Microsoft analysts said they had “moderate confidence” this Chinese group, which it dubbed as “Volt Typhoon”, was developing capabilities that could disrupt critical communications infrastructure between the United States and Asia region during future crises. “It means they are preparing for that possibility,” added said John Hultquist, who heads threatContinue Reading
Two weeks ago, the US Ambassador to South Africa, Reuben Brigety, publicly alleged that arms or related technologies were loaded onto a Russian ship, Lady R, as it was docked at Naval Base Simon’s Town.
This was a serious cause for concern as the ship was under sanctions from the United States government for “transporting military equipment for the Russian government.”
While South African President, Cyril Ramaphosa, has stressed that there is no evidence that arms or related technologies were loaded onto the ship, the South African government has nonetheless launched a formal investigation into the matter.
Following the public allegations, the Financial Times reconstructed the itinerary of the Lady R as it circumnavigated the African continent. Their work revealed that the ship stopped in Egypt, Togo and Cameroon prior to arriving in Simon’s Town.
Note, no allegations have been made of arms transfers during those stops. However, there are separate allegations that the Egyptian government recently tried to transfer arms to the Russian government.
Their work also revealed that the ship called on ports in Mozambique, Sudan, and Russia after departing Simon’s Town. Now, it appears to be en route to China.
This itinerary not only raises the possibility that whatever was loaded onto the ship in Simon’s Town was offloaded prior to the port call in Russia. It also raises the possibility that the arms or related technologies are still on the ship.
An arms transfer is a multidimensional phenomenon. These dimensions not only include the actors, their roles, and their intentionality. They also include the shipment and the complexity of the system, among other things.
Right now, there is not a lot of good information in the public domain across any of these dimensions. However, the allegation immediately led to fingers being pointed squarely at the South African government and the Russian government by some commentators.
Of course, there are well-known ties between the South African government and the Russian government. But, these are not the only actors who were capable of being parties to such a transaction. That is why it is important to establish the context in which the alleged arms transfer occurred.
There are well-known ties between the South African Special Forces and Mozambique. The South African military is engaged in ongoing counter-terrorism operations in Northern Mozambique. This includes South African Special Forces. These forces are deployed as part of a wider military intervention by the Southern African Development Community.
The situation in Mozambique is a national security priority for the South African government due to the virtually open border between the two countries. And the situation in Cabo Delgado Province does not seem to be under control.
This is evidenced by the fact that Mozambique’s Defense Minister, Cristovao Chume, asked the South African government to do more to help in their fight against the Islamist insurgency. This request was made only a few months after the Russian ship, Lady R, departed Simon’s Town en route to Mozambique.
There are well-known ties between Russian private military contractors and many of the stops along the itinerary. According to the Council for Foreign Relations, the Wagner Group is active in Cameroon, Equatorial Guinea, and Sudan, and it was previously active in Mozambique. It is also active in Burkina Faso and Mali. Note, neither of those countries has seaports. However, Burkina Faso shares a land border with Togo.
There are also suspected ties between Russian private military contractors, Arab governments, and Arab private military contractors. And, all have participated in armed conflicts along the reported itinerary.
In Mozambique, there are allegations that an Emirati private military contractor affiliated with Erik Prince, founder of Blackwater and Frontier Services Group, once sought to collaborate with the Wagner Group. In Sudan, there are allegations that the Wagner Group has made arms transfers to the Rapid Support Forces.
There are also allegations that the Rapid Support Forces have been funded by Saudi Arabia and the United Arab Emirates. Moreover, there are allegations that the Emirati government played an active role in what has been framed as a coup attempt by the Rapid Support Forces. That remains disputed.
Either way, the Rapid Support Forces have been deployed to Yemen, where its troops have fought alongside Saudi and Emirati forces. And, it is one of the main conflict parties in the 2023 Sudan Civil War. Note, that conflict started only a few months after Lady R departed Sudan.
Outside of Sudan, there are allegations that Arab states have sought to collaborate with the Wagner Group. Famously, the United States Department of Defense alleged that the United Arab Emirates once financed the Wagner Group in Libya. There are also allegations that Emirati private military contractors have collaborated with Wagner Group in a number of African states, including the Central African Republic, Mali, and Libya.
This led to an Emirati-based company, Kratol Aviation, being sanctioned by the United States government. It also led to ongoing investigations by the Federal Bureau of Investigations into whether Erik Prince violated arms trafficking laws in Libya and Sudan.
There are also well-known ties between Arab private military contractors and South African private military contractors. There are allegations that Arab private military contractors specially target the South African special forces and South private military contractors for recruitment.
This includes the allegation that Erik Prince once recruited former employees of a South African private military contractor, Executive Outcomes, for an Emirati private military contractor, Reflex Response.
There are well-known ties between the South African defense industry and the Russian defense industry. On the South African side, there are bilateral ties involving Armscor, Denel, and Paramount.
On the Russian side, there are bilateral ties involving Rosoboronexport, Kalashnikov MRO, Rostec, and Russian Helicopters. Over the last decade, the Russian government and South African government have sought to broaden and deepen bilateral military, scientific, and technical cooperation even further.
This appears to be part of a wider strategic effort by the Russian government to foster mutually beneficial ties with African states. In the words of the Rosoboronexport Director General, Alexander Mikheev, “Sub-Saharan Africa is now among the growth leaders in the level and quality of military-technical cooperation with Russia.”
It is therefore not surprising that the Russian ship was reportedly carrying armor-piercing shells and machine guns purchased by Armscor through Rosoboronexport for the South African Special Forces.
There are also well-known ties between the South African defense industry and Arab governments. This becomes evident when one explores the SIPRI Arms Transfers Database. Between 2011 and 2022, the largest recipient of South African exports of major conventional weapons was the United Arab Emirates.
Other large destinations included India and the United States. However, significant exports of major conventional weapons were also recorded for Saudi Arabia and Yemen. Here, the figures can be a bit misleading.
The exports to Yemen were recorded between 2011 and 2013. Since 2014, there has been a civil war in the country. In 2015, a Saudi Arabia-led coalition intervened in that conflict. In 2018, the fighting escalated and Saleh Ali al-Sammad, president of Yemen’s Supreme Political Council, was killed.
It is therefore useful to look at the figures between 2015 and 2018. In that time period, over one-third of the South African exports of major conventional weapons went to Saudi Arabia-led coalition member states, including Saudi Arabia and the United Arab Emirates.
Since then, the transfer of major conventional weapons to Arab countries has become more problematic. In 2019, the South African government reportedly blocked exports to Saudi Arabia and the United Arab Emirates over inspections that they reportedly considered to be “a violation of their sovereignty.”
They were not alone. Exports were also blocked to Algeria and Oman when they similarly “refused strict end user certificates that made provision for on-site inspections.”
These ties extend beyond South African exports of major conventional weapons. The South African defense industry has been in a structural state of decline for many years. As noted by Matthews and Koh, this decline has been “exacerbated by corruption, unethical sales, and government mismanagement.”
In recent years, this has raised concerns that the South African defense industrial complex might collapse altogether. To avert such a scenario, the South African government entered into talks with the Saudi Arabian government and Qatari government on the purchase of stakes in one of their state-owned defense companies, Denel.
According to open sources, the Saudi Arabian government appeared to be especially interested in the advanced drone and missile technologies possessed by the company. In 2018, the Saudi Arabian government reportedly made their move with a billion dollar bid to acquire a minority stake in a joint venture with Germany’s Rheinmetall. Following the murder of Jamal Khashoggi, that sale started to unravel.
But, that did not stop Paramount from entering into a separate agreement with Saudi Arabian Military Industries the next year. This brought about a strategic partnership to develop a broad spectrum of “technologies and capabilities across the land, sea and air domains, as well as system integration.”
Since then, the Saudi Arabian government and the South African government have expanded their “cooperation in the field of military industries and procurements.” Last October, they even executed a new memorandum of understanding that strengthened “areas of cooperation in the field of defense procurement partnership between South Africa and Saudi Arabia.”
Given the context, it seems reasonable to assume that other kinds of actors could have been party to an arms transfer at Naval Base Simon’s Town. Aside from governments, these actors could include government agencies, private military contractors, and defense industry entities. Moreover, non-Russian government agencies, private military contractors, and defense industry entities could have been involved in the transaction.
This could include one or more non-Russian actors acting as intermediaries, mediators, or recipients. Of course, this is not a definitive list of the different kinds of actors that might have been involved. It simply serves as a useful starting point for generating hypotheses about what may have transpired.
The application of the above framework generates an expansive set of hypotheses about what may have happened at Naval Base Simon’s Town. Examples include:
Note, these are not mutually exclusive sets of hypotheses. It is possible that what really happened involved some combination of two or more of them.
The Simon’s Town Incident is a puzzle that needs to be solved. In the coming months, the South African government says that it will be investigating what really happened. Other governments will be doing the same. These will involve different levels of cooperation.
Hopefully, these investigations will produce the evidence needed to reach a solid conclusion about what really happened with #LadyRussiagate. In the meantime, there will only be hypotheses, hunches, conjectures and suppositions.
Policymakers and policy wonks should therefore avoid the urge to jump to a conclusion. The full story of the Simon’s Town Incident has yet to be told. It may be a blockbuster of a story. Or it could be a box office bomb. Only time will tell.
Michael Walsh is an Adjunct Fellow at the Center for African Studies at Howard University and a Visiting Researcher at the School of Foreign Service at Georgetown University.
Ambassador Charles Ray Is a trustee and chair of the Africa Program of the Foreign Policy Research Institute (FPRI), Philadelphia, PA. He served as US ambassador to the Kingdom of Cambodia and the Republic of Zimbabwe, and as Assistant Secretary of Defense for POW/Missing Personnel Affairs.
Updated Silicon Malaysia and Silicon Stars – Pearl of the Orient map launched
MSIA has 225 members, spanning 10 states in Malaysia with headquarters in 18 countries
SEMICONSEA, the event that aims to build connections and foster collaborations for a sustainable Southeast Asia electronics manufacturing industry, is back in Penang for its 2023 edition.
This…Continue Reading
Getty ImagesCathay Pacific Airways has fired three flight attendants after a complaint that they had discriminated against non-English speaking passengers.
They were sacked after an audio clip of the cabin crew apparently mocking passengers went viral.
The Hong Kong carrier launched an internal investigation and apologised for causing “widespread concern”.
Chinese state media claimed the airline was “looking down on mainland Chinese people”.
A passenger travelling from Chengdu to Hong Kong said the cabin crew mocked passengers who mistakenly asked for a “carpet” instead of a “blanket”.
In the audio clip, a flight attendant can be heard laughing as she tells her colleagues: “If you cannot say blanket in English, you cannot have it. Carpet is on the floor.”
The incident has drawn much criticism on social media in China, with some users calling for a boycott of Cathay Pacific.
Hong Kong chief executive John Lee also said the incident had “hurt the feelings of compatriots in Hong Kong and the mainland”.
The airline’s CEO Ronald Lam apologised for the incident and said he will personally lead a taskforce to conduct a review into the company’s code of conduct.
Cathay Pacific has been trying to return to profit as the territory removes the last remaining pandemic restrictions.
The flagship carrier was hit hard by strict quarantine rules and border closures, which led to massive job cuts in 2020 at the height of the pandemic.
Due to this, it cannot afford to alienate China, says Greg Waldron, who covers the aerospace industry at the online aviation news site FlightGlobal.
“Cathay relies heavily on China, which is a key market for the company both for inbound travel to Hong Kong, as well as transit traffic to Cathay’s broader network,” he told the BBC.
Major brands such as H&M, Nike, Adidas, and Puma have all felt the brunt of social media-fuelled backlashes in China over cultural insensitivities or political controversies.
“Anyone who offends the Chinese people should prepare to pay the price,” China’s Foreign Ministry Spokeswoman Hua Chunying said in 2021 when asked about Western companies which faced boycotts after expressing concern over alleged human rights abuses in Xinjiang province.
Diplomatic relationship between Hong Kong and China has been on edge since 2019, when mass protests erupted over an extradition bill proposed by Beijing, allowing suspects from Hong Kong to be sent to China for trial.
In response to the demonstrations, China passed a controversial national security law which criminalised subversion.
Beijing said the law was needed to bring stability to the city. Critics said it was designed to squash dissent, and weaken Hong Kong’s autonomy.
More than 250 people have been arrested under the law since it came into force, with as many as 30 people convicted.
Carolyn Cartier, a professor of Asian studies at the University of Technology Sydney, says it is typical that flashpoints between Hong Kong and China revolve around language and differences in political convictions.
Prof Cartier, who frequently travels to both places for work, says speaking in Cantonese has been seen as a “symbol of fidelity to Hong Kong’s culture”.
“Hong Hong is seen as a glitzy, glamorous financial hub,” she told the BBC.
“It’s not so much who is from Hong Kong or who is from China. It’s about who is savvy enough to learn about the culture, and to be cosmopolitan enough to be there”.
SINGAPORE: A 62-year-old man was fined S$2,000 (US$1,500) on Tuesday (May 23) for failing to report a change in his residential address, an offence under the National Registration Act.
Singaporean Lee Kah Hin had moved out of his landlord’s home at Jalan Bukit Merah in April 2020.
More than two years later, in December 2022, the landlord informed the Immigration and Checkpoints Authority (ICA) that she was still receiving his letters.
These included letters of demand from different credit companies.
ICA said that after Lee moved out of his landlord’s home to a new place at Tampines Street, he continued to take out additional loans from various licensed moneylenders using his former address.
“He did so knowing that the moneylenders would send him reminder letters whenever he could not keep up with his repayments,” the agency said.
“As a result, letters of demand were sent to the former address after Lee had defaulted on debt repayments.”
Under the National Registration Act, all identity card holders who change their place of residence must report it to ICA within 28 days.
Those who fail to do so face a fine of up to S$5,000, a jail term of up to five years, or both.
“ICA takes a firm stance against any person who fails to comply with the National Registration Act and its Regulations,” the agency said.
Those who need to report a change in their residential addresses can do so online via ICA’s change of address e-Service. The updated addresses will facilitate their transactions with government agencies.
On what to fund, the Ministry of Health’s Agency for Care Effectiveness has an established process for assessing cost-effectiveness, which should be the basis upon which the model for rare disease treatments is adapted.
On how much to fund, Singapore must find its own way between hard-headed pragmatism – finite funds mean that millions of dollars used to treat one patient are millions not available for other health programmes – and compassion.
Beyond aggressively seeking pricing discounts from manufacturers, one proposed approach is to have staggered payment arrangements, combined with “value-based contracting” where the price of the drug is tied to how well it performs.
This approach shares the risk, as the long-term effects and side effects of these therapies are still unknown. It helps to avoid wasting taxpayers’ money for therapies that may ultimately prove ineffective.
Singapore would be well-placed to pilot such value-based contracting given our trusted standing with pharmaceutical companies, our medical sophistication and ease of long-term patient follow up. Singapore could take reference from the American experience with Luxturna, in which a rebate programme is offered to payers (such as insurance companies), based on the drug’s effectiveness which is assessed at 30 to 90 days, and again at 30 months.
These heart-wrenching decisions on healthcare coverage are not just about financials, they are also about nation-building.
As Deputy Prime Minister Lawrence Wong assured Singaporeans at the May Day Rally: “However treacherous the terrains ahead, so long as Singapore continues to progress, all Singaporeans must continue to progress – with none among us left behind”.
Innovative ways for health systems to finance and deliver these new therapeutic modalities are needed as more high-priced therapies become available in the coming years.
It cannot be that only wealthy patients deserve life or that desperate parents cling on to the life of their children by the thin thread of public charity.
Dr Ng Qin Xiang is currently working towards becoming a Preventive Medicine specialist and pursuing a PhD at the NUS Saw Swee Hock School of Public Health. Dr Chan Hwei Wuen is a Consultant, Department of Ophthalmology and leads a dedicated Inherited Retinal Diseases service at the National University Hospital. Associate Professor Jeremy Lim is director of the Leadership Institute for Global Health Transformation at the NUS Saw Swee Hock School of Public Health.
Getty ImagesArtificial intelligence has emerged as enough of a concern that it made it onto what was already a packed agenda at the G7 summit at the weekend.
Concerns about AI’s harmful impact coincide with the US’ attempts to restrict China’s access to crucial technology.
For now, the US seems to be ahead in the AI race. And there is already the possibility that current restrictions on semiconductor exports to China could hamper Beijing’s technological progress.
But China could catch up, according to analysts, as AI solutions take years to be perfected. Chinese internet companies “are arguably more advanced than US internet companies, depending on how you’re measuring advancement,” Kendra Schaefer, head of tech policy research at Trivium China tells the BBC.
However, she says China’s “ability to manufacture high-end equipment and components is an estimated 10 to 15 years behind global leaders.”
The US’ biggest advantage is Silicon Valley, arguably the world’s supreme entrepreneurial hotspot. It is the birthplace of technology giants such as Google, Apple and Intel that have helped shape modern life.
Innovators in the country have been helped by its unique research culture, says Pascale Fung, director of the Center for Artificial Intelligence Research at the Hong Kong University of Science and Technology.
Researchers often spend years working to improve a technology without a product in mind, Ms Fung says.
OpenAI, for example, operated as a non-profit company for years as it researched the Transformers machine learning model, which eventually powered ChatGPT.
“This environment never existed in most Chinese companies. They would build deep learning systems or large language models only after they saw the popularity,” she adds. “This is a fundamental challenge to Chinese AI.”
US investors have also been supportive of the country’s research push. In 2019, Microsoft said it would put $1bn (£810,000) in to OpenAI.
“AI is one of the most transformative technologies of our time and has the potential to help solve many of our world’s most pressing challenges,” Microsoft chief executive Satya Nadella said.
China, meanwhile, benefits from a larger consumer base. It is the world’s second-most populous country, home to roughly 1.4 billion people.
It also has a thriving internet sector, says Edith Yeung, a partner at the Race Capital investment firm.
Nearly everyone in the country uses the super app WeChat, for example. It is used for almost everything from sending text messages, to booking doctor’s appointments and filing taxes.
As a result, there’s a wealth of information that can be used to improve products. “The AI model is going to be only as good as the data that is available for it to learn from,” Ms Yeung says.
“For good or bad, China has a lot less rules around privacy, and a lot more data [compared to the US]. There’s CCTV facial recognition everywhere, for example,” she adds. “Imagine how useful that would be for AI-generated images.”
While China’s tech community may appear to be lagging behind the US, its developers have an edge, according to Lee Kai-Fu, who makes the argument in his book AI Superpowers: China, Silicon Valley, and the New World Order.
“They live in a world where speed is essential, copying is an accepted practice, and competitors will stop at nothing to win a new market,” wrote Mr Lee, a prominent figure in Beijing’s internet sector and the former head of Google China.
“This rough-and-tumble environment makes a strong contrast to Silicon Valley, where copying is stigmatised and many companies are allowed to coast on the basis of one original idea or lucky break.”
China’s copycat era has its problems, including serious issues around intellectual property. Mr Lee writes that it has led to a generation of hardy and nimble entrepreneurs ready to compete.
Since the 1980s, China has been expanding its economy, which used to be based mainly on manufacturing, to one that is technology-based, Ms Fung says.
“In the last decade, we have seen more innovation from Chinese consumer-driven internet companies and high-end Chinese designs,” she adds.
While Chinese tech companies certainly have unique advantages, the full impact of Beijing’s authoritarianism is still unclear.
There are questions, for instance, about whether censorship would affect development of Chinese AI chatbots. Will they be able to answer sensitive questions about President Xi Jinping?
“I don’t think anyone in China will ask controversial questions on Baidu or Ernie in the first place. They know it’s censored,” Ms Yeung says. “Sensitive topics are a very small part of the usage [of chatbots]. They just get more media attention,” Ms Fung adds.
The bigger concern is that US attempts to restrict China’s access to specialised tech can stymie the latter’s AI industry.
High-performing computer chips, or semiconductors, are now the source of much tension between Washington and Beijing. They are used in everyday products including laptops and smartphones, and could have military applications. They are also crucial to the hardware required for AI learning.
US companies like Nvidia currently have the lead in developing AI chips and “few [Chinese] companies can compete against ChatGPT” given export restrictions, Ms Fung says.
While this will hit China’s high-tech industries like cutting edge AI, it won’t affect the the production of consumer technology, such as mobiles and laptops. This is because “the export controls are designed to prevent China from developing advanced AI for military purposes,” Ms Schaefer says.
To overcome this, China needs its own Silicon Valley – a research culture that attracts talent from diverse backgrounds, Ms Fung says.
“So far it has relied on both domestic talent and those from overseas with Chinese heritage. There is a limit to homogeneous cultural thinking,” she adds.
Beijing has been trying to close the gap through its “Big Fund”, which offers massive incentives to chip companies.
But it has also tightened its grip on the sector. In March, Zhao Weiguo became the latest technology tycoon to be accused of corruption by authorities.
Beijing’s focus on certain industries can bring financial incentives and loosen red tape, but it may also mean greater scrutiny, and more fear and uncertainty.
“Zhao’s arrest is a message for other state-owned firms: don’t mess around with state money, particularly in the chip space,” Ms Schaefer says. “Now it’s time to get on with the job.”
How that message will affect the future of China’s AI industry remains to be seen.
Representative Mike Gallagher, an influential lawmaker whose select committee on China has pressed the Biden administration to take tougher stances on China, is the only lawmaker so far to call for retaliatory action. The US “must make clear to the PRC (People’s Republic of China) that it will not tolerateContinue Reading
Progressive liquor bill part of Move Forward agenda to give small business a fairer chance
A beer-loving MP-elect once arrested for illegal brewing is hoping the Move Forward Party’s election victory can give him a long-awaited shot at breaking up a 470-billion-baht alcohol duopoly of two of the country’s wealthiest families.
Brewer-turned-politician Taopiphop Limjittrakorn has been fighting to overhaul strict regulations for years, taking on Boon Rawd Brewery and ThaiBev, which have long had a stranglehold on the production of alcohol.
After winning the most seats in the May 14 electon, Move Forward this week reached an agreement with prospective coalition partners that include measures to “abolish monopolies and promote fair competition in all industries, such as alcoholic beverages”.
“The progressive alcohol bill is not only a bill, it is a political project,” said Mr Taopiphop, 34, who was re-elected in Bangkok Constituency 22, in an interview at his Taopiphop Bar Project on Charoen Rat Road.
“Now, I’m gathering all the stakeholders in this policy to make it happen as smoothly as I can because I realise that we are not the opposition any more. We are government.”
Boon Rawd, which makes Singha and Leo beers, and ThaiBev, the brewer of Chang, did not immediately respond to questions from Reuters.
Boon Rawd, the country’s first brewery founded in 1933, is owned and controlled by the Bhirombhakdi family, the country’s 15th richest, according to Forbes magazine. ThaiBev was founded by Charoen Sirivadhanabhakdi, ranked by Forbes as the country’s third-richest person with a net worth of $14 billion.
If Move Forward is able to lead the government and open up the alcohol sector, the two companies may see short-term effects on their performance because of new competitors, said Damien Yeo, consumer and retail analyst at the research firm BMI.
“Over the long run, both ThaiBev and Boon Rawd have plenty going for them that will help them maintain a healthy lead over any potential new competitors,” Mr Yeo said, pointing to both firms’ better understanding of the market and regulatory issues.
‘Not an extremist’
More than half of the country’s alcoholic drinks market, valued at about 470 billion baht in 2020, consists of beer.
Boon Rawd controls a 57.9% share of the beer market followed by Singapore-listed ThaiBev at 34.3% and Thai Asia Pacific Brewery at 4.7%, according to a February 2022 report by Krungsri Research.
ThaiBev is also the runaway leader in the spirits market with a 59.5% share, with the second-place player holding only 8% of the segment, according to Krungsri Research.
Through an amendment to the excise laws, which failed to make it through parliament previously, Mr Taopiphop said he was aiming to remove high-entry barriers for the alcohol industry that largely favour big firms like Boon Rawd and ThaiBev.
The aim would be help small domestic brewers gain at least 10% of the beer market within a decade, he said.
In a social media post on May 19 after Move Forward’s election win, Piti Bhirombhakdi, who is on the board of Boon Rawd, said he backed the liberalisation of the industry.
“There will be some impact but in free trade we have competition. We will have to adjust our plan,” he said in reply to a comment on Facebook.
On a May 12 earnings call, ahead of the polls, a ThaiBev executive said the company was alert for new regulations. The company’s stock is trading at its lowest level since early November.
“We’ve been watching this closely for each party, and what is their policy,” said senior executive vice-president Ueychai Tantha-Obhas. “We just prepare for any outcome.”
A lawyer who became a tour guide before turning to brewing, Mr Taopiphop said he planned to follow up on regulatory easing with further legislation on rationalising restrictive alcohol advertising and allowing 24-hour alcohol sales.
“I’m not an extremist,” he said. “I want to drink good beer.”
JAKARTA – Valid or not, it is proving difficult for President Joko Widodo to fend off claims that a political motive lies behind last week’s arrest of National Democrat Party-affiliated (Nasdem) Communications and Informatics Minister Johnny Plate on corruption charges.
Although a cloud had been hanging over him for months, it must still have taken the president’s nod to indict Plate for allegedly causing losses to the state of 8 trillion rupiah (US$536 million) in the installation of telecom base transceiver stations (BTS) in remote corners of the vast archipelago.
Nasdem has three ministers in the current Cabinet, but party leader Surya Paloh created tensions within the government – and sparked rumors of a pending reshuffle – after declaring his support for opposition presidential candidate Anies Baswedan last October.
Although there had been some friction between the two, Paloh’s move to switch sides clearly took Widodo by surprise because the bearded media baron had been the first senior political figure to support him when he ran for the presidency in 2014 and again in 2019.
With the Justice and Prosperity (PKS) and Democrat (DP) parties already lining up behind Baswedan, Nasdem’s support allowed the former Jakarta governor to clear the threshold of 20% of parliamentary seats necessary to be nominated for what is shaping up to be a three-way race.
Jakarta’s political elite are wary of Baswedan because of his links to Islamic conservatives and because of the belief he could attract substantial votes from among the 56% of the electorate that is under 40 and has differing political views.
Although his chances do appear remote at this point, his election would also represent a changing of the guard among the powerful politically-connected businessmen who surround the current government.
Paloh acknowledged in a recent interview that there have been persistent efforts by intermediaries to get him to change his mind. If he did, and he shows no signs of relenting, it would leave the race without a genuine opposition candidate.
There have also been several investigations by the Anti-Corruption Commission (KPK) and the police seeking to implicate Baswedan himself in a graft case linked to Formula E race staged in Jakarta in mid-2022, but they have apparently been unable to find proof.
Widodo has yet to make it clear who he will endorse for the presidency: ruling Indonesian Democratic Party for Struggle (PDI-P) candidate Ganjar Pranowo or Defense Minister and Great Indonesian Movement (Gerindra) leader Prabowo Subianto.
Paloh has insisted he will continue to support government policies through the rest of Widodo’s tenure, and until now Widodo has resisted pressure to remove Plate and the two other Nasdem Cabinet members, Agriculture Minister Syahrul Yasin Limpo and Environment and Forestry Minister Siti Nurbaya Bakar.
But Attorney General Sanitiar Burhanuddin’s action in arresting Plate, 66, Nasdem’s concurrent secretary-general, could present him with the excuse to finally proceed with the long-rumored shakeup. The minister was removed from his post on May 17, the day he was detained.
A career prosecutor, Burhanuddin claims to be a political independent, but his older brother is senior PDI-P politician Tubagus Hasanuddin, a retired two-star general and former military secretary to party leader and then-president Megawati Sukarnoputri.
Earlier this month, the president failed to invite Paloh to a meeting of chairmen of six political parties making up the ruling coalition, hinting that a reshuffle could be imminent. “This is about the coalition’s business,” he told reporters. “Do they (Nasdem) have to know what strategy we are planning.”
Four of Widodo’s ministers have already been jailed for corruption during his nine-year term, including sports minister Imam Nahrawi (National Awakening Party), fisheries minister Edhy Prabowo (Gerindra) and social affairs ministers Idrus Marham (Golkar) and Juliari Batubara (PDI-P).
The latest scandal may be the worst case of high-level corruption since 2017 when Golkar Party chairman and House of Representatives speaker Setya Novanto was jailed for 15 years for embezzling $172 million from an electronic identity card program.
Plate and five other suspects are accused of padding the cost of studies for the national rollout of new 4G towers, marking up the price of equipment and pocketing money destined for stations that were either not built or aren’t functioning.
Plate’s younger brother, Gregorius Alex Plate, is also under scrutiny as the alleged intermediary between sub-contractors and the ministry in the construction of 7,904 towers in Sumatra, Kalimantan, Maluku, Sulawesi and East Nusa Tenggara between 2020 and 2022.
Indonesia has reached an impressive 95% of mobile phone availability, with coverage provided by state-owned Telkomsel, the biggest and only provider operating in all 38 provinces, the newly merged Indosat Ooredoo-Hutchinson, XL Axiata and Smartfren.
Unlike towers in populous regions, the funding for remote stations comes from the Universal Service Obligation (USO), a long-recognized consumer protection mechanism in which in Indonesia’s case a 1.75% tax is levied on the gross profits of all telecom companies.
Without it, individual carriers would not find it commercially viable to expand their networks into areas where they would never recoup the $100,000-$150,000 cost of building a single BTS.
Telkom Indonesia, Telkomsel’s majority owner, operates about 138,000 stations across Indonesia, a huge increase over the 1,575 in 2014. The mobile phone subsidiary booked revenues of $5.8 billion in 2021, while the parent reported a net profit of $1.8 billion.
The Communications and Informatics Ministry budgeted 9.5 trillion rupiah from the USO for the BTS program in 2020, with 4,200 towers planned for 2021 and 3,700 more in 2022. According to the ministry’s website, about 1,900 locations are currently in operation.
“The USO is a great big pot of money,” says one telecom executive. “What makes it egregious is that it is meant for disadvantaged people. We are never allowed to ask, and we are never told, where the money goes. As far as we know, there isn’t even an audit.”
That all changed when the Attorney-General’s Office began its investigation and brought in the BPKP, the state’s audit agency, to check the numbers.
