Elliott Haynes' Indonesian Diary, Desember 1967

=== [PDF page 1] === ee.. TPIS BI / Limited Official Use * — ELLIOTT HAYNES' INDONESIAN DIARY December 1967 Table of Contents Page Malik, Tobing, Soehardiman, Delson (New York, June 29) ] Prof. Sadli, Foreign Investment Team 2 Kim Adhyatman, assistant to Malik 3 Marshall Green, U3 Ambassador, Ed Masters, Paul McCusker 4 The Sultan of Jogjakarta 5 Brig. Gen Sudjono Humardani, President's Staff 7 Malik and Adhyatnian 6 H.A. Sjaichu, Chzirman of Parliament (DPR) 9 M. Subchan, Vice Chairman of People's Congress (HPRS) 9 Mochtar Lubis 10 Col. $. Djojopranato, Editor, Harian Angkatan Bersendjata,and h.P. VW Nahar Zahiruddin. 12 Admiral Mursalin, Vice Chairman of Parliament 12 Hafas, Editor, Nusantora 12 Max Loveday, Ambassador of Australia 13 Brig. Gen. (Police) Dr. Awaloedin Djamin, Min of Manpower; A.G. Samii 14 Kosasih Purwanegeéra S.H. 15 Prof. Selo Sumardjan, Secretary: to the Sultan 16 Dr. Subroto, Department of Trade 17 Ibrahim Usman, Sec. Gen., P.B. Gasbi indo 18 B. R. Motik, Chairman, All Indonesia Importers' Association 16 Jakob Oetama, Editor, Kompas- (Catholic daily) 19 Prof. Soemantri; 19 Vice Air Marshal Sutopo, Min. of Communications 20 Rosihan Anwar, journalist 22 Rear Adm. Jatidjan, Minister of Maritime Affairs 22 Abdulrachman Setjowibowo, Chairman, Eco.&- Fin. Comm., Parliament 23 Soedarpo Sastrosatomo, Mg. Dir., P.D. Soedarpo Corp. 24 Soed jatmoko" (leading: intellectual) 25 Maj. Gen. Dr. Sjarif Thajeb, Vice Chairman of Parliament 27 Idham, Director, P.T. Bank Niaga 27 Zein Effendi Sh., Director, The Djakarta Times 28 Julius Tahija, President, Caltex Indonesia 29 Prof. G.A. Siwabessy, Minister of Health 29 Gen. Suryo (Suharto's staff); Prof. Sadli 30 Agus Sudono, Gen Chairman, Gasbi indo 32 McCusker, US Embassy’ and Joe Harary 32 Radius Prawiro, 3overnor, Bank Negara 33 Mustafa Miga, Editor, Suluh Marhaen 34 A Rz Suhud, weber cf Sacli's Board 34 Ali Noor Luddin,: President, P.T. Masayu 35 Sumono Mustoffa, head of KNi news service 36 Qei Jong Tjioe, Director, P T. Keramika: Indonesia Baru 36 Taufig R. Tjokroaminoto, Gen Sec., Gobsii-Indonesia 37 Dr. Soenawar Soekowati, Gen. Chairman, KBM 38 Drs. Soesilo Sardadi, Managing: Director, Bank Negara-tndonesia Unit IV 39 Dr. Deliar Noer, Rector;:-Teachers':Training College eo 40 Barli Halim, Sec. Gen.', Dept. of Basic & Light- Industry, and Power 40 Frans Seda, Minister of Finance - ho Maj. Gen.“Ashari Danudirdjo, Minister of Basie: & Light Industry 4] cont'd nT | Limited Offictal Use === [PDF page 2] === Table of Contents (cont'd) Prof. Dr. Widjojo Nitisastro, Director,:-Nat'l Planning Bureau R. Achmad Soekarmadidjaja Dr. Mohamad Sadli Ir. Tojib Hadiwidjaja, Minister-of Plantations Dr. Selo Soemardjan, Secretary to the Sultan Darius Marpaung, M.P. - General Chairman, Kespekri Mh. Isnaeni, Vice Chairman, Parliament (DPRGA) Arifin Harahap, Secretary-General, Ministry of Trade Harlan Bekti, President, Tohnik Umus, Oejeng Soewargana, publisher, friend of Bekti H. Mahbub Djunaidi, Gen. Chairman, P.W.1. Pusat (journalists ass'n) Sjafruddin Prawiranegara, economist R. L. Tobing Sh., VP, Indonesian Importers Ass'n Maj. Gen. Supjipto S.H., Minister, Dept. of Agrictlture Zulharmans, Harian Kami Dr. Emil Salim, Bappenas (Nat'1l Planning Bureau) R. Soetanto M.A., Direktur Utama, Bank Negara Indonesia 1946 5NI Omar Abdalla B.B.A., President, Bank Dagang Negara M. Subchan, Vice Chairman, Peoples Congress === [PDF page 3] === INDONESIAN DIARY June 29 - New York Dr. Adam Malik, Presidium Minister for Foreign Affairs Elkanam Tobing, Indonesian parliamentarian and businessman R. Soehardiman, Indonesian Consul General in New York Robert Delson, partner in Delson & Gordon, 230 Park Avenue, New York, N. Y. 10017, tel. MU 6-8030 Several other officials The law firm of Delson & Gordon claim to be legal counsel to the Government of Indonesia -- even the new team. Bob Delson and his colleague, Carl Slater, and | had a session several weeks ago in which they offered to give all the assistance they could in the organization of the Roundtable, and specifically to help launch it by making a date with Dr. Adam Malik, Presidium Minister for Foreign Affairs. Meanwhile, Slater has gone back to Indonesia on a 6-week trip, taking with him a copy of our letter to Adam Malik (the usual initial form letter) to give to the top man in the Indonesian Government concerned with foreign investment, Mohammed Sadli, Chairman, Foreign Investment Council. He also took with him the following description of our room needs at the only plausible hotel in Djakarta, with the promise that he would, on our behalf, nail down the dates for these rooms of March 10 through March 15, 1968: 20 suites and 60 twin-bedded singles. The date with Malik was duly set up for today (June 29), and Jean Anderson, Ken Gott and | went over to the Waldorf-Astoria Towers to keep it. Bob Delson had made one initial error which concerned me (but no longer does). i had sent an additional copy of our letter to Malik to the. Delson & Gordon office as a matter of courtesy, and Slater took one to Indonesia while Delson, purely on his own initiative, took the other copy to Malik on Tuesday, June 27, and gave it to him. This had all the earmarks, of course, of Delson horning in on our roundtable and attempting to appear as the chief factotum. I dressed him down politely on the telephone, and he was full of apologies. At that session, an Indonesian parliamentarian (and businessman) named Elkanam Tobing had been present and had constantly interrupted to insist that our Roundtable be held with Indonesian officials in, of all places, Tokyo. The idea apparently is that Indonesia very much wants Japanese business investment and economic development cooperation (and Indonesians also love to go to Japan). At our session with Malik, | hit this idea on the head, and also discouraged the idea of going to Bandung instead of Djakarta. Malik listened intently, and when, at the end, Tobing tried again to raise the issue of Tokyo, he cut him off abruptly and assured me that if we wanted the meeting in Djakarta we would have it there. We also made it crystal-clear to Malik that Delson & Gordon was working for the Indonesian Government and not for us, and had absolutely no connection with the Roundtable. Everybody, including Malik and Delson, heartily agreed. === [PDF page 4] === Indonesian Diary -2- Malik listened carefully to the entire description of the Roundtable, its nature and purpose, etc., and then assured me that, in his view, it would be extremely welcome in Indonesia. He promised to give us a prompt reply to our letter, indicating of course that it would be affirmative. He assured us that the date we had suggested was a good one and did not conflict with any religious holiday or other event. Also present at this meeting was the Consul General in New York, R. Soehardiman, and a number of other officials. November 19 - Diakarta Professor Sadli Called Prof. Sadli, head of the Foreign Investment Team (technical body whose recommendations to the Foreign!nvestment Council are tantamount to approval) for a date and he said to go to his house at 5:00 PM. Arrived with Jean and Sanjoto to find him still asleep. Sadli is US-educated, knows how Americans operate, and can take criticism and talk directly and honestly. He raved about the Time meeting in Geneva which struck just the right note and was a "“love-in at the International Hotel."' Said the tndonesians had returned recognizing that they had to amend some laws, that he is now worried that they must perform before the Time group returns (after the marriage you must perform). The Time group apparently told them some cold truths about foreign investors. Sadli is all for our Roundtable as an excellent follow-up. He and other civilians (or at least technicians) apparently want the politicians and the military to learn about the outside world and the views and needs of foreign investors -- also to counteract 10 years of brainwashing by Sukarno about imperialism and neocolonialism. But he suggests June or later, primarily because Suharto is going to Europe and the US in March (or April or May). He was concerned at first about our meeting with Suharto on grounds that he is still learning English and is still being educated by the Sadlis and others about the outside world (he's never been abroad). Sadli thinks the foreign trip will make a new man of him. Sadli's objections about a session with him at the Roundtable collapsed when | explained how our group was sensitive to the level of understanding of chiefs of state and never embarrassed them, and that we would furnish simultaneous interpreting. Sadli also suggested that Malik froze when speaking English in front of large groups and that we should have interpreting for him as well. He urged me to see Suharto personally, ahd immediately wrote out two introductions for me to the two generals who are Suharto's key advisors: Brig. Gen. Sudjono (economics ) and Maj. Gen. Alamsjah (political). He also urged me to see Malik's assistant, Kim Adhyatman. He looked over the draft agenda. and approved, agreeing that we should add a session with Suharto's eeponic Advisory Team of which he is a member (this originally Sanjoto's ix Hea). Sadli thinks such ideas as harmonization of national development plans in Asia, the Pacific Basin approach, etc., may sound impossible until people think they can work, until the political will exists to carry them out. === [PDF page 5] === Indonesian Diary -3- This in turn needs leaders with international reputations (like Monnet and others in Europe). He sees no such leaders yet but feels Malik might become one. To rise up, such men need a forum -- international conferences ~- where they can develop their ideas and gain recognition. This is another reason why Sadli is all for us. November 20 - Djakarta Kim Adhyatman, assistant to Malik 10:00 AM Easily made a date with Adhyatman. Apparently Sadli had called him (and | suspect called the Sultan and the two generals as well). Adhyatman immediately pronounced himself as all in favor of the Roundtable and ready to "take personal charge" of the response on Malik's side. Adhyatman was instrumental in organizing the Time RT, which he attended, and said he wanted to avoid the big battle that went on unbeknownst to the Time side within the Indonesian delegation before and during the meeting -- where they had two captains, the Sultan and Malik, who were vying for hegemony. Some say Malik, now that the Presidium is dead, has less stature than the Sultan, since Malik is no longer in charge of political affairs as well as the Foreign Ministry as he once was. Yet the Sultan has no portfolio at all, but is simply charged with coordinating all the various economic activities of the ministries. Malik is decisive, has ideas, pushed the cautious, hesitant Suharto to a quick re-entry into the UN and quick end to the Malaysian war. He may agree all too quickly (with such people as Ambassador Green) and then not follow up, but this (says Masters, the Embassy political officer) is because he lacks staff work, can't delegate, can't organize. Malik is, | think, a Sumatran, a race which is more incisive and less cautious and devious than are Javans. The Sultan of Jogdjakarta is of course a Javan, not an original mind, but delightful, a man everybody likes, and does well in bringing about a consensus, acting as a catalyst, and a man with much political power even though his supposed field is economics. He may wind up as a figurehead President once the country has held elections and has a Prime Minister. Brig. Gen. Sudjono also has great political power: he and Alamsjah have access to Suharto 24 hours a day, whereas Sadli and his ilk see him once a week. Either Sudjono or the Sultan share the same soothsayer with Suharto, which gives him (I'm positive it's Sudjono) almost a brother relationship with Suharto, Adhyatman urged me to stay away from Alamsjah, and the US Embassy agrees. He is power mad, would like to be top dog, might seize the RT and use it to his own end. Especially since he's now under attack (justifiably) by the students as corrupt (he's made himself rich). Also, he and Sudjono are rivals, and it is hard to be friends with both. Suharto is expected to dump him eventually -- but is, typically, going very slow in this, just as he did in dumping Sukarno (which Masters now says, in retrospect, was wise, in that it avoided open revolt by the Sukarno forces). Even though Sadli gave me a note to him (Alamsjah) | can just forget him unless he makes it clear he wants to see me, says Masters. It's clear the Ambassador and Alamsjah are not on good terms. Alamsjah tried to ram through some AID policies that were politically oriented, and Amembassy had to get tough and show him the US didn't do things that way. === [PDF page 6] === Indonesian Diary -4- When | told Adhyatman that Green has written to the Sultan requesting a date for me with the Sultan, Adhyatman instantly said that | should go through the Sultan and not Malik if that is the way things turned out. He urged me not to call Sudjono until |! had seen Malik, and true to his word phoned me during my next visit (with Green) to say that | had a date the 2lst with Malik at 11:00 AM. Adhyatman said that Suharto had requested that two generals attend the Geneva meeting and that Malik had not objected but that Time had refused. They were probably the two Sadli mentioned to me -- but might have been the ministers for Industry and for Trade. The fear of “creeping militarism" on the part of the civilians is a problem -- or rather, a problem in the country is the uneasy relations between the civilians and the military. Malik in Geneva made a speech saying the two had to get along better and better. There is no reason why we shouldn't accept the military at our Roundtable -~ Masters agrees. Adhyatman's other comments: Malik doesn't trust the Indonesian Ambassador in Washington (Malik must accept Sukarno-appointed ambassadors, or Alamsjah-appointed) and goes around him ("we deal with Green and with the number two man in Washington"), and BI must deal with Jack Lightman, number two in the US Embassy, as well as with Green, since "the Army doesn't get along well with Green®' but apparently does with Lightman. 1! felt I had to pass this on to Green, who was surprised ("That's a new one."), but Masters felt it reflected Green's difficulties with Alamsjah. (Nobody feels Nasution is important. ) November 20 - Diakarta Marshall Green, US Ambassador to Indonesia Ed Masters, Political Counselor Paul McCusker, economic chief of the Embassy Green was struck by the scope of the Roundtable and felt we should work with Malik since it is broader than just economic. He agrees we should postpone it to June or later. He feels the Indonesians are sensitive to questions on the elections, banking law, etc., and that many will relish our group coming to ask such questions but others will be "enguished."t He promised full Embassy support and requested that | see Masters this afternoon. Also present at this meeting was McCusker,the economic chief of the Embassy -- and at the end | brought in Sanjoto to meet Green. Met with Masters at 3:30. Very knowledgeable. Says Suharto is a ere good man trying his best to run the country. He didn't ask for power, it was thrust on him. He is trying to balance civilian with military power in government. The Embassy made a study several months ago of the percentage of military among the top 200 that run the country compared to the Sukarno period, and found that there were 38% under Sukarno and 43% under Suharto. But he admits the military has vastly more power today than it did when Sukarno was in power. The Army began infiltrating the government years ago when it saw what Sukarno was up to (one should say the Military, but the Army is the real power compared to the Navy or Air Force), and now has a corps of men about colonel rank who are among the === [PDF page 7] === Indonesian Diary -4- When | told Adhyatman that Green has written to the Sultan requesting a date for me with the Sultan, Adhyatman instantly said that | should go through the Sultan and not Malik if that is the way things turned out. He urged me not to call Sudjono until | had seen Malik, and true to his word phoned me during my next visit (with Green) to say that | had a date the 21st with Malik at 11:00 AM. Adhyatman said that Suharto had requested that two generals attend the Geneva meeting and that Malik had not objected but that Time had refused. They were probably the two Sadli mentioned to me == but might have been the ministers for Industry and for Trade. The fear of “creeping militarism" on the part of the civilians is a problem -- or rather, a problem in the country is the uneasy relations between the civilians and the military. Malik in Geneva made a speech saying the two had to get along better and better. There is no reason why we shouldn't accept the military at our Roundtable -- Masters agrees. Adhyatman's other comments; Malik doesn't trust the Indonesian Ambassador in Washington (Malik must accept Sukarno-appointed ambassadors, or Alamsjah-appointed) and goes around him (*we deal with Green and with the number two man in Washington"), and B! must deal with Jack Lightman, number two in the US Embassy, as well as with Green, since "the Army doesn't get along well with Green® but apparently does with Lightman. | felt | had to pass this on to Green, who was surprised ('"'That's a new one."), but Masters felt it reflected Green's difficulties with Alamsjah. (Nobody feels Nasution is important. ) November 20 - Diakarta Marshall Green, US Ambassador to Indonesia Ed Masters, Political Counselor Paul McCusker, economic chief of the Embassy Green was struck by the scope of the Roundtable and felt we should work with Malik since it is broader than just economic. He agrees we should postpone it to June or later. He feels the Indonesians are sensitive to questions on the elections, banking law, etc., and that many will relish our group coming to ask such questions but others will be "anguished." He promised full Embassy support and requested that | see Masters this afternoon. Also present at this meeting was McCusker,the economic chief of the Embassy -~ and at the end | brought in Sanjoto to meet Green. Met with Masters at 3:30. Very knowledgeable. Says Suharto is a good man trying his best to run the country. He didn't ask for power, it was thrust on him. He is trying to balance civilian with military power in government. The Embassy made a study several months ago of the percentage of military among the top 200 that run the country compared to the Sukarno period, and found that there were 38% under Sukarno and 43% under Suharto. But he admits the military has vastly more power today than it did when Sukarno was in power. The Army began infiltrating the government years ago when it saw what Sukarno was up to (one should say the Military, but the Army is the real power compared to the Navy or Air Force), and now has a corps of men about colonel rank who are among the === [PDF page 8] === Indonesian Diary -5best-qualified administrators in Indonesia. So this Army influence in the government is not bad. But he also stressed, as have others, that the Army has taken over provincial government down to a very low level -- a grassroots political control that could lead to military dominance on a vast, long-lasting scale. The country simply isn't ready for elections, even though they are required by law as of July of next year (7). The electoral law will be passed the end of this month -- probably a good law though somewhat vague and giving the Administration much leeway in interpretation. But the machinery of elections is missing, even including voting lists. And the political parties that still exist today have no power or relevance. The good parties were banned by Sukarno and still have not been born again (like the socialist party). The two principal parties (secular and religious) have no programs and no effective leadership. It is doubtful that they can even be reformed very quickly (both played footsie with Sukarno and the Commies -- even the Muslim Party, hence it is not true that religion in Indonesia can ever be a bar to Communism). Thus Masters says the earliest the Government can agree to elections is 1970, and even if they are held then they will be carefully controlled, especially in view of the austerity program, which has to get tougher. But Masters does not think that Suharto would ever allow a military junta to arise, and Suharto himself has been making good speeches recently about constitutionalism, the rule of law, etc. Masters agrees that, given the poor state of the political parties, we might switch the political session to a session with the legislative leaders. Masters warns that the Javanese are truly, truly, truly sensitive. They will harbor grudges a whole year and then express them. Watch out -- they have a deep inferiority complex (all Indonesians do, says Masters -- unlike Indians:). He also says Kim Adhyamat is of Chinese derivation -- he changed his name a year ago -- and too close an association by BI with him will raise many Indonesian eyebrows: November 21 - Djakarta The Sultan of Jogjakarta Merdika Selatan No. 6 Office (direct line): 51122 Home: 8219] Saw the Sultan from 8:30 to 10:00. Fair English, pleasant, good sense of humor. Sees priorities for the economy as food (mainly rise), through fertilizer, insecticides, etc., clothing, infrastructure (telecommunications, shipping, etc. ), and exports. Rice is short one million tons a year, requiring annual imports worth $70-80 million they can ill afford to spend. Hence they are pushing the establishment of fully mechanized rice estates (two in Sumatra, one in Borneo, one near New Guinea to supply New Guinea) -- rice estates will grow more than just rice. The Government is asking new investors to grow their own rice, start rice estates (as Uniroyal is now beginning). The Government hopes that migrants will group around these rice estates. === [PDF page 9] === Indonesian Diary “6- ; On exports, Uniroyal and Goodyear are planning new rubber plantations in Sumatra. The Government hopes to increase palm oi] exports (not coconut ) and has issued tenders for concessions in tin, nickel, and oil. 18 companies bid for five tin areas, 21 firms bid for five nickel areas (and apparently Kaiser Steel got one in a joint bid with the French "Nickel Internat ional!'), All the mainland oil areas are nearly occupied. A few offshore areas are left, and already companies are fighting for them. Among Indonesia's problems: a 2.5% annual population growth -- Java with 70 million-plus people horribly overpopulated with every square inch now in use (Sumatra is four times bigger, has only 12-14 million). At Geneva, the Indonesians found they were thinking too small. In logging, they were thinking 20,000 to 100,000 hectares, private foreign firms talked a million hectares. The Sultan laughed in telling me that some foreign executive asked Sadli how many chickens he had in mind and Sadli replied 50,000. ''That's chicken feed; how about 500,0007'' was the reply. Thus they are re-thinking the 30-year concession limitation (may go to 50?) and also whether the 5-year tax holiday should be modified to cover such things as pulp mills started years after the logging operation got started, The Sultan's view on inflation: it was 650% in 1966, the target for 1967 is 65% but will be 75% "'or 80% at m "' (shortfall owing to rice failure resulting in rice-priée hike), target for 1968 is 35% maximum, for 1969 a maximum of 15%, and no inflation in 1970. The Sultan expects the budget to be balanced in 1968 with tax reform. The period through 1970 will be rehabilitation (to quote the Sultan), with real development only starting in 1971. Many industries and towns have not had spare parts for five years (many towns no electricity), and failways, shipping, aircraft, trucks, buses, power plants, etc. are in terrible repair. Hence 95% of the $200 million credits received from abroad this year are being spent on replacement and spare parts, and a similar percentage of foreign credits received in 1968 will be spent the same way. Many joint ventures are already operating in fishing (with Koreans, Japanese, etc.) and ''there is no more room for fishing ventures.'' South Koreans are beginning next week to fish south of Java and near Amur (sp?) with ten ships. The Indonesian Government is asking all fishing ventures to process and can as well as just fish. The Sultan offered the services of his Secretary (a Ph.D. from Cornel] and Professor of Sociology) as liaison, saying there are no bus or other services and thus the Government must cooperate with BI in providing such facilities (e.g., for the Ladies Program, which the Sultan specifically asked about). He called the Secretary in to meet me, but he was teaching a class. | am to see him later (through Sadli?). The Sultan studied the draft agenda carefully for a full half hour. He stressed the idea of inviting leaders of government-owned banks (other government industries too?) to join the business and banking session. He finally agreed that the Economic Advisory Team was sufficient to cover the National Economic Planning bureau. He expressed fear that our meeting === [PDF page 10] === Indonesian Diary a7 with the Economic Advisory Team would conflict with his own since "that is my team," but | assured him we would cover broad issues with him on stabilization, allocation of resources, and get into detail with the team. He also said the other ministers were men he coordinated, to which | responded that if he wanted to attend other sessions he'd be welcome -- or could send a man like Sadli to cover other sessions for him. The Sultan wants an Australian briefing memo. He assured me, after we finished discussing the agenda, that "this can be done."" Also, that | would have no trouble in getting the Acting President to attend. He knew I was seeing Sudjono. November 2] - Djakarta Brig. Gen. Sudiono Humardani, Private Staff of Economic Affairs to the Acting President, Office of the Presidium, Merdeka Barat #15 Saw Sudjono from 1:30 to 3:30. Olive-clad soldiers with guns lolling all about, but sleepy atmosphere. Explained all to Sudjono, and he almost immediately dropped the pretense that he knew little about it (also gave him Sadli's note about me). His behavior indicated strongly that the Government was in agreement that the Roundtable should be held and Suharto should attend. We discussed why the RT was so important for Indonesia -- Sudjono is another bear on the importance of infrastructure. He was curious about my view of what Japan would do to help Indonesia and help maintain Asian security, and agreed reluctantly that Asian security could be maintained by the US and others. Regarding the session of the RT with Suharto, Sudjono stressed that Suharto kept up with the activities of all the ministries and that he was fully capable of an economic discussion with our group. He said he would try to make a date for me to see Suharto before he left for the provinces (Nov. 24-27), but assured me that | could see him the 27th or 28th on his return. Gave me his office and home phone numbers and urged me to call on him for help as needed. Studied the agenda carefully, and urged that we include the Minister of Public Works and Minister of Maritime. Sudjono went to New York with Malik when Indonesia re-joined the UN, also went to the US on State Dept. invitation. He saw Humphrey in Minnesota as well as during Hubert's Indonesian visit, and is a great admirer of Humphrey. ''He is the best friend in the US that Indonesia has." | was not terribly impressed by Sudjono, though he is quite charming -- as I'm beginning to believe all Indonesians can be. He agreed that | should call him the 27th re a date with Suharto. === [PDF page 11] === Indonesian Diary -8- November 21 - Diakarta Dr. Adam Malik, Presidium Minister for Foreign Affairs Kim Adhyatman, assistant to Malik Saw Malik and Adhyatman from 11:00 to 12:00. Malik said Green spoke to him last night, and that he replied that he had approved of the idea way back in New York in June. | think he's embarrassed at the long delay and absence of a reply to my letter. | showed him the revised schedule. He approves. He was interested to hear whether the Sultan had approved. | assured him the Sultan did, and also told him that the Sultan had volunteered his Secretary's help as liaison. | raised the question of seeing Gen. Sudjono, and he assured me that | should, and that Suharto was taking a trip to the provinces Nov. 26. | must see him first. Malik also assured me that Suharto would agree to the program. Apparently the Government has decided to accept the Roundtable, and my seeing Suharto will merely be a formality. Malik stresses that the big need for the country now is fertilizer production, and oil. They need big investments in these (oi] in the sense that existing producers can do much more). At Geneva they discovered they had been thinking too small (see notes on my meeting with the Sultan). Malik was the one who suggested they take two generals (Jusif and Sudjono) but Suharto turned it down, said they had enough experts there and he needed the generals in Djakarta. Malik swears the American Embassy is wrong and | that more than 60% of the top 200 government people are military. He says the military want to postpone elections for selfish reasons, that elections are vital to political stability, but that they must not be held until the rice production has been increased. Sumatra is okay, but elections in Java -- 70 million-plus people -- would return the Communists if held before the rice problem is solved. The big stress in the RT should be on infrastructure (here is a challenge for the briefing memo). Of 13,600 islands, 3,000 are inhabited. Indonesia needs the latest technology in telecommunications, ships, ports, etc. to make a viable country. This is why Malik is all for our RT. He says we should stress this infrastructure challenge in our briefing memo. Says Union Carbide's problem in a proposed plastics plant (which would export to Asian countries) is that the oi] company that would sell them the oil residue is | making more money in the black market and doesn't want a big Union Carbide operation to cut into these profits. A more basic point: the Indonesians have been scared off about imperialism, and also want their own little profits, hence balk against a big foreign investor in big projects. Malik told Sato (Japanese Prime Minister) that Japan should reach 1% of GNP in aid, mainly to Asia, that should include investment guarantees (Sato replied that the Japanese parliament is now working on such guarantees), that given an Asian Marshall Plan for 200 million people in Indonesia, the Philippines, Malaysia and Singapore they would compete with Japan in "20 years," Malik sees these four countries harmonizing their development plans (e.g., in steel production), and disagrees with Dr. Goh of Singapore that this is impossible. === [PDF page 12] === Indonesian Diary -9- November 23 - Djakarta 10:;30-11:10 H. A. Sjaichu ("Shy-Who"), Chairman of Parliament (DPR), Pintu VII, Komplek Gelora, Bung Karno Senajan, Kebajoran Baru Moch. Thana Ma'roef, Member of Parliament (Foreign Affairs Committee) Sjaichu was fully aware of the importance of the Roundtable, but insisted that he and other Parliamentary leaders meet separately from the People's Congress leaders. Also, that they be accompanied by the Finance Committee (as he called it) members (and possibly the Ehairmen of a number of Parliament's key committees). | finally ascertained (1 think!) that the Economics Committee and the Finance Committee are one and the same -- at least the man Sjaichu desperately wants to accompany him is Abdulrachman, whom | had intended to invite anyway and who was described to me as Chairman of Parliament's Economic Committee. No matter. We agreed on Wednesday, June 19, at 6:30-8:00 PM. | assume that in my letter to Sjaichu | should not only mention Abdulrachman as invited (or welcome) but also Moch. Thana Ma'roef. November 23 - Djakarta 9:45 - 10:20 M. Subchan, Z.£., Vice Chairman of the MPRS (People's Congress) Subchan, an ex-businessman, was chairman of the National Chamber of Commerce and Industry for eight years. He said that the political structure of Indonesia is ike a basketball game,"* with a "man-to-man" defense, e.g., each of the following watches the comparable government official: Nasution - domestic affairs; Subchan - economics, finance, development; Maliki - defense; Siregar - foreign affairs; Gen. Mashudi - social affairs and education. Subchan believes that inflation will be held to 80% this year, but at ] a sacrifice of exchange rate disparity. Hence, the Sultan is wrong “as I've told him" in saying the budget will be balanced in 1968 -- unless US aid of $375 million is forthcoming or foreign investments come in (which Subchan says is doubtful). He thinks creeping militarism is a danger. The rule of law must be established. The People's Congress is like the Supreme Soviet, has top authority for policy and implementation; it appoints the President and directs the Parliament. Subkhan is the Sultan's boss "in theory" (he has a bigger staff than | do"). Subchan claims to have been a key man in ousting Sukarno, though ''I like him." Subchan wants the Legislative Leaders session first: “We are not salesmen to foreign investors, will tell the truth, give you ideas about questions to put to the Government" (/). Yet Subchan adds that the People's Congress has directed the Government to sell foreign investors: He will come to the RT, offered all help, including the suggestion that | write him re bios of all the legislative leaders and he will organize them. "I'm junior in age and therefore do all the work!" Later | called Subchan and told him (1) of the split in the Legislative Leaders session, and (2) we had put the People's Congress on the first day. === [PDF page 13] === Indonesian Diary aO- November 23 - Djakarta 11:30 - 12:00 Mr. Mochtar Lubis, Pintu Air 20A, tel. 18312 Lubis is the no. | opinion leader, was eight years in jail under Sukarno, is a national hero, has now started a publication and also does business consulting. We discussed "“Berdikari™ ("stand on your own feet!) -- banks owned by the army, navy, air force, police, that never pay taxes. Suharto is trying to stop this slowly, but is making no headway. He says this concept of Berdikari, initiated by Sukarno, was a response by Sukarno to the fact that he lacked funds to carry on a war with Malaysia, hence instructed the Army, Navy and Air Force to find ways of raising their own funds. In turn, they (the military) called on the Chinese to help them raise funds, first in trading, etc., and then in smuggling and other corrupt activities. This has carried on today, with (as above) the Army, Navy and Air Force running banks and other operations. (never paying taxes) and continuing to smuggle. The ownership and operation of banks and other establishments by the military is carried on up to the battalion level! This permits retention of a huge military establishment the country cannot afford, terrible economic drain. Corruption, in addition, may have begun because civil servants and military personnel simply couldn't live on their salaries, but it has now become a matter of getting more and more, amassing greater and greater riches, a Suharto can't stop this military corruption, military banks, etc., overnight -- it would cause chaos. He is trying to curtail it slowly, but getting nowhere at all, says Lubis. This is why the military is still living beyond the funds voted for them by the Parliament. Lubis agrees with Malik that the percentage of the top 200 government powers represented by the military is above 60% He says you can count those generals who are honest on "the fingers of two hands." He agrees some are good administrators, but many are lousy. Recognizing that Suharto has an open mind, is eager to learn, and that he is trying to moderate the influence of the military, Lubis and other liberals are supporting him. But he has yet to show the dynamism, ability to make big decisions, act decisively, that the times demand. He is still a question mark. The quality of national leadership is lacking -- the abiiity to inspire people, get them to work hard. He hopes Suharto will grow quickly and achieve this stature, but he lives too much in Sukarno's shadow. Lubis, in face of these facts, and the overwhelming economic problems of Indonesia, greets the country's future prospects for stability and growth with ‘very cautious optimism." Lubis wants his #2 man, Prof. Sumitro Jojohadikusumo, to attend the rendezvous dinner with him. He is a former Finance Minister, a distinguished guy now in Amsterdam. 1! agreed -- and Lubis will invite him on our behalf. Lubis has agreed to make a 5-10 minute talk at the dinner and presumably will ask Prof. Sumitro to do the same. Lubis may look us up in New York in January. === [PDF page 14] === Indonesian Diary -l1- November 23 =- Diakarta 5:00 - 6:10 Colonel S$. Djojopranoto, Editor in Chief of the Harian Angkatan Bersendjata,"t Member of Parliament for Security, Defence & Foreign Affairs - Djl. Merdeka Barat 13, Djakarta The Colonel is not the Editor of the Army newspaper "Berita Yuda,"! but of the newspaper that is the official spokesman for the entire military. Its national edition, of which he is Editor in Chief, has a circulation of 40,000. Local editions, over which he has general supervision, have combined circulation of 200,000 or so. These papers go to the soldiers (all the military), the police (which are part of the armed forces in Indonesia) and veterans. The Colonel sees the military as the only force between Indonesia and chaos. And he sees the Army as natural leaders: General Suharto gives the word - "A" - and the Colonel prints "A", The soldiers read it, and repeat "A"! =The people, looking up to the soldiers, ask them what's what, are told "'A'', and the people believe and repeat "'A".! The soldiers -- privates to colonels and up -- are so respected that they are naturally elected to be local mayors, governors, etc., and thus the heavy incidence of the military in civilian government does not reflect an effort by the military to muscle in. The Army (military) is against Communism in Asia and especially in Indonesia. Hence it insists that the Nationalist Party (PNI) "consolidate" by the end of the year or face compulsory dissolution. ''Consolidation® means disowning all Marxism, embracing the New Order and swearing allegience to Suharto. The Nu (Muslim Party) is okay, since "religion is anti-atheistic and hence will never accept Communism. The election law will be passed by the end of the year (with clauses forbidding Communists to run), but laws must be passed reorganizing (1) Parliament and the People's Congress and (2) political parties. Only then -- sometime in 1969 -- will the New Order be consolidated to the point where elections will be guaranteed to keep the New Order (e.g., the military) in power. Corruption by the military is "exaggerated" by people who are against Suharto. Give them half the power Suharto has and they'd shut up. Corruption today is much less than it was under Sukarno. The Colonel claims he will put us in touch with people who can prove this. He was eager to persuade us that these people were not themselves corrupt! But he quickly admits the military units should not run banks, etc., and that ''this will be stopped when the situation returns to normal." He suggested several people who can give us information -- and whom we might invite to the RT; . Rosihan Anwar (we've invited) . Hatta (is passe) Dachlan Ranuwihardjo, leader and founder of HMT, the Moslem youth or student organization (but we have a student leader) . Achmad Sukarmadidjaja, leader of the IPKI Party ("'The Upholders of Indonesian Independence") founded by Nasution-(we should invite). Amembassy says it is not strong now in numbers, but could be if PNI is banned, since IPKI, like PNI, is secular. === [PDF page 15] === Indonesian Diary -l2- He refused to commit himself to attend the RT, asked many questions about Bl. I must write to invite him again. As an Army apologist, he is lousy, showing more enthusiasm than brains. He spent the Sukarno period in | the field as a Regimental Commander in Bali, probably pimping for a general.<— November 24 - Djakarta 9:00 - 9:05 Nahar Zahiruddin A quick meeting in the hotel lobby before dashing to a meeting with Loveday. He understood the invitation to the business and banking session, said he was a key man in the PIBA meeting. He may call me. If not, | | should write him (should write in any case). He hasn't yet formally accepted. a November 24 - Djakarta 11:25 - 12:00 - vse Reac Admiral Mursalin, Vice Chairman of Parliament (note: not. Mursalim as the US Embassy has it) men Taman Sunda Kelapa 4, Djakarta tel: 46620 (home); 71894 (office) -(don't count on this, it's a big, empty room) When he ascertained that Sjaichu had accepted, he said he would too. This man must really be bird-dogged, however. He said the People's Congress | had directed Parliament to pass the electoral law and a law on | political parties, but elections won't be held until 1969. Says talk to the Minister of Maritime on shipping to the islands. He gave me a rundown on what responsibilities each Vice Chairman of Parliament has; his is coordinating economics and | gather Abdulrachman reports to him. Abdubrachman's committee, by the way, is the Economic and Finance Committee of the Parliament. Mursalin's English is not very good. He asked about the agenda for the Parliamentary session, and | said (1) laws under debate or to come up, (2) political stability, (3) new political parties, (4) elections, (5) structure of government. November 24 - Djakarta 10:30 = 10:55 Hafas, Editor, Nusantora He will attend, and also may run an article now. There are more good economists, technocrats, etc., outside the Government, but, like Sumitro, their time is not yet. They are not in any party, refuse to be "boot-lickers.'' By the end of December a new independent party will be formed by Hafas, Lubis, and others. Then these good men will again work in government and legislative roles. === [PDF page 16] === Indonesian Diary -13- The PNI is infiltrated by Communists. It and NU are the only parties in the provinces, hence any election now would automatically put the same people back in power who were in at the time of Sukarno. Also -- and part of this problem -- since the Dutch provision of shipping to the 3,000 islands was destroyed in 1956, the islands have been unreachable. You can't even get election materials to them. Hence, why spend $80 million on an election now just to prove Indonesia is democratic? The Army is today the only force between Indonesia and Communism. Nusantora has 25,00 circulation, goes up to 30,000 when news is hot. It was closed down five years ago -- and Djojopranoto's paper took over, has a 5-year lead. Nusantora has published a series of articles on why foreign investors don't rush in. Jeannie Anderson can -- and should -- get them at the US Embassy. Hafas is an extremely self-assured man, somewhat abrupt and stentorianvoiced. Hafas did not attend the PIBA meeting, sent his economic editor instead. November 24 - Djakarta 9:15 - 10:00 Max Loveday, Ambassador of Australia to Indonesia See the following chart on the Indonesian government structure: MPRS (Pedple's Congress) Sup reme Advisory President Counci | ~ "DPR Cabinet SPRI Presidium (President's military (now abolished) advisors -- like the White House experts or shadow cabinet -- including Alamsjah, Sudjomo, etc. ) === [PDF page 17] === Indonesian Diary -14- Loveday says the President in fart has all the power, not the People's Congress. Also, that the SAC actually has members who draw salaries, but it's never heard from, and that the SPR! may be more powerful than the Cabinet. 12 men do all the work, are the brains in the Government (Sadli, Salim, etc. ). There is mot enough time in the day. Indonesia needs a corps of foreign advisors, at least one in each ministry -- a key point. Green is enormously effective, hard-working, sincere, and McCusker and Masters are top-flight. PIBA's research (one week) was superficial, yet enough to shake up the Indonesians. Indonesia felt foreign investors would rush in when they opened the door with the foreign investment law. They are still "picking themselves off the floor" from the shock of no inrush of investors. They greeted PIBA with great enthusiasm, will not greet us as well -- may have become cynical. Never trust that a man will do what he says he will. They always tell you what you want to hear. This re attendance, provision of meeting rooms, buses, etc. The Sultan's secretary is nice, relatively effective -- but even he needs watching. Qur research should take many, many weeks. And | should return long before two weeks before the conference. Loveday says Sir lan McLennan, Managing Director of Broken Hill, is the guy who is really taking the company overseas, has the vision and guts. He was at Time's Geneva meeting on Indonesia. November 24 - Djakarta 1:00 - 1:35 .Brig. General (Police) Dr. Awaloedin Djamin, Minister of Manpower A. G. Samil, Bureau for Relations and Information, Department of Manpower The Manpower Ministry has two sections: (1) development and utilization of manpower (training, including management training! ); (2) protection and social welfare (pay, working hours and conditions, health, etc. ). There are "five principles"- irrigation, fertilizers, insecticides, better seeds, better techniques (?) - that have worked well in upping agricultural output. This phrase, "five principles," has become an Indonesian by-word. Awaloedin speaks good English, seems very well informed and extremely dedicated. Equally so does Samil. A hopeful pair. He recognizes that Indonesia must create conditions attractive to foreign investors, not just open the door. He sees foreign investors as === [PDF page 18] === indore iar Biary 84 witel te the (1) eeplowmert and @) training in modern skills (isbor ene parepement} 6 tndenesians, He visited the 1410's senagement schoo! © Tur vererily, seve the professors ere too theoretical! (s sophisti ceted qry ) Me wil! attend the AT, even if thie means cutting short his participator i the FO weet ing (6 ferape which tents fram June 5-23 oF so, Semi! tried 0 were hie he wawlé be tied ap et this meeting ot the tine of our AT, and he Druched ft @nl@e, seying 81'« meeting was more importent to Indonesi«e and he wawlé “eters is time be teke pert! | wat mention this in my follarup jeter, fortner, te ond beril ere eager to give vs materials re the Ministry's work, and Geril will trensiete some basic | ion for Jeon. fhe must Gli bin They Neve treining schools, mensgement schools, etc. dweloedin and tis ministry ere pushing birth control ~~ but for psycho | top ioe! reesens coll it “family planning.” We should get more dape on this, | prospects for guetens, etc. | delondin wears 16 belence labor-intensive and capital intensive invest - wont, Me sere Poed-bullding, cottege industry (hendcrafts), const ruct ion ond similar prejects #6 providing mwch-needed employment, but agrees thet comp tel <intemsive investment wil! (0) mete Indonesia competitive in world oorvets ont G) furnish secondary employment in service, repair, parts : mtettere, #10, Se eepecially Sapes thet capital intensive investments is to materiel emloltetion #1)! be meade by foreign investors (“ell our weste® ie Getside deve”) <= ane thet this will ettrect people and draw ther vt of Jove, Me believer this type of investment will hewe @ “multiplier ettect™ regarding jobs ené ewloyrem, "When conditions outside Jeve become better User coméitions in Jews, then people will move out to the islends.” = tee) Aveloedin could be on ace-in-the-hole for us. He's smart, wery (nterestes in the AT <- ong if the military. Mevembe: 24 beware tones + Porwanegers 5.4%. Oji. MH. Sjemrir 16, Bjerarte tel. &§705 —es trainees it tow, Me is secretary Of the tus nese es nme | - mien of ebich Berti is, | Believe, president. He's also chelrmer of the Pevtbel (soccer) seveciation, “wy first lowe. oe will attend the GT. Urges that we invite feher, privete banner end iad the er gerigst ion of privete bents, possibly in plece of buna!) «how he oye ts terramer in stew, Ali Maer Leddin of Rasaye (trading company), mt tayiness ele Businesemen he is elem & member of Ihe Fore: gn pees ee eGbrensves of mest of my fell List of beri menemen, mes foes bids (ote) ame Kis wife ie @ lawyer ond pres) dont oe taeld be Relptel in the believe =< He's @ Bit Giff ieult to enderstend ang 6 wp foreign imvestaent by femwing “i apedioenrs © === [PDF page 19] === Indonesian Diary -16- His bill would exclude foreign investors from the provisions of the comp any law (derived from the Dutch who in turn derived it from 18th century French law) relating to voting rights, in which shareholders may not vote more than six or three shares (depending on whether they own more or less than 100 shares). In short, his bill would let foreign parent companies exercise voting control, which they must, in his view, if the Indonesian sub was part of a worldwide structure. His bill would also permit the Indonesian capital in a joint Indo-foreign venture to enjoy all the rights, tax holidays, dutyfree imports, etc. that the foreign capital enjoys under the foreign investment law. This would speed up foreign investment by avoiding the need to wait for completion of a law on domestic investment, which may take a year or more, The only exclusion of rights enjoyed by foreign capital that would be given to domestic capital in his bill are rights relating to transfer of earnings and capital (naturally). November 25 = Djakarta 8:00 - 9:00 Prof. Selo Sumardjan, Secretary to the Sultan Sumardjan has good English, is US-trained, a Sumitro student. On the Ladies' Program, he suggested | use WIC (Women's International Club), and said that Dr. Emil Salim is expert at popularizing economics and would be the best man to talk to the ladies. On interpreters, he says there are no simultaneous interpreters in Indonesia, that we should forget about it and if General Suharto and Malik want to use consecutive they will furnish their own interpreters. We should concern ourselves solely with non-English/ Indonesian language problems (e.g., Japanese). But it seems very doubtful if any simultaneous equipment exists in usable form. Sumardjan will be our liaison man, will form a committee if necessary to work on the RT. I mentioned theneed for a bus on Sunday to and from the US Embassy, and should write him about this; also keep him informed about our negotiations with WIC, etc. He says Sumitro still has too many enemies in the Army, should stay in the background for the time being. He urges us to have a separate session with Widjojo on planning, that Widjojo's 5-year plan to start in 1969 will be in rough outline by June 1968, The Sultan also urged this, and we will probably have to bow to it. Widjojo is also the top man of the Economic Advisors Team. He says the political parties had action arms for mass action -- including unions, women's groups, student groups, etc. -- and that the unions didn't exist to help workers but as instruments for mass support of political parties. The parties used to finance themselves by taking graft through government channels. The Sultan has put a stop to this, and hence the parties have no money, are passive, and hence so are the unions passive. Also, the effective === [PDF page 20] === Indonesian Diary -I7union leaders were Communist, and the new union leaders are weak, unknown. He urges us to invite Brig. Gen. Suhardiman, head of SOKSJI. This union was formed to combat Communism in the labor movement and is controlled by generals; as such, it is small but powerful and important. He suggested that Hatta is living in the past, that we strike Roem (too many politicians at Opinion Leaders session) and invite Sjafrudin Prawiranegara instead, an excellent economist (“Lubis is a politician?). On Business Leaders, he suggested B. R. Motik as counterweight to Bekti (two big business camps) and Jusuf Reno Sutan as the buffer or catalyst between them. Said not to invite Dasaad, who financed Sukarno (though his son, says Kosasih, is okay and now runs the business). Also suggests Sumali (private banker), Julids Tahija (Caltex), Sudarpo Sastrosatomo (ISTA-shipping, _etc.). He explained that Subchan and Sjaichu are in opposing camps of the same party, and hence Sjaichu was not saying that Parliament leaders couldn't meet together with People's Congress leaders, but that he wouldn't meet in the same room with Subchan! Sumardjan will attend the session with the Sultan and Economic Advisory Team (of which he seems to be an ex-officio member) and will "float in and out of other meetings"! with government ministers as he sees fit. Parliament is only working on two political laws: the electoral, and the law affecting political parties and labor unions. November 25 = Djakarta 12:00 - 12:30 Dr. Subroto, Department of Trade, Djl. Abdul Muis 87 Office tel.: 43033/31 (direct line); home tel.: 82297 Subroto, another Sumitro graduate and US-trained, is the key deputy to the Minister of Trade and also one of the five men who constitute the Economic Advisory Team to Gen. Suharto. He agreed that we should change the Economic Advtsory Team session to a session just with Widjojo and Salim, call it the National Planning Bureau session, and assume that he (Subroto) would accompany his minister (Trade) and that Ali Wardhana should be invited to attend with the Governor of the Central Bank and the BLLD (Kartadjumena). | must make this change. He seemed enthusiastic about the Roundtable, and will call me (if not, 1'11 call him) about a date with Jusuf, Minister of Trade, before Jusuf leaves with the President on December 6 for another trip. | left Jeannie and Sanjoto to interview him while | rushed off to a date at 12:30 with a labor leader. === [PDF page 21] === Indonesian Diary -18- November 25 = Djakarta 12:35 - 1:25 Ibrahim Usman, Secretary General, P.B. Gasbiindo Tanah Abang II! #6 Tel: 45782 Plus five others in the union A heartwarming, intriguing visit to this mud-laden cesspool. They got quite excited about the RT, want me to meet their General Chairman (now away), Agus Sudono (home phone: 49937). They say the Army wants to take over or control all the unions, hence don't like the idea of inviting SOKSI. | should ask Sudono if he would boycott the session if we did. They wanted to invite the other unions on our behalf, which | firmly declined. They agree that they and other unions have been adjuncts of political parties and are now broke, but show real eagerness to begin working on behalf of workers. They even seemed genuinely responsive to the idea that unions are best of f (1) getting funds from dues and working solely: for workers, (2) keeping out of politics, and (3) staying out of management so as to be able to fight for better wages, etc. They were eager to learn how co-determination was working, differences between US and European uhion movements, etc. They have a new (July 1967) constitution which they say is ''democratic'' and modelled after the US. | have an Indonesian-language copy. November 27 - Djakarta 4:30 - 5:10 B. R. Motik, Chairman, All Indonesia Importers' Association (0.P.S. Impor) Djl. Banjumas 2 tel: 51625, or 51675 Motik was in the hospital awaiting a 'minor"' operation, but he looked and sounded pretty weak. | went with hiswife to see him. He looked at the business guest list and said "none of my friends are on it, I'm alone.** He then added: R. L. Tobing (import/export -- not the M.P. | met with Malik) M. Nuh (transport ) Drs. Noordin Zaini (his own secretary -- or his associate's secretary) Drs. Sikri Djaffar (inter-island trade) Mr. Assaat To get addresses and phone numbers, call 0.P.S. Impor Pusat, 1, Djl. Modjoparit, tel. 47269 or 40643. He then explained the battle between himself and Bekti and Kosasih. It seems -- he says -- that he was the big-shot in the Commerce & Industry Association until Sukarno. Then the Communists began infiltrating -- right into the board of directors -- and he began fighting this, and was finally forced out by the Bekti/Kosasih forces. But Motik is -- or sounds like -- a fanatic right-winger: ''Bekti supports the Chinese, or some of them, and to me all Chinese are Communist." He also dislikes Bekti because Bekti always talks -- including in the PIBA meeting, about his own company, is always trying to advance his own cause and not the cause of all the Commerce & Industry Association members. <———_— me eee === [PDF page 22] === Indonesian Diary ro ag He says, too, that Tahija is a newcomer who did little until the PIBA meeting. He says a new Commerce & Industry Association must be formed. | have doubts about Motik, must check him out. We don't want to get in the middle of a battle in the business world. PIBA didn't: they had only the Bekti forces. He says Sutan helped force him out: "Scratch him from your meeting." November 27 - Diakarta 17:00 - 11:45 Jakob Qetama, Editor in Chief, Kompas (Catholic daily) Pintu Besar 86 Tel: 23667 P. K. Ojong, Publisher Both want to attend the RT, but agree that only one will speak for 5-10 minutes. They feel the law on political parties will give reasonable freedom, but the big question is whether the parties will use it. They say our Qpinion Leaders are all of the same persuasion (except Djojopranato) and urged us to invite nationalists and socialists, e.g.: Mustafa Mega, Editor in Chief, “Suluh Marhain™ (nationalist paper that Isuarni is behind) Mahbub Djunaidi, Editor in Chief, "Djuta Masjarakat"! (NU-Muslimnationalist paper) Zein Effendi, 'Djakarta Times" Rosihan Anwar, ex-Editor in Chief of the PSA (Socialist) daily. (Oetama and Ojong say that Anwar will have started a new paper by June 1968. The old one was shut down by Suharto as Communist. ) November 27 ~ Dijakarta 9:30 - 10:05 Prof. Dr. Ir. Soemantri, Menteng Raya 3, tel: 50232 Delightful, good English. Will come and bring key aides. Jeannie should see Soetarjo Sigit, Chairman of the Dept. of Mining's Foreign Investment Committee, or Manoe, that committee's secretary, for information. Sadli had spoken to Soemantri. He confirmed the Sultan's figures on mining bidders, added that Alcoa is seeking bauxite concession but wants lower income tax than normal 60% Mining companies pay land rent, royalty (Alcoa willing to go to 10% of production), and then the income tax. Department of Mining would like to see the income tax come down to 50-55%, but say the Finance Minister has the last word. === [PDF page 23] === Indonesian Diary -20- Soemantri is willing to extend the tax holiday -- or see it start at the time of processing. But he says some firms are more interested in low tax during the whole concession period than in the tax holiday. Soemantri is willing to see concessions extended 20 years (to 50) after exploitation and processing has begun, not at the start (they want to see what they are extending. The Mining Dept. used to have Industry too, but now this is split. The Mining Dept. would like to see (or foment) processing, including petrochemicals, but the Dept. of Heavy and Light Industries now has this. Hence the two departments will cooperate and have joint consultation re petrochemicals. Soemantri is worried that Indonesia's own tin production is now too low, and that if the tin cartel (INCO?) sets quotas for Indonesia on the basis of the present output, the country will get squeezed out of its rightful share of the market. National (Indonesian) oi] producers can finance and handle easy technology of on-shore exploration, but foreign capital and technology are needed for off-shore. Soemantri hopes the output from all soutes can be raised from 0.5 million bbs/day today, to 1.5 million in 1969. Soemantri says the existing foreign oi] companies are big, can do the necessary job: Caltex (The Texas Co. ) and Stanvac (SOJ). Soemantri made it a condition to Gen. Suharto in accepting his government job that the Gas & Oi} section would be put firmly back under him as Mining Minister. He said the head of that section and the former Mining Minister simply couldn't get along. November 27 - Dijakarta 2:00 - 3:00 Vice Air Marshal Sutopo, Minister of Communications Hajam Wuruk 2 He agreed that he would "try to" come -- then later revealed the reason for his hesitancy: he has not gotten a letter from the Sultan “officially" approving his participation. He requested such a letter, adding that it should go not just to him but to all the ministers.! must arrange such a letter through Selo Sumardjan, who has already agreed to write to the Ministers of Agriculture, Plantations, and Industries (as well as phone them). On research, he urged that we (Jean or Sanjoto) approach first his Secretary-General, Simatubang -- and through him the Chief of the Planning Bureau (of the Ministry) Mr. Soehono, and also the Chief of the Analyst and Reporting Bureau which collects and analyzes all the country's communications data and feeds this to the Planning Bureau. On air communications, he feels the huge size of the country and its 3,000 inhabited islands makes air travel the key to development (though he === [PDF page 24] === Indonesian Diary Le) & admits ships will be important, too). He feels Indonesia should "eventually" have its own aircraft industry making at least small and medium "rugged" planes; he thinks such an idea is "sound#™ right now, but admits that other projects may take priority -- he's glad they created a National Planning Bureau to centralize the setting of priorities and allocation of resources in terms of the national interest. (Another indication of what a key man Widjojo is.) He is even eager to keep imported advanced weapons systems (aircraft) to a minimum ("just enough to protect our sovereignty") so as to’ push civilian aircraft harder, ("leven though | am an Air Marshal"), They now fee] that totally government-run airlines and aircraft industry is bad, and passed a law last Spring permitting private firms to get into the act. Already there are two private airlines in operation, and he hopes private firms will start up production of airplanes as well. They are letting Thai International run Caravelles into Bali (Garuda runs Electras in). But they want "the whole world"! routed into Bali and will finish a big-jet airport by the end of 1968. He himself feels there are other tourist heavens in Indonesia as well as Bali, and hopes these can be publicized. On telecommunications, they have been buying telephone equipment from Siemens, and recently revised the contract to force’(?) Siemens to assemble telephone exchanges in Indonesia (Siemens will discuss actual production at a later date). Philips (Eindhoven) is now negotiating to produce fluorescent and other lights, but has also expressed an interest in manufacturing telecommunications equipment (perhaps as bait for the lamp factory?). These are the only two firms that have approached the Indonesian Government on telecommunications. The Indonesian Government does have a 20-year contract with!TT for satellite communications (ITT said it took seven years to get their money back), but this "mainly"! concerns communications with the outside world (‘we don't know if the satellite can be used for internal communications''). Indonesia's problem is that they have only one big station, and this means they must schedule operating hours to and from various regions, cut a region off at the scheduled hour despite a heavy traffic load. The Indonesian Government doesn't know if it would be more economical to use undersea or wireless telecommunications. While telecommunications equipment manufacturing is really under the Ministry of Heavy and Light Industries, that is a new Ministry that doesn't know what is needed in telecommunications equipment and which would take "much too long to act.'' Therefore the Communications Ministry handles negotiations until the factory is approved, hands over negotiations from there on to the Ministry of Heavy and Light Industry. Sutopo stresses that telecommunications is extremely expensive, and that development will drag on for years unless they get big outside financing. === [PDF page 25] === Indonesian Diary oe November 28 - Djakarta 8:00 - 8:30 Rosihan Anwar, free-lance journalist - Teuku Umar 23A Anwar is ex-editor of the PSI (socialist) daily (and Sanjoto's former editor). His Paper was shut down; the new Government hasnpt yet decided whether to license him to begin a new paper (nor whether to license Lubis to begin another new paper, he said, though | thought Lubis had already started a new paper). Even if he gets a license, raising the capital in today's tight money situation will be tough. Anwar likes to free-lance, but feels he should begin another newspaper on principle. He debated with Subroto last night on TV, told Subroto that his list of woes (drop-off in aid from donor countries, worsening terms of trade, etc. ) was old-hat, and the question was what the Government intended to do about them. To this, Subroto replied that there were "bottlenecks" such as monetary bottlenecks, internal bottlenecks, holding up progress. Anwar replied: "What are you doing to break the bottlenecks?" His own answer (Anwar): “Nothing."' Why? Because the Javanese feudal tradition, strengthened (worsened) by the present government structure, means that bureaucrats won't make decisions, will not act to get the country going. Moreover, the Government is still littered with the old order -- people who fear foreign capital and block it, etc. ''A few men like Sadli and Subroto can't succeed in the face of this widespread obstruction. " He will attend the RT, and make a 5-minute talk. His house is back behind the street-front house -- the latter taken over by the Army to guard Gen. Nasution across the street and another general down the street. The front yard is littered with gun-carriers, etc. November 28 - Djakarta 9:05 - 10:00 Rear Admiral Jatidjan, Minister of Maritime Affairs, 42010 Djl. Panglima Polim 111/140, Kebajoran-Baru, Djakarta, tel: 72010,/ Office: Medan Merdeka Timur 5, Djakarta, tel: 48798 Jatidjan's English is poor. He had another Admiral with him who never produced a card but whose English was much better. | hope he attends the RT. Jatidjan said they would make sure to make themselves available for the hour and a half if the RT was held. Obviously, he too neédds a letter from the Sultan. Both men talked plaintively about the Government's treatment of shipping! In the 1968 budget, shiphards and shipping lines receive no government subsidies as do the railroads and Garuda. But Jatidjan seems to feel that ship’ lines can show a profit without subsidies if they are given profitable routes to balance against unprofitable ones. Thus, in the ''Indonesian Shipowners'! Association" (both government and private lines) the Government is offering “ocean"t shipping with its lucrative foreign exchange earnings but requiring in turn that the lines "fill in** routes in inter-island shipping that are marginal or loss routes. The old (Dutch) line, KBM, was a monopoly and === [PDF page 26] === Indonesian Diary -23received subsidies. Foreign lines have an advantage over Indonesian lines in that Indonesian lines (government and private) must automatically hand over to the Government 10% of their foreign exchange earnings. The Government line PELNI sends a 2,000-ton ship from Djakarta west along the north and then underbelly of Indonesia and back every 35 days, but it collects only about 400 tons. One reason is that exporters in the islands used to be required to export through large trading companies and would ship their produce to central exporting ports, from which large shipments could be made. Today they are allowed to export directly themselves, and hence send out 50 tons at a time or so. Thus, the Minister says he is requiring shipping lines to buy 500-ton ships as the maximum size that can still be economical. The Government subsidizes roads and airports -- but not ports! It requires ports to pay their own way (dredging, wharts, etc. paid for from berthing fees, etc. ). The Minister did, however, ram through 2.4 billion rupiahs in the 1968 budget for ports (20% of 1968 port requirements). Shipyards abound in Indonesia, but they are today largely idle. Reason: for building new ships and for maintaining and repairing old ships they must: 1) pay full duty on all materials and supplies; 2) pay 5-6% interest per month on their loans; 3) pay 10% tax on the value of the new ship in advance. As the Minister says, no country treats its ship builders like that. They can't compete and hence the business goes to Singapore and elsewhere. 55% of shipping today is government -owned. November 28 - Diakarta 11:10 - 12:00 Abdul rachman Set jowibowo, Chairman, Economic & Finance Committee, DPRGR (Parliament) - home address: Dil. Darmawangsa 1X/6, Kebajoran, Djakarta. Tel: 70733 (home); 46210/328 (office) Abdud rachman is a police general (7). He agrees to attend the RT. He feels we should invite the Motik forces to the Business Leader meeting, but that our group would not want to get embroiled in the Bekti/Motik fight. He says he is hopeful Indonesia can beat inflation and acquire stability, but that ''strong measures" may be needed: Increase tax revenues (partly to offset loss of exchange-differential revenues) by: . spreading the income tax beyond 200,000 ("1 know rich people who don't pay taxes"). Stop smuggling (requires better communications and shipping to the islands). Stop corruption (he feels the comments about the Military and ''stand on your own feet" principle are inspired by private business, says that === [PDF page 27] === Indonesian Diary -24his own Police bank (related to Police welfare activity) and other military banks get no special privilege and ''compete™ freely with private banks =~ but admits that military governors must watch out that they don't exceed 'broper limits"' in business activity. Practice austerity -- which "must begin with government austerity" in the budget, and in the level of living of government and military personnel. While discussing these points he raised his fist to show that force may be required. November 28 = Diakarta 3:00 - 3:55 Soedarpo (preferred spelling) Sastrosatomo, Managing Director P. D. Soedarpo Corporation, Djl. Veteran 1/21-22 or Kali Besar Barat 43 Phone: 47108 Saw Soedarpo with his export manager. Soedarpo Corporation is a holding company which has firms that export (as brokers, not on their own account) and import (they represent RCA, Rem Rand, Univac), hold a major share of a shipping company. He will attend the RT. He says Anwar will have no trouble raising money; he owned 20% of the old paper, will finance the new one! Says Motik's dislike of the Chinese is a cover-up for his own business inadequacies -- though he himself is in "both the Bekti and Motik camps. *! The Motik group are professional association people (or “politicians"') with little real business experience. "To understand trading, you've really got to be a trader.'' But he says the Motik group are powerful lobbyists with great influence in the Government (see Sumardjan) and cannot be discounted. They are responsible for the new laws that have brought exports down (the check price, which doesn't permit fighting for export markets, the absence of adequate financing, etc. ). In contrast, the Bekti group are active traders, and are more modern. But Soedarpo suggests that if we really want to understand Indonesian business we must invite a few big Chinese traders. "This won't be popular, but to be realistic you must do it."' They are shrewd, wheeler-dealers, “out for the buck first and the country second." He suggests Choo Ming Fat, of Tri Bina Karya, a big rubber trader in Sumatra who has a big influence in rubber production, and the son of the founder (?)d TOAR, a huge auto parts and replacements importer. On the Motik side, he suggests we invite Motik, Tobing and Nuh and that's all. (McCusker of the US Embassy agrees, and suggests we scratch Nahar as a politician (association man, not a businessman) and Sumali, but that we do invite Idham as a private banker plus Sutanto of Negara I11, the government bank that does most of the foreign business. Sutanto is correspondent for many US banks, all of whom say good things about him. ) === [PDF page 28] === Indonesian Diary -25- November 28 - Djakarta Soedjatmoko, Cjl. Tandjung 18, Djakarta - Tel. 44757 Soedjatmoko is Indonesia's: leading intellectual, though he has no degrees! We had a: fascinating discussion (he speaks--exeellent English). He was’ just back from-a lecture: tour in Australia and gave me his two lectures, Unlike the Negroes’ in the US, the Chinese in- Indonesia are respected for their: economic’ wealth and power.’ The problem:is to fit them into an tis eae role in the: economy; this’ is possible’ in a’ growing economy, but "people won't accept~ them’ in a stagnating economy’, which Indonesia has today.' Technoerats like-Sadli, Widjojo, et al., concentrate on: problems open to government: action: bottlenecks, reorganization, ete., and-stress the creation of conditions through government action’ (mainly monetary =- i.e., tight money and austerity) that’ should lead to or foment rationality in decision-making. But they’ ignore the fact' that’ economic’ imperatives: are not: the only imperatives at work in’a‘ society: they ignore the basic factors’ that cause people to act rationally. For’ example, they ignore’ the fact that- competition is needed to’ make’ government: (state): companies: behave properiy. « Civil servants running state companies: should be: judged on merit, not: on the usual system of automatic advancement.’ These state’ companies’ need’ entrepreneurial strength, people who can‘ calculate’ risk’ and’ take risk and" who are: rewarded if they succeed and get’ fired if they fail. At the moment’; the: conditions created by the government’ in the- austerity program have littie effect-on state companies, since’ their’ managers’ are not: judged on the basis of how they are reacting as managers: to the deflationary measures. Government creation (by the technocrats) of economic factors does not cause the’ appropriate: reaction by managers of state enterprises’ for’ these reasons. No’ “purges” in the banking system have’ yet’ taken place.’: They are needed. Indonesia"’s technocrats have no time: to think’ through problems as above (there are too few doing too much); worse, they are showing signs of fatigue and intellectual sterility. ° They may even: kill themselves. But' the answer: is not’ foreign advisors’ in each ministry. These are not used properly by the Minister or by’ their counterpart: in eachministry. And if they are used vigorously,’ they tread on sacred’ cows,’ often give advice that doesn't: fit the eountry's reality -- or take years’ to’ learn that reality. More useful would’ be’ a’ small research’ organization: {BI?] to: study problems on call and come’ up’ with’ recommendations, but not’ be part’ of the government system itself with all the “love-hate"-relations this creates. Indonesia’ must’ broaden"its political life. This is the key issue. Social forces (workers, housewives, students,’ etc.) must’ be® given a chance to channel’ their energies toward responsible, constructive action, must have freedom of thought’ and’ behaviour in the creation of free political parties, labor unions, etc. Soedjatmoko himself: would them not’ just stay outside the government’ system (where’ he’ can’ at’ present’ contribute most: through criticism === [PDF page 29] === Indonesian Diary -26and suggestions) and lecture and write, but would join forces with the government. Broadening the political life of Indonesia would put an end to "extraconstitutional" action by the general public in protests, corruption, etc. -- extra-legal behaviour that is bound to increase as the gap between expected government performance and actual performance widens, as it must. More feeling of responsibility must be given to people to involve them more in the life of the country. Government is only part of society. To his credit, as an astute politician, Sukarno did involve a large part of society in his politics; today, these same people are not involved, have not had roles assigned to them, don't know what’ to do or where they stand, are lost. Soedjatmoko has been urging Suharto’ for more than a year to travel in the country, involve the people in his New Order; he is finally beginning to do so, "but it is rather late." Expecially important, trade unions must be developed if the country is to mobilize for production and economic development. Under Sukarno, the trade union leadership betrayed the trade union movement, left a "shell" of unionism. (became mere extensions of political parties). But a real trade union movement in Indonesia must be more than US-style -- with right to collective bargeining, to strike, etc. It must also assime the responsibility to raise production, which means that it must curb or set limits to strikes, wage demands. [I disagree with this point. ] The problem in broadening Indonesia's political life is manifold: earlier Indonesian states (Dutch colonial, pre-colonial kingdoms) were feudal, “bureaucratic" states. Thus, Indonesia's traditional notions of society are nondemocratic, and don't give rise to ideas concerning the value of non-governmental (and unregulated) action by social groups. Hence there does not exist in Indonesia an understanding of how a modern, pluralistic society operates or functions. For these reasons, militarism in Indonesia today comes "by default," not from a conscious plan. In these terms the fight in Indonesia is not against a purposeful, well-entrenched idea of militarism, and of a closed society, but against ignorance and tradition. Thus education of of Indonesians regarding the open society is basic to the survival and growth of the country, but this takes a long, long time. However, "it can be done" (and this is what Soedjatmoko is really trying to.dd: Another problem, of course, is that the Army is security-conscious and afraid of the type of free social action an open society demands. Soedjatmoko will participate in the Roundtable. —~——— === [PDF page 30] === Indonesian Diary e7- November 28 - Djakarta 7:00 - 8:30 PM Maj. Gen. Dr. Sjarif Thajeb, Vice Chairman: of Parliament Ejl. H.O.S. Tjokroaminoto 114, Tel (GBR) 46420 Thajeb is responsible for foreign and social affairs in the Parliament. He is supposedly the military voice in Parliament. Jean Anderson was with me on this call, and took notes, so I will only mention a few things. Thajeb says there is a "gentlemen's agreement" in Parliament that the new election law will not only provide for proportional representation (which he insists will help the old Sukarno parties) -- the students want a simple, direct voting system =- but also that the law will contain provisions to permit*the President of Indonesia to appoint one third of the 700-760 members of the Peoples Congress [totally unwieldy number -- a farce] and to appoint 100 of the 460 members of Parliament (the other 360 would be elected). Of the latter 100 appointed by the President, three quarters would be from the armed forces, the rest professors, intellectuals, etc. Subroto has made political mistakes and will be thrown out of the Government. The Parliament is growing in power, no longer knuckles under to Suharto's every demand ("we had to do so at the start, it would have been unsafe not BO"); and is telling the People's Congress to go fly a kite -- that it, the Parliament, is the body that makes the laws, and that the People's Congress should stop trying to tell Parliament what laws it should pass and stick to creating very general, overall policies. The new law on political parties and labor unions must cut down the number of parties (how he didn't explain). Indonesia now has eight parties -- all formed or approved by Sukarno -- and two new ones are in formation (Independent, and the PMI [Muslim]). They don't want to emulate France of the 1940's and 50's. Thajeb will attend the Roundtable. November 29 - Djakarta 8:00 - 8:45 AM Idham, Director, P.T. Bank.‘iaga Roa Malaka Utara 21, Tel: 23740 Idham claims he only knows local (Indonesian) banking. He will attend the Roundtable. Idham is president of the private bankers" association, and a Kosasih recommentation. === [PDF page 31] === Indonesian Diary -28- He recommended Omar Abdalia, President of the Bank Dagang Negara, a state bank, as an excellent’ man. Further, this bank is more dynamic and aggressive -- though smaller -- than’ Bank Negara’ III. The second man is Moeljoto Djojomartono, also good. He also recommended Drs. Soesilo Sardadi oF BNI IV (another state bank), as young, bright, and knowledgeable about foreign banking, trained in London in the Chartered Bank (as some 30 or 40 Indonesians were). He agrees Sutanto is a very good man, but he took over the Bank Negara III from the old (Sukarno) management, who had made it a mess. It is improving now, but still isn't very aggressive. The banking laws now under debate are: - A state commercial bank law, divided into: - state savings banks - state development banks - state commercial (7?) banks . A private banking law (with a clause covering both foreign/ Indonesian banking: joint ventures and foreign branch banks -- though some members of Parliament’ want a separate law re foreign banks) - A law on the Central Bank, re-creating it as purely a reserve bank - A law on insurance companies. He feels the military banks may survive if they learn the ropes (e.g., the peculiar behaviour of Indonesian creditors, etc.), and if they create services to meet the needs of the community at large so they can attract depositors. "I don't know how they are currently financed." November 29 - Djakarta 9:20 - 9:50 AM Zein Effendi Sh., Director, The Djakarta Times Djl. Hajan Wuruk 8 tels: office 48170, home 51522 Effendi was late at’ the hotel because his car broke down. We had a very brief meeting. He will attend the Roundtable. He suggests the need for a true nationalist (in Indonesia, this doesn't just mean an Indonesian, but a non-Chinese Indonesian): Sumono Mustoffa, Chief Editor. KNI. This is a newspaper of the MURPA Party, Malik's former party (he left it), and a party not only known as "nationalist" but also as "Trotskyite." (This explains why Malik is distrusted by some in the New Order.) But Sumono, says Effendi, is not Trotskyite, has sound ideas. === [PDF page 32] === Indonesian Diary =29= November~29 - Djakarta 10:05 - 10:50 AM Julius Tahija, President, Caltex Indonesia (?) Kebon Sirih 52 Tahija may be* negative about our RT since he is (1) the 'Indonesian who made’ it'' as President of Caltex Indonesia, and (2) the self-confessed creator of PIBA (whereas at> the Bl» RT he is just another participant). But negative he-is.- His: reason’ (stated) <° Indonesia needs one: or: two big investments ("Il was instrumental, through The: Texas-Co., in getting Texas Gulf Sulphur to invest’ in Indonesia!), since other: US firms will then follow; but two bad experiences ins trying to get’ started will undo-ald the conferences in the world in* Indonesia;~ there-is:a grave danger that bureaucratic delays, etc. will queer: a few big: deals: (‘One $100 million deal: is now hanging on the ropes'' --- he means- Union’ Carbide, 1 believe) "and: Alcoa refused for some time to send another’ delegation to Djakarta;'+ hence what> Indonesia needs now is implementation: of investment: projects, not more: conferences to arouse interest. The latter will only cause: damage-.in the:4.ight> of Indonesia's inability to carry through. My answer, that- our RT would help educate: international companies in the: need for patience, fell-on deaf ears. But he will attend the RT. He- says: the’ Motik group thinks onhy of its individual-members' selfish interests: "'PIBA’ has’ chalienged foreign investors to think beyond their immediate profit and loss: interests, and thus: we Indonestans must match this level of thinking. Motik and his group do not.!'! PIBA has’ set up: an’. Indonesian: businessmem's- group to promote foreign investment. | gave him the~Bourdrez: success: story and he immediately agreed, saying that: the provinces’ in’ Indonesia do not yet understand the»need for foreign investment, are not’ ready to cooperate in making it at home, helping it get started. November 29 - Djakarta 11200 - 11740 Prof. G. A. Siwabessy, Minister of Health Djl. Imam Bondjol 7 Tel: 46540 Siwabessy speaks fair English. He is direct, sincere and dedicated. He’ says Indonesia had° one doctor to 200,000 people at the time of a independence, now has one to every 25,000. It now has six medical schools --: and in 10 years’ will have one doctor for every 2,000 people; they are producing 500 ''well-trained’' doctors a year. They have-a paramedical personnel program in being (nurses, etc.), and will build, equip and staff 30 or 40 hospitals === [PDF page 33] === Indonesian Diary =30> us Se i yeor at cost of $1 million each or 535-40 million to build and equip the full number. He has proposed (or is about to propose)’ a national health insurance scheme’ to Parliament. "If they don't accept it, they can find themselves a new Minister of Health."! He has initiated a $20-30 million program to eradicate malaria. The #2 health problem, after malaria, is smallpox, much less expensive to deal with. Providing water (for baths), plus shoes and clothing, will cut smallpox in heif, cnl “rehabilitation of hospital beds will also help." Indonesia needs’ technical assistance in training doctors, nurses, hospital technicians orderlies, etc. Pfizer must start production of basic materials in 3-5 years, but the Foreign Investment Law covers drug companies adequately, no need for a special law. South Java hes no water or electricity, many starve. Food is the third big health problem (after malaria and smallpox). The Minister has a plan to build nuclear-power plants’ in that region for desalinization/irrigation purposes ($50 million per plant, without distribution of the electricity or transmission). He's a big spender -- or wants to be. He is excited by the-RT, will attend, and-probably~send us questions. November’ 29 - Djakarta 1=30 = 3:00 General Suryo (Suharto's staff) Professor Sadli Got a call from Sadli in the morning: "The Acting President has officially approved-your Roundtable,'" but he's’ ''trying to’ sell Bali and suggests several days of the Roundtable there." Later, | was called’ to the President's ''White House’ by Gen. Suryo, and met there’ by: Sadli, who told me | was to meet ''the big boss'' (Suharto). Waited with Sadli (and later Gen. Suryo) for 24 hours, but never did see the President. His cabinet’ meeting was delayed by a visit to the tomb of Gen. Nasution's 4-year-old daughter: when the Communists attempted their coup on Oct. 1, 1965, they: tried to’ kill Nasution -~--heewent» over the-wall, and the bullets got his youngest daughter, the only natural child he had (he has four older adopted children). He's bitter. Sadli is woefully overworked and lacking in knowledge of international investors. ‘Ils H. L. Hunt a man who can deliver on his promises?'' ''Who is Universal Chemical Ltd. of the Bahamas -- they want to be brokers bringing together Kelly 0i1 and outside financing for a $50 million fertilizer project using gas in West Java (unproven), but they want a 20-year guarantee of === [PDF page 34] === Indonesian Diary gt ice purchases by the Government in foreign exchange and guaranteed supplies of natural gas.'! Sadli says the ''honeymoon'' between the New Order and the--intellectuals ended last year Union Carbide's investment, that could reach $50-100 million, is in danger. They want 90% (100,000 tons a day) of the 20% of Caltex' production that goes to the Government: (and which the Governmentlets: Caltex market _on behalf-of the Government): And: they want the right to sell this crude directly if they (Union Carbide) don't need’ it all for production of plastics or plastic materials. The Government doesn’t want to give them this right. Another’ problem is price: the Government wants to charge the actual ''realized!' price, Union Carbide wants’ a lower price. Alcoa's bauxite deal is also in danger. (Sadli himself suggested the present ''cooling off'' period in the negotiations.) The Government is willing to drop the tax holiday and average out an income tax (factoring in the dropped holiday) of about 40% for 30 years or even 50 years and also negotiate a lower royalty (‘'the 10% of foreign exchange that companies: must give the Government’ is too costly for them, we realize; and we also realize that a 60% income tax is ludicrous!'). But Sadli insists that any investment will pay off in 30 years (even though he's*willing to extend it, later, to 50 years or so). Apparently, the Goodyear and-Uniroyal contracts include the provision that-after 20° years: (in 1987) the Government» will negotiate a 20-year extension beyond the 30-year limit (1997). Sadli is the author of the 30-year limit (which he pulled out: of a hat» says McCusker, with no economic rationale), and is sensitive to criticism about it, tends to get stubborn on the point. James(?) Rockefeller of FNCB, at’ a PanAm board»meeting in-Djakerta where the then new Foreign Investment Law was described by Sadti and the Sultan, attacked it strongly on several grounds, including the 30-year limit and the clause about right-of the Government to nationalize only by a law of Parliament (''we all know you can nationalize; why mention it at alan). Alcoa wanta a 75-year: concession if they put up an-aluminum plant. "Universal Chemical Ltd.'' of the Bahamas, apparently just a group of promotors, wants’a deal to bring in’Kelly Oi] and make fertilizer from natural gas in West (7) Java -- but wants a 20-year guarantee that the Government wil] buy the output in dollars and a guarantee of natural gas supply (the field is unproven). Sadli asked: me if he should’ insist on knowing who the backers of Universal Chemical Ltd. are, what- | thought of the deat. He was enthusiastic at first (this area of Java needs development), then cooled off. Sadli asked if’ H.L. Hunt’ was an outfit that could back up its claims and promises. | said yes. Sadli is illiterate re international firms: ''You Americans are crazy to invest in plants -- you just kill your exports and hurt your balance of payments.'' This he got from a US Treasury man now in Djakarta. Sadli operates on an amazingly thin base of information. He asks his friends and anybody he can get his hands on about this or that potential investor, what they think on this or that proposal. He needs help -- and of a kind we could really give him. === [PDF page 35] === Indonesian Diary -32- November® 29 - Djakarta 6330. = 7:45PM Agus Sudono, General Chairman (or President?), Gasbiindo Djl. Sultan Agung 7 (home) Sudono’ is young, has five-small children. Speaks good English. He will attend the RT. Suggests we invite Sob-Pantjasila (RC), Kespekri (Protestant), Kubu Pantjasila (IPKI), but says that KBIM is too small, doesn't even have’ a Djakarta branch. He is very close’ to the: AFL-C10. Knows Jay Lovestone. He is strongly anti-Army. Of generals, he says» that one moment a general is’ a general, another moment he is a labor» leader (untrained) like Gen. Suhardiman, another> moment a businessman or banker (also untrained). This is too much! He feels labor unions must’ unhook themselves from political parties, become truly independent,’ and start fighting for economic development. This is the only salvation, and must even come: before fighting for workers' rights, since only through economic development will workers prosper. Thus unions must enter a ''partnership'' with management- to insure that the company stays profitable’ and contributes to economic development. But by this Sudono does not’ mean co-determination or worker voice in management; rather, he means’ the: unions cooperating in keeping worker demands realistic, worker effort in production at a maximum. (Sounds: like» the millenium.) He hopes to bring all the free trade- union leaders together to start a movement away from politics’ and toward’ economic development by next January. He feels the men around Suharto are corrupt (but he jumps when Gen. Alamsjah calls), but that the’ New Order commanders in political power in the provinces’ are first-rate. He says the Celebes: have fantastic mineral resources. He is afraid foreign investors stay away through fear of union ideas. He will attend the RT. November 29 - Djakarta 4200 - 5:45 Paul McCusker, economic chief of the US Embassy Joe Harary (sp?) They suggested we add an Indonesian of Chinese origin, who is talkative and peppery, to the business session: Dr. Oei Jong Tjioe (‘'Dr. Wee''),Director, C. V. Keramika Indonesia, a manufacturer of ceramics. Office: Djl. Raja Mangga Besar 52 (tel: 22671, 20695, 21660). Home: Djl. Diponegoro 64, tel: 81861. Suggested | write a letter to the Sultan thanking him and the Government and spelling out all the conditions and agreements of the’ RT, giving it to === [PDF page 36] === Indonesian Diary -33- Selo Soemardjan, and that | draft a reply over the Sultan's signature that says that the Government officially approves the RT, etc. (he says Soemardjan would welcome*> such a draft). | must also get Soemardjan to send a letter to all the Government officials -- and | could draft that one too -- over the Sultan's signature. They suggested’ a little publicity wouldn't hurt: "Elliott Haynes, just in from a successful Roundtable with Prime Minister Holt and the Australian Government, has met: with the Sultan, Malik, et al., to organize an Indonesian RT with international executives coming from Europe, the US and Japan, etc.'"' This should be planted with Antara, and also with Jeff Williams of AP and Stone of UPI. Williams: 45522; Stone: 45937/46823. Suggested | check editors and union leaders with the EmbassyPress Officer and Labor Attache. Said we could rent electric typewriters from Royal or IBM, that the US Embassy wives were not a source of secretarial help but that the secretaries of other embassies got afternoons off and might work, but that we will have to hire local help: "They want $5-American in cash per hour, and it's worth it if you get a good one.'' They said to stay clear of Gen. Suryo, who has an unsavory reputation. November’ 30 - Djakarta 8:00 - 8:30 AM Radius Prawiro, Governor, Bank Negara Djl. Thamrin 2 Fair English. Accepted the idea of a combined meeting with BLLD and Wardhana, and will attend. He wanted to: make sure both-the Sultan and Malik approved. He wants a copy of the Australian briefing memorandum. A lizard skittered across our papers right under our noses and plopped down on the’ floor. Prawiro giggled in embarrassment as he moved it away. === [PDF page 37] === Indonesian Diary aaa November~ 30 - Djakarta 10:15 - 10:40 Mustafa Miga, Editor in Chief, Suluh Marhaen Dj. Kran/Kemajoran 1V/24 Tel: 41103/21334 Miga does not speak English. He will attend the RT and bring Drs. Samuel Pardede, his Foreign Editor, as his interpreter. Pasaribu of the Hotel Indonesia -- my assistant for the past two weeks -- was Interpreter at this meeting. Miga’ says that’ Suharto is not expected to ban the PNI (Isnaeni's nationalist, secular party --- though: PNI: people are’ primarily Muslim). “Suharto is a good democrat.'' The forthcoming law on political parties must give freedom to the forces in the country that are working for the Five Principles (Pantjasila ---Pantja=5, Sila=principle), including PNI. Nor will the law ban any of the remaining parties (like PNI): now in existence; the goal of fewer parties will be achieved by a merger of the separate Muslim parties. The suspension of the PNI in Sumatra was contrary to Suharto's policy and will be lifted, he says. The Five Principles: Beiief in the One, Supreme God. Just and Civilized Humanity (humanism). The Unity of Indonesia’ (nationalism): Democracy which is guided by the inner: wisdom in the unanimity arising out of deliberation amongst representatives. 5. Social Justice for the whole of: the People of Indonesia. The three: ‘leading independence leaders: Sukarno, Tjokroaminoto, Hatta November’ 30 - Djakarta HBC) est 23(0)0) Ir. A. R. Suhud, Taman Tjut Mutiah 7; P. 0. Box 2236, Djakarta-Raya Suhud’ wan s an Australian briefing memo. He will ''support!' the RT and attend. He is a consulting engineer. Is a member of Sadli's Foreign Investment Board (not ''Team''), but: says he's called in only at the last minute on deals such as the Phillips contract. He assesses’ whether a project is good for Indonesia, fits-with Indon.sia's external economic relations, and will be profitable for the company. He did not» accept the chairmanship of the PIBA foreign investment promotion group, since he-wants to stay out of the Bekti-Motik battle (Bekti= PIBA). But: he helps P4BA on the side. He is an extremely busy guy, speaks good English. === [PDF page 38] === Indonesian Diary =35" He says the Government ignores social and-mental attitude realities and concerns itself solely with US-style factors such as supply and demand, monetary policy, etc. But the social/mental problems- are many. The simplest to explain is the fact that the Government is still ''colonial'' in attitude -- i.e., bureaucrats who lack entrepreneurial ideas and vigor. For example, the ASEAN: program (Malaysia-Singapore-Philippines-~Indonesia) is totally in the hands°of bureaucrats, no businessmen.are involved who can understand what it is to make a deal, share markets, trade back and forth. Another example: in Australia the Trade € Industry Ministry is businesslike, offers facilities to potential investors, practically pulls them into the country -- but in Indonesia the opposite is true. He agrees that’ Sadli and others- do not’ understand business thinking or the international corporation, but blames the -Dutch:’ ''l don't’ care that the Dutch took the rubber, tea, spices, etc. --~they deserved it for their sweat in coming’ to and working in Indonesia. But they took the top jobs and gave the Chinese the middle jobs’ -- hence’ Indonesians never got a chance to become entrepreneurs, learn how to build a business: and an economy.'' Younger Indonesians now are beginning to learn. Suhud feels: the: tight money policy won't work, will cause-an explosion. “When there’s only a trickle, the few powerful people» get it and the mass of people get nothing.": Suhud is trying to educate’ the ASEAN peopte: and the Sadtis. He appears to be liked by everybody;;) and would-be»a very useful ally for any prospective investor. November~30 - Djakarta 2:00 - 2:45 Ali Noor Luddin, President, P.T. Masayu Djl. Djenderal Sudirman H18;°P. 0. Box 2107; Tel: 72181/72182 Home: Djl. Hanglekir tt/21, Tel: 72558 Masayu is the International Harvester distributor. Luddin disagrees’ with Suhud on the question of lack of entrepreneurs in Indonesia. The» Dutch’ may haves caused it once ~- but this was 25 years ago "Nand what have we been doing since?'' He feels: the 90%-of-aid expenditure-on replacement parts ts stupid, since the machines: date’ from 1952 -Eximbank loans and-are slow, inefficient, not worth repairing -- and-parts are* horribly expensive. ~But-you can't stop the policy because too-many officials are involved. Therets~not one official in Djakarta whose boss: has given*him a job description, and when responsibility is not clearly fixed you're-in deep troubte.'' Venality is also a problem. One recent investor got his: approval from the Government, then found himself being quoted land-at $25-a-square yard: The governor of the city (or province?) intervened and orderedthe price-cut to a sensible $2 a yard -- but the firm wound up paying $5.50 anyway. -fn-another instance, a new investor wanted a phone hooked-up to his office ---and some official along the way asked for a $2500 bribe: === [PDF page 39] === Indonesian Diary =50= The US Treasury consultant now in Djakarta asked McCusker, Harary and Luddin why US aid had stopped US exports ---“what happened to the $500 million you spent in the US on normal ‘commercial imports in 1965?" Luddin explained that the money used in 1965 from check prices (?) and DPs (7?) had dried up, that without US aid there would-be no-imports at all from the US. He. then suggested the US AID officials in Washington stop taking I+ years to analyze and approve projects -- and that these projects be centered on private Indonesian groups, e.g., rice projects using US equipment:to create purchasing power and a continuing rice-equipment market for US suppliers. Luddin will attend the RT. December 1 - Indonesia 11:00 - 11:40 Sumono Mustoffa Djl. Djatinegara Barat 111/6 (home) Tel: 43202 Djl. Prapatan 46 (office) Mustoffa heeds’ up KNI, a private news~service started after the October coup by eight or nine -newpapers:,: and which ''cooperates'! -- not competes -- with Antara, the Government news service. They operate: on a shoestring, are really broke. He insists KNI has’ nothing’ to do with the Murba party. He will attend the Roundtable. His English is only fair. December’ 1 - Djakarta 2330 = 3340 Oei Jong Tjioe, Director, P.T. Keramika Indonesia Baru Office: Ejl. Raja Mangga Besar 52 tel: 2267) Home:-Djl. Diponegoro 64, Djakarta 111/19 tel: 81861 An Indonesian of Chinese’ ancestry. Jean saw earlier. His theme: PK| had three million card carrying members, and only 250,000 were kiiled in the October coup. This leaves 2.75 million left around, plus another 20 million fellow travelers. This is-the big danger. He claims Choo Ming Fat, suggested by Soedarpo; financed the PKI, is two-faced and politically dangerous (in the light of the above figures), urges us not to invite him. Instead, he suggested: Tan Theam Ann, president (?) of Pantja Surja (five sons) who is headquartered in Medan (like Choo Ming Fat) Kwee Oei is to send me the addresses of these men. — Both of these men are Chinese -- but loyal to Indonesia -- and better yet are industrialists (like Oei, who started a ceramics plant). ‘We have plenty of traders in Indonesia, but === [PDF page 40] === -37- Indonesian Diary ething cheaper a deal to produce som; for automobile ! Qei is working on f some plant we neglect production. but better than foam rubber from discarded husks 0 seats -- with German (Manheim) interests. %- of Indonesian business iS still in Chinese hands; Indonesians of Chinese orig!n,; The latter represents a Bekti and»Tahtja- Ten, altogether Dei claims that 80 another 10% is in the hands of ''my people," and only 10% is in the hands-of pure Indone "handful! of Indonesians such as Soedarpo,;: (?);°° The* banks“ aresran by generals, but behind them-are always the Chinese- When an Indonesian-gets a Government: license to trade or do some form of business, what does he do?’ He doesn't (or doesn't know how to) use it, but he gets some Chinese to use it for him. This explains why~ Sumi tro's program to get the Chinese out of the trading business failed, despite el] the licenses and financing that Sumitro furnished to Indonesians. sians« ine) sells his within Bes Garuda (government air! doesn't account for t trade in rubber, eri, cea, Indonesia is widespread: f tickets outside Indonesia, uption is evident in Corruption in $4 million worth o Indonesia. The same corr keep his remarks brief. Oei will attend the-RT. The problem wil 1 be to He can be sat on, |} warned him about this --~ but we'll] have» to sit on him. | discovered. December 1 - Djakarta 5:00 - 6:10 Taufig R. Tjokroaminoto, General Secretary, Gebsii-Indonesia Office: Taman Matraman Timur 2 tel: 81026 13359 Home: Djt: Singamangaradja No: 4h-(Pav.)-, Kebajoran Baru d the-head-of PSII's Moslem and-several other Gobsii types. ters out of the living Met: in= his» home with himeand his: father an Association of Businessmen (founded in 1938!), They spent much of the time chasing the-flamboyant roos room onto the porch (1. exaggerate slightly). TRT's English is only fair, and he's the silent type. But he will attend the RT. Gasbiindo-was split in half (both halves keeping They told me that today ‘to Agus’ Sudono~and the other to the founder of the name) with one half going Gasbiindo, Jusuf Wibisono). ed-tslamic Party of Indo- TRT says that Gobsiti was-created by the Unit Agus Sudono notwithstanding. nesia (PSI!) and must remain tied to that party, But he agrees with the "partnership! idea. He-ts -- or seems- to: be: --~moreconcerned-wi th immediate labor problems than with politics. Says~the big question ment: 40,000 in Djakarta, 3-4-million in Indonesia as a whole. He hopes to have a conference on this problem with al] labor -unions soon. Says he has solutions, for-discussion at our RT is unemployand government officials but wouldn't =-- or coutdn't -- share» them with me. === [PDF page 41] === Indonesian Diary -38- December 1 - Djakarta 7:30 Waited in my room for Duta Masjkarat, deputy to Mahbub <Djunaidi (NU- Muslim nationalist=newspaper editor), but he never showed up. Could Pasaribu have goofed and | should have gone to his office? December 1 - Djakarta 8:00 - 9:30 Abortive effort to get to the Minister of Agriculture, General Sutjpto’ with an idiot taxi driver, who had me talking with a Lt. Col. Soetidjab’ Tjitrosoemarto, of Dinas Perbekalan Kesehatan Angketan Darat, Djl. Salemba Raja 28, whom | thought was the minister for 10 minutes, until he finally informed me he’ was in charge of buying medicine for the Army! When | finally (after another false delivery of my body to the wrong address) got to the right place, | was an hour late and missed the appointment. The birds flying around the reception hall at the first stop made up for the trouble. To reach Sutjpto, ask-for Departamen Pertanian, in front of St. Carolus. December 1 - Djakarta 10:00 - 10:45 Dr. Mr. Soenawar Soekowati, General: Chairman, KBM (also a chairman’ of PNt and Chief of PNI's Economic Dept.) Djl. Dago 42A; Bandung Tel: 5626 Kebayoran phone: 70730 Djakarta address: Djl. Galuh t/4, Deb. Baru This labor union leader (KBM), of the Marhaenis party (or wing of PNI?) swears that popular opinion to the effect that PNl-is Marxist is wrong; that, to be sure; Sukarno typified it as such, but ''PNt- doesn't -betong to Sukarno but to the people,''-and the’ people -in PNI-reject Marxism.~ Soekowati and Maliki (the PNI: leader) opposed» the PKI~ (Communist Party) and Sukarno -- and for this’ reason Soekowati was dismissed as Deputy Agriculture Minister in September 1965°-- a month before»the coup (good timing!). He feels PNI will not be banned, since Suharto knows» the political repercussions of a ban would be dangerous. He feels that’ Indonesia will achieve fewer political parties not just by the merger of Muslim parties, but also a merger of nationalist parties; PN1 may merge with 1PKI° and SOKSI (the latter, he says, is as much a political party as a union). He doubts that solidarity of the Inco.csian labor movement (which he feels is necessary) will be achieved, because some unions are secular and some are religious. He sees a very limited kind of cooperation among them. His philosophy of labor is that labor in Indonesia must be ''good === [PDF page 42] === Indonesian Diary ak eg partners" of management and government in fomenting economic development. Labor can't be the ''antithesis!' Where'd that Marxist word creep in?) of capital, as it is in the’ US, since ''there is no capital in Indoresia.'' Soekowati and Maliki’ approve of foreign investment. To support this point, he mentioned a Dutch firm which he nationalized (he apparently nationalized a good many-on the Government's behalf) in-1958, -and which became a state enterprise in 1959, with 2,000:-workers.: They expected that it would grow and increase employment. Generals were put in charge. The firm shrank for five years, employs many fewer than 2,000 today. ''The workers get punished, but it's the management that should be punished.'' Foreign investors will provide good management, and thus’ help the workers. December 2 - Djakarta 9:15. 5: 95'S Drs. Soesilo Sardadi, Mancging-Director, Bank Negara Indonesia Unit IV Home: 19, Djl. Madiun Tel: 51119 Office: 66-70 Djl. Kebon Strih Tel: 47012 Fair English. Will attend the RT (business and-banker session). He feels there should be -20-million on the tax rolls (five people per family, 110 million people). On Seda's point about the secondary level of speculative credit institutions, he says that’ it is a matter of psychology ~--the Government must create a climate of opinion that speculation isn't necessary and won't pay. To do this, the Government must first cut out its own unnecessary expendi tures (it is the country's biggest spender). Also, the’ Government organizations must begin obeying the law requiring payments’ to-be-madeby checks drawn against bank accounts as a means of reducing the money supply (this law has never been adhered to). He wants an Australian briefing memo. Sardadi was asked by Gen. Suharto to leave private business and take over this state bank. He feels that there are many left in the Government who are from the old order and who will never change their thinking and must be replaced. But accomplishing this is difficult, because of the "hard shell"' around Suharto (Alamsjah, Suryo, Sudjono, etc.) who are themselves corrupt and lacking in modern ideas. To get Suharto to listen, you must push from your side and we will push from ours.'' He is young (35 or 38) and dynamic. Should make a good panelist at the RT. He told me that Sanjoto's brother (very unlike Sanjoto) was chairman of the PNI, came to dislike some of Sukarno's ideas and said so too bluntly, was thrown out of the Party (or of office), had a stroke, was ill for six years -- and diec. === [PDF page 43] === aia Indonesian Diary December 2 - Djakarta 10:20 - 10:45 Dr. Deliar Noer, Rector, Teachers! Training College Komplex 1.K.1.f., Rawamangun Tel: 81811 pes. 104 at 8:00 (unknown to me). IKIP is way the hell and gone He expected me We had a very short meeting. out in the sticks. wondered why we are inviting He said he sees very little of businessmen, him. He understood the broad scope of the Rendezvous Dinner, and will attend. His English is not so good. December 2 - Djakarta 11:00 - 11:45 Barli Halim, Secretary General Department of Basic and Light Industry, and Power Off: Djl. Kebon Sirih No. 36 Tel: 48111/45729 Home: Djl. Brawidjaja 111/7, Kebajoran Baru Tel: 71528 He'll try to fix an appointad the RT "with his Minister." for Tuesday morning. He asked for a copy of the He will atte ment for me with the latter Australian briefing memo. Has fair English, but a nervous type. December 2 - Djakarta 8:30 - 9:00 Frans Seda, Minister of Finance Home: 22 Djl. Sriwidjaja Blok 1, Kebajoran Baru Tel: 72263 alkative. He has been trying to stimulate ) by lowering taxes in one area and increasing government revenues in another. Thus he's cut the sales tax (loss: 2.5 billion rupiahs) and customs duties (loss: 5 billion rupiahs). Because it takes too long to get a tex increase through Parliament, he's tried to broaden the tax rolls from the present 210,000 to at a minimum 1.5 miilion. The ''wealth'' tax roll is only 9,000, should be at least 1% of the total population (or one million), but he hopes to raise it at least to 200,000 he company tax -- and ''there are or 300,000. Only 20,000 companies pay t 1 He feels 14 million people should pay 300,000 Chinese business firms alone. the land tax, and only 100,000 do so. Only 150,000 ''plots'' are even registered in the whole of Indonesia (and | believe he said there are this many in Djakarta alone). Naturally, few people pay the tax on sale of land. Since he has only 16,000 tax collectors, he inust rely on voluntary payments ~~ and has recently introduced the lise] f-assessment'' principle. He feels it will work and points to success already achieved with importers in Medan (Sumatra) ee elsewhere. Fair English, quite open and t business (and still fight inflation === [PDF page 44] === wie Indonesian Diary He's disturbed by the fact that in between the primary financing sources and the country's producers who need it is a layer of speculative credit institutions who finance producers and others by a aut and run'!' method. He feels this has resulted (at least in part) from the disruption of the business and financial sectors under Sukarno. The proper channeling of money has been disrupted, and most of money circulation goes to these secondary credit institutions. He wants the Australian briefing memo. Will attend the RT. December 4 - Djakarta 1:05 - 1:40 Maj. Gen. Ashari Danudirdjo Minister of Basic and Light Industry, and Power Kebon Sirih 36 Poor English. He will attend, but will probably bring 4n interpreter. and in-what bad shape; the economy its. ane It is amazing how poor, projects at the moment are: Ministry's three Lig problems and/or 1) How to reiabilitate existing industry when jt has been totally neglected for so siany years. d huge projects begun by the Eastern d-or should more millions of dollars ities make this an insoluble 2) What to co with the semi-complete Europeans. Should they be- left -unfinishe be poured into them? "Our nationat economic prior problem.'' -A huge amount of foreign investment is needed-to finish them, but they were poorly planned: to begin with. Example: an Eastern Europe-devised steel mill, on which some $10 million has already been-spent (and which Indonesia must stil] repay) needs another 524 million to comptete, but "everything is wrong with this: project;"'! hence’ they: are tryiag to use what has been completed under this project, such as: the: workshop, and have succeeded in using 10% of it ~~ so the: question here is not so much should they finish the mill but how to use’ what has already been built. me- money: for (a) industrial rehabilitation, d preparation for the industrial ''take-off"' which will: initiate’ the 5-year plan beginning in 1969; Of the $325 million Indonesia hopes to get from donor countries in 1968, the Ministry of Basic and Light Industry, and Power will get (of the $75 million for projects out of the $325 million) $14.2 million for electric power (even- though’ $20-30 million is needed’ just to patch up Djakarta's power system alone!), and $3.25 million for other industries under the: Ministry’s care: paper, caustic soda, tire ($1> mill ion> needed to: finish a-government-owned: plant: begun’ sy West Europeans) salt, fertilizer, cement. The- entire fertilizer plant needs $50 million fiche. 3) The 1968 budget provides so and (b) for what the Minister calle === [PDF page 45] === -42- Indonesian Diary under-employed.’ Also present’ December 4 - Djakarta 2:50 - 3755 Prof. Dr. Widjojo Nitisastro, Director dvisory Team) d head of Economic A National Planning Bureau Team National Planning Bureau (an Dr. Emil Salim, Deputy Director, Dr. Ali Wardhana, Economic Advisory Saw all three of these’ key men-at-once.~ Salim is also-on the Economic Advisory Teem (to the Acting President), with responsibitity for production and planning. Widjojo heads up: the team, and Ali Wardhana +s responsible for monetary and banking affairs for the Economic Advisory Team. he talking, and was quite skeptical. He grilled me t-of the Roundtabte. The-other two were very dhana -wants-an Australian»briefing memo. Widjojo did most of t for an hour on every aspec relaxed and friendly. War | had-to leave before: we-could-everr begin -to-discuss issues and problems, unfortunately. All three will attend the RT. December’ 4 - Djakarta 4:00 - 5:15 R. Achmad -Soekarmadidjaja Home: Djl. Tosari 27 Tel: Gambir 45204 He brought with: him his "secretary,'' Drs. Muchlis, who turned out to be, Director of the Planning: Bureau of the Minister of Basic and Light he- time attacking: the US bitterly for sending in $2 million of rice and whet and not furnishing credits and grants for projects: ‘You spend $1 billion a week: fighting Communists in Vietnam and let 110 million Indonesians --- with: the spectre of Communism at their backs ~~ starve.'! Hessays it tases from $500 to $750 to create one job; assuming 3.5 million unemployed, that is $1.75 billion --- not counting the 20 million was Drs. Chaidir Minang, a business friend. he says, Industry, and Power, and who spent’ t Achmad says: PNI- does: not: support: the Pantjasila, and until it does there can be no~merger of IPKI and PNI: (he ignored the question of merging with SOKS{). But he says’ PNI’ may do: so- (after purging itself of some bad elements) and then IPKI could merge with it. He does not betieve that PNI will be banned, but thinks it will be cut down in size (at Suharto's insistence that it slough off certain elements). students, workers and housewives) plus IPKI has’ 10 mass~action groups ( It is nationalist, independent, secular. a ''merchants'! group, or 14'al? told: === [PDF page 46] === Indonesian Diary December 4 - Djakarta 10:30 PM Dr. Mohamad Sadli help him in a-that ~B could lk about He- was: receptive to the ide etter and later a ta Sadli called. would welcome: a ] vetting investment proposals, this. that it take over the He told me that’ Union Carbide really has proposed; Government's entire share of Caltex production --- {and enjoy depietion al lowance) -- so that, as production goes up, so’ does Union Carbide's oil. They | want, says Sadli, to get into the oil: business, since oi] compantes are getting into the chemical business: Sadli has difficulty in swallowing this, and again asked my opinion. | told him I'd have to study the- facts, couldn't give a telephone opinion. a pipedreem. Sadli claims authorship of’ the ASEAN: idea, but» says it- is still 9:35 - 10:15 December 4 - Djakarta lee Og ID Hadiwidjaja, Minister- of Plantations Djl. imam Bondjol 29 his. should: be called the "Ministry of Commercial Crops, since its main’ job is’ to foment their production. He himself is non-political, a plant pathologist and former’ Rector of the Agricul tural College at Bogor. The Ministry hancles: Tojib feels 1) Big estates ~~ 500: acres- or more; both’ government and private. The butch set: up: government-owned-estetes- originally, anc their number has increased since the: Indonesian: Government: took them over in- 1958. In 1963-64,. the Government expropriated the British estates; in 1965 the-Belgian, French and Swiss. The two American’ (rubber) estates-were-returned this: year (to Goodyear and Uniroyal). They: got’ the Belgians» to come back in joint ventures (paying the Belgians” for the: Indonesian’ share), and: are now awaiting the decision of former ike owners: one the-semerdeel«<he- feels: some: Ut ex ownersmery not wish to return). n-owned: estates’, of which there are 280 in West Java 2) Private Indonesia 50-and 500-acres in size). alone (presumably between 3) Smallholdings ("native!! plantations) of 50° acres or less (most are + acre or | acre). These grow: rubber, coffee, pepper,» kapok, spices (clove nutmeg, etc.). The total yield of smallholdings. in- rubber iseqpome than th. of the big estates, but the: quality: is low. (The trees are old, and sm i. holders have paid little attention to the variety of trees that-shoul.d h been planted.) The Ministry: is‘ now trying: to upgrade the qualit (H ahs Minister: began: talking: about” rubber” ''s/abs," which: us‘ed-to be Pe ecla ibe Biagapenns” and the fact’ that ''re~milling'' is now done’ in: Indonesia A k blankets; '"' and: the: fact’ that’ foam: rubber: ‘is now-experbed:fronrtndone i ~~: the fact that: ''crumb’ rubber,'' using ''slabs" (?), will- produce a Le and price of rubber. | got lost.) === [PDF page 47] === Indonesian Diary -4hate next» to its rubber e without: flooding) but may also enter d estates’ to grow rice and other je adeng -- | presume Uniroyal not only has started its own rice est estate (in the: trightlands’, growing rie into joint ventures" with: Indonesian” owne products, or may rent the-land: of these-estates’ and do again at the request of the Indonesian Government. t old rubber estates with d to: rice and other crops? The big question for Tojib: should they reptan Indonesia switches more rubber trees, OF should these-lands: be converte The demand for and price’ of rubber is: falling ---but if to another ‘crop’ on a given estate it’s risky -~ especially wanen they switch to perennials,’ which take years: to start producing: well and which you're stuck with once’ you plant it. What will happen to world market demand and prices is difficult to forecast. For exampte, the US: used to import a great deal of Indonesie's palm oil ~~ but -with the introduction of other oils (cotton, etc.), these imports: fedt to 2,500 tons in 1965. ed: tor get- soft: loans: from the~+BRD for fertilizer for a period of two: years. Tea, for example, needs 400-600°-kilograms per hectare-per year, but» the- Government estates have only enough for 200-300" (4 of: the need); hence: these-tea plants are not diseaseresistant. Rubber and-other- plantations have similar fertilizer needs and the same need’ for soft’ loans* Tojib figures two: years of imports will permit increased’ production and exports so that the country can jmport all the fertilizer it needs t paying the: loans. but IBRD is not yet’ convinc -this-in Amsterdam). The Minister has tri imports’ to’ cover imports” he- third year and-start re ed: (the: Indonestans: fated to getber, etc~) need-$20-30 million Total’ government-owned-estates: (tea, rub in: soft: loans’ for fertilizers alone in the next~two~years, and all estates combined~ (including: private) need>-$50-60: mit lion for the pertod. The Asian Development: Bank hes’ nor funds yet- for this kind of soft loan. 0%- of -tndonesia’s: export earnings. % of on these crops ranges* from 6% to 80% 4Jndonesia-a big loss in Commercial crops: represent’ 50-6 this goes to: the: EE€s" > The’ EEE taxes (depending: on’ how processed:-the: crops are)-,- causing foreign exchange. This, too, is: a big problem. Tojib will» attend the» RT,- wi th» bet1s~ on. He- feels- the: political situation is good for foreign: investment,” and that the: private: Indonesian estates desperately need foreign partners: and: capital « He'd-like-to discuss this at the RT. December 4 - Djakarta 7:00 - 7:45 PM Dr. Selo Soemardyjan, Secretary: to’ the: Sultan~ (at his office) Selo is going to’ Balisuntil next Saturday. is wa isi é ys This was my last visit i him. Gave him a letter: to: the: Sultan nailing down RT agreements, Ean etc., plus a suggested reply: to me from the Sultan. He accepted both -- i including the promise: that: the Sultan would: send a-letter to all Government pis ee and: Suharto: approve their participation (he said this u orce® the’ Sultan’ to: phone Suharto!) He' a el ) e' also read and approved my === [PDF page 48] === Indonesian Diary -45- Soemardjan told me that in Gen. -Sudjono's absence,-Gen. Suryo is my contact with Suharto (the Embassy: told me to-stay away from Suryo), but that the man to write to who handles all of the President's correspondence is Brig. Gen. Soedarmono, the Secretary of the Cabinet. December 5 - Djakarta 5005. -qbeks Darius Marpaung, M.P. --General Chatrman, Kespekri Home: Djl. Guntur 43 Tel: 51396 Received me in white gloves “in a small, dingy, dirty home.- He has gout, was in obvious pain (his hands), +s going to Texas-for treatment in ten days ("Christian froends have~made+t possibte.!’).--Youngish, fair English. He doesn't: think the unions will combine and break-away from political parties for three and probably five years at the lesst -- and perhaps not for a great deal longer. He agrees that many~feel-they- can't survive without the help and support of a political party ---though Kespekri is independent, is not even related to a Christian Party, and, though small, has succeeded (and is avbit militant!"). It is strong in North Sumatra; assume, he says, that a textile company -owner- is also Treasurer-of-the Christian party active in that area, and that Kespekri» had joined that Party. As the union in the textile: company: (which it is),-how»could Kespekri-+ fight- for the workers? He says he tried to draw the Indonesian: unions together in a confederation (“which we-must have to be-strong'') but failed, since every umion was worried about its’ freedom and identity in: such: a confederation. (Even Agus Sudono, says the US Embassy Labor Attache, is about to become a VP of a political party, and his words: about separation have’ a holtow ring. Also, the division within Basbindo ~--which-is»not a break-up of: the union into two separate unions -- will weaken’ Sudono im his: quest for-confederation.) He (Merpaung) believes: elections: won't be held until 1970, and» thet» the situation at least until then will be too muddled for any real union movement away: from politics. Marpaung will attend the RT. His secretary shoed-me to my taxi: ''God bless you, sir." December 5 - Djakarta 7:50 - 8:20 AM Mh. [snaeni, Vice-Chairman, Parliament (DPRGR) Home: Djl. Mangunsarkotoe- 5° Tel: £1384/46446 (old phone) Pleasant visit.- Fair English.-*He apologized for being so hard to see, explained they are trying: to wind up’ the: 1968 budget by December Qe Wes 1S responsible: for “Commission: A,"' which handles industry- and public works. Says it is very difficult to draw up a budget» in an unstable» country where conditions - change sharply ''every day." He will attend the RT -- says: it's “very important." === [PDF page 49] === Indonesian Diary a He and Widjojo and others seem firmly convinced that the US plan expressed in Amsterdam to furnish 1/3 of the $325-million in-aid-is a solid commitment. They seem to give no weight to the fact that the US:Administration has to ask Congress for the money -- and may not get it. December 5 - Djakarta Get 07 = 10"30 Arifin Harahap,: Secretary-General, Ministry of Trade Djl. Abdul Muis- 87 (Tanah Abang Timur 87) A brief visit, designed to insure the Minister’s (Jusuf) attendance, since Subroto never made a date with Jusuf for me (Soemardjan says he's very shy and shuns foreigners). Harahap confirmed that Jusuf is in Bali and won't return before | leave, but said ''l am sure the’ Minister will be happy to participate.'' He also said Jusuf sees’ foreigners’ every day and is used to them! He claims he could have made-a date for me, alas. He will inform Jusuf of our talk, the RT, etc.’ My only fear is that Subroto»may be tossed out of the Trade Dept., and Harahap confirmed that” he will be made an ambassador, and Col. Abdulrachman, Director-General ofthe Dept.'s Bureau of Foreign Trade, is also away, so there may be nobody left in the Department whom | have seen. December’ 5 - Djakarta 8:50 - 9:55 Harlan Bekti, President, Tohnik Umum Wahid Hasjim 86 Bekti- was suspicious at first of the RT. | think the PIBA people are worried that another continuing group may be set up by Bt in competition with them. Once he understood, he became’ intensely interested and helpful. He agrees the Motik people are’ good lobbyists. He himself will come if he possibly can, and we shoutd send him alt our materials. But he is very much involved with the ILO, and Alawoedin, Minister of Manpower, has asked him to attend the June ILO meeting: in Geneva (Indonesia has just re-joined bay) He will try very hard to be with us, thinks the RT is great. He said he-had an elementary school friend who is now potitical advisor to Nasution, and when | said | couldn't get a date with Nasution he promptly called his friend and took me personally to call on him (after an interlude while i visited Harahap). === [PDF page 50] === }ndonesian Diary ode December 5 - Djakarta 10:50 - ea Ae) Oejeng Soewargana Djl. Garut 18, Djakarta Tel: 51660 Bekti took me to see this man to get his help in reaching Nasution. He th Nasution, and is the is a publisher, helped to create the IPKI- party wi; rses on Communism in Asta latter's political advisor. ~ He ds now setting up cou for the four ‘'war colleges!! (Army,: Navy, Air Force and Police) and for the colleges of the Dept. of Foreign Affairs and the college of the Dept. or the Interior. Studying Communism i's his: hobby (a devout Mostem, he is fasting now that we are in Rahmadan'*-~ "as He wants an Australian briefing memo and list of BIES members, me a date with Nasution, whose political advisor he isis Sanjoto) - and will try to get He showed me two confidential documents’ we should get hold of: ''The Cornel] (University) Study on the October 1 Coup," anc a rebuttal by The Rand Corporation, also called ''The Oct. 1, 1965 Coup.'' The Cornell Study (Masters has a copy) is all wrong (Nasters agrees), partly in that -Tt over-emphas izes the strength of the PKI: before’and after the Coup,’ both in numbers and in influence and power in political and other organizations- Oejeng feels that many members of PXI were not convinced Communists The PKI infiltrated the BT! (Indonesian Peasants Association) and such parties as the PNI, but never used the name “\Communitsm,'* as other groups used: their: name (e.g.,''Catholic," "Christian," ‘Mus Lim!) Hence: people: in: the infiltrated: organizations never identified themselves as Communists --- and this has proved to bea real weakness for the PKI and -the Communist movement in Indonesia in general. 2) in- the’ PNt adopted’ the poticy that they accepted fit the needs- of Indonesies'! This opened the door nfiltrated today. But Suharto yonalist party The Marhaenis (group Marxism, as modified to for PKI: filtration ~~~ and- the party” remains i will not: ban: the: PNt+~!'the~Army~needs~to keep-alive-a strong nat to: be"acounter~force'to~ the: Musil im parties." Books’ recommended by Oejeng: The: Communist: Party: of Indonesia 1951-63" Donald: Hindtey* sk University-of California e- Decline: of: Constitutional Democracy in Indonesia’ Herbert Feith: ''Th Cornell University Robert A. Scalapino® “The: Communist: Revolution in Asia'' He also urges we talk to: frank’ N.° Trager. NYUs-Robert Tilghman? and Karl J. Pelzer (Yale);: and’Arthur Dommen:at Yales Al\;-or as are Petnad to the Cornell Study. === [PDF page 51] === indonesian Diary -48- 1:30. - 2:15 December 5 - Djakarta Chairman H. Mahbub Djunaidi, General lists Association) P.W.1. Pusat ({ndonesian Journa Tjokroaminoto 14 Tel: 49590 -- and Editor, Duta Masjarakat (Hus lim daily) Mahbub is also fasting. He is young, has fair English. Will attend the RT. in 1968 to the point where 4 newspaper 't buy a paper at that Says three paper e out of them. He says newsprint cost will rise will have to sell for 7 or 8 ruptahs, and ''people can He feels the: Government must subsidize the papers. ting ~~ but nothing has yet com in our group. price. mills are supposed to start opera He was interested in the paper companies is still basically Marxist -~-Vit's in their Constitution." (Sumitro, Lubis, etc.) have Marxism in their truly Marxist. He feels the PNt Also feels that the Socialists Constitution, but that these men are not 4:05 - 4:50 December 5 - Djakarta Sjafrucdin Prawiranegara Home: Djl. Tjiputat Raya 3, Kebajoran Lama off: Djl. K.-H. Agus Salim 52A, Tel: 42811 Sjafruadin is an economist, was Minister of Finance and then Governor of the Central Benk from 1945~to 1950° or so. He has: just returned from East Java where he was lecturing on how bad the: present Government is. He will attend the RT (Rendezvous: Dinner) and: be one of the four or five panelists -~ he'll be frank! He says Sumitro's ‘Nsgtudents'! (Sadli, Soemardjan, Widjojo, etc.) lack Umoral courage’ and have sold out, become "yes men.'' They accept far more than they should ~~ oF rather, should get out of Government before accepting all they do accept. Basically,’ he feels they: accept: a rotten, corrupt government which makes a mockery of its own’ policies: the tight money and balanced budget policy, for example, is a farce. The assumption in the 1968 budget is that revenues will be 110 billion rupiahs. He says they'11 be lucky to get 50 billion ~~ and even if they were to get the 110 billion they still need $250 million of outside’ aid to balance the budget. Further, 90% of the budget goes to pay the salaries- of this: corrupt government (yet- he also volunteers that low salaries make corruption inevitable). There is- today no rule of law but only corruption. Only the "generation of 1966'' (the post-coup Rouans ters) is pure == and even’ they lose their ideals and become: corrupt’ when they come into contact witn and under the influence: of the old Sukarno forces who are still in power ~~ and Indonesia will not survive without this 'idealism,' this ‘moral courage'.'' Yet he admits that Suharto’ needs the generals ena other military men’ and can't dismiss them en’ masse, even though they are corrupt men who collaborated with Sukarno. === [PDF page 52] === :4ndonesian Diary government emptoyee }s-corrupt, fire them all, hire back half and put the rest on a waiting list. ("Even the: Attorney-General is corrupt: how have these-men the: right: to judge: the- corruption of others?"') Then start an Indonesian: Marshal]: Plan of-a kind, heavily involving foreign private enterprises; jn- this way: create wealth-producing projects competently managed, and then put these- suspended~ government: employees; including generals, back to work in these projects. -“You can't save Indonesia with credits alone. His: solution: assume every~ Quite a guy- And: the: first white-haired tndonesian: I've come across. December» 6 - Djakarta 3:50 - 4:40 R. L. Tobing Sh», Vice President: Indonesian Importers Association Home?:: Dji. Dr. Sam Ratulangi 19A, Tel: 455165-0ff tel: 47269 He came with two: aides He~#s- quite nationatistic, feels Indonesia needs some form of’ protection: (unidentified? against the- power of foreign capital. Fair-to-poor English» Feels, dike Motik, that-Ymost! Chinese are Reds, but listened: when’ 17 suggested that acceptance: of: and compassion: toward the Chinese would wake’ the’ difference: between their: loyalty “to Indonesia and to Peking. He will: attend: the RT-,- and wil inform Moh.* Noeh: about its: | am to write Noeh: Moh. Noeh c/o Organda Djl. Madjapahit | Tel: 43773/40282 the "generals," presumably those who Tobing says Choo Ming Fat financed 1965("'Gestapu-PKI"') - attempted’ the Communist coup of Oct. 1, December’6 - Djakarta 10:50 - 11:45 Maj. Gen+ Supjipto’S.H., Minister Department of Agriculture (Departamen Pertanian) Salemba Raya 16 Finally met with Supjipto:and four aides.:> He will- attend the RT with the Minister of Plantations. No English, will have: to bring an interpreter but will: probably rely on: his: colleagues in the: maine {he-will bring his Secretary-General and at his: Direetor-Generals:). He~ says {ndonesia’s- big agricultural needs are: - Fertilizer and agricultural- machinery: and equipment, especially equipment* to open up new farme lands: in Sumatra and: elsewhere-outside Java. - Exploitation of forestry. They: should immediately-exptoit 40 million hectares, keep: 80: million in reserve;- and: open: another 40-50 million to farming. === [PDF page 53] === - attempted’ the Communist coup: of Oct. : Indonesian Diary His: solution: assume every- government emptoyee is-corrupt, fire them all, hire back half and put the rest. on a waiting list: (‘Even the: Attorney-General is corrupt: how have: these*men the: right» to judge the- corruption of others?'') Then start an Indonesian: Marshal]: Plan of-a kind, heavily involving foreign private enterprises; jn: this way: create weal th-producing projects competently erals, managed, and then put these suspended government: employees, including gen back to work in these projects. “You: can't save Indonesia with credits alone.’ Quite a guy. And the: first whi te-hai red Jndonesian- }'ve come across. December 6 - Djakarta 3:50 - 4:40 «4ndonesian Importers Association R.-L. Tobing Sh«, Vice President, 45516;- Off tel: 47269 Home?’: Djl.- Dr. Sam Ratulangi 19A, Tel: He: came» with two aides He~ ¢s- quite nationatistic, feels Indonesia needs some form of protection: (unidentified) against the-power: of foreign capital. Fair-to-poor English Feels, dike Motik, that-"most!’ Chinese are Reds, but listened’ when’ 1- suggested that acceptance: of: and compassion: toward the Chinese would: make’ the: citference between their: loyalty “to Indonesia and to Peking. He will: attend: the RT-- and wild inform Moh.*Noeh about its; <1 am to write Noeh: Moh. Noeh c/o Organda Djl. Madjapahit | Tel: 43773/40282 Tobing says Choo Ming Fat financed the "generals," presumably those who ls, 1965 ("'Gestapu-PKI"'). December’6 - Djakarta 10:50 - 11:45 Maj. Gens Supjipto S.H., Minister Department of Agriculture (Departamen Pertanian) Salemba Raya 16 Finally met with Supyjipto-and four aides.: He-witl- attend the RT with the Minister’ of Plantations. No English, will have: to bring an interpreter, but will- probably rely on: his: colleagues jn: the: maine {he-will bring his Secretary-Generel and att his: Direetor-Generals:). He- says {ndonesia's- big agricultural needs are: - Fertilizer and agricultural- machinery: and equipment, especially equipment’ to open: up’ new: farme lands: in Sumatra and elsewhere-outside Java. They: should immediately-exploit 40 million - Exploitation of forestry: -and: open: another 40-50 million to hectares, keep: 80: million in reserve, farming. === [PDF page 54] === 4ndonesian Diary aa nosbandeyie< They-hever plenty- of cettte, would like = Deved opments of = anima | like the Goa deal a slaughtering operation jons: in Indonesia -~ spoke for- more processing operet her: wood products rather Supjipto is: pushing fabricated hous ing and: ot of the need to produce pre than’ just* export lumber. hevobseinately-refused’ tovconment: onr-the: question” Of farm prices allowed to rise as-a stimulus to farmers-<- | don’t: think: he knows-much, and/or is afraid tov talk: Example: when: 4+ mentioned: the: 1BRD- refusing soft loans for fertilizer: importss re eeide that: ats Amsterdam ther-lBRO- wes: pusiting the Indo- -nesians: to giver greater weight in their ptanni ng to agriculture ~~ completely off the: point Het ld be a difficult guest and: other materials in a week.or -year- plan he at’ the FAO meeting, The Ministry: wilds have: its 5 plus: Sup ipto’s* speec so, | bediieve ine English. © This’, should be picked up by Sanjoto. 12:00 - 12:30 December 6 - Djakarta ne Zulharmans, Harian Kami Kramat: Vili7va Tel: 45386/45408 -He- distened terthe story and The: st! ins Zulharmans: i s+ not pronounced: - jJl-attend: thes Opinion Leader assured: me Nono: Makerim,~ whose: deputy: hee 455 wi session» and be a panelist. sent-ing students,~ and editor of ‘Nonor'is® 27; member» of Pardiament repre dership Grant visit to chevatadents paper Harien’ Kari s«rHets-on- e-twormonthe Fes the: US* now: (State Dept.). drop Hefes: as~e- panelist» (herd: just repeat Lubis) the: onty-man: ine the: group’ whe: speaks for a Mosems: in=the:-group buteno real Moslem Mahbubs«: He says* Subchan of the English), butwe-can’t take Subchan wild« speak» out boldly at a maybe we can get Zul harmans’ suggested’ wer and put» Mahbubr int his: places since: Mus Tim party-is* Mahbub: (there ares many” politicians or political spokesmen: except’ People's: Congress: woul d-dor better” {better out of that: session.’ * He-also wonders: if Mahbub meeting agken this. + Thenk the Lord: dunerts: not: Rehmadians” -Mahbub' liquored up: December: 6 - Djakarta 1:30 — 2:50 Dr. Emil Salim Beppenas' (Netionad- Planning Bureau) Spentether first hour waiting: for Saiim,- with: deswttory discussion with a ope: soemiedt tke “Seunctors! Aareny thee brit lstr-amcent) who is a Sereot-Fenberyen’s' Econom cr institute: and-expects: to STAY at Bappenas until 1972 or: 73: sis: salary: is: paid-by- Tinbergen: but» the: Dutch Government is really footing: the bit]: "Hee was: at’ Bappenas: even before Widjojo. === [PDF page 55] === tndonesian Diary =i = y directed Bappenas » under of: the free- pl ay of market tailed ngress” has elread plan: on: the bess 1969---> since they: must have a de d- be very: simple~ and broad for the ture’ and agriculture; in strategic ed the-present Government Sal im says: thes Peeples Co Rutex 23°42) “tor put the S-yeer: forcess’ The Plan wid: concentrate on development= budget for thet: year" an 1970-74 period: at wid stress: infrastruc terms. Exampte: by: 1969* theywidd~ have-convert agency: which: buys and'di sburses: rice to: an agency whose purpose will be to > create’ a burfer stockr<~--buyingrtocad 1y-as~ weld as‘ importing, and selling or Te eT Le aguorelngrce che-supply: amtnpr |coror: rfoers’ 2 phi losophy will be: tor keep'ther price: of rice high’ enough to permit rice growers to buy fertilizer and expand production.” Just recently: the: price: ratio of fertilizer to rice was*2°to |, making it impossible~ for the: growers~ to: buy fertilizer. The: Government. onidedvats acBandung-eonferences thet they- musts SOP” a policy that: will increase: rather: than: dampen production. Salter says~ the price today -4s about right” in relation’ to fertilizer prices~ Thee Ptan wilt- focus on rice because its* price vefecte: the whole- economy: --~and-s inriteriy” the Plan will ae ageethargevernment-inrotherskey- conmod [thes Governments out of business ~~ at least those’ businesses thet: privaterenterprise- cen and wild runs Example: the thos et Boresery-whichehessbeen-operating: plantsy” wi tt jn future provide heetdities- for private texti le~expanston-of product ion. In the main, the Government wilt create” industrial parks rather: than-industries per Se. But Governnent wt ated: Interests+derther Government” wo" O77 Wm G7 make the f business a-stow- one.’ - Phere is astalt . Thet Plan: wi 1}: gradual ty~meve~ thes process" of getting: ther government:-ouf © division in her Cobinetronrthis:queetiomlindse. 5" they” dont yet’ know if they'11 the: Phidippines: or not’: As«-government* does get out, go to freer exchanger er Te more and’ more of its revenues can: enterprise’ cannot operate. bee spent-on infrastructure, where private 1967-wasr the- first: years that Indonesia: hews budget-that meant anything at sTeae PGE: that pes DADA Yoaray ns best: Peg ONS Nore TST Ministers always® got end-of-year supphementss+- The-l'chi sei pine’ of-e" tough budget is causing anguish and’ eri tieism among the: pubic: Invthe: +967* budget most of Se ee reevarengoing: for-ther Routine!’ budget-end: very TFT ® for scene Che ar gdget« self expects-ehernetghit: tor changer“ DUE age!” gradually _--jn’ favor: of development. Al though ther ‘1968 expected internet revenues of - 96° b#+] ion (not 110 ptdddenjerupdake-witdeprobabty-ratieshorey, the, 6250 mittie was budgeted on Ot hort cor: ue bE: rateref see nu e~ 15 at ready: 200y- hence Wi Tr rise in the he ee ocethire: Tepe ree rn (or cut '}ts° budget deficit). bl ahntegemusecenett the: ceqnisl tien: efret: toast” Some basie- data. Indonestac has nernetioned=incone- eecountss” nov industris} census’, etc., and only: se dy: didinteven” know-how-merty™-peopte: were om the Govsenment payrolls! eet tax rolds-must: be-expended- greatiy;~ and this takes time. s- detractors expeet’ too~much too soon, -are-not realistic. He stresses that: Sukarno left+e- horrible mess -- exports and: production wey-down,,: inflation: up: GNF stagnatings:: The: idealists outside -Governmente think: ai]' this* can‘ be: changed overnights+«They are wrong. . Salim bed#eves: the: Government’ === [PDF page 56] === Indonesian Diary =D25 December’ 7 - Djakarta 8:50 - 9:50 R. Soetanto M.As:,» Direktur Utama Office: Bank-Negare: ‘Indonesia 1946 (BNI III) Djl. Lada-4--- Tel: 23291/25885 Home: Dj}. Lawu-5, Tel: 50520 Good English. He feels the-RT-could jolt Suharto,-is all for it, will attend. His bank,-BNt 111, a-state-bank,-is-the-only- bank: that began originally as a purely Indonesian state bank. Hence it is a bank» for small business, for ''newcomers’,!' and-has 325-branches: throughout ‘Indonesia. Most of these lose money: (shades: of Australta!), e.g. BNI 111! -has 7 branches tn West Borneo, only one of which makes: money.- In-number» of transactions in export-import and foreign exchange BNI’ I11- is first, but: in value: they rank third. The Bank Dagang Negara (also state) has 45. branches» and- enjoys: the legacy of big Chinese business clients (exporters)-which the: bank had whenit was-a Dutch bank. BNI: IV has 28-branches,* and- enjoys: as clients: the big-estates. BNI III was a wreck when Soetanto took over.- He uncovered: 600° millton rupiahs worth of fraud involving: 160 employees! Soetanto wes chairman-of the committee that drafted the original bank law, which’ outlawed’-foreign’ branch: banks: The Minister->of Finance made two changes’ in this*draft: (1) permitting foreign branch banks, and (2) making the Minister of Finance respensible:for giving +icenses te new banks rather than the Governor of the: Central Banks: Soetanto’ fears foreign banks, and says they must: be restricted-if they’ do--come in, because-(+) Indonesians can't forget the old'-days of foreign'bank: and: other domination, (2) the state banks are required bylaw to charge-onty 3-5% interest per month, whereas private banks: (the ''secondary: level of: speculative credit institutions!''?) can charge what they’ like (7.5% to’ 10%-today) and presumably the»foreign banks would have’ the same: freedom ~~~ but» whereas +tndonestans don't trust the strength of the: private banks (for good:-reason), they would trust foreign banks with their deposits, andthe state: banks: (and: maybe: the: private» banks**too) would be driven-out of business;: the: Government rationale tn forcing state banks to hetp business’ is that business: must have-access-to loans lower than the rate of inflation; (3) the total money-supply-in Indonesta-is- 40: bitlion rupiahs, 25% (10° bition} in the: banks: {demand depos#ts): with the-BE~rate today $1 to 200° ruptahs,~this~means+ the banks: have: onty+$50-middion!!! A Freeport Sulphur’ investment: wild alone amount: to $70° mitlion: (in West: Irian): this shows the relative magnitudes: involved in foreign capital strength vs. Indonesian. “ Soetanto would: agree: to: the: idea‘ of: foreign banks: acquiring equity in Indonesian banks: if this included: the: state. banks,» which have a "social function’! tc perform. Savings in Indonesia are- only: 5-6%;- and: the country: needs+15-20% to reach the take-off stage." * He« wonders: if+‘Indonesia-can attain- the take-off stage without inflation; he feels: 1ndonesie needs: "'controlied!' inflation for the next 20 years. One idea+ he: harbors: is: that: international firms might sell stock certificates: in Indonesia’ to give Indonesians: something secure to buy as savings’,’ thus‘ slowing inflation. === [PDF page 57] === Indonesian Diary ' ge) ae Indonesia* has* 75% currency: and 25% demand deposits:-- The: Government still pays its’ bills: (1 believe-he- said!) by: printing money rather: than writing checks: against: existing: bank: accounts: {paying salariess-e.g-, in cash). By paying in cash,: they permit: continued corruption:: ''The generads must go or the whole effort will go: down the drain. The: generads- around Suharto have big houses‘, go to’: Singapore, Hong: Kong or Tokyo: every: weekend, send their wives to Europe on tour,: educate their children in Swiss schools and keep mistresses everywhere -- all on 2,000 rupiahs«a month salary. This is destroying confidence: in the: Government: and: will eventuatly destroy it!’ -- and he banged his fist futilely in his hand. December: 7 - Djakarta 1Os15 "= 11330 Omar Abdalla B.B.A., President, Bank: Dagang Negara Off: 5, Pintu Besar: Utara; Djakarta-Kota’- Tel: 22822/22826 Home: 19, Pasuruan, Djakarta-Kota Tel: 51655 Suggests’ as a business--guest» Mr. Hasjim Ning, an’ Indonesian»who assembles Toyotas, Consuls, etc., as founder’ of the Indonesian Service Company. There-are 123 private’ banks: in? Indonesia, 80: in Java alone, but none are really controlled by: the: Central Bank: *-- and he doubts*that the Central Bank >will ine future: be: able: to control then ~--* not« enough: skilded* bank examiners. He: feels that’ ali banks’ =~ private, foreign and» state*-- should have to furnish thes same: low interest rates.- He's not: worried about: losses by provincial branches, partly’ because: the: export business:-is- outside Djakarta (Medan, etc.) and branches: can make: money.’ Dijakarta-is- only an import market. He will attend the RT. December: 7 - Djakarta™ 8:30 - 9:30 PM M.* Subchan,,’ Vice’ £hairman, people's Congress «= | had’ called: Subchan: to: teld: him 1° was cancelling the: session with the Peoples Congress: (he was: sleeping: ‘ine the: afternoon when I* called, as all Jndonesians* seem to: do: --- or at: least- the» Muslims). He: insisted we meet in the evening: at his office. | explained that: | hadn't. been: abte+to see+ Maliki: Mashudi, Siregar, or Gen. Nasution, and that we-needed-e strong Muslim like: him to speak for the political forces’ of Musiim at: thes Rendezvous: Dinner.» (Mahbub's English is bad, he's" junior in rank: and’ too scared to speak» out«)-° 1 also explained that Nasution's’' political advisor had: tried’ to: make: a date, but that Nasution's* excuse’ was that: this is Ramadan, he sleeps: extra long in the PM, reads’ the’ Koran' with his’ friends at night --- and» hence ‘is too busy in the AM to see me -~~a flimsy excuse: === [PDF page 58] === Indonesian Diary -54- Subchan: gave me a number’ of: names: of: peopte we would invite to fill this need: (mainly PNI* types??7).. He then begar to tell-me why we should keep the Peoples Congress session» | baited: him (''the- Parliament: has: become supreme, Peoples Congress has become just’ a symbol, ete.''). His reply:''those who say such things: about the Peoples: Congress are like the-weak who denigrate the courageous’ ~~ it's a psychological reaction. The» Peoples Congress is the only force that isn't afraid of the military and stands up to them. | myself (Subchan), knowing that Nasution is indecisive; forced through the action that finally got rid of Sukarno -- but I stay in the background: and*give Nasution the’ credit. Rosihan’ Anwar is’ a master politician, and he-does- have principles, but he won't*go to jail for them, is: expert: tn salon conversation -- but\.we (Peoples” Congress) truly fight for what we belfeve; -Resotution 23 which directed: the country: andthe 5-year Plan: to adopt~the-market forces as the key economic determinant’ was‘ my resolution ---most-members* of Parliament don't even: understand it,'' -- etc. etc. ‘ When’ he guaranteed to detiver Nasutton at~the’ RT, t-agreed to reinstate that meeting.’ He’ is to stip: me: into the-meeting: of Nasutton and the vice chai rmen~at’ 8:30’ AM before thet: 9:00* AM: week+ty! meeting (next-June) -- says Nasution’ ducked: iiubert Humphrey's: dinner for Suharto because (1) Humphrey had already spent am hour with Nasution’ in’ the-latter's: home, and (2) there is a real protocol probtem in’ that the: Peoples: Congress: appoints: the President and thus the Chairman of the’ Peoples: Congress: ‘in theory: outranks=the President (but not,* of course, in practice).+: This’ is: even a:probtem at flag-raising: to whom is’ the: salute directed??? Nasution* could’ have~ been: President, said: Bektt; if: he'd been more decisive in 1965°+-- and-Subchan agrees. Subchan’ has: gtven'me: his: personel ptedge that"Nasution, Maliki, Mashudi and Stregar°-will-attend the RT. === [PDF page 59] === NATIONAL SECURITY ARCHIVE National Security Archive, Suite 701, Gelman Library, The George Washington University, 2130 H Street, NW, Washington, D.C., 20037, Phone: 202/994-7000, Fax: 202/994-7005, nsarchiv@gwu.edu