office. 
By legal mafias, SBY was referring to those seeking to use influence 
in legal cases to harm others for personal gain.  These practices, 
which are pervasive in national and regional government institutions 
and law enforcement agencies, include case brokering, bribery, 
extortion, threatening witnesses and other parties, charging 
unofficial fees, and other rent seeking behavior.  SBY said this 
mafia undermines justice and the rule of law, creating an uncertain 
investment climate in the nation.  His focus on this issue came to a 
head during recent national attention to allegations of case 
brokering, extortion, and conspiracy in a dispute between the 
Indonesian National Police (INP), the Attorney General's Office 
(AGO), and the Corruption Eradication Commission (KPK) (see Jakarta 
1845).  SBY's initial response to this controversy was to designate 
a team of 8 respected academicians, attorneys, and civil society 
leaders to investigate the controversy between these organizations 
and to direct the public to report Mafioso-like behaviors in legal 
matters to a post office box.  President SBY's focus on these issues 
provides opportunities to increase US-Indonesia collaboration in 
promoting good governance and the rule of law and establishing a 
better climate for foreign investment and entrepreneurship. 
 
¶6. (SBU) REVITALIZING INDONESIA'S DEFENSE INDUSTRY:  This has been a 
goal of the GOI for some time, although its inclusion in the 100-day 
plan elevates it to a higher priority.  The sector's lack of 
development stems in part from the state-owned enterprise (SOE) 
status of producers such as small arms maker PT Pindad and 
shipbuilder PT PAL.  Defense Minister Yusgiantoro told the press 
that as a first step to increasing those producers' capabilities and 
competitiveness, the GOI must clarify under which ministry they 
fall.  The Indonesian defense industry's lack of ability to produce 
sophisticated armaments has resulted in a very small volume of 
third-country sales and what the GOI believes is an over-reliance on 
foreign manufacturers, particularly for the Navy and Air Force.  A 
recently concluded Memorandum of Understanding between Bell 
Helicopters and an Indonesian SOE presents an opportunity for 
possible win-win collaboration in this sector. 
 
¶7. (SBU) OVERCOMING TERRORISM (THE INCREASE OF CAPACITY IN THE 
RESTRUCTURING OF COUNTERTERRORISM INSTITUTIONS TO FURTHER INVOLVE 
ALL LAYERS OF SOCIETY):  The government has proposed the 
establishment of a Counterterrorism Coordination Agency which would 
coordinate GOI CT policy and activities, and serve as a central 
crisis center in the event of a terrorist attack.  The agency would 
be composed of governmental and social components, including most 
GOI Ministries, the Attorney General's Office, the National Police 
(INP), the National Intelligence Body (BIN), and the Armed Forces 
(TNI).  The Coordinating Minister for Political, Legal, and Social 
Affairs would head the body and answer directly to the president. 
It has not yet been determined whether the agency would have 
operational capacities.  In addition to ongoing U.S.-GOI CT 
cooperation between law enforcement agencies, elements of the agency 
would also coordinate with the Religious, Education, and Information 
Affairs Ministries to implement counter- and de-radicalization 
programs, another U.S.-GOI area of cooperation.  Since the July 17 
bombings, we have seen GOI efforts to tighten interagency law 
enforcement cooperation, including proposed amendments to existing 
counterterrorism law that would allow the TNI and BIN to work more 
closely with police on CT activities.  The establishment of a CT 
Coordination Agency could enhance CT operational capabilities and 
intelligence sharing across GOI agencies if it is structured in such 
a way that participating agencies' responsibilities are clearly 
defined and there is an information sharing mandate that applies to 
all agencies. 
 
¶8. (SBU) CLIMATE CHANGE AND THE ENVIRONMENT AND RATIONALIZING 
LAND-USE AND SPATIAL PLANNING:  SBY's priority programs on climate 
change and environment, and harmonizing land-use and spatial 
planning, are consistent with his G20 commitment in Pittsburgh to 
reduce Indonesia's emissions - primarily from forestry and peat 
lands.  The administration seeks to protect forests, combat illegal 
logging and fires, and protect marine habitats.  It also seeks to 
address underlying land-tenure and governance ambiguities that 
undermine sustainable forest and land-use management.  USAID is now 
concluding a highly successful year-long effort to establish the 
regional spatial plan for Papua, which the Governor touts as the 
"blueprint for development" of his Province.  We expect to 
strengthen our partnership in these areas during the coming years. 
 
The new Minister of Forestry Zulkifli Hasan has declared that forest 
rehabilitation, peat land conversion, and spatial planning were 
among his short list of priorities for the ministry.  The new 
Minister of Environment Gusti Muhammad Hatta has stated that 
 
resolving overlapping and conflicting spatial and land-use plans in 
coordination with other ministries is a priority, and the Minister 
of Agriculture has made similar statements.  This is a promising 
start to what could be a whole-of-government effort to address 
climate change mitigation, with U.S. and international partners' 
support.  Next year we will significantly increase USG support for 
forest management initiatives and GHG emissions reduction from 
deforestation. 
 
Although the Ministry of Marine Affairs and Fisheries has not yet 
spelled out its 100-day plan, it is likely to continue work on the 
Coral Triangle Initiative, of which the U.S. is the largest 
bilateral supporter.  The new Minister Fadel Muhammad says SBY 
instructed him to focus on the livelihoods of fishermen, 
particularly small-scale, traditional ones.  Next year, we will have 
a major effort involving USAID, NOAA and DOJ that will collaborate 
on these priorities as well as coastal community resilience, GOI 
capacity building, reducing illegal fishing, marine protected areas 
management, alternative livelihoods and sustainable fisheries in the 
face of climate change. 
 
¶9. (SBU) PROVIDING ELECTRICITY:  The SBY administration recognizes 
the hardships that electricity shortages are creating, but its 
proposed solutions offer little new and nothing that will rapidly 
solve the problem.  The Minister of Energy and Mineral Resources has 
reiterated a commitment to the country's two 10,000 MW accelerated 
electricity development programs, Phase I (coal powered) and Phase 
II (geothermal, hydro, gas, coal).  Phase I is behind schedule due 
to problems with financing and delays attributed to the Chinese 
contractors who are building most plants.  The government has not 
yet begun Phase II due to pricing uncertainty and the inadequacy of 
the regulatory and tendering mechanisms that will be needed to bring 
in independent power producers.  The Indonesian government has 
already approached the U.S. and other countries for help on many of 
the policy obstacles it faces.  The only innovation suggested by the 
Ministry is contract renegotiations for about 50 independent power 
producer (IPPs) projects that have been stalled in the financing 
stage for years.  Most of the 50 IPPs bid unrealistically low in the 
public tender phase, making their business models non-viable. 
Industry observers oppose contract renegotiations for these IPPs, 
believing that allowing these companies to get more favorable prices 
now would reward anti-competitive practices in future bids.  To 
assist in these priorities, USAID will initiate a large new clean 
energy development program next year. 
¶10. (U) FOOD PRODUCTION AND SECURITY:  In October 2009, newly 
appointed Minister of Agriculture, Minister Ir. H. Suswono, stated 
that Indonesia will work to identify the regions most vulnerable to 
food insecurity through the development of a Food Security and 
Vulnerability Atlas (FSVA).  Data from the FSVA will serve as a 
monitoring and early warning system the Government of Indonesia 
(GOI) will use to identify and target food insecure regions.  GOI 
officials have told us their priority areas for food security 
include:  the need for human resource development, focusing on 
research, education and extension; the need for investment in hard 
infrastructure (including irrigation facilities, ports and rural 
roads) to reduce the 40% loss rate from poor distribution and soft 
infrastructure, to include broadband links to agricultural 
universities and research centers; and Maternal and childhood 
nutrition targeting both rural and urban poor.  The Embassy seeks to 
collaborate with Indonesia to address these priority areas.  One way 
forward would be to establish Centers of Excellence on research, 
education and extension through partnerships with Land Grant 
Universities or Sea Grant Colleges.  These University Partnerships 
could be based on principles outlined in the Global Food Security 
Act, introduced to the U.S. Senate in February, 2009 by Senator 
Richard G. Lugar.  Any Center of Excellence would build on existing 
institutions or programs.  Suggested research areas include Marine & 
Fisheries, AgroForestry, and Food & Agriculture. 
¶11. (U) REVITALIZING FERTILIZER AND SUGAR INDUSTRIES:  Mission will 
encourage the GOI to explore U.S. sources for fertilizers and farm 
equipment.  Furthermore, we will encourage the GOI to address 
concerns regarding sugar production by exploring the use of 
biotechnology in its own sugar production system. 
¶12. (SBU) DEVELOPING INFRASTRUCTURE:  President Yudhoyono has vowed 
to invest in development of the country's infrastructure, an 
important part of his strategy to promote better economic 
integration nationwide.  Experts here stress that the cost of 
transporting goods within Indonesia is well over the average in 
Asia, and double the cost in Europe.  An improved road network is 
critical for linking provinces and major islands, but plans are 
complicated by contradictory regulations between multiple 
ministries.  The new administration plans to build twenty-two toll 
roads by 2014 in collaboration with private investors.  Also slated 
for improvement are port facilities, harbors, airports and 
infrastructure for transportation and fisheries.  These are key 
areas for continued U.S. - Indonesia cooperation to promote the safe 
and secure movement of people and goods both domestically and 
internationally.  Prioritizing civil aviation may help advance U.S. 
- supported improvements in the sector.  Infrastructure development 
could spur more competitive logistics services, a key factor in 
attracting new investment in manufacturing and resources. 
Investment in infrastructure overall also has the potential to 
create a wealth of business opportunities for U.S. firms. 
 
¶13. (U) EMPOWERING SMALL, MEDIUM AND MICRO-ENTERPRISES:  The GOI has 
said it intends to increase the availability of financing to this 
important sector.  The government of Indonesia, including members of 
the new legislature, appears receptive to U.S. efforts aimed at 
promoting entrepreneurship and engaging local entrepreneurs in 
Muslim-majority countries.  Mission has facilitated contacts between 
Indonesian government officials and the private sector with U.S. 
entrepreneurship organizations, has requested Public Diplomacy 
entrepreneurship-focus speaker programs and is exploring with 
EEB/CBA possible entrepreneurship activities in Indonesia.  There is 
also interest here for the possibility of Indonesia as host of a 
regional entrepreneurship summit. 
 
¶14. (SBU) FINANCING INVESTMENT AND DEVELOPMENT:  The government of 
Indonesia seeks to promote the financing of and investment into 
Indonesian infrastructure, electricity and food security activities. 
 The U.S. continues negotiations with the GOI on an OPIC Investment 
Incentive Agreement which would allow OPIC to provide expanded 
financing, insurance, private investment fund and other services to 
those investing in Indonesia.  We will also follow up on the 
interest expressed by Vice President Boediono to Ambassador Hume 
regarding a possible Bilateral Investment Treaty.  Mission is also 
engaged in policy discussions with the Indonesian government 
regarding regulatory changes needed in order to encourage investment 
in Indonesia's energy sector, particularly in the area of clean and 
renewable energy. 
 
¶15. (SBU) REFORMING HEALTH SERVICES:  Indonesia's priority is no 
longer free medicine, but rather free health for the poor, therefore 
public health facilities must be given stronger capacity.  Equitable 
access to quality health care for all is an important endeavor.  A 
strong health system meeting the needs of an entire nation requires 
six fundamental building blocks: leadership and governance, human 
resources, medical products, financing, service delivery, and 
information systems.  While stronger capacity to provide uniform 
standards of quality care must be built in the public health 
facilities, more attention must also be paid to engage private 
sector providers.  The private sector's role has grown dramatically 
over the past decade and there is an overall wide acceptance among 
Idonesian consumers to use private sector providersfor a range of 
health services - even among the oorest socio-economic groups. 
Decentralization pses another challenge to equitable access to 
quality health care.  There is little coordination between district 
health officials and central health officials or between the 
district health providers and private providers.  A coordinated 
effort must include changing provider incentives, promoting 
partnership with private providers, and providing support to 
district and provincial health officials to focus on a limited set 
of critical health priorities.  Through a variety of health 
programs, USAID is focused on building replicable models for quality 
services to increase access to quality health care.  Mission will 
also continue to engage in policy discussions to encourage the GOI 
to ease market access restrictions and regulatory uncertainty which 
discourage foreign investors from investing in the health care 
sector. 
 
¶16. (SBU) REFORMING EDUCATION:  Innovation and critical thinking are 
essential to this era's knowledge-based, high-tech economy - and 
what educational institutions teach must be linked to the needs of 
the economy and workplace.  The GOI has recognized this imperative 
in its priority for reforming education.  Indonesian students must 
have the teaching and the technology they need to fulfill their 
personal potential as well as contribute productively to the 
economic advancement of their country.  Our education partnership 
will help Indonesian students develop in these critical areas - by 
encouraging linkages with U.S. universities in priority areas such 
 
as science and technology, supporting English language teaching and 
learning, and exposing more Indonesian students to education in the 
U.S.  Our efforts to expand science and technology cooperation and 
generally to encourage public-private partnerships, such as those to 
support U.S. IT in the classroom, will also support the GOI's 
efforts to improve education.  As the new Minister's policies and 
plans evolve, we expect more explicit attention will be given to 
higher education reform, including policy changes that would 
encourage more private sector involvement, allow foreign investment 
in higher education, and increase the number of GOI-funded 
scholarships to U.S. universities.  Mission will continue to 
encourage GOI to ease market access restrictions and regulatory 
uncertainty which discourage foreign investors. 
 
¶17. (U) PREPAREDNESS OF DISASTER RELIEF:  For many years the GOI 
focused its efforts on effective disaster response, but the 
frequency, damage and human/financial costs of natural disasters in 
Indonesia demonstrate on a continuing basis the importance of 
disaster preparedness.  The lessons from the past few years 
including the recent Tasikmalaya and Padang earthquakes have clearly 
shown that disaster preparedness is the most effective and least 
expensive way to minimize financial and human losses from disasters. 
 The National Disaster Management Agency (BNPB) that was formed in 
2007 is slowly but surely increasing its capacity in disaster 
response and wishes to play a larger role in disaster preparedness. 
The USG has been one of the main donors in disaster response, 
including both civilian as well as military resources that have 
filled critical needs such as medical services water/sanitation, 
shelter and transportation logistics.   Furthermore, the Embassy 
signed an MOU with the American Chamber of Commerce to augment 
existing USAID/OFDA emergency response capacity.  We have also 
designed a disaster risk reduction program that will complement 
climate change adaptation activities in vulnerable coastal areas 
that we plan to initiate next year. 
 
¶18. (SBU) IMPROVING SYNERGY BETWEEN THE CENTRAL AND REGIONAL 
GOVERNMENTS:  The recognition of the need to improve synergy between 
the central and regional governments is a welcome one, especially if 
it results in greater clarity on the roles and responsibilities of 
the different levels of government.  The prioritization of this 
issue could potentially be helpful in USAID's program providing 
assistance to regional governments to improve public service 
delivery by improving coordination between the different levels of 
government.  However, it is unclear what can realistically be 
accomplished within 100 days to turn this priority into action.