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, 10 March
Highlights
National
 South Korean, Indonesian leaders agree to boost cooperation
Politics
 Foreign minister says elections should not disturb diplomatic efforts
Terrorism
 Indonesian officials meet Guantanamo Bay detainee Hambali
Security
 Surabaya hosts regional meeting on maritime security
 1.4 million personnel to safeguard elections
Law & order
 House of Representatives goes into recess with only three bills passed
 AGO calls for presidential immunity to be lifted for election disputes
Economy
 Government to start pushing funds for infrastructure into economy by March 18
 Strong investment flows continue in coal mining sector
Business briefs
Macroeconomy
 Central bank trims benchmark rate half a point to 7.75%
 Tax revenues move up 5% in January but rate of growth slows
Investment
 Islamic fund to give $50 million for small and medium enterprises
 Russia’s Reshetnev to build new satellite for Telkom
State concerns
 Indonesia, South Korea to cooperate on energy
 ASEAN signs FTA with Australia, New Zealand, urges open trading environment
SOEs
 Garuda reports Rp683 billion unaudited operational profit
 PT Jasa Marga to spend Rp2.1 trillion on new toll roads
Private sector
 PT Indofood to issue Rp1 trillion in bonds to repay debt
 February car sales up 5.5% on month but sharply down on year
Banks
 Bank Central Asia 2008 profit moves up 67%
Power
 Work on power plant for coal miner PT Bukit Asam to start
Oil & gas
 Six oil and gas fields to come on stream in 2010
Mining
 Thailand’s Unique sets aside $27.6M to acquire coal mine
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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
S. Korea, Indonesia agree to boost cooperation
South Korea and Indonesia agreed Friday to cooperate more closely on a range of issues including
defense, the global financial crisis and alternative sources of energy, Agence France-Presse reported.
South Korean President Lee Myung-Bak and President Susilo Bambang Yudhoyono signed several
agreements after talks at the state palace on the last stop of Lee’s three-nation tour, which included
Australia and New Zealand.
"This meeting will make a big contribution to bilateral and international cooperation," Lee told reporters
after the talks.
"We are facing a world economic crisis. Both countries have had economic difficulties but we will work
hand-in-hand in the future," he added.
The two leaders signed a memorandum of understanding to "cooperate more actively" in security and
defense issues, Lee said.
Both countries are eager to build economic and defense ties and boost cooperation through the
ASEAN+3 forum -- the Association of Southeast Asian Nations as well as China, Japan and South Korea.
Indonesia's trade with South Korea has been soaring in recent years, almost doubling in value in 2008 to
$20 billion, Yudhoyono said.
"We are committed to maintaining investment cooperation between both countries despite the current
global economic crisis," he said.
"Apart from trade and investment cooperation, we also discussed cooperation in other sectors including
information technology, alternative energy, defense and security, Indonesian workers (in South Korea)
and tourism."
Indonesia is the second-largest supplier of liquefied natural gas to South Korea, which is the seventhbiggest country of destination for Indonesian non-oil and gas exports.
POLITICS
Elections should not affect diplomacy: Minister
The upcoming G-20 and G-8 summits in London and Rome are too high a price to skip for Indonesia
even though it will be holding national elections, Foreign Minister Hassan Wirajuda said, The Jakarta Post
reported.
Wirajuda said the elections should not put Indonesia’s efforts to articulate national interests and help
solve global problems at risk in international forums.
“The world keeps changing and the momentum goes our way. We should make full use of the
opportunities while at the same time we take care of our national agenda,” Wirajuda said.
Indonesia has been invited to the key G-20 meeting scheduled to take place on April 2, a week before
legislative elections and President Susilo Bambang Yudhoyono says he will make a brief appearance at
the meeting.
This year’s G-8 host Italy also officially extended an invitation to Indonesia to participate in the meeting of
leaders of the world’s largest economies on July 8-10, which coincides with the presidential election.
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Wirajuda said the invitations constituted the international community’s recognition of Indonesia’s role in
helping tackle global issues.
“G-20 has given us a respectable place. How come we sacrifice the opportunity for the sake of our
domestic agenda?” he said. “We will lose the golden chance on offer if we only focus on domestic
matters,” Wirajuda said.
TERRORISM
Regional extremists wooing support online
As radicals in the region find it harder to operate in the open, they are rapidly turning to the internet to win
support, a new study has found, The Straits Times reported.
Extremists used to just celebrate terrorist victories and spread material from the al Qaeda and Jemaah
Islamiah (JI) terrorist networks online but some are now using the internet to share know-how on hacking
into websites, bomb-making and use of firearms, said the study, conducted jointly by researchers in
Indonesia and Australia.
Sympathizers are also making use of social networking sites like Friendster and Multiply, and posting
exclusive news reports and videos.
Regional governments and law enforcement agencies have done little to stop the rise of online
radicalization, said the authors of the study, Countering Internet Radicalization in Southeast Asia.
Their report noted that while websites inciting violence are subject to criminal laws in some countries,
there are often no specific regulations covering the Internet.
“Some governments don't want to appear un-Islamic by coming down hard on Islamist groups, and some
don't want to appear undemocratic by seeming to rein in freedom of expression in cyberspace,” it said.
The 24-page report was written by a team of researchers: Sulastri Osman and Nur Azlin Mohamed Yasin
from the S. Rajaratnam School of International Studies (RSIS) and Dr. Anthony Bergin and Dr. Carl
Ungerer of the Australian Strategic Policy Institute in Canberra.
They found that online extremism in the region surfaced in early 2000, on Malay- and Indonesianlanguage websites.
Extremist websites typically justify radical ideology and terrorist acts as divinely-sanctioned, and draw on
the Iraq, Afghanistan and Arab-Israeli conflicts to incite hostility against the West, the authors found.
They noted that the number of sites operated by radical and extremist groups or which are sympathetic to
their beliefs had risen from 13 in 2007 to 31 last year.
They added that some 90% of visitors to 10% of the sites they examined were from Indonesia. By
contrast, Singaporeans figured in only two of these sites, accounting for only 0.1% and 0.2% of traffic
respectively.
The authors also detected and monitored 82 individual blogs and social networking accounts sympathetic
to radical views last year - up from zero in 2007.
“This shows that a growing number of individuals, encouraged by propaganda material like the recently
posted last will of Bali bomber Imam Samudra, are lending support to or sympathizing with radical and
extremist groups,” they said.
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Imam Samudra and two other militants behind the 2002 attack on a Bali nightclub were executed last
November.
Jakarta gains access to Hambali
After years of fruitless requests, Indonesian intelligence and counter-terrorism officers have finally met
former Jemaah Islamiah (JI) operations chief Riduan Isamuddin, better known as Hambali, in the US
detention center at Guantanamo Bay, The Straits Times reported.
A senior Indonesian counter-terrorist official and Western police sources confirmed that the meeting took
place about two weeks ago, near the time of US Secretary of State Hillary Clinton's first official visit to
Jakarta.
Sources familiar with the session say Hambali made several admissions about his involvement in terrorist
acts, which are reported to include the 2000 Christmas bombings, the 2002 Bali bombing and the 2003
attack on Jakarta's JW Marriott Hotel.
The Indonesian team included a police colonel from the Detachment 88 counter-terrorist unit and agents
from the National Intelligence Agency (BIN).
Regarded as the key link between JI and al Qaeda, the 44-year-old Hambali was captured in 2003 in a
US Central Intelligence Agency operation in the Thai town of Ayutthaya.
He was flown almost immediately to the US Indian Ocean base of Diego Garcia and later to a secret
location in Jordan, where he was held until his transfer to Guantanamo in 2007.
US counter-terrorism officials had always denied access to Hambali, but that policy changed with
President Barack Obama's decision to close the Guantanamo centre within a year.
SECURITY
RI hosts regional security meeting
Influential delegates from 27 countries at the ASEAN Regional Forum (ARF), including 10 ASEAN
members, kicked off a meeting in Surabaya on Thursday to discuss maritime security in the Southeast
Asian region, The Jakarta Post reported.
Director General for Asia-Pacific and African Affairs at the Foreign Ministry Hamzah Thayeb said although
the issue had been discussed thoroughly in the past, the rapid resurgence of piracy across the globe
demanded the ARF consider boosting security in the region.
Several sea passages in the ASEAN region, such as the Malacca Strait, were key trade routes used by
hundreds of countries for transporting goods and cargo.
Sea transportation through these routes has been disturbed by piracy in the past "and the meeting is
being held to force cooperation focused on coordination and security patrol by countries in their
respective territory, especially in their own economic exclusive zones," Thayeb said.
Thayeb said the meeting was aimed at enhancing technical cooperation among institutions and
integrating the planned education, training and standard operational procedures used to handle security
disturbances in all waters in the region.
Maritime security along the Malacca Strait would be handled cooperatively by not only its border countries
of Indonesia, Malaysia and Singapore, but also Thailand.
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"The four countries can stage joint patrols to ensure security along the strait. Such cooperation should be
also conducted in other water zones of interest to many countries."
He said Indonesia has also established a Navy post on Nipah Islet facing Malaysia and Singapore to help
monitor and handle piracy in the strait.
1.4M security personnel ready for general election
The government will deploy a 1.4 million-strong security force to safeguard democratic elections later this
year, police said, Agence France-Presse reported.
Around 246,000 police and 1.2 million members of its civil protection force will guard polling stations
during upcoming legislative elections and presidential polls, national police spokesman Abubakar
Nataprawira said.
The security force would be responsible for guarding more than half a million polling stations across the
massive archipelago nation, according to the official.
"Around 80,000 polling stations are considered to be unstable, but that figure can still change," he added.
About 24,000 members of the Armed Forces will also guard the votes, police chief Bambang Hendarso
Danuri was reported as saying.
LAW & ORDER
House leaves many crucial bills unfinished
The House of Representatives has upheld its poor record for legislation performance, ending its 45-day
sitting period on Tuesday with just three bills passed into law, The Jakarta Post reported.
The three laws deal with the trafficking of women and children, taxes and the ratification of the UN
convention against transnational organized crime.
"The salaries and allowances of House members should be cut off if they continue to perform poorly, like
what we have seen today," constitutional law expert Irman Putra Sidin said.
Every legislator receives between Rp90 million and Rp100 million in monthly pay after tax, which includes
salary and allowance.
"They still receive pay from the state without properly carrying out their jobs," he added. Tuesday's
plenary session was attended by less than 100 of the 550 House members.
However, the meeting was declared as having met a quorum because more than 300 legislators filled in
their attendance sheets before the session commenced. Most then left as the meeting got underway.
"We have to admit that many legislators skipped the meeting out of nothing more than laziness," legislator
Ganjar Pranowo from the Indonesian Democratic Party of Struggle said.
House Speaker Agung Laksono reprimanded legislators attending the last plenary session before the
April 9 legislative elections for leaving such a large amount of unfinished business on the House agenda.
The session saw discussions take place on the 35 priority bills still waiting deliberation.
“We only finished deliberating three drafts during this sitting period,” Laksono said at the meeting.
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He said the House had many priority bills waiting to be deliberated and passed including the military court
bill, the health services bill, the population bill, the narcotics bill, the immigration bill and the public
services bill.
A bill of particular importance is the corruption court draft law, which must be passed before December
2009. Based on a 2007 Constitutional Court decision, a new law on corruption courts must be enacted by
then or the existing court will be dissolved.
AGO wants lawmaker immunity on hold
The Attorney General’s Office (AGO) on Friday submitted a formal request asking that the Supreme Court
revoke a ruling that requires prosecutors to get presidential approval before they can summon lawmakers
or high-level officials for questioning for election offenses, The Jakarta Globe reported.
The AGO asked that the court make an exception for election offenses, which require a tighter deadline
for prosecutors to make an indictment, said Abdul Hakim Ritonga, deputy attorney general for general
crimes.
“The law says we need a permit from the president or the minister of home affairs to summon high-level
officials and the process to get the approval normally takes three or four months,” Ritonga said.
“The ruling will put investigation periods out of synchronization because for the election offenses, we are
given only 14 days to complete the investigation and just seven days to prepare the indictment,” he said.
Election offenses include campaigning outside the designated time period, paying for votes or civil
servants’ participation in political campaigns.
Ritonga said a lawmaker from a “major party” had refused to comply with prosecutors’ summons
regarding an alleged election offense due to a lack of permit from the president.
“I will not meet your summons because you don’t have the president's permit,” Ritonga quoted the
lawmaker as having told prosecutors, but he declined to name the offender or specify the accusation.
The case was ultimately dropped because the investigation period had lapsed, he said.
According to an AGO document, prosecutors have so far handled 46 elections offenses, with 19 cases
already getting verdicts from the court.
The AGO has formed a team of 980 prosecutors to handle elections offenses across the country.
Senior legislator Gayus Lumbuun said he supported the AGO’s move because, due to the massive scale
of the upcoming elections, police needed to streamline the system for dealing with offenses.
ECONOMY
First disbursement of stimulus March 18
The government will move quickly to disburse money into the economy in an attempt to boost activity and
create employment.
The first disbursement of some Rp12.2 trillion ($1.01 billion) in infrastructure funds will take place by
March 18, Finance Minister Sri Mulyani Indrawati said late Thursday, The Jakarta Globe reported.
“On March 11, ministries will receive their budget allocations and must submit the necessary
documentation to the Finance Ministry, so that everything can be settled by March 18,” Indrawati said.
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“The infrastructure projects should start creating jobs within one or two months,” Indrawati said, adding
that ministers will be expected to deliver their estimates of how many jobs can be created by their
projects.
The National Development Planning Board would monitor the progress of ministries and punish those that
failed to spend the money with budget cuts next year.
The Rp12.2 trillion is part of the Rp73.3 trillion stimulus package that the government plans to roll out.
The Public Works Ministry will receive the biggest share of the funds at Rp6.6 trillion, which is intended for
irrigation, water supply and road schemes.
The Transportation Ministry will get Rp2.2 trillion for railway network, port and airport expansion or
upgrades.
10 ministries getting the biggest infrastructure stimulus funds, according to Kompas, are:
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Public Works (Rp6.6 trillion)
Transportation (Rp2.2 trillion)
Energy, Mineral Resources (Rp500 billion)
People's Housing (Rp400 billion)
Maritime and Fisheries (Rp100 billion)
Agriculture Ministry (Rp650 billion)
Trade (Rp335 billion)
Manpower (Rp300 billion)
Health (Rp150 billion)
Foreign ownership of local-currency bonds fell 9.6% as of March 3 from December, the government said
Thursday. Funds abroad sold more Indonesian shares than they bought in the last three trading days,
according to the stock exchange, Reuters reported.
Overseas investors’ holdings of local bonds fell to Rp79.24 trillion ($6.5 billion) from Rp87.61 trillion in
December, according to the web site of the finance ministry. Ownership reached a record Rp106.66
trillion in August before risk aversion mounted as Lehman Brothers Holdings Inc. filed for bankruptcy in
September.
Non-deliverable forwards contracts signal traders are betting the rupiah will drop 2% to Rp12,358 per
dollar in a month, after indicating a rate of Rp12,325 on Wednesday.
Indonesia’s reserves rose to $53.7 billion after the government last week sold $3 billion of debt, Governor
Boediono said Friday.
To restore confidence, BI doubled its currency swap agreement with Japan to $12 billion last month.
Southeast Asian nations will also seek to ease restrictions on the amount countries can swap to add to
the region's pool of reserves, Sarwono said.
While investment elsewhere in the economy remained dormant, and some projects were shelved, the
coal sector continued to attract interest.
Thai Banpu, the country’s fourth-largest producer, will spend $126 million to expand its Bontang port and
coal-fired power plant, and on infrastructure at its Bharinto mine, while another Thai company, Unique
Mining Services PCL, has set aside $27.6 million to acquire a coal mine in Indonesia.
Singapore-listed Straits Asia Resources said it may acquire two Indonesian coal mines to achieve its
target to more than double its annual coal production to 20 million tons by 2012
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Eighth-largest producer PT Bayan Resources expects to expand coal production by 56% this year
following expansion last year. From India, GMR Energy has acquired 100% ownership of PT Barasentosa
Lestari (PT BSL), a coal mining company in South Sumatra.
Indicators:
Total exports
Non-oil & gas exports
Inflation
December
January
$8.69 billion
$7.45 billion
January
(y-o-y)
9.17%
Full year 2006
5.5%
December
$7.15 billion
$6.21 billion
January
(m-o-m)
-0.07%
Full year
2007
6.3%
January
610,500
473,200
GDP growth
Tourist arrivals
January 09/
January 08
-36.08%
-30.64%
February
(y-o-y)
8.60%
Full year 2008
6.1%
Growth/loss
(m-o-m)
-22.49%
February
(m-o-m)
0.21%
Fourth quarter
2008
5.4%
Growth/loss
(y-o-y)
8.04
Source: Central Statistics Agency
BUSINESS BRIEFS
MACROECONOMY
BI trims another half point from key interest rate
Bank Indonesia (BI) on Wednesday reduced its benchmark interest rate for a fourth straight month to help
boost consumer spending as exports plummet, Bloomberg reported.
BI Governor Boediono and his seven colleagues on the bank's board lowered the key rate to 7.75% from
8.25%, the central bank said in a statement.
Indonesia had been struggling to bring down inflation topping 10%, but that figure slowed to 8.6% on year
and 0.2% month-on-month in February, BI said.
The central bank forecast a slowdown in economic growth to 4% in 2009, from an estimated 6.1% in
2008, "with considerable downside risk if global economic growth worsens even more than expected."
"Indications of the economic slowdown are also borne out in slowing household consumption brought on
by falling public purchasing power," BI said.
“At the same time, Indonesia's banking system -- which collapsed just over a decade ago in the Asian
financial crisis -- was in stable condition," the bank said, The Associated Press reported..
BI deputy governor Hartadi Sarwono said on Thursday that the central bank still has room for more
interest rate cuts, Reuters reported.
"I think 7-8% for the BI rate will be OK to maintain our inflation target," Sarwono said.
"If you cut it too much it will, but up to now the weakening of the rupiah is not because of the interest rate
cuts,” Sarwono said when asked if cutting rates would hurt the rupiah, which has fallen close to 9%
against the dollar so far this year.
Sarwono said BI had been in the market to reduce volatility in the rupiah, which reached a three-month
low against the dollar this week.
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January tax revenues up 5%
Net state tax revenues, not including income tax from the oil and gas sector, rose 4.96% year-on-year to
Rp34.28 trillion ($2.8 billion) in January 2009, Asia Pulse reported.
The growth rate, however, was much lower than the usual 18 to 20%, Taxation Director General Darmin
Nasution said.
Including income taxes from the oil sector the state tax revenues totaled Rp39.53 trillion in January,
Nasution said.
Indef economic think tank executive director Ahmad Erani Yustika predicted tax revenues in 2009 would
decline as a result of the global financial woes.
Govt. gets $5.5B in standby loans
The government on Wednesday secured a $5.5 billion standby loan from multilateral and bilateral
lenders, to be used if the country fails to raise funds from the offshore and local debt markets, Dow Jones
reported.
“The loan facility is an important precautionary measure, which we have designed to maintain the
confidence of the international and domestic market, and allow the country to continue raising the
necessary funds for its development," said Finance Minister Sri Mulyani Indrawati.
The finance ministry said the World Bank will contribute $2 billion, Japan $1.5 billion, Australia $1 billion
and the Asian Development Bank $1 billion to the facility.
Govt. aims for Rp2T March 10 debt sale
The Finance Ministry said on Thursday it aims to raise Rp2 trillion ($167 million) from its debt auctions on
March 10, to help finance a ballooning budget deficit, Reuters reported.
The ministry said in a statement it plans to sell treasury bills maturing in 2010 and fixed-rate bonds
maturing in 2019.
The stimulus package has pushed up the forecast budget deficit to Rp139.5 trillion for 2009, equivalent to
2.5% of GDP.
Last month, the ministry raised $3 billion from a global bond issue and Rp5.556 trillion ($463 million) from
a retail sukuk issue.
It also raised a total of Rp6.15 trillion at its last government debt auction, on February 24, or more than
double its target for that sale.
Bank Indonesia posted $53.7 billion in foreign exchange reserves as of Friday, taking into account
proceeds from the finance ministry's recent $3 billion global bond issue, BI Governor Boediono said.
Boediono also said Indonesian assets should remain attractive, despite recent interest rate cuts by the
central bank, but did not elaborate.
BI deputy governor Hartadi Sarwono said on Thursday that the government may sell as much as $500
million in its first sale of global Islamic bond, Bloomberg reported.
According to director of Islamic financing policy at the Finance Ministry, Dahlan Siamat, the government
plans to sell the bonds this year. Indonesia has more than $600 million in assets available to back the
sale of Islamic bonds, Siamat said.
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“We are monitoring the market,” Rahmat Waluyanto, Director General of the government’s debt
management office, said in an interview. “The market is still volatile right now. The government will sell
the global sukuk this year as planned.”
On Tuesday, the government bought back Rp8.518 trillion ($710.4 million) of government bonds in an
auction on Tuesday, Reuters reported.
Indonesia's rupiah bond buyback, its first since November 12, should support bond prices and help the
government to finance the budget deficit, analysts said.
Exports tumble in January
January exports fell a worse-than-expected 36%, the biggest annual decline in more than 22 years, as
global demand for key commodities such as palm oil and rubber slumped, according to data released on
Monday by the Central Bureau of Statistics.
"The fall in exports is actually in line with regional plunges. Exports in the regional economies in the likes
of Singapore, Taiwan, and Malaysia have collapsed of late, shrinking by massive double digits in the
range of 30-40%," said Enrico Tanuwidjaja, an economist at Singapore's OCBC Bank.
"Considering that Indonesia also serves such regional markets, the demand for raw and intermediate
Indonesian goods is likely to be significantly reduced," he added.
The drop in exports to $7.15 billion in January, from $11.19 billion a year ago, was worse than the 30%
decline forecast by analysts, and followed a drop of 20.6% in December.
Annual inflation in February was in line with expectations, falling to 8.60%, the lowest since March 2008,
from 9.17% in January.
INVESTMENT
ICD offers $50M to develop small enterprises
The Islamic Corporation for Development of the Private Sector (ICD) has offered $50 million to Indonesia
to develop small- and medium-sized enterprises, Xinhua reported.
ICD general manager Al-Aboodi said Indonesia is an important market for the ICD.
"Indonesia is one of the essential markets as its government's initiative to boost infrastructure
development under the Islamic economic system is very good," he said on the sidelines of the Fifth World
Islamic Economic Forum in Jakarta on Tuesday, Detikcom reported.
Russia’s Reshetnev to build satellite for Telkom
State-owned telecommunications company PT Telkom has signed a $200 million contract with Russia's
ISS-Reshetnev for the procurement of a telecommunications satellite, Asia Pulse reported.
Under the contract signed on Monday, ISS Reshetnev will build a satellite, provide satellite control
equipment and training and internship for Telkom technicians.
The satellite, which will have 42 transponders, is expected to be ready for launch in August 2011, Telkom
president director Rinaldi Firmansyah, said.
Around 45% of the transponders will be leased out commercially and the rest will be used by the Telkom
Group, Firmansyah said, Investor Daily reported.
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Singapore’s Mother Earth to invest $100M in jatropha
Singapore-based Mother Earth Plantations Pte. Ltd., through its Indonesian subsidiary PT Buana Ibunda,
will invest $100 million to develop jatropha plantations and a refinery in West Timor, East Nusa Tenggara,
which it says will be able to produce up to 21 million barrels of biodiesel a year by 2013, The Jakarta
Globe reported.
Speaking on Tuesday on the sidelines of the 5th World Islamic Economic Forum in Jakarta, Roland A.
Jansen, Mother Earth’s president, said the investment would take place over four years, and include the
construction of a refinery with a processing capacity of 100,000 tons of jatropha seeds per annum by the
end of this year.
Jansen said the company would eventually be able to produce some three million tons of jatropha curcas
seeds on marginal land in Kupang that is to be planted as part of the project.
STATE CONCERNS
Korea, Indonesia to boost energy ties
President Lee Myung-bak and Indonesian President Susilo Bambang Yudhoyono agreed Friday to
expand substantial cooperation between the two countries in the fields of energy and resources, The
Korea Times reported.
The agreement includes the extension of a contract to develop oil fields in West Madura, East Java and
securing an additional 200,000 hectares of forested areas for South Korean businesses in Indonesia that
produce wood pellets, on top of the current 500,000 hectares.
Wood pellet stoves have recently gained some attention as alternative heating sources. Burning pellets is
considered more environmentally friendly than using fossil fuels or wood logs.
In a summit in Jakarta, Lee promised to assist Indonesia's industrial, energy and information-technology
sectors by increasing Korea's official development assistance for developing countries, Lee's aides said.
Lee asked Dr. Yudhoyono to help South Korean businesses participate in the construction of
infrastructure, and electricity and resources development, they said.
The two leaders agreed on the need for policy coordination between Asian countries to tide over the
global economic turmoil.
They also agreed to increase cooperation in developing clean, renewable energy for ``green growth'' and
fighting corruption and terrorism in the international community, the officials said.
ASEAN urges world to keep trade open
Leaders of Southeast Asia's economies met on March 1 in Thailand to urge major trading partners, such
as the US and the European Union, to continue opening up trade, as many countries in the region
grapple with protectionist trends, Wall Street Journal Asia reported.
ASEAN members earlier signed a free-trade agreement with Australia and New Zealand during their
annual summit. The pact with Australia and New Zealand, to take effect in December, is projected to
expand trade among the 12 countries by $48 billion by 2020.
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Thai Prime Minister Abhisit Vejjajiva, who hosted the summit, urged ASEAN to take the lead in resisting
protectionist policies. "If we start going down the route of protectionism, everybody will go down. It doesn't
help anybody at the end," he said.
Indonesian Trade Minister Mari Pangestu said in an interview on the sidelines of the summit that the
world's biggest trading powers need to re-engage in the stalled Doha round of free-trade talks at the
World Trade Organization "as soon as possible" to help offset a deeper global downturn.
She noted that none of ASEAN's member nations had adopted tougher trade barriers in response to the
onset of the global crisis.
Referring to negotiations on a proposed ASEAN-EU free-trade agreement, Pangestu said ASEAN wants
to negotiate as a group, not as individual countries.
“We still maintain that if there's going to be an Asean-EU FTA then it has to be region to region. Asean
has not changed on that position,” Trade Minister Mari Pangestu told The Straits Times.
"If some countries are going to be approached for bilaterals, that's another issue... that is their right to do
it," she said. "But I don't think we want to have a situation where they negotiate bilaterally with only a few
and then try to add it up for that becoming an ASEAN-EU (pact)."
Workers in three sectors receive tax incentives
The tax office said Wednesday that workers with a maximum monthly salary of Rp5 million working in the
agriculture, fishery and manufacturing sectors are now eligible for a waiver of income tax following a
government ruling, The Jakarta Post reported.
The measures will cost the government Rp6.5 trillion, Darmin Nasution, the Finance Ministry's Director
General for Taxation said.
The agricultural sector includes the sub-sectors of food-crop plantations, hunting and animal breeding
while the fishery sector includes sea-fishing and sea-plant cultivations, states a report by the taxation
office.
"We chose those sectors because they are export-focused industries. Those industries also suffered the
most during the crisis," Nasution said.
Among the three sectors, the manufacturing sector will receive the most incentives, with the sub-sectors
of food and beverage, milk, shoes and print such as newspapers.
"There are some export-oriented industries that were not selected for the waiver, such as mining,
because most of the workers there already earn high salaries."
2009 unhusked rice predicted at 60.93M tons
The Central Bureau of Statistics (BPS) on Monday said unhusked rice production will reach 60.93 million
tons this year, Antara reported.
BPS head Rusman Heriawan said production would increase by 1.13% or 0.68 million tons compared to
last year. Heriawan said increases would take place in several provinces, including West Java, West
Sumatra, South Sumatra, Central Java, North Sumatra and Riau.
BPS also put the provisional figure for the country’s rice production in 2008 at 60.25 million tons or an
increase of about 5.41% from the previous year.
The increase in rice production was made possible due to an increase in the total area of rice fields
harvested by 1.33% to 161,520 hectares. This increased production by about 4.04%.
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The increase in rice production in 2008, Heriawan said, took place in East Java, Central Java, South
Sulawesi, West Nusa Tenggara, South Sumatra, West Java and Central Sulawesi.
SOEs
Garuda reports profit of Rp683B
National flag carrier PT Garuda Indonesia booked an unaudited operational profit of Rp683.6 billion in
2008, higher than the net profit for the previous year, Antara reported.
Garuda president director Emirsyah Satar said on Tuesday that the company also recorded an
improvement in its on-time performance to 84.11% in 2008 from 76.73% in 2007.
The company said passenger occupancy for 2008 reached 76.53%, lower than 2007's 77.46%.
Satar said operational income in 2007 reached Rp13.1 trillion while in 2008 it was recorded at Rp18.1
trillion.
Jasa Marga to spend $2.1B on toll road projects
State-owned toll road construction company PT Jasa Marga said it will spend Rp24 trillion ($2.1 billion) on
eight toll road projects in Java this year, Asia Pulse reported.
The company and its partners involved in the projects will put up the remaining Rp7.5 trillion, with Jasa
Marga to contribute 60% and the partners 40%, finance director Reynaldi Hermansyah said.
Jasa Marga has secured loan commitments of Rp16.5 trillion ($1.369 billion) from a number of banks to
finance the investment, Hermansyah said.
"There is no more financial problem in the implementation of the eight toll road projects including the
Bogor Ring Road and Jakarta Ring Road," Bisnis Indonesia quoted him as saying.
PRIVATE SECTOR
Indofood plans to issue Rp1T worth of bonds
Food giant PT Indofood Sukses Makmur plans to issue bonds worth Rp1 trillion to repay maturing bonds
worth Rp976 billion, Antara reported.
The plan to issue the bonds is still under consideration, Indofood corporate secretary Werianty Setiawan
said on Tuesday.
The value of the bonds will be a minimum of Rp1 trillion, depending on the market conditions, she said.
Part of the proceeds from the bonds issuance will be used to repay short-term debts and strengthen
working capital, she said.
To issue the bonds, the company will appoint PT DBS Vickers Securities Indonesia, PT Danareksa
Sekuritas, PT ING Securities Indonesia, PT Kim Eng Securities, PT Mandiri Sekuritas and PT OSK
Nusadana Securities Indonesia as joint lead underwriters, Setiawan said.
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February car sales up 5.5% on month
Sales of new cars in Indonesia in February rose 5.5% on month to 33,363 units, boosted by improved
liquidity and lower interest rates, Bisnis Indonesia reported Friday.
But, on an annual basis, car sales last month fell 30%, car assembler association Gaikindo chairman
Bambang Trisulo said.
Meanwhile motorcycle sales are expected to drop 20-28% this year, an official at market leader Astra
Honda Motor said on Tuesday, reflecting weaker consumer spending amid a global economic slowdown,
Reuters reported.
Astra Honda Motor, a unit of PT Astra International, expects total motorcycle sales of between 4.5-5
million units in 2009, down from 6.215 million in 2008.
The company has started to cut shifts and overtime in order to prevent large stocks from building up,
marketing director Johannes Loman said.
Humpuss seeks $105M in external funds
Publicly traded sea transport company PT Humpuss Intermoda Transportasi said it is seeking external
loans of $105 million to help finance its investments this year.
The company plans to spend $150 million in capital expenditure this year including for the purchases of a
number of new barges, company president Antonius W Sumarlin said.
The company will use external funds to cover 70% of the investment and will put up the remaining 30%
from its internal cash, Sumarlin said.
Negotiations are in progress with a number of financers, he was quoted as saying by the newspaper
Investor Daily.
BANKS
Danamon gets pledges for 90% of rights issue: Sources
PT Bank Danamon Indonesia's existing shareholders have already made pledges for 90% of the lender's
Rp4 trillion ($335 million) rights issue, people close to the situation said Thursday, Dow Jones reported.
Subscriptions to the rights offer began on April 7 and end April 14.
One person said a number of parties that don't have any holdings in the bank have expressed interest in
purchasing the new shares by sub-underwriting the deal.
He declined to comment on the identity of the parties, but said they include other banks, brokers and
hedge funds. Sub-underwriters underwrite the risk taken on by underwriters.
Singapore's Temasek Holdings Pte Ltd., which owns a 67.9% stake in Bank Danamon through wholly
owned Asia Financial (Indonesia) Pte Ltd., isn't one of the sub-underwriters, another person said.
Bank Danamon said when it launched the rights issue last month that Asia Financial had undertaken to
fully subscribe to its entitlement.
The roadshow for the deal ended Wednesday, after touring Jakarta, Hong Kong, Singapore, London and
the Netherlands.
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Danamon said last month it will issue shareholders with 68 preemptive rights for every 100 shares held at
Rp1,200 each, or a discount of 47% to the stock's price of Rp2,250 before the announcement.
Proceeds from the rights issue will strengthen the bank's capital position and support growth. It will boost
the lender's Tier 1 ratio - a measure of a bank's financial strength - to 19.4% from 14.1%.
BCA 2008 unaudited net profit up 67%
Indonesia's second-largest lender, PT Bank Central Asia (BCA), posted a 67% increase in its 2008
unaudited net profit, the bank said on Monday, on the back of strong loan growth, Reuters reported.
BCA's unaudited net profit stood at Rp7.5 trillion ($625.5 million) on a net interest income of Rp19.28
trillion.
On January 7, the bank's vice president Jahja Setiaatmadja told Reuters that the bank's lending grew by
around 36.5% in 2008 but warned that loan growth was likely to slow to around 15% this year.
Bank Muamalat to hold $60M rights issue
PT Bank Muamalat, Indonesia's second-largest Islamic bank by assets, may hold a $60 million rights
issue by the end of the year to strengthen its capital base, the bank's chief executive said Monday, Dow
Jones reported.
Muamalat expects its assets to grow around 30% this year and its customer base to grow by at least
30%, around one million new customers, as it expands its operations, Muamalat's president director
Riawan Amin said.
The cost of the bank's planned expansion may mean net profit will not grow at all from last year's figure.
“We are focusing now on spreading the network rather than turning a profit this year,” Amin said.
"It looks like we should do a rights issue by the end of the year," he said. "We would have to raise about
$60 million."
Bank Muamalat aims to increase its capital adequacy ratio to about 12% in 2009 from around 10.8% last
year.
Bank Muamalat's total assets last year rose 20% to Rp12.67 trillion.
CIMB Niaga credit growth projected at Rp3T
Bank CIMB Niaga credits will expand to Rp3 trillion in 2009, corporate director Chaterinawati Hadiman
said on Tuesday, Antara reported.
"While the total portfolio in 2008 of the bank’s credits reached more than Rp20 trillion, this year we have
projected the growth at Rp3 trillion," she said.
The bank would be more selective in disbursing its credits this year in view of the global economic crisis.
"This year, as many people have predicted, the corporate sector may face heavier pressure, while the
number of non-performing loans may increase," she said.
POWER
PLN resolves problems with Chinese banks
State power company PT PLN says it has resolved the dispute on loan interest with Chinese banks, the
investors in the first 10,000 MW expansion program, with both sides sticking to the terms of the initial
contract, The Jakarta Post reported.
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"In February, there was an issue about the revision of the terms and conditions of the signed and agreed
loans. We (PLN and Chinese banks) have recently sat together to discuss this matter, resulting in
agreement to stick to the initial commitment," PLN's vice president Rudiantara told reporters Thursday.
Three Chinese banks have committed to providing loans amounting to about $1.4 billion for the projects.
Bank of China has agreed to provide $600 million for a power plant in Indramayu, West Java, while China
Development Bank (CDB) will provide a $270 million loan for a power plant in Rembang, Central Java.
Chexim has agreed to lend $280 million for the Suralaya power plant in West Java and $330 for the
Paiton plant in Pasuruan, East Java.
The 10,000 MW program covers the construction of 35 power plants, 10 of them in Java and Bali.
Work on Bukit Asam power plant to start in April
PT Tambang Batubara Bukit Asam will start building a $41 million power plant at its concession in South
Sumatra next month, Bloomberg reported.
The coal-fired power plant, with a capacity of 30 MW, will be completed in April 2011, Milawarma,
operational director at Bukit Asam, said on Friday.
The company may save as much as $3.3 million a year with the new plant, compared with the charges it’s
currently paying state power company PT PLN, Milawarma said.
The company will use internal cash to fund the project, he said.
Bukit Asam is seeking cheaper electricity after benchmark coal prices in Asia dropped 66% from a record
$194.79 a metric ton in July.
OIL & GAS
Six oil, gas fields expected on stream in 2010
Indonesia expects six oil and gas fields to start operations in 2010 and these will likely produce a total of
249 million cubic feet of natural gas a day and 3,785 barrels per day (bpd) of crude oil, Dow Jones
reported.
Raden Priyono, chairman of upstream oil and gas regulator BP Migas, said Thursday the fields include
ConocoPhillips’s Bukit Tua field in Sumatra, Pearl Oil's Ruby field in Kalimantan and the South
Sembakung field in Kalimantan, which is jointly operated by state-owned PT Pertamina and Medco
Energi Internasional.
The other three are the Gajah Baru-Iguana-Naga field in the Natuna Sea operated by Premier Oil, the
Peciko Phase 7 field in East Kalimantan operated by Total SA and Pertamina's Gundih field in East Java.
The government and House of Representatives have set a target of 960,000 bpd of oil for 2009 as output
from aging fields declines, and additional production is only expected to be around 5,336 bpd. The natural
gas output target is 7.53 billion cubic feet a day for 2009.
Around 10 to 15 new oil and gas blocks are planned to be offered for tender this year.
Three state plantations to build biodiesel plant
Three Indonesian state plantation firms plan to build a biodiesel factory with a capacity to produce up to
400,000 tons of palm-based biodiesel a year, a senior government official said on Friday, Reuters
reported.
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"The biodiesel industry is new for state plantation firms. The plantation firms also plan to venture into
bioethanol," said Agus Pakpahan, deputy for agriculture in the State Enterprises Ministry, adding that
certain state enterprises will co-operate to build a bioethanol facility to produce 800,000 tons of
bioethanol.
State plantation firm PT Perkebunan Nusantara (PTPN) III and its sister companies -- PTPN IV and PTPN
V -- plan to set up the biodiesel plant in northern Sumatra, with construction expected to start this year or
next, said Pakpahan.
This year, 11 state plantation firms are expected to produce a total of 3 million tons of crude palm oil, or
15% of Indonesia's total palm oil production, up from 2.9 million tons in 2008, Pakpahan said.
Pertamina to upgrade Balikpapan refinery
State-owned oil company Pertamina has renewed a plan to upgrade its Balikpapan refinery in East
Kalimantan with Dubai-based ETA Star and Itochu Corp of Japan, a spokesman said on Monday, Reuters
reported.
Pertamina has previously said it wanted to boost capacity of its 260,000 barrels-per-day (bpd) Balikpapan
refinery to 280,000 bpd as part of an upgrading project and a shift to sour crude from more expensive
sweet crude.
"By signing the memorandum of commitment, Pertamina and those companies will hold further talks on
upgrading Balikpapan refinery," Anang Noor said.
Last year, the cost of the project was estimated at $1.7 billion and Pertamina had previously said it hoped
the upgrade would be complete by 2011.
Balikpapan refinery is the second biggest in Indonesia after the 348,000 bpd Cilacap refinery.
"Improving the productivity and flexibility of existing refining capacity and investing in the new capacity is
one of (Pertamina chief) Karen Agustiawan's strategic priorities," Pertamina said on its website.
Pertamina has nine refineries in the country with a combined capacity of around one million barrels per
day (bpd) but it only supplies 70% of domestic oil product consumption.
MINING
Straits Asia may acquire two coal mines
Singapore-listed Straits Asia Resources said on Friday it may acquire two Indonesian coal mines to
achieve its target to more than double its annual coal production to 20 million tons by 2012, Reuters
reported.
Straits Asia controls 100% of Indonesian mining service company PT Indo Straits, which it aims to spin off
and either sell part or its entire stake through an initial public offering by the end of 2009, Straits Asia
CEO Richard Ong said.
Ong said the company will start by boosting its production to 9.5 million tons this year from 8.6 million last
year.
"We are not stopping to look into acquisitions, we may want to select one or two," Ong said, adding that
those acquisitions will be of Indonesian assets.
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Straits Asia, with a market cap of $548.6 million, has two coal mines in East Kalimantan and exports most
of its output to power plants in Japan, Korea, Taiwan and India.
Thai Unique sets aside $27.6M to acquire coal mine
Unique Mining Services PCL, a Thai coal importer and distributor, has set aside $27.6 million to acquire a
coal mine in Indonesia, managing director Chaiwat Cruecha-em said Monday, Dow Jones reported.
The company is negotiating with three to four miners in Kalimantan and Sumatra that have mines with
coal reserves of between 10 million and 50 million metric tons each, he told reporters, adding that the
investment will be funded by internal cash flow and loans.
If a deal is sealed, the company expects to start operating the acquired mine either in the middle of next
year or late next year, Cruecha-em said.
The company's coal sales in 2009 are projected to be close to over 1 million tons, a similar level to that in
2008, but net profit is likely to be lower than the previous year, Cruecha-em said.
Indo Tambangraya profit up four-fold
Coal miner PT Indo Tambangraya Megah reported a more than four-fold jump in its 2008 net profit driven
by higher coal prices, the company said on Friday, Reuters reported.
The company, which is a unit of Thailand's Banpu PCL, said in a statement net profit last year was
$234.93 million, against $55.79 million a year earlier.
Its revenue rose 71% to $1.32 billion from $771.82 million in 2007.
Indo Tambangraya owns shares in several Indonesian coal miners including PT Trubaindo Coal Mining,
PT Indominco Mandiri, PT Kitadin, PT Jorong Barutama Greston and PT Bharinto Ekatama.
Banpu said it sold 18.5 million tons of coal in 2008 with about 95%, or 17.7 million tons, of coal sales from
its Indonesian mines.
Indo Tambangraya previously said it planned to spend $200 million this year to finance development
projects.
Bayan sees 2009 coal output up 56%
Coal miner PT Bayan Resources expects its coal production to increase by 56% this year on expansion
of its coal mines, the company said in a statement, Reuters reported.
Bayan, Indonesia's eighth-largest coal producer, plans to produce 9.5 million tons of coal this year, up
from an estimated 6.1 million tons in 2008, it said.
The increased production would come from its Firman Ketaun Perkasa mine in East Kalimantan and
continued expansion in other mines including PT Wahana Baratama and PT Perkasa Inakerta.
With higher coal production, the company expects revenue to reach Rp6-6.5 trillion ($500.2 million) this
year, up from Rp4.5-5 trillion in 2008.
The firm expects to sell 10 million tons of coal this year, up from 6.7 million tons in 2008. It said demand
remained strong and that all coal sales volumes were fully committed.
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