VZCZCXRO7451
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJS #0078/01 3320428
ZNR UUUUU ZZH
R 280428Z NOV 07
FM AMCONSUL SURABAYA
TO RUEHC/SECSTATE WASHDC 0114
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHJA/AMEMBASSY JAKARTA 0104
RUEHWL/AMEMBASSY WELLINGTON 0047
RUEHBY/AMEMBASSY CANBERRA 0049
RHHMUNA/HQ USPACOM HONOLULU HI
RUEHBJ/AMEMBASSY BEIJING 0003
RUEHJS/AMCONSUL SURABAYA 0116
UNCLAS SECTION 01 OF 02 SURABAYA 000078
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR EAP, EAP/MTS, EAP/MLS
E.O. 12958: N/A
TAGS: ECON PGOV EINV SOCI ID
SUBJECT: EAST JAVA: SURABAYA-MADURA BRIDGE - COMMUNITIES UNPREPARED
TO TAKE ADVANTAGE OF ANTICIPATED DEVELOPMENT
SURABAYA 00000078 001.2 OF 002
This message is sensitive but unclassified. Please protect
accordingly.
1. (SBU) Summary: Residents originally opposed plans to build a
bridge linking the island of Madura with Indonesia's second
largest city Surabaya fearing Madura's unique culture would be
destroyed. With the Surabaya-Madura bridge scheduled for
completion in late-2008, distrust has given way to anticipation
as local leaders envision the revenues, prestige, and influence
that will accrue in coordination with business opportunities
linked to the bridge's opening. With regency-level elections
scheduled for the coming months, election officials and civic
leaders lament the amount of money being spent to secure these
lucrative positions. While local regents spin elaborate plans
for new ports, airports, dams, and power projects, others worry
that economic development will bypass communities with limited
skills, poor infrastructure, and weak education systems.
Bridging the gap between expectations and reality may be a
bigger challenge than bridging the straits of Madura. End
Summary.
2. (SBU) On November 20-21, Surabaya Principal Officer and
Pol/Econ Assistant visited three of four regencies -- Bangkalan,
Sampang, Pamekasan -- on Madura, an island of 4 million
primarily ethnic Madurese lying less than five kms, or 45
minutes by ferry, from East Java's commercial hub Surabaya.
Throughout the visit, local officials, civic leaders, academics,
and businessmen speculated on the impact of the Rp 3.6 trillion
(USD 400 million) Surabaya-Madura bridge (referred to locally as
Suramadu) on Madurese society, politics, and economics.
Suramadu, 50% financed by the Chinese government and built by
two consortia of Chinese and Indonesian contractors, is
scheduled for completion in late-2008, creating the first
permanent link between Madura and the Javanese mainland.
Initially, local religious and community leaders opposed the
bridge on the grounds that Madurese culture and identity would
be destroyed. Lured by the promise of much-needed economic
development, the local community has now embraced Suramadu,
hoping that greatly reduced transportation times/costs will
attract industries, businesses, and investment to this
impoverished area.
Lacking Infrastructure, Skilled Population
-------------------------------------------
3. (SBU) According to Achmad Syaffi, the Regent of Pamekasan,
Madura is home to three of the 199 most "backward" regencies in
Indonesia. An estimated 49% of the population is considered
"poor" and 66% are farmers. Economic growth was only 4.2% in
2006, and higher fuel costs and the weakening dollar are
expected to slow growth in 2007. Investment is limited by poor
infrastructure, a lack of direct links to import/export
facilities in Surabaya, and an unskilled population. A November
2007 investors meeting in Pamekasan suggested that investors
were interested in power plants and agriculture processing
projects. Hazin Mukti, the head of local NGO Research and
Development Center of Madura (LP3M), commented separately to us
that Pamekasan has the potential to serve as a business center
for Madura, as it already hosts the head offices of various
banks, the regional tax office, agricultural consolidation
facilities, and has a business-friendly bupati. But, he added,
Pamekasan is not ideal -- it is "the best among the worst."
Big Plans, Little Planning
--------------------------
4. (SBU) Officials from the Regency of Bangkalan, located
closest to East Java, used an elaborate power point presentation
to outline the new development opportunities that would follow
the opening of the Suramadu bride. Recognizing that the bridge
will terminate in Bangkalan regency, the local government has
issued a "perda" (local regulation) announcing plans for five
major infrastructure projects: a container terminal; an airport;
a dam; a gas power plant; and transportation infrastructure.
Although port officials in Surabaya have expressed skepticism
about the demand for a new container port on Madura, Bangkalan
officials assured us that a feasibility study completed by a
Japanese consultant demonstrated the project was technologically
and economically feasible. They added that a local investor
already holds a permit to begin construction, with a target date
of 2015. The proposed airport, they explained, would serve
Madurese migrants in Jakarta and Kalimantan and relieve
anticipated congestion at Surabaya's Juanda airport. Although
officials admitted that human resource capacity and economic
SURABAYA 00000078 002.2 OF 002
demand in the regency to support these projects was currently
insufficient, they expressed confidence that the existence of
the bridge would mitigate such obstacles.
5. (SBU) Local officials acknowledge, while activists and
academics complain, that Madura is ill-prepared to take
advantage of the opportunities presented by the bridge. The
Pamekasan Regent said his office was focused on development of
the education sector in an effort to strengthen local skills and
in doing so attract investment. The Bangkalan regency has
opened a training center (BLK) to provide vocational skills
training. Everyone we met expressed a desire to improve English
language training. LP3M provides advocacy to all four regencies
on Madura to help strengthen good governance and improve the
investment climate. Hazim Mukti noted that Pamekasan has been
the most responsive, establishing a team made up of government
officials, NGOs, and religious leaders in an effort to
strengthen governance.
Limited Coordination
--------------------------
6. (SBU) To date, efforts to coordinate all four regencies'
preparations for the bridge's completion have been limited. The
Regent of Pamekasan told us that the four regents have asked the
East Java provincial government to work with them to develop a
clear and integrated development program. The Regents also
submitted individual development concepts and recommendations to
the central government in Jakarta. The Bangkalan regency said
that it was the responsibility of the central and provincial
governments to develop not only the bridge but also the
surrounding areas. Local officials explained that, following
the bridge's completion, the central government will establish a
"Suramadu Administrative Agency," an organization that will be
responsible for coordinating and developing the area. LP3M
commented that decentralization has reduced the coordination
among regencies as well as the coordination between the
regencies and the provincial government.
Money Politics
----------------
7. (SBU) Given the expectations for economic development and
influence associated with the completion of the Suramadu bridge,
it is perhaps not surprising that candidates are eagerly
anticipating the upcoming regency elections: Sampang December
27, 2007 Bangkalan January 23, 2008; and Pamekasan March 5,
2008. The political process is expensive, with LP3M's Hazin
Mukti estimating that a regent candidate needed at least Rp 10
billion (USD 1.1 million) for the campaign, logistics, and
"other purposes." Other civic leaders suggested Rp 35 billion
(USD 3.5 million) was necessary to run a successful campaign.
Both NGOs stressed, however, that the outcome of the first
direct elections for rgent was hard to predict, as it's no
longer easy to "provoke" the people. The Chairman of the
Sampang Election Commission KPU noted that political parties may
play a weaker role in this election, observing that the
candidate supported by a small political party won the election
in the Banyuwangi regency in East Java.
MCCLELLAND