JPRS-SEA-86-146 22 AUGUST 1986

southeast Asia Report



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JPRS-SEA-86-146 22 AUGUST 1986



Chamber of Commerce Officials Say Trade With PRC Continues (SINAR HARAPAN , 23 Jun 86) *eeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Iranian Deputy Foreign Minister Calls On President (KOMPAS, 25 Jun 86 ) eeeeeoeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Suharto Denies Rice Self-Sufficiency Program ‘Threatened’ (KOMPAS , 8 Jul 86) *eveeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeene

Discussion of Presidential Succession Issue (Saur Hutabarat; TEMPO, 28 Jun 86) e*eeeeeeeeeeeeeeeeeeeeeee

NU Branch Defies Ban on Serving as PPP Officers (TEMPO, 28 Jun 86 ) eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

PERBANAS Chairman Denies Allegations of Capital Flight (HARLAN UMUM AB, 25 Jun 86) eevee eeeeeeeeeeeeeeeeeeeeeeeee

Paper Describes ‘Serious Condition’ of Plywood Industry (KOMPAS , 7 Jul 86) *eeeeceeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Briefs Optimism for GOLKAR Indonesia as Nonaligned Host Decline in Imports


Aquino To Raise Sugar Quota Issue on U.S. Visit (BUSINESS DAY, 28 Jul 86) eee eee eeeeee ee eeeeeeeeeeeeeeeereee

Groups Plan Mass Protest Actions Against IMF, Bases (THE NEWS HERALD, 30 Jul 86 ) *eeeeeeeeeeeeeeeeeeeeeeeeeeeee



Pimentel on Ouster of OIC Governors (BUSINESS DAY, 25 Jul 86) oseeeeeeeeeeeeeeeeeeeeeeweeeeeeeee ee

NEW DAY Interviews Labor Minister Sanchez (Gemma N. Almendral; NEW DAY, 28 Jul 86) ..cccscceccccecees

Official Dispels Worries Over Strike Increases (Daisy Cl. Mandap; NEW DAY, 28 Jul 86) ...ccccececccececees

Former MP Criticizes Aquino for Forgetting Promises (Melchow Parale; THE NEW PHILIPPINES DAILY EXPRESS,

29 Jul 86) eeeeeeereeeeeneeeweeeeeeeeeeeeeeeeeeeee ee eeeeeeeee

Paper Reports on CPP Internal ‘Ideological Struggle’ (Marites Danguilan-Vitug; BUSINESS DAY, 24 Jul 86) ........

Columnist Alleges Aquino Supporters Disenchanted (Amando Doronila; THE MANILA CHRONICLE, 12 Jul 86) ........

Weekly Perceives Government ‘Softening of Stance' (NEW DAY, 28 Jul 86) eeeeeeeeeeeeeeeeeeeeeeeeeen ee eeeeeeeeee

Editorial Welcomes Filing of Rebellion Charges (PHILIPPINE DAILY INQUIRER, 29 Jul 86) wicccccssccccceseees

Columnist Criticizes Loyalists’ Beliefs, Actions (Niney Cacho-Olinares; BUSINESS DAY, 29 Jul 86) ..cecseeess

Editorial Urges Level-Headedness in Rally Questions (THE NEW PHILIPPINES DAILY EXPRESS, 29 Jul 86) wescceseeess

Human Rights Commission Receives 647 Complaints (Marites Dison; THE MANILA CHRONICLE, 29 Jul 86) .......05.

Editorial Lauds Military's Pledge of Allegiance (PHILIPPINES DAILY INQUIRER, 28 Jul 86) .occccccsvccsessees

Manila To Release Funds To Stimulate Economic Growth (MANILA BULLETIN, 28 Jul 86) eee eeeeeeeeeeeeeeeer eee eee eeeee

Government Securities Show 38 Percent Increase (BUSINESS DAY, 24 Jul 84) *eeeeeeeeeeeeeeeeeeeeeeeeeeee eee


Agricuiture Sector Worried About Bank Closures (Corrie Salientes; THE MANILA CHRONICLE, 27 Jul 86) .......

Tourism Industry Confident of Growth (Manolo B. Jara; THE MANILA CHRONICLE, 27 Jul 86) ....eee.s

- b -









Economic Indicator on Increase in Strike Notices (BUSLNESS DAY, 29 Jul 86 ) *eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 57

Military Girds for Major Offensive (Ed Malay; THE MANILA EVENING POST, 19 Jul 86) ......eee02. 59

Study Assesses Peace, Order Problem Areas (Joel D. Lacsamana; NEW DAY, 21 Jul 86 ) eeeeeeveeeeeeeeeeeee 62

RUC 1 on Ties With Balweg Against NPA (MANILA BULLETIN, 23 Jul 86 ) *eeeoeeveeeveeeeeeeeeeeeeeeeeeeeeee 65

NPA Increases Recruitment Activities (BUSINESS DAY, 24 Jul 86) e*eeeeeeeseeeeeeeeeeeeeeeereeeeeeeeeee 66

Private Army Poses Threat to Cavite (THE MANILA EVENING POST, 25 Jul 86) ....cccccccccccccecess 68

Briefs Human Rights Group Proposal 69 Membership in Nonaligned Movement 69


Loei Governor Reviews Relations With Laos (BAN MUANG, 25 Jun 86) *eeeoeeeeeeeeeeeseeeeeeeeeeeevreeeeeeeeere 70

Malay Prince To Receive Combat Training, Crown Prince To Teach (DAO SLAM, 8 Jun 86) eeeeeeeeeee ee eee e eee eeeeeeeeeeeeeeeeee 71

Army Watches Politicians for Hostile Views; Secret Fund Noted (BAN MUANG , 26 Jun 86) eevee eeee eee ee eee ee eeeervr eevee eeeeeere 72

Army Sources Discuss Senior Reassignments (SU ANAKHOT, 16-22 Jul 86) TRE RE EERE EEE EOE ee eee 74

Leadership Preference Poll Data Interpreted (MAT LCHON SUT SAPDA, 20 Jul 86 ) *eeeeee eee eeeeeeevpeeeeeeeeee 77

Bank Scandal Reportage, Tamchai Involvement Viewed (Various sources, various dateS) ..ccccccescssessseseceeses 82

Tamchai Loans Questioned 82 Tamchai-Phon Dealings 83 Police: Evidence on Tamchai Insufficient 87 Editorial Criticizes Finance Ministry 87 Editorial Sees Central Bank Failure 88

Reeducation Set for University Returnee Victims of 1976 Coup (BAN MUANG, 7 Jun 86 ) eeeeeee eee eee eee ee ee eee eeeee eee eee eee 90

Mong Bandits Suspected in Payroll Robbery Attempt (DAO SIAM, 26 Jun 86) eseeeeseeoeeeeeeeoeeeeeeeeveeeeeeeeeeeeeeeeee




Ho Chi Minh City Readers Provide Ideas on Party Matters (SAIGON GIAI PHONG, 7 May 86 ) eseeeeeeeeeeeeeeeeeeeeeeeeeeee

Newspaper Denies Criticism Restraints (Ben Nghe; SAIGON GIAI PHONG, 8 Jun 86) ..ccecececcccceecess


Enterprise Director Criticizes Control by Upper Level (Nguyen Huu Tien; SAIGON GIAI PHONG, 7 May 86) .....eseeeees





JPRS-SEA-86- 146 22 August 1986



[Text] Jakarta, 23 June--Indonesian-PRC trade relations have not ceased but rather have increased, in spite of technical obstacles related to the PRC's ban against the presence of SGS (Societe Generale de Surveillance) surveyor representatives at Chinese ports. This problem needs to be resolved by the two governments. Because of this ban, trade between the two countries cannot be conducted directly but must be done at additional cost through third country ports like Hong Kong and Singapore.

Sukamdani S. Gitosardjono and H.M. Taha, general chairman of the Indonesian KADIN [Chamber of Commerce and Industry] and chairman of the KADIN China Committee, respectively, gave this information to SINAR HARAPAN in

separate interviews in Jakarta on Friday afternoon [20 June}.

Indonesian-PRC trade reportedly ceased some time ago because of failure to reach agreement on procedures for inspection of Indonesian imports at Chinese ports, which necessitated direct involvement by the head of state.

Sukamdani said that transactions between businessmen in the two countries still function smoothly. This is in spite of the fact that shipping must be done via Hong Kong and Singapore, where national importers incur additional] expense for transit port costs, transfer of cargo, and commissions to intermediaries in those ports. "It is true that high costs must be borne by our importers, but don't take that as meaning they have stopped trading,” Sukamdani said.

The general chairman of the Indonesian KADIN could not say with certainty, however, when the question of SGS authority to inspect cargoes at ports of shipment, in accordance with INPRES [Presidential Instruction] 4/85, would be settled.

Contracts In Effect

Meanwhile, H.M. Taha, chairman of the China Committee, who is still on

leave following his return from Hong Kong and Singapore, said when contacted by SINAR HARAPAN that he was surprised at statements that trade activity between the two countries had ceased.

Taha said that businessmen he met with in Hong Kong and Singapore have signed contracts with Chinese businessmen. "In May alone, several Chinese and Indonesian ships carried about 60,000 tons of Indonesian goods for China, and at the end of May the PRC contracted for $6 million worth of purchases from Indonesia," Taha explained.

KADIN Representation

In answer to a question about KADIN meetings with the CCIC (Chinese inspection group), he saic that several meetings on the SGS problem were held with authorities involved before the KADIN delegation left for Beijing in the middle of April 1986.

He said the obstacles to be overcome now that must receive the "goodwill" of the PRC government and responsible authorities relate to the flow of Chinese exports. "In view of this experience, the opening of KADIN representations in the PRC may now be necessary, not only to handle problems but also to help Indonesian businessmen find overseas buyers," H.M. Taha stated.

Following the resumption of trade with the PRC through the signing of a memorandum of understanding in Singapore on 5 July 1985, the government specified 6 months as a transition period for the inspection of goods and issuance of investigation validation reports (LKP) at ports of shipment. The CCIC and the Indonesian KADIN used that opportunity to meet with the SGS in Jakarta in January 1986.

New Talks

“Agreement between the CCIC and the SGS had been reached and signed before the SGS held consultation with the Department of Trade, which had commissioned the SGS," said Taha. He feels that this was the main reason for the problems that followed, because the Indonesian government considers that stipulations in the agreement are inadequate. Finally, it was necessary to reconsider the agreement, and the minister of trade wrote a letter to the SGS asking that the agreement be corrected.

"That was the reason the KADIN delegation that accompanied the SCS to Bei jing was unable to reach an agreement. Nevertheless, I believe that under present conditions there will be an opportunity if new talks are held," Taha further explained.

6942 CSO: 4213/167


JPRS-SEA-86-146 22 August 1986



[Text] Jakarta, KOMPAS--Yesterday at the Bina Graha, Shaykhol Fslam, political deputy to the Iranian foreign minister, accompanied by Seyed Hussein Mir Fakhar, iranian ambassador in Jakarta, paid a courtesy call on President Soeharto. They were escorted by Soedarmono, secretary general of DEPLU [Department of Foreign Affairs].

Eslam told the press that he had brought a message to President Soeharto from President of Iran Khamenei and that they had discussed several matters related to Indonesian-Iranian relations and cooperation and to efforts to stabilize the price of oil. The two countries are members of the Nonaligned Movement and of OPFC. He said Iran hopes to establish cooperation with Indonesia in areas of economy, culture, etc.

Trade relations between the two countries so far have been through intermediaries. Therefore, a way must be sought to make direct trade possible.

With regard to that, Eslam added that he hoped the Iranian minister of trade will be able to visit Indonesia to further discuss possibilities for economic and trade cooperation between the two countries. "Indonesia has much potential for a market in Iran," he declared.

He feels that Indonesia and Iran can cooperate in international forums as well as in economic and trade sectors

With respect to the stabilization of world oil prices, the political deputy to the foreign minister of Iran said that OPFC is the most effective body for the third world and that, consequently, Iran will not leave OPFC.

6942 CSO: 4213/167

JPRS-SEA-86- 146 22 August 1986



[Text] Jakarta, KOMPAS--Although the production of paddy recently has declined to some extent, according to President Suharto this has not threatened the rice self-sufficiency program. Present stocks of rice are about 2.6 million tons, and the average production per capita has also increased, compared to consumption per capita.

The statement of the chief of state was made at the Bina Graha offices in Jakarta on 7 July after the president received a report from Engr Achmad Affandi, minister of agriculture, and Engineer Wardoyo, junior minister for food production.

Engineer Wardoyo told reporters that up to the end of June the area planted to paddy had declined by about 337,000 hectares. However, the area planted to secondary crops had increased by about 1 million hectares. Acccrding to Junior Minister Wardoyo, the decrease in the area planted to paddy was caused by the fact that the onset of the rainy season had been delayed, and farmers had made use of this circumstance to plant secondary crops.

He said that the decline in production of rice this year will not disturb the food self-sufficiency program. However, declines of this kind should not continue to occur.

On 3 July Junior Minister Wardoyo said that the increase in the production of rice this year, according to the Central Statistical Bureau, would be only 0.18 percent, compared to 1985. In this connection, the increase in the production of rice, comparing 1983 to 1984, was 8 percent, and the increase from 1984 to 1985 was 2.3 percent.

The decline in planting paddy is a result of the low price of unhusked rice to farmers growing it, at the beginning of 1985. In addition, it is also due to the fact that the area planted to rice declined after the paddy fields concerned were turned over to planting corn and soy beans.

The tendency toward steadily smaller increases in the production of rice over the past 3 years, accorcing to Junior Minister Wardoyo, is a warning sign which must be taken seriously if we want to mintain self-sufficiency in the production of rice.

2.5 Billion Rupiah

Regarding the food aid for the people of Africa, which was promised by President Soeharto to the director general of the FAO at the FAO meeting in Rome in November 1985, Wardoyo said that this will be turned over by the chief of state to the director general of FAO on the occasion of the celebration of Farmers Action Day and National Farmers Contact Week next 22 July in North Sumatra.

The help promised by President Soeharto amounts to 100,000 tons of rice, valued at 17.5 billion rupiahs. The first consignment of the food which will be turned over to the director general of FAO is worth 2.5 billion rupiahs.

5170 CSO: 4213/1732

JPRS- SEA-86- 146 22 August 1986



[Article by Saur Hutabarat: “Suhardiman, and the Institution of the Presidency” ]

[Text] The subject of the office of the president is egain a popular one. Issues surrounding the institution of the presidency have come to the surface after being brought up by Suhardiman. The chairman for political affairs of the Development Function Faction in the DPR [parliament] indeed proposed that the system of succession for national leadership be discussed in the 1988 General Assembly [SU] of the MPR [Peoples Consultative Congress]. "Actually, we do not have a standard pattern for the regeneration of national leader- ship," he said. He believes a discussion of the succession system will be very important, so that there will not be national disruption when the moment of change in national leadership arrives.

"We must have a modern systcm of state administration, must we not?" declared the chairman of SOKSI [Federation of Indonesian Socialist Workers Organiza- tions]. "It's necessary, then, to have clear plans." Clear plans, he said, can be made only if there is a policy decision as a basis, which means an MPR decision.

In the view of the holder of a doctorate in administrative science from

i7 August University, a policy decision on regeneration in the institution of the presidency will, in fact, supplement the UUD 45 [1945 Constitution]. He said that Article 7 of the UUD 45 "does not support limiting the president's term of otfice, nor does it forbid the limitation.” The article reads, “The president and vice president shall have a term of office of 5 years, after which they may be reelected."

In the view of the retired brigadier general, who was born at Gawok, Kartosuro, Surakarta, on 18 December 1924, it would be good if the 1988 SU-MPR would define qualifications for the president and vice president and specify how many terms of office they may hold.

According to Suhardiman, tl.e 1988-93 period will be the final period of service for the independence generation. By 1993, the baton of leadership will have been passed totally to a new generation, "A mechanism with a strong

legal foundation, namely, an MPR decision, should be readied so that the relay can be accomplished flawlessly," he stated.

He sees a strong legal foundation as very necessary. Why? Because of experience, he said, indicating that the change of presidents in the past was not flawless. “There was an element of surprise," he stated. "Must we await surprise and crisis again?" he added. "That must be avoided. Therefore, a system is needei that will prevent it."

Prof Dr Sri Soemantri, dean of the Law Faculty of Pajajaran University, believes it is indeed "necessary to have a limitation on the term of office of the head of state." He stated that Article 7 of the UUD 45 actually refers to limiting the length of the cerm of office, but it does not mention how many times a president may be reelected. How many times is appropriate? "That requires thorough study," Sri said. Indonesia is a pluralistic society that "demands a strong form of leadership, but, at the same time, the leader must be demccratic," he stated.

At present, however, only ABRI is homogeneous. "Consequently, an inflexible limitation on the term of office of the national leadership could, on the negative side, give rise to political disruption," said Sri Soemantri. "On the positive side, it could bring a welcome change, for succession also means renewal," he added.

Sri feels that if a limitation on the term of office is deemed necessary, the guideline should be long-term national interest. "We have REPELITA [5-Year Development Plan]. From that, we can agree on how many phases are needed for a period of national leadership to be complete,” he said.

As for Suhardiman himself, there is no need to set a figure as a limit on the number of terms, “What is necessary are specific parameters on how a president can be reelected to another term," he declared. What does he mean? "The point is, there must be clear guidelines regarding the quality of a president."

The points brought up by Suhardiman are material for discussion in the 1988 SU-MPR, now about 2 years in the future. Contradictory views are also appearing. It is Sarwono Kusumaatmadja, secretary general of th. GOLF’” DPP [Central Executive Council], who feels that no further regulation is nm ded. "I think the institution of the presidency is adequately regulated in the UUD 45," he asserted. "The UUD 45 is absolute and cannot be altered."

According to Sarwono, democracy develops through public awareness, and also because political institutions fully play their roles. The presidency is merely one of those institutions. But, in reality, there are many democratic nations that "do not make an issue of presidential terms of office," he said. Sarwono, like Prof Sri Soemantri, cited France as an example. With the president's 7-year term of office, said Soemantri, France does not limit the number of times a president may be reelected.

Sarwono seid that Great Britain, with its parliamentary system, also does not limit the number of times a person may be elected as prime minister. The United States itself, he said, did not limit the term of the president to two terms until after World War II. “Does that mean the United States was not democratic before that?"

It was SUARA KARYA that stated in an editorial that there is no relevance in discussing limitations on the office of the president. It is more important, for example, to face economic problems. Furthermore, the paper said, "The Indonesian people still want Soeharto to be president for the next term." SINAR HARAPAN quoted from a speech by Minister Cosmas Batubare. Cosmas, it said, recently stated in a speech in Tokyo that moving to a new generation without a political system that works well will produce 200 years of disruption through struggles for power, as in Latin America.

"Others may not agree," said Suhardiman, director of PT [limited company } Evergreen Hotel and a leader of SOKSI since 1962. "I may be as one walking alone through the desert," said the GOLKAR figure, who always gives the impression of vigor.

6942 CSO: 4213/167

JPRS-SEA-86- 146 22 August 1986


NU BRANCH DEFIES BAN ON SERVING AS PPP OFFICERS Jakarta [EMPO in Indonesian 28 Jun 86 pp 15, 16

[Text] Two cousins, the grandsons of K.H. Hasyim Asy'ari, founder of the NU [Nahdlatul Ulama], are now involved in political conflict. The conflict between Mohammad Baidhawi and Abdurrahman Wahid erupted at the end of last month as a consequence of the ban by the NU PB [Executive Board] on holding office in a political party and its ban on NU scholars, boarding school directors, and NU preachers becoming campaign workers in the 1987 elections.

Mohammad Baidhawi, chairman of the Jombang, East Java, Branch of the NU, has indeed paid no attention to NU PB Decision 72 of 1985. Almost all directors of the Jombang NU also hold responsible positions in the PPP [Development Unity Party]. For example, Mohammad Baidhawi himself is a member of the PPP DPP [Central Executive Council].

Furthermore, the Jombang NU office continues to have multiple functions, as though opposing the NU PB decision. The office serves both the NU and the PPP and has two signs on it. In fact, K.H. Syamsuri Badawi, a member of the Jombang NU Consultative Council, not only continues to serve as chairman of the Branch Advisory Council of the PPP DPC [Branch Executive Board] but also requires that Muslims vote for the PPP. "Islam is supported only by Muslims, and the PPP is the only political party that still has a program of support for Islam," said the 66-year-old scholar.

It was the East Java Regional Executive Board of the NU that asked the PB to freeze the Jombang Branch of the NU. The decision was issued on 29 May.

According to Abdurrahman Wahid, chairman of the NU PB, the Regional NU had reprimanded the Jombang Branch before the letter of decision was issued. "Their answer was that they do not recognize Hasyim Latief as chairman of the East Java Regional NU," said Abdurrahman Wahid. "That means rebellion, doesn't it?"

The "rebellion" of Mohammad Baidhawi and his colleagues has so far not been resolved. For example, 2 days before Idulfitri [feast at the end of the fasting month], he held a periodic conference, which was attended by representatives of 17 of the 20 subbranch councils (at the subdistrict level). The conference set up a selection group, which then formed a new board for the

period 1986-89. K.H. Syamsuri Badawi, director of the noted Tebuireng boarding school, was chosen as new chairman of the Executive Board of the Jombang NU Branch.

The scholar from Cirebon, who has a reputation for being brusque and frank, said the the NU PB took the wrong attitude. "Voting for the PPP is a requirement for Muslims," he stated. "If you join Islam, don't be half- hearted about it. That includes politics."

He acknowledged that NU leadership under J. Naro has had an “unstable"™ credibility. But, he said, "If the leadership is bad, that doesn't mean the members must be bad, too. Replace the leadership, so that the members will be preserved." With that attitude, he rejected the NU PB decision to separate from the PPP. "I will not back down,” he declared. "J will face anyone."

6942 CSO: 4213/167


JPRS-SEA-86- 146 22 August 1986



Jakarta HARIAN UMUM AB in Indonesian 25 Jun 86 pp 1, 8

[Text] Jakarta, AB--I Nyoman Moena, general chairman of the Association of National Private Banks (PERBANAS), denied allegations by the Indonesian KADIN [Chamber of Commerce and Industry] that massive flights of capital are now taking place.

I Nyoman Moena made this denial in an interview with ANTARA in Jakarta on Tuesday [24 June].

Big surges in transactions on the Foreign Currency Exchange (BVA) of the Bank of Indonesia will mean that massive overseas flights oi Indonesian capital are taking place.

From his observation, however, foreign exchange transactions, especially in U.S. dollars, have not increased but rather have dropped in comparison with earlier periods.

The drop in U.S. dollar transactions on the Bank of Indonesia BVA is very disturbing, because it raises concern that domestic industries that normally use foreign exchange to import raw and support materials are nct producing. "The weakening demand for the U.S. dollar on the Bank of Indonesia BVA is an indication that massive overseas flights of capital are not occurring,” he stated.

Engr Siswono Yudhohusodo, deputy general chairman of the Indonesian KADIN, had told the press recently that rather large amounts of Indonesian capital are now fleeing overseas, causing alarm in the national business world.

Indonesia currently uses a system of unrestricted foreign exchange, which makes possible the flight of capital overseas. If this has taken place, however, it has not reached the point of endangering domestic monetary stability.

Normal foreign exchange demand is about $800 million per month for raw and support materials to meet the needs of domestic industries.

Recent observation found that foreign exchange sales on the Bank of Indonesia BVA and at other foreign exchange banks have been at lower than normal levels.

6942 CSO: 4213/167 1

JPRS-SEA-86- 146 22 August 1986



[Text] Jakarta, KOMPAS--Plywood, which up to now has been called the prima donna of non-oil and natural gas exports, has turned out to be only an apparent source of pride which can cause a national disaster. The rather large export earnings from this commodity in fact have amounted to the return on investments which have not been paid for. It is not surprising that many companies are unable to pay interest on their bank loans. Indeed, a number of mills are processing fiber mats or, at least, have reduced their production under the impact of the present situation.

According to a KOMPAS source in the Ministry of Forestry who made these comments on 3 July, in a relatively short time the production of Indonesian plywood rose sharply from an initial output of only 1.55 million cubic meters in 1981 to 4.68 million cubic meters in 1985. Exports also rose from 774,000 cubic meters (1981) to 3.78 million cubic meters (1985). There was an increase in the foreign exchange value of these exports from $162,780,000 to $810,930,000 during the same period.

However, it is regrettable that the rapid expansion of production occurred at the same time as a decline in orders from all world markets as a consequence of the world recession. The plywood price, which was originally $340 to $350 per cubic meter, declined in an uncontrolled way and reached $210 per cubic meter. Ironically, the greater the exports, the greater also the losses suffered by the producers. This is because, on the one hand, the price tended to decline while, on the other hand, the cost of domestic production increased.

Many factories at present are in serious condition and are experiencing cash flow problems which are a cause for great concern. The sluggishness of the domestic plywood industry has now reached dimensions which can endanger the continued existence of the industry as a whole. One plywood factory in West Kalimantan has been taken over by its bank, while another factory in Ambon is faced with a debt problem.

At present there are 108 plywood factories throughout Indonesia, with an installed productive capacity of 7.5 million cubic meters annually. In 1986 it is estimated that the industry will be capable of producing 5.0 million


cubic meters of plywood. Out of this production 3.7 million cubic meters will be exported, and 1.3 million cubic meters will be consumed in Indonesia. Export receipts will be about $8.) million, while domestic sales are estimated at about $200 million, amounting to total sales of $1 billion for the whole industry.

Such large gross income figures are meaningless when compared with the costs which must be met. Recalling that the total asset value of the whole plywood industry is about $2.5 billion, bank interest of $300 million annually must be paid, assuming a rate of interest of only 12 percent.

The above does not include depreciation of the plywood factories, which is also very high. When it is considered that the useful life of a plywood factory is up to 12.5 years, the depreciation charges reach $200 million annually. That is, $2.5 billion invested, divided by 12.5 years. So the plywood industry must pay bank interest and depreciation charges amounting to $500 million per year.

In view of this calculation, from the receipts from sales of plywood in 1986, estimated at $1 billion, $500 million in costs must be deducted, leaving $500 million. If the plywood industry really pays bank interest due and allows for depreciation, the remaining $500 million will not be enough to produce 5.0 million cubic meters of plywood at a price of $100 per cubic meter, when the cost of production is about $160-180 per cubic meter.

Because the industry has lost capital from previous sales of plywood, it has no alternative to refusing to pay interest to the banks and areturn on its capital. This means that existing capital will continue to be nibbled away to maintain production, and the industry will be increasingly stifled by accumulated debt and rising interest rates.

A serious matter which must be handled is achieving the efficiencies of scale, so that factory capacity, as far as possible, will be fully used. It is very much hoped that assistance will be obtained from all groups invo'ved to strengthen continued production and marketing of plywood, because Indonesia has rashly become the largest producer and exporter of tropical plywood in the world.

Indeed, the growth of the industry has continued because businessmen holding HPH [logging permits] have tried to keep them in effect, after realizing that it is no longer possible to continue exporting timber in logs. The plywood factories grew quickly without consideration of the fact that the economy had reached the saturation point.

The moral burden for the plywood industry is so heavy because it provides work to about 750,000 heads of families, who support 3.0 million Indonesians in isolated areas of the country.

5170 CSO: -4213/173


~14€ 22 August j9g¢



OPTIMISM FOR GOLKAR--Jakarta, PELITA--Sudharmono, SH [master of laws],

general chairman of the GOLKAR DPP [Central Executive Council], is confident GOLKAR will meet its desired target of 65 percent of the votes in the 1987 elections, which means that GOLKAR must win 20 million more votes than it did in 1982 if it is to maintain the same position. Sudharmono expressed his optimism at the closing program of the education and training (DIKLAT) for women functional cadres of the GOLKAR Central Federation of Women's Organizations, held on Saturday [28 June] at the GOLKAR DPP building in Jakarta. Moreover, said Sudharmono, if GOLKAR cadres show the same hard work and dedication they have shown during the 3-day DIKLAT, more than the

70 million votes will be achieved and more than 270 seats will be won in parliament. Sudharmono thus emphasized the task and challenge that must be taken up by each cadre in order to make the next election a success. Sudharmono also expressed his confidence that each member of the Federation of Women's Organizations, whether in Jakarta or in the provinces, will have the determination, knowledge, and dedication to bring about a three-fold success for GOLKAR, especially in the election, which is success number three. [Text] {Jakarta PELITA in Indonesian 30 Jun 86 p 1] 6942

INDONESIA AS NONALIGNED HOST--Jakarta, PELITA--The Islamic Republic of Iran supports Indonesia as host of the next Nonaligned Movement summit after the summit meeting that is to be held in Zimbabwe this year. This statement was made by the special envoy of the president of Iran, who paid a courtesy visit to President Soeharto at the Bina Graha on Thursday [24 June]. The envoy, Syaikol Eslam, who is also the Iranian deputy foreign minister, said after his meeting with the president that he brought a message and greetings to President Soeharto from Iranian President Ali Khamaeni. He did not reveal the contents of the message, however. He said he hoped economic, trade, and political relations between the two countries could be expanded. An Iranian economic delegation led by the Iranian minister of trade will visit Indonesia for that purpose in the near future. Fslam feels that Islamic nations do not play a large enough role in the Nonaligned Movement and hopes their role will se larger in the future. [Text] [Jakarta PELITA in Indonesian 21 Jun 86 p 3] 6942

DECLINE IN IMPORTS--Jakarta, PELITA--Indonesian imports have declined steadily over the last 3 years. Among the reasons for this is Indonesia's capability to produce import substitutes such as electronic and computer equipment, which


previously were imported extensively. In addition, increased domestic production of rice and sugar have helped to save foreign exchange. Figures from the Public Relations Section of the Department of Trade show that Indonesian imports in 1982 were valued at $16.859 million. In 1983, they declined to $16.352 million, then to $14.872 million in 1984 and to $10.262 million in in 1985, In the first 2 months (January and February) of 1980, imports were about 10 percent less than during the same period in 1985. Whereas imports during the first 2 months of 1985 were valued at $1.718 million, they declined about 10 percent to $1.548 million during the same period in 1986. For the most part, Indonesian imports consist of capital goods like machinery, chemicals, and items that cannot yet be produced domestically. [Text] [Jakarta PELITA in Indonesian 21 Jun 86 p 3] 5942

CSO: 4213/167


JPRS-SEA-86- 146 22 August 1986



[Text] Bacolod City--Sugar quota issue will be one of the items on the "shop- ping list" of President Corazon C. Aquino when she goes to the United States late this year.

Sugar Regulatory Agency [SRA] Chairman Arsenio Yulo said the chances of an in- crease in the Philippine sugar quota for the U.S. market are brighter than ever with 98 percent of the American senators and congressmen giving signals of their willingness to help this country.

Yulo disclosed this here yesterday when he spoke at the installation rites of the Bishop Casimiro M. Lledoc Assembly of the Knights of Columbus, headed by Enrico Lagtapon.

The SRA head who confirmed to BUSINESS DAY that he would also be in the United States during the president's official visit had earlier revealed that U.S. officials also tend to favor the chances of an increased quota.

The present quota is only 203,000 metric tons and the industry is lobbying to double the amount. Hopes dimmed further last month, however, with the announce- ment that the United States had earmarked an $18-million allocation to the Philippines to make up for its loss of the quota there.

Yulo said the president herself had informed his that she was including the sugar quota problem in her talks with U.S. officials.

Yulo also told the Knights of Columbus and their guests most of whom were sugar planters that they must accept the fact that the production of sugar alone is not likely to help them overcome the present crisis in the industry.

However, he said they should look to the other uses and byproducts of sugar cane which could still offset the gloomy predictions of those who appeared to be giv- ing up all hopes for the industry.

"By sugar alone we cannot overcome the crisis," Yulo said, “but we can exploit the possibilities and the versatility of the sugar cane itself."


He mentioned the production of ethanol from molasses to fuel cars and machiner- ies which, he said, could raise the target of 1.4 million tons set by Sugar Order No 1 recently to as high as 1.7 million tons.

Another item, he said, was bagasse which could be used in sugar mills instead of bunker fuel as well as for reconditioning the soil.

He also warned the planters against the inroads being made by ar':ificial sweeteners in the domestic market and asked them to join other countries in their fight against its use.

"Point out that sugar is natural, that sweetners are chemically-based and in- ferior in taste compared to it," he advised.

Yulo also pointed out that domestic consumption of sugar has not increased very greatly within the past 20 years. In 1966, he said, the country consumed 800,000 metric tons. Today, 1986, we barely reach 1 million tons he said.

/12232 CSO: 4200/1280


JPRS-SEA-86- 146 22 August 1986



{(Text] Militant groups will stage today before Malacanang and the Batasang Pambansa simultaneous mass actions to protest the World Bank-IMF imposition of import liberalization, demand removal of U.S. military facilities and press for autonomy for the ethnic tribes.

Kilusang Pilipino Muna (KPM) [Filipinos First Movement] and Bagong Alyansang Makabayan [Bayan--New People's Alliance] will march to Malacanang this morning to protest the imposition of import liberalization program which they said is blatant intervention in the country’s economy, a condition for the release of $615 million special drawing rights as a standby credit.

Bal Pinguel, director of Popular Struggle of People's Center Commission under Bayan, said that the liberalization scheme will spell doom for the country's industrialization. He added that this involves 13 areas of commodity products affecting more than 1,000 commodities from food to iron and steel. He said that the lowering of tariffs and duties on those imported items will directly affect the farmers, workers and all producers since these items are already being produced locally. He cited corn as one of the items which, he added, the country has already a glut.

He said that they will try to talk with the president about this imposition.

Another mass action will be carried out by Bayan Metro Manila Chapter during Constitutional Commission plenary session. They will call attention to issues concerning the removal of the U.S. military facilities which they believe had been left out.

They said that the plenary session is where the vital bases issue should be discussed thoroughly to bring up the fact of the growing anti-bases sentiment of the people. This drastic change showed the political awakening of the people concerning the facilities, they added.

The other mass action will involve ethnic tribes from the different minority groups. They will hold a motorcade up to the Batasan to press for autonomy.

The Cordillera Peoples Alliance of Mountain Provinces and other groups from as far as the Mindanao region will stage the demonstration which Bayan will support.

/12232 CSO: 4200/1280 18

JPRS-SEA-86- 146 22 August 1986


PIMENTEL ON OUSTER OF OIC GOVERNORS HK251527 Quezon City BUSINESS DAY in English 25 Jul 86 p 14

[Text] Local Governments Minister Aquilino Pimentel Jr said yesterday more newly-appointed officers-in-charge [OIC]--governors and municipal or city mayors--are to be ousted and replaced due to serious complaints or charges against them.

He told newsmen that the purge of the OICs has begun with the ouster and re- placement of former member of parliament Jolly Fernandez as OIC governor of Masbate last Tuesday.

Pimentel said