After four years of struggle to recover from the devastating tsunami and decades of bloody insurgent uprising, Nanggroe Aceh Darussalam is seemingly taking a further step to unplug itself from the dependency on public funding and diminishing gas proceeds. The Jakarta Post's Rendi A. Witular and Hotli Simanjuntak recently explored one of the country's most richly endowed provinces to map out its economic development travails. Here are the stories:
The sprawl of motorcycles that beads the streets of Aceh's capital Banda Aceh pose a simple view of the city's blossoming economy, but overshadows a deep-rooted problem the government should not overlook.
The boom in private and household consumption in the province is based primarily on a frail foundation of government spending, diminishing gas proceeds, and multilateral donor funds under the post-tsunami reconstruction program spearheaded by the Aceh Reconstruction Agency (BRR), whose mandate expired this month.
Despite the injection of US$7.5 billion in reconstruction funds, the province is sinking back into its old ways, left with a handful of agricultural production centers, poor business infrastructure, a seemingly declining security situation, and growing disorientation among local and central authorities in setting out the province's development course.
A recent survey by Greenomics Indonesia covering the western part of Aceh, which was heavily impacted by the tsunami, revealed 82.1 percent of households there have revived their economic empowerment without assistance from the BRR or overseas donors.
Blessed with abundant natural resources, Aceh's agricultural centers are mostly concentrated in Central Aceh regency – producing vegetables and the world-renowned iconic Arabica Gayo coffee. Pidie regency and North Aceh regency are also important rice production centers.
While the end of the conflict between the Free Aceh Movement (GAM) and the government has contributed to higher growth in the agricultural sector, the province relies less and less on it.
According to a joint World Bank and Bank Indonesia report, the agricultural sector accounted for only 25 percent of Aceh's GDP during the first half of 2008.
"The agricultural sector has yet to become the new economic growth engine to immediately replace the consumption-driven economy based on the reconstruction funds," said Firmandez, chairman of the Indonesian Chambers of Commerce and Industry's (Kadin) Aceh branch.
"Worst of all, Aceh remains under the economic mercy of Medan (capital of neighboring North Sumatra) for daily necessities. We even have to get our eggs, vegetable and poultry from there."
According to Kadin, around 60 percent of Aceh's food supply comes from North Sumatra. "However, there have been no efforts yet by the local and central government to cut such dependencies by empowering local producers."
Among the factors keeping Aceh chained to supplies from Medan is the absence of a container port that can handle shipments from elsewhere in the country. Medan businesses supply goods to Aceh by land.
A plan by the government and the BRR to upgrade Malahayati Port's facilities in Banda Aceh to bolster inter-regional trade and cut Aceh's "forced dependency" on North Sumatra remains on the back burner.
Aceh Governor Irwandi Yusuf said the port was the key to unlocking Aceh's economic potential. The local government has pledged to develop it using this year's budget.
"The BRR has been a great deal of help to us. But there are greater economic problems the agency failed to immediately address. We hope our full autonomy status in managing our budget this year can help close the gap," he said.
As the province waits for an upgrade of key economic infrastructure, there is a greater problem at the heart of its poor areas: soaring unemployment.
According to the joint BI-World Bank report, the unemployment rate as of the second half of 2008 stood at more than 9 percent, or close to the national level.
While the report shows a significant increase in employment in the services and small industry sectors, it was partly as a result of outside assistance under the reconstruction effort. But as the assistance slowly peters out and the general state of Indonesia's economy slows, the jobless woes are likely to worsen.
Analysts believe a soaring jobless rate will threaten Aceh's political stability as former combatants of the now disbanded GAM seek to use the issue as ammunition to challenge the effectiveness of the peace accord signed with the government in 2005.
This is because most of the former combatants are not only unemployed but also live in worse conditions than their former leaders. The discord was manifested in a recent string of armed robberies linked to the former militants.
The possibility of unrest rises as the wealth gap widens, especially in Aceh's "petro-dollar" area of Lhokseumawe, in North Aceh regency, home to the Arun gas field operated by US energy giant ExxonMobil Corp, liquefied natural gas plant PT Arun Natural Gas Liquefaction (run by Pertamina and ExxonMobil) and state fertilizer company PT Pupuk Iskandar Muda.
Gas exports from Aceh topped $3 billion last year, but the province only reaped around 1 percent of the proceeds.
Matang Mlinye village in Syamtalira Aron district, a few meters from the Arun cluster II production area, is a striking example of how Aceh's resources have long been plundered by a handful of Jakarta elites and overseas energy firms.
The village remains a backwater, with its 548 residents working as seasonal farmers for a mere Rp 15,000 ($1.20) a day, according to village chief Jafar Sabon. Most of the children here do not go to school because of financial constraints and the lack of even a modest school anywhere in the area.
"The nearest elementary school here is 2.5 kilometers away, while the junior high school is 4 kilometers away. Life here is no better off since the gas plant began operating in the late 1970s," Jafar said.
And yet, a few kilometers from the village, stands the exclusive, upmarket residential area for Arun and ExxonMobil employees, equipped with a golf course, swimming pool, entertainment center and soccer stadium.