Although the latest figures from the Central Statistics Agency (BPS) show year-on-year inflation slowing for the second month in a row to 17.03 percent in January, high inflation is set to continue looming large over the economy this year.
Despite the lower figure, monthly inflation still increased by 1.36 percent in January, in contrast to deflation of 0.04 percent in December.
The high inflationary pressure seems likely to persist amid increases in food prices resulting from seasonal floods that are likely to continue in many parts of the country for the rest of this month. This could prompt the central bank to further hike its benchmark interest rate to reduce price pressures.
"January's inflation was mainly driven by a rise in staple food prices, particularly of rice," BPS director Choiril Maksum said.
"We recorded increases in rice prices of between 2 and 23 percent, contributing up to 0.6 percent to this month's inflation rate."
Staple food prices as a whole were the largest contributors to January's inflation, rising by as much as 4.26 percent and contributing 0.94 percent to the inflation rate.
The price of rice rose despite the government importing 110,000 tons to secure stocks and stabilize prices. Flooding across the country has been threatening the rice harvest, which is likely to further push up rices prices.
Besides staple food prices, consumers also saw a 0.70 percent rise in transportation, communication and financial services costs, which contributed 0.18 percent to January's inflation rate. Another main contributor was processed foodstuffs, whose prices increased by 0.94 percent.
However, the prices of gasoline, kerosene, cooking oil and vegetables and fruits fell.
Apart from headline inflation, the BPS also reported that core inflation, which excludes volatile prices, such as those of food, and regulated prices like utility rates, was up 0.72 percent month-to-month and 9.68 percent year-on-year.
The BPS, in collaboration with Bank Indonesia, has started this year to report core inflation, which the central bank relies on in deciding its macroeconomic policy.
The government has officially targeted full-year inflation of 8 percent in this year's budget.
Year-on-year inflation stood at 18.38 percent in November, the highest level in six years, as costs rose following the October fuel price hikes and as a result of increased food consumption during the Idul Fitri season.
BI has forecast that monthly inflation will remain at 3.19 percent in the first quarter before easing to 2.36 percent in the fourth quarter, ending up at a year-on-year level of between 7 and 9 percent. The forecast has already factored in possible power rate hikes, although only up to a maximum of 30 percent.
Commenting on the possible electricity hikes, Choiril said that an increase of between 15 and 40 percent could up inflation by between 0.4 and 1 percent.
"If electricity prices rise by 30 percent, then inflation will increase by 0.9 percent," he said. "And this is just the direct effect -- we have yet to calculate the knock-on effects."
Separately, Finance Minister Sri Mulyani Indrawati said that monthly inflation was expected to remain high until March at the earliest.
"Afterward, we expect inflation to ease," she said. "We will from then on be particularly cautious about months with holidays and the year-end in order to keep inflation at those times in check at below 1 percent."
Source:
The Jakarta Post
Thursday, February 02, 2006
Temasek eyeing PT Chandra Asri: Report
SINGAPORE (AFP): Singapore's Temasek Holdings is stepping up its global buying spree by offering to buy control of Indonesia's biggest petrochemical firm PT Chandra Asri, a newspaper reported here Thursday.
The Business Times said the state-linked investment firm had signed a letter of intent to take a controlling interest in the petrochemical firm, whose production complex is located on the western tip of Java island.
The newspaper said Temasek was "close to paying" an estimated US$700 million for a stake in Chandra Asri, which is owned by Japan's Marubeni, Malaysia's Glazers and Putnam and Indonesian investors.
This would raise Temasek's Indonesian investments to $3 billion since 1997, it added. A spokeswoman for Temasek said it had no comment to make on the report. Temasek normally announces only completed deals. Its global portfolio now exceeds $60 billion.
In Indonesia, the Temasek group has direct or indirect stakes in telecommunications firms Indosat and Telkomsel, Bank Internasional Indonesia and Bank Danamon Indonesia.
News of the Chandra Asri offer closely follows a Temasek-led group's purchase of shares in a Thai telecommunications firm, Shin Corp, from the family of Thai Prime Minister Thaksin Shinawatra.
Temasek's fully-owned subsidiary PSA International has also made an offer for British port giant P and O that has been topped by Dubai-based rival DP World in what is shaping up to be a high-stakes bidding war.
Source:
The Jakarta Post
February 02, 2006
The Business Times said the state-linked investment firm had signed a letter of intent to take a controlling interest in the petrochemical firm, whose production complex is located on the western tip of Java island.
The newspaper said Temasek was "close to paying" an estimated US$700 million for a stake in Chandra Asri, which is owned by Japan's Marubeni, Malaysia's Glazers and Putnam and Indonesian investors.
This would raise Temasek's Indonesian investments to $3 billion since 1997, it added. A spokeswoman for Temasek said it had no comment to make on the report. Temasek normally announces only completed deals. Its global portfolio now exceeds $60 billion.
In Indonesia, the Temasek group has direct or indirect stakes in telecommunications firms Indosat and Telkomsel, Bank Internasional Indonesia and Bank Danamon Indonesia.
News of the Chandra Asri offer closely follows a Temasek-led group's purchase of shares in a Thai telecommunications firm, Shin Corp, from the family of Thai Prime Minister Thaksin Shinawatra.
Temasek's fully-owned subsidiary PSA International has also made an offer for British port giant P and O that has been topped by Dubai-based rival DP World in what is shaping up to be a high-stakes bidding war.
Source:
The Jakarta Post
February 02, 2006
Hutchison's Indon unit to lose 3G edge with more players
(HONG KONG) Hutchison Telecommunications International Ltd's (HTIL) Indonesian mobile unit will soon lose its place as one of only two operators licensed to run both 2G and 3G services, with the Indonesian government likely to award 3G spectrum to another two local operators, according to the South China Morning Post.
Big market: Indonesia's mobile subscriber numbers are expected to grow by 30% this year to 61 million. The newspaper quoted analysts as saying that while Cyber Access Communications would first roll out 2G services in Indonesia, they feared that the 60 per cent-owned unit of HTIL would miss out on the emerging mobile market's peak subscriber growth because of its slower-than-expected 2G network roll-out.
Gatot Broto, a spokesman for Indonesia's directorate-general of post and telecommunications, was quoted as saying that the government would auction 15 megahertz (MHz) of spectrum in its second round of 3G spectrum auction next Tuesday. Another 20MHz is expected to be auctioned in 2008.
'(One likely scenario) is for the government to split the 15MHz so that one winner would get 10MHz, and another, 5MHz,' said Mr Gatot.
The current round has generated keen interest from seven firms, including operators Telkomsel, Indosat and Excelcomindo. The only other operator with a combined 2G and 3G nationwide licence is Natrindo Telepon Seluler, which is 51 per cent owned by Malaysia's Maxis Communications.
Analysts say a 3G operator needs at least 10MHz of spectrum for a service roll-out. Mr Gatot said Cyber Access had already returned 5MHz of its paired spectrum to the government after it appealed to the two existing 3G licensees last September for a partial return of their 3G spectrum.
The administration wanted the spectrum back for a second round of auctions for operators such as Indosat and Telkomsel, who were reportedly upset about not securing any 3G spectrum in the first round in 2003. Cyber Access now has 10MHz of unpaired 3G spectrum.
With less 3G spectrum, Cyber Access would probably have to build more base stations to add network capacity to compensate for the lost spectrum - a move likely to increase its investment cost, one analyst said.
Meanwhile, analysts do not expect Cyber Access to launch a 2G service until early next year, later than its original launch target set for this year.
HTIL said last month that the first 2,000 cell sites, built by Siemens, were not expected to be completed until the second half of this year.
Richard Moe, an analyst at Macquarie Research, said operators such as Telkomsel would probably be more aggressive in building a network than newcomers such as Cyber Access, as it already had 9,000 base stations in the country.
With a mobile penetration rate of just 20 per cent, Indonesia's mobile subscriber numbers are expected to grow by 30 per cent this year to 61 million, before growth slows to just 20 per cent by 2008. That compares with a growth rate of 55 per cent last year.
Mr Moe said Cyber Access's delayed launch means it would have already missed out on the country's peak subscriber growth rate.
Source:
The Business Times Singapore
February 2, 2006
Big market: Indonesia's mobile subscriber numbers are expected to grow by 30% this year to 61 million. The newspaper quoted analysts as saying that while Cyber Access Communications would first roll out 2G services in Indonesia, they feared that the 60 per cent-owned unit of HTIL would miss out on the emerging mobile market's peak subscriber growth because of its slower-than-expected 2G network roll-out.
Gatot Broto, a spokesman for Indonesia's directorate-general of post and telecommunications, was quoted as saying that the government would auction 15 megahertz (MHz) of spectrum in its second round of 3G spectrum auction next Tuesday. Another 20MHz is expected to be auctioned in 2008.
'(One likely scenario) is for the government to split the 15MHz so that one winner would get 10MHz, and another, 5MHz,' said Mr Gatot.
The current round has generated keen interest from seven firms, including operators Telkomsel, Indosat and Excelcomindo. The only other operator with a combined 2G and 3G nationwide licence is Natrindo Telepon Seluler, which is 51 per cent owned by Malaysia's Maxis Communications.
Analysts say a 3G operator needs at least 10MHz of spectrum for a service roll-out. Mr Gatot said Cyber Access had already returned 5MHz of its paired spectrum to the government after it appealed to the two existing 3G licensees last September for a partial return of their 3G spectrum.
The administration wanted the spectrum back for a second round of auctions for operators such as Indosat and Telkomsel, who were reportedly upset about not securing any 3G spectrum in the first round in 2003. Cyber Access now has 10MHz of unpaired 3G spectrum.
With less 3G spectrum, Cyber Access would probably have to build more base stations to add network capacity to compensate for the lost spectrum - a move likely to increase its investment cost, one analyst said.
Meanwhile, analysts do not expect Cyber Access to launch a 2G service until early next year, later than its original launch target set for this year.
HTIL said last month that the first 2,000 cell sites, built by Siemens, were not expected to be completed until the second half of this year.
Richard Moe, an analyst at Macquarie Research, said operators such as Telkomsel would probably be more aggressive in building a network than newcomers such as Cyber Access, as it already had 9,000 base stations in the country.
With a mobile penetration rate of just 20 per cent, Indonesia's mobile subscriber numbers are expected to grow by 30 per cent this year to 61 million, before growth slows to just 20 per cent by 2008. That compares with a growth rate of 55 per cent last year.
Mr Moe said Cyber Access's delayed launch means it would have already missed out on the country's peak subscriber growth rate.
Source:
The Business Times Singapore
February 2, 2006
Jakarta to delay enforcing some bad-loan regulations
Bank Indonesia will delay enforcing some bad-loan rules because it needs more time to build a system to monitor the credit-worthiness of borrowers, Deputy Governor Maman Somantri said.
The central bank will delay enforcing rules where by lenders must classify a loan as bad, even if it is not overdue, if the borrower has defaulted on debts to other banks, Mr Maman said in an interview on Monday.
The rules were to have come into effect in mid-2005, and the delay underlines the challenges faced by lenders and the central bank in assessing whether borrowers are credit-worthy or not. Still, it may allow lenders such as PT Bank Mandiri and PT Bank Negara Indonesia, the nation's two biggest banks, to reclassify some non-performing loans as good.
'This is certainly good news for state banks,' said Tjandra Lienandjaja, a banking analyst at BNP Paribas Peregrine in Jakarta. 'Their non-performing loans will certainly decline and loan-loss provisions will also decline as well. That will help profit at the lenders to increase.'
The central bank will not delay the enforcement of rules under which all banks participating in a syndicated loan, where a group of lenders join to provide funds to a borrower, must reclassify loans if there is a delay in repayment, Mr Maman said. It will also not delay enforcing rules for loans greater than 25 billion rupiah (S$4.3 million), the central bank said in a statement.
The central bank cannot enforce the rules for other types of loans such as ones given to individuals and small companies of between 500 million rupiah and 25 billion rupiah until it has completed construction of a system to track defaults. The implementation of the rule for such loans may be delayed for as long as one and a half years, the statement said.
The loan-classification rules, which force banks to prepare for possible losses if a borrower appears to be at risk of default, are among reforms introduced after the 1997-98 Asian crisis.
The collapse in the value of the rupiah left hundreds of companies unable to pay back foreign currency debt, triggering thousands of defaults by both companies and individuals.
The banking industry almost failed, forcing the government, backed by the International Monetary Fund, to orchestrate a 450 trillion rupiah bailout of the industry.
'Indonesian banks usually have enough time to digest any of Bank Indonesia's regulations, but for this regulation lenders didn't have much time. That affected state lenders like Bank Mandiri and Bank Negara,' said Fendi Susiyanto, who helps manage about US$170 million at PT Bank Permata in Jakarta.
'Still, if Bank Indonesia is now trying to delay the implementation, it shows inconsistency.'
Mr Maman said the central bank plans to rate banks on a scale of one to five to take account of their overall corporate governance and transparency. To that end, Bank Indonesia is pushing banks to set up audit and remuneration committees. -
Source:
Bloomberg
February 2, 2006
The central bank will delay enforcing rules where by lenders must classify a loan as bad, even if it is not overdue, if the borrower has defaulted on debts to other banks, Mr Maman said in an interview on Monday.
The rules were to have come into effect in mid-2005, and the delay underlines the challenges faced by lenders and the central bank in assessing whether borrowers are credit-worthy or not. Still, it may allow lenders such as PT Bank Mandiri and PT Bank Negara Indonesia, the nation's two biggest banks, to reclassify some non-performing loans as good.
'This is certainly good news for state banks,' said Tjandra Lienandjaja, a banking analyst at BNP Paribas Peregrine in Jakarta. 'Their non-performing loans will certainly decline and loan-loss provisions will also decline as well. That will help profit at the lenders to increase.'
The central bank will not delay the enforcement of rules under which all banks participating in a syndicated loan, where a group of lenders join to provide funds to a borrower, must reclassify loans if there is a delay in repayment, Mr Maman said. It will also not delay enforcing rules for loans greater than 25 billion rupiah (S$4.3 million), the central bank said in a statement.
The central bank cannot enforce the rules for other types of loans such as ones given to individuals and small companies of between 500 million rupiah and 25 billion rupiah until it has completed construction of a system to track defaults. The implementation of the rule for such loans may be delayed for as long as one and a half years, the statement said.
The loan-classification rules, which force banks to prepare for possible losses if a borrower appears to be at risk of default, are among reforms introduced after the 1997-98 Asian crisis.
The collapse in the value of the rupiah left hundreds of companies unable to pay back foreign currency debt, triggering thousands of defaults by both companies and individuals.
The banking industry almost failed, forcing the government, backed by the International Monetary Fund, to orchestrate a 450 trillion rupiah bailout of the industry.
'Indonesian banks usually have enough time to digest any of Bank Indonesia's regulations, but for this regulation lenders didn't have much time. That affected state lenders like Bank Mandiri and Bank Negara,' said Fendi Susiyanto, who helps manage about US$170 million at PT Bank Permata in Jakarta.
'Still, if Bank Indonesia is now trying to delay the implementation, it shows inconsistency.'
Mr Maman said the central bank plans to rate banks on a scale of one to five to take account of their overall corporate governance and transparency. To that end, Bank Indonesia is pushing banks to set up audit and remuneration committees. -
Source:
Bloomberg
February 2, 2006
Indonesian military's new day?
An Indonesian parliamentary committee sent President Susilo Bambang Yudhoyono's nomination to lead the armed forces to the full Parliament on Thursday after the nominee assured them of his commitment to rein in corrupt military business interests and prevent human rights abuses.
Djoko Suyanto, who currently heads the air force, said he would cooperate with the attorney general's office on human rights cases, although he added that the responsibility for any unsuccessful prosecutions would lie with the civilian justice system.
Suyanto, who studied in 1983 at Nellis Air Force Base in Nevada, told the parliamentary defense committee Wednesday that he favored total civilian control over the military and would eliminate participation by military officials in the political process.
He also said that he would support the government's efforts to investigate the military's involvement with business interests. In many parts of Indonesia, the military is engaged in legal activities such as owning hotels and shopping centers, but it is also linked to illegal operations, such as logging and gambling. In particular, Suyanto said, he supported the efforts of a group of cabinet ministers that is auditing the military's business practices.
"The military is not allergic to change," Suyanto, 55, told the committee. A final vote on the nomination is expected Tuesday. Widjajanto, a lecturer at the University of Indonesia and a military analyst, said Suyanto, if approved, was likely to continue the initial reforms of the outgoing military leader, General Endriartono Sutarto.
"His whole experience is based on combat, and he has no track record of abuse or human rights violations," Widjajanto said. "And because he has always been involved with military operations, he has never been involved with politics."
Recent efforts to overhaul the military, notably its involvement in politics, have produced better relations with the United States. The Bush administration has encouraged closer ties with the military, seeing it as possible partner in its campaign against terrorism.
In November, the administration lifted prohibitions on the sale of lethal American equipment after restoring training for Indonesian armed forces earlier in the year. Washington had cut military assistance to Indonesia in 1991, after the army cracked down on the independence movement in East Timor, formerly an Indonesian province, and sanctions were further tightened in 1999 after the army killed more than a thousand civilians there.
Suyanto defended the military's organizational structure, which is left over from the three-decade rule of Suharto, who was ousted in 1998, even though some critics of the military want to dismantle it. Suyanto said the structure was helpful as an "early warning system" against terrorism because it gave the military a presence at all levels of the country, from provinces to districts to villages. He said he intended to keep it, despite concerns that the structure encourages involvement by the military in civilian affairs.
During the hearing Wednesday, lawmakers expressed concern that the commander of the air force, the smallest branch of the military, would have trouble asserting control over the army, which is the most powerful branch of the Indonesian military.
"I think he is the best for the job," said H. Ade Nasution, one of the members of Parliament who questioned Suyanto. "But he will have to assert his authority with confidence if he wants to control the army."
Meaningful reform of the military, some believe, will depend on the extent to which Parliament and the president insist on change. "There are still parts of the military, especially the army, that is resistant to reform," said Ikrar Nusa Bhakti, a military affairs expert at the Indonesian Institute of Sciences.
Source:
Peter Gelling International Herald Tribune
THURSDAY, FEBRUARY 2, 2006
Djoko Suyanto, who currently heads the air force, said he would cooperate with the attorney general's office on human rights cases, although he added that the responsibility for any unsuccessful prosecutions would lie with the civilian justice system.
Suyanto, who studied in 1983 at Nellis Air Force Base in Nevada, told the parliamentary defense committee Wednesday that he favored total civilian control over the military and would eliminate participation by military officials in the political process.
He also said that he would support the government's efforts to investigate the military's involvement with business interests. In many parts of Indonesia, the military is engaged in legal activities such as owning hotels and shopping centers, but it is also linked to illegal operations, such as logging and gambling. In particular, Suyanto said, he supported the efforts of a group of cabinet ministers that is auditing the military's business practices.
"The military is not allergic to change," Suyanto, 55, told the committee. A final vote on the nomination is expected Tuesday. Widjajanto, a lecturer at the University of Indonesia and a military analyst, said Suyanto, if approved, was likely to continue the initial reforms of the outgoing military leader, General Endriartono Sutarto.
"His whole experience is based on combat, and he has no track record of abuse or human rights violations," Widjajanto said. "And because he has always been involved with military operations, he has never been involved with politics."
Recent efforts to overhaul the military, notably its involvement in politics, have produced better relations with the United States. The Bush administration has encouraged closer ties with the military, seeing it as possible partner in its campaign against terrorism.
In November, the administration lifted prohibitions on the sale of lethal American equipment after restoring training for Indonesian armed forces earlier in the year. Washington had cut military assistance to Indonesia in 1991, after the army cracked down on the independence movement in East Timor, formerly an Indonesian province, and sanctions were further tightened in 1999 after the army killed more than a thousand civilians there.
Suyanto defended the military's organizational structure, which is left over from the three-decade rule of Suharto, who was ousted in 1998, even though some critics of the military want to dismantle it. Suyanto said the structure was helpful as an "early warning system" against terrorism because it gave the military a presence at all levels of the country, from provinces to districts to villages. He said he intended to keep it, despite concerns that the structure encourages involvement by the military in civilian affairs.
During the hearing Wednesday, lawmakers expressed concern that the commander of the air force, the smallest branch of the military, would have trouble asserting control over the army, which is the most powerful branch of the Indonesian military.
"I think he is the best for the job," said H. Ade Nasution, one of the members of Parliament who questioned Suyanto. "But he will have to assert his authority with confidence if he wants to control the army."
Meaningful reform of the military, some believe, will depend on the extent to which Parliament and the president insist on change. "There are still parts of the military, especially the army, that is resistant to reform," said Ikrar Nusa Bhakti, a military affairs expert at the Indonesian Institute of Sciences.
Source:
Peter Gelling International Herald Tribune
THURSDAY, FEBRUARY 2, 2006
JI preparing Malaysian students for militant activities
KUALA LUMPUR: Jemaah Islamiah (JI) has a house in Pakistan where students from Malaysia and Singapore are indoctrinated and prepared for militant activities.
Gungun Rusman Gunawan, a brother of Ridwan Ishamuddin (better known as Hambali, a key man in al-Qaeda's operations in South-East Asia who was captured in Thailand in August 2003) revealed this in his confession to the Indonesian police last year.
A source disclosed the contents of the confession to The Star recently.
Gungun and 18 others, including 13 Malaysians, were picked up by the Pakistan Federal Agency and the United States Central Intelligence Agency in Karachi in September 2003 for suspected militant activities.
The arrests were based on information gleaned from US interrogations of Hambali, who had been under US custody at a secret location after his capture.
Gungun: Said the students in Pakistan were closely knit and met weekly in the home.The Malaysians, pursuing religious courses in Karachi universities, were arrested under the Internal Security Act after they were deported. Eight were released after being questioned by police.
Gungun, who was deported to Indonesia after his arrest, is now serving a four-year jail sentence in his homeland for helping to finance the Jakarta J.W. Marriott hotel bombing.
In his confession, Gungun said Malaysians who made frequent visits to the house after completing their studies in Pakistan would be persuaded to undergo a military stint in Afghanistan.
He told police that he was ordered to set up the house by Abdul Rahim, the youngest son of jailed Indonesian Muslim leader Abubakar Ba'asyir - who has been accused of heading the JI network in Indonesia.
The house was set up at Johar Square, Karachi, in 2000. Kompak (an Indonesian militant group allegedly involved in a series of bomb blasts in the Poso region as well as in the Muslim-Christian conflicts in the Moluccas) paid for its rental.
The confession did not specify if the house still exists or how many Malaysians had gone to Afghanistan after the Pakistani authorities and the CIA arrested Gungun and the 18 others.
Gungun revealed that recruits for the Afghan military stint had to undergo a 40-day tadrib (military training) before they were introduced to light weaponry for 20 days.
“They were exposed to the theory and handling of AK-47 assault rifles and Pulemyot Kalashnikov general purpose machine guns.
“They were also introduced to RPG (rocket propelled grenade) guns, M-16 rifles and a wide range of pistols.” Gungun, a former student of the Abu Bakar Islamic University, said the recruits were also taught how to read the compass and maps and use explosives like Molotov bombs, grenades, anti-tank mines and TNT.
He added that Malaysian and Indonesian students in Pakistan were closely knit and met weekly at the home. “The brotherhood also saw them forming a study group called al-Ghuraba under Abdul Rahim’s tutelage.” , according to the source, the authorities are concerned that the so-called study group could be part of a JI sleeper cell that could be activated any time.
“Based on Gungun’s evidence, the police in Indonesia, Malaysia and Singapore are working together to identify those who had been to the house,” said the source. In July last year the Pakistani government deported hundreds of foreign students, including some 200 Malaysians, in a move to curb militancy in the country.
This followed their finding that two out of four Pakistan-origin terror suspects involved in the London bombings on July 7 had studied at the same madrasah (religious community school). The Pakistani move had also put the Malaysian authorities on a similar alert. “The Malaysian police would be keeping an eye on local students who return home as a precautionary measure,” said the source.
EDDIE CHUA, The Star Malaysia
Thursday February 2, 2006
Gungun Rusman Gunawan, a brother of Ridwan Ishamuddin (better known as Hambali, a key man in al-Qaeda's operations in South-East Asia who was captured in Thailand in August 2003) revealed this in his confession to the Indonesian police last year.
A source disclosed the contents of the confession to The Star recently.
Gungun and 18 others, including 13 Malaysians, were picked up by the Pakistan Federal Agency and the United States Central Intelligence Agency in Karachi in September 2003 for suspected militant activities.
The arrests were based on information gleaned from US interrogations of Hambali, who had been under US custody at a secret location after his capture.
Gungun: Said the students in Pakistan were closely knit and met weekly in the home.The Malaysians, pursuing religious courses in Karachi universities, were arrested under the Internal Security Act after they were deported. Eight were released after being questioned by police.
Gungun, who was deported to Indonesia after his arrest, is now serving a four-year jail sentence in his homeland for helping to finance the Jakarta J.W. Marriott hotel bombing.
In his confession, Gungun said Malaysians who made frequent visits to the house after completing their studies in Pakistan would be persuaded to undergo a military stint in Afghanistan.
He told police that he was ordered to set up the house by Abdul Rahim, the youngest son of jailed Indonesian Muslim leader Abubakar Ba'asyir - who has been accused of heading the JI network in Indonesia.
The house was set up at Johar Square, Karachi, in 2000. Kompak (an Indonesian militant group allegedly involved in a series of bomb blasts in the Poso region as well as in the Muslim-Christian conflicts in the Moluccas) paid for its rental.
The confession did not specify if the house still exists or how many Malaysians had gone to Afghanistan after the Pakistani authorities and the CIA arrested Gungun and the 18 others.
Gungun revealed that recruits for the Afghan military stint had to undergo a 40-day tadrib (military training) before they were introduced to light weaponry for 20 days.
“They were exposed to the theory and handling of AK-47 assault rifles and Pulemyot Kalashnikov general purpose machine guns.
“They were also introduced to RPG (rocket propelled grenade) guns, M-16 rifles and a wide range of pistols.” Gungun, a former student of the Abu Bakar Islamic University, said the recruits were also taught how to read the compass and maps and use explosives like Molotov bombs, grenades, anti-tank mines and TNT.
He added that Malaysian and Indonesian students in Pakistan were closely knit and met weekly at the home. “The brotherhood also saw them forming a study group called al-Ghuraba under Abdul Rahim’s tutelage.” , according to the source, the authorities are concerned that the so-called study group could be part of a JI sleeper cell that could be activated any time.
“Based on Gungun’s evidence, the police in Indonesia, Malaysia and Singapore are working together to identify those who had been to the house,” said the source. In July last year the Pakistani government deported hundreds of foreign students, including some 200 Malaysians, in a move to curb militancy in the country.
This followed their finding that two out of four Pakistan-origin terror suspects involved in the London bombings on July 7 had studied at the same madrasah (religious community school). The Pakistani move had also put the Malaysian authorities on a similar alert. “The Malaysian police would be keeping an eye on local students who return home as a precautionary measure,” said the source.
EDDIE CHUA, The Star Malaysia
Thursday February 2, 2006
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