Minister urges withdrawal of state assets from East Timor
JAKARTA (JP): Minister of Cooperatives and Small Enterprises Adi Sasono said Indonesia must immediately withdraw all of its assets from East Timor before the territory becomes an independent state.
The assets should be used to finance development in Indonesia's 26 other provinces, Adi said in the West Sumatra capital of Padang.
He said his ministry is considering initiating the move.
He did not give details of the assets that his office controls in East Timor.
Adi, one of few Cabinet ministers to openly welcome the announcement of the East Timor vote on Saturday, said the separation would save Indonesia US$100 million each year, as this was how much had been spent annually on the province in recent years.
Indonesia has invested heavily in East Timor's economic and social infrastructure in the 23 years since its annexation of the former Portuguese territory. This includes roads, bridges, schools and government buildings, hospitals and houses of worship.
The government has also been encouraging the private sector to invest in East Timor, although there have been few takers given the constant disruption to security in the territory.
State Minister of Investment/chairman of the Investment Coordinating Board Marzuki Usman said on Monday that in 1998, the government approved two foreign investment projects worth $45.2 million.
They were for Portuguese trading firm PT Sotrei Timor and Australia's Austin Hotel.
The government also approved Rp 3.3 billion ($417,700) worth of investment projects from Indonesian companies in 1998.
During the year, five investment projects worth Rp 871.9 million were implemented.
The Indonesian investors include property developer PT Sunaplo Agung Sejahtera, hotelier PT Multi Pesona Maya, TV broadcaster SCTV, pearl cultivating firm PT Siera Beta Pranasakti and transportation firm PT Wisesa Nugrahatama.
The investment figures do not include investment in the oil and gas sector. Indonesian and foreign oil companies have set up base camps in East Timor to explore for oil in the sea off East Timor, called the Timor Gap. The area, a disputed territory with Australia, has been designated a joint exploration zone by the Indonesian and Australian governments.
Marzuki said that following last week's ballot in which East Timorese voted to separate from Indonesia, the Indonesian government no longer has any authority over investment projects in the territory.
He said the fate of foreign and local investments in East Timor would depend entirely on the investors themselves.
"But the rights of the investors must be fully preserved. If the (new) East Timor government wants to nationalize the private investments, they must provide compensation for the investors," he told reporters.
Separately, central bank governor Sjahril Sabirin said all banking transactions ceased to operate in East Timor starting on Monday because of the violence there.
They would only resume business when peace and order were restored, he said.
The central bank transferred its East Timor operations to Kupang, the main town in West Timor, he said.
"There's nothing we can do there at the moment. Starting today, all banks have stopped their operations there," he told reporters after meeting with senior economic ministers.
In a related development, the International Monetary Fund said on Monday that it is closely watching the situation in East Timor, noting that Indonesia should have "every interest" in ensuring that peace is restored to the troubled half-island.
"The International Monetary Fund, like other institutions, is closely watching the situation in East Timor, and welcomes the generally peaceful referendum vote," an IMF official was quoted by Dow Jones as saying.
"However, it notes with concern the violence that has continued to mar the process in East Timor," the official added.
The official did not say whether the IMF would consider withholding some of its standby loans for Indonesia if it failed to restore law and order in East Timor.
But he warned that Indonesia had an obligation to ensure that the transition process in East Timor unfolds smoothly.
"Indonesia, which is making progress in its program of economic reform and recovery, supported by the international financial community and through the IMF, should have every interest in seeing the process in East Timor unfold smoothly and without violence, in accordance with internationally recognized norms," the official said.
The IMF, which led a $40 billion international bailout of the Indonesian economy, is scheduled to release the next installment of its $460 million loan to Indonesia later this month.
The release date of this installment has been in question since the unfolding of a huge banking scandal last month. (rei/02)