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, 13 November 2006
Highlights
Politics
-
Poverty, education,
investment,
bird flu
high on agenda for talks with George W. Bush
-
Indonesia
to push for a regional anti-corruption agreement at APEC
summit
Regions
-
A man who led an attack on teachers at the
Freeport
mine sentenced to life
-
Preparations for Aceh polls proceeding well, says minister
Economy
Business
briefs, Macro economy
-
Bank
Indonesia
cuts key rate to 10.25%, says more cuts feasible
-
Consumer confidence rises to its highest level for 14 months
Investment
-
Reaction positive to new incentives on infrastructure
-
Regional leaders taught how to promote investment
-
Bajaj Auto enters motorcycle market
-
New look at investment figures
State
concerns
S O E s
-
PT Jasa Marga delays float pending parliamentary approval
-
Danareksa to partly finance new cement plant
-
Pension fund PT Taspen looks to double share investments
Private
sector
-
Car, motorcycle sales slump over holiday, prospects brighter
-
Singapore
company sells first Indonesian bio-fuel output
Banks
Power
Oil & gas
Mining
Oil &
gas
POLITICS
Poverty, Graft on Bush Talks Agenda
Investment,
Poverty reduction, fighting corruption and limiting nuclear
weapons are among the issues
US President
George W. Bush wants to talk about when he meets President
Susilo Bambang Yudhoyono during a flying 10-hour visit to
Indonesia
on November 20.
Indonesia,
for its part, will focus on pursuing education opportunities for
its students in the US, curbing the spread of bird flu and
attracting new
US
energy investment.
Presidential
spokesman Dino Djalal said the discussion on education and
health issues will be led by five Indonesians who are experts in
the two fields.
The meeting
at
Bogor’s presidential palace will come a day after the two
leaders attend the Asia Pacific Economic Cooperation Forum
meeting in
Hanoi.
Djalal said
Yudhoyono will push for more scholarship and educational
opportunities for Indonesians wanting to study at American
colleges.
"Bush
donated some $157 million for education the last time he visited
... we want to get more schemes for education and training
programs in the US,” he said.
While it was
not clear if
Indonesia
would seek financial aid to combat bird flu, Djalal described
the disease as a “key topic” for both leaders.
With 55
deaths from bird flu,
Indonesia
now has the world's highest number of deaths from the disease.
Djalal said
other issues expected to be on the table included investment,
particularly in the energy sector, bio-fuel development, natural
disaster mitigation and information and technology.
He said
Bush' visit was important to relations between the two
countries, with the
US
considering Indonesia its "strategic partner" in the region.
"The
US
sees us as the world's third biggest democracy, the most
populous Muslim nation, the biggest economy in Southeast Asia,
with potential and a strategic location. We, on the other hand,
are looking outward as we seek to polish our image and play a
bigger role in the international scene," he said.
Defense
Minister
Juwono
Sudarsono
told reporters on Monday that political and military issues
would take a back seat during the talks.
He said
Indonesia
will declare its intent "to maintain good relations with all
those who want to enter into partnerships with us, whether they
are Russia, China, India or South Korea.”
He was
alluding to
Indonesia's
drive to diversify its sources of weaponry.
Indonesia
has increasingly sought military equipment from countries other
than the US, its traditional key source.
Sudarsono
said while
Indonesia
will welcome assistance from the US in fighting terrorism, but
Jakarta will not allow Washington to set its own agenda.
"We have
stated several times that we will handle terrorism issues
ourselves," he said. "If
America
wants to help, it should only be in technical matters and
without any pressure."
Jakarta Pushes Anti-Graft Pact
Indonesia
will push for a regional anti-corruption agreement at the
upcoming Asia-
Pacific Economic Cooperation (APEC) leaders meeting in Hanoi,
Foreign Affairs Minister Hassan Wirayuda said on Thursday
(9/11/06).
Bilateral
agreements alone are ineffective in adequately tackling
corruption, he told reporters.
"We will ask
for commitment and cooperation from all APEC members to help us
fight corruption (because) there are many (corruption suspects)
that have fled
Indonesia
and hidden their wealth overseas," he said. The APEC meeting
will be held November 18-19.
Wirayuda's
comments indicate that the government of President Susilo
Bambang Yudhoyono has recognized that regional assistance is
essential to the success of an ongoing anti-corruption campaign.
Efforts to
track corruption suspects and their ill-gotten gains have been
hobbled by a lack of regional cooperation, officials say.
Jakarta Accepts Saddam Verdict
Indonesia
said on Monday (6/11/06) it could understand the death sentence
handed down against former Iraqi dictator Saddam Hussein.
Foreign
ministry spokesman Desra Percaya said the raging insurgency in
Iraq
meant conditions were not ideal for a fair trial but it was
still better than many victims of Saddam's regime had enjoyed
when he was in power.
"We can
understand the issuance of a death sentence on Saddam Hussein,"
he said in a written statement, reported Agence France-Presse.
Saddam,
ousted in a US-led invasion in 2003, was Sunday sentenced to
death by hanging for ordering the deaths of 148 Shiite residents
of a village north of
Baghdad
after a 1982
assassination attempt.
Two
Get Death for Ecstasy
The two
bosses of an Ecstasy factory capable of producing millions of
illegal pills a year were sentenced to death on Monday (6/11/06),
while seven foreigners who operated the factory got 20 years to
life in prison.
Presiding
judge Jaid Umar Bob Sain told the Tangerang District Court the
Indonesian owner of the factory and its chief chemical expert
will face a firing squad for helping produce the high-quality
drug.
"Their
actions hurt our young generation," he said, as dozens in the
packed courtroom erupted in cheers.
Frenchman
Serge Areski Atloui and Dick Nicolaas of the
Netherlands
got life behind bars for producing ingredients used to make the
drug in a separate trial and five Chinese men each got 20 years.
Indonesian
police launched a
November 11,
2005, raid on a sprawling factory on the outskirts of Serang,
100 km west of the capital Jakarta, following months of
surveillance with Australian, US and Chinese drug enforcement
officers.
The factory
was capable of producing 300,000 Ecstasy tablets per week, some
destined for overseas markets, prosecutors said.
They said
police seized an estimated $142 million worth of Ecstasy,
methamphetamines, ketamine and chemical ingredients from the
site.
New
Security Treaty Clinched
Australia
and Indonesia have agreed to a new broad-ranging security
treaty, seven years after Jakarta cancelled a previous agreement
negotiated by then-president Suharto and Australian prime
minister Paul Keating.
Under the
terms of the new pact,
Jakarta and
Canberra have pledged not to support separatist causes in each
other's country.
This was a
key demand made by
Jakarta in
the wake of the crisis generated by the granting of temporary
protection visas to 43 Papuan asylum seekers earlier this year
after they landed on
Cape York.
The two
countries have also agreed to "do everything possible,
individually and jointly, to eradicate international terrorism
and extremism,” including rapid, practical and effective
responses to terrorist attacks.
Foreign
Minister Alexander Downer and his Indonesian counterpart, Hassan
Wirayuda, will sign the new pact on the
island of
Lombok today (13/11/06) after nearly two years of discussions
and negotiations.
"It's a very
significant step forward in the bilateral relationship," Downer
told
The
Australian
newspaper on Tuesday (7/11/06).
"It is a
sensible agreement, a realistic agreement and it is a
sustainable agreement. The Australian public think it is
important we have a good relationship with
Indonesia
and we
should look for ways of strengthening that."
The
Framework for Security Co-operation is a far more detailed
document than the four-clause agreement signed in 1995.
Article 2 of
the document commits the signatories to "not in any manner
support or participate in activities by any person or entity
which constitutes a threat to the stability, sovereignty, or
territorial integrity of the other party", consistent with their
respective domestic laws and international obligations.
This
includes those who use the countries' territory for "encouraging
or committing such activities, including separatism, in the
territory of the other party". The effect of Article 2 is to
unambiguously rule out support by a future Australian government
for groups such as the Free Papua Movement (OPM).
The treaty
has a sharp focus on counter-terrorism and trans-national crime,
with both countries pledging to work together to "respond to
these new challenges and threats".
Jakarta Gets Role in Iran Crisis
The
US is
seeking support from Indonesia to help push Iran to the
negotiating table to stop its uranium enrichment program.
Vienna-based
US Permanent Representative to International Organizations
Gregory Schulte said support from the international community
was essential as the UN Security Council prepares sanctions
against
Iran for not
abiding by a UN resolution on its nuclear program.
Vienna is
the home of the International Atomic Energy Agency (IAEA), which
is charged with monitoring nuclear programs in
Iran
and North Korea.
Schulte said
international condemnation of
North Korea
may have achieved results. "We don't know exactly why the
leadership in Pyongyang decided to go back to six-party talks,
but I think we can speculate that the universal condemnation of
their nuclear tests and the swift deduction of the Security
Council resolution both played a very important role," he said
during a teleconference on Tuesday (7/11/06).
"So, for
Indonesia
and countries across the world to call on the Iranian leadership
to change course will vastly increase the prospect of success in
our common diplomatic endeavour," he said.
Schulte said
he believed that
Indonesia
had a constructive role to play in communicating international
concerns about the direction the leadership in Pyongyang has
taken.
He said that
Indonesia
could also play a very important role in the Iranian nuclear
issue, because Indonesia and the US shared a common objective in
forging a diplomatic solution to the problem.
"Indonesia
is on the board of governors of the IAEA.
Indonesia
is a country whose voice is well-respected across the world
community and the Non-Aligned Movement. I think
Indonesia
can play a very important role in helping communicate both
publicly and privately to the leadership in Iran that they need
to take a different course," Schulte said.
The
Indonesian government has expressed its support for
Iran's
peaceful uranium enrichment program, and has called for a
diplomatic solution to the dispute.
Peacekeepers Land in Lebanon
The first
batch of Indonesian troops arrived on Friday (10/11/06)
in Lebanon to join a United Nations peacekeeping force
monitoring the cease-fire between Israel and Hizbollah.
The
125-member advance team landed at
Beirut
airport aboard two US Air Force planes from
Istanbul.
They
boarded buses at the airport and headed to south
Lebanon
where they will take up positions along with thousands of other
peacekeepers from some 20 countries in the UN's Interim Force in
Lebanon,
or UNIFIL.
REGIONS
Papua:
Wamang Sentenced to Life
Antonius
Wamang, the man who orchestrated the killings of two American
teachers and an Indonesian colleague at the
Freeport
mine site in 2002, was sentenced to life in prison on Tuesday
(7/11/06).
The judge
handed down the sentence soon after he and six other defendants
walked out of the courtroom in the latest of many protests over
what they say are unfair legal processes.
The sentence
for Wamang was more than the 20 years demanded by prosecutors.
"This was
premeditated murder," Judge Andriani Nurdin told the Central
Jakarta District Court, describing his actions as a "gross
violation of human rights."
Two other
defendants received seven-year sentences while the remaining
four were sentenced to 18 months in jail each.
Good
Progress on Aceh Polls: Minister
Preparations
for the election of governors, mayors and district heads in the
formerly conflict-torn
province
of
Aceh
are proceeding smoothly, Minister of Home Affairs M Ma’aruf said
Wednesday (8/11/06).
He said a
visit to the region had shown progress in preparations by the
provincial administration, the Independent Elections Commission
(KIP), security agencies and the public.
“Let us hope
that the further processes such as campaigns, elections and vote
counting will run smoothly and fairly," he said after attending
a coordination meeting of regional officials on the elections.Read
more
The minister appealed to all parties, especially the candidates,
to maintain law and peace during campaigns.
Ma’ruf said if the elections in Aceh were successful, the poll
would be an important example for other regions.
At least 2.6
million people in the region will cast their votes in the
election of a governor and 19 mayors and district heads, which
would be the biggest poll in the country so far.
Bird
Flu: No Pandemic, says Official
A senior
health official played down fears that a pandemic sparked by
bird flu could occur in
Indonesia
although admitting that a risk still existed.
"We are
still far from a pandemic," said Bayu Krisnamurthi, the chief
executive of the Indonesian National Committee for Avian
Influenza Control and Pandemic Influenza Preparedness (Komnas
FBPI.)
He said,
however, that the virus remained unpredictable and the threat of
a pandemic of human infections could not be ruled out.
Indonesia
now has 72 confirmed cases of human bird flu infection, 55 of
them fatal. Further tests are being conducted on a boy who died
of bird flu-like symptoms in central Java on Monday (6/11/06)
after initial tests proved negative for the disease.
Krisnamurthi
said the ratio of confirmed cases compared to reported suspect
cases was decreasing, from about 30% to 35% six months ago to
currently about 14%.
Although
bird flu had been found in 30 of the country's 32 provinces,
human infections were contained to nine provinces.
The ratio
between confirmed cases and fatalities remained largely
unchanged at about 75%, due to late treatment following late
diagnosis, and limited health facilities.
Planes
Start Work on Kalimantan Fires
Two Russian
planes arrived in
South
Kalimantan
on Wednesday (8/11/06)
to battle fires causing choking smoke haze, but one slipped off
the runway at their base in Banjarmarsin airport after landing
in heavy rain.
The planes
helped douse fires in southern
Sumatra
before moving to
Kalimantan,
where fires are continuing in a number of areas of underlying
peat.
The
aircraft, which can each carry up to 12 tons of water to drop
over forest fires, have been rented for 45 days, officials said.
Hopes that
Indonesia
will not need to use the planes for the full period rose as
regular rain began in Palangkaraya, the capital of Central
Kalimantan.
Visibility
improved to around 4 km around noon from around 500 meters at
daybreak by mid-week.
Transparency International to Monitor BRR
The
Aceh-Nias Rehabilitation and Reconstruction Agency (BRR) has
agreed to cooperate with Transparency International Indonesia to
tighten supervision of expenditure by BRR.
BRR head
Kuntoro Mangkusubroto and Transparancy International Indonesia (TII)
chairman Todung Mulya Lubis signed a memorandum of understanding
on Tuesday (7/11/06) on good governance in Medan, The
Jakarta Post
reported.
Under the
memorandum, the two parties will evaluate BRR's systems, improve
its use of technology and educate stakeholders involved in the
program about how to avoid graft.
"The
signing of the MOU constitutes a positive and historical moment.
We will carry out surveys and assessments of the integrity of
BRR systems in order to minimize graft," Lubis said at the
signing ceremony.
Mangkusubroto
said the agreement would increase transparency in the agency’s
expenditure of Rp9.6 trillion ($1.6 billion) this year.
ECONOMY
Share
Market Booms
The Jakarta
Stock Exchange continues to hit new highs, with the composite
index hitting a new record on Friday (10/11/06) after Bank
Indonesia (BI) dropped its key rate by 50 points to 10.25%.
The
composite index rose to 1,673.125 before falling off to close at
1,664.837. Interest was driven by buying in telecommunication
and mining blue chips, dealers said.
The
advances put the market’s growth up 42% for the year, making it
one of the best performers in Asia, with analysts saying more
highs are expected.
On Tuesday,
BI cut its key rate for the sixth cut this year, after annual
inflation plunged in October. A bank spokesman said BI would
continue to act cautiously but it saw room for further cuts in
months to come.
The economy
was predicted to have moved faster in the third quarter, with
exports booming and domestic consumption starting to pick up.
Seven
economists polled by Dow Jones Newswires forecast gross domestic
product in the July-September period to have expanded an average
5.53% on year, up from the second quarter's 5.22%.
The
government’s efforts to pitch a new investment climate in the
infrastructure sector were boosted by a pledge to offer
financial backing for private investors in state-sponsored
ventures, The Wall Street Journal reported.
"The
foundations for future projects are potentially there," the
daily quoted Karin Finkelston, associate director for East Asia
at the International Finance Corp., the World Bank arm for
lending to the private sector, as saying. "The key now is how
this is implemented."
Officials
had highlighted 10 projects with a total value of $4.5 billion
the government hopes will become models for private-public deals
and pave the way for other investment. They include power
plants, toll roads, water-supply projects, fiber-optic networks,
a ferry terminal and a port.
Finance
Minister Sri Mulyani Indrawati
outlined a plan to earmark $450 million from
Jakarta's
2006 and 2007 budgets to fund financial guarantees and offer
other support for the projects.
Also
unveiled at the conference was a separate $300 million fund for
government purchases of land for infrastructure projects, which
would relieve private investors of long and difficult
negotiations.
Peter
Eliot, the president director of Citibank Indonesia, told The
Jakarta Post
conditions were looking positive for next year.
“If we look
at the macro financial condition, the situation is improving and
getting better here. I'm optimistic about next year,” he said,
adding that the bank would retain its prudent position on loans.
Asked where
he would project the growth figure of next year, he replied:
Economic growth of 6.3% for next year is reasonable. Again I'm
optimistic about next year. I think that in terms of various
sectors of the economy here, whether it's oil and gas, mining,
palm oil, or consumers goods, they've all got tremendous
opportunities. So I certainly hope Indonesia will achieve the
6.3% growth. Perhaps it'll be higher.”
BUSINESS
BRIEFS
MACRO ECONOMY
BI
Cuts Rate to 10.25%, More Seen
Bank
Indonesia (BI) cut its key interest rate by 50 basis points on
Tuesday (7/11/06) to 10.25%, the sixth cut this year, after
annual inflation plunged in October.
The central
bank will remain cautious but "there is still room for further
BI rate cuts," BI spokesman Budi Mulya was quoted as saying by
Reuters.
Tuesday's
rate cut was in line with expectations and the rupiah currency
was trading at 9,120 to the dollar on Tuesday, little changed
from 9,123 before the announcement.
"There are
unlikely to be any large capital outflows as the interest rate
differentials with the Fed funds rate still remain wide," said
Jakarta-based economist Juniman of Bank Internasional Indonesia
(BII).
"I see
another 50 basis-point cut next month which will bring us to
single digit... and then another 200-basis-point reduction in
2007," ING economist, Tim Condon, was quoted as saying by Dow
Jones Newswires.
Ongoing
rate cuts are "the privilege (BI) gets for successfully
containing inflation and bolstering the rupiah... and there's
certainly room for another 50 basis points (cut) in December,
taking them below the magic 10% level," said David Cohen,
economist at Action Economics. Cohen projected the rate to
bottom at 9% by the end of the first quarter of 2007.
The
central bank said its monetary policy would remain measured,
despite some suggestions it should be more aggressive in helping
stimulate the economy.
"The board
of governors is of the view that monetary policy going forward
needs to remain more measured and cautious to maintain
macroeconomic stability and strengthen the momentum for
sustained economic growth," Mulya said.
The central
bank has said that its key interest rate may fall to between 9%
and 9.5% by the end of the year, despite a sharp drop in
inflation. Annual inflation dropped by more than half in
October to 6.29% from 14.55% in September as the impact of a big
fuel price hike in October 2005 fell out of the calculation.
The rupiah
has risen around 8% so far this year.
Consumer
Confidence Index at 14-Month High
The consumer
confidence index rose to 98.1 points in October, its highest
mark in 14 months, up from 96.1 points in September, a central
bank survey showed Wednesday (8/11/06), according to Agence
France-Presse.
The
confidence index, which indicates respondents' optimism about
the economy, last stood above 100 points in June last year.
The two
components of the index -- the present condition index and
consumer expectation index -- both rose in October. The present
situation index, which indicates the level of consumer
confidence in current economic conditions, rose to 82.3 points
in October from 81.8 points in September.
Meanwhile,
the consumer expectation index, which shows the level of
confidence in economic prospects for the next six months, rose
to 113.9 points in October from 110.5 points previously.
The survey
said the increase in the expectation index was mainly due to
rising optimism over income prospects for the next six months on
the back of improved economic conditions.
Forex
Reserves Fall to $39.77b
Indonesia's international reserves fell to $39.77 billion at the
end of October from $42.35 billion at the end of September, Bank
Indonesia (BI) data showed on
Monday
(6/11/06), according to Reuters.
Central bank spokesman Budi Mulya said the fall was due to the
repayment of $3.2 billion of Indonesia's debt to the
International Monetary Fund (IMF) last month.
BI said on its website base money fell to Rp257.39 trillion
($28.27 billion) at the end of October from Rp257.84 trillion at
the end of September, while net domestic assets rose to Rp17.27
trillion from Rp2.66 trillion over the same period. Net claims
on government likewise increased to Rp243.68 trillion in October
from Rp219.53 trillion in September.
INVESTMENT
Jakarta
Paves the Way on Works Projects
Indonesia’s
efforts to get delayed infrastructure projects off the ground
inched forward as foreign and local investors at the recent
infrastructure conference were encouraged by a government pledge
to offer financial backing for private investors in
state-sponsored ventures, The Wall Street Journal
reported on Monday (6/11/06).
“Whether
that will translate into new tie-ups between private companies
and Jakarta to improve Indonesia's decrepit toll roads, ports
and power plants, investors say, will become clearer over the
next few months, the Journal said.
"The
foundations for future projects are potentially there," said
Karin Finkelston, associate director for East Asia at the
International Finance Corp, the World Bank’s private investment
subsidiary.
At the
recent Infrastructure Summit, the government set out a number of
fresh initiatives, including financial guarantees, which it
hopes will lure more foreign investment.
Indonesia's
economy is unlikely to grow faster than this year’s projected
rate of 5.6% unless infrastructure can be improved, frustrating
Jakarta’s hopes of creating jobs and cutting poverty.
At the
summit, President Susilo Bambang Yudhoyono appealed to foreign
investors to help supply the $22 billion Indonesia needs to
spend annually in the next few years to upgrade its
infrastructure. "The government will provide only part of this
funding," he said, "while the major portion will have to come
from the private sector."
Officials
highlighted 10 projects with a total value of $4.5 billion the
government hopes will become models for private-public deals and
pave the way for other investment. They include power plants,
toll roads, water-supply projects, fiber-optic networks, a ferry
terminal and a port.
Finance
Minister Sri Mulyani Indrawati outlined a plan to earmark $450
million from Jakarta's 2006 and 2007 budgets to fund financial
guarantees and offer other support for the projects. Investors
have been demanding these guarantees, which are meant to cover
the risk that state-owned companies like PT PLN, which runs the
national electricity grid, could break contractual agreements or
default on payments.
Also
unveiled at the conference was a separate $300 million fund for
government purchases of land for infrastructure projects. Poor
land documentation in Indonesia has deterred foreign companies
from investing in projects such as toll roads for fear of
getting bogged down in legal disputes with property owners.
While the moves drew praise, many investors say they want more
detailed information about projects before they commit money.
"The
government has shown strong determination to move forward," said
Muhammad Fadzil Abdul Hamid, business development manager at
Plus Expressways Bhd, a Malaysian toll-road operator.
Regional
Leaders Learn to Pitch
Several
regional leaders took part in the Indonesian Regional Investment
Forum (IRIF) held in Jakarta recently to learn basic
salesmanship and promote the economic potential of their
regions.
The lack of
sales and business skills in regional leaders has not only
resulted in poor marketing but also in the issuance of policies
which often harm investors' interests, The
Jakarta Post
reported on Monday (6/11/06).
"The
problem is the local government officials' mind-set. They are
bureaucrats, not businessmen. We have to change that," Tanri
Abeng, a noted businessman, who is also the forum's advisory
board chairman, said.
In the hope
of improving the investment climate in the regions, the Regional
Representatives Council (DPD), in collaboration with a global
event organizer, held the IRIF, where regional leaders were
taught basic skills in business promotion, from guidelines in
making leaflets to talking to foreign investors.
Chairman of
the forum's organizing committee, Irman Gusman, said that the
forum would help regional leaders learn to stand out in
international forums dealing with investors. "For example, we
help them design investor-friendly investment proposals," he
said.
The two-day
investment forum was participated in by more than 400 foreign
investors, coming from 20 countries, including the US, Japan,
Australia, Singapore, Taiwan and China.
Bajaj
Enters Bike Market, Eyes Growth
India's second largest motorcycle maker, Bajaj Auto Ltd, rode
into Indonesia's $6 billion bike market with its flagship model
on
Thursday (9/11/06), and plans to set
up a regional production base in the country.
Bajaj Auto, which also makes scooters and three-wheeled
motorized rickshaws, launched the 180 cc Bajaj Pulsar, and said
it would invest $50 million in Indonesia, the world's third
largest motorcycle market, over the next three years to set up a
production base and distribution network.
"In the first phase, we will focus on customer satisfaction.
The second phase would be to set up a local manufacturing
facility and the third phase is to make Indonesia the hub for
the Southeast Asian market," executive director, Sanjiv Bajaj
was quoted as saying by Reuters.
KS Grihapathy, president director of Bajaj Auto Indonesia, said
the company initially aimed to sell 100,000 motorbikes in
Indonesia in two years.
BKPM
to Adopt New Statistical System
The
Investment Coordinating Board (BKPM) is planning to revamp the
way it records the flow of investment into the country so as to
better reflect what is actually happening.
"The
current system is inaccurate," BKPM chief, M Luthfi said Monday
(6/11/06), according to The
Jakarta Post.
"The data about actual, realized investment, for example, refers
to what happened 18 months, and sometimes even 36 months ago."
Luthfi said
the government would adopt a system of investment statistics
similar to that used in Singapore, in which the actual
expenditure of investors is updated on a near real-time basis.
"So, as
soon as the investors get their approvals, we will immediately
record how much they spend on office space, on importing capital
goods and equipment, on building materials to set up their
factories, and so on," he said.
The figures
for capital goods and equipment imports are particularly
important, Luthfi said, as they sometimes account for 80% of an
investment's value, and result in an actual trickle-down effect
that benefits the real sector.
The new
system is expected to be adopted this November, in tandem with
the Central Bureau of Statistics (BPS) and Bank Indonesia (BI),
both of which produce their own investment statistics.
STATE
CONCERNS
Indonesia
Out of IP Priority Watch List
The US government has changed Indonesia's position in its
intellectual property right protection list, raising its
position from priority watch list to watch list.
Assistant to US Trade Representatives Barbara Weisel said
Monday (6/11/06) the decision of the
US government was a result of out of cycle review of progress on
improvements in intellectual property rights protection, Antara
reported.
Weisel said the Indonesian status may be changed again in April
next year when the US government evaluates the performances of
all US trading partners in the world in intellectual property
rights protection.
She described the change in the Indonesian status as a
significant development, which could bring about positive
implications for the country's economy. The improvement in the
status is expected to contribute significantly to improving
international confidence in the country.
Rice
Output Seen Up 5% in 2007
Indonesia's
dry unhusked rice production is projected to rise by 5% in 2007
to 57.54 million tons, Agriculture Minister Anton Apriyantono
said Monday (6/11/06).
"Production
in 2007 is targeted to rise by 5% from this year's production of
54.8 million tons," Apriyantono was quoted as saying by Antara.
He said the
increase in production would be reached through expansion of
rice fields and improvements in yield per hectare, but gave no
details. He also said that the government would subsidize
grains for planting as well as develop organic fertilizers to
encourage rice farming.
SOEs
Jasa
Marga Delays IPO to Early 2007
State-owned
toll road firm PT Jasa Marga said it has postponed a planned Rp2
trillion ($219.6 million) initial public offering to the first
quarter of 2007.
The firm
said in September it planned to list 15% of its shares on the
Jakarta Stock Exchange in November to raise funds to finance the
construction of some toll roads. But a company official said on
Wednesday (8/11/06) it has yet to receive parliamentary approval
for the offering, Reuters reported.
The firm,
which controls more than 75% of the country's toll roads, plans
to build three toll roads as part of government efforts to
improve the country's creaking infrastructure.
Jasa Marga
president director Frans Sunito said the company needs Rp4
trillion to finance the toll road projects on Java next year.
"Part of the funding will come from the IPO, which will be done
in the first quarter of 2007," Sunito said.
He said the
company expects to raise Rp1.5 trillion to Rp2 trillion from the
IPO while the rest would come from loans.
Danareksa
to Join $500m Cement Project
State-owned
trust company Danareksa has agreed to partly finance the
construction of a Rp4.5 trillion ($500 million) cement plant to
be built by Semen Gerobogan in Central Java.
Semen
Gerobogan general manager Tonny Santoso said Tuesday (7/11/06)
that Danareksa had signed a letter of intent (LoI) to become one
of the financiers of the cement plant, which when completed will
have a production capacity of 2.3 million tons a year.
He however
declined to disclose any details on the size of Danareksa's
investment in the project. "For sure, three months after the
signing of the LoI, we will start the preparations for the
construction of the cement plant," he was quoted as saying by
The Jakarta Post.
The deal,
signed by Danareksa and Semen Gerobogan, was one of 38
investment agreements signed during a Central Java
Infrastructure Business Forum held on November 5-7 in Solo. The
agreements, with a total value of Rp6.56 trillion, cover 27
infrastructure projects, including waste treatment, water,
railways and agribusiness.
Even though
the investment commitments failed to reach the initial target of
Rp14 trillion, Central Java Governor Mardiyanto hailed the forum
as a success.
Investors
from China, Taiwan, the Netherlands, France and Malaysia
attended the forum.
Taspen
to Double Stock Funds to Rp340b
PT Taspen, Indonesia's second largest state-owned pension fund,
is looking to double its investments on the Jakarta Stock
Exchange to about Rp340 billion ($37.3 million) "soon", amid
improving sentiment on the bourse and a stronger economic
outlook, a fund executive said
Thursday
(9/11/06).
"Our investment in stocks is less than 1% (of total funds), we
will increase this to around 2% soon," Taspen’s chief financial
officer Heru Maliksjah told Dow Jones Newswires.
Taspen currently has Rp17 trillion in investment funds, about
73% of which is invested in fixed income instruments, Maliksjah
said. He said Taspen may invest in stocks including
telecommunications blue chips and sector leaders.
Taspen will also invest in second-tier stocks that have good
trading liquidity and strong potential to offer gains, Maliksjah
said, declining to name specific companies.
Adhi
Karya Eyes 65% Profit Rise in 2007
State
construction company PT Adhi Karya expects to post a 65%
increase in its net profit next year as the company will sign
more projects, president director Saiful Iman said Wednesday
(8/11/06).
Adhi
Karya's net profit is likely to reach Rp150 billion ($16.48
million) next year compared to an expected Rp91 billion this
year “as we have more (projects)", Iman said, according to
Reuters.
Revenue is
expected to jump to Rp6.04 trillion in 2007 from Rp4.15 trillion
this year, as it will construct the $224 million monorail
project in Jakarta and a $215 million power plant project for
state electricity firm, PT PLN.
Funding for
the power plant project will come from its owner, PT Indonesia
Power, while for the monorail, it will come from a consortium
led by the Dubai Islamic Bank.
He said the
total cost of the monorail project is $650 million, $224 million
of which is for the construction of the rail by Adhi Karya and
the rest will be used to acquire carriages. "We expect to get
the funds by December and in October next year the project could
come into operation," Iman said.
PRIVATE
SECTOR
October Car Sales Down 40%, Bikes Down 30%
Car sales in
Indonesia are expected to have slumped 40% in October, hit by
the week-long Idul Fitri holiday, but industry experts see
interest rate cuts, and cheaper car loans stoking a recovery
into next year.
Annual
sales are expected to fall to 330,000 to 350,000 units from last
year's record 533,910, but analysts and manufacturers predict a
rebound to 500,000 units in 2007 as the central bank moves
aggressively to cut interest rates, Reuters reported.
Meanwhile,
sales of the country’s top three motorcycle makers fell nearly
30% last month, also due to the holiday, a PT Astra
International official said Tuesday (7/11/06).
Motorbike
sales have soared to a record 5.1 million units last year from
less than 1 million in 2000. But sales in January to September
dropped by nearly a fifth amid high interest rates and loans
that deterred buyers. Some analysts and industry executives
expect volumes to recover to 2005 levels next year.
First
Bio-fuel Output Sold
A
Singapore-based company says it has sold Indonesia’s first
commercial production of bio-fuel, Reuters reported.
Wilmar
International Holdings said it has already sold half of its
planned bio-diesel production from three plants due to start
operating next year.
The firm
expects the first of its three, 350,000-tonne bio-diesel plants
to start production in January 2007 and will run at full
capacity in 2008.
Wilmar
operates 96,360 hectares of palm plantations and operates 72
milling, crushing, refining and processing plants in Indonesia
and Malaysia.
Kuok Khoon
Hong, Wilmar's chairman and CEO, said the company planned to
produce 700,000 tons of bio-diesel next year, and has already
lined up customers in the
United
States
and Europe to buy half of that amount.
By the end
of 2007 all the plants, based in Indonesia, will be up and
running, taking bio-diesel production capacity to a total of
1.05 million tons, he said.
"Half of
the 2007 bio-diesel production has been sold and the margins we
are getting are likely to push our profits higher," Kuok told a
press and analyst briefing in
Singapore.
Wilmar, in
which
US
agribusiness giant Archer Daniels Midland Co is a significant
shareholder through its Asia- Pacific subsidiary, said on
Thursday that net profit jumped 76% to 36.3 million in the third
quarter ending September, from $20.6 million in the year-ago
period.
Global
Institute to Promote Small Firms
To support
the growth of small and medium enterprises (SMEs), the World
Resource Institute (WRI) -- an independent US-based think thank
-- will assist 10 selected SMEs to gain global market access and
financial support.
Under a
non-profit program called New Ventures Indonesia, WRI has
selected 10 profitable enterprises operating in a wide variety
of sectors, such as Archipelago Senoadi Perkasa which operates
in the renewable energy field, Caprina Agroindustry in organic
agriculture, Yussagrindo in sustainable forestry, Manunggal
Aswinaba Sejahtera in tourism and Dyna Energy in clean
technology.
"Based on
our set-up criteria, from 56 companies, we select 10 that have
the most environmental and social benefits, and profitability,"
New Ventures director Virgiana Barriero said Monday (6/11/06),
according to The
Jakarta Post.
Firms that
have a high level of social and environmental awareness are more
likely to produce sustainable growth, she said, adding that the
10 firms would be able to avail of business consulting services
to improve their business plans, develop their cash-flow
analysis capabilities, allow them to contact investors and
better prepare them to move into the global market.
Indonesia
New Ventures country director Diyanto Imam stressed the
important role played by SMEs in the Indonesian economy. "Some
60% of gross domestic product comes from SMEs and 90% of
employment also comes from this sector," he said.
Figures
from the Central Bureau of Statistics (BPS) show that the total
number of SMEs in Indonesia increased by 28% from 33 million in
2004 to 42.4 million in 2005.
The World
Resources Institute's New Ventures program operates in five key
emerging economies: Brazil, China, India, Indonesia and Mexico.
To date, New Venture has trained more than 1,000 entrepreneurs,
involving more than 100 companies, and assisted with the
transfer of more than $15 million in investment.
Adam
Air to List in Singapore
Low-cost
carrier Adam Air plans a public listing in Singapore by the
middle of 2008, a top executive said Thursday (9/11/06) at a
regional aviation conference in the city state, Agence France-Presse
reported.
"I think
mid-2008 will be a good time to (list)," said Adam Suherman,
president director of the budget airline.
Speaking at
the Aviation Outlook Summit, Suherman said the founders of the
budget carrier were likely to retain at least 51% of Adam Air if
it proceeds with the public listing.
Suherman
also said Adam Air was planning to beef up its fleet by an
additional 10 planes next year to handle a projected rise in
passenger numbers.
The airline
expects to handle 11 million passengers in 2007, up from an
estimated seven million this year, Suherman said, adding the
carrier will concentrate on its domestic market which is still
largely untapped.
Adam Air
has also reported to be in talks with Australia’s Qantas,
reported to be interested in the upstart’s route permits. The
company began operations in 2003.
POWER
IAEA
Backs Nuclear Plant
The
International Atomic Energy Agency (IAEA) believes Indonesia has
met all the prerequisites to build a nuclear power plant and
that it will not develop nuclear weapons.
"Nuclear is
the energy of the future, so the development of a nuclear power
plant should not be monopolized by the rich countries alone.
Poor countries should also be given the chance to use nuclear
energy in power generation," IAEA public information director,
Marc Vidricaire said during a discussion on nuclear energy in
Jakarta
on Tuesday (7/11/06).
The IAEA
supports the development of nuclear energy to meet public demand
for a sufficient electricity supply, said Vidricaire. He also
pointed out that nuclear technology has been used in various
fields such as health, food production, and water resources
exploration.
Read more
He conceded however that the peaceful application of the
technology could be easily abused to develop nuclear weapons.
Thus, a number of countries have been discouraged to apply
nuclear energy, while other countries, such as Indonesia, are
free to pursue it, he added.
Vidricaire
told the audience that so far, there are 442 nuclear power
plants in 30 countries which provide 370 gigawatts or 16% of the
world’s electricity demand. Some 28 other nuclear plants are
under construction in 16 countries, including developing
countries.
Indonesia
has said it plans to have its own nuclear power plant by 2016,
to be built at Ujung Lemah Abang in Central Java’s Muria
peninsula. The first plant is expected to have a capacity of
2,000 MW and an open tender for its construction will be opened
in 2008.
Investors
Sought for Bontang Coal Plant
Indonesia is seeking investors to build a plant to supply coal
steam to the Bontang liquefied natural gas (LNG) facility that
uses natural gas to generate electricity, Mines and Energy
Minister Purnomo Yusgiantoro said on
Thursday
(9/11/06).
The move aims to boost LNG production in Indonesia, the world's
top LNG exporter, which has failed to meet its contractual
commitments to traditional buyers such as Japan, South Korea and
Taiwan because of a slump in production.
"We need to replace gas used at the power plant with coal
steam. We will process that gas to become LNG," Yusgiantoro was
quoted as saying by Reuters.
Separately, Yoga Suprapto, president director of PT Badak, said
about 300 million cubic ft per day of gas are burned to generate
power at Bontang plants.
"If we replace that gas with coal steam then we can process an
additional 21 cargoes of LNG per year," Suprapto said. "We will
open a tender soon to build that coal steam. We expect the coal
steam plant will be on stream in 2009."
Another Badak official, who declined to be identified, said
Bontang LNG will produce 316 cargoes of 125,000 cubic m each of
LNG in 2006 and 310 cargoes in 2007. The official said
Indonesia has a contractual obligation to sell 365 cargoes of
LNG from Bontang each year.
French oil group, Total is the main supplier of gas, delivering
about 2.6 billion cubic ft per day to the Bontang LNG plant in
East Kalimantan. Other suppliers are Chevron Corp and Vico
Indonesia. Vico's shareholders include BP Plc and Italian
energy group Eni SpA. Both supply about 800 million cubic ft
per day of gas.
Badak, which operates the Bontang LNG plant, is 55% owned by
state oil firm PT Pertamina. Vico has a 20% stake, Total 15%
and a consortium of Japanese firms 10%.
OIL
AND GAS
Subsidy
Bill Shrinks
Current
international prices for oil will soon allow the government to
reduce the price of subsidized gasoline, a Mines and Energy
Ministry official said.
"If crude
prices are on the decrease like they are now, then the
government will consequently lower the price of subsidized fuel
as well," Director General for Oil and Gas Luluk Sumiarso was
quoted as saying by Antara on Wednesday (8/11/06).
Crude oil
has lately been trading at about $59 a barrel on the New York
and London markets, well down from its mid-year price level of
$70. This means the global market price of gasoline equivalent
to the subsidized medium-octane Premium type popular in
Indonesia has also dropped to Rp4,740 a liter, nearing Premium's
price cap of Rp4,500 a liter.
"If the
market price goes below Rp4,500, then the domestic selling price
will follow, and the government will not have to subsidize it
anymore," Sumiarso said, adding that the government will
continue to cap gasoline at the Rp4,500 ceiling should crude oil
prices rise again, subsidizing the difference.
The price
decreases will not apply to automotive diesel or kerosene, which
are subsidized at levels far lower than current market rates, he
added.
Pertamina
May Get Subsidized Supply Rights
Downstream
oil and gas regulator, BPH Migas may give state oil firm PT
Pertamina exclusive rights to supply and distribute subsidized
oil products in 2007 as private firms do not have the necessary
network, its chief said Tuesday (7/11/06).
"There is
no other firm so far to meet BPH MIGAS’ criteria to become a
supplier and distributor of subsidized oil products, except
Pertamina," Tubagus Haryono was quoted as saying by Reuters.
"One of the criteria is the firm has to have a supply network in
Indonesia's remote areas."
In 2004,
the government opened up its domestic downstream oil business to
foreign firms, including oil products retail, paving the way for
them to directly import fuel and sell to local customers, after
revoking Pertamina's monopoly in 2001. But BPH MIGAS evaluates
the supply and distribution rights of subsidized oil products
such as low-octane gasoline, kerosene and diesel every year.
The agency
had given Pertamina exclusive rights to supply subsidized oil
products in 2006 with estimated volumes of 37.9 million
kiloliters (kl).
International firms such as Royal Dutch Shell Plc and
Malaysia's Petronas have several pump stations around Jakarta to
retail high-octane gasoline, and have expressed interest in
participating in also supplying subsidized oil products.
Haryono
said Indonesia is expected to consume 37.9 million kl (237
million barrels) of subsidized oil products in 2007, or 17
million kl of low-octane gasoline, 11 million kl of diesel oil
and 9.9 million kl of kerosene. The figures are the same as
2006.
Total
Makes New Gas Find
French oil major Total said on
Tuesday
(7/11/06) it had made a new gas
discovery between the Tunu and Peciko fields in the offshore
Mahakam block in
Kalimantan.
The Tunu Great South-1 well encountered a number of gas
reservoirs that confirm the existence of an extension of the
southern zone of Tunu, Total said, according to Reuters. It
added that it would carry out a production test to confirm the
find, and further wells will be drilled in the area to appraise
the potential. The new resources could come on stream by 2009.
Total operates the Mahakam block in a 50-50 joint venture with
Japanese energy company Inpex Holdings Inc.
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