TRANSMITTAL OF MS/[ ] CONTRIBUTION TO ORR PROJECT(Sanitized) SUMATRA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A002900120001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: November 16, 2016
• Document Release Date: March 3, 2000
• Sequence Number: 1
• Publication Date: March 30, 1964
• Content Type: MF

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MMORANDW
THROUGH : AD/R,R
THROUGH : ' ief, Ste:
THROUGH : Chief, llf IBS
,r"Rm: Chief, !/OOM
25X1 C
The subject
A total of 80 hours were
of this project.
25X1A
Excluder ;, . r.a
dark
?P& y-2 7__
30 1 ` t 3
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ilities in Sumatra
25X1 C ORR -4ect # .#2B3
27 Mrcbl
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G. Telecaea,eattions
The telecommunications systen of
owned and operated the
government and provides all civil t ?phone, telegraph, and radlQbroadcasting
services. Telephone and/or telegraph service is available in all inhabited
areas of Sumatra as is radiobroadcaating
. Telephone and Tell Services and Facil
(a) Domestic
The Administration of
Telegraphs, and Telephones (PTT) for
Indonesia, subordinate to the Ministry of nunications, operates the telephone
and telegraph systems. Tice services provided by the PTT are restricted by
antiquated facilities and adverse climatic and topographical conditions. There
are 20,000 telephones in use in Sumatra, me third of which are automatic. More
than forty per cent of the total number of telephones are located in .an.. Padang,
and. Palembang. Conventional telegregah service is provided throughout Sumatra.
The larger cities have automatic subscriber telegraph (TELEX) exchange facilities,
used principally by business an government, which afford direct connections
with Djkarta. Interurban telephone and telegraph connections are made by open
wireline and high frequency (m') and very high frequency (vnF) radio facilities.
(See map, Figure 1.)
(b) International
The only direct international circuit -- a HP radiotelegraph connection
between Medan and Singapore -- c
is not in operation. All international
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connections are a thxou&i Djs"fta.
Bx astin1 Facilities and rvices
M tilY~
The l .o Republic amnesia (MU) broadcastij syoto , which is
controlled by the Minist
2M,0radiobroedeaot receivers
service is furnished by t
at Sibolge (1 kw)
7.5 kw, and 1 kw),, Padmg (10 kw,, 10 kw, eat 1 kw),,
1 kw).
In addition, local service
(.3 kw WA
ularly bra
service to 4VrO I awtelr
ungpirs g (5 kw an 1 kw
.I kw): end
Inionesian with the exception of Kutar dje which r ?
.a At jehue-
operates its asap
tropospheric sea
and Java Is under constructi
Palembang Djkarts is to be coapl
ate p:
(10 kv and
in 1965, the
:n 1966 or 1967.
local bx eaeting
setts L"kw7,
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rd-r-
(b) Aeronautical
The Department of Civil AvistI.Oft (pCA) MA the Air Force operate
HF point-to-point and VHF ground-to?air radio facilities at
Sumatra. (tee map, Figure 1. )
maritime
Maritime radiotelegraph and
the PTT, the Navy, the Caltex Pacific on Company (CALTi ), and the
Petroleum Meats?hsppij (mm). (see
(d) Police
The State Police operate HF raii legraph facilities that connect
major i s in Sumatra. VHF radiotelephone facilities are used for city,
mobile, and marine service. (See map, Figure
(e) other
ephone service is pivvided by
1.)
airports in
The Standard-Vacs Petroleum Coopmy (STANVA C) and 4 have radio-
telephone connections between their raf
at Swagsi
and Pledju
25X1 C respectively, and oilfields in South and Central Sumatra. CALTEX has radio-
telephone facilities in its Central Sumatra oilfields.
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 25X1C
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1'gure 1
Uff
Sumatra: Main lee~ication Faeilitie, 1964.
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s =:.J ... e a Fh E, a=7
1. Open wirelines along Kisaaran
23 km south of Medan.
2. Open wirelines along lulu
highway and railroad route,
186 km from Palembang.
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Figure
0 transmitting station near the Medan airport.
4. PTT radio receiving station near
aizport.
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Figure 2
XU transmitting anted at Medan, along the him to Bind jai .
6. E& station buildings at Medan, along the highway to Bindjai.
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1 ogranhy
DOD. Trip Report of South and Centres Sumatra, OUSA-M4A, Indonesia,
2845017763, 18 October 1963, Official Use Only.
ITU. Alphabetical List of Call Signs of Stations Used by the Maritime
Mobile Service, second ec.ition,. November 1963, Geneva, U.
ITU. List of Fixed S
ions, Vols. I and II, March 1959, Geneva, U.
0. Lund Johansen Ltd. World Radio TV 1 ndbook, Hellerup, Denmark, 1964. U.
State. Djkarta, A-595. 3 January 1964, Limited Official Use.
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r+$:
Chapter V - Economy
Project No. 46.4283
16 April 1964
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C}L v. Eeo F SUMTRA
A. General
Sumatra Is, economically the most important island of the Indonesian
archipelago. The yields of its mineral resources, chiefly petroleum and
tin, and agricultural estates contribute alMost 70 percent of total Indonesian
foreign exchange earnings. Although the island is not as fully developed as
the main Indonesian island of Java, its export earnings contribute signifi-
cantly to the welfare of Java.
The Sumatran economy is characterized by two distinct sectors +- the
capital intensive market sector based largely on foreign capital and the labor
intensive non-monetized peasant sector. Northern Sumatra has extensive
agricultural estates, which were initially established with European capital.
These estates continue to produce cash crops for export, such as rubber,
tobacco, tea, coffee, palm oil, and cinchona bark (used. for quinine). Although
foreign interests remain on the island, the Indonesian government is gradually
lessening the influence of foreLgn enterprise throughout all of Indonesia.
In 1958, a government decree was issued forbidding foreign interest from
exploiting the bauxite and tin ieposite of the islands. British and US
investment continues in the petroleum industry, but this will gradually be
token over under an agreement signed between the government and the foreign
oil companies which provides for the compensated nationalization of these
holdi.ngse Dutch agricultural estates were taken over during 1957-58 at the
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FLU
same time other Dutch interests in the islands were seized. Currently,
British eatates3 are being subjected. to threats of similar takeover actions.
The peasant economy is dominated by labor intensive enterprise, primarily
subsistence farming. Some of the peasants, however, have set aside small
plots on which to grow cash crops. There is some cottage industry in the
villages. Basically, however, the peasant economy is limited to agricultural
pursuits. Although smallholder production is increasing in importance through-
out the island and the rest of Indonesia, the estates continue to be the most
efficient agricultural producers, and, their products continue to be of better
quality than those produced by smallholders.
The economic development of the Island has been hindered by inept
government policies. Little progress has been made in the industrialization
of the island or in the improvement of production techniques to exploit the
island's natural resources. Under an 8-year plan of development, now largely
abandoned, an effort was made to provide for some development of the outer
is3lcnds3. The economic situation on Sumatra has been aggravated. by the
current confrontation of the newly formed federation of Malaysia. This
confrontation has cut off the Malaysian ports to which almost all of
.:A Sumatra's exports were formerly shipped.. This has caused. severe problems
because new markets and processing facilities must be sought to substitute
for those in Singapore and Malaya and there has been a consequent disruption
in the normal flow of trade.
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 n r
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B. Natural Recources
Petroleum is Sumatra's most important natural resource. Total.
Indonesian reserves are the largest in the Far East, and Sumatran reserves
account for about 90 percent of all Indonesian reserves. Although most of
the $250 million annual export production is controlled by foreign dominated
companies -- Caltex, Stanvac, and. Shell Indonesian government firms are
becoming more important in the industry. Three small government firms --
Permina, Pertemin and Per2nigan -- conduct operations in Sumatra. Indonesia
is expected to continue to expand its activities in the oil industry as it
continues a process of gradual compensated nationalization.
Tin is mined on the islands of Bangka, Billiton and Singkep, off the
southeast coast of Sumatra. Although tin accounts for less than 5 percent
of total Indonesian exports, Indonesia rani as the third largest free world
tin producer. Nationalization of the industry in 1958 led to great inef-
ficiencies in production because of inept management and other consequences
of the government's failure to establish a positive economic policy.
Bauxite mines have shotim increasing production during recent years.
Confined to the island of Bintan, Indonesian bauxite deposits are relatively
insignificant as a world, source.
There are two coal mining regions, one southeast of Palembang and
the other at Ombilin, north of Bukittinggi, in central Sumatra. `.these mines
do not fulfill Indonesia's requirements, and further rehabilitation is not
likely to Increase production greatly.
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There are other mineral deposits which are not currently exploited,
conanercially. Junong these are gold, silver, lead., copper, iron, antimony,
cobalt, naptha, sulfur, alum, and. saltpeter. Iron deposits may be commercially
exploited in the future when the Soviet-financed steel project at Tjilegon,
Java, is completed.
C. Industry and Electric Power
There is little industrial activity in Sumatra. Industry is restricted.
to the processing of primary commodities and. to the manufacture of cement,
fertilizer, textiles, and various other consumer goods. Two important foreign
owned petroleum refineries are the island's only heavy industry. Shell operates
a refinery at Pladju, and. Stanvac operates a refinery at Sungai Gerong, both
located in the Palembang area. There are several saw milling centers and
rubber processing facilities. A hydroelectric power plant and aluminum project
financed by the USSR is to be constructed on the upper Asshan River southeast
of Lake Toba. In general, however, the central government has made little
provision for the expansion of Industrial activity in Sumatra.
Electric power facilities are limited. on the island of Sumatra. Total
electrical generating capacity on the island is about 1/lath of the total
capacity for all of Indonesia. Power facilities are found primarily in the
Medan, Padang, and Palembang areas. Most of the electrical supply is generated
by small therr.:al plants. Hydroelectric power generating potential exists in
the uplands region of Sumatra especially in the Lake Toba region. This
potential mna.' be developed under the 1960 Soviet credit described above. To
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date preliminary surveys have been made, but actual construction work on the
Asahan project has been delayed until 1967.
D. ricalture
Agriculture in Su atra consists of three types -- peasant (subsistence),
smallholder and estate. The peasants' main crop is rice, the staple food of
the island. In spite of the peasant rice production, large quantities of rice
must be imported annually to fulfil the needs of the population. Both wet
land and dry land methods of cultivation are practiced.. Maize is also grown
for home consumption. Smallholder crops include copra, spices (pepper, cloves,
and nutmegs), coffee, tobacco, betelnuts, peanuts, coconuts and cotton. Estate
agriculture, primarily European, is concentrated on the production of rubber,
tobacco, tea, palm oil, and. fibers and to a lesser extent cinchona bark, coffee,
g bier, and coca.
The most extensively cultivated area is in northern Sumatra around
Medan. Although grown throughout Sumatra and on Bangka, most of Sumatra's
rubber yield comes from the large estates situated. in the eastern parts of
Atjeh and Sumatra Utara provinces. Tobacco, oil palm, tea, and hard fibers
are also grown on north Sumatran estates. Cinchona bark is grown by small-
holders in L=mnpung province and on the west coast as far north as the Tapanuli
region, Pepper is grown in the Lampung area, around Palembang, and. In Atjeh
province. Minor smallholder crops grown throughout the island, include
betelnuts, copra, nutmegs and cloves.
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F. Fishing O l Forestry
Fishing is important to the economy of Sumatra and provides the
main source of animal protein in the Sumatran diet. Most fishing is done in
coastal waters, although inland fishing is gaining in importance, especially
in the laxge rivers of northern Sumatra and in Lake Toba. The largest coastal
fishing port is t3agarssiapiapi. Other fishing centers are Sungsung, Lampung,
Bangka, and lB:~.nkahula. Shell fish, trepangs (sea slugs) anti. praims are
caught and dried. fish are exported.
Liumati?a contains the finest timber producing forests in the Indonesian
archipelago. About 60 percent of the island is covered with forests, containing
hard wood and. soft wood. in great variety. Oak, chestnut, ebony, ironwood,
camphorwood., and sandalwood as well as many species of resin and wild rubber
producing trees arc found. Much of the timber, however, is difficult to obtain
because of inaccost3ibility.
loyi,tent and. Labor
About 70 percent of the Sumatran labor force is engaged in agriculture.
Although root peasants carry,_:on only subsistence agriculture, some --- par-
ticularly in the northeastern and southern parts of the island --- reserve
crall plots to grow cash crops. In addition to the peasants who devote small
plots to cash crops, there are many smallholders who devote all their acreage
to cash crops. Estate agriculture is also an important employer of Sumatran labor.
Leas than 10 percent of the labor force is engaged in industrial activ-
ities. Although industrial enterprises are very limited, Javanese laborers have
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been recruited to supplement the local labor force. The industrial labor
force consists prim-u-11y of workers in oil refineries, textile mills and other
light consumer goods industries.
As in other parts of Indonesia, Sumatra has a severe shortage of
capable rnFSna ers, administrators and technicians. During the colonial era,
foreigners suprlied these talents. With the Indonesian desire to eliminate
foreign influence, people with maa e.rial skills have also been elim!nated.
The Chinese retain their place in small buziness ventures, but the government
has imposed ri id controls over their activities. Lacking capable native
managers anc7 entrepreneurs, many Sumatran enterprises formerly managed by
foreigners hr.ve d.eteriorated.
bore is an active, politically oriented. labor movement, in Sumatra.
The unions have, in fact, mainly political functions, because strict government
controls have 1:Lnited their economic bargaining powers. SOBSI is the most
influentiaal labor federation, not only in Sumatra but in all of Indonesia.
Sponzored by the Connunist party, SOBSI affiliates, including Sarbapri, the
plantation workers union, have been active in the recent takeovers of British
estates on Sumatra.
G. Foram Trad.e
The island of Sumatra contributes a major share to total Indonesian
foreign e:-.change earnings. During 1961, Sumatra's exports \rere valued at
$560 inilLon, more than 70 percent of total Indonesian e-:portE.. Important
exports include rubber, petroleum, tin, bauxite, copra, tea, coffee, oil palm
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and. tobacco. Sumatran imports, on the other hand, were 3 11~C) riillion, less
than 20 percent of total Indonesian imports. These imports consisted
primarily of consumer goods and foodstuffs, mostly rice.
The Indonesian economic confrontation with Malaysia, which began when
the latter was formed in September 1963, has had important consequences for
the island of Sumatra and associated islands. Prior to confrontation a large
share of the island's exports were transhipped. through Singapore or other
Malaysian ports. Now, new markets and processing facilities, which could.
substitute for those formerly provided by Malaysia, are being sought. Small-
holder rubbcr producers have been seriously affected. by confrontation because
the low quality of this rubber has made marketing --- except to the processors
in Singapore --- difficult. High quality estate rubber has always been shipped
direct to consumern, and thus confrontation has posed little problem for the
estate rubber producers. Petroleum exports have been rerouted., but there has
been a decline in the normal flow of exports. Tin ore exports have been shifted.
from Penang to the Netherlands for smelting and re-export to Western European
markets. Even if new markets can be found for Sumatran expcrts, the problem
of adequate port and shipping facilities remains.
one United States and. Great Britain remain among the most important
consumers of Sumatran exports. The cc anunist countries' share of trade,
although increF.sing, is only about 10 percent --- consisting primarily of
rubber and. other tropical commodity exports in exchange for machinery and
textiles .
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if. Forei ;.n Loans C rid Aid
Little foreign aid, has been contributed. for the economic dievelopment
of the island o: Sutnatra. The limited amounts of aid. that have been granted
are for the most part unused, and prospects for the early coicpletion of any
major aid projects are faint. The most significant loans to the island are
those of ti.c Soviet Bloc, primarily the USSR. The USSR agreed to build a
lame hydroelectric power facility and aluminum project in the L Elie Toba
region of Northern Sumatra. This project has been surveyed, but further
progress has beon delayed. until 1967. Other Bloc projects scheduled on the
island include the rehabilitation of the Ombilin coal mine and the con-
struction of a cement plant in North Sumatra, a sugar refinery in Atjeh, and
a soda ash plant in Palempang. Aid from western nations includes construction
of a blast furnace at Lambung and a new tin smelter at Muntok, P.angk_a, both
financed. by West Germany. Japan has cooperated. in a production sharing
venture with the Indonesian oil industry. United States aid projects include
diesel electrification projects, a fertilizer plant at Paler-bang, harbor
developnent r nd. rehabilitation, malaria control programs and. agricultural
extension >ervicec. As with welfare programs in Indonesia, the aid programs
of Western and Bloc nations have been largely centered, on Java. The same in
true for the government development plans, which consider the outer islands
as produr--.ors of primary goods to provide the capital for the industrialization
of Java. R'-ii s aspect of the plans has tended to alienate, many of the peoples
in the outer islands and. especially those on Sumatra.
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