Rebuilding Maluku

Maluku's Governor Karel Albert Ralahalu and me on Maluku's governor yacht when we were traveling to Saparua

 

Maluku’s governor has turned around the region into one of growth and peace from the dark days of violence a decade ago.

Maluku, one of the nation’s oldest provinces, was in tatters following the 1999-2002 sectarian violence. Not only did it cause the death of thousands and the displacement of perhaps half a million, it also left behind a huge rebuilding task with the provincial economy at its worst contracting by 29%. But Maluku has shown its resilience and its economy is expected to grow 6.5% this year, matching the national rate.

A rise in the fishery, forestry, mining, tourism sectors are among the key drivers of this recovery of this province of 1,336 islands spread over 600,000 square kilometers. Maluku, also known as the Moluccas, is a major exporter of fish to Asia and the U.S. President Susilo Bambang Yudhoyono has set 2015 as the year the province is targeted became one of biggest seafood exporters in the world, setting aside Rp 950 billion for investment in the sector, most of which would go to processing industries. The islands of Tual, Seram, Aru and Ambon are designated to be centers for this expanded fishery industry. The program aims to raise the fish output from 300,000 tonnes a year to 500,000 tonnes within two years.

The province, which borders East Timor and Australia in the south, also has many natural resources. The $4.9 billion Masela natural gas project, being done by Japan’s Inpex Corp, in the Arafura Sea is just one of several oil and gas projects in the pipeline. In plantations, Maluku is going to back to its roots as the home to the fabled spice islands, and is looking to raise its output of nutmeg, cloves, cocoa, coconut, cashews and coffee. Tourism is another area prioritized for development. To review progress so far and prospects for the future, Maluku Governor Karel Albert Ralahalu, 65, sat down with Forbes Indonesia, in his offices. Karel, a former brigadier-general in the armed forces, took office in 2003, just after the end of the violence.

Forbes Indonesia: After the central government agreed to inject Rp 950 billion, what is your strategy to bolster the fishery sector?

Karel Albert Ralahalu: We will increase production by optimizing the utilization of fishing ports from the current 12 fishing docks, as well as the modernization of the fishing fleet for small fishermen, together with the construction of production and processing centers that protect the sustainability of resources. We will also develop the fishery industry. As you may know when the president came to Banda last year, he launched Maluku as a national fishery center, given the enormous potential in the province. We have an estimated 1.7 million tonnes of potential annual fish output but the current production only stands at about 300,000 tonnes. To fully tap that potential, we need good management and investment.

FI: What about seaweed farming?

KAR: Maluku has the potential in this sector as we have around 1,000 kilometers of coastline. Seaweed from Maluku among the best in the world. Last year, the output was 47,783 tons. Seaweed is actually the best way to generate income and overcome poverty issues here as production takes only 40 days, from cultivation to harvest. This year, seaweed is also one of my priorities.

FI: What about the pearl output?

KAR: Maluku’s pearls are also world-class. The pearl industry is centered on Dobo island in the Aru regency. In 2009, pearls output stood at 1.7 tonnes, which is mostly exported to Japan, U.S. and Europe. It is our third biggest export by value. We are eyeing to boost the pearl output.

FI: Others?

KAR: Our clove and nutmeg output is quite high. Most of the world production of cloves and nutmeg come from Maluku. The nutmeg output was more than 1,000 tonnes, while cloves is more than 11,000 tonnes. We are trying to develop an oil industry that comes from spices, including nutmeg, cloves and eucalyptus oil. We also are focused on developing coconut and palm oil plantations.

FI: Tourism?

KAR: Yes, we are continually promoting it, we hope with the Sail Banda event last year, the world would recognize Maluku even more [an event in which around 100 yachts visit the Banda islands]. After the conflict, the security issue remains the main concern for tourists. But we are again promoting this area and will ensure their safety. Another issue is the transportation. For tourists, it is difficult to visit other islands in Maluku. Just take Banda as an example. From Ambon, there is only one flight a week, so that’s a constraint, although the flight to Ambon is no longer an issue, as there are many flights on Indonesian airlines. But for land and sea transportation, I admit it remains a problem. We will resolve this.

FI: Have you tried to interest foreign investors in infrastructure projects?

KAR: Infrastructure development in an archipelago province like ours is not the same situation as with other provinces. To reach all the islands, we need to use three modes of transportation; sea, land and air.  We have encouraged investors to invest in infrastructure. We have also ensured them not to be worried about regulations as we will fully support and cooperate with them. We are in the process of building a road infrastructure with help from a Japanese company, slated for completion by 2013 at the latest. We also trying to expand our airport, Saumlaki, so larger aircraft can also land. It is scheduled for completion by 2012. We also in negotiation with the Australian government and Australian airlines to open direct flights from Darwin to Ambon, because it only takes 30 minutes flight from there.

FI: What is the state of development on the Masela project?

KAR: As early as 2018, Masela will start production. Most of our deepwater areas contain massive oil and gas resources. ConocoPhillips is also in the process of exploration.

FI: Do you think the economic growth target of 6.5% this year can be reached?

KAR: I believe we will. However, the poverty rate is still high, at 28%, because many islands are still not connected with the mainland. If our transportation network can be better developed, this issue could be better addressed. Currently, the average earning for households in Maluku is just Rp 6,000 per day. Out of 1.5 million inhabitants, most work as fisherman, but there are also farmers who produce cloves, nutmeg and rice. We are also good in handicrafts, such as seashell crafts and woven fabrics.

FI: You are in the seventh year of your term, what have you accomplished?

KAR: I started my term in 2003 soon after the riots ended. At the time, my focus was on stability and recovery. Starting in 2005, my focus has been on the development of Maluku’s competitiveness. I developed Maluku from a declining to growth economy. Before our growth rate was negative 29%, now we are at 6.5%. When my term ends in 2013, I believe our growth rate can reach 9%. My focus is to develop seaweed, fishery and aquaculture. About 90% of Maluku’s area is ocean. With almost 1,400 islands, which nearly a third are not inhabited, my task is quite hard. The poverty rate has been reduced from 35% in 2002 to 28% last year, while the unemployment rate has dropped from 13% in 2003 to 9% in 2010. My priority is in economic development focuses on developing Maluku through priority sectors, including fishery, plantation, tourism as well as oil and gas. 

Interesting Facts:

-Although Karel is a former brigadier general in armed forces but he has very soft voice and he is very modest. He is far from strict image that i imagined from someone from armed forces. He was kind enough to take me travel around Ambon and we were traveling also to Saparua, which is known for its 17th century Dutch forth that remind us with Pattimura struggle against Dutch colonial. In overall, I was very impressed on how beautiful Ambon is.

- Despite years of peace, the deadly sectarian violence between Muslims and Christian over three years starting in 1999 is one of the darkest chapters in the long history of this region. Yet in September 2003, less than a month after Karel Albert Ralahalu was elected governor, the emergency status in the province was finally lifted. The peace process involved negotiations between Muslim and Christian leaders along with other community leaders. They tried to settle their differences under the slogan pela gandong, which means all those on Maluku share a common ancestry and are, in effect, one family. To seal the peace, leaders from various factions would often drink a mixture of palm wine tinged with both of their blood, thus binding them together. Awath Ternate, the district head of Batu Merah, where the unrest first started, says pela gandong  has brought peace to the area. “God teaches us to never harm others, especially our own family. Maluku is one big family, and we should not hurt each other,” he says.

-Maluku lies in the eastern part of Indonesia. Some 90% of the province’s area is sea. With its capital, Ambon, the province has nine districts and is home to countless diving sites. The biggest islands are Seram, Buru, Yamdena and Wetar, but Banda is the most favorite destination for cruising and diving. Maluku has much potential for plantations as currently only 25% of its 200,000 hectares that are suitable for farming have so far been cultivated. It also has huge untapped resources for oil and gas, gold, copper, sulfur as well as mercury. But the current economic growth remains heavily dependent on tourism and fishery.

Maluku exports in 2010:

Commodity                                    Value ($)           

1) Copper                                    9,013,044           

2) Fish, shrimp                            7,654,550           

3) Jewelry                                    3,664,065           

4) Coffee, tea, spices                 2,362,361           

5) Grains                                         358,092           

6) Resin and latex                          233,201           

Total                              23,285,313           

Source: Statistics Indonesia (BPS)