Kiev. Ukraine on Friday reported the first deaths in three days in east Ukraine and President Petro Poroshenko said Russia would pose a “military threat” even if a ceasefire holds.

Government troops fighting pro-Russian separatists in the east began towing artillery away from the front line on Thursday, a sign the truce meant to begin on Feb. 15 could at last be taking effect.

But Kiev’s military later announced the deaths of three servicemen in the past 24 hours, following two days with none.

“Even under the most optimistic scenario … the military threat from the east would unfortunately remain,” Poroshenko said in a televised speech, in a clear reference to Russia.

Kiev and Western governments have accused Russia of sending troops and weapons to support the separatists in east Ukraine, despite a peace deal agreed in the Belarussian capital Minsk on Feb. 12. Moscow has denied this.

Russian Foreign Minister Sergei Lavrov welcomed news that the two sides were pulling back heavy artillery. But he accused the West of pushing Kiev toward confrontation with Moscow.

“There is no objective precondition for calling this all a second Cold War. On the other hand, the hardening line that we see in some Western capitals goes beyond what we saw during the Cold War,” Lavrov told a gathering at the Foreign Ministry’s Diplomatic Academy.

The situation in the conflict zone was “relatively calm” overnight, Ukrainian military spokesman Anatoly Stelmakh said, although he reported isolated attacks by rebels on Ukrainian troop positions.

Ukraine continued to withdraw its weapons on Friday, but the army will remain on high alert, Defense Ministry spokesman Serhiy Galushko said in a televised briefing.

“Sufficient troops and resources remain along the front line in case the terrorists and the forces supporting them violate the ceasefire,” he said.

The rebels, who committed to the truce only after seizing a strategic town in a humiliating defeat for Kiev, have been pulling back heavy weapons since Tuesday.

In a phone call, Poroshenko told German Chancellor Angela Merkel Kiev wanted a European Union peacekeeping mission in Ukraine.

European leaders have said the latest Minsk protocols should be given a chance before peacekeepers are considered.

VERIFICATION

Alexander Hug, deputy head of the European rights and security group OSCE, said OSCE monitors in eastern Ukraine needed more access to check the combatants were fulfilling their promises to withdraw weapons.

“What we need to know is where those weapons were originally, along which routes they will be moved, and most importantly where they will be stationed or stored now, so we can be sure that they really have been withdrawn,” he told Reuters.

“Our job is not to just observe but also to verify. That is a key difference.”

Kiev says it fears the rebels could be regrouping and preparing to attack Mariupol on the Sea of Azov. Capturing the port city would help open up a corridor to the Crimean peninsula, which Russia annexed from Ukraine last year following the overthrow of a Moscow-leaning president in Kiev.

Military spokesman Andriy Lysenko said a convoy of GRAD missile systems and other equipment had been tracked leaving rebel-held Donetsk in the direction of Mariupol.

On the front line between government forces and rebels at Shirokino, near Mariupol, residents complained of destruction.

“My house has burned completely. My life burned, my children’s inheritance burned up and their future burned up,” said Viktor Vdovenko, 62, pointing to the remains of his home, hit by a mortar bomb two weeks ago.

Moscow has in turn raised doubts about Kiev’s commitment to the ceasefire and asked whether the United States and the European Union, which have imposed economic sanctions on Russia, really want the Feb. 12 peace deal to succeed.

Reuters

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Caretaker Tan Jin Hong looks for swifts on the roof of the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. Prized in China for is alleged health benefits for hundreds of years, nests made from swiftlets’ saliva are being mixed into coffee and cereal as the Southeast Asian producers of the delicacy seek to broaden its appeal, and their profit margins. The nests are among the world’s most expensive foods, selling for up to $2,500 a kg and the swiftlets that weave them are indigenous to Indonesia, Malaysia, Thailand and Vietnam. (Reuters Photo/Olivia Harris)

Speakers are pictured on a roof at the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. (Reuters Photo/Olivia Harris)

Caretaker Tan Jin Hong holds a swiftlet tester which plays bird songs to attract swifts at the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. (Reuters Photo/Olivia Harris)

Swifts fly inside a building constructed to farm swiftlet nests at the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. (Reuters Photo/Olivia Harris)

Caretaker Tan Jin Hong harvests a bird’s nest at the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. (Reuters Photo/Olivia Harris)

Caretaker Tan Jin Hong looks for swifts on the roof of the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. Prized in China for is alleged health benefits for hundreds of years, nests made from swiftlets’ saliva are being mixed into coffee and cereal as the Southeast Asian producers of the delicacy seek to broaden its appeal, and their profit margins. The nests are among the world’s most expensive foods, selling for up to $2,500 a kg and the swiftlets that weave them are indigenous to Indonesia, Malaysia, Thailand and Vietnam. (Reuters Photo/Olivia Harris)

Caretaker Tan Jin Hong looks for swifts on the roof of the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. Prized in China for is alleged health benefits for hundreds of years, nests made from swiftlets’ saliva are being mixed into coffee and cereal as the Southeast Asian producers of the delicacy seek to broaden its appeal, and their profit margins. The nests are among the world’s most expensive foods, selling for up to $2,500 a kg and the swiftlets that weave them are indigenous to Indonesia, Malaysia, Thailand and Vietnam. (Reuters Photo/Olivia Harris)

Caretaker Tan Jin Hong poses with a bird’s nest and egg at the Swiftlet Eco Park in Perak, northern Malaysia, Feb. 14, 2015. (Reuters Photo/Olivia Harris)

A worker poses with an unclean bird’s nest at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

Two styles of cleaned bird’s nest, Yan Zhan (L) and Su Zhan (R) await repacking at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

Bird’s nests are pictured before the cleaning process at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

Clean bird’s nests are sorted according to size at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

A worker uses tweezers to remove feathers from a bird’s nest at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

A worker uses tweezers to remove feathers from a bird’s nest at a processing plant in Kuala Lumpur, Feb. 17, 2015. (Reuters Photo/Olivia Harris)

Bird’s nest coffee is pictured for sale at an outlet at Kuala Lumpur International Airport 2, outside Kuala Lumpur, Feb. 18, 2015. (Reuters Photo/Olivia Harris)

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Jakarta. Indonesia’s antigraft commission has vowed to follow up on a report by Jakarta Governor Basuki Tjahaja Purnama alleging budget irregularities by the City Council, with Basuki saying the chamber’s members added to the capital’s 2015 spending plan without City Hall’s approval.

Basuki said on Friday afternoon that he had deposited printouts of the city’s budget with the Corruption Eradication Commission, or KPK — amounting, in the governor’s words, to “two boxes of instant noodles,” or roughly 60 linear centimeters of paper, by the Jakarta Globe’s calculations.

“The team will follow up on the governor’s complaints by first reviewing the report,” said Johan Budi, an interim KPK commissioner. “We’ll look at what information and data is valid and accurate, and conclude if there are indications of corruption [to investigate].”

If the KPK finds indications of criminal activity, the commission will launch an investigation, Johan added.

Basuki said the two boxes presented to the KPK contained evidence of “stealth spending” inserted after the budget had been approved, as indicated by separate audits conducted by the Jakarta Supreme Audit Agency (BPKP) and the Regional Development Planning Agency (Bappeda) of the budgets approved by City Hall, totaling Rp 78 trillion ($6 billion), and that approved by the City Council, which amounts to Rp 90 trillion.

“I’ve come here to the KPK with evidence of differences in the budget that I submitted to the City Council, which was drafted through the e-budgeting system, and that approved by our colleagues in the council,” Basuki said. “There’s quite a big difference — Rp 12 trillion.”

Basuki has since submitted his own version of the budget to the Home Affairs Ministry.

Prominent backing

His hard-line approach to what he believes is unauthorized spending inserted by rogue councilors has provoked threats among the council’s members this week to launch proceedings that, if realized, could result in the governor’s impeachment.

Basuki has said that, if faced with impeachment, he would rather lose his job than let members of the City Council manipulate the capital’s budget.

The governor would appear to have backing, however, from at least one well-placed supporter; Basuki met with President Joko Widodo at the State Palace on Friday.

Joko, Basuki said, offered unconditional support for his struggle to reject the Rp 12.1 trillion allegedly inserted by councilors without the administration’s knowledge or consent.

“The president said that e-budgeting must go ahead [to avoid such schemes from happening again],” the governor said. “Yes, e-budgeting is still new, but it must be implemented.”

Taking the budgeting process online is seen as a measure to stop councilors and rogue officials from adding programs of their own under dubious circumstances and for unjustifiable amounts.

Among the items that the councilors allegedly inserted was the procurement of uninterruptible power supply systems to 55 schools across the city — at a cost of nearly Rp 6 billion each. The schools say that they neither need nor requested the devices.

The price tag is also questionable. According to online retailers, consumer-grade UPS machines sell for between $40 and $1,800. The most advanced consumer-grade model has an output power capacity of 2,700 watts and a run time of 15 minutes, enough for 10 computers.

“This is why we need to take [these irregularities] to law enforcement so we’ll know which [officials] are manipulating [the budget] and which councilors are getting rich because of this,” Basuki said. “I asked for [the president's] commitment to implement e-budgeting across Indonesia. The president agrees. He wants to stop regional budgets from being tampered with.”

Intrepid governor

In an unprecedented move, Basuki refused to submit the Rp 90 trillion budget proposal approved by the City Council to the Home Affairs Ministry — submitting instead what he says is the lower-cost version that his administration had initially proposed.

Regardless of the irregularities, the council remains adamant that the governor’s move to submit a budget proposal that it hadn’t signed off on violated at least three separate laws.

In a floor vote conducted on Thursday, all 91 council members present voted in favor of launching a probe — a move that could result in Basuki’s impeachment.

According to the 2014 Regional Administration Law, the council can recommend the president fire Basuki for disobeying regulations with a floor vote attended by a quorum of at least two-thirds of council members. At least 75 percent the councilors present must vote to recommend impeachment.

The council’s impeachment indictment would then be forwarded to the Supreme Court for a trial on the council’s bill of indictment that would weigh the circumstances and ultimately decide the governor’s fate.

Should the court endorse the council’s recommendation, the president would, by law, have no choice but to dismiss Basuki.

‘Other leaders must speak up’

Indonesia Corruption Watch chairman Ade Irawan applauded Basuki for sticking to his guns and facing down the council’s impeachment threat in order to expose the truth behind the council’s manipulation of the budget.

“Jakarta isn’t the only one that has embezzlement issues. We rarely hear of them just because the leaders prefer to stay silent and follow the requests or even cooperate with the councilors. All for their own interests,” Ade told the Jakarta Globe on Friday. “Now that Basuki has brought this up, other leaders must learn to speak up too, unless they’re also corrupt.”

Political expert Hamdi Muluk of the University of Indonesia (UI) said Basuki could purposely break the rules to say: “We need change.”

“What’s happening between Basuki and the council actually generates good momentum toward eliminating [many] budgeting violations by lawmakers, not just in the capital but throughout Indonesia,” he told the Globe.

For years, allegations of corruption in the budgetary process has amounted to little more than unsubstantiated rumors, Hamdi said, with all involved keeping silent while profiting from such schemes.

Even when regional leaders are not in on the action, “no one has guts to reveal it,” Hamdi said, lest they face a backlash from lawmakers.

“Should there be an impeachment, the public will likely support Basuki. The public must watch this process closely to know who is wrong and who is right.”

Senior political researcher Siti Zuhro of the Indonesian Institute of Sciences (LIPI), however, said it would be difficult for Basuki to evade impeachment, but added that Basuki was well aware of the risks he was taking: “Legally speaking, Basuki is wrong for submitting an unapproved document,” she said.

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Jakarta. Inflation appears to have slowed further in February from a month earlier, with commodity prices remaining steady, taming the impact of rising rice prices and presenting an opportunity to the central bank to cut interest rates further.

The consumer price index is likely to ease to 6.7 percent in February since the same period a year ago, according to the median estimate of 12 economists polled. January inflation eased to 7 percent on-year from a pace of 8.4 percent a month earlier.

The Central Statistics Agency (BPS) is scheduled to announce Indonesia’s official inflation and trade data on Monday.

Economists noted that raw food prices such as chili, onions and meat declined thanks to ample supply.

“From our observation, food prices eased in February but rice prices increased,” Aldian Taloputra, an economist at Bank Mandiri Sekuritas told Globe Asia on Friday.

Rice prices increased 30 percent to average Rp 12,000 per kilogram in February, compared with the same period last year.

Still, David Sumual, chief economist at Bank Central Asia, said the increase in rice prices were enough to catapult February’s inflation to 7.4 percent.

“In addition, the rupiah weakened, affecting inflation through more expensive imported products,” David said.

Lower inflation should give Bank Indonesia, the central bank, room to cut its rate further, Mandiri’s Aldian said, adding that Bank Indonesia’s benchmark rate could see another 25 basis point cut between April and June this year.

The central bank unexpectedly cut its benchmark last week rate by 25 basis points to 7.5 percent to boost growth, as it expect inflation to be lower than 4 percent at the end of this year.

Cutting the interest rate further could put more pressure on rupiah, which has fallen 4 percent so far this year against US dollar this year to levels last seen in August 1998.

Still, the central bank said the weakening rupiah was not a concern, as it would help the country exports. The bank also noted that the rupiah has actually appreciated against several currencies this year.

“There’s no need to be worried about Indonesia’s economy; the rupiah is in good condition and Bank Indonesia will always be in the market to guard it,” central bank governor Agus Martowardojo told reporters on Friday.

Standard Chartered Economist Eric Sugandi said he expected another 25 basis point cut in the benchmark rate in March due to good inflation data.

“It’s better to cut in the first quarter rather than the second because we could have the seasonal ballooning current account problem in the second quarter,” Sugandi said.

GlobeAsia; additional reporting from Reuters

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Jakarta. Bank Danamon Indonesia, the country’s sixth-largest lender by assets, welcomed its new president director on Friday, following the retirement of its former top executive, as the lender seeks to turn around its bottom line and lending growth.

Shareholders of Bank Danamon inaugurated Sng Seow Wah, previously the group chief executive of Alliance Bank Malaysia, during an extraordinary shareholders’ meeting in Jakarta.

Sng takes the helm of Danamon after it reported a sharp decline in profits last year due to slower lending growth.

“The Indonesian banking industry still offers various opportunities for growth, particularly in the micro, small and medium enterprises sector,” Sng said on Friday. “I am looking forward to expand Danamon’s presence in the industry and its contribution to this growing economy.”

Profit at Bank Danamon — shares of which are mostly controlled by Asia Financial, a unit of Singapore’s Temasek — declined by 36 percent to Rp 2.6 trillion ($201 million) last year, largely due to a regulatory change in accounting required the lender to book a lower premium income from its insurance units.

Bank Danamon’s total outstanding loans grew 3 percent to Rp 139 trillion last year; loans to micro, small and medium enterprises made up 28 percent of the total loans.

The lender also disbursed Rp 49.6 trillion in automotive loans last year, accounting for 36 percent of its total outstanding loans.

Still Sng has a more bullish outlook for lending growth this year on the back of stronger economic growth.

The Jakarta-based lender aims to grow total loans by 15 percent in 2015, on top of 18 percent growth in loans to micro, small and medium enterprises, Danamon’s
finance director Vera Eve Lim said.

Sng said that he will continue the lender’s focus on automotive financing and micro financing in the future, while also noting that it will still scout the market for other potential opportunities.

GlobeAsia

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Jakarta Governor Basuki Tjahaja Purnama has never been one to back down from a fight, and on Friday he showed he wouldn’t be cowed by the City Council in a tussle over the city’s 2015 budget.

He first paid a visit to his old friend, the previous governor, Joko Widodo, who just so happens to be president, to fill him in on the council’s attempt to tack on Rp 12.1 trillion ($940 million) of unauthorized funding onto City Hall’s original budget of Rp 78 trillion.

Then he headed over to every crooked politician’s worst nightmare, the Corruption Eradication Commission (KPK), to report the councilors’ shenanigans, and came away with a promise that antigraft investigators would look very closely at the two boxes’ worth of documents that he left them.

Basuki is a politician like no other — brash and abrasive, but always principled. This is the person, after all, who broke with two political parties because their self-interested ways did not reconcile with his own values of public service.

With the KPK by his side, Basuki presents a formidable David to the City Council’s Goliath. If the latter really is bent on impeaching him, as it has made clear since long before he even became governor, then it has a fight on its hands.

But it is hard to say what kind of help he can expect from Joko, who is juggling a host of problems of his own. Indeed, this issue marks the second time on Joko’s watch that a staunch and heralded reformer has come under blatant attack by an institution widely perceived as dirty.

Basuki and the KPK are the rare beacons of integrity and hope that Indonesians can look up to, and any attempt to undermine them should be fought back. Joko, unlike his former deputy, is better known for avoiding confrontations. Now would be a good time for him to knuckle up.

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