Singapore, Indonesia meet, greet and
run By Bill Guerin
JAKARTA -
Singaporean Prime Minister Lee Hsien Loong, the son of
the tiny republic's founding father Lee Kuan Yew, held a
one-on-one meeting with Indonesian President Susilo
Bambang Yudhoyono during a two-day visit to Jakarta this
week.
Loong, 52, the third prime minister of
Southeast Asia's most technologically and economically
developed country, met with Yudhoyono, the sixth
president of the region's largest economy, for only 25
minutes. During the short meeting, the two leaders
agreed to resolve bilateral issues rationally and avoid
the "megaphone" diplomacy of the media.
Despite
having fought over the formation of Malaysia in 1965,
Singapore's relationship with Indonesia during the New
Order regime was exceptionally good, largely due to Lee
Kuan Yew's close personal relationship with strongman
president Suharto.
After Suharto's downfall in
1998, however, Lee Kuan Yew upset the apple cart with a
series of critical statements about Indonesia. He
expressed shock that Indonesia was trying to take
Suharto to court, criticized security conditions as
hampering foreign investment, and claimed that Malays,
including Indonesians, did not have a strong work ethic.
Bilateral relations under Goh Chok Tong, who led
Singapore for 14 years before Loong took the reigns in
August, were then subject to severe strains during the
brief Indonesian presidencies of B J Habibie and
Abdurrahman Wahid. Singapore earned the derision of
Habibie, who said the island republic was just a "tiny
red dot on the map". It didn't stop there.
Habibie later lashed out with a racist card,
saying, "In Singapore, if you are Malay, you can never
become a military officer. They are the real racists,
not here. You can go and check it out."
Wahid,
popularly known as Gus Dur in Indonesia, when winding
down after an Association of Southeast Asian Nations
(ASEAN) informal summit in what he thought was a
closed-door session with Indonesian community members in
Singapore, slammed Singaporeans - the majority of them
ethnic Chinese - for looking down on ethnic Malays and
thinking only of how they could profit from their poorer
neighbors. The story leaked and Singapore's
government-controlled media had a field day.
When addressing reporters after meeting
Yudhoyono on Monday, Loong said negotiations between the
countries should be rational and constructive so the
result is a "win-win" outcome. Several thorny issues
remain to be resolved, such as extradition, trade
transparency, smuggling and, last but hardly least, the
approach to terror and security in the region.
Singapore was Indonesia's fifth-largest investor
last year, buying up chunks of assets of former
conglomerates and state enterprises, such as banks and
telecommunications, but so far there has been little
else of the "winning" bit for Indonesia.
Major investments The investment drive
started much earlier, in 2001, when Singapore's Cycle
& Carriage group bought 35% of Indonesia's car
giant, Astra International.
Bank Danamon,
Indonesia's fifth-largest lender, is now 62% controlled
by Temasek Holdings - the Singapore government's
investment company - and Deutsche Bank AG. Temasek is a
wholly owned arm of Singapore's Finance Ministry, which
was headed by Loong when he was deputy prime minister.
The executive director, Ho Ching, is Loong's wife. She
controls more than S$70 billion (US$42.3 billion) of
government investments, including 67% of Singapore
Telecommunications (SingTel) and 100% of Singapore
Technologies, which Ho used to run.
SingTel,
whose chief executive Lee Hsien Yang is Loong's brother,
has been the biggest player. It paid more than US$1
billion for a 35% stake in Indonesia's leading
mobile-phone operator, Telkomsel. SingTel also has a 40%
interest in Bukaka SingTel International, which has a
fixed-line monopoly in less populated eastern Indonesia.
ST Telemedia, an offshoot of government-owned
Singapore Technologies, has also grabbed a slice of the
action in Indonesia's most promising sector. It bought
41.94% of the country's giant satellite
telecommunications company, publicly listed Indosat, for
US$650 million.
Indonesia's natural gas fires
Singapore's power stations, generating valuable foreign
exchange revenue for Indonesia. Singapore's
high-technology products made on Indonesian territory on
Bintan and Batam islands are included in its free-trade
pact with the United States. Under the deal, Singapore
is allowed to export high-technology products assembled
on the islands to the US duty-free.
Bilateral
trade Trade figures released publicly for the
first time this year showed that Indonesia is
Singapore's seventh-largest trading partner. Official
figures from International Enterprise Singapore, the
government's trade body, show trade with Indonesia
reached US$15.41 billion in 2003. Major imports from
Indonesia were parts of office and data processing
machines, telecommunication equipment and petroleum
products. The main exports to Indonesia were electric
machinery, petroleum products and telecommunication
equipment.
For 30 years trade figures had been
kept secret, reportedly after a request by Suharto, so
that discrepancies arising from rampant smuggling could
be concealed. It was claimed that the "secret" trade
between the two countries was never revealed because it
was in Singapore's interests to collude with the
Indonesian leader's desire to keep the scale of the
illicit trade quiet, given that they were in on the take
from billions of dollars in smuggled goods that passed
through Singapore.
Former president Megawati
Sukarnoputri's Minister for Industry and Trade Rini M S
Soewandi, irked that, despite Indonesia being
Singapore's fifth-largest export market, it was not
included on Singapore's list of 150 trading partners,
pressed the city-state to acknowledge the need for
clarity in trade statistics to help curb smuggling.
Trade data for 2002 compiled by Singapore had
put non-oil exports to Indonesia at US$5.25 billion,
compared with the $2.44 billion reported by Indonesia's
Central Statistics Agency (BPS). Import statistics
showed similar levels of discrepancies, with Singapore
saying non-oil imports from Indonesia were $7.41 billion
last year, and BPS saying they stood at only $4.6
billion. The implication was that the discrepancy
represented the amount of smuggled goods that pass
through Singapore. Exposing the barons behind the
smuggling clearly carries a high degree of risk to the
bilateral relationship.
Territory Crowded Singapore has been
reclaiming land from the sea to provide more room for
its more than 4 million residents. Sand-mining exports
from the Riau Islands to Singapore first began in 1976,
following a plan by the islands' government to start
land-reclamation projects to expand on its total area of
only 647.5 square kilometers. Indonesia has accused the
city-state of buying sand illegally mined and exported
by Indonesian businessmen for the projects, which
affects the demarcation of the seas between the two
countries.
Sand smuggling, mostly by
Singaporean-owned ships, became worse after Suharto
stepped down. The ships, decked out with advanced
technology-dredging equipment, sucked up the sand from
these coastal areas at night, up to 10,000 cubic meters
of sand an hour, and brought it back to Singapore for
construction and reclamation projects. Jakarta banned
all sand exports from Indonesia to Singapore in February
last year.
Singapore maintains all reclamation
is within its territorial waters, but Indonesia fears it
could lose out if the city-state were to redraw its
borders after the reclamation. In February, former
president Megawati sailed on a warship to the small
island of Nipah on the maritime border with Singapore to
reinforce Indonesia's claim to the island.
Illegal timber Singapore has been less
than helpful on another major economic issue dogging
Indonesia: trade in illegal timber. Only days before
Loong's visit, Yudhoyono pledged that his government
would take "tough action" against illegal loggers. He
described widespread deforestation - much of it done
with the complicity of corrupt government officials -
the hunting of protected wildlife and maritime pollution
as "serious" problems. Yet, like Malaysia, Singapore has
ignored all Indonesian requests to help stop the traffic
in illegal timber.
Safe haven Though
several Indonesians living in Singapore are wanted in
Indonesia on corruption charges, Singapore has refused
to include economic crimes in the draft of an
extradition treaty between the two countries, citing
vast differences in the two legal systems. Former
justice and human rights minister, Yusril Ihza Mahendra,
described this "excuse" as laughable. "We already have
extradition agreements with Australia, Malaysia and Hong
Kong, and they all adhere to a similar system as
Singapore - that is British common law," said Mahendra,
who now heads the very powerful State Secretariat.
Adrian Waworuntu, a key suspect in the Rp1.7
trillion (US$190 million) Bank Negara Indonesia (BNI)
scandal, fled to Singapore. Another suspect, Maria
Pauline Lumowa, a Dutch citizen, but Indonesian by
birth, is reportedly living in Singapore. The absence of
an extradition treaty with Singapore has made it
difficult for the Indonesian authorities to prosecute
her in Jakarta, National Police chief General Da'i
Bachtiar said last week. Several suspects in the misuse
of Bank Indonesia liquidity support funds, including
David Nusa Wijaya, have also been able to avoid justice
by fleeing to Singapore.
Indonesian officials
have complained that Singapore is dragging its heels in
signing an extradition deal because it does not want to
lose billions of dollars allegedly deposited there by
corrupt Indonesian businessmen. Many Indonesian
businessmen fled to Singapore following the 1997
regional economic crisis, leaving huge debts to the
government.
House of Representatives speaker
Agung Laksono said on Tuesday after meeting Loong that
he hoped Singapore would establish a treaty, the "sooner
the better". Laksono's direct take on the issue confirms
the view by some analysts that public opinion in
Indonesia may shape Jakarta's foreign and bilateral
policies much more than in the past. If true, this will
be bad news for Singapore and its new leader.
The way ahead? Security characterized
the bilateral relationship between Indonesia and
Singapore in the 1980s. But Singapore now lives in
constant fear of the terror threat emanating from its
two biggest neighbors. It has historically been
sensitive to racial matters, being an ethnic
Chinese-majority state, surrounded by the much more
populous and predominantly Muslim nations of Indonesia
and Malaysia. Singapore's poor understanding of Islam
has hardly helped.
In his memoirs Lee Kuan Yew
recalls how Singapore's ambassador to Jakarta, Rahim
Ishak, warned him that Singapore would be a "convenient
whipping boy whenever there was discontent in
Indonesia". Singapore's new leader, whose given name
means Illustrious Dragon, needs to reflect on this and
find ways to reach out beyond Indonesia's political
elite to ordinary Indonesians themselves.
Commonly known as B G Lee, from his rank as a
brigadier general, Loong, together with Yudhoyono,
dubbed the "smiling general" can move ahead in cementing
the bilateral relationship by resolving the issues that
cause these same Indonesians to see Singapore simply as
a greedy exploiter of Indonesian resources and say
strategic assets are falling cheaply into powerful
foreign hands.
Bill Guerin, a weekly
Jakarta correspondent for Asia Times Online since 2000,
has worked in Indonesia for 19 years in journalism and
editorial positions. He has been published by the BBC on
East Timor and specializes in business/economic and
political analysis in Indonesia.
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