Navy told to work within budget

JAKARTA (JP): President Soeharto, acknowledging the Indonesian Navy's needs to bolster its fleet to defend the archipelago's vast waters, says it still has to operate within the budget.

Soeharto however gave his full endorsement to the plan to develop a Navy base in Teluk Ratai on the southern tip of Sumatra by making a visit there yesterday.

The project has been mentioned as a candidate for the government axe as the Ministry of Finance and the Agency for the Research and Application of Technology (BPPT) is now haggling over the budget for the Navy's ambitious development plan.

"I fully support the development of the main base in Teluk Ratai," Soeharto said during a visit to the site yesterday to launch the project. He said that given the government's budget constraints, the base should be developed in phases.

The President, speaking without a text, stressed that the Navy, and the Armed Forces (ABRI) for that matter, must fall in line with the government's development program which puts emphasis on improving the welfare of the people.

The Ministry of Finance has slashed the Navy's proposal for a $1.1 billion budget to finance the purchase and refitting of 39 second hand warships from Germany. The budget includes spare parts and ammunition, as well as for the construction of Teluk Ratai base which will house some of these ships.

It has imposed a limit of $320 million for the entire package, ordering the Navy to scale down their plans. The BPPT, which has been appointed to handle the procurement, said it could only bring the figure down to $482 million.

In the original budget proposal, the Teluk Ratai project was to cost US$151 million. This item was excluded from the latest proposal from BPPT.

The haggling between Minister of Finance Mar'ie Muhammad and State Minister of Research and Technology B.J. Habibie became public knowledge when the two were questioned in separate hearings at the House of Representatives on Tuesday.

Costly

Soeharto in his speech stressed that a strong Armed Forces is crucial for Indonesia to safeguard the fruits of development. He acknowledged that strengthening the Indonesian Navy is a costly venture yet emphasized that the nation needs a dependable force to protect its territorial waters.

The German warships, comprising 16 corvettes, 14 tank landers and nine minesweepers, come from the former arsenal of East Germany. They are being earmarked to replace about 40 of the 80 aging ships now being operated by the Navy.

Soeharto yesterday defended Habibie from criticism of the way he has handled the procurement, saying that he personally asked the minister to handle the negotiations because he was familiar with German officials and industrialists.

"We shouldn't make a big issue out of his appointment. Certainly it was not because we didn't trust the officers in the Ministry of Defense and Security or in ABRI."

He recalled that the idea to buy the ships first came from a private entrepreneur but he subsequently backed out after finding that there would be no commission from the deal. That's when Habibie was asked to step in.

He stressed that the ships were sold at bargain prices, even after the additional costs of refitting them were included.

Warning

The President warned that the controversy over the procurement of the warships was fanned by people who had little knowledge about the issue.

"They aired their views, further muddling the situation, set one official against another, sowed mistrust between them to the point of disrupting stability," he said. "We won't let them get away. We will warn them, and if that doesn't stop them, we'll take firm action."

He stressed that this had nothing to do with freedom of speech, which is guaranteed by the constitution. "There are laws on how to exercise this right, and any violation should be punished."

Soeharto, accompanied by Mrs. Tien Soeharto, also went on board the KRI Teluk Banten, one of the 17 warships from Germany that had been delivered. From the ship, they witnessed 23 of the Navy's ships pass by.

Soeharto also witnessed the presentation of five of the German ships from Habibie to Minister of Defense and Security Edi Sudradjat, who in turned handed them over to Navy Chief of Staff Admiral Tanto Kuswanto. (emb)