RECONSTRUCTION, WITHOUT 
SOCIAL TRANSFORMATION:  
Observations from Aceh’s eastern coast 
 
 
George Junus Aditjondro

Working Paper #4, 2007

 

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RECONSTRUCTION, WITHOUT SOCIAL TRANSFORMATION:
Observations from Aceh’s eastern coast1
----------------------------------------------------------------------------------------
By George Junus Aditjondro

NO study about the political economy of Aceh’s post-tsunami reconstruction

can be considered to be complete, without investigating the developments on the
Eastern coast of the territory. The triple districts of North Aceh, Bireuen and Pidie,
which grew out of the former North Aceh district with its capital in Lhokseumawe,
now a separate municipality, play an distinct role in the post-tsunami reconstruction –
and even more so – since the post-Helsinki reconstruction of Aceh. Not that they have
been hit worse or less than other parts of Aceh by the 26 December 2004 tsunami. As
we can see from the following Table, on Aceh’s eastern coast, a total of 87,556 people
have been displaced, which is nearly as much as the 93,310 people displaced on the
west coast, and nearly half of the number of people displaced from Aceh’s capital,
Banda Aceh, and the adjacent district of Aceh Besar.

DISTRIBUTION OF INTERNALLY DISPLACED PERSONS (IDPs)

IN ACEH CAUSED BY THE 26 DECEMBER 2004 TSUNAMI

MUNICIPALITY/DISTRICT NUMBER OF IDPs

(persons)
01. Banda Aceh and Aceh Besar 153,769
02. Aceh Jaya 32,000
03. West Aceh 49,310
04. Nagan Raya 12,000
05. Pidie 38,100
06. Bireuen 17,041
07. North Aceh 28,103
08. East Aceh 4,312
Source: Department of Public Works, Aceh Province, January 25, 2005

There are two reasons why studying post-tsunami reconstruction on Aceh’s

east coast is very important. Firstly, one of Aceh’s major economic centres, namely
the major petro-dollar producing centre, Lhokseumawe and its adjacent natural gas
field, Arun, is located on the eastern coast. The second reason for studying post-
tsunami reconstruction on Aceh’s eastern coast is that the former North Aceh district
was hot bed of the Free Aceh Movement (GAM), since many of the movement’s
leaders were born in North Aceh, Bireuen, or Pidie. Such as, the movement’s
Sweden-based leader, Hasan di Tiro, was born in Tanjung Bungong, in the district of
Pidie (Djalal & Djalal 2006: 25). The commander of the guerilla army, TNA (Tentera
Nanggroe Aceh), Muzakkir Manaf, was also born in Pidie, while his wife hails from
the subdistrict of Sawan in North Aceh, one of the subdistricts most feared by the
Indonesian military during the armed guerilla resistance against the Indonesian State,
before the Helsinki peace accord.

1
Based on the Field Research in Aceh sponsored by the International NGO Forum on Indonesian
Development (INFID) in March – May 2007.

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 These two factors – the economic significance of Aceh’s eastern coast and the
emergence of GAM on the eastern coast – are very closely interconnected. As noted
by Djalal and Djalal (2006: 22-3):
Liquified natural gas, or LNG, reserves were discovered in Aceh in 1971, and
this discovery was instrumental in changing Acehnese society and politics.
Aceh’s gas fields were a virtual gold mine, producing some 40 per cent of
Indonesia’s total LNG production, some 22 per cent of its total gas exports,
and about ten per cent of its oil production. In monetary terms, Aceh
contributes some US$ 2.6 billion to Jakarta’s coffers from its LNG supplies
alone. …… As a result, Aceh’s contribution to Indonesia’s overall economic
development has been massive. The province’s natural and industrial wealth
combined makes up eleven per cent of Indonesia’s national revenue.
According to the World Bank, Aceh was for many years Indonesia’s fourth
richest province. …..[Ironically] In 1993, fourty per cent of Acehnese were
categorized as impoverished. That is the highest incidence of poverty in all of
Sumatra’s eight provinces. And, in a survey of all of Indonesia’s 27 provinces,
Aceh was the seventh poorest. Why was this so? Because year after year, the
government returned less than five per cent of Aceh’s lucrative revenues to
Aceh.

As Djalal and Djalal added (2006: 23):

The gas fields were not the only money-maker in Aceh. Large-scale
plantations, large-scale logging, as well as mining and other industrial
enterprises, were proliferating in Aceh. The firm Pupuk Iskandar Muda was
thriving from its export of fertilizer. Aceh was booming, and the economic
development brought to Aceh migrants from all over Indonesia. The dynamics
of the cities was changing. While the big firms employed “foreigners” (either
foreign nationals or non-Acehnese Indonesians), its top employees living in
walled enclaves, Acehnese were losing their homes and farms to logging
concessions and industrial compounds – to make matters worse, without
adequate compensation. Environmental degradation at these industrial sites
ensued, as did the deterioration of local incomes. Some jobs were given to
Acehnese, but they were mostly low-paying and unskilled factory work. The
result was a marked economic inequity between the locals and the newcomers
– and the resentments that it provoked.

This continuously growing market economic inequity, was felt mostly in

Lhokseumawe and North Aceh, where most of the big economic enterprises were
located, ranging from the ExxonMobile gas fields and LNG processing plant, Tommy
Soeharto’s PT Humpuss Aromatic plant, which ceased to operate after Soeharto was
forced to step down, the two huge fertilizer companies, PT Pupuk Iskandar Muda
(PIM) and Asean Aceh Fertilizer (AAF), and the PT Kertas Kraft Aceh (KKA)
factory which specializes in producing cement sacks for PT Semen Andalas
Indonesia, from pine trees harvested in the water catchment area of Lake Laut Tawar
in Central Aceh. KKA’s logging road from its timber concession area to
Lhokseumawe provided an access road both for the GAM guerilla fighters as well as
the Indonesian military which were chasing them.

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GAM’S SHADOW GOVERNMENT:
The sense of economic injustice, created by the contrast between the glaring
Lhokseumawe Industrial Zone and the poor villages surrounding the zone with its
luxurious residential site and golf course, combined with the ongoing repressive
tactics used by the Indonesian armed forces against the guerilla movement, caused the
movement to swell to up 15,000 armed members (Djalal & Djalal 2006: 32).

The thirty years of struggle against the Indonesian armed forces, has turned
GAM – especially its military wing, TNA (Tentera Nanggroe Aceh) – into a very
hierarchical and well-organized organization. Following the death of the former TNA
commander, Abdullah Syafei, Muzzakir Manaf took over the armed resistance’s
command. Manaf presided over seventeen regional commanders, or panglima
wilayah, who each presided over four district commanders, or panglima daerah. At
the lowest level is the panglima sagoe, whose organizations are primarily small cells
of individuals – and many of them were only part-time fighters, spending the rest of
the time farming, fishing, or employed in seasonal work (idem).

In contrast to the Indonesian state, GAM still recognizes the boundaries of

Aceh before 1873, when parts of what is now the province of North Sumatra was still
controlled by the sultanate of Aceh. The seventeen regional commands, or wilayah,
are Atjeh Rayeuk (Aceh Besar), Tiro (Pidie), Batee Iliek (Bireuen), Samudra Pase
(Lhokseumawe & North Aceh), Peureulak (East Aceh), Linge (Langsa), Teuming
(Aceh Tamiang), Langkat, Deli and Asahan (three wilayah which are now part of the
province of North Sumatra), Blangkeujeren, Gayo Lues, Singkil, Lhok Tapak Tuan,
Blang Pidie, Meulaboh Raya, Meureuhom Daya (personal communication with a
former GAM functionary in Lhokseumawe, on 18 and19 July 2007).

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THE HIRARCHICAL STRUCTURE OF GAM

Ketua
KPA
(Panglima
TNA)

17 Panglima
Wilayah

17 x 4
Panglima Daerah

17 x 4 x 4  
Panglima Sagoe

17 x 4 x 4  x 6 
Mukim (x bbrp Gampong)

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 The GAM resource person mentioned earlier, confirmed and further
elaborated the organizations structure mentioned by Djajal and Djalal (2006: 32).
Each Panglima Wilayah presides over four Panglima Daerah, and each Panglima
Daerah presides over four Panglima Sagoe. Each Panglima Sagoe presides over six
Mukim, or cluster of Gampong, or hamlets, while each Mukim covers an indefinite
numbers of Gampong (see Diagram on previous page). This structure turned GAM
into an actual shadow government, especially on the eastern coast of Aceh, since
GAM has its own keuchik, or gampong chief, distinct from the keuchik approved by
the Indonesian government.

Apart from the political and economic significance of GAM, which during the
armed struggle collected pajak nanggroe, a special tax to support the resistance
(Djalal & Djalal 2006: 31), people from Northern Aceh also pride themselves for
historical reasons, namely coming from Samudra Pasai, often simply abbreviated as
Pase. This is the oldest Islamic kingdom in the Indonesian archipelago, founded by
Sultan Maliku’s-Saleh in 1285 and lasted until 1522 (Said 1981: 82; Parlindungan
2007: 506-8). The name of this earliest Acehnese kingdom has been immortalized by
GAM in naming their guerilla region which overlaps with Lhokseumawe (now a
municipality) and the new district of North Aceh, as mentioned earlier.

Although not as destructive as on the West coast of Aceh and in Banda Aceh
and on the coast of Aceh Besar, the December 2004 tsunami has left its trail – and tale
– of destruction also on Aceh’s eastern coast, from the district of Pidie to the
municipality of Langsa. Most badly hit were the coastal villages of North Aceh.
Ironically, however, the new municipality of Lhokseumawe, which was the former
district capital of North Aceh, which is the base of most of most lucrative big
industries of Aceh, escaped the wrath of the tsunami. Hence, the regional office of the
Aceh-Nias Rehabilitation and Reconstruction Coordinating Body (BRR Aceh-Nias) is
located in Lhokseumawe, and so are most of the local, national, and international
NGOs, as well as the state and privately owned companies involved in the
rehabilitation and reconstruction work on the eastern board of Aceh.

MUZAKIR MANAF’S TRIPLE FUNCTIONS:

Interestingly, the rehabilitation and reconstruction work has enabled the
former TNA/GAM combatants to consolidate their organizational structure and
transform GAM from a vehicle to carry out armed resistance to a business and welfare
vehicle, which still maintains the centralistic characteristics of a military organization.
This transformation is led by Muzakkir Manaf, who holds three positions in his hands.
Firstly, he is still referred by the former TNA combatants as their top commander, and
called mualim in reference. Secondly, Manaf holds the position as chairman of KPA
(Komite Peralihan Aceh), the organization set up by the Indonesian government to
assist the re-integration of all former combatants into the Acehnese society according
to the Helsinki agreement (Djalal & Djalal 2006: 174-5).

Then, KPA has appointed its functionaries at district and subdistrict level, by
following the TNA/GAM hierarchy of Panglima TNA Æ Panglima Wilayah Æ
Panglima Daerah Æ Panglima Sagoe. So, basically, from an ‘illegal’ organization

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during the armed resistance, GAM has transformed itself into a ‘legal’ and respectable
organization, with social duties.

Social duties, since KPA – apart from BRR – became the main place where
former combatants and their widows, came to ask for financial support, expecting that
KPA could always help them to overcome their economic problems. In North Aceh
alone, according to sources in Lhokseumawe, the local KPA chapter had to provide
Rp 800 million to former combatants and their families and widows.

Hence, to solve the economic dependency of his former (sic!) subordinates,

Muzakir Manaf set up a group of companies, under the umbrella of PT Pulo Gadeng
as its holding company, to provide jobs and generate cash to fulfill his social
obligations. In addition to the business endeavours mentioned in the main report, the
Pulo Gadeng Group – in which Aceh’s newly elected governor, Irwandy Jusuf is also
a co-founder -- is carrying out various construction projects on the eastern coast of
Aceh, ranging from building houses for sixty former combatants and widows, in
cooperation with an Indonesian emergency relief organization, to rebuilding the
Cunda bridge in the municipality of Lhokseumawe.

All these projects generate the badly needed cash for KPA functionaries to
provide the financial relief for former combatants and their widows. In the case of the
sixty houses that are being built for former combatants and their widows, for each
house Rp 42 million is provided by the Indonesian emergency relief organization to
the KPA leader, who keeps a portion for the provincial KPA coffers and
‘subcontracts’ the construction of the houses to the local KPA officials. With the risk,
that in some cases, lower quality bricks or wood is used to build the houses. Then, in
the case of the Cunda Bridge, the costs of building the bridge is rather marked up to
Rp 23 billion, while the actual costs are rather much lower. This bridge is officially
built by Pulo Gadeng, as is the case of the sixty houses for former combatants and
their widows.

All of this non-conventional ways of generating cash to provide relief funds

for former TNA combatants and their widows is enabled by the triple functions held
by Muzakir Manaf. Firstly, he is still respected by most former TNA/GAM
combatants as mualim, their supreme commander, secondly, he presides over KPA,
province wide, and thirdly, he is also the president commissioner of PT Pulo Gadeng,
the holding company of the Pulo Gadeng Group.

Manaf’s triple functions, however, is not only accepted by most of the former
TNA and GAM members, but also by the national elite in Jakarta. Seven months ago,
according to sources in Lhokseumawe, a memorandum of agreement (MoU) was
signed between a younger brother of Surya Paloh, and Muzakir Manaf as chairman of
KPA, to build eleven gas stations in Aceh. Those eleven gas stations were distributed
among eleven Panglima Wilayah, who are considered to be close (loyal?) to the
mualim. Most of the gas stations are going to be located on the eastern coast, along
the highway between the border of Aceh Tamiang and North Sumatera, and Banda
Aceh, but some of them are also to be off that east coast highway and on the west
coast highway instead. The construction of one of those brand new gas stations had
just been completed in the subdistrict of Beureuneun in the district of Pidie, which the
author of this report visited on 15 July 2007.

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 The constructions of those eleven gas stations are still covered in a shrowd of
mistery. According to a contractor who had joined the first public offering to build
those gas stations, each gas station costs Rp 17 million, but the local Panglima
Wilayah received an allocation of Rp 200 million to cover the costs of obtaining
licences. Contractors interested in building the gas stations soon backed off, when
they were told that they could not only build, say, three gas stations, and had to build
all the eleven.

Eventually, a Pertamina employee in Banda Aceh obtained that contract,

which was also subcontracted in each location to businesspeople working on behalf of
Pulo Gadeng Group, or, the local KPA chapter. Former combatants interviewed in
Bireuen, claimed to know nothing that their local Panglima Wilayah had a say in
managing those gas stations, which would certainly help to generate funds for former
combatants and their families or widows. So, there is a question of transparency here,
as far as the KPA leadership is concerned.

It is also not clear yet, which younger brother of Surya Paloh signed the MoU
and provided the funds to build those eleven gas stations. The only brother of Surya
Paloh, who is known for his business acumen and connections, is his brother-in-law,
Rosano Barack, a younger brother of Surya Paloh’s wife, Rosita Barack, and one of
the colleagues and confidants of Bambang Trihatmodjo, Soeharto’s second son and
behind-the-scene leader of the Bimantara Group (which is now run by Harry
Tanusudibyo).

Although his name does not appear in the MoU with the KPA leader, is has
been alleged by business sources in Lhokseumawe, that companies linked to the Vice
President, Jusuf Kalla, are also taking part in underwriting this gas stations project.
While making a big buck from this project, since gas stations are indeed doing good
business in the economically thriving province of Aceh, it is probable that the rapport
created by the two Golkar dignatories and the KPA leaders is meant to prevent a
revival of GAM’s ambitions of an independent Aceh. It is unclear how this second
aim will be facilitated by the joint Paloh-Kalla and KPA project, especially since
Manaf has been appointed as vice chairman of the newly born GAM Party. So,
making money from gas stations spread along the main eastern and western highways,
as well as along the higway from Meulaboh to Takengon and Langkat, makes more
sense.

The quickly growing businesses of Muzakir Manaf’s Pulo Gadeng Group and
their proximity to the current GAM-dominated administration, has led to
dissatisfactions among former combatants, who have been left out in the cold. Former
combatants who had surrendered to the Indonesian troops before the Helsinki peace
agreement, have been denied the economic and social benefits from KPA and Pulo
Gadeng (see Nasikhin 2007), which may lead to a type of “East-West” polarization
which has nearly ripped the Timor Leste society apart (for a thorough analysis of this
polarization, see Aditjondro 2007).

It is also unclear, how much of the wealth accumulated by the

GAM/KPA/Pulo Gadeng trinity, will actually trickle down to the rank and file, the
former fighters and supporters who have not benefited from KPA or BRR relief. In

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this case, the former GAM leaders have to be careful not to repeat the mistakes of the
Indonesian military, who set up foundations which then became shareholders of big
business groups, claiming to raise funds to help widows, orphans, retirees, and low
ranking soldiers, pioneered by Soeharto during his transition from army officer to
becoming Indonesian dictator for more than thirty years. Not much wealth from those
military-controlled businesses have filtered down, while making Soeharto and his
generals extremely rich (see Aditjondro 1998: 32-6).

Much closer to Aceh, chronologically, not geographically, is the situation in

post-referendum Timor Leste. There, the recently appointed new Prime Minister,
Xanana Gusmao, has founded and chaired an association for war veterans; AVER
(Associacao Veteranos do Resistencia). This association has set up business
enterprises, led by Xanana’s younger brother, Ano Gusmao, and their nephew, Milton
dos Santos. It is unclear, how much of AVER’s business revenues have been used to
improve the lot of the war veterans. What is clear, though, is that Milton has become a
rather wealthy and flamboyant young fellow, who recently opened his own gas station
in Dili. Meanwhile, other former guerilla commanders who had fought under
Xanana’s command, have also set up their own legal and illegal businesses, dealing
happily with their former enemies on the Timor Leste-West Timor border in various
types of smuggled goods (Aditjondro 2007: 99-100).

Back to Aceh, then, the big question is, have all the billions of dollars
channeled to the war- and disaster-torn province – in the form of disaster relief, as
well as investments -- really helped to uplift the poorest of the poor in the province,
or, create a new elite? After traveling to many parts of the province, interviewing
people, and reading other observers’ reports, my impression is that new elite is in the
formation, which does business happily with the old provincial and national elite,
since, money unites and poverty divides people. We can see how happily the old and
new business elite socialized during the recent congress of Acehnese business people,
Kongres Saudagar Aceh in Banda Aceh at the end of July 2007, completely forgetting
that some of them – such as Surya Paloh, the son of an Indonesian police officer, and
Muzakir Manaf – were on the opposing sites of the 30-year long conflict.

ABSENTEE FISHERFOLKS:
My observations on Aceh’s eastern coast, though, have not been focused
mainly to newly emerging elite, or, only on the transformation of GAM from an
armed resistance movement to a business vehicle. I have also visited fisherfolk
villages, interview fisherfolks, observe their traditional fishing techniques, and
interview social workers who have been working with fisherfolks and other coastal
villagers, whose houses were hit by the December 2004 tsunami. Villages, such as
Lhok Puuk and Bantayan, which were badly hit by the tsunami, or, villages such as
Hagu Selatan, near the Pertamina depot in Lhokseumawe, which were saved from the
tsunami.

Although it has not (yet) been turned officially into a district regulation
(peraturan daerah), the local government has, in collaboration with some
international NGOs, strongly encouraged people to move away as far as possible from
the sea shore. The fear of another tsunami has been instrumental to encourage this

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move away from the sea, a traumatic development for villagers who have lived for
generations along the coast, eking a simple living from artisanal fishery.

Does that mean that the coast has become a dangerous place to be, and to earn
a living? Certainly not, for the rich Acehnese who own most of the fish ponds
(tambak) and hatcheries along the coast of North Aceh. And who are they? Many of
them rarely wet their feet at the sea coast, since they are government employees, who
have been able to become absentee coastal landowners from their wealth which only
God knows how that wealth was generated. Nearer to the town of Lhokseumawe,
motorized boats with computerized GSP gadgets which can chase fish up to seven
hours sailing from the town are anchored in the bay, near the Army-controlled
recreation beach in Lhokseumawe. Who owns those boats? Again, not the ordinary,
artisanal fisherfolks, but the dean of the local Faculty of Economics, a military
business unit, and other non-fisherfolk business people are the owners.

The absence of the enforcement of coastal agrarian reform laws since the New
Order, and the thirty year armed conflict between GAM and TNI, have enabled a new
class of bureaucratic and military capitalists to control the coastal and marine
resources of Aceh’s eastern coast. Only those with money, power, and guns, could
control those resources, forcing local villagers to keep on fishing with their row boats,
or forcing them to leave fishery and become farmers.

CONCLUSION:
Hence, one can conclude this odyssey into the reconstruction business of post-
tsunami and post-Helsinki Aceh with one conclusion: Aceh’s reconstruction is a case
of reconstruction, without social transformation. Those on the bottom of the social
ladder, including those on the bottom of the guerilla movement, have mostly stayed
on the bottom, and those on top of the social ladder, including those on top of the
independence movement, have moved nicely into the national, regional, and global
economic arena.

Yogyakarta, 12 August 2007.

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