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THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
Main Building, Ministry of
Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta Pusat
Tel: (021) 380-8384 Fax:
(021) 344-0394 Website:
http://www.ekon.go.id
Trade and
Investment News, 29 January 2007
Highlights
Politics
Regions
Economy
Business
briefs
Macro
economy
Investment
State
concerns
SOEs
Private
sector
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Retail industry looks to 17% growth
-
Hutchison Telecommunications to enter Indonesian market
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Vehicle sales tipped to rise 25%
Banks
Power
Oil & gas
Mining
POLITICS
Police
Chief Seeks Tougher Terror Law
National
Police Chief Gen. Sutanto has called for tougher laws to fight
terrorism, suggesting that Jakarta
adopt an Internal Security Act (ISA) such as the ones enforced
in Singapore and Malaysia. He said that current legislation
impeded investigations.
“We need
something like the ISA because it has been effective in cracking
down on terrorist cells in our neighboring countries,” he told
The Straits Times in an interview in Washington
on Thursday (25/1/07). “We are looking at options to strengthen
our laws.”
Sutanto was
in
Washington on a four-day working visit for talks with senior
officials from the US’s National Security Council, the Pentagon,
the Central Intelligence Agency and the Federal Bureau of
Investigation. Indonesian officials said the trip - his first as
police chief - was aimed at forging closer links, especially in
fighting terrorism.
During the
occasion, the general said American technological assistance,
among several other things, would be critical. But Jakarta was
also looking for ways to refine its anti-terrorism laws to deal
with terrorist network and other extremist groups in Indonesia.
He said
current legislation placed law enforcement officials in a
dilemma. They were compelled to produce substantial proof to
apprehend and take suspects to courts. An ISA equivalent could
enable detention on the basis of voice recordings of terror
suspects. “This regulation will allow the police to arrest
terrorist suspects with minimum evidence,” he said.
A second
consideration in favor of the ISA was that it allowed indefinite
detention. “We have a serious problem. We can only hold someone
for a week, and then release him if we cannot find more evidence
against him. It takes months or even years to work on terror
suspects so that they will reveal the extent of their network.”
Court
Freezes Suspect Millions
A Guernsey
court on Monday (22/1/07)
approved an application by the Indonesian government to freeze
tens of millions of dollars allegedly hidden illegally on the
island by Tommy Suharto, the youngest son of former president
Suharto.
Jakarta’s
action is an intervention granted by the Channel Island’s royal
court in a case where Garnet Investment, incorporated in the
British Virgin islands and owned by Tommy Suharto, is suing a
branch of BNP Paribas for refusing to release at least $45.6
million and perhaps as much as $90 million from its account.
The court
also approved Jakarta’s
bid to become a third party in the case, Marty
Natalegawa,
Indonesia’s ambassador to Britain, told the Financial Times.
The action
by the bank and the Indonesian government is based on concerns
that the money was obtained corruptly, Natalegawa said.
Transparency International in 2004 put ex-president Suharto at
the top of its list of 20th-century kleptocrats, estimating that
he and his family amassed up to $35 billion during his 32-year
rule.
Tommy, 44,
was released from prison last October after serving five years
of a 15-year sentence for ordering the murder of an Indonesian
judge who had convicted him of corruption in connection with a
land-scam case.
During his
father’s rule, Tommy became one of the most powerful businessmen
in the country amid constant whispers over how he – and his
siblings – were handed many lucrative contracts and businesses
to run. In Tommy’s case those included a now defunct clove
monopoly and the company developing the Timor
national car.
Natalegawa
said the government believed the money in the account “is
beneficially owned by the Republic of
Indonesia” because “it was obtained by corrupt use of power”
during the Suharto era.
Jakarta’s
lawyers presented some evidence to support their government’s
affidavit. “We’re still building our case” the ambassador said.
“We will present more evidence when the full trial starts on
March 8.”
Salman
Maryadi, a spokesman for Indonesia’s
attorney general, said on Monday the corruption issue was
secondary. “The best result would be that the court recognizes
Tommy’s outstanding obligations and orders the money there be
used to pay them,” he said. “Whether the money was obtained
corruptly can be dealt with later.”
Natalegawa
said that while $45 million was the most commonly quoted figure
for the sum in the account, initial data put the balance at more
than $90 million. “We still looking at this discrepancy,” he
said.
Maryadi said
Indonesia was keen to seize the $45 million in the Guernsey
account opened in the name of Garnet Investment because the
authorities were not aware of any other assets. “He is
reportedly doing business here but we cannot prove that it is
his money,” he said.
According to
Transparency International’s Indonesia
branch, Garnet deposited money with BNP Paribas in Guernsey
on 22
July 1998, weeks after the fall of Suharto in May.
Four years
later, in October 2002, Garnet asked to transfer $45.6 million,
a request the bank refused. Three weeks after that Garnet tried
to transfer £47,500 and 7,960 Euros to Peter Amy, a Garnet
employee, according to Transparency International. The bank also
rejected the request.
Todung Mulya
Lubis, the head of Transparency International Indonesia, said
BNP Paribas must have had good grounds to refuse the transfer
requests.
Suharto
Civil Lawsuit Ready
Indonesian
state prosecutors plan to file a civil suit against former
president Suharto in the coming days over the alleged misuse of
charitable funds, Attorney General Abdul Rahman Saleh
said on Thursday (25/1/07).
Suharto, 85,
has so far escaped trial over allegations that he amassed
billions of dollars in state assets during the three decades he
ruled Indonesia,
including through foundations he ran.
Saleh said
they would file a lawsuit over the alleged mismanagement of one
of seven charitable foundations set up and chaired by the former
leader. "It will be (filed) at the end of January but there are
still a few details that are not yet completed," Saleh told
journalists.
"The first
step will be the Supersemar, but that is not the last one, we
continue to study the cases and there are still six others
(foundations)."
The
Supersemar foundation, founded by Suharto in 1974, collected
donations from businessmen and other donors to provide
scholarships for students. Almost 800,000 scholarships have been
awarded by the foundation but, as a private foundation, its
management of its fund has never been made public.
Due to ill
health, Suharto has never taken the stand for corruption charges
against him. The charges accused him of misusing more than $500
million from charitable foundations -- separate to the billions
in state assets he is also alleged by critics to have siphoned
off.
Last May,
prosecutors dropped a corruption case against Suharto after an
appeal court overruled a lower court's order to reopen the
proceedings.
REGIONS
Adam
Air Black Box Found
The
government stopped its efforts to search for the missing Adam
Air plane on Saturday (27/1/07) following the finding of the
jetliner’s black box signal by the USS Mary Sears.
However, the
retrieval of the black box and the main body of the missing
jetliner will be extremely difficult as they are located on the
sea bed at a depth of around 2,000 meters, The
Jakarta Post
reported.
Head of the
search and rescue team, First Marshall Eddy Suyanto said the
decision was normal as the black box was the main target of the
search operation.
"The black
box and debris of the aircraft have been found. Therefore, our
job is terminated starting today. This command post will be
closed and all personnel will be returned to their respective
institutions," Suyanto told reporters at Hasanuddin Airbase in
Makassar, South Sulawesi.
On Thursday,
the Mary Sears captured the signals from the black boxes
of the jetliner, using its sophisticated Towed Pinger Locator.
The radar indicated that the flight data recorder (FDR) is
located 1,800 meters below the sea, while the cockpit voice
recorder (CVR) is 2,000 meters down.
The chief
investigator of the crash, Frans Wenas, said the plane's black
box could possibly be retrieved by a Remote Operated Underwater
Vehicle (RoV), which is equipped with a camera.
"Tomorrow we
will meet with technology ministry officials to discuss the
possibility of using RoV," he told Reuters, adding that using
the device would cost a lot of money, possibly millions of
dollars.
Indonesia
does not have the technology to recover them, and would have to
request help from a country such as the United States, Setio
Rahardjo, chairman of the National Commission on Transport
Safety, told Agence France-Presse.
The
17-year-old plane, with 102 people on board, was heading from
Surabaya in East Java to Manado in North Sulawesi when it
vanished in bad weather on January 1. The plane made no distress
call, although the pilot had reported concerns over crosswinds.
Indonesia Free of Polio Again: WHO
A resurgence
of polio has been eradicated in Indonesia
following five nationwide rounds of immunizations against the
crippling disease, a World Health Organization official said
Tuesday (23/1/07).
"All
indicators suggest that we have been successful in eradicating
polio", WHO external relations officer Thomas Moran told
Agency France-Press.
Moran said
the crippling disease was brought to an end thanks to the
immunization of 24 million children. The last case was reported
in February 2006, so enough time had passed to make this
assessment, he explained.
A total of
305 cases of infant polio have been found since the disease
resurfaced in Indonesia in March 2005, a decade after it was
believed to have been first eradicated. The waterborne polio
virus attacks, withers children's limbs and can be fatal.
Over
9,000 Islands to be Named
The
government will give individual names to each of the thousands
of tiny islands in the country that remain nameless,
Antara reported on Saturday
(27/1/07).
Home affairs
official Soadjuangon Situmorang told the state news agency that
the government had formed a national team to name 9,500 islands
by the end of this year.
The team
will be led by President Susilo Bambang Yudhoyono and will
include the defense and foreign ministers as the government
hopes to improve security and territorial claims through the
naming operation.
In total,
Indonesia consists of 17,540 islands, which in total covers 1.9
million square kilometers.
ECONOMY
Indonesia
Ends CGI Program
Indonesia
is to end the Consultative Group on Indonesia (CGI) donor group
process and switch to bilateral talks with major lenders at the
same time that it moves to generate more cash from domestic
sources.
"Indonesia
no longer needs the CGI," President Susilo Bambang Yudhoyono
said Wednesday (24/1/07).
The CGI,
chaired by the World Bank and composed of Indonesia’s main
Western donors, last year pledged $5.4 billion in fresh loans
and grants to the country.
“I deem it
necessary to end the format which we know as the CGI forum... in
this year of 2007, I declare that there is no longer a need for
the existence of the CGI forum as before," Yudhoyono told
journalists after receiving visiting International Monetary Fund
(IMF) managing director Rodrigo Rato, Agence France-Presse
reported.
The World
Bank welcomed the decision, saying the country had built a
strong economy. "Indonesia
has skillfully built a strong economy, and is no longer
dependent on donor funding," World Bank country director for
Indonesia Andrew Steer said in a statement Thursday.
"The old CGI
model -- whereby the government presented a financing gap, and
donors pledged funds to fill it -- is no longer relevant to a
strong country like Indonesia," Steer said, according to Agence
France-Presse.
Indonesia
would “continue to benefit from the support from its development
partners, consistent with the government's development
priorities," Steer said.
The Asian
Development Bank and Japan also backed the move, according to
Coordinating Minister for Economic Affairs Boediono.
"I have met
with the three. In principle, they have no objection. We hope
other members will also support (this)," Boediono told a press
briefing.
The move to
end the CGI followed an announcement by the World Bank Tuesday
that the ratio of debt to GDP in 2006 declined to 35% from 47% a
year earlier.
The
government is moving to sell treasury bills this year to
contribute to its financing sources and said last week it
expected to name primary dealers for the bonds by the end of
February.
Apart from
introducing 12-month treasury bills, the government will also
issue more retail bonds to further widen the bond market's
investor base.
Meanwhile
Bank Indonesia deputy governor Aslim
Tadjuddin
said Friday there will be room to lower the key interest rate if
January inflation is lower than that of December, as the Central
Bureau of Statistics has predicted.
There was
positive news from the state-owned sector. Bank Rakyat Indonesia
(BRI) hit its net profit target of Rp4.4 trillion for 2006,
while Bank Mandiri estimated its 2006 net profit at between
Rp1.8-2.4 trillion, up from Rp603 billion in 2005. PT Semen
Gresik meanwhile announced an estimated 30% rise in net profit
to Rp1.32 trillion.
BUSINESS
BRIEFS
MACRO ECONOMY
World
Bank Welcomes CGI Move
The World
Bank has welcomed Indonesia's decision not to rely on CGI forum,
saying the country had built a strong economy.
President
Susilo Bambang Yudhoyono said Wednesday (24/1/07) he would wind
up the Consultative Group on Indonesia (CGI), a group of the
country's main donors.
"We welcome
President Yudhoyono's announcement... that Indonesia would no
longer rely on the CGI framework. Indonesia has skillfully
built a strong economy, and is no longer dependent on donor
funding," World Bank country director for Indonesia Andrew
Steer, said in a statement Thursday, according to Agence France-Presse.
Indonesia
has for the past two years chaired the CGI whose major donors
are the World Bank, the Asian Development Bank and Japan.
At the
annual CGI forum, the government usually presented its
development plan to be discussed and sometimes criticized. "The
old CGI model -- whereby the government presented a financing
gap, and donors pledged funds to fill it -- is no longer
relevant to a strong country like Indonesia," Steer said.
Coordinating Minister for the Economy Boediono said Indonesia
would however continue bilateral dialogues with donor.
"We are
also pleased that the government plans to continue to benefit
from the support from its development partners, consistent with
the government's development priorities," Steer said.
Yudhoyono's
announcement came after Indonesia last year cleared its debt
with the International Monetary Fund. The CGI last year
pledged $5.4 billion in fresh loans and grants for Indonesia.
Govt.
to Issue T-Bills in April, July, December
The Finance
Department will issue treasury bills on April 3, July 10 and
December 4, marking the debut of short-term treasury bills in
the country, an official said Monday (22/1/07).
The
department also plans to issue retail treasury bonds in March,
June and November, head of the debt management unit, Rahmat
Waluyanto, was quoted as saying by Dow Jones Newswires. He did
not provide dates for the retail issues.
Analysts
have described the t-bill issuance as a good strategy to provide
a wider range of yield curves for the local debt market.
The
government has already announced that proceeds from the pending
t-bills and retail bond issuances will be used to finance the
deficit in the state budget, which is expected to stand at 1.1%
of gross domestic product in 2007.
Waluyanto
said that the department has also tentatively scheduled
Indonesia's first shariah bond issuance for September, pending
approval of related legislation by lawmakers.
Shariah, or
Islamic bonds, conform with the legal code of Islam, which
prohibits interest payments. They are usually structured either
as zero-coupon bonds and sold at a discount, or pay a profit
rate in the form of regular payments derived from some
underlying asset, such as rental income from property.
The
department has been carefully formulating the necessary legal
infrastructure for shariah bonds over the past two years.
BI
Awards Rp124t Worth of SBIs
Bank
Indonesia (BI) said it has awarded Rp124 trillion worth of
one-month BI Certificates (SBI) at a fixed rate of 9.5% at its
weekly auction, XFN-Asia reported on Wednesday (24/1/07). It
said the auction absorbed 64.94% of total bids.
INVESTMENT
Interest
in ‘Palapa Ring’ Project
Five
companies have expressed interest in taking part in a
$1.517-billion broadband fiber optic mega-project tender, an
official said Tuesday (23/1/07).
"The five
companies have already met requirements for participation in the
tender on the Palapa Ring mega-project," Yusuf Iskandar,
Director General of Post and Telecommunications, said on the
sidelines of an Information Communication and Telecommunication
Summit 2007, Antara reported.
The five
firms are PT Aqela, PT Potensi Bumi Sakti, PT Telkom, PT Bakrie
Telecom and PT Wireless Indonesia (WIN), a telecommunications
subsidiary of the Sinar Mas Group.
The Palapa
Ring would be a broadband fiber optic network which can carry
high speed and high capacity data. The network would consist of
seven fiber optic rings connecting Sumatra, Java, Kalimantan,
Nusa Tenggara, Sulawesi, Maluku and Papua as well as eight back
hauls.
"The
network project is aimed at developing the telecommunication
sector, encouraging economic growth and reducing the digital
gap," Iskandar said.
In view of
the huge amount of investment involved, the government would
give the five companies a chance to set up a consortium, he
said.
"The five
firms have generally agreed to form a consortium and none of
them has said it is ready to finance the mega-project by
itself," he said.
Saudi
Group Plans to Invest $2b
Saudi
Arabian conglomerate the Savola Group plans to invest $2 billion
in a number of business areas in Indonesia.
The group
will team up with local partners to do business in the food and
beverage industry, retail business, agribusiness and property
sector, an executive of the Indonesian Chamber of Commerce and
Industry (Kadin), Rudi Rusli, said, adding that the group plans
to open hypermarkets in the country.
The company
management has also met with prospective local partners, he
said, according to Antara.
Novartis
to Set Up Research Facility
Swiss
pharmaceutical producer Novartis AG (NVS) said Thursday
(25/1/07) it will open a new clinical research facility in
Indonesia to conduct research on tuberculosis, dengue fever and
malaria, the company said in a statement.
The new
collaboration involves the company’s Singapore-based operation,
the Eijkman Institute in Jakarta
and the Hasanuddin University Clinical Research Institute in
Makassar.
The three
organizations will create a joint research initiative that will
recruit top scientists from Indonesia
and also provide Singapore-based researchers direct access to
hospitals and patients suffering from the diseases in a
"real-life" context.
Offices of
the new laboratory will be located at the Eijkman Institute in
Jakarta and at the Dr. Wahidin Sudirohusodo Hospital in Makassar.
STATE CONCERNS
India
Asked Not to Discriminate Against CPO
Industry
Minister Fahmi Idris has asked the Indian government not to
discriminate against Indonesian crude palm oil (CPO) in its
import duty policy as it could disadvantage Indonesia's national
CPO industry.
Idris said
recently that India is imposing a higher import duty rate on
Indonesian CPO than on CPO from Malaysia, which is Indonesia's
main competitor in the international CPO market.
"I have
written a letter to the Indian government, via the Indian
Ambassador to Indonesia, asking India to apply the same import
duty rate (as applied to Malaysian CPO). However, they have not
informed us about when they will apply the same rate to
Indonesian CPO," he was quoted as saying by Antara.
SOEs
Answers Sought on PGN Share-Price Debacle
Finance
Minister Sri Mulyani Indrawati has instructed the Capital Market
and Financial Institutions Supervisory Agency (Bapepam-LK) to
speed up the ongoing probe into the sudden collapse in the price
of shares of state-owned gas firm, PT PGN.
"The finance
minister wants the investigation into the case to be wrapped up
quickly. The case is very sensitive and could damage the
market," Jakarta Stock Exchange president director, Erry
Firmansyah, said on January 19, according to
The Jakarta
Post.
No specific
timetable has been set for the investigation, but Firmansyah
said he hoped it would take less than two weeks.
PGN's shares
fell 23.3% at one point earlier this month, prompting the
regulator to temporarily suspend trading in the company's
shares.
PGN has said
the unanticipated slump in its shares was due to the
announcement of a six-month delay in the commencement of a gas
pipeline project worth $1.1 billion. Because of the delay, the
company had to revise down its gas output target for this year
to 555 million standard cubic ft per day (mmscfd) from 787
mmscfd. The pipeline has the capacity to transport 1,000 mmscfd,
and links South Sumatra and West Java.
The
suspension of trading in PGN shares on the Jakarta Stock
Exchange has been lifted, but an investigation is underway to
find out what really happened.
Bapepam said
that besides PGN, it would also question 12 local and
foreign-based brokers reportedly involved in the case.
Firmansyah
said the JSX is ready to submit the relevant information to
Bapepam, but stressed that it could not become involved in the
investigation.
Garuda
Strategic Invest by End-H1
State-owned
flag carrier, PT Garuda Indonesia, will seal a strategic
investment stake deal by the end of the first half of 2007, the
firm's chief executive officer, Emirsyah Satar, said.
A strategic
investor must be in place by the end of June so that Garuda can
proceed with restructuring its massive $749 million debt, Satar
told Dow Jones Newswires in a recent interview.
"The
government has decided that we'll have a strategic partner and
that's the priority (for 2007)," he said. "My target is there
has to be (debt restructuring) in the second semester (of 2007)
so there should be a very clear direction who is the
(investor)."
The
government said earlier this month that as many as six
international companies have expressed interest in buying up to
a 49% stake in Garuda.
Satar said
the government will allow private firms to take up to a 49%
stake in Garuda, but the final decision on the size and value of
a strategic investment has not been decided. He however
suggested that the government and Garuda will welcome an
investor willing and able to pay down a significant portion of
the firm's massive debt burden. "If you look at it as a
reference, we have a debt close to $800 million and we really
have to reduce that," he said.
Texas
Pacific Group has "expressed interest" in a Garuda stake, but no
prospective investors have yet launched a formal due diligence
of the Indonesian carrier, Satar said. "Airline or non-airline,
definitely (a prospective investor) should be someone who knows
the airline business."
He said a
strategic investor would provide needed funds to pay down
Garuda's debt burden as well as an injection of market savvy to
upgrade the carrier's technological edge and market
competitiveness.
"Garuda has
always been in a monopoly position... (so) a strategic investor
coming in, looking at things differently, will be very good for
Garuda employees," Satar said, adding that Garuda and the
Indonesian government will welcome any prospective investors
"... provided they bring this value-added."
PRIVATE SECTOR
Retailers
Expect 17% Sales Growth
Major
retailers expect sales growth of about 17% this year, slightly
lower than the 20% recorded in 2006.
"We have
calculated all the figures gathered from our members and have
come up with a sales growth target of 17% from about Rp50.8
trillion ($5.64 billion) last year," Association of Indonesian
Retailers (Aprindo) chairman, Handaka Santosa, said on Thursday
(25/1/07).
Although
2007's projected sales growth will likely be lower than last
year’s, Santosa said that the sales target is still a very
healthy one for the retail industry. "Last year, the retail
sector contributed 20% to the country's GDP," he was quoted as
saying by
The Jakarta
Post.
"Last year,
we targeted 20% growth from about Rp42 trillion in 2005, and we
almost met the target, being just little below 20%. So, the 17%
growth target for this year is quite realistic," he said.
Trade
Minister Mari Pangestu meanwhile said that the government is in
the process of drawing up legislation to create healthy
competition among retailers, such as hypermarkets, supermarkets,
minimarts and traditional markets.
"We have
been preparing a presidential decree on modern markets for one
and a half years now. It's not finished yet but I am optimistic
that we will finalize it this March," she said.
Hutchison Set to Start Mobile Services
Hutchison
Telecommunications International, which has operations from Hong
Kong to Ghana, says it is on track to start offering mobile
telephone services in Indonesia this quarter.
The company
also clarified its commitment to its Indonesian mobile business
with planned capital expenditure of $750 million for the three
years up to 2008, a Hutchison Telecom spokesman was quoted as
saying by The South China Morning Post.
Hutchison CP
Telecommunications, the Indonesian unit of Hutchison Telecom,
will invest in wireless towers in Sumatra, company director
Sidarta Sidik said, confirming a report in the Koran Tempo
newspaper.
"We have a
presence in most of the big cities in Java, and now we are going
to move toward Sumatra," he said. "As a new player, the most
important thing is to get the first one million subscribers as
soon as possible. Things will be easier after that." He
declined to give a time frame.
Koran
Tempo,
citing Sidik, reported Hutchison CP Telecom plans to spend $1
billion to build telephone towers in Indonesia this year.
"Our capital
expenditure for Indonesian operations for three years since 2006
has not changed and remains at $750 million in total," Hutchison
Telecom spokesman, Micky Shiu, said.
2007
Vehicle Sales Seen Up 25%
The
country’s domestic vehicle sales are likely to rise 25% this
year, marking a recovery in the sector hit by high interest
rates and weak purchasing power, a trade body said on Thursday
(25/1/07).
High fuel
prices and interest rates sent vehicle sales down 40% last year
to 318,883 units after a historic high of 533,910 in the
previous year.
Sales have
been recovering in recent months after the central bank started
cutting the benchmark interest rate and Bambang Trisulo,
chairman of the Automotive Industry Association (Gaikindo), told
Reuters domestic sales next year are likely to return close to
2005 levels if interest rates continue to fall.
"If the 8.5%
(interest) rate can be achieved in the first half... it could
exceed 400,000 units (in 2007)," Trisulo said in an interview,
referring to the central bank's reference money market rate,
known as the BI rate. "We will see how things work in the first
quarter, if the numbers are encouraging, we might revise up our
forecast."
Trisulo also
said exports of completely built vehicles this year are likely
to grow 61% to about 50,000 units.
BANKS
Mandiri Eyes 25% Profit Growth in 2007
Indonesia's
largest lender, Bank Mandiri, expects its net profit to increase
up to 25% this year as it seeks to cut its non-performing loan (NPL)
ratio, a company director said Wednesday (24/1/07).
Bank
Mandiri has estimated its 2006 net profit to be between Rp1.8
trillion and Rp2.4 trillion, up from Rp603 billion in 2005.
"We expect
this year’s net profit would be around Rp2.5 trillion to Rp3
trillion. This is in line with a lower non-performing loan
ratio target for this year of under 5%," risk management
director, Sentot Sentausa, was quoted as saying by Reuters.
Sentausa
said he expects loans to grow 18.5% this year from last year’s
outstanding loans of Rp109.392 trillion ($12.04 billion).
The bank's
net NPL in 2006 was at 7.88% compared to 16% the previous year,
due to an agreement with some of its major bad debtors to settle
their debt.
Bank
Mandiri vice president director Wayan Mertayasa, said the lender
is committed to reducing the gross NPL to less than 10% this
year from 17.86% in 2006.
In a
statement issued early last week, Bank Mandiri said the debt
from its top 30 problematic debtors had declined to Rp9.6
trillion from Rp16.1 trillion a year ago, reported Dow Jones
Newswires.
Meanwhile,
Bank Mandiri said it plans to open a branch in China to help
facilitate bilateral trade, which is expected to expand to $20
billion this year.
The branch
will serve both Indonesian and Chinese businessmen, managing
director Thomas Arifin was quoted as saying by Antara. He said
the bilateral trade has great potential to expand, and that the
bank already has a representative office in Shanghai.
BNI
Sees 2006 Net Profit Up a Third
The
country’s third largest lender, Bank Negara Indonesia (BNI),
expects its 2006 net profit to rise about a third to Rp1.9
trillion ($209.4 million) from Rp1.4 trillion in 2005, its
president director said on Monday (22/1/07).
The
state-owned bank expects loans to grow 20% this year from an
estimated Rp66.7 trillion last year, Sigit Pramono said,
according to Reuters.
Pramono
also said a secondary offering of BNI's shares is expected by
the end of June, during which the government might offer between
30% and 40% of the bank. "About 15% to 20% of which would be
used to strengthen our capital base, I cannot say how much money
we expect to raise right now," he said.
Meanwhile,
BNI is leading a syndicate of three banks that will provide
Rp1.5 trillion to finance the construction of a toll road
between Surabaya and Mojokerto in East Java.
BNI
corporate director, Acmad Baiquni, said BNI would provide 51% of
the loan and Bank Rakyat Indonesia (BRI) and Bukopin would put
up the rest, Antara reported on Wednesday.
The bank
loan will cover 65% of the total cost of about Rp2.5 trillion of
the project, which is expected to be completed in 2009, Baiquni
added. Earlier, he said the loan, which will mature in 10
years, will carry an annual interest of 14% to 15%.
BRI
2006 Net Up 15% to Rp4.4t - CEO
Bank Rakyat
Indonesia (BRI) said its unaudited 2006 net profit rose 15% on
year, mostly because of lower costs of funds stemming from a
decrease in interest rates, the chief executive of the country's
fourth largest bank by assets said Wednesday (24/1/07).
"As of
December 31, 2006, our net profit was Rp4.4 trillion, compared
with Rp3.81 trillion a year earlier," Sofyan Basir was quoted as
saying by Dow Jones Newswires.
He said
falling interest rates had caused the bank's net interest income
to remain flat at about Rp12 trillion, but it also reduced the
costs of funds. At the end of December, the bank's total
outstanding loan portfolio stood at Rp90 trillion, up 19% from
Rp75.5 trillion a year earlier.
BRI is
expected to announce its audited 2006 earnings late next month.
Two
Banks to Merge into Rabobank
The
management of Rabobank International Indonesia (RII) has
reported to Bank Indonesia (BI) its plan to absorb Hagabank and
Bank Hagakita.
The Dutch
bank, which recently acquired the two banks for Rp800 billion
($88 million), plans to complete the merger early next year, BI
Deputy Governor Siti Fadjrijah said, according to Antara. She
said the central bank has approved the merger plan.
Based on
their financial reports in 2006, the three banks had assets
valued at Rp8.12 trillion, with capital totaling Rp796.5
billion, and a capital adequacy ratio of 13%.
Bank
Muamalat Earns Rp207b in Profit
The
country's first shariah bank, Bank Muamalat Indonesia, reported
Rp207.07 billion ($23 million) in pre-tax profit in 2006, up
from Rp156.25 billion the previous year.
Last year,
the Islamic bank disbursed Rp6.58 trillion in shariah financing,
up from Rp5.88 trillion in 2005, Antara reported on Tuesday
(23/1/07).
The bank
also recorded an increase in assets to Rp8.45 trillion from
Rp7.42 trillion, and in deposits to Rp6.83 trillion from Rp5.74
trillion.
Bank
director M Hidayat however said a decline was recorded in its
financing-to-deposit ratio to 95% in 2006 from 110% in 2005 due
to a decline in the demand for loans from the real sector.
Islamic
banks operate in line with the shariah law, under which a bank
pays or receives no interest, and profit is to be shared.
POWER
Kideco
to Supply Coal to Tanjung Kasam
Korean
company PT Kideco Jaya Agung has agreed to supply low-calorie
sub-bituminous coal from its mine in Kalimantan to state power
firm PT PLN's planned $96.99 million steam power plant in
Tanjung Kasam, Batam,
The Jakarta
Post
reported on Monday (22/1/07).
The power
project will have two generators, each with a designed total
generating capacity of 55 MW. The first generator is slated to
start operating in March 2009 and the second, three months
later.
PLN-Batam
operates a number of power plants with a total capacity of 320
MW, about 31% more than its capacity in 2005. PLN-Batam
president director Ery Ifyandri said that, based on the
agreement, Kideco would supply 360,000 tons of coal containing
4,700-4,800 kilocalories per kg per annum for 15 years.
PT Tanjung
Kasam (TJK) Power, operator of the project, and PT Solusi Energi
System Consult also signed an agreement on engineering and
construction supervision, while Solusi Energi Sistem Consult and
PPLS Management Sendirian Bhd, a subsidiary of Sarawak
Electricity Supply Company Bhd (SESCO) of Malaysia, signed an
agreement on technical cooperation.
TJK Power
president director, Binarto Bekti Mahardjana, said the
cooperation with Solusi Energi Sistem Consult is to ensure that
the construction of the two power units would be finished on
time.
The Mines
and Energy Department’s Director General for Electricity and
Energy, J Purwono, said the construction schedule has to be
tight to cope with the annual 15% rise in electricity demand in
Batam. "We estimate that we will need an additional installed
capacity of between 260 MW and 280 MW by 2009," Ifyandri said.
PLN-Batam
further plans to build two other coal-fired power plants with a
total investment of about $100 million, in line with its plan to
boost coal usage in the power sector. The two new power plants
will be located in Bintan and have an installed capacity of 12
MW each.
Malaysian
AE Models' Unit Wins Contract
Malaysian AE
Models Holdings Bhd said its 59.45%-owned unit, PT AE Automation
Indonesia, has won a power plant contract worth $8.1 million,
XFN-Asia reported on Thursday (25/1/07).
AE
Automation will design and construct an 8-MW coal-fired power
station in East Kalimantan to be delivered by end-May 2008, it
said.
OIL
AND GAS
Pertamina Good Governance Drive
State oil
firm PT Pertamina has embarked on an internal reform program
under new leadership and has reaped billions of dollars in
investments to double its oil and gas output.
Speaking to
the media on Thursday (25/1/07), Pertamina president Ari H
Soemarno said he had launched the internal transformation
through 27 "breakthrough projects", including reducing the
rampant leakage of fuels during transportation, increasing
efficiency at the company's many ports and ridding its fuel
depots of white-collar thugs and thieves.
Within
their first three months, he said, these projects had brought in
an additional $15 million.
The company
has also worked to revamp its gas stations to better serve
customers. Pertamina will also work with multinational oil and
gas companies to enhance its downstream businesses; for example,
it will partner with SK Corp to build a lubrication oil plant in
Dumai, Riau and team up with Shell in the aviation fuel sector.
Soemarno
said the company plans to more than triple its investment in the
downstream sector to Rp3.7 trillion ($410 million) this year
from Rp960 billion last year and Rp1.3 trillion in 2005.
He added
that Pertamina would deepen its involvement in the upstream
sector as well, which he said promised bigger returns. "The
upstream is our value creator, while the downstream is our value
enhancer. So we have to be strong in both," he said.
In the
upstream sector, Soemarno said Pertamina would invest a hefty
Rp10.1 trillion this year, a jump from Rp3.5 trillion last year
and Rp3.9 trillion in 2005. Pertamina aims to double its oil and
gas output from its current level of 235,000 barrels of oil
equivalent per day within the next four years.
"So our
total investment plan for this year would be about Rp14 trillion
($1.5 billion). That's still small, compared to our friends
overseas. Petronas, for example, invests about $5 billion a
year," Soemarno said.
He noted
that most of the money for investment this year would be taken
from retained earnings. Last year, Pertamina booked a profit of
Rp21 trillion. About Rp12 trillion of that will be paid as
shareholder dividends to the government, and the remainder
retained.
This year,
Pertamina, with total assets of about Rp360 trillion, aims to
book a net profit of Rp23 trillion.
MINING
Regulations Issued on Tin Exports
Indonesia
has issued regulations limiting refined tin exports in an effort
to curb unchecked exports of the commodity, widely used in the
electronics industry, a Trade Department official said on
Tuesday (23/1/07).
The
government will only allow exports of refined tin by smelters
that have a mining permit or if they team up with mining permit
holders, the department’s Director General of International
Trade, Diah Maulida, said.
"We have
banned exports of tin ore since 2002, so exports are only
allowed for refined tin, which so far have no regulation to
control them," Maulida was quoted as saying by Reuters. "After
seeing the fact in the (tin-producing) area, exports of refined
tin have led to uncontrolled tin mining which has caused
environmental problems. So, we need to regulate this."
She said
exporters will only be allowed to sell refined tin with a
minimum purity of 99.85% after they have provided proof of
paying a royalty to the government.
Bangka
island is home to state-run PT Timah, the world's biggest
integrated tin miner, and PT Koba Tin, which is 25%-owned by
Timah and the rest by Malaysia Smelting Corp Bhd.
In October,
dozens of small smelters ceased business after the police closed
three for operating without a proper mining permit, triggering
violent protests by miners concerned about their livelihood.
The Bangka-Belitung provincial government has identified eight
smelters, out of 35 small smelters, that may be allowed to
reopen as they meet proper requirements for tin smelting.
Meanwhile,
police in Bangka-Belitung province are investigating Koba Tin in
connection with sourcing illegal tin ore and operating outside
its mining area, the police chief said on Wednesday (24/1/07).
Bangka-Belitung
Police chief Imam Sudjarwo told Reuters police had received
reports Koba Tin has sourced tin ore from local miners that
worked outside the firm's mining area. "It means Koba Tin has
violated the mining law by operating outside its concession and
violated the criminal law for fencing illegal tin ore," Sudjarwo
said.
He said
police had seized 500 tons of refined tin owned by Koba Tin, but
the company was still allowed to run its smelter.
Malaysian
Smelting denied in a statement to the Kuala Lumpur Stock
Exchange its Indonesian unit had sourced illegal tin ore. "Koba
Tin collects tin concentrates from small-scale miners operating
within its Contract of Work (CoW) mining leases based on annual
quantity approved by the authorities," the statement said,
adding the ore was documented to ensure its origin.
It said it
had suspended ore collection from local miners during the probe,
but smelting operations were running as usual to process tin
concentrates from its own dredging and gravel pump operations.
The company
was also negotiating the early release of 500 tons of refined
tin due for shipment which was seized by the police for
verification purpose, it said.
London
Metal Exchange three-month tin extended its recent gains to hit
a fresh record high of $12,500 a metric ton Wednesday on
speculative buying amid ongoing supply concerns, analysts said,
according to Dow Jones Newswires. Tin has climbed roughly 21%
to $12,500/ton since hitting a low for 2007 of $9,849/ton on
January 9.
Ban
on Sand Exports to Singapore
Indonesia
has banned all further sand exports, citing environmental
concerns and the need to protect its borders, the Singapore
government said in a statement on Wednesday (24/1/07).
Land-scarce
Singapore, with a total area of just 700 sq km, is one of the
biggest importers of Indonesian sand, used for land reclamation
and currently in strong demand in a construction industry that
is recovering after years in the doldrums.
Indonesia's
sand trade with Singapore, worth hundreds of millions of dollars
a year, has been criticized by environmentalists who said sand
mining had led to erosion and even the disappearance of some
islands. This, in turn, has raised concerns that sand mining
could alter Indonesia's sea borders.
The ban
took effect on Tuesday (23/1/07), but exporters have been given
until February 5 to honor existing contracts.
The latest
ban applies to the export of land sand, which is used to produce
concrete for building construction, a ministry spokeswoman said.
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