THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
Main Building, Ministry of Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta 10710
Tel: (021) 351-1178 Fax: (021) 351-1186 Website: http://www.ekon.go.id
Trade and Investment News1, 15 September 2008
Highlights
National
 Autonomy is progressing in Papua
 Two people killed in earthquake in South Sumatra
Politics
 Political parties pledge a peaceful campaign in Aceh
 General Election Commission says presidential poll to be held on July 6, 2009
Anti-Terrorism
 Indonesia’s senior terrorism fighter says Western hard-line confounds problems
Health
 Health ministry announces two new bird flu deaths
 Government to intensify program to fight hepatitis C
Law & order
 Court orders the trial of a former senior intelligence officer to continue
Economy
 Central bank governor says cautious approach in place to meet global readjustment
Business briefs
Macroeconomy
 Asian Development Bank chief predicts Indonesia growth at 6.0% to 6.5%
 Tougher stand on tax pays off, says country’s chief tax official
Investment
 Investment during 2008 to grow more than 10% despite global problems, says minister
State concerns
 Government to move freight faster through ports
SOEs
 A House of Representatives committee backs IPO for PT Krakatau Steel
Private sector
 PT Berlian Laju Tanker wins $400 million in loans for new ship purchases
 PT Unilever Indonesia to commission news skin care cosmetics factory
Banks
 Bank Muamalat to open Malaysian branch to boost business
Oil & gas
 Indonesia leaves the OPEC oil producers cartel
Mining
 Tin smelters urge government to set up Jakarta trading market
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This Trade and Investment News is a publication of the Coordinating Ministry for Economic
Affairs of the Republic of Indonesia. Readers are welcomed to forward it in its original form but no
reproduction is allowed without permission
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NATIONAL
Special autonomy is progressing in Papua
US ambassador to Indonesia Cameron Hume met with Papua People’s Council (MRP) leaders on Friday
and held intense discussion on the progress of special autonomy implementation in the region, Antara
reported.
"US ambassador Cameron Hume came to the MRP office and discussed the implementation of Papua’s
special autonomy. It was a routine activity by the ambassador in observing developmental progress in
Indonesia, including in Papua," MRP vice chairman Frans Wospakrik said after the meeting.
He said one of the items on Hume’s agenda was to take a close look at the development of the
implementation of Law No. 21/2001 on special autonomy for Papua and wished to hear the MRP’s
perspective, he said.
Wospakrik said the MRP told Hume that autonomy was still being implemented and improvements are
ongoing.
The US ambassador said he had received information that Papua obtains large sums of autonomy funds
and wanted to know if they were being spent well.
"We responded by saying there are indeed problems in Papua but we look to see how the fundamental
rights of the indigenous people of Papua are being met and make sure they feel well protected in their
homeland," he said.
Two killed, 60 injured in S. Sumatra quake
Two people were killed when a 5.6-magnitude earthquake rattled South Sumatra on Tuesday at 10:07
AM, Kompas reported.
One of the victims was reportedly inside her home in Jarai district, Lahat regency, when it collapsed.
The Health Ministry’s crisis center head, Rustam Pakaya, said at least 60 people were injured, 10 of them
hospitalized.
“Also, 353 houses and a community health center were damaged,” he said, adding that local authorities
were still evacuating victims and providing relief supplies.
The quake's epicenter was located 51 km southwest of Tebing Tinggi, Bengkulu, at a depth of 10 km. Two
aftershocks of 2.7 and 4.4 magnitude hit the same area several minutes after the initial quake.
None of the quakes triggered a tsunami alert.
POLITICS
Parties pledge campaign peace in Aceh
Political parties in Aceh province pledged peace on Friday for the first national elections since government
and rebel forces signed a deal to end decades of war, Agence France-Presse reported.
Leaders of all but four of the 44 parties that will contest the national and provincial elections in Aceh next
April read out their pledge in front of the grand mosque in Banda Aceh, the provincial capital.
As part of efforts to secure what the declaration called "enduring peace" in the province, party leaders
vowed to abide by electoral rules and not to engage in intimidation, provocation or violence.
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Rebels from the Free Aceh Movement (GAM) signed a peace pact with the Indonesian government in
Helsinki in 2005, giving up their fight for independence in return for broad-ranging autonomy.
The deal ended almost three decades of violence that claimed more than 15,000 lives.
A gubernatorial election in 2006 proceeded with relatively little trouble and a former rebel leader was
named the winner.
GAM members have formed the Aceh Party (Partai Aceh), chaired by the former guerrilla commander
Muzakkir Manaf, which ICG said is the party to beat in next year's vote.
The provincial police chief, Inspector General Rismawan, told reporters that his officers will conduct
special operations to help ensure a calm campaign. "I'm certain the election in Aceh will be peaceful," he
said.
Police chief denies vice presidential ambitions
Responding to rumors circulating among journalists, National Police Chief Gen. Sutanto said he has yet
to consider what he will do after he enters retirement at the end of this month, The Jakarta Post reported
Friday.
"I am aware of my capacity. My capacity is in the field of police work," he told reporters in Jakarta, adding
he had no thoughts on what he would become after reaching pension age. “I must be aware of our
capacity if chosen as the vice president," he said.
The president sent a letter to the House of Representatives nominating head of the National Police's
detectives and crime unit, Comm. Gen. Bambang Hendarso Danuri, to replace Sutanto.
KPU sets date for presidential election
The General Election Commission (KPU) set July 6, 2009 as the official date for next year’s presidential
elections, KPU chairman Abdul Hafiz Anshary said Thursday, Antara reported.
Anshary said the date was chosen in anticipation of the possibility of a run-off election, which would be
held on September 21, 2009. “The new president and vice president will be inaugurated in October,” he
added.
He also said that coordination between KPU and the House of Representatives must be prepared to
anticipate any potential dispute in the presidential election by finishing the presidential election draft bill,
adding the KPU will publicly discuss the presidential election schedule by January at the latest.
Meanwhile, KPU member I Gusti Putu Artha said if there is a run-off election in for the presidency then the
old Law on presidential elections must be revised. “But if it is only conducted in one round, there is no
need for revision,” he added.
Earlier, the KPU set the date for the legislative election on April 9, 2009.
Last week, the KPU announced it received verification of 170.9 million voters for next year's elections,
Tempo reported.
“The number does not count voters living outside the country,” said KPU member Abdul Azis, adding that
the KPU will start arranging the permanent voter list from October 1 to 10.
MPR, DPD discuss constitutional amendments
The People’s Consultative Assembly (MPR) and the Regional Representative Council (DPD) on Monday
began discussions on forming a committee to study amendments to the constitution, Antara reported.
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The joint meeting was presided over by MPR chairman Hidayat Nur Wahid and attended by all faction
heads at the MPR.
DPD secretary Ichsan Loulembah said the debate on the committee marked the first meeting held to
prepare for a fifth constitutional amendment.
Some factions, said Loulembah, voiced opposition to any additional constitutional amendments during the
joint session. They included the Indonesian Democratic Party of Struggle and National Mandate Party
factions.
Loulembah said that although factions still had varying opinions on amendments to the constitution, the
DPD will remain consistent in striving for constitutional changes.
The MPR dissolved an earlier constitutional commission in April 2004 which recommended a fifth
constitutional amendment be proposed before the next MPR general session in 2009.
"The DPD supports the setting up of a special team to study constitution changes. The team’s members
should comprise faction members from the MPR, prominent national figures and academics," Loulembah
said.
President Susilo Bambang Yudhoyono earlier discussed a plan to amend the constitution with leaders at
the MPR and the DPD in which all agreed constitutional amendments should top the post-election agenda
next year.
ANTI-TERRORISM
West 'makes terror fight harder': anti-terror chief
Indonesia's head of counter-terrorism said Western governments have made it harder for moderate
Muslims to tackle terror in their own countries.
Counter-terrorism desk chief at Coordinating Ministry of Political, Legal and Security Affairs Ansyaad Mbai
said Western governments have made it harder for moderate Muslims to tackle terror in their own
countries, the BBC reported on Friday.
Mbai said each country faced a unique situation in its fight against terrorism, and that there was no onesize-fits-all.
He said that there needed to be a balance between force and negotiation, and that war - as pursued by
America in Iraq and Afghanistan - was not an effective strategy against terrorism.
"The situation in Iraq and Afghanistan makes it more difficult for us, for moderate Muslims, to convince the
radicals that the war in Iraq is not an attack against a Muslim country," he said.
Mbai told the BBC that Indonesia's own fight against terrorism relied on a much softer approach. He
suggested other countries should also apply similar tactics alongside military force.
In the past few years, Indonesia has managed to halt those attacks and break down the country's main
terror network.
The government has used a softer and sometimes controversial approach, including using former
militants to negotiate with radical cells, and spread a more moderate message.
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HEALTH
Health Ministry reports first bird flu cases since June
Bird flu killed two Indonesian men in July, the health ministry said, in its first reports of cases in almost
three months, Bloomberg reported.
Both fatalities occurred in Tangerang, Banten, according to the Ministry of Health. No cases of the H5N1
strain of avian influenza were reported in August, the ministry in Jakarta said in a statement on its web
site Tuesday.
The H5N1 flu strain is known to have infected 385 people in 15 countries since 2003, according to the
WHO. Almost two of every three cases were fatal. Most infections were caused by contact with infected
poultry, such as children playing with them or adults butchering them or plucking feathers, according to
the WHO.
Govt. to intensify hepatitis C program
The Health Ministry will widen and intensify recording the number of hepatitis C patients in Indonesia to
develop a better surveillance system to help overcome the disease, Kompas reported.
According to Health Minister Siti Fadilah Supari on Thursday, prevention, medical treatment and
surveillance are the three main strategic keys in overcoming the disease. The strategies are meant to
decrease the spread of the disease and its effect and to raise awareness of the virus.
In the first stage, the ministry recorded 5,870 cases of hepatitis C patients in 11 provinces, including
Jakarta, North Sumatra, South Sumatra and Bali. According to the data, 1,980 of the patients are aged
between 30 to 39 years old.
From the total, 84% of the patients are male, in which 41% of them are intravenous drug users.
In the second stage, the ministry will record the number of hepatitis C patients in 10 provinces, including
Riau, South Kalimantan, Yogyakarta and West Nusa Tenggara.
Based on data from the World Health Organization, seven million people in Indonesia are infected with
hepatitis C and in 90% of the cases patients do not realize they are infected until symptoms begin
showing after several years.
“Thousands of new hepatitis C cases appear every year in the country. Some cases develop into chronic
hepatitis, cirrhosis and liver cancer,” said Ali Sulaiman, the head of hepatitis work group at the Health
Ministry.
Hepatitis C is caused by a virus which can be transmitted through contact with blood, including through
sexual contact where the two parties' blood is mixed, and can also cross placenta.
LAW AND ORDER
Court to go ahead with Muchdi murder trial
The South Jakarta District Court on Tuesday ruled it would continue with the trial of former top intelligence
official Muchdi Purwopranjono, charged with premeditating the murder of a prominent human rights
campaigner, The Jakarta Post reported.
The court dismissed pleas by the defendant, a former State Intelligence Agency (BIN) deputy chief, and
his lawyers.
Last week, Purwopranjono pleaded not guilty to ordering the 2004 murder of Munir Said Thalib, claiming
the indictment against him was flawed and based only on assumptions in determining his motives in the
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murder.
The panel of judges, however, rejected objections filed by Purwopranjono’s lawyers and declared the
prosecutors' indictment was not flawed.
"Because the indictment is lawful, the trial of Purwopranjono must continue," presiding judge Suharto told
the packed courtroom.
He said the indictment determining the defendant's motives for murdering Thalib would be investigated in
upcoming hearings, in which 19 witnesses are scheduled to testify.
During the first hearing two weeks ago, prosecutors alleged Purwopranjono sought revenge against
Thalib, who was instrumental in the defendant's dismissal as head of the Army's Special Forces
(Kopassus) only 52 days after his inauguration in 1998.
In an investigation by the Commission on Missing Persons and Victims of Violence (Kontras), Thalib
revealed that several Kopassus soldiers were involved in the abduction between 1997 and 1998 of 13
activists critical of the government.
The incident led to Purwopranjono’s dismissal, serving as a slap in his face because it effectively ended
his military career, prosecutors said.
The judges also rejected objections from defense lawyers that the case fell outside the jurisdiction of the
South Jakarta District Court because the murder occurred outside Indonesia.
On September 7, 2004, Thalib was found dead from arsenic poisoning on board a Garuda Indonesia flight
from Jakarta to Amsterdam via Singapore. Former Garuda pilot Pollycarpus Budihari Priyanto was
sentenced to 20 years in prison for his role in the murder.
ECONOMY
Bank Indonesia takes ‘cautious’ stance
Central bank governor Boediono said on Friday the bank would continue to operate in the market to
ensure stability of the rupiah but policy responses would be cautious, Reuters reported.
The rupiah fell to a seven-month low on Friday after weakening since earlier August, raising speculation
that Bank Indonesia (BI) may have to keep monetary policy tighter for longer than expected.
The rupiah fell on Friday to 9,465 per dollar, its lowest level since January, before firming to 9,440.
The currency had been hit in recent days as investors worried about a withdrawal of foreign funds from
the high-yielding bond market after a deficit in the country's trade account.
"We will always be in the market," Boediono replied when asked about the rupiah's weakness. He has
said in the past the phrase does not necessarily mean currency intervention. It could also refer to market
monitoring.
"We certainly have to respond to these changes in a fundamental way, meaning we will respond to
changes which are fundamental, not changes that are temporary," he told reporters.
"I think our response should not be excessive, whether in regards to interest rates or exchange rates."
The recent declines in the stock market and the rupiah were part of a global adjustment process,
Boediono said, adding all countries would have to adjust to slowing world economic growth, The Jakarta
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Post reported him as saying.
Only those nations with good fundamentals -- including sound economic growth, controllable inflation, a
healthy state budget, an acceptable rate of debt and favorable political conditions -- would remain strong
throughout the adjustment process, he said.
"I think we have all the fundamentals. And if we make the right adjustments, we will become a sound
country (economically) in the end," he added.
Vice President Jusuf Kalla said the fall in the currency should not be cause for concern. The currency's
level was still in line with budget projections and a weaker rupiah would support exports, Reuters added.
"Of course, for importers and consumers (the rupiah fall) is not good, but it is good for exporters," he told
reporters.
"The state budget targets (the rupiah) at around the current levels, between 9,400 and 9,500 (per dollar).
So we do not need to worry with (the rupiah) at the current levels."
The stock market fell sharply during the week, falling another 3.5% on Friday with the composite index
ending trading at 1,804.06 points on Friday, the lowest closing level since March 22, 2007, Agence
France-Presse reported.
Analysts said they expected continuing vulnerability, though any slide was likely to be less dramatic.
"As long as oil is still going down, the commodities sector is still vulnerable to experiencing a correction,"
said Lanang Trihardian at Syailendra Capital.
Some of the pressure was coming from a stand-off between crude palm oil producers. Analysts said
stocks were being kept in the country as producers looked for better prices, while buyers were holding off
in the hope that prices would actually fall further.
Crude palm oil prices have fallen almost 40% in the last two months and nearly 50% from their peak in
March.
Indonesia, the world's largest producer and exporter of crude palm oil, has already slashed its export tax
on the commodity to 10% from 20% in July, following the fall in prices.
In the meantime, car sales were down 3.8% on month in August as higher interest rates began to stifle
demand.
BUSINESS BRIEFS
MACROECONOMY
ADB predicts 6.0% to 6.5% growth
Indonesia's economy will likely grow between 6% and 6.5% this year, despite high inflation and monetary
tightening, Asian Development Bank (ADB) president Haruhiko Kuroda said Wednesday, Dow Jones
reported.
"In the long term growth could even accelerate to 7%," Kuroda said. He didn't elaborate.
Bank Indonesia's most recent forecast is for 6.2% growth in gross domestic product this year and 6.3%
growth in 2009. Indonesia's GDP grew by 6.3% in 2007.
Kuroda also said the ADB has allocated $1 billion that can be loaned to Indonesia to support economic
growth. “In the next three years we are still calculating but we will provide approximately $1.2 billion (in
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total loans)," he said.
Kuroda said Indonesia's inflation rate has likely peaked and should decline.
Kuroda reiterated that the ADB plans to issue local-currency bonds to fund its Indonesian projects, but
said it is assessing market conditions and doesn't have a fixed date for the issuance.
The ADB previously said it would issue an indicative Rp1 trillion in bonds in the third or fourth quarter of
this year.
Tougher tax stance pays off
Indonesian tax revenue in August, excluding the oil and gas sector, jumped 40.5% from a year ago, as
tougher action by the authorities led to improved compliance, Director General for Tax Darmin Nasution
said, Reuters reported.
The government has taken a much tougher stance against individuals and companies over tax payments
since 2006, when Nasution was appointed director general, in a bid to increase revenues.
Now it hopes to widen the tax net further, after parliament passed the government's long-awaited tax bill
on September 3, introducing lower tax rates and providing incentives for Indonesians to register as
taxpayers.
"Revenue increased because the tax office has been modernizing, implementing new methods," said
Nasution at a meeting with reporters on Tuesday.
He said the tax office had set benchmarks for various sectors and used this to check whether companies'
tax payments were sufficient.
In cases where corporate tax payments were well below the benchmark, or where individuals were not
registering to pay tax, the tax office has stepped up its investigations, he said. "People would rather pay
than be investigated," Nasution added.
For years, it was common practice to pay bribes to tax officers to avoid having to pay taxes or reduce the
tax bill.
But Finance Minister Sri Mulyani Indrawati, a reformer who has vowed to clean up key government
officers, has introduced changes in the tax and customs departments in a bid to raise state revenues and
improve efficiency.
The finance ministry has set a tax revenue target of Rp609.2 trillion for 2008, or about 70% of the total
budget revenue, and has forecast tax revenue will rise by 19% to Rp723.9 trillion in 2009.
Tax revenue in August, minus tax from oil and gas, climbed to Rp46.132 trillion, from Rp32.843 trillion in
August last year. For the first eight months, tax revenue was Rp318.74 trillion, up 46% from Rp218.33
trillion a year ago.
August consumer confidence improves
Consumer confidence improved in August as the impact of fuel price rises subsided, but consumers were
still largely pessimistic, expecting costs to increase in the near term, two surveys showed, Reuters
reported.
A central bank survey of 4,600 households in 18 cities showed the consumer confidence index rose to
89.3 in August from 82.1 in July.
A reading below 100 means consumers are pessimistic. The last time the index was above 100 was in
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November 2007.
"Respondents expect prices in general to increase in the next three and six months," the central bank
said in the report posted on its website.
A separate survey of 1,700 households across six provinces by the state-run Danareksa Research
Institute also showed an improvement in sentiment, with the index rising to 75.7 from 72.7 in July.
"The impact of the fuel price hike only lasted for two months. Consumers started to regain confidence but
the government needs to maintain, especially, prices of basic foodstuff," said Danareksa Institute
economist Purbaya Yudhi Sadewa.
The government raised the price of subsidized fuel in late May by an average of 29%. The move sparked
some protests, as well as pushed up inflation to double digits and forced the central bank to raise interest
rates.
Annual inflation eased slightly to 11.85% in August from 11.9% in July, which was the highest level in
almost two years.
Analysts say price pressures will remain high due to steady demand, especially for food, during the
fasting month of Ramadhan and the Idul Fitri holiday.
FX reserves on track to reach $60B: BI
Indonesia is still on track to accumulate $60 billion worth of foreign exchange reserves by the end of this
year, central bank deputy governor Hartadi Sarwono said, Reuters reported.
His remarks came after the country's foreign exchange reserves fell to $58.36 billion in August from
$60.56 billion a month earlier partly due to efforts by Bank Indonesia (BI) to stabilize the rupiah.
"(Forex reserves) have to be at least four months worth of imports and government debt (repayment).
That's the best thing and that is what we are trying to maintain," Sarwono said, adding that the amount
should be an equivalent of $60 billion.
Customs receipts reach 73.61% of target
Customs tax receipts until September 2 this year reached Rp33.65 trillion ($3.6 billion) or about 73.61% of
the full-year target of Rp45.72 trillion, Asia Pulse reported.
According to an online report from the Customs and Excise Office, import duty receipts in the period
reached Rp14.80 trillion or about 93.55% of the full-year target of Rp15.82 trillion.
Export tax revenues reached Rp12.52 trillion or about 112.24% of the target set at Rp11.16 trillion in the
state budget.
Total state revenues received by the Customs and Exercise Office until September 2 reached Rp60.97
trillion while the revised 2008 state budget set a full-year total of Rp74.70 trillion.
H1 non-oil and gas exports over 50% of target
Non-oil and gas exports reached $54.4 billion as of June, exceeding 50% of the full-year target of $102
billion, Antara reported.
"Our non-oil and gas exports have been increasing in the past four years by an average 18%," Secretary
General of the Trade Ministry Ardiansyah Parman said at a meeting with the House of Representative's
Commission VI.
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He said Indonesia's total non-oil and gas exports in 2007 reached $92 billion.
"Non-oil and gas exports to China and Taiwan rose sharply compared to those to the US, Japan, Europe
and Singapore in 2007," he said.
Exports to these economies reached $26 billion or 20% of Indonesia's total exports.
INVESTMENT
Investment up more than 10%: Minister
Investment in Indonesia should grow more than 10% this year despite global financial turmoil, Trade
Minister Mari Pangestu said Wednesday, Agence France-Presse reported.
"We are still optimistic that investment in Indonesia will grow more than 10% even though the condition of
global markets is very bad," she told reporters.
Total investment last year was Rp135 trillion ($14.3 billion), she said.
Next year authorities may launch initiatives to encourage foreign investment in sectors other than
commodities, Pangestu said.
Indonesia can also export more to China, India and the Middle East to offset weakening demand in trade
partners like the United States, she added.
Bank Indonesia, the central bank, said last week that Indonesia posted a second-quarter current account
deficit of $1.5 billion, its first in almost three years.
Govt. disputes investment climate ranking
The government has questioned a new report from the World Bank's investment arm, the International
Finance Corporation (IFC), which says Indonesia has slipped two notches down its list for 2009 to 129 of
181 countries surveyed.
The IFC official overseeing operation, business enabling and environment advisory services, Fararitri
Widyadari, said the slip was mainly because the government had imposed a high minimum starting
capital for business.
"The government raised the starting capital from Rp5 million to Rp12.5 million," Fararitri said, adding that
79 other countries surveyed did not impose a starting capital requirement.
A press release issued on Wednesday night by the coordinating ministry of economic affairs only hours
after the release of the IFC report said the higher minimum start-up capital had been imposed to ensure
that people starting companies were bona fide.
It added that the cost of setting up a business appeared to be the only reason for Indonesia to be seen as
performing worse, when many other steps had been taken to improve the business climate.
The statement also noted that investment was improving, evidence that its reforms were producing a
positive effect.
An independent analyst who attended the launch of the IFC report also noted that while it was called the
2009 report, it actually used data from 2007 and did not take into account a range of steps taken this year.
IFC Indonesia country manager Adam Sack said in a statement sent to The Jakarta Post that the IFC did
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recognize that the government was working to improve business conditions.
"We know the Indonesian government is committed to improving the business climate. There is a pipeline
of reforms that I am hopeful will positively impact Indonesia's Doing Business ranking next year," he said.
Suramadu bridge completed in March
The government is determined to complete the long-awaited Suramadu bridge megaproject worth Rp3
trillion ($330 million) by March next year at the latest, The Jakarta Post reported.
The 5.4-km bridge connecting Surabaya in East Java and Bangkalan on Madura Island could start
operation in April, acting East Java Governor Setya Purwoko said.
Setya said the government has agreed to seek an additional loan of Rp83 billion from the Surabaya
municipal administration and the Export-Import Bank of China.
The loan will be spent to complete the construction of the bridge's central span and approaches, which is
part of the 15% of work still remaining to be completed on the project, and to appropriate the remaining
plots of land for access to the bridge both in Surabaya and Bangkalan.
The provincial government and the East Java Development Bank (Bank Jatim) have agreed to pay Rp40
billion in advance. The remaining Rp43 billion would be provided by the Chinese Bank, so that the
suspended work for the central span and approaches could resume soon, he said.
The bridge will link Madura with the mainland in a 10-minute trip, replacing the current crowded ferry
transportation, and will open up vast areas of under-utilized land on Madura.
Quantum to build bio-ethanol plant in Sumba
The regional administration of Sumba Barat Daya and Quantum Petroleum signed an agreement to invest
$350 million in bio-ethanol industry in the regency, Asia Pulse reported.
The subsidiary of Australia's Quantum Group said it has completed studies of the area where it will grow
cassava to supply feedstock of a bio-ethanol plant to be built in that area.
Quantum Petroleum Executive chairperson Ralph Michael told the newspaper Bisnis Indonesia his
company will invest $100 million in 100,000 hectares of cassava plantations.
Malaysia's BCHB completes acquisition of insurer
Bumiputra-Commerce Holdings Berhad (BCHB), Malaysia's second largest lender, said life insurer PT
Asuransi Jiwa John Hancock Indonesia (JHI) is now its subsidiary following the completion of its
acquisition, Asia Pulse reported.
BCHB said its indirect subsidiaries, Commerce International Group Berhad and PT Bank CIMB Niaga,
have completed the acquisition of the entire stake in PT Asuransi Jiwa John Hancock Indonesia (JHI)
from John Hancock Life Insurance Company and PT Indras Insan Jaya Utama for Rp76.472 billion ($8.2
million).
The purchase consideration is based on the net asset value of JHI plus premium of Rp4.5 billion, BCHB
said in a statement to Bursa Malaysia.
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STATE CONCERNS
Govt. to reduce port overloads
In addition to accelerating its inspection process, the government is looking to reduce overloading and
delays at Jakarta’s Tanjung Priok port by penalizing traders who fail to remove goods that clear customs,
The Jakarta Post reported.
A government-appointed team charged with assuring the smooth flow of export and import goods will
arrange a series of meetings to provide solutions to the port's overloading problems, Trade Minister Mari
Pangestu said.
Among other problems causing delays is the practice of traders who secure a clearance, but choose to
store their goods at the port, she said, adding the appointed team would investigate the problem.
"It now takes three to eight days for a container undergoing the redline inspection to go from unloading to
customs clearance, with another few days before it's picked up by the importer," Pangestu said Thursday
after an inspection at one of the port's terminals.
Many importers choose to store their containers "for months" as "it is more expensive for them to pick the
goods up immediately and keep them in warehouses than to keep them here," said a source who spoke
on condition of anonymity.
Nearly 185,000 containers move in and out of the port every month, up from 160,000 containers per
month last year, said Abdullah Syaifudin, president director of state port operator PT Pelindo II.
"The team is considering applying disincentives in the foreseeable future for importers who have obtained
customs clearances but continue to store goods at the port," Pangestu said. The team will also formulate
a set of incentives for fast collection of goods.
The team, led by Coordinating Minister for the Economy Sri Mulyani Indrawati, includes, among others,
Transportation Minister Jusman Syafii, Public Works Minister Djoko Kirmanto and Pangestu.
VAT on imported textile machinery abolished
The finance ministry has officially abolished the value added tax (VAT) on textile machine imports as part
of the country's restructuring program in the textile industry, Asia Pulse reported.
The abolition of the VAT was in reply to a request by the Indonesian textile association (API) late last year,
The Jakarta Post said.
API chairman Benny Soetrisno said he would seek further details on the announcement as he did not
know whether the decision is retroactive.
Last year the government launched a revitalization program providing soft loans and subsidies for banks
lending to modernize and improve the competitiveness of the industry.
Government to audit timber stocks
Forestry companies will be required to have their wood stocks inspected from the beginning of the
purchasing chain, to help ensure the companies do not receive stocks from illegally felled timber, The
Jakarta Post reported.
Hadi Pasaribu, the Forestry Ministry's Director General for the Management of Forestry Production, said
the ministry would appoint several independent assessor companies to verify the flow of timber from
upstream to downstream.
"The new verification system will involve all stakeholders, including NGOs," Pasaribu said.
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The new Wood Legality Verification System (SVLK) is expected to replace the current system run by the
Forestry Industry Revitalization Agency (BRIK), which only inspects legal documents for the wood.
Under the proposed system, assessors will be deployed to conduct field checks on forests where the
wood is logged.
Companies that use timber as a raw material are also required to report the origin of their wood supplies
to the government for legal certification. Those failing to comply will risk being prosecuted or losing their
operating licenses.
Taufiq Alimi, Indonesian Ecolabeling Institute (LEI) Executive Director, said the new system was
necessary because several importing countries, including Britain and Japan, required documents
certifying the legality of the wood and the sustainability of the forests as the source of the wood.
LEI spokesperson Indra Setiadewi said the independent assessors would also function as watchdogs,
legality verifiers, and license authorities.
SOEs
House committee supports Krakatau Steel IPO
The privatization working committee of House Commission VI has signaled it will agree to PT Krakatau
Steel`s plan to sell shares through an initial public offering (IPO), Antara reported.
"What is clear is that discussions at committee level have been completed. The plan will now be
discussed by Commissions VI and XI and the result will be submitted to the leadership of the House of
Representatives (DPR)," Commission VI chairman Totok Daryanto said on Tuesday.
A final meeting will be held in the next two or three days so that the process will be completed soon, he
said. "Hopefully no problem will arise during the deliberations so that the results could be submitted to the
DPR Speaker for use to issue an approval for the IPO," he said.
Daryanto said however that the committee had recommended the company sell not more than 35% of its
shares. The office of the minister for state-owned enterprises has been pushing for an IPO this year at
Krakatau, which needs funds for expansion.
An earlier move for a private placement involving a major international bidder was rejected by the House.
Krakatau could hope to get around Rp4 trillion for an IPO of 35% of its shares.
The company`s president director, Fazwar Bujang, said he could not predict when an IPO would be
launched, since discussions at the House had not been finalized.
Meanwhile Bujang said PT Krakatau Steel plans to build a new factory in Cilegon, Banten, next year to
produce steel plates with an annual capacity of 1.5 million tons.
Around Rp5 trillion ($555 million) in funds it hopes to raise from an IPO will be used to help finance the
project, Bujang said.
The factory to be built in its industrial estate in Cilegon will produce steel plates for the shipbuilding
industry, the newspaper Investor Daily said.
Bujang said the country's largest steel producer may still need to seek bank loans to finance the project.
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Gresik looking to offshore cement ventures
Cement maker PT Semen Gresik is considering acquiring cement companies in neighboring countries to
increase output, an executive at Indonesia's largest cement maker by output said, Dow Jones reported.
"We are exploring the possibility of buying (cement companies in) countries like Thailand, the Philippines
and Vietnam," Gresik vice president director Heru Adiningrat said. He didn't specify the target companies.
He said the company is planning $1.6 billion in capital expenditure until 2011. "Some of the funds will be
used to help finance the acquisition plans," he added.
Meanwhile, Asia Pulse reported that Adiningrat said that the company would need around $300 million
next year in connection with its plan to build new factories in Indonesia.
He said the requirement could be met by banks or other sources. "It depends. We will take the one which
is most favorable," he said.
PRIVATE SECTOR
Berlian Tanker gets $400M loan for new ships
Publicly listed cargo shipping company PT Berlian Laju Tanker has secured a $400 million loan from a
bank syndicate that includes Bank Mandiri and Fortis Bank. The company needs $500 million to buy 20
units of tankers for liquid cargoes including chemicals, crude oil and oil fuels, Asia Pulse reported.
Company president Widihardja Tanudjaja said the first delivery of two ships will be this year and other
deliveries would continue until 2012. The ships are being ordered from Japan and South Korea with
prices averaging $25 million each, Tanudajaja said.
He said the company will also have new tankers for the transport of liquefied natural gas (LNG) from the
Tangguh LNG plant in Papua to a number of foreign countries.
The company is also studying a plan to expand operation to the coal transport business, the newspaper
Bisnis Indonesia reported him as saying.
PT Unilever Indonesia to commission new factory
Publicly traded consumer company PT Unilever Indonesia hopes to start operation of a new factory
producing skin care cosmetics by the end of this year, Asia Pulse reported.
Corporate secretary Franky Jamin said construction of the $60 million factory will be completed as
scheduled despite the increase in the prices of steel and other building materials.
The new factory in Cikarang, Bekasi, will increase the production capacity of the company and reduce the
burden of its old factory in Surabaya which is operating at peak capacity.
Jamin said Unilever Indonesia will spend Rp677 billion ($75 million) in capital expenditure this year.
The company reported an increase of 23% in sales in the first half of this year, the newspaper Bisnis
Indonesia said.
Asian Agri to start operation of new bio-diesel plant
The Asian Agri Group said it will commission a new bio-diesel factory with a capacity of 400,000 tons a
year next week, Asia Pulse reported.
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The Rp350 billion ($37 million) factory built in Dumai, Riau, will use crude palm oil (CPO) as the
feedstock, company director Semion Tarigan said.
Tarigan said with the high price of CPO, the selling price would be too high for domestic market.
Therefore, the company plans to export its entire production.
He told the newspaper Bisnis Indonesia the factory, construction of which started in 2006, will start with a
capacity of 200,000 tons a year to be increased later to 400,000 tons.
BANKS
Muamalat to establish Malaysian investment company
Bank Muamalat is to establish the First Islamic Investment Bank Ltd in Malaysia with an initial capital of
$10 million, its president director Andi Buchori said, Antara reported.
"We have received the license from Labuan Offshore Financial Services Authority (LOFSA) in Malaysia
and the letter of consent from Bank Indonesia, the central bank, to establish the investment company in
the country," Buchori said.
He said the company would start up in October this year and Bank Muamalat would add $100 million to
its capital, while investment for its infrastructure development was predicted to be around $1 million.
According to Buchori, First Islamic Investment Bank Ltd would have its main office in Kuala Lumpur and
its secretariat office in Labuan, Malaysia.
Buchori said the purpose of establishing the company in Malaysia was to net international investors,
especially those from the Middle East and North Africa.
"Labuan has been known by international investors including those from the Middle East who use foreign
SVP," Buchori said, adding that the establishment of an investment bank was aimed at attracting funds
from investors interested in medium- and long-term equity financing.
Meanwhile Muamalat said it recorded a 28% increase in outstanding financing to Rp10.176 trillion ($1.1
billion) in August from Rp7.946 trillion a year earlier, Asia Pulse reported.
The shariah bank hopes to raise the financing to Rp12.5 trillion by the end of this year, Buchori said.
Buchori said shariah bonds are contributing to the increase in financing performance, adding the bank
has already issued shariah bonds valued at Rp300 billion that helped improve its capital adequacy ratio
from 11.6% to 12.2%.
The ratio, which is well above the minimum level of 8% set by the central bank, gives enough room for the
bank to plan further expansion, he said.
Permata’s shariah unit posts 441% profit rise
The shariah unit of Permata Bank posted Rp20.9 billion ($2.3 million) in net profit in the first half of this
year, an increase of 441% from Rp6.1 billion in the same period last year, Asia Pulse reported.
The surge in net profit came with an increase in shariah financing which resulted in a 356% hike in
operating income to Rp37.6 billion, Adrian A Gunadi, head of the shariah unit said.
Gunadi said the shariah unit also succeeded in reducing its non-performing financing (NPF) from 28.3%
to 4.1%.
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An increase was also recorded in its assets to Rp1.2 trillion from Rp874.4 billion, the newspaper Investor
Daily said.
Mandiri to lend Rp1.8T to Timah
State-owned tin mining company PT Timah said it has secured a loan commitment of Rp1.8 trillion
($190.8 million) for Bank Mandiri to finance business expansion, Antara reported.
The loan is part of a Rp5 trillion loan pledge by a number of local banks including PT Bank Rakyat
Indonesia made earlier this year, corporate secretary Abrun Abubakar said.
The world's largest tin producing company wants to use the fund to acquire coal mines and build power
plants in East Kalimantan, South Kalimantan and South Sumatra, Abubakar said.
Abubakar said the company's tin production is expected to reach 50,000 tons this year, falling short of its
previously set target of 60,000 tons.
Production from on-shore mines is not up to expectation, but the production is not expected to result in a
decline in income, he said.
Sales are still under control; and the price is expected to remain strong at more than $20,000 a ton, he
was quoted as saying by the newspaper Investor Daily.
OIL & GAS
Indonesia leaves OPEC
Indonesia has officially left the Organization of Petroleum Exporting Countries (OPEC), the cartel
announced Wednesday after a meeting in Vienna, Agence France-Presse reported.
"The conference regretfully accepted the wish of Indonesia to suspend its full membership in the
organization and recorded its hope the country would be in a position to rejoin the organization in the not
too distant future," OPEC said in a statement at the end of a meeting.
Indonesia, one of the smallest members of OPEC and the only Asian one, announced in late May that it
intended to withdraw from the cartel as it had become a net oil importer.
Energy and Mineral Resources Minister Purnomo Yusgiantoro said however that his country could rejoin if
production increased in line with an ongoing effort to boost capacity after years of declining investment.
"If our production comes back again to a level that gives us the status of a net oil exporter then I think we
can go back to OPEC," he said.
While other OPEC members have enjoyed windfall profits on the back of high global oil prices, Indonesia,
which joined the organization in 1961, has been unable to get enough of its 4.37 billion barrels in proven
reserves to the market.
Oil production in the archipelago has been in decline since 1995, Yusgiantoro said.
The government earlier this year lowered its oil sales estimate for 2008 to 927,000 barrels a day from a
previous 1.034 million barrels.
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MINING
Tin smelters urge govt. to set up Jakarta tin market
Tin smelting operators grouped in the Bangka Belitung Timah Sejahtera (BBTS) consortium urged the
government to immediately form a Jakarta Tin Market (JTM) to improve their price bargaining power,
Antara reported.
"If the JTM is already operating, we hope we could determine the tin price," BBTS director Patris
Lumumba said.
He said the government needs to prepare the regulation quickly to speed up the operation of the JTM. He
said BBTS members were ready to give inputs and discuss the implementation of the idea.
Director General of General Mining, Minerals and Natural Gas Bambang Setiawan recently underlined the
importance of the JTM, noting that the country's tin production accounts for 40% of global demand for the
commodity.
"We are more appropriate to be a world tin marketing country. Certainly the idea has to be discussed first
with the shareholders and other countries," he said.
He said there would be no financial problem if the tin market was moved from East Kalimantan to Jakarta
but it would be better if transactions were carried out inside the country.
Two tin markets have so far been operating in Kuala Lumpur for the Asian region and in London for
Europe and America.
Indonesia in 2007 produced 93,735 metric tons of tin ingots worth $1,354 billion while production in 2006
reached 118.555 tons worth $913 million, according to trade ministry data.
Antam plans to join coal rush
Publicly listed PT Aneka Tambang (Antam), the nation's second largest nickel producer, is planning to
acquire coal concessions this year to help secure supply for its new coal-fired power plants, The Jakarta
Post reported.
Antam president director Alwin Syah Loebis said recently the company would need a coal supply of up to
five million tons by 2012 for two plants in its mining site at Pomalaa, Southeast Sulawesi.
Currently, the state-controlled company only needs 200,000 tons of coal a year for production processes.
Loebis refused to cite the investment needed for the coal mines or the plant, which would have a capacity
of 150 MW.
He said the plan was part of the company's efforts to cut its soaring production costs following a jump in
oil and coal prices.
Aside from securing energy supply, the shopping spree for coal concessions is also aimed at diversifying
the company's portfolio (to compliment nickel), Loebis said.
Huge declines in global nickel prices have encouraged nickel producers to look for other minerals like
coal, gold, and iron ore to offset losses.
Gem Diamonds restarts Cempaka Mine
Gem Diamonds Ltd said its Cempaka mine had recommenced operations after receiving government
approval for a revised environmental plan and feasibility study, Reuters reported.
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Operations at the mine were suspended for four months after the regional government in South
Kalimantan raised concerns regarding waste water discharge at the mine.
Gem Diamonds said the use of water treatment facilities would not materially increase costs at the mine.
Thai Lanna to open new coal mine by Q4
Thai coal miner and ethanol producer Lanna Resources PCL said it planned to open another mine in
Indonesia by the fourth quarter to help ease the impact of the forced closure of one of its existing mines in
the country, Reuters reported.
The opening had been delayed from earlier this year due to heavy rains, business development director
Srihasak Arirachchkaran said.
"We want to speed up operating this mine because it should help compensate for the second mine," he
said.
Lanna's coal business contributes almost 90% of the company's sales and nearly half of profit.
In July an Indonesian court revoked the license of one of its two mines in the country, which was operated
by its 55%-owned Indonesian subsidiary.
Lanna planned to spend $10 million next year to develop the third mine, which should produce about
50,000-100,000 tons this year, rising to 1.2-1.5 million tons in 2009 and 2 million tons in 2010.
Lanna is 45% owned by Siam City Cement SCCC.BK, Thailand's second-largest cement producer.
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