Govt still calls economic shots

Govt still calls economic shots

Rendi A. Witular, The Jakarta Post, Jakarta

Following the signed peace deal between the government and the
Free Aceh Movement (GAM) rebel group, Aceh will still adhere to
most of the key fiscal and monetary policies set by the central
government with some exceptions.

Based on the Memorandum of Understanding (MoU) signed by the
government and GAM representatives on Monday, the exceptions
would include the rights to set interest rates beyond that set by
Bank Indonesia (BI), Coordinating Minister for the Economy
Aburizal Bakrie said on Wednesday.

"There are several special rights given to Aceh in managing
certain economic affairs," he explained.

With those rights, he added, the Aceh administration would
have the right to set up provincial banks and allow those banks
to decide their own interest rates for its deposits and loans
without having to stick to the central bank's benchmark rates.

At present, Bank Indonesia's benchmark interest rate stands at
8.71 percent.

"There is no way that Aceh can set up its own central bank
with the existing legal framework. Their provincial banks will
have the freedom to set their own level of interest rates if they
believe they can benefit from it," Aburizal said.

BI Governor Burhanuddin Abdullah said the board of governors
would soon convene to study the points in the MoU, which gave
some monetary authority to the Aceh administration.

"We are still studying the MoU to see if the points in it will
require the government to revise certain laws or regulations. BI
has yet to come to any conclusions," he said.

The peace pact also included points on Aceh's rights to raise
funds from foreign loans and to retain 70 percent of the revenues
from all current and future hydrocarbon deposits and other
natural resources in the oil-rich territory. Additionally, the
province will have jurisdiction over living natural resources in
the territorial sea surrounding the province.

Indonesia currently has proven oil reserves of 4.7 billion
barrels and estimated reserves of 9.0 billion barrels, with much
of it stored beneath Aceh's soil and sea.

Indonesia also has proven natural gas reserves of 92.5
trillion cubic feet, and is the largest liquefied natural gas
(LNG) producer in the world. Aceh is believed to have a huge
amount of untapped gas resources.

Aburizal emphasized that the points were not new to the
government, because they had already been included in the Special
Autonomy Law passed in 2001, but the MOU just emphasizes them for
the government to fully implement the law.

Minister of Communications and Information Sofyan Djalil, who
had been a member of the negotiating team, said the economic
arrangements in the MoU were unlikely to trigger any jealousy
from other provinces.

"Aceh is a special case. I believe other provinces will not
demand the same economic arrangements as Aceh," he said.