INDONESIAN REQUIREMENTS FOR SHORT-TERM ECONOMIC ASSISTANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A002400150001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 9, 2016
• Document Release Date: March 19, 2001
• Sequence Number: 1
• Publication Date: October 1, 1965
• Content Type: BRIEF

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INDONESIAN REQUIREMENTS
SHORT-TERM ECONOMIC ASSISTANCE
DIRECTORATE OF INTELLIGENCE
Office of Research and Reports
SECRET
GROUP I
Excludod'from automatic
downgrading and
declassification
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 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 194, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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INDONESIAN REQUIREMENTS
FOR SHORT-TERM ECONOMIC ASSISTANCE
The changes in the political balance of power following the 30 Sep-
tember coup in Indonesia do not alter the country's economic problems,
but they may offer opportunities for renewed economic assistance from
the West. The shifting fortunes of the Army and the PKI are not ex-
pected to change either the intense nationalism of the government or
Sukarno's presentation of the United States as a symbol of NECOLIM
(neo-colonialists, colonialists, imperialists). Thus the emerging
Indonesian government probably will not find it expedient to effect an
abrupt change in its posture toward the United States. It may be pos-
sible, however, for the United States to provide assistance* indirectly
and to influence the assistance provided by other nations. This assist-
ance could be directed at maintaining and improving living conditions
in order to mitigate developing discontent, especially in urban areas,
which could undermine government stability. In addition, spare parts
and repair facilities for trucks and for the inter-island merchant fleet;
rice, cotton, coal, kerosine, and lubricating oils; and road construction
aid would all be of short-run assistance.
1, Spare Parts and Technical Assistance for Transportation
Economic assistance in the form of spare parts and technical assist-
ance for the Indonesian transportation system would improve domestic
distribution facilities and thus insure a more efficient use of available
resources. Although there have been recent imports of trucks and, roll-
ing stock from the US, West Germany, Japan, Yugoslavia, Rumania,
Czechoslovakia, and East Germany, the existing vehi=cle stock has been
so badly maintained that investments in repair facilities and spare parts
would have been more productive. The road system is badly in need
of repair, and trucks and buses are operating at less than 50 percent
of capacity.
* The US aid program to Indonesia was terminated in mid-FY 1965.
During FY 1965, $3. 8 million in existing economic aid grants and loans
was withdrawn. The PL-480 program amounted to $5. 7 million in
grants shipped under Title II and Title III. These shipments included
dry milk, bulgar wheat, corn, and fats and oils. Military assistance,
primarily training, totaled $5. 0 million. No new aid was extended
for FY 1966 but some programs -- educational exchanges and a harbor
rehabilitation contract -- are continuing with funds still in the pipeline.
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The Minister of Sea Communications estimates that almost 60 per-
cent of the Indonesian merchant fleet is idle, because of a lack of
spare parts, port congestion, and the low operating efficiency of ports.
The air transport system, on the other hand, is relatively efficient.
Moreover, certain forms of aid to the air transport system (for example,
meeting Indonesia's request for C-130 spares) would have the disad-
vantage of supporting the confrontation policy against Malaysia. Assist-
ance could be provided to certain other elements of the Indonesian
transport system, however, without giving material aid to confrontation.
US equipment was introduced into Indonesia to rehabilitate the
transportation system following the Japanese occupation, and thus
spare parts for US-manufactured equipment could be used. Western
technicians could also direct repair work on roads and rail facilities
to make the transport system more efficient.
A severe rice shortage in Indonesia would create serious political
problems for any new government. The seasonal shortage that
usually occurs between December and March did not materialize in
1964, because rice imports were available for immediate distribution
to rice-deficit areas. This year, however, imports were sharply
cut back in line with Sukarno's August 1964 edict that Indonesia im-
port no more rice. During 1965, Indonesia imported only 150, 000
metric tons (mt), compared with annual imports of more than a mil-
lion tons during recent years. As a result of a record rice harvest
of 10.4 million mt this year, Indonesia should have sufficient rice
available if it were not for internal distribution problems, which are
likely to create localized shortages. The difficulties posed by mal-
functioning of the distribution system have been highlighted during
the recent political upheaval. Between 30 September and 6 October
the price of rice in Medan rose by more than 100 percent. Localized
shortages could be eased by US rice shipments. * Some rice could
probably be procured from Thailand, but most other countries that
The US government maintains no stockpiles of rice, and most
domestic production is sold commercially. Most surplus rice is now
shipped to Vietnam, and Indonesia would have to take precedence
over Vietnam to obtain rice under PL-480 programs. Vietnam has
commitments for 150, 000 to 200, 000 mt for calendar year 1965, and
for 1966 the commitment may reach as high as 400, 000 mt.
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are traditionally major sources of Indonesia's rice imports have no
surplus stocks available at the present time. Although other food-
stuffs could be shipped, substitute grains are considered inferior to
rice, for which the Indonesians have a marked preference.
Although Indonesia produces and refines a large volume of
petroleum, there is a perennial shortfall problem, requiring Indonesia
to import various petroleum products. Kerosine, an important con-
sumers' good used for heating, cooking, and illumination, has been
in chronic short supply. While it is doubtful if kerosine is imported
to meet consumer demands, additional supplies could be utilized if
available. Indonesia is dependent on imports for much of its supply
of lubricating oils. Other shortages of petroleum products are likely
to develop now that the Indonesian government has taken over the
internal distribution and marketing of all petroleum products. A
recent report noted that the Kemajoran Airport at Djarkarta was with-
out jet fuel for three days because of internal distribution problems.
4. Cotton and Spare Parts for Textile Machinery
Indonesia could also use raw cotton and spare parts to rehabilitate
its textile production facilities and thus reduce its need to import
textiles. Domestic spinning capacity has increased during the past
two years, but actual production has declined.
The government-owned railroad has been beset by coal shortages,
created in part by the declining output of Indonesia's coal mines and
in part by the inefficiency of local transportation facilities. The rail-
road company estimates its monthly requirements at 35, 000 mt whereas
the coal board will provide only 25, 000 mt. This shortage is likely
to reduce the operating efficiency of the railroad, still further aggra-
vating distribution problems.
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 CONTROL RECORD FOR SUPPLEMENTAL DISTRIBUTION 25X1A
SERIES NUMBER
CIA/RR CB 65-65
CLASSIFICATION OF REPORT
SECRET
DISTRIBUTION TO RC
55
DATE OF DOCUMENT
October 1965
NUMBER OF COPIES
325
NUMBER IN RC
COPY
RECIPIENT
DATE
NO. (S)
SENT
RETURNED
177-187
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 ES T
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St/A/DS Distribution of Current Support Brief No. 65-65, Indonesian
Requirements for Short-Term Economic Assistance --- October 1965
(SECR, T)
Copy No.
Recipient
1
5
O/DDI, Room 7E32 H . 25X1A
6
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8
& 9
DD/ORR (hand carried by St/P/C, 26 Oct 65)
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D/T (1 each branch)
28
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D/R (1 each branch)
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MRA
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D/P (1 each branch)
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D/F (1 each branch)
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St/PS
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D/I (1 each branch)
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D/A (1 each branch)
59
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GD/OBI
61
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CD/OBI
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CD/X/OBI.
64
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RID/SS/DS, Unit 4, Room 1B4004, Hq.
25X1A
70
St/P/A
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St/FM
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Analyst/B ranch I/At
73
GR/CR
74
BR/CR
75
FIB/SR/CR, Room 1G27, Hq.
76
Library/CR
77
IPI/CR
78
Archival, File - Records Center
79
Chief, OCR/FDD
80
DCS/SD
81
OCI/SA/R, Room 5G19, Hq.
82
DD1/CGS, Room 7G00, Hq.
83
- 84
DDI/CGS/HR, Room 7G00, Hq.
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DDI/RS, Room 4G39, Hq.
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Copy No.
Recipient
86
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D/OSI
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D/OBI
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DD/S& T/SpIN T
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OTR/IS/IP, Room 532, 1000 Glebe (1 - OTR/SIC)
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National Indications Center, Room 1E821, Pentagon
115
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State, INR Communications Center, Room 6527, State 25X1A
Dept. Bldg.
127
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USIA, IRS/A, Room 1002, 1750 - Pennsylvania Avenue,
N. W., Attn: Warren Phelps
131
- 175
Defense Intelligence Agency, DIAAQ-3, A Building,
Arlington Hall Station
176
-
Z60
St/P/C/RR, Room 4F41, Hq. (held in St/P/C 28 Oct 65)
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 OPTIONAL FORM NO. 10 S E C RE T
Ap~t-~~rj Rgas~/~ TCIA-RDP79T01003A002400150001-8
Memorandum
Chief, Dissemination Control Branch,
DATE: 29 Oct
ber 1965
Chief, Publications Staff, ORR
SUBJECT: Transmittal of Material
It is requested that the attached copy of CIA/RR CB 65-65, Indonesian
Re uirements for Short-Term Economic Assistance, October 1965, Secret,
be forwarded as follows:
ACTION L 01P? Tr partment of State, I NR Communications
.aa . Center.. Room 6527. State Dent. Slc .
the d 155Orr rraI pn rrc-ueTfed by Attn: Mr R Kent Goodspeed
this memorandum has been completedX Chief., Indonesian Desk
BY: jt/
Room 5315, State Department
Date.
v
Iw...__. Ggatir
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 SECRET
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2 November 1965
MEMORANDUM FOR: Chief, Dissemination Control Branch, DD/CR
FROM Acting Chief, Publications Staff, ORR
SUBJECT . Transmittal of Material
It is requested that the attached copies of CIA/RR CB 65-65,
done:ian Re uirements for Short-Term Economic Assistance October 1965,
caret,: be fbrwarcted. as follows;
State, INR Communications Center,
Room 6527, State Dept. Bldg.
Suggested distribution for
Embassies in The Hague, Bew ok,
Djakarta,, Rangoon, and Tokyo
ACTR''l COMPLETED
The dissem;not,on re'.uue.stod by
this memorandum has been completed;
BY:
Date: `7U-1/. 6 S
Attachments:
Copies #218 - #222 of CB 65-65
cc; CGS/RB
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 Approved For Release 2001/04/17: CIA-R 03A002400150001-8
Project No. 46.5284
Report Series CIA/RR CB 65-65
Assistance LSecretj_
Responsible Analyst and Branch I/A
RECOMMENDED DISTRIBUTION TO STATE POSTS
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 RECORD OF
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SUU
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FORM 235 SECRE
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9RA '9
SECRET
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Djakarta, For* igri ,Agri ;l tWe Service, . f ? 2, 8 July 1 , V=D~ssif
D r in
Dj r t4, 077 Imoming ', eiegrem, 6 October
179, 4 September 165, CQ I;j .
Djekar ;, 179, 4 Septentber 1)65, CC3
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