Lees Belated Wake-up to Reality

27 January 2004

Singapore appears to have finally realized that the game has changed in its relationship with Indonesia, and that it is high time to create an alliance with the new political forces at work in Indonesia.

Singapore’s Deputy Prime Minister Lee Hsien Loong (commonly known as B.G. Lee from his rank as a brigadier general) was in Jakarta this week to establish the new relationship on solid ground.

Speaking to reporters after meeting President Megawati Sukarnoputri Monday (26/1/04), Lee made it clear that Singapore considers its neighbor a very important factor in its own stability.

It is very important to us that the elections go well for Indonesia and that a strong government emerges, able to take Indonesia forward peacefully and prosperously, said the designated successor to Prime Minister Goh Chok Tong.

Indonesian Foreign Minister Hassan Wirayuda had his own words to say on the relationship just a day before Lees visit.

Speaking to reporters on Sunday, Wirayuda implicitly sent the message that it is time the Singaporean authorities adapted to the new situation in Indonesia.

No specific agenda has been arranged for Lee’s visit, he said, but I hope we can build up mutual understanding on the real situation in our country following the fall of the New Order regime.

Rapid changes in various fields have taken place here since 1999, added Wirayuda, noting that the executive was no longer the only institution that mattered. There is now also the legislature, the press and civil society calling us to account. In my opinion, a number of neighboring countries still fail to understand this.

There was little doubt that it was Singapore that he had in mind when he made the statement.

Two years ago, Justice and Human Rights Minister Yusril Ihza Mahendra made a more confrontational statement on the relationship.

In response to Singapores unwillingness to establish an extradition treaty with Indonesia on the grounds that the country adheres to the British common law system and that this created difficulty in establishing such a treaty, Yusril said he laughed at the excuse.

We already have extradition agreements with Australia, Malaysia and Hong Kong and they all adhere to a similar system as Singapore, that is British common law, said Yusril.

Reformist elements within the Megawati Cabinet who would like to see several black conglomerates like Syamsul Nursalim returned to Indonesia have good reason to be disappointed with Singapores intransigence on the issue.

Many Indonesian citizens alleged to have committed crimes in Indonesia live untroubled in Singapore, and some have become Singaporean citizens.

Yusril is also on record as stating that Singapore must be considered uncooperative in dealing with money laundering and the funding of terrorism.

More salt in the wound has been provided by Singapores reluctance to fully publish its trade statistics with Indonesia. The island nation’s trade promotion body International Enterprise Singapore for the first time for 30 years released earlier this month full trade statistics with Indonesia.

“We released them for the first time and we are in the process of reviewing our methodology and make it consistent with World Trade Organization standards,” Lee told the Jakarta media.

Critics in Jakarta say the data still concealed various questionable activities, such as imports of sand from nearby Indonesian islands for use in landfills in Singapore.

The critics say the figures supplied by Indonesia provided figures for half the imported commodities for 2002, and the other half for 2003, making it impossible to make a comparison. Full figures were provided for only two commodities.

Sources at Indonesias Department of Industry and Trade state that the overall figures for two-way trade were always supplied to Indonesia, but the statistics were kept quiet.

When Habibie became president we asked him if we should publish the figures. He replied it was better not to, said one senior departmental official.

The secret trade between the two nations was kept so presumably because the Indonesian leaders were in on the take from billions of dollars in smuggled goods that passed through Singapore. It was in Singapores interests to collude with the Indonesian leaders desire to keep the scale of the illicit trade quiet.

Requests by the current government for details of transactions hit a brick wall. Singapore responded that it was not able to reveal details without the agreement of the companies involved.

Rather than dwell on the continuing problems with the trade statistics, Lee preferred to concentrate on Singapores enthusiasm for Indonesian assets. “Last year, Singapore became the fifth-biggest investor in Indonesia,” Lee told the press.

Singapore has been rushing in to deals in Indonesia at a time when others have feared to tread. Government-controlled companies have sunk $2 billion into Indonesia in the past year.

Singapore Telecommunications has been the biggest player. Last year it paid more than $1 billion for a 35% stake in Indonesia’s leading mobile-phone operator, Telekomunikasi Selular (Telkomsel).

SingTel also has a 40% interest in Bukaka SingTel International, which has the fixed-line monopoly in less populated eastern Indonesia.

ST Telemedia, an offshoot of government-owned Singapore Technologies, in December 2002 bought 42% of the country’s No. 2 mobile carrier, Indosat, for $650 million.

And in May 2003, Temasek Holdings, Singapore’s state investment arm, agreed to pay almost $400 million for a 51% stake in Indonesia’s fourth-largest bank, Danamon.

Regime change

Essentially, Singapore has been slow in adjusting to regime change in Indonesia. The cordial relationship between Indonesias authoritarian ruler Suharto and the equally authoritarian Lee Kuan Yew suited Singapore very well. Dealing with a new political environment appears to have left Singapore wrong-footed for the past five years.

The uncooperative attitude of the Singaporean authorities in the matter of the extradition agreement indicates more fundamental and crucial problems in the relationship.

Singapore has been unhappy with the new situation in which checks and balances have developed between the executive and the legislative. Accustomed to having its way at home, the Singapore government has been slow to accept that times have changes in its once cooperative neighbor.

Wirayudas comments on the need to understand the greater level of accountability to the legislature, the press and civil society was very clearly directed at Singapore.

Others have also been slow to catch on to the sea change in Indonesia. Transparency International, which rightly scores Indonesia far down the scale on the global corruption list, nevertheless continues to see Singapore as a haven of purity.

No-one doubts that Indonesia deserves its place on the corruption list, but questions need to be asked about Singapores reputation for being squeaky clean. With questions being raised about the role of its citizens in smuggling, money laundering and even the financing of international terrorism, Singapores talents for wheeling and dealing are now being brought into the spotlight.

Given the new reality in the relationship and the desire by Indonesias new generation of leaders to set the record straight, it is small wonder that B.G. Lee sees the need to create a framework for a new relationship.