INDONESIA DIGEST Indonesia's complex Issues in a Nutshell Published by: TBSC-Strategic Communication No.: 18. 07 - Dated: 30 June 2007
In this issue: MAIN FEATURE: 'UNFAIR': EU BARRING INDONESIAN AIRLINES FROM FLYING TO EUROPE NEWS AND BACKGROUND: 1. Tourism and Transportation: Corrections to Indonesia Digest 17.07 Article on Visa on Arrival, p. 6 Garuda Indonesia expands operations to Australia and China 2. The Environment, Health and Culture: Narcotic Users increasing and starting younger 3. The Economy, Trade and Industry Government plans to cap production of Cigarettes Indonesia Looks to 36% cut in 2008 Fuel Subsidy --------------------------------------------------------------------------- MAIN FEATURE: 'UNFAIR': EU BARRING INDONESIAN AIRLINES FROM FLYING TO EUROPE In a surprise announcement, the European Transport Commission stated on 28 June that within one week EU would officially bar all Indonesian airlines from flying to Europe. The information was met with surprise and protests from Indonesia carriers, calling the ban "unfair" and "outside of normal procedure". Reuters news from Brussels, as quoted by CNN.com mentioned that "All Indonesian airlines including national carrier Garuda will be banned from flying to the European Union within a week, the European Commission said on Thursday, updating a "blacklist" of carriers deemed unsafe. Indonesian carriers do not currently fly to Europe so the ban is also a warning to the 27-nation EU's consumers and travel agencies not to use the country's airlines, an EU official said. The policy is "to make sure that airlines and civil aviation authorities take appropriate actions to improve safety," Transport Commissioner Jacques Barrot said in a statement. The Indonesian carrier ban applies to all 51 airlines certified in that country. The decision, following advice from an EU air safety committee, is expected to be formalized within a week. The Commission advised EU countries to start preparing for the ban immediately", reported Reuters. Indonesia was apparently too late to include the latest assessments audit that noted significant improvements made by Indonesian operators during the past three months, to be included in the EU Commission report, despite efforts having been made to do so, explained Director General for Air Transportation, Budhi Suyitno to the press. More importantly, says Suyitno, the government will continue to apply the Roadmap to Safety, Security and Services through Compliances (3S+1C). Safety of Indonesian airlines Significantly Improved since March A few days earlier, on 25 June Director General Suyitno had announced results of the latest quarterly audit on Indonesian airlines, in which Garuda Indonesia was shown to have greatly improved its safety performance, and therefore was moved up into Category I, - the only Indonesian airline that has so far made it into the top category. Garuda had in fact exceeded the required minimum assessment points, having achieved 168 points in compliance, much improved from the 146 points noted in March. The Department of Communications audited 21 airlines, of which only one, which is Jatayu Air had been found failing and therefore its operations license immediately frozen. A category I airline fulfills minimum air transportation regulation requirements with a score of between 162 and 200, while a category II airline satisfies minimum requirements with a score of between 120 and 161. However, a category III airline, with a score of less than 120, fails to consistently meet minimum requirements. Suyitno explained that Garuda's strength lies in its manpower, aircraft maintenance facility and strong technical support, reports Bisnis Indonesia Other more well known commercial airlines using larger than 30 passenger aircrafts that improved their safety standards and moved up to Category II are: Merpati Nusantara, with 152 compliance points in June compared to 132 in March; Indonesia Air Asia (with 142 points, up from 128 in March); Sriwijaya Air (140 points, up from 132) ; Pelita Air Services (140 points); Kartika Airlines (132 points, up from 116); Lion Air (131 points, up from 122); Wing Air (130 points, up from 127); Adam Air (129 points, up from 117); Metro Batavia Air (128 points, up from 117); Mandala Airlines (124 points, up from 120). No Retaliatory Actions from Indonesia Meanwhile, new Minister for Transportation, Jusman Syafii Jamal remains optimistic that there is still room for Indonesia to explain to the EU on the serious and systematic efforts being done in Indonesia to improve its flight safety records, since the notice was given by the EU Commission, and the Indonesian government had not yet received an official notice from EU on the subject. On 2 July, Indonesia will meet the President of ICAO to explain measures of improvements made in the standard of safety in Indonesia's airline industry. Minister Jamal, however, does not agree that Indonesia should take retaliatory actions to bar European airlines from Indonesia's airspace as suggested by the Association of Indonesian Commercial Airlines, INACA. On a similar note, Vice President Jusuf Kalla, when interviewed tried to cool down the public and operators' heated sentiments, saying that Indonesia should view the EU opinion positively, by considering it as a reprimand to further improve our air safety standards. Commercially, the ban will not affect Indonesian airlines as yet, because no Indonesian operator flies to Europe. (Garuda planned to resume its operations early 2008, having ceased flying to Europe since 2004). However, the VP concedes, that this is a setback to Indonesia's image abroad. The airline associations on their part urge the authorities to explain in detail to the authorities and the international press, the serious efforts made by Indonesia to improve its air safety record. An opportune moment to do so will be at the Airline Safety Conference to be held in Bali from 2-3 July, which is hosted by Indonesia and to be attended by Senior Officials from around the world. Garuda Indonesia's Vice President for Operations, Ari Sapari, when interviewed on Television stated his opinion that EU's banning Indonesian airlines has followed an uncommon procedure as EU has never audited Indonesian airlines. This differs from the American authorities, who have made their own audit before making their assessments, and American authorities have not banned Indonesian airlines. However, President Director of Garuda, Emirsyah Satar, said that facing a possible EU ban, Garuda Indonesia will continue to lobby through IATA and AAPA as well as discuss the matter further with counterpart airlines, including KLM. Most Hit: Tourism, Poor Cultural villages and Eco-tours to sustain the Environment Most concerned with these latest developments, nonetheless, is the Tourist Industry, who sees the EU ban as another threat to international confidence in Indonesia's tourism, the market having finally sufficiently recovered from the fear of terrorism. Europe and European tourists form a very important market for Indonesia. The 2005 statistics from the Department of Culture and Tourism show that near to 800,000 Europeans stayed between 15-18 days in Indonesia, visiting many regions and spending an average of US$ 1,450 per stay. This compared to the average Asian from Singapore, Malaysia, China or Japan, who stayed 5-8 days spending an average of US$ 500 (Singaporeans) to US$ 838 (Japanese) per stay. It is envisaged that with stagnation in the number of European tourists, regions that will suffer most are the poor, outlying traditional villages that have so far benefited from tourism, such as those in Toraja, Nias, Lake Toba, the Moluccas, Papua, East and West Nusatenggara, and the Dayak villages in Kalimantan, but also remote and handicraft villages in Central and East Java. Asian tourists, on the other hand, although more in number, stay a short 5-6 days only, preferring the city life and shopping, While Chinese tourists are known to shun visiting graves and the Toraja highlands, which has as its main attraction its ancient culture of the dead, or trekking through forests and valleys - the very attractions for Europeans. Indeed, the tourism industry already sees black clouds looming again on the horizon through no fault of tourism itself. Ben Sukma, Chairman of the Indonesian Tour and Travel Association, ASITA, urged the government to explain clearly to the international press and authorities, on Indonesia's air transportation improved performance, since most affected will be secondary destinations and regions that do not have direct international flights from abroad and rely on Indonesian air carriers. Europe remains an important market for Indonesia, despite the fact that numbers have been declining. More importantly, Europeans tend to disperse and travel to more widespread destinations in Indonesia and are interested Culture, Village life and the Environment, the very areas that are developed in Indonesia's new tourism policy, which is aimed to improve the lives of rural communities and alleviate the burden of the poor. The European ban, although perhaps well meant, will in the end thwart those very efforts that Europe - and Indonesia - both wish to foster, which are the preservation of Culture, Sustainable Environment and the Alleviation of Poverty through the development of Tourism. (Sources, CNN.com, ANTV, Bisnis Indonesia, detik.com, Kompas) (Tuti Sunario) NEWS AND BACKGROUND: 1. Tourism and Transportation: Corrections to article on Visa on Arrival in Indonesia Digest 17.07 There are a number of disturbing errors in the article on Visa on Arrival (VoA) on page 6 in Indonesia Digest 17.07, that have been brought to the editor's notice by our readers. VoA Fee should read: US$ 10 for a stay of 1-7 days; and US$ 25 for a stay of 8 - 30 days. Among new countries whose nationals are extended VoA is: the Czech Republic, and not Czechoslovakia. Indonesia now extends VoA facility to 63 countries. We sincerely thank our readers for the corrections. For complete details on VoA please open: www. budpar.go.id website, and click "Regulations" on the right hand side of the front page. Garuda Indonesia expands operations to Australia and China Although Australian arrivals to Bali are still lagging some 30% behind numbers recorded during the heydays just 3 years ago, yet today's improved year-on-year arrivals have prompted Garuda Indonesia to increase seat capacity with a new Wednesday flight from Sydney to Bali, effective June 20, 2007, reports balidiscovery.com. Australian arrivals to Bali January-May 2007 totaled 65,561 which represents a +56.34% increase from the same period in 2006. The new flight, GA 717 brings the total number of Garuda Indonesia services between Sydney and Bali to five non-stop flights per week with departures daily, except Tuesday and Friday. "The introduction of the new service results in a doubling of capacity from Sydney since the end of March which, along with capacity increases from Perth and Melbourne earlier in the year, put Garuda Indonesia in a good position to handle the increasing demand for Bali," said the airline's Regional General Manager, Southwest Pacific, Suranto Yitnopawiro. Garuda Indonesia has the greatest number of non-stop flights to Bali, serving Sydney, Melbourne, Perth and Darwin. Increased services to China At the same time, according to Indonesia's Trade and Investment News published by the Coordinating Ministry for the Economy, Indonesia's National flag carrier PT Garuda Indonesia and China's fourth largest airline, Hainan Airlines, have signed a code-sharing agreement on Tuesday (19/6/07) to strengthen their marketing positions both in China and Indonesia, reported The Jakarta Post. Agus Priyanto, Garuda executive Vice President for Sales and Marketing, said the agreement would allow Hainan Airlines to sell up to 20 seats on each Garuda flight from Jakarta to Beijing, and vice-versa. The agreement will come into effect in July. According to Den Jiang, General Manager of Hainan Airlines, his company would also serve Garuda passengers with connecting flights to domestic destinations in China, including to Harbin, Hangzou and Nanning. "Through this deal, Garuda and Hainan Airlines hope to secure bigger markets in the Chinese region and in Indonesia," Priyanto said. Hainan Airlines flies to 53 cities across China, while Garuda flies 16 times a week to four cities in China. In 2006, Garuda carried more than 275,000 passengers between the two countries and expects the figure to increase to more than 300,000 passengers this year. Garuda's China routes generate $130 million from passengers and $150 million from cargo, about 25% of the airline's total revenue. 4. The Environment, Health and Culture: Narcotic Users on the increase starting even in Primary school TEMPO Interaktif, reported on 25 June that according to data from the National Narcotics Board, BNN, crimes involving narcotics in Indonesia has risen sharply. During the past five years, the number of crimes in narcotics has increased by 51.3%, up 3,100 cases per year. Sharpest increase was seen in 2005 involving 16.252 cases or up a hefty 93% compared to the year before. In the same year, 22,000 suspects were arrested involved in narcotics, which has doubled, or up 101.2% compared to the 11,323 cases in 2004. When contacted by Tempo, criminologist Muhammad Mustofa, said that the number of cases cited by BNN are far below those in the field, since there are many more cases that have not been nabbed. In his report commemorating International Anti-Narcotics Day on 26 June, Chief of Police, General Sutanto, as Head of the Narcotics Bureau, said that there are an estimated 3.2 million users of narcotics in Indonesia. While the press has warned that some users start very young even while still in primary school. The Law in Indonesia stipulates that narcotic dealers are liable to receive the death sentence. 5. The Economy, Trade and Industry Government Plans to Cap Cigarette Production by 2010 The government plans to limit cigarette production starting 2010 in a preliminary move to curb smoking in Indonesia, which today is the world's fifth-largest tobacco market. Whilst the number of smokers in western countries has fallen, a third of Indonesians today are cigarette smokers, up from a quarter of its population some 10 years ago, Reuters reported on Tuesday (19/6/07) as quoted by Indonesia's Trade and Investment News. Cigarettes cost as little as $1 a pack in Indonesia, which has a population of about 225 million, Imam Haryono, Director of Beverages and Tobacco at the Department of Industry , said on Tuesday. There are plans to cap production at 240 billion cigarettes in 2010. "In 2010, we will impose a maximum production limit of 240 billion sticks and in 2015, the limit will be 260 billion and remain at that number until 2020," Haryono said. Indonesians smoked an estimated 220 billion cigarettes last year, the same as in 2005 but below the peak of 239 billion in 2000, according to government data. According to the World Health Organization, nearly a quarter of deaths in Indonesia during 2005 were caused by tobacco, and 80% of lung and respiratory cancer cases were caused by smoking. Indonesia Looks to 36% cut in 2008 Fuel Subsidy Indonesia's Trade and Investment News further reports that the government looks to cut fuel subsidies by 36% in its Budget next year as the country replaces the use of heavily subsidized kerosene with liquefied petroleum gas, a senior official said late Tuesday (19/6/07). Spending on fuel subsidy in 2008 could be Rp39.5-49.8 trillion, a figure much lower than this year's Rp61.8 trillion, Luluk Sumiarso, Oil and Gas Director General at the Mines and Energy Ministry told Platts Commodity News. The government hopes to reduce fuel quotas by 3.5% to 36.57 million kiloliters next year from the current 37.9 million kl in the 2007 budget. The reduction is expected to come from replacing kerosene used by households with LPG. It will reduce the volume of kerosene consumed from 9.9 million kl this year to 8.6 million kl next year. Meanwhile, consumption of diesel oil is expected to stay unchanged at 11 million kl next year, while gasoline quotas will be cut slightly to 16.95 million kl from this year's 17 million kl, Sumiarso said. For your comments or further inquiries, please e-mail to : tbsc;[EMAIL PROTECTED]
