RESULTS of BLUE LANTERN LEVEL 3: PRE-LICENSE-USE CHECK ON

UNCLAS JAKARTA 001178

SIPDIS

DEPT FOR EAP/IET, PM/DTCC/BLUE LANTERN COORDINATOR - JUDD STITZIEL

E.O. 12958: N/A
TAGS: KOMC ETTC ECON SN ID
SUBJECT: RESULTS of BLUE LANTERN LEVEL 3: PRE-LICENSE-USE CHECK ON
LICENSE 050155869

REF: A) STATE 58133
B) 06 SINGAPORE 3391
C) 06 JAKARTA 13362


1. Summary: Embassy confirmed an order of spare parts consistent
with the types in Ref A from the end-user, the Indonesian Air Force,
via PT Mandira Jaya Abadi, the foreign consignee, from the U.S.
supplier, Merex. Though the license value in Ref A is USD
1,000,000.00, the actual amount of the current order, according to
foreign consignee is only USD 32,840.00. Both the end-user and the
foreign consignee identified Singapore-based Master Logistics as an
intermediary shipping/receiving company which is necessary because
there are no direct flights from the U.S. to Indonesia. End
Summary.


2. On July 7 the Embassy contacted PT Mandira Jaya Abadi (Mandira)
Director Hariyanto Adipratomo to verify the order in Ref A.
Hariyanto provided a copy of a purchase order and contract to supply
four spare parts for maintenance of IAF's Northrop F-5 (J85 Engine)
worth USD 32,840.00 (supporting documentation will be sent via
email). The purchase order between Mandira and Merex Inc is dated
March 3, 2009 and labeled No 0303/MJA/M/2009, Quote Number 804037
and 803869. The spare parts in the purchase order are: "Main Spray
Bar" PN:5040T18P01 (9 pcs); "Roller Ven" PN:3017T93P01 (14 pcs); "AB
Plug" PN:3011T93P05 (10 pcs); and "Main Plug" PN:4066T34P01 (7 pcs).
The contract (number 183/1356/DA/DR/2005/AU, dated November 30,
2005 and amended December 2, 2008) between the Indonesian Air Force
(IAF) and CV Bina Pratama (a sister company of Mandira) indicates
that the aforementioned parts are requested in lieu of another
originally stipulated part ("R/H Horizontal Stab Assy" PN
14-32000-6). The IAF amended the contract to substitute PN
14-32000-6 because the part was no longer in production and because
the order had been idle for years.


3. Mandira, as a designated supplier for the IAF, ordered the spare
parts directly from the U.S. seller, Merex Inc, as mentioned in Ref
A, on behalf of the Indonesian Air Force. Master Logistic is an
intermediary shipping/receiving company that has a relationship with
Mandira. According to Hariyanto, Merex and Mandira requested a
blanket export license with a total value of USD 1,000,000.00. The
current transaction, however, is only for parts valued at USD
32,840.00. Mandira will use the same blanket export license in the
future when the company receives other orders from IAF to procure
spare parts from the U.S. company, Merex Inc. In addition,
Hariyanto said that his company held another blanket export license
worth USD 6,000,000.00 from December 18, 2006 for multiple orders
from U.S. seller Aeromax Industries valid for 48 months.


4. PT. Mandira Jaya Abadi was established in 1982 as a publishing
and general supply business in Semarang, Central Java. In 2005,
Mandira expanded their business to supply spare parts to the IAF.
Post checked and verified a transaction involving this company back
in 2006 (Ref C) when Mandira received an order from IAF to supply
spare parts for maintenance of the Indonesian Air Force's F-5 and
OV-10 aircrafts. According to Mandira, their customers include the
IAF and Ministry of Transportation, to whom they supply simulators.


5. According to Hariyanto, once Master Logistic receives the goods
from the U.S. supplier, Master Logistic will forward the spare parts
to Mandira's warehouse located at Jalan Tanjung Duren Barat V/44 in
Jakarta (as listed in Ref A) before the company sends the spare
parts to the end-user. Hariyanto noted that they usually store the
goods for up to four working days while awaiting confirmation and
coordination with the end-user for final delivery to the IAF.
Hariyanto said that the company's Jakarta warehouse is protected by
company staff who work there and a 24-hour security guard service.
Hariyanto also noted that his company is aware of the restrictions
on United States Munition List (USML) items, particularly the
prohibition against unauthorized re-transfer and re-exports.


6. We contacted the Indonesian Air Force Procurement Division Major
Dani Herdiana on July 10 to verify the transaction in Para 2 in
accordance with Ref A. Major Dani confirmed that this transaction
was part of their contract order to Mandira in 2005. In 2008, the
end-user amended this long awaited procurement and contracted
Mandira to purchase the items listed in para 2 (same items listed in
purchase order). The original contract was to procure a horizontal
stabilizer, however, since they waited for years with no item
procured, the IAF decided to instead procure the aforementioned
replacement items. According to Major Dani, both the Air Force and
Mandira agreed that they will use Master Logistic, the
Singaporean-based intermediary shipping company, since there is no
direct flight from the U.S. to Indonesia.

HUME