Limited Use ELLIOTT INDONESIAN DIARY December I967 Table of Contents Malik Tobing Soehardiman Delson New York June 29 Prof Sadli Foreign Investment Team Kim Adhyatman assistant to Malik Marshall Green US Ambassador Ed Masters Paul McCusker The Sultan of J09jakarta Brig Gen Sudjono Humardani President's Staff Malik and Adhyatman H A Sjaichu Chzirman of Parliament DPR M Subchan Vice Chairman of People's Congress HPRS Mochtar Lubis Col S Djojopraneto Editor Harian Angkatan Bersendjata and H P Nahar Zahiruddin Admiral Mursalin Vice Chairman of Parliament Hafas Editor Nusantora Max Loveday Ambassador of Australia Brig Gen Police Dr Awaloedin Djamin Min of Manpower Kosasih Purwanegara S H Prof Selo Sumardjan Secretary-to the Sultan Dr Subroto Department of Trade Ibrahim Usman Sec Gen P B Gasbiindo B R Motik Chairman 'AIl Indonesia lmporters' Association Jakob Oetama Editor Kompas- Catholic daily Prof Soemantri Vice Air Marshal Sutopo Min of Communications Rosihan Anwar journalist Rear Adm Jatidjan Minister of Maritime Affairs Abdulrachman Setjowibowo Chairman Comm Parliament Soedarpo Soedarpo Corp Maj Gen Dr Sjarif Thajeb Vice Chairman of Parliament ldham Director P T Bank Niaga Zein Effendi Sh Director The Djakarta Times Julius Tahija President Caltex Indonesia Prof G A Siwabessy Minister of Health Gen Suryo Suharto's staff Prof Sadli Agus Sudono Gen Chairman Gasbiindo McCusker US Embassy and Joe Harary Radius Prawiro Governor Bank Negara Mustafa Miga Editor Suluh Marhaen A R Suhud mcmbor cf Sarli's Board Ali Noor Luddin President P T Masayu Sumono Mustoffa head of KN1 news service Jong Tjioe Director T Keramika Indonesia Baru Taufig R Tjokroaminoto Gen Sec Gobsii-Indonesia Dr Soenawar Soekowati Gen Chairman KBM Drs Soesilo Sardadi Managing-Director Bank Negarallndonesia Unit IV Dr Deiiar Noer College Barli Halim Sec Gena Dept of'Basic-s Light-Industry and Power Frans Seda Minister of Finance - Maj Gen Ashari Danudirdjo Minister'of Basic a Light Industry A G Samii cont'd DECLASSIFIED - Almo wwgga L mlisd mime Use 0 OJ L8 A Table of Contents cont d Prof Dr Widjojo Nitisastro Director Nat'l Planning Bureau R Achmad Soekarmadidjaja Dr Nohamad Sadli Ir Tojib Hadiwidjaja Minister-of Plantations Dr Selo Soemardjan Secretary to the Sultan Darius Marpaung M P - General Chairman KeSpekri Mh lsnaeni Vice Chairman Parliament Arifin Harahap Secretary-General Ministry of Trade Harlan Bekti President Tohnik Umum Oejeng Soewargana publisher friend of Bekti H Mahbub Djunaidi Gen Chairman P w l Pusat journalists ass'n Sjafruddin Prawiranegara economist R L Tobing Sh VP Indonesian Importers Ass'n Maj Gen Supjipto S H Minister Dept of AgriCthure Zulharmans Harlan Kami Dr Emil Salim Bappenas Nat'l Planning Bureau R Soetanto M A Direktur Utama Bank Negara Indonesia 1946 SNI Ill Omar Abdalla B B A President Bank Dagang Negara M Subchan Vice Chairman Peeples Congress 0 I A I A June 22 - 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 l0017 tel MU 6-8030 Several other officials The law firm of Delson 8 Gordon claim to be legal counsel to the Govern- ment of Indonesia even the new team Bob Delson and his colleague Carl Slater and I 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 l0 through March l5 l968 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 I 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 8 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 lndonesians also love to go to Japan At our session with Malik I hit this idea on the head and also dis- couraged 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 to Malik that Delson 8 Gordon was working for the Indonesian Government and not for us and had absolutely no connec- tion with the Roundtable Everybody including Malik and Delson heartily agreed 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 - Djakarta Professor Sadli Called Prof Sadli head of the Foreign investment Team technical body whose recommendations to the Foreign investment 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 Indo- nesians 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 embar- rassed 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 and immediately wrote out two introductions for me to the two generals who are Suharto's key advisors Brig Gen udjono economics and Maj Gen Alamsjah political He also urged me o see Malik's assistant Kim Adhyatman He looked over the draft agenda and approved agreeing that we should add a session with Suharto's Economic Advisory Team of which he is a member this originally Sanjoto's iyea Sadli thinks such ideas as harmonization of national development plans in Asia the Pacific Basin approach etc may sound impossible uniil peOple think they can work until the political will exists to carry them out 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 l0 00 AM Easily made a date with Adhyatman Apparently Sadli had called him and i 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 I 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 justifi- ably 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 Ouhich Masters now says in retro- spect was wise in that it avoided open revolt by the Sukarno forces Even though Sadli gave me a note to him Alamsjah I 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 Indonesian Diary -4- When I told Adhyatman that Green has written to the Sultan requesting a date for me with the Sultan Adhyatman instantly said that I should go through the Sultan and not Malik if that is the way things turned out He urged me not to call Sudjono until i had seen Malik and true to his word phoned me during my next visit with Green to say that i had a date the 2lst with Malik at ll 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 8 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 I felt I had to pass this on to Green who was surprised That's a new but Masters felt it reflected Green's difficulties with Alamsjah Nobody feels Nasution is important November 20 Diakarta Marshall Green US Ambassador to lndonesia 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 sen- sitive to questions on the elections banking law etc and that many will relish our group coming to ask such questions but others will be 'ianguished l He promised full Embassy support and requested that I see Masters this afternoon Also present at this meeting was McCusker the economic chief of the Embassy -- and at the end I 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 indonesian Diary -4- When I told Adhyatman that Green has written to the Sultan requesting a date for me with the Sultan Adhyatman instantly said that I should go through the Sultan and not Malik if that is the way things turned out He urged me not to call Sudjono until i had seen Malik and true to his word phoned me during my next visit with Green to say that i had a date the let with Malik at ll 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 i felt I had to pass this on to Green who was surprised That's a new 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 sen- sitive to questions on the elections banking law etc and that many will relish our group coming to ask such questions but others will be 'languished l He promised full Embassy support and requested that see Masters this afternoon Also present at this meeting was McGusker the economic chief of the Embassy -- and at the end I 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 Indonesian Diary -5- best-qualified administrators in Indonesia 50 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 grass- roots 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 The electoral law will be passed the end of this month -- probably a good law though some- what 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 relig ious 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 ear- liest the Government can agree to elections is I970 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 Indiansl He also says Kim Adhyamat is of Chinese derivation -- he changed his name a year ago -- and too close an association by Bl with him will raise many Indonesian eyebrows November 2l - Djakarta The Sultan of Jogjakarta Merdika SeIatan No 6 Office direct line SIIZZ Home 8219 Saw the Sultan from 8 30 to Fair English pleasant good sense of humor Sees priorities for the economy as food mainly rise thr0ugh fertilizer insecticides etc clothing infrastructure telecommunications shipping etc and exports Rice is short one million tons a year requir- ing 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 i Indonesian Diary -6- 0n exports Uniroyal and Goodyear are planning new rubber plantations In Sumatra The Government hopes to increase palm oil 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 lnternationalU 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 l2-lh million At Geneva the Indonesians found they were thinking too small In logging they were thinking 20 000 to l00 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 500 000 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 I967 is 65% but will be 75% or 80% at shortfall owing to rice failure resulting in rice-priEe hike target for 1968 is 35% maximum for l969 a maximum of 15% and no inflation in l970 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 l97l Many industries and towns have not had spare parts for five years many towns no electricity and failways shipping air- craft 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 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 from Cornell 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 for the Ladies Program which the Sultan specifically asked about He called the Secretary in to meet me but he was teaching a class I 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 sufficnent to cover the National Economic Planning bureau He expressed fear that our meeting Indonesian Diary with the Economic Advisory Team would conflict with his own since that is my team but I assured him we would cover broad issues with him on stabil- ization allocation of resources and get into detail with the team He also said the other ministers were men he coordinated to which I 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 I would have no trouble in getting the Acting President to attend He knew I was seeing Sudjono November 21 - Djakarta Brig Gen Sudjono Humardani Private Staff of Economic Affairs to the Acting President Office of the Presidium Merdeka Barat #15 Saw Sudjono from l 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 lndonesia and help maintain Asian security and agreed reluctantly that Asian security c0uld 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 2h-27 but assured me that I 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 lndonesia 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 lndonesia has l was not terribly impressed by Sudjono though he is quite charming -- as I'm beginning to believe all lndonesians can be He agreed that should call him the 27th re a date with Suharto lndonesian Diary November 2i - Djakarta Dr Adam Malik Presidium Minister for Foreign Affairs Kim Adhyatman assistant to Malik Saw Malik and Adhyatman from ll 00 to l2 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 I think he's embarrassed at the long delay and absence of a reply to my letter I showed him the revised schedule He approves He was interested to hear whether the Sultan had approved I assured him the Sultan did and also told him that the Sultan had volunteered his Secretary's help as liaison I raised the question of seeing Gen Sudjono and he assured me that I should and that Suharto was taking a trip to the provinces Nov 26 i 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 oil 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 techn0109y 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 ONhich would export to Asian countries is that the oil 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 in steel production and disagrees with Dr Goh of Singapore that this is impos- sible 6 Indonesian Diary November 23 - Djakarta lU 30-ll l0 H A Sjaichu Chairman of Parliament DPR Pintu Vli 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 Chairmen of a number of Parlia- ment's key committees I finally ascertained I 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 I had inten- ded 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 I assume that in my letter to Sjaichu I should not only mention Abdulrachman as invited or wel- come but also Moch Thana Ma'roef November 23 - Djakarta 9 45 - l0 20 M Subchan Z E Vice Chairman of the MPRS People's Congress pron Soobc-Han - Pegangsaam Barat #4 Congress Bldg Subchan an ex-businessman was chairman of the National Chamber of Commerce and Industry for eight years He said that the political structure of lndonesia is Hike a basketball game with a 'hmn-to-man defense 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 l've told him in saying the budget will be balanced in l968 -- unless US aid of $375 million is forthcoming or foreign investments come in which Subchan says is doubtful He thinks creeping militarism i _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 Subbhan is the Sultan's boss in theory he has a bigger staff than I don Subchan claims to have been a key man in ousting Sukarno though 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 3 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 I write him re bios of all the legislative leaders and he will organize them I'm junior in age and there- fore do all the work Later I 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 Indonesian Diary -10 November 23 - Djakarta 11 30 - 12 00 Mr Mochtar Lubis Pintu Air 20A tel 18312 Lubis is the no 1 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 'way of life 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 '%he 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 ability 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 over- whelming economic problems of Indonesia greets the country's future pros- pects 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 disting- uished guy now in Amsterdam I 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 Indonesian Diary November 23 - Diakarta 5 00 - 6 10 Colonel S Djojopranoto Editor in Chief of the Harian Angkatan Bersendjata l Member of Parliament for Security Defence 8 Foreign Affairs - Djl Merdeka Barat l3 Djakarta The Colonel is n9 _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 #0 000 Local editions over which he has general supervision have com- bined 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'l - and the Colonel prints The soldiers read it and repeat The people looking up to the soldiers ask them what's what are told and the people believe and repeat 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 Indo- nesia 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 allegiance to Suharto The Nu Muslim Party is okay since llreligion 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 Parliament and the People's Congress and 2 political parties Only then -- sometime in l969 -- will the New Order be consolidated to the point where elections will be guaranteed to keep the New Order 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 Corrup- tion 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 per- suade 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-Owe should invite Amembassy says it is not strong now in numbers but could be if PNI is banned since IPKI like PNI is secular Indonesian Diary 12- 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 I 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 I said he was a key man in the PIBA meeting He may call me If not I should write him should write in any case He hasn't yet formally accepted S 12 November 2h - Djakarta 11 25 - 12 00 Cfi mhy Rear Admiral Mursalin Vice Chairman of Parliament note gg _Mursalim_as the has it Taman Sunda Kelapa h Djakarta tel 46620 home 71894 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 hacl 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 I gather Abdulrachman reports to him Abdulrachman'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 I said 1 laws under debate or to come up 2 political stability 3 new polit- ical parties 0 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 Govern- ment 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 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 peeple 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 stentorian- voiced 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 People's Congress Supreme Advisory President Council -fParIiament Cabi et SPRI Presidium President's military now abolished advisors -- like the White House experts or shadow cabinet -- including Alamsjah Sudjomo etc Indonesian Diary -14- Loveday says the President in fact has all the power not the People's Congress Also that the SAC actually has members who draw salaries but it's givg _heard from and that the SPRI may be more powerful than the Cabinet l2 men do all the work are the brains in the Government Sadli Salim etc There is not 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 I Masters are top-flight 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 'bicking 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 Our research should take many many weeks And I should return long before two weeks before the conference Loveday says Sir Ian 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 35 Briq 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 agri- cultural 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 nor-mu- Nory I5 03 W U lam and I woman in Inc-Own HUN our 0 m3 4 mica-s out the stoma-M ml v- 'w lm can 0- ovum on to mutual 0 mm nan on and IY on nu no ovum won MC 'Ht'nhv a ulna In dual Mn N 0 n in um nun- 1 no and on It out um I may noun an an lo luau-Ho eta-lo woun- la u- ul- In luau- an ln 0 loll-n lava who I a hill on on to gun as mulch to the month s m an call cmluo out nu swim Joan In and now watch on hole u- on M 0 us on mm um and but he yd-o- 1 equal all plot-Mn u all got non duo on can emu 0 0 cum on hula-Ito no balm l ol ml and canal lam - I-u an an noun microns mtwcum all Mala mice a ova-lam lap-M in no that nu-uncut lama-In all Hi - Mlo will In not w Ml luv-u In ml Olt nru my on a mum on um and loam noun maul Illwid will to not by Imtm all a do can l no tut um out not at an I 0' a Doll-m nu noun-u Mn 0 rm on low mum caulk Java tona- a allthe loot 0 w cum in mug-aunt lot as an gunl6 Om I676 la u It may 0' l mm h d l lg Cullen gout-t an m- mm u- hunt Wall In lulu on at 99 all u In mm Wad luau ml can -munlauomuowumlm known L 1 allu- -- Ir 0 0 man a at by Indonesian Diary -l6- His bill would exclude foreign investors from the provisions of the company law derived from the Dutch who in turn derived it from l8th 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 lndo-foreign venture to enjoy all the rights tax holidays dUtY' free imports etc that the foreign capital enjoys under the foreign invest- ment 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 0n the Ladies' Program he suggested I use NIC 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 lndonesian language problems Japanese But it seems very doubtful if any simultaneous eguipment 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 I969 will be in rough outline by June I968 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 Indonesian Diary -l7- union leaders were Communist and the new union leaders are weak unknown He urges us to invite Brig Gen Suhardiman head of SOKSJ 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 ng _to invite Dasaad who financed Sukarno though his son says Kosasih is okay and now runs the business Also suggests Sumali private banker Julius Tahija Caltex Sudarpo Sastrosatomo lSTA-shipping etc He explained that Subchan and Sjaichu are in opposing camps of the same party and hence Sjaichu was n9 _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 l2 00 - 12 30 Dr Subroto Department of Trade Djl Abdul Muis 87 Office tel 43033 3l 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 Advisory 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 I must make this change He seemed enthusiastic about the Roundtable and will call me if not I ll call him about a date with Jusuf Minister of Trade before Jusuf leaves with the President on December 6 for another trip I left Jeannie and Sanjoto to interview him while I rushed off to a date at l2 30 with a labor leader Indonesian Diary 18- November 25 - Qjakarta l2 35 - 1 25 Ibrahim Usman Secretary General P B Gasbiindo Tanah Abang Ill #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 I should ask Sudono if he would boycott the session if we did They wanted to invite the other unions on our behalf which I 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 off getting funds from dues and working soleIXLfor 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 union movements etc They have a new July 1967 constitution which they say is democratic and modelled after the US I have an Indonesian-language copy November 27 - Djakarta # 30 - 5 l0 B R Motik Chairman All Indonesia Importers' Association 0 P S lmpor Djl Banjumas 2 tel 5l625 or 51675 Motik was in the hospital awaiting a minor'I operation but he looked and sounded pretty weak I 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 -- g2 the M P I 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 lmpor Pusat l Djl Modj0parit tel 47269 or #0643 He then explained the battle between himself and Bekti and Kosasih It seems -- he says -- that he was the big-shot in the Commerce 8 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 5 Industry Association members - lndonesian Diary -19- He says too that Tahija is a newcomer who did little until the meeting He says a new Commerce 5 lndustry Association must be formed I 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 - Djakarta ll 00 - ll h5 Jakob Oetama 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 Opinion Leaders are all of the same persuasion except Djojopranato and urged us to invite nationalists and socialists Mustafa Mega Editor in Chief Suluh Marhain nationalist paper that lsuarni is behind Mahbub Djunaidi Editor in Chief Djuta Masjarakat NU-Muslim- nationalist paper Zein Effendi I'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 - Djakarta 9 30 - 10 05 Prof Dr lr 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 informa- tion 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 ndonesian 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 ELLEL explo'tation 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 petro- chemicals but the Dept of Heavy and Light Industries now has this Hence the two departments will cooperate and have joint consultation re petro- chemicals Soemantri is worried that Indonesia's own tin production is now too low and that if the tin cartel 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 oil producers can finance and handle easy tech- nology of on-shore exploration but foreign capital and technology are needed for off-shore Soemantri hopes the output from all souces can be raised from 0 5 million bbs day today to 1 5 million in I969 Soemantri says the existing foreign oil companies are big can do the necessary job Caltex The Texas Co and Stanvac SOJL Soemantri made it a condition to Gen Suharto in accepting his government job that the Gas 8 Oil 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 2 - Djakarta 2 00 - 3 00 Vice Air Marshal Sutopo Minister of Communications Hajam Wuruk 2 He agreed that he would try to L 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 I 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 Indonesian Diary 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 t0 push civilian aircraft harder even though I am an Air Marshal They now feel 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 I968 He himself feels there are other tourist heavens in Indonesia as well as Bali and hopes these can be publicized 0n telecommunications they have been buying telephone equipment from Siemens and recently revised the contract to 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 tele- communications equipment perhaps as bait for the lamp factory These are the only two firms that have approached the Indonesian Government on tele- communications The lndonesian Government does have a 20-year contract with ITT for satellite communications ITT said it took seven years to get their money back but this 'hminly concerns communications with the outside world we don't know if the satellite can be used for internal communica- tions lndonesia'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 Indonesian Diary -22- 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 I 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 m His own answer Anwar Nothing Why Because the Javanese feudal tradition streng thened 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 few men like Sadli and Subroto can't succeed in the face of this widespread obstruction l 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 - Diakarta 9 05 - 10 00 Rear Admiral Jatidjan Minister of Maritime Affairs 42010 Djl Panglima Polim Ill 140 Kebajoran-Baru Djakarta tel 720l0 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 I hope he attends the RT Jatidjan said they would make sure to make themselves available for the hour and a half ij_the RT was held Obviously he too needs 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 sub- sidies 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 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 221 Indonesian Diary -23- received subsidies Foreign lines have an advantage over Indonesian lines in that Indonesian lines government and private must automatically hand over to the Government l0% of their foreign exchange earnings The Government line PELNI sends a 2 000-ton ship from Djakarta west along the north and then under- belly 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 expor- ting 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 SOU-ton ships as the maximum size that can still be economical The Government subsidizes roads and airports -- but ng _ports It re- quires 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 l968 budget for ports 20% of I968 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 I 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 - Djakarta - l2 00 Abdulrachman Setjowibowo Chairman Economic 5 Finance Committee Parliament - home address Djl Darmawangsa Kebajoran Djakarta Tel 70733 home 462l0 328 office Abdulrachman is a police general 2 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'l may be needed Increase tax revenues partly to offset loss of exchange-differential revenues by spreading the income tax beyond 200 000 know rich peeple 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 lndonesian Diary -24- his Police bank related to Police welfare activity and other military banks get no special privilege and I'compete freely with private banks -- but admits that military governors must watch out that they don't exceed'proper limits in business activity Practice austerity -- which 'hust begin with government austerity in the budget and in the level of living of government and military personnel Uhile discussing these points he raised his fist to show that force may be required November 28 - Diakarta 3 00 - 5 55 Soedarpo preferred spelling Sastrosatomo Managing Director P D Soedarpo Corporation Djl Veteran l Zl-22 or Kali Besar Barat 43 Phone 47l08 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 'boliticians 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 a _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 TOAR a huge auto parts and replacements importer 0n 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 g9 invite ldham as a private banker plus Sutanto of Negara 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 Indonesian Diary -25- November 28 - Djakarta Soedjatmoko le Tandjung 18 DJakarta Tel hh757 Soedjatmoko is Indonesia' 5 leading intellectual though he has no degrees We had a fascinating discussion he speaks excellent 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 acceptable 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 Technocrats like Sadli Widjojo et al concentrate on problems open to government'actiont bottlenecks 'reorganization etc andistress the creation of conditions through monetary tight money and austerit that should'lead'tO or foment rationality'in decision making But they'ignore the fact'that'economic'imperatives are not the only impera- tives at work in a'society they that'cause people to act rationally For'exampie they ignore the fact that'competition is needed'to make Civil servants running state companies should be Judged on merit not on the usual system of automatic advancementu- 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 momenty'the'conditions created by the government'in the austerity program'have'little effect on state companies since basis of how they are reacting as managers tO'the deflationary'measures Government creation by the techno- crats of economic factors does not cause the appropriate reaction by managers of state enterprises for these reasons No purges in the-banking They are needed Indonesia s technocrats think'through problems as above there are too few doing too much9 worse they are showing signs of fatigue and intellectual sterility They may evenvkill themselves But'the answer'is not'foreign advisers in each ministry These are not used properly by the Minister or by And if they are used vigorously they tread'on sacred cows often give advice that doesn fit the country's reality or take years'to learn that reality More useful would be a small research organization- to study problems on call and come'up'with recommendations but not be part of the government system itself with all the this creates This is th _key issue Social forces workers housewives students 'etcu 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 then not just stay outside the criticism Indonesian Diary -20 and suggestions and lecture and write but would join forces with the govern- ment Broadening the political life of Indonesia would put an end to extra constitutional 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 got 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 bargaining to strike etc It must also ass me the responsibility to raise production which means that it must curb or set limits to strikes wage demands disagree with this point The problem in broadening Indoneria's political life is manfold earlier Indonesian states Dutch colonial pre-colonial were feudal bureau- cratic states Thus Indonesia's traditional notions of society are non- democratic and don't give rise to ideas concerning the value of non govern- mental 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 Indo nesia 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 5 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 Indonesian Diary 7 November 28 Djakarta 7 00 - 8 10 PM Maj Gen Dr Sjarif Thajeb Vice Chairman of Parliament Ejl H 0 S Tjokroaminoto 11h Tel GBR h6h20 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 Lnly 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 h60 members of Parliament the other 360 would be elected 0f the latter 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 Govern ment 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 and is telling the People's Congress to go fly a kite that 13 the Parlia- ment 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 l9h0's and 50's Thajeb will attend the Roundtable November 29 - Djakarta 8 00 - 8zh5 AM Idham Director P T Bank Liaga Roa Malaka Utara 21 Tel 237h0 Idham claims he only knows local Indonesian banking He will attend the Roundtable Idham is president of the private bankers' association and a Kosasih recommendation 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 The second man is Moeljoto Djojomartono also good He also recommended Drs Soesilo Sardadi another state bank as young bright and knowledgeable about foreign banking trained in London in the Chartered Bank as some 30 or ho Indonesians were He agrees SutaLto is a very good man but he took over the Bank Negara 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 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 the peculiar behaviour of Indonesian creditors etc and i _they create services to meet the needs of the community at large so they can attract depositors 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 h8170 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 n23 Trotskyite has sound ideas Indonesian Diary 29- November 29 - Djakarta l0 05 - l0 50 AM Julius Tahija President Caltex Indonesia Kebon Sirih 52 Tahija may be negative about our RT since he is I the Indonesian who made it as President of Caltex Indonesia and 2 the self-confessed creator of PIBA whereas at the BI RT he is just another participant But negative he is His Indonesia needs one or two big investments was instrumental through The Texas-00 in getting Texas-Gulf Sulphur to invest in Indonesia since other-US firms will then follow but two bad experiences in trying to get'started will undotall the conferences in the world in'lndonesia 'there'ds a grave danger that bureaucratic delays etc will queer a $100 million dea4 is now hanging on the ropes -- he believe and Alcoa refusedxfor some time to send another'delegation to now is not'more'conferences to arouse interest The latter will oniy cause damage in thel ight of Indonesia's inability to carry through My RT would help'educate international companies in the'need for'patienceg fell on deaf ears But he will attend the RT group'thinks only of its individual members' selfish interests PIBA'haS'chailengedrforeign investors to think-beyond their immediate profit'and'lOSS'interests and thus-we lndones ans must match this level of thinking Motik and his group do not ll PIBA has set-up an Indonesian businessmean-group to promote foreign investment I gave him the Bourdrez success story and he immediatedyragreed 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 - Qjakarta ll 00 - ll 40 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 one to every 25 000 It now has six medical schools -- and in lo years will 2 000 P309133 they are producing 500 wedl-trained doctors a year They'have a paramedical personnel program in being' nurses etc and will build equip and staff 30 or no hospitals Indonesian Diary 30' i cost of SI million each or milli0n tc build and equip full number He has proposed or is about to pr0pose 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 bathsL plus shoes and clothing will cut smallpox in 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 has 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 pur- poses $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 RW will attend and-probably-send us questions November'29 - Djakarta l 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 Roundtableg but he's trying to sell Bali and suggests several days of the'Roundtable there Later I 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 2% hours but never did see the President His cabinet meeting was delayed by a visit to the tomb of Gen Nasution's h-year-old daughtert when the Communists attempted their coup on Oct l l965 they tried to kill Nasution --'herwent'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 ls 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 Oil and outside financing for a $50 million fertilizer project using gas in West Java unproven but they want a 20-year guarantee of Indonesian Diary 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 million is in danger They want 90% l00 000 tons a day of the 20% of Caltex' production that goes to the Government and which the Government_letsmCaLtex market on bghalfcof the Government AEEJthey 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 llrealized 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 l0% 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 a y_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 pro- vision that after 20 years in l987 the Government will negotiate a 20-year extension beyond the'30-year limit I997 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 Djakarta where the then new Foreign Investment Law was described by Sadli 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 Parlia- ment we all know you can nationalize why mention it at Alcoa wanta a 75-year-concession if they put up an aluminum plant llUniversal Chemical Ltd of the Bahamas apparently just a group of pro- motors wants a deal to bring in Kelly Oil and make fertilizer from natural gas in West Java -- but wants a 20-year guarantee that the Government will buy the output 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 I thought of the deal He was enthusi- astic 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 I 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 Indonesian Diary '32- November 29 - Djakarta 6 30 71h5 PM 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 Knows Jay Lovestone He is strongly anti-Army 0f 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 move- ment 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 - Diakarta - 5 45 Paul McCusker economic chief of the US Embassy Joe Harary They suggested we add an Indonesian of Chinese origin Who is talkative and peppery to the business session Dr Jong Tjioe C V Keramika Indonesia a manufacturer of ceramics Office Djl Raja Mangga Besar 52 tel 2267i 20595 2l650 Home Djl Diponegoro 6h tel 8186l Suggested I 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 Indonesnan Diary _33_ Selo Soemardjan agd_that I 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 I must also get Soemardjan to send a letter to all the Government officials -- and I could draft that one too -- over the Sultan's signature They suggested a little publicity wouldn't hurt I'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 h5937 h6823 Suggested I check editors and union leaders with the Embassy Press 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 ESE 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 ll They said to stay clear of Gen Suryo who has an unsavory reputation November 30 - Qjakarta 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 IndoneSIan Diary -5b_ November'SO - QJakarta 10 15 - 10 40 Mustafa Miga Editor in Chief Suluh Marhaen Dj Kran Kemajoran Tel Miga does not speak English He will attend the RT and bring Drs Samuel Pardede his Foreign Editor as his hterpretc 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' 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 Si1a princip1e 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 pnlicy and will be lifted he says The Five Principles 1 Belief in the One Supreme God 2 Just and Civilized Humanity humanism 3 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 11 20 - 12 00 Ir A R Suhud Taman Tjut Hutiah 7 P 0 Box 2236 Djakarta-Raya Suhud wan 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 t e PIBA foreign investment promotion group since he wants to stay out of the Bekti-Motik battle Bekti PIBA But'he helps on the side He is an extremely busy guy speaks good English 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'I in attitude -- bureaucrats who lack entrepreneurial ideas and vigor For example the ASEAN program 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 8 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 I'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 Indo- nesians 3 3 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 people'end the Sadlis He appears to be liked by everybodyg 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 Hl8 P Tel 7218l 72l82 Home Djl Hanglekir Tel 72558 Masayu is the International Harvester-distributor Luddin disagrees with Suhud on the question of lack of entrepreneurs in Indonesia The Dutch may havercaused it once -- but this was 25 years ago and what have wefbeen'doing since He expenditure on replacement parts is stupid since the machines'date'from l952-Eximbankrloans and are-slow inefficient not worth repairing -- and parts are horribly expensiveu But'you Can't stop the policy because tOO'many officials are involved ' There s-not one official in Djakarta whose boss-has given him a job description and when responsi- bility is not clearly fixed you're-in deep trouble 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 ordered the'price cut to a sensible $2 a yard -- but the firm wound up paying $5 50 anyway In another instance a new investor wanted a phone hooked-up to his office some official along the way asked for a $2500 bribe Indonesian Diary 30 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 l965 Luddin explained that the money used in l965 from check prices 7 and OPS 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 Ii years to analyze and approve projects -- and that these projects be centered on private Indonesian groups rice projects using US equipment to create purchasing power and a continuing rice-equipment market for US suppliers Luddin will attend the RT December - Indonesia ll 00 - llzho Sumono Mustoffa Djl Djatinegara Barat home Tel M3202 Djl Prapatan 46 office Mustoffa heads 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 d0 with the Murba party He will attend the Roundtabie His English is only fair December - Djakarta 2 30 - 3zh0 Cei Jong Tjioe Director P T Keramika Indonesia Baru Office Ejl Raja Mangga Besar 52 tel 2267 Homer-Djl Diponegoro 6h Djakarta Ill l9 tel 8l86l An Indonesian of Chinese'ancestry Jean saw earlier His theme PKI had three million card carrying members and only 250 030 were killed 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 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 Indonesian Diary '37- duce something cheaper is working on a deal to pro or automobile we neglect oduction EL arded husks of some plant I but better than foam rubber from seats -- with German Hanheim interests Indonesian business is still in Chinese hands claims that 80% of' Indonesians of Chinese origin another 10% is in the hands of my people and only l0% is in the hands of pure Indonesians The latter represents a handful of Indonesians such as Soedarpo Bekti and Tahija Tcn altogether The banks are run 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 Sumitro's program to get the Chinese out of the trading business failed deSpite all the licenses and financing that Sumitro furnished to Indonesians Garuda government airline sells doesn't account for this within rubber oil tea etc nesia is widespread kets outside Indonesia ption is evident in trade i Corruption in Indo 5 million worth of tic Indonesia The same corru be to keep his remarks brief will attend the-RT The problem will He can be sat on I warned him about this -- but we'll have-to sit on him I discovered December I - Djakarta 5 00 - 6 l0 Taufig R Tjokroaminoto General Secretary Gobsii-lndonesia Office Taman Matraman Timur 2 tel 8l026 Home Djl Singamangaradja No #4 Kebajoran Baru Met in his home with himvand-his father and the head of PSII's Moslem Association of Businessmen foundeddin l938l and-several other Gobsii types They spent much of the time chasing-the flamboyant roosters out of the living room onto the porch I exaggerate TRT's English is only fair and he's the silent type But he will attend the RT They told me that today Gasbiindo was split in half both halves keeping the name With one half going to Agus'Sudono and the other to the founder of Gasbiindo Jusuf Wibisono says that Gobsii was created-by the United Islamic Party of Indo- nesia PSII and must remain tied to that party A us Sudon But he agrees with the partnership idea 0 nOtW'thStand'ng' '5 -- or immediate than w'th politics Says the big question for discussion at ouibgl Oblemsl ment 0 000 In'Djakarta 3-H'million in Indonesia as a whole He ho unemp oy- have a conference on this problem with 31 labor'uniOns and governmeniesfg soon Says he has solutions but wouldn't -- or couldn't -- sharethemowith'rit'aS Indonesian Diary -38- December - Djakarta 7130 Waited in my room for Duta Masjkarat deputy to Hahbub Djunaidi NU- Muslim nationalist-newspaper editor but he never showed up Could Pasaribu have goofed and I 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 Angk tan Darat Djl Salemba Raja 28 whom I thought was the minister for 10 minutes until he finally informed me he was in charge of buying medicine for the Army When I 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 I - Djakarta l0 00 - lO h5 Dr Mr Soenawar Soekowati General Chairman KBM also a chairman of and Chief of PNl's Economic Dept Djl Dago HZA Bandung Tel 5626 Kebayoran phone 70730 Djakarta address Djl Galuh l h Deb Baru This labor union leader KBM of the'Marhaenis party or wing of swears that-popular opinion to the effect that PNI is Marxist is wrong that to be sure Sukarno typified it as such but doesn't belong to Sukarno but to the people and the'people-in PNI-reject Marxism - Soekowati and Maliki the PN1 leader opposed the PKI Communist Party and Sukarno -- and for this reason Soekowati was dismissed as Deputy Agriculture Minister in September l96S'-- a month beforerthe coup good timingl He feels PNI will not be banned since Suharto knows the political repercussions of a ban would be dangerous He feels that lndonesia will achieve fewer political parties not just by the merger of Muslim parties but also a merger of nationalist parties may merge with and SOKSI the latter he says is as much a political party as a union He doubts that solidarity of sian 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 Indonesian Diary '39- partners of management and government in romenting economic development Labor can't be the antithesis hmere'd that Marxist word creep in of capital as it is in the US since there is no capital in IndOiesia Soekowati and Maliki approve of foreign investment To support this point he mentioned a Dutch firm which he nationalized he apparently national- ized 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 9 45 Drs Soesilo Sardadi Manrging-Director Bank Negara Indonesia Unit IV Home 19 Djl Madiun' Tel 51119 Office 66-70 Djl Kebon Sirih Tel #7012 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 institu- tions he says that it is a matter of -- 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 expenditures it is the country's biggest Spender Also the Government organizations must begin obeying the law requiring payments to be made by 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 moJern ideas To get Suharto to listen you must push from your side and we will push from ours Hc is young 35 or 33 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 -ho- Indonesian Diary December 2 - Djakarta l0 20 - l0 45 Training College Dr Deliar Noer Rector Teachers Tel 8l8ll pes th Komplex I K I I Rawamangun He expected me at 8 00 unknown to me IKIP is way the hell and gone out in the sticks We had a very short meeting He said he sees very little of businessmen wondered why we are inviting him He understood the broad scope of the Rendezvous Dinner and will attend His English is not so good December 2 - Djakarta ll 00 - ll h5 Barli Halim Secretary General Department of Basic and Light Industry and Power Off Djl Kebon Sirih No 36 Tel Home Djl Brawidjaja Kebajoran Baru Tel 71528 He'll try to fix an appoint- He will attend the RT with his Minister ment for me with the latter for Tuesday morning Australian briefing memo He asked for a copy of the Has fair English but a nervous type December 2 - Djakarta 8 30 - 9 00 Frans Seda Minister of Finance Home 22 Djl Sriwidjaja Blok l Kebajoran Baru Tel 72263 alkative He has been trying to stimulate by lowering taxes in one area and in- creasing government revenues in another Thus he's cut the sales tax 1055 2 5 billion rupiahs and customs duties loss 5 billion rupiahs Because it takes too long to get a increase through Parliament he's tried to broaden the tax rolls from the present 2l0 000 to at a minimum 1 5 million The wealth tax roll is only 9 000 should be at least gng the total population or one million but he hopes to raise it at least to 200 000 or 300 000 Only 20 000 companies pay the company tax -- and there are 300 000 Chinese business firms alone He feels lh million people should pay the land tax and only 100 000 do so Only l50 000 plots I are even regis- tered in the whole of Indonesia and I believe he said there are this many in Djakarta alone Naturally few people pay the tax on sale of land Since he has only l6 000 tax collectors he must rely on voluntary payments and has recently introduced the self-assessment principle He feels it will work and points to success already achieved with importers in Medan Sumatra and elsewhere Fair English quite open and business and still fight inflation 41 Indonesian Diary financing sources is a layer of secondary sources -- rs and others by a hit and in part from the dis- The proper lation goes to He's disturbed by the fact that in between the primer and the country's producers who need it Speculative credit institu ons who finance produce run method He feels this has resulted at least ruption of the business and financial sectors under Sukarno channeling of money has been disrupted and most of money circu these secondary credit institutions He wants the Australian briefing memo Will attend the RT December - Djakarta 1 05 - lzhO Maj Gen Ashari Danudirdjo Minister of Basic and Light Industry and Power Kebon Sirih 36 Poor English He will attend but will probably bring an interpreter and in what bad shape the economy is The It is amazing how poor d or projects at the moment are Ministry's three big problems an i How to rehabilitate existing industry when it has teen totally neglected for so many years 2 What to do with the semi-completed huge projects begun by the Eastern Europeans Should they be left-unfinished or should more millions of dollars be poured into them Our national economic priorities make this an insoluble 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 $l0 million has already been spent and which Indo- repay needs another 52h million to complete but ''everything hence they-are trying to use what h _been such as the workshop and have succeeded in is not so much should they finish the nesia must still is wrong with this project completed under this project using 10% of it -- so the question here mill but how to use what has already been built 3 The 1968 budget provides some money for industrial rehabilitation and for what the Minister called preparation for the industrial take-off which will initiate the 5-year plan beginning in l969 0f the $325 million Indonesia hopes to get from donor countries in I968 the Ministry of Basic and Light Industry and Power will get oF the $75 million for projects out of the $325 million $l4 2 million for electric power million atch up Djakarta's power system alonel and $3 25 million the Ministry s-care paper caustic soda tire plant begun by West Europeans The-entire'fertilizer plant needs $50 million alone is needed just to for other industries-under to'finis salt fertilizer cement Indonesian Diary 2 50 - 3 55 December A - Djakarta Director ead of Economic Advisory Team National Planning Bureau Team Prof Dr Widjojo Nitisastro National Planning Bureau and 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 Tetw to the Acting President with reSponsibility for production and planning Widjojo heads up the team and Ali Wardhana is responsible for monetary and banking affairs for the Economic Advisory Team quite skeptical He grilled me The other two were very lian briefing memo Widjojo did most of the talking and was for an hour on every aSpect of the Roundtable relaxed and friendly Wardhana wants an Austra I had to leave before-we could evenrbegin to discuss issues and problems unfortunately All three will attend the RT December - Djakarta # 00 - 5 15 R Achmad Soekarmadidjaja Home Djl Tosari 27 Tel Gambir ASZOA 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 Industry and Power and who'spent'the time'attacking the US bitterly for sending in $2 million of rice and what and not furnishing credits and grants for projects You spend $l billion a week fighting Communists in Vietnam and let llO million Indonesians the spectre of Communism at their backs -- starve He says it takes From $ uJ Lt 750 to create one-job assuming 3 5 million unemployed that is $1 75 billion -- not counting the 20 million under-employedu Also present'was Drs Chaidir Minang a business friend he says Achmad says-PNi does 222 support the Pantjasila and until it does there can be no merger of and PNI he ignored the question of merging with But he says PNi'may do so after purging itself of some bad elements and then could merge with it He-does not beiieve that PNI will be banned but'thian it will be cut down in size at Suharto's insistence that it slough off certain elements s-action groups students workers and housewives plus IPKI has lo mas It is nationalist independent secular a merchants group or ll all told Indonesnan Diary December 4 - Djakarta 10 30 PM Dr Mohamad Sadli could help him in the idea that BI or a talk about He was receptive lcome-a letter and lat Sadli called would we vetting investment proposals this He told me that Union Carbide really has proposed that it take over the Government's entire share of Caltex production enjoy depletion allow- ance -- so that as production goes up so does Union Carbide's oil They I want says Sadli to get into the oil business since oil companies are getting into the chemical business Sadli has difficulty in swallowing this and agaln asked my opinion I told him I'd have to study the-facts couldn't give a telephone opinion Sadli claims authorship of the ASEAN idea but says it is still a pipedream 9 35 - l0 l5 December 4 - Djakarta Ir Tojib Hadiwidjaja Minister-of Plantations Djl Imam Bondjol 29 his should be called the Ministry of Commercial Crops is to foment their production He-himself is non-political Tojib feels- former Rector of the Agricultural College at Bogor since its main jo a plant pathologist an The Ministry hancles 1 Big estates -- SOO-acres-or more both-government and private The Dutch and their number has increased since the Indonesian Government'took them-over in-l958 In l963-6h the Government expropriated theLBritish estate53 in-l965 the Belgian French and Swiss The two American rubber to Goodyear and Uniroyal They got the Bedgians to come back-in joint ventures paying the BelgianS for the Indonesian share and are now awaiting the decision of former UK owners on'the'samerdeal not wish to return n ownedtestate53'of which-there are 280 in West Java 2 Private Indonesia SOLand 500bacres in size alone presumably between 3 Smallholdings plantations of 50 acres or less most are acre or I acre These grow-rubber coffee pepper3 kapok spices clove nutmeg etc The total yield of smallholdings in rubber is more than th of the big estates but the-quality is low The trees are old and small holders have paid little attention to the variety-of trees that should been plantedz The Ministry-is now trying to upgrade the-quality Heraveh which used to be exported t6 Eingapore'- and the fact that re-milling is now done in'lndonesia to0 blankets and the'fact that'foam'rubber'is nOW'exported from lndone ma the faCt using slabs 7 will produce a betteilzua iy and price of rubber I got lost Indonesian Diary hh- next to its rubber but may also enter ow rice and other I presume ed its own rice estate Uniroyal not only has start 9 rice without flooding estate in the'highiands growin into to gr products or may rent the'land'of these estates and do it along -- again at the request of the Indonesian Government rubber estates with to rice and other crops The big question for Tojib should they repian Indonesia switches more rubber trees or should these'iands be converte The demand for and price of rubber is falling if to another crop on a given estate it's risky -- especially when they switch to perenniais '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 example the US used to import a great deal of Indonesia s palm oil -- but with the introduction of other oils cotton etc these imports fell to 2 560-tons in l965 get soft loans from the for fertilizer of two-years Tea for example needs but the-Government estates have only The Minister has tried tor imports to cover imports for a period #00-600 kilograms per hectarevper year enough for of the need hence thesewtea-plants are not disease- i resistant Rubber and other piantations have-simiiar fertilizerwneeds and the same need'for soft'loans Tojib figures two'years of Tmports will permit 3 increased'production and exports so that the country can import all the fer- tilizer repaying the ioens but IBRD is not getvthis-in Amsterdam 'Totai'government-owned estates tea rubber etCa need $20-30 million in soft loans for fertilizers alone in the next two-years and all estates combined' inciuding private needv$50-60-million for the period The Asian Development Bank haS'no'funds yet-for this kind of soft loan Commercial crops indonesia s export earnings of this goes these crops ranges from 6% to 80% depending on how indonesiawa big loss in foreign exchange This too -is-a big problem Tojib will-attend on He-feeis-the-poiitical situation IS good for that the private indonesian estates capital He d like to discuss this at the RT Decemberhh - Djakarta 7 00 - 7 h5 pH Dr Selo Soemardjan his office SelO iS'going'tOLBali until next Saturda This we a him Gave him a'letter to the 6ultan nailingydown RT agieElehtzt etc plus a suggested reply to me from the Suitana He accepted both _-Ions Including the promise-that'the Suitan wouid-send ailetter to all Govern offICIals saying he and 5uhartorapprove their participation he said t'hrpent would force-the'Sultan tO phone Suhartol He also read and approved press release Indonesian Diary -45- Soemardjan told me that in Gen Sudjono's absence -Gen Suryo is my contact with Sunarto 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 5205 5145 Darius Marpaung M P - General Chairman KeSpekri Home Djl Guntur 43 Tel 5l396 Received me in white gloves in a small dingy dirty home He has gout was in obvious pain his hands is going to Texas-for treatment in ten days Christian fr ends have-made-it possibleu '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 lC st -- and perhaps not for a great deal longer He 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 33% succeeded and is a bit militantl 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 union 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 hollow ring Also the division within Basbindo -- which is not a break-up of the union into two separate unions -- will weaken'Sudono in his quest for confederation He Marpaung believes elections woth be held until l9703 and that the situation at least until then will he too muddled for any real union movement away from politics Marpaung will attend the His secretary shoed me to my taxi God bless you sir December - Djakarta 7 50 - 8 20 AM Hh lsnaeni Vice-Chairman Parliament Home Djl Mangunsarkoto 5- Tel Ll384 H6hh6 ld phone Pleasant visit - Fair English He apologized for being so hard to see explained they are trying to wind up the l968'budget by December 2h He is 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 itls very important Indonesian Diary -h6- He and Widjojo and others seem firmly convinced that the US plan expressed in Amsterdam to furnish l 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 l0 l0 - l0 30 Arifin Harahapg'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 I leave but said 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 I 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 I think the people are worried that another-continuin group may be set up by Bi 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 shouid send him-ali our materials But he is very much involved with the 1L0 -and Alawoedin Minister of Manpower has asked him to attend the June meeting in-Geneva Indonesia has just re-joined ILO He will try very hard to be with us thinks the RT is great He said he had an eiementary school friend who is now political adVisor to Nasution and when i said I couldn't get a date with Nasution he called his friend and took me'personaily to cail on him after an interlude while'l visited Harahap Indonesian Diary 47 December 5 - Jjakarta 10 50 - 12 10 Oejeng Soewargana Garut 18 DjaLarta Tel 51660 Bekti took me to see this man to get his help in reaching Nasution He is a publisher helped to create the party with Nasution and IS the rses on Communism in Asia latter's political advisor He is 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 of the Interior Studying Communism is his hobby a devout Hoslem he is fasting now that we are in Rahmadan -- as is Sanjoto He wants an Australian briefing memo and list of BIES members and will try to get me a date with Nasution whose political advisor he is confidential documents we should get hold of The on the October 1 Coup anc a rebuttal by The Rand The Cornell Study Masters at it over-emphasizes in numb rs and in He showed me tw Cornell University Study Corporation also called The Oct 1 l965 Coup has a copy is all wrong Masters agrees partly in th the strength of the PKI before and after the Coup 'both influence and povsr in political and other organizations Oejeng feels that many members of were-not convinced Communistsz The PKI infiltrated the BTI Indonesian Peasants Association and such parties as the PNI but never used the name Communism as other groups used their-name Christian I Muslim Hence-peoplevin-the infiltrated-organizations never identified themselves as Communists -- and this has proved to be-a real weak- ness for the PKI and the Communist movement in lndonesia in general in the PNI adoptedfthe policy-that they accepted the needs-of lndonesie This opened the door infiltrated today But Suharto alive'a-strong nationalist party The Marhaenis group Marxism as modified to fit for remains will keep to be parties Books recommended by Oejeng 1951-63 Donald Hindley University of California e Decline-of Constitutional Democracy in Indonesia Herbert Feith Th Cornell University - Robert A Scalapinoc The Communist'Revolution in Asna He also urges we talk to Frank'N Trager' N U Robert Til hman a Karl J Pelzer Yale and Arthur Dommenvat Yale All or most are ogposed to the Cornell Study -ug- Indonesian Diary December 5 - Ojakarta 1 30 2115 Chairman H Mahbub Djunaidi General lists Association Pusat Indonesian Journa Tjokroaminoto lh Tel 9590 and Editor Duta Masjarakat Muslim daily M ill attend Mahbub is also fasting He is young has fair English the RT He says newsprint cost will rise in l968 to the point where a newspaper will have to sell for 7 or 8 rupiahs and people can't buy a paper at that He feels the-Government must subsidize the papers Says three paper -- but nothing has yet come out of them in our group price mills are supposed to start operating He was interested in the paper companies He feels the PNI is still basically Marxist -- in their Constitution Also feels that the Socialists Sumitro Lubis etc have Marxism in their Constitution but that these men are not truly Marxist 4 05 - hzso December 5 - Djakarta Sjafrquin Prawiranegara Home Djl Tjiputat Raya 3 Kebajoran Lama Off Ujl K H Agus Salim 52A Tel h28ll Sjafruodin is an economist was Minister of Finance and then Governor of the Central Bank from l9h5 to l950 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 students Sadli Soemardjan Widjojo etc lack moral courage and have sold out become yes men They accept far more than they should -- or rather should get out of Government before accepting all they do accept Basically he feels they-accept a rotten corrupt govern- ment which makes a mockery of its own policies the tight money and balanced budget policy for example is a farce - The assumption in the l968 budget is that revenues will be llO billion rupiahs He says they'll be lucky to get 50 billion -- and even if they were to get the llO 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 youngsters is pure -- and even they lose their ideals and become corrupt'when they come into contact With 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 and other military men and can't dismiss them en masse even though they are corrupt men who collaborated with Sukarno huh managed and then pu -h9- Indonesian Diary government employee is corrupt fire them all on a waiting list Even the Attorney-General the right to judge the-corruption of others Then start an Indonesian Marshall Plan of a kind heavily involving foreign private enterprises in this way create wealth producing projects competently including generals You can't save Indonesia with credits alone His solution assume everyr hire back half and put the rest is corrupt how have these men back to work in these-projects I've come across Quite a guy And the-first white-haired Indonesian- December-6 - Djakarta 3 50 - hzhO R L Tobing Sh Vice Association Home Djl Dr Sam Ratulangi I9A Tel Off tel #7269 He came with two aides He'is-quite nationalistic feels Indonesia needs some form against the power-of foreign capital Fair-to-poor English Feels -like Motik that- most Chinese are Reds but listened'when'1'suggested'that acceptance-of-and compassion toward the Chinese would make the difference between their loyalty to Indonesia and to Peking He will-attend the RTy-and will inform Moh Noeh-about am to write Noeh Moh Noeh c o Organda Djl Madjapahit I Tel #3773 40282 ed the generals presumably those who Tobing says Choo Ming Fat financ l attempted the Communist coup of Oct December 6 - Djakarta l0 50 - Ilzhs Maj Gen Supjipto S H Minister Department'of Agriculture Departamen Pertanian Salemba Raya 16 land four aides -He-w ll attend the RT with the Minister of lantations No'English 'will have to bring an interpreter but will probably rely on'his-colleagues in-the'mainvihexwill bring his Secretary-General and-ail his-Director-Generalsl Finally met with Supjipto He-says lndonesia s-big agricultural needs are - Fertilizer and agricultural machinery'and equipment especially equip- ment-to open up'new farmolands'in Sumatra and elsewhere-outside Java - Exploitation of forestry They should immediately exploit MO hectares keep 80 million in million to farming _g9_ lndonesian Diary His solution assume every-government employee 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 lndonesian Marshall Plan of a kind heavily involving foreign private enterprises in-this way create wealth producing projects competently mana ed and then put including generals back to work in these projects You can't save Indonesia with credits alone I Quite a guy And the-first white-haired lndonesian-l've come across December 6 - Djakarta 3 50 - 4 40 R L Tobing Sh Vice President3'lndonesian Importers Association Home Djl Dr Sam Ratulangi 19A Tel 455l6 Off tel 47269 He came with two-aides Heris quite nationalistic feels lndonesia needs some form of protection' unidentified against the-power of foreign capital Fair-to-poor English Feels like Motik Chlnese are Reds but listened'when l'suggested that acceptance-of and compassion-toward the Chinese would make the'olfference'between-their loyalty to Indonesia and to Peking He will attend the RTg-and will inform Moh Noah-about it ' I am to write Noeh Moh Noeh c o Organda Djl Madjapahlt 1 Tel 43773 40282 ed the generals presumably those who Tobing says Choo Ming Fat financ l 'attempted'the'Communist coup of Oct December 6 - Djakarta l0 50 - 11 45 Maj Gen Minister Department'of Agriculture Departamen Pertanian Salemba Raya l6 rand four the RT with the Minister of Plantations No'Englishg will have to bring an interpreter but will probably rely on'his-colleagues bring his Secretary General andvall his-Director-Generalsl Finally met with Supjipto He-says lndoneslals-big agricultural needs are - Fertilizer and agricultural machinery and equipment especially equip- ment to open up'new-farm'lands'in Sumatra and elsewhere-outside Java - Exploitation of forestry They-should immediately-exploit 40 million hectares keep180 million in 40-50 million to farming Indonesian Diary '50 husbandry - They have plenty-of'cattle would like - Development ofwanlmal like-the Goa deal a slaughtering-operation in Indonesia -- spoke peretlons products rather for-moreoprocessing-o other-wood SapjiptO'is pushing' efabrlcated housinguendt of the need-to'producevpr than just export lumber rm prices allowed fa and or is He-obstinately refuse I don t'think he knows-much to rise aS'a stimulus to farmers w afraid tO'talk soft loans for fertilizer imports pushing the Indo- planning'to agriculture -- completely off the-point He ll be-a-difficult guest other-materials in a week or its 5-yeer planvands peechaat the FAO meeting The'Ministry will have- p4us 5upjipto s s so I believe in'Engl sh 'lhis should be'picked up by Sanjoto l2 00 - l2 30 Decemberr6 - Djakart _ Zulharmans3 Harlan Kami Kramat Tel h5386 h5h08 story and pronounceda- ll attend'the 0pinion Leader The s putysheeisg-MH sessionrand be a panelist Nono'l5'27 editor of the-studentrpaper Harlaanam vae s on a two month Leedersh p Grant visit to Dept Lubis and for a Muslim but'no real Moslem politicians of the Subchan out boldly at a meeting we can get 'Mahbub'liquored up December' - Djakarta 1 30 - 2 50 Dr Emil Salim Bappenas Natlonal Plenning Bureau Spent'thevfirst hour waiting for discussion with a who is a at Bappenas until l972'or 73 Government is really footing'the'bill Widjojo was 'create a Government'will createrin Ibillion9'rupiah The'tax'roidsumus 'arernot rea istic Indonesian Diary as already-directed-Bappenas under Salim says-therPeoples Congress the-basis of thewfree play of market to'put the 5ryear-plan on force5t The'Plen'will must have a detailed development'budget for that year r- and be very-simple and broad for the l970-7h perioda 'It wiil stress-infrastructure'and agriculture in strategic terms Example by l969 they will have converted the present Government agency to-an agency whose-purpose will be to 5 well as importing and selling or ph losophy will high'enough-to pern t rice growers to buy Just recently the-pricehratio of fertilizer fertilizer and expand production - to rice was-2 to l makingwit impos The-Government productdoh is about'right in relation to fertilizer prieev on rice becausetits price the Plan will involveetherGovernment in othe keyvcommodities siblenfor buy fertilizer that they must adopt a policy Salim says-the price today of business -- at least those'businesses Example the in future provide productiona In the main the dustrial parks rather-thanbindustries per se But make the there'are'manyvveeted-intere o-u-tvof business avstlow one - There is still division-in they-don t yet know if they'll ASvgovernment does get out go-tO'free'exchan its private more and'more-of enterprise'cannot operate budgetvthat meant anything -Past-budgets were ignored -- Ministers budget is causing anguish'and-criticism'among thetpub4icv'-4nhthe-l967 budget most of for the gradually in'favor'of development always got end of-year supp dbinterna4 not llO srwi44-probably fall short31ther$250 m44lion was budgeted on rise in the or cut 'its budget deficit besiekdata Indo- censusg etc and only recently payrolls takes time too soon mess -- exports stagnatingn-iThe idealists outside overnighta They are wrong Salim beiieve5 i Indonesian Diary '52 December 7 - Djakarta 8 50 9150 R Soetanto M A Direktur Utama Office Bank-Negara-lndonesia-l946 BNI Ill Djl Lada Tel 23291 25885 Home Djl Lawu 5 Tel 50520 Good English He feels the RT could jolt Suharto -is all for it will attend His bank BNI a state-bank is-the only bank that began originally as a purely Indonesian state banks Hence it is a bank for small business for newcomers and-has 325 branches throughout lndonesia Most of these lose money- shades-of Australial e g BNI has 7 branches in West Borneo only one of which makes-moneyuv In number of transactions in export-import and foreign exchange BNI is first but in valuelthey rank third The Bank Dagang Negara also state -has 45-brancheSLandwenjoys-the legacy of big Chinese business clients exporters which the'bank had when'it was a Dutch bank IV has clients-the big estates BNI was a wreck when Soetanto took over - He uncovered 600-million rupiahs worth of fraud involving'l o employees Soetanto was chairman of the-committee that drafted the original bank law which'outlawed foreign branch'banksw- The Minister-of Finance made two changes in this draft I permitting foreign branch banks and 2 making the Minister of Finance responsiblevfor-giving licenses to new banks rather than the Governor'of the'Central Bank Soetanto fears foreign banks and says they must'be in becausev i Indonesians can't forget the oid'days-of foreignrbankrand other the state banks are required byvlaw-to chargevonly month whereas private speculative credit institutions can charge what they like l0%-today and presumably the foreign banks would have'the same'freedom'-- but whereas lndonesians don't trust the strength of the'private banks for goodhreasona they woqu'trust foreign banks with their deposits and the maybe thehprivate'banks too would be driven out of businessg'the'Government rationale in'forcing state banks to help business is that business must have access to loans lower than the rate of inflation 3 the total Indonesia-is 40-billion rupiahs 25% IO billion in with thevBE rate today $l to millionlil A Freeport Sulphur investment'will alone amount to West lrian this shows foreign capital strength vs Indo- nesian Soetanto equity in Indonesian banks'if this a IIsocial function to perform Savings in Indonesia thencountry need5145_20% to reach the attain the take-off stage without infiation for the next 20 years international firms might sell stock certificates-in lnd nesia to give Indonesians something'secure to buy as savingsg'thus'slowing inflation Indonesian Diary 53 Indonesia has 75% currency and 25% demand depositsa The Government still pays its bills l believe he-seidl by printing money rather than writing checks against salarie53 eng- in C85h - BY paying in cash they permit continued corruptiont The generals must go or the whole effort will go down the drain Thexgenerals around Suharto have big housesg'go to Singapore Hong'Kong or Tokyomevery'weekend send their wives to Europe'on'tour5 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 andewill eventually destroy it -- and he bangedlhiS'fist futilely in his hand December 7 - Djakarta l0 l5 - ll 30 Omar Abdalla President Bank Dagang Negara Off 5 Pintu Besar Utara DjakartarKota Tel 22822 22826 Homea Pasuruan Djakarta Kota' Tel 51655 Suggests as a business guest Mr Hesjim'Ning an'lndonesian who assembles Toyotas Consuls etc as founder-of the Indonesian Service Company There-are l23 Java alone but none are really controlled by'the'Central Bank --and he doubts that the Central Bank in future'be'able'to control examiners He feels that all foreign should have to furnish the'same low interest rates - He s not worried about losses by pro- vincial branches partly because'the-export business is-outside Djakarta Medan 'etcz and Djakarta-is-only an import market He will attend the RT Decembe7'7 - Djakarta 8 30 - 9 30 PM Ma'Subchang'Vice'llhaIirman7 People's Congress I cancelling the session with the Peoples as all lndonesians-seem to or-at least-theeMuslims9 He insisted we meet in the evening at his office I explained'that l hadn3t been'ab4eeto Siregar or'Gen Nasution like him to speak for the Mahbub's English is bad heJS'junior in rank'and'too scaredlto speak ou a9- I also explained that Nasution's political advisor had triedlto make a-date but that Nasution'S'excuse-was that'this is Ramadan3-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 flimsy excuse Indonesian Diary 54' Subchan'gave me a number of names of to fill this need mainiy He-then'began'to tell me why we should keep the Peoples Congress session I supreme Peoples Congress has become'just a symbol etca His reply those who say such things about the Peoples-Congress-are Jike-the'weakrwho'denigrate the courageous it s a reaction The PeOples Congress is the 9211 force that isn t afraid of the military and stands up to them I myself Subchan knowing that Nasution is indecisive5 forced through the action that finally got rid of Sukarno -- but I stay in the background and give Nasution the credit Roslhan Anwar is a master politician and he does have principles but he won't go to jail for them is-expert in salon conversation -- butg g PeopleS'Congress truly fight for what webbelieve 'Resoiution 23 which directed Plan forces as the key economic determinant'was my Parliament don t'even understand it3 -- etc etc RT i agreed-to reinstate that meetingu He iS'to slip me into thevmeeting-of Nasution and the vice -- says for Suharto because 49 Humphrey had already spent there is a real protocoi'probiem in'that President and thus the'thalrman'of President but'not 'of'course in flag-raising to whom'iS'the'saiute been more decisive in agrees Mashudi and Siregar'will-attend the RT                     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