President Susilo Bambang Yudhoyono said Tuesday that Indonesia would not bargain with Malaysia over the disputed oil-rich Ambalat territory but would solve the problem through diplomatic channels.

“The solution to the Indonesia-Malaysia dispute should be made through precise and unyielding diplomatic strategy.

“We will not accept any claim by Malaysia over Ambalat,” he said to journalists after the Association of Southeast Asian Nations (ASEAN)-South Korean Commemorative Summit in Jeju Island, as quoted by kompas.com.

The President said he would meet with Malaysian leaders and had proposed intensive talks on the disputed border area issue.

Ambalat is a maritime area located off the east Kalimantan coast, which both Indonesia and Malaysia claim as their own.

Indonesia recently accused Malaysian battleships of entering Indonesian territorial waters surrounding Ambalat. Malaysian naval ships have trespassed into the disputed zone several times. According to the TNI, this was the ninth time Malaysia had breached the border in 2009.

Yudhoyono said that he had ordered the Indonesian Military chief Gen. Djoko Santoso and Air Force chief of staff Marshall Subandrio to boost security measures in Ambalat.

The dispute over the maritime block, believed to be rich in oil and gas, has been raising tensions between Indonesia and Malaysia since the 1980s. (dre)

JAKARTA – Indonesia’s presidential election campaign period officially opened Tuesday with opinion polls showing incumbent Susilo Bambang Yudhoyono holding a huge lead over his rivals ahead of the July 8 vote.

The liberal ex-general is riding high after his centrist Democratic Party tripled its vote in April’s general elections, snaring more than 20 per cent of the ballots compared to around 14 per cent for the main opposition.

“We are confident that the presidential elections will be carried out in a fair, smooth and peaceful manner,” Election Commission spokesman Syafriadi Yatim said.

Yudhoyono, known in Indonesia by his initials, SBY, won a landslide victory over Democratic Party of Struggle leader and ex-president Megawati Sukarnoputri to become the country’s first directly elected head of state in 2004.

He is hoping for a second term to make good on his promises to clean up rampant corruption and steer Southeast Asia’s biggest economy out of the global recession.

Sharing a ticket with respected economist and former central bank chief Boediono, the mild-mannered Yudhoyono will be hoping to win more than 50 per cent of the vote to avoid a second round in September.

“We are confident of getting 55 to 70 per cent of votes, based on recent polls,” Yudhoyono campaign adviser Darwin Zahedy Saleh told AFP.

“The SBY-Boediono pair is consistent in their vision to promote democracy, uphold laws that fight corruption, reform the bureaucracy and come up with economic programmes that will grow the economy with quality and equity.”

But Yudhoyono’s plans for a first-round win over Megawati received a blow when his previous running mate, outgoing Vice President Jusuf Kalla, announced he would make his own bid for the presidency as head of the Golkar Party.

Kalla is a distant third in the opinion polls but his entry makes it a three-horse race and a first-round result less likely.

During months of public negotiations over power-sharing deals, Megawati and Kalla both chose former generals with chequered pasts as their running mates.

The presence of ex-military men in all three leading campaigns is evidence, analysts say, that old elites remain powerful in Indonesia 10 years after the fall of Suharto’s military-led government.

Megawati has teamed up with notorious special forces ex-commander Prabowo Subianto, who is accused of serious human rights violations, including the kidnapping of activists on behalf of the Suharto government in the 1990s.

Kalla has chosen former military chief Wiranto, who has been indicted by the United Nations for crimes against humanity including murder, deportation and persecution over East Timor’s bloody independence referendum in 1999.

Aria Bima, an adviser to Megawati, said the daughter of national independence hero Sukarno could win 30 per cent of the vote despite her reputation for inaction and the corruption of her 2001-2004 administration.

“Under SBY, the economic situation was not much better and many people are disappointed in him. I’m sure we can get these people to support us,” he said.

Growth is expected to fall from above six per cent last year to around four per cent in 2009, but the economy should avoid recession thanks to strong domestic demand, analysts say.

A poll published last month by the Indonesian Survey Institute found that 70 per cent of 2,014 respondents would vote for Yudhoyono, compared with 21 per cent for Megawati and a mere three per cent for Kalla.

From the Economist Intelligence Unit ViewsWire

A brightening outlook for Indonesia’s economy Despite the weakness of the global economy, the Economist Intelligence Unit has raised its forecast for Indonesian economic growth. The economy’s performance in the first quarter of 2009, when real GDP grew by 4.4% year on year, was surprisingly strong, mainly owing to the resilience of private consumption. We now expect real GDP to expand by 2.4% this year, compared with a contraction of 1.4% in our previous forecast. We expect growth to accelerate to 3.2% in 2010, up from 0.5% previously. A number of factors have buoyed private consumption, which accounts for around 60% of GDP. The government’s Rp71.3trn (US$6.9bn) stimulus package, which included cash transfers and higher salaries for civil servants, has supported household expenditure. So too have lower prices for food and fuel, which mean that personal disposable income has not fallen as sharply as expected. Lastly, consumption has been boosted by spending relating to the April legislative election and the upcoming presidential election in July. Private consumption fuelled the first-quarter expansion, rising by 5.8% year on year and contributing 3.4 percentage points to growth. To be sure, the economy continues to face significant headwinds. Fixed investment, which contributed just 0.8 percentage points to first-quarter growth, will contract this year as domestic firms experience difficulty in accessing capital. Prior to the onset of the global financial crisis, domestic non-financial corporations obtained almost half of their financing from abroad. The Western investors that provided much of this cash are now scrambling to sell assets to pay off their own short-term liabilities, which are becoming increasingly difficult to roll over. As a result, many domestic investment plans are being put on hold or scrapped. Meanwhile, exporters will have to contend with a sharp contraction in world trade in goods in 2009. After shrinking by 19.1% year on year in the first quarter, the sharpest fall in almost a decade, Indonesia’s merchandise exports will continue to contract sharply in the rest of 2009 owing to lower external demand and weaker prices for most of the commodities that the country sells abroad. In turn, extremely weak export demand will lead firms in the export sector to cut back on investment and lay off workers. However, lower global oil prices, together with a contraction in domestic investment, will suppress the import bill. As a result, we expect the trade surplus to remain stable in 2009. Risks There are downside risks to our revised forecast. First, the international financial crisis could deepen and have a larger negative impact on global economic growth and capital inflows to Indonesia than we currently expect. Second, although the rupiah has appreciated since mid-March, there is a possibility of renewed exchange-rate weakness. The effect of a full-scale collapse in the rupiah (not our central forecast) on domestic prices would lower the spending power of most Indonesians. A weaker rupiah would also make it more difficult for local corporations to meet their external debt obligations, raising the incidence of bankruptcy. Third, there are also political risks: if deteriorating economic conditions spark social unrest, investment could suffer an even deeper and more protracted decline as investors lose confidence in the country.