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, 1 June 2009
National
 Meteorologists are warning of increasing forest fire hotspots in Riau
Politics
 KPU: Presidential election campaigning will begin 11 days earlier on June 2
Terrorism
 Singaporean Jemaah Islamiyah (JI) militant has been detained under Malaysian security laws
Security
 Indonesia is in talks with the US to buy new C-130 Hercules transport planes
Law & Order
 The Corruption Eradication Commission is able to conduct its business as usual
Health
 Australia is set to write off $58.7 million in Indonesian commercial debt
BUSINESS BRIEFS
Macro Economy
 The government expects the economy will expand 5-6% next year
Investment
 Taiwan’s investment in Indonesia until 2008 reached $13.837 billion
State Concerns
 Indonesian migrant workers remitted $6.6 billion in 2008
 Exports of palm oil to India are forecast to jump 25% this year
SOEs
 PT Wijaya Karya (Wika) expects to win Rp17.2 trillion ($1.66 billion) of contracts
 The government forms new state company to manage the country’s longest bridge
Private Sector
 Sharp rises in cigarette sales
Banks
 PT Bank Danamon expects to increase its lending in the second quarter.
Power
 PT PLN is set to secure another $761 million in loans from Chinese
Oil & Gas
 Cepu block will only produce a maximum of 20,000 bpd from 2010 to third quarter of 2011
Mining
 State coal miner PT Tambang Batubara Bukit Asam expects a 20% rise in revenue this year
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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.
1
National
63 hotspots detected in Sumatra: BMG
A total of 63 forest fire hotspots have been detected in Riau, Bengkulu, South Sumatera and
Jambi, said a Meteorology and Geophysics Agency (BMG) official on Friday, reported Kompas.
The number of hotspots has declined from 350 last week but BMG has warned the number will
likely increase in the coming weeks.
The BMG has warned of widespread forest fires across Sumatra due to the onset of the dry
season.
The warning also stressed that North Sumatra, South Sumatra, Riau and Jambi provinces are
highly vulnerable to forest fires, due to higher temperatures, low humidity, heavy winds and low
rainfall in the area.
France to help improve Jakarta’s flood-warning system
The French government will help improve Jakarta’s flood-warning CCTV system, said French
Ambassador Philippe Zeller on Wednesday, reported Viva News.
Zeller said the assistance is part of an earlier pledge by the French government to help Jakarta
establish an effective early-warning system for natural disasters.
“Aside from donating new CCTV cameras and monitors, training for personnel at Jakarta’s Crisis
Center will also be provided,” said Zeller.
Currently, 160 CCTV cameras are installed at a number of flood-prone areas around the capital,
including the Manggarai, Sunda Kelapa and Penjaringan sluice gates.
A Crisis Center official said Jakarta needs 1,000 CCTVs to guarantee effective disaster
management.
POLITICS
Presidential campaigning to begin June 2: KPU
Presidential election campaigning will officially begin on June 2, 11 days earlier than the previous
schedule, said the General Election Commission (KPU) on Wednesday, reported Seputar
Indonesia.
“Presidential election campaigning has been moved ahead as the registration for all three
candidate pairs is now complete,” KPU member Andi Nurpati said.
The presidential election campaigning will be divided into two periods.
From June 2 to June 12, only media campaigning will be permitted while open campaigning and
televised debates will be permitted from June 12 to July 4, according to the KPU.
“A declaration of peaceful campaigning will be signed by all candidates on June 2 at KPU
headquarters,” said KPU member Putu Artha said.
Artha said an open plenary session will be held on Saturday to determine the candidates’
respective ballot numbers.
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The KPU said a series of six televised debates -- three presidential and two vice presidential -will begin on June 18.
KPU names legislative election winners
The General Election Commission (KPU) on Sunday released the names of the 560 candidates
who won seats at the House of Representative in the April 9 legislative election, reported Antara.
“The elected candidates' names have been announced although several disputes are ongoing at
the Constitutional Court. We will adjust the list later in accordance with the verdicts," said KPU
chairman Abdul Hafiz Anshary.
The names were announced during an open plenary session attended by KPU members and
representatives from all political parties that participated in the legislative poll.
“The announcement of legislative winners from East, West and Central Java has been postponed
due to demands from several parties for clarification over vote-counting methods," said Anshary.
A number of current House members were re-elected for the 2009-2014 period, including House
Speaker Agung Laksono, who was predicted to lose his legislative seat.
A number of current ministers were also elected to the House, including Tourism and Culture
Minister Jero Wacik from the Democratic Party and Youth and Sports Minister Adhyaksa Dault
from the Prosperous Justice Party (PKS).
All elected legislative candidates are scheduled to be inaugurated on October 1.
TERRORISM
Malaysia detains Singapore JI militant for two years
Singaporean Jemaah Islamiyah (JI) militant Mas Selamat Kastari, who was re-captured in
Malaysia last month, has been detained under security laws for a two-year term, Malaysian Prime
Minister Najib Razak said Wednesday, reported Agence France-Presse.
Kastari, the head of the JI’s Singapore cell, which has links to al Qaeda, had been on the run for
more than a year after escaping from a high-security detention center in Singapore.
Razak confirmed reports that the 48-year-old Islamist militant had been detained under
Malaysia's Internal Security Act (ISA) which allows for indefinite detention without trial.
"This is Malaysia's decision. He is a threat to Malaysia's security and that is why he has been
detained," he told a press conference.
Razak said Malaysian authorities needed to extract "more information" from Kastari and
downplayed suggestions that Singaporean authorities would be anxious to have him in their
custody.
Kastari was captured in April in Malaysia's southern state of Johor where he had reportedly been
hiding since February 2008 when he escaped from detention by squeezing through a toilet
window and climbing over a fence.
He reportedly used an improvised floatation device to cross the narrow strait which separates
Singapore from Johor state.
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Kastari is reportedly being held at the Kamunting detention center in Malaysia's north with other
ISA detainees, who are mostly Islamist militants.
An unnamed source familiar with the case said any extradition proceedings with Singapore would
be discussed only after the two-year term had been completed.
SECURITY
TNI to stay ‘calm’ over rising Ambalat tensions
The Armed Forces (TNI) will remain calm amid renewed tensions between Indonesia and
Malaysia over the disputed oil-rich Ambalat territory, reported The Jakarta Post.
"We do not need overexposure of this issue again. I have spoken with the Malaysian military chief
about Ambalat, and we have reached some agreement," TNI chief Gen. Djoko Santoso said on
Thursday.
"No more ships will be sent to the zone," he said.
Ambalat is a maritime area located off East Kalimantan, which both Indonesia and Malaysia claim
as their own.
Recently, Indonesia accused Malaysian battleships of entering Indonesian territorial waters
surrounding Ambalat.
According to the TNI, it was the ninth time Malaysia had violated Indonesian waters this year.
"During the talks with Malaysia, both countries claimed ownership of the area. However, we both
agreed on procedures if conflict does arise," Santoso said, adding joint patrols have also been
arranged.
Santoso confirmed Malaysian naval ships breached the disputed zone several times recently.
"Every time they enter Indonesian waters, our forces remind them to leave,” he said.
The dispute over the maritime block, believed to be rich in oil and gas, has raised tensions
between Indonesia and Malaysia since the 1980s.
In 2005, Indonesian and Malaysian warships collided while patrolling the zone.
The Navy revealed that it was moments away from firing on a Malaysian warship that encroached
deep into Indonesian territorial waters last week, but called off the attack when the intruder
retreated, reported The Jakarta Globe.
Lt. Col. Toni Syaiful, a spokesman for the Navy’s Eastern Fleet Command, said the Malaysian
Fast Attack Craft Gun KD Yu-3508 vessel penetrated 12 nautical miles into Indonesian waters on
Monday.
Not only did the Malaysian warship penetrate far into Indonesian waters, but it had also ignored
demands from the captain of the Indonesian KRI Untung Suropati-872 to retreat, Toni said.
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Armed Forces look to buy US jets, subs
Indonesia is in talks with the US to buy new C-130 Hercules transport planes and might be in a
position to buy fighter jets and submarines in two to three years, the Defense Minister said,
Reported Reuters.
Juwono Sudarsono said on Saturday after talks with US Defense Secretary Robert Gates that no
final agreement had yet been reached on the transport planes, a possible first step in upgrading
its military.
"With Gates we discussed the possibility of Hercules ... but because the market of that particular
plane is quite tight we have to wait our turn," Sudarsono said.
"He promised for a discounted price but we don't know how much the discount will be. Because it
is in their interest for Indonesia to remain stable," he said.
Indonesia aims to raise its defense spending to 1.2% of GDP within five years, from 0.68% or
$3.3 billion now, Sudarsono said.
"It all depends on how quick the economy will recover," he said.
He said the defense spending was far below neighboring countries such as Singapore, Australia
and Malaysia.
"Currently, we are focusing on the maintenance of existing equipment so we can minimize the
risk to our troops. Maybe in two or three years time, other defense equipment, striking equipment
like submarines and fighter jets can be added," Sudarsono said.
He said the country is aiming to maintain the same technological level of military equipment as
neighboring countries, although the numbers might be smaller.
Since Singapore is buying F-15 fighter jets, Indonesia was matching that move by buying Russian
Sukhoi fighters, he said.
"Although it is a costly exercise, we have to do it to maintain the parity in the technology of our
equipment with neighboring countries.
LAW & ORDER
KPK 'on track for now': Deputy Chairman
The Corruption Eradication Commission (KPK) is able to conduct its business as usual despite
the suspension of its chief, who is a suspect in a murder investigation, a deputy chairman of the
agency said, reported Reuters.
However, KPK operations face uncertainties if the House of Representatives does not approve
soon a law to extend the life of the Corruption Court, deputy chairman Mochammad Jasin said.
The KPK currently submits cases only to the Corruption Court, but the court's mandate is due to
expire in December and the current House term ends in September leaving a narrowing window.
"(I am) a little pessimistic, hopefully House members can still discuss it within the next few
months," said Jasin, who is one of four deputies running the KPK after Antasari Azhar's
suspension.
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Jasin said the four met President Susilo Bambang Yudhoyono last week to explain the problems
the KPK faces if the Corruption Court is forced to shut.
The Corruption Court, which has a 100% conviction record and is considered clean due to its use
of ad-hoc judges, is now threatened after the Constitutional Court said the House should draw up
a new law by December to give it legal basis.
Jasin said if the House failed to pass the law in time, Yudhoyono would have to issue a regulation
to allow the court to continue its work.
If this is not done, experts say the cases might have to be heard in regular courts, which can be
more easily manipulated by corruption.
Under Yudhoyono, notoriously corrupt agencies such as the customs and tax offices have been
cleaned.
The KPK has built up something of a "cult" status for arrests and convictions of top officials
including lawmakers and central bankers, but it suffered a blow this month after its head was
detained as a suspect in a murder case.
The case against KPK chairman Azhar, who has denied any wrongdoing, has shocked and
gripped the masses in equal measure because of its combination of alleged murder, corruption
and sex.
"Whether Antasari is present or not, we are building a system here, so we will work as usual,"
said Jasin.
1,395 asylum seekers nabbed this year: Police
As many as 1,395 asylum seekers have been caught in Indonesia since the beginning of the
year, said a police official on Wednesday, reported Kompas.
“However, it is believed there are thousands more asylum seekers in Indonesia that have not
been caught,” said a National Police official Sr. Comm. Minton Mariaty Simanjuntak.
According to Simanjuntak, most came from Afghanistan with 736 asylum seekers.
The other asylum seekers were mainly from Sri Lanka, Myanmar and Iraq, he said.
“The main entrance points are Medan and Tanjung Balai Asahan, North Sumatra; Tanjung
Pinang, Riau Islands; Bagan Siapi-Api, Riau; Banten and Anyer in North Jakarta,” said
Simanjuntak.
“It is believed there are an estimated 8,000 asylum seekers from Afghanistan and Myanmar
currently in Malaysia trying to enter Indonesia to claim asylum or reach Australia,” he said.
HEALTH
Bali: Japanese national declared swine flu negative
A Japanese national suspected of being infected with swine flu in Bali was declared negative of
the virus, said an official on Friday, reported Detikcom.
On Thursday, 50-year-old Kuri Akira was admitted to Sanglah Hospital, Denpasar, Bali for
suspected swine flu.
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He arrived at Ngurah Rai International Airport from Osaka, Japan.
“Blood test results from the Health Ministry showed no H1N1 virus was present in the patient,”
said a Sanglah Hospital official.
The patient was later allowed to leave the hospital.
Australia to convert Indonesian debt into health program: Official
Australia on Thursday said it was set to write off AU$75 million or US$58.7 million in Indonesian
commercial debt under an innovative scheme to promote public health, reported Agence FrancePresse.
It is the first time that commercial debt is being forgiven under a program called Debt2Health,
launched by the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Instead of repaying the debt, Indonesia will invest half of the total in domestic schemes to combat
TB, according to a press release issued jointly by Australia and the Global Fund.
"Indonesia is one of our closest neighbors and it is a priority for us to support the efforts of the
Indonesian authorities to fight tuberculosis," Australia's parliamentary secretary for overseas aid,
Bob McMullan, said.
McMullan was in Paris for a meeting on health financing at the Organization for Economic
Cooperation and Development (OECD).
Debt2Health is similar to debt-for-nature swaps, in which rich countries write off a poor country's
debt in exchange for commitments that money, which is freed up will be spent on environmental
protection.
Germany, the first country to join Debt2Health, has signed deals with Indonesia on foregoing
repayment of state loans worth $69 million that were used for development aid.
The debt was owed to the Australian Export Credit Agency, a state organization, but was used to
secure a commercial transaction, which thus places it in the category of a commercial debt, he
said.
ECONOMY
Indonesian stocks upgraded to ‘overweight’ at BNP
Indonesian stocks were raised to “overweight” from “neutral” at BNP Paribas SA, which cited
record-low interest rates, a resilient economy and better-than-expected earnings outlook,
Bloomberg reported on Thursday.
The Jakarta Composite index may rise 16% to 2,200 based on a 12-month target, BNP said. PT
Bank Danamon Indonesia, PT Astra International, PT Indofood Sukses Makmur and PT Ciputra
Property are among its preferred stocks, BNP said. The index closed on Friday at 1,916.83, an
over 40% gain this year and compared to 1,881.71 a week earlier.
BNP’s rating upgrade follows those by JP Morgan Chase & Co. and Credit Suisse Group after the
April legislative elections in strengthened President Susilo Bambang Yudhoyono’s hold in
parliament and raised expectations he will boost economic growth. The country’s economy
expanded 4.4% in the first quarter, the fastest pace in Southeast Asia.
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“The democratic process has become entrenched, which has resulted in a stronger currency and
a re-rating in both the bond and equity markets,” BNP’s Jakarta-based analyst Elvira
Tjandrawinata wrote in a note Thursday. “The economy is one of the most resilient in the region.”
The rupiah has risen 7.2% this year, helping to ease inflation to a 16-month low in April. The
currency was trading at the end of the week at 10,305 to the dollar, compared to 10,285 a week
earlier.
JP Morgan, Credit Suisse and Deutsche Bank AG raised their ratings on Indonesia to
“overweight” earlier this month. The stock index fell by a record 51% last year after the global
credit crisis prompted investors to sell assets in high- yielding markets including Indonesia.
“Increased risk appetite among investors and a lack of better investment alternatives has driven
local investors back” to the equity and bond markets, BNP’s Tjandrawinata said. A “correction” in
the stock market may be “shallow” as overseas investors are “still waiting on the sidelines for a
dip.”
Morgan Stanley, in a note on Wednesday, almost doubled its economic growth forecast for
Indonesia to 3.7% from 1.9%, citing gains in commodity prices and diminished political risks.
Meanwhile Bank Indonesia (BI) expects loan disbursements to pick up given signs the economic
crisis is bottoming out, The Jakarta Post reported on Friday.
“BI is confident on credit growth in the next quarters, and optimistic this will be able to support
(economic) growth for the rest of the year,” Miranda S. Goeltom, BI Senior Deputy Governor, told
a hearing with the House of Representatives Thursday.
Outstanding loans as of the end of March reached Rp1,325.3 trillion (about $129.9 billion),
actually Rp11.5 trillion lower than the Rp1,353.6 trillion booked by the end of December, as more
loans were redeemed than extended.
Goeltom said lending had in fact increased from January to February to March, although “not by
much”, as the global downturn continued to have negative impacts but indicated that the
downturn had reached the bottom. “But, we do not know how long (it will stay on the) bottom.”
“Banks did not (hold back from) loan provision for no reasons. They have come to us, presenting
the outlook of the debtors, which is questionable,” she said, commenting on weak lending
performance in the January-March period.
Goeltom said lending rates on average had so far this year actually decreased by 38 basis points,
while deposit rates fell by 171 basis points.
The average rate for investment loans stands currently at 14%, for working capital loans at 14.8%
and for consumer loans at 16.5%, she added.
Bank Indicators as of Q1 2009 (in trillion rupiah)
Third-party funds
Loans
Non-performing loans (%)
January
1,745.6
1,325.3
4.2
February
1,771.1
1,339.1
4.3
March
1,786,2
1,342.1
4.5
Source: Bank Indonesia
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BUSINESS BRIEFS
MACROECONOMY
Govt. expects 5-6% growth in 2010: Minister
The government expects the economy will expand 5-6% next year as the country prepares a
budget that will "focus on economic recovery," Finance Minister Sri Mulyani Indrawati said
Wednesday, Agence France-Presse reported.
Full-year inflation would likely average 4.5% to 5.5%, she told reporters after presenting the
ministry's official macroeconomic forecasts for next year to parliament.
The forecasts are used to calculate the state budget and are updated throughout the year.
The government expects to run a budget deficit equal to 1.3% of GDP and the rupiah to trade
between Rp9,500 and Rp10,500 against the dollar, the minister said.
The government expects the economy to expand 4.0% to 4.5% this year.
This year, the budget deficit is forecast to reach 2.5% of GDP, due in part to a $7.1 billion
stimulus spending plan.
INVESTMENT
Kadin urges revision of foreign investment rules
The Indonesian Chamber of Commerce and Industry (Kadin) is calling for the completion of
promised revisions to the national “negative investment list”, The Jakarta Globe reported on
Friday.
The list sets out areas of the economy where foreign investment is restricted. The latest version,
introduced in 2007 defied expectations by increasing restrictions on foreign ownership in 23
sectors.
Rules barring foreign investment in a number of strategic industries urgently needed to be
revised, Kanter said, particularly in the mining, logistics, telecommunications, health and retail
sectors.
Clifford D. Rees, the chairman of the European Chamber of Commerce in Indonesia, said that
several issues needed to be addressed if the country wanted to improve its attractiveness to
foreign investors.
Chinese Taiwan’s investment in Indonesia reaches $13B
Chinese Taiwan’s investment in Indonesia until 2008 reached $13.837 billion, director of the
economic division of the Taipei Economic and Trade Office (TETO) Bennet Wen-bin Chen said
on Wednesday, Antara reported.
"Taiwan’s investment in Indonesia this year will probably continue to rise," he said.
Chinese Taiwan investors have invested in 1,239 companies in Indonesia including firms such as
Pao-cheng Shoes Co., ACER, Bank Chinatrust, President Food, RSEA, Evergreen Group and Na
Ya Plastics Corp.
"Taiwan has not only put an investment but has also contributed managerial and technical skilled
employees totaling around 10,000," Chen said.
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He said cooperation between Chinese Taiwan and Indonesia had been conducted since 1990 in
the fields of energy, economy, agriculture, investment assessment and protection and eradication
of double taxation.
Chinese Taiwan’s investment in Indonesia is ranked eighth of all countries investing in the
country.
STATE CONCERNS
Migrant workers remitted $6.6B last year
Indonesian migrant workers remitted $6.6 billion in 2008, providing a major source of revenue for
the economy, an official said Wednesday, Agence France-Presse reported.
"Their remittances have significantly helped to develop their areas of origin," National Migrant
Workers Placement and Protection Agency official Lisna Poeloengan told AFP.
She said there were some six million Indonesian migrant workers abroad last year.
"The gap in income between workers who went abroad and those who stayed home is huge," she
said, without providing the figures.
The remittances accounted for 1.37% of the country's gross domestic product of some $480
billion last year, and were double the 2009 defense budget of about $3.26 billion.
Poeloengan said the inflow had risen from about $5.6 billion in 2006 thanks to a 13% increase in
the number of skilled labourers and professionals.
"There has also been an increase in salaries from several countries, such as Saudi Arabia, Hong
Kong and Singapore," she said.
Shipping increase hints at improving economy
The number of containers handled from January to late May at Tanjung Priok port in North
Jakarta, which handles around 65% of total shipments annually, has gone down by 30% for
imports and 12% for exports from the same period last year, The Jakarta Post reported on
Thursday.
State port operator PT Pelindo II president director Richard Lino said Wednesday said, there
have been signs that activities began to pick up mid March.
Lino was speaking to reporters after new facilities installed by the Jakarta International Container
Terminal (JICT) — the largest terminal operator at the port — aimed at increasing its handling
capacity were opened.
Trade Minister Mari Elka Pangestu also expressed her confidence that trade activities at the
Jakarta port, and elsewhere, would eventually recover from its slump, which begun in the last
quarter of last year at the height of global financial meltdown.
While the economic downturn slows down trade activities, she said, now is actually the right time
to make necessary reforms in the anticipation of a rebound.
Pangestu expects other container terminal operators in the country to keep expanding and
investing to ensure Indonesia's trade competitiveness.
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According to the UN Conference on Trade and Development, Indonesia handled 5.74 million
TEUs of containers in 2006, far less than the 24.79 million TEUs managed by Singapore.
Palm oil exports to India seen up 25%
Exports of palm oil to India are forecast to jump 25% this year, driven by higher consumption in
the world's second-biggest edible oils buyer and tight supply of rival soybean oil, an industry
official said, Reuters reported.
"India's imports of edible oils are set to increase because of higher consumption, while domestic
production is not rising," Derom Bangun, vice chairman of the Indonesian Palm Oil Board said.
Indonesia may ship out six million tons of palm oil products this year to India, its main buyer,
against 4.8 million in 2008, said Bangun. Indian exports would represent about 37% of total
exports for 2009.
In contrast, the world's biggest buyer of edible oils, China, buys mostly refined products, not
crude palm oil.
Bangun said Indonesia's exports to China were expected to grow by around 15% to nearly 2
million tons this year.
Meanwhile, exports to Europe were expected to be flat on last year's 2.8 million tons.
Alongside the impact of the global economic crisis, Bangun said demand to Europe had also
been hit because palm oil was no longer used as a feedstock for biodiesel due to climate change
considerations.
"There is a requirement that the use of alternative fuel must reduce carbon emission by 35%
compared to the use of fossil fuel," Bangun said, adding that Europe did not consider palm oil met
such requirements and was using rapeseed instead.
Healthy demand from China and India, coupled with tight supply of global vegetable oils, has
helped palm oil prices rise about 40% this year, although prices are still 47% below a record of
$1,277 a ton hit last year.
Indonesia is projected to produce 20.6 million tons of palm oil this year, up from 18.8 million tons
in 2008.
Japan top export destination for March
Japan was the largest non-oil and gas export destination for Indonesia in March, according to the
Central Bureau of Statictics (BPS), Antara reported.
The total non-oil and gas exports to Japan in March reached $888.9 million or 12% of Indonesia’s
total exports for the month, said BPS official Titi Kanti Lestari on Thursday.
In the first quarter of this year, Indonesian exports to Japan totaled $2.4 billion or 12.3% of the
country's total exports of $19.6 billion.
Lestari said Indonesia's exports to Japan were dominated by commodities such as coal, copper,
rubber, plastics and plywood.
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SOEs
Wika eyes $1.66B in infrastructure deals
State-owned construction firm PT Wijaya Karya (Wika) expects to win Rp17.2 trillion ($1.66
billion) of contracts thanks to government spending on infrastructure, Reuters reported.
"As long as we obtain big-value contracts and with a clear funding source, we are optimistic that
we can reach our target," said Finance Director Ganda Kusuma.
Kusuma added that the firm will concentrate on government projects as these have a more
definite source of funding compared to those from private firms during a crisis.
Wika won contracts valued at Rp15.5 trillion in 2008.
It reported net profit of Rp46 billion in first quarter, up 27% from last year, while revenue rose
13.9% to Rp1.3 trillion.
Govt. to form firm to manage Suramadu bridge
The office of the State Minister of State Enterprises said it is forming a new state company to
manage the country’s longest bridge in Surabaya-Madura (Suramadu) East Java, which will be
open for the public next month, The Jakarta Post reported.
"We have held a fit and proper test for director candidates of the new company," State Minister of
State Enterprises Sofyan Djalil said Thursday.
The new company, Djalil said, would manage the bridge professionally, including its maintenance
and creating potential economic development around the bridge.
"We will gain long term benefits from this bridge project. Thus, we have to take care of this
infrastucture so that it would be durable for hundreds of years," Djalil said.
Telkom to take over 49% stake in Infomedia (NEW) PT Telekomunikasi Indonesia (Telkom) plans
to take over PT Infomedia Nusantara by acquiring a 49% stake in it from oil and gas service
provider PT Elnusa The Jakarta Globe reported.
Infomedia started as a joint venture between Telkom and Elnusa, with Telkom holding 51%. It
provides residential and business telephone data and addresses in print and electronic form.
Telkom said it had set aside Rp1 trillion ($97 million) to acquire local multimedia firms, including
Infomedia.
“We hope the acquisition will be completed by August,” Eddy Kurnia, Telkom’s vice president of
public and marketing communication, said on Friday. “There are still a lot of things we still have to
settle in this transaction.”
Meanwhile, Telkom’s subsidiary PT Telkomsel is in the process of selecting arrangers for its plan
for $600 million in loans from the European Credit Agency, the chief executive of Indonesia's
largest cellular company by subscribers said Friday, Dow Jones reported.
"We have invited up to five foreign investment banks to become arrangers for the loans," Sarwoto
Atmowiloto said.
He expects that his company will soon name the arrangers.
Telkomsel has plans for $1.5 billion of capital expenditure in 2009 to strengthen its coverage.
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In the first quarter of this year Telkomsel had 73 million subscribers, representing almost 60% of
the domestic market.
Telkom has a 65% stake in Telkomsel, while the rest is owned by Singapore Telecommunications
Ltd.
PRIVATE SECTOR
Sharp rise in cigarette sales
Cigarette sales in Indonesia during the first quarter of this year, at 59.6 billion, were 11.5% higher
than those of the same period in 2008, according to a report in The Jakarta Post quoting figures
from Sampoerna.
About 60% of the first quarter sales comprised machine-rolled clove cigarettes, about 32%
comprised hand-rolled clove cigarettes and about 8% comprised machine-rolled non-clove
cigarettes.
Sales of Sampoerna products increased by 2.5% to 18.1 billion, but the company’s market share
fell 0.7 percentage points to 24.3%.
Philip Morris’ market share increased 0.2 percentage points to 4.7%, but the combined market
share of Sampoerna and Philip Morris, which owns Sampoerna, fell by 0.5 percentage points to
29%.
Meanwhile, Sampoerna communications director Niken Rachmad told journalist on Wednesday
that the government plan to increase tax on cigarettes in a new regulation will double taxes and
will burden the cigarette producers because they have already paid tax.
She said Sampoerna had yet to decide whether to increase cigarette prices if the new tax was
approved.
BANKS
Danamon sees higher Q2 lending growth
PT Bank Danamon, the country’s fifth-largest bank by assets, expects to increase its lending in
the second quarter, The Jakarta Globe reported.
Sebastian Paredes, Danamon’s president director, said the bank’s loan growth might exceed
10% given the brighter outlook.
“For 2009, we expected that our loan growth would be less than 10%, with the first half of the
year being very difficult,” Paredes said.
“We now feel the second half will be better because interest rates will continue to decrease. Firstquarter gross domestic product was also not as low as we expected and our microfinance growth
was better than predicted.”
He said that the bank still had a strong capital position and that high liquidity would allow it to
expand faster if economic conditions allowed.
He added that Danamon’s loan growth would likely center around microfinance, consumer
lending and small and medium enterprises.
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As of the end of April, Danamon’s capital adequacy ratio stood at 23%, well above the minimum
of 8% required by the central bank, while its loan-to-deposit ratio during the same period was a
moderate 80%.
During a shareholders meeting, company officials said Danamon planned to pay out 50% of its
net profit in 2008 in the form of dividends. Total dividends of Rp765 billion ($74 billion), or Rp91
per share, are to be paid at the end of July.
Shareholders also approved the company’s plan to acquire an additional 20% stake in motorcycle
financing subsidiary PT Adira Dinamika Multi Finance.
Stanchart Indonesia eyes 90% SMEs credit growth
Stanchart Indonesia eyes 90% SMEs credit growth (NEW) Standard Chartered Bank
Indonesia(Stanchart) is targeting to increase its credit to small medium enterprises (SMEs) by
90% this year in an effort to grow its market share, an official said on Friday, Xinhua reported.
"SMEs contribute 18% to Stanchart Indonesia's revenue annually. Our parent company set the
highest growth from this segment," the company's vice corporate general manager Small and
Medium Enterprise Tonny Timor Basri told the press, declining to elaborate the figures.
The bank would focus on manufacture and trading companies that have been well-established
and have revenue Rp100 to 250 million (about $9.7 to $24.7 million).
In the first quarter of this year, the bank booked 68% growth, prompted by credit growth in plastic
and chemical industries that have been focusing on the domestic market.
Stanchart Indonesia is the Stanchart Bank's unit that listed in London and Hong Kong Capital
Market. In 2008, the company posted revenue increase of 26% to $13.97 billion with pre-tax
operating profit hike of 13% to $4.57 billion.
Panin to issue $45.4M in bonds
Publicly listed bank PT Bank Pan Indonesia (Panin) said it will issue bonds valued at Rp500
billion ($45.4 million) this year, Asia Pulse reported.
Panin corporate secretary Jasman Ginting said the bank will issue the bonds to take advantage of
a decline in interest rates.
Ginting refused to give more details beyond saying the bank needs the funds to strengthen its
capital and funding structure for long-term financing.
The bank has named Bahana Securities, Danareksa Sekuritas, Evergreen Capital and Indo
Premier Securities as underwriters, a company source said, Bisnis Indonesia reported.
POWER
PLN to secure $761M loan from Chinese banks in June
State power company PT PLN is set to secure another $761 million in loans from Chinese banks
next month to help finance its 10,000 MW power project, president director Fahmi Mochtar said
Monday, The Jakarta Post reported.
"The loan agreements will be signed on June 10 during the inauguration of the Suramadu
Bridge." Mochtar said.
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Mochtar said PLN would receive a loan amounting to $468 million from the China Development
Bank for the Adipala power plant in Cilacap, Central Java, and another $293 million loan from the
Export-Import Bank of China to finance the Pacitan plant in East Java.
Mochtar said PLN had earlier secured Rp1.46 trillion in loans from Bank Bukopin for the rupiah
portion of the loans required for the Pacitan power plant development. "Now, we are still looking
for another Rp1.89 trillion loan for the rupiah portion of the Adipala power plant development," he
said.
According to PLN vice president director Rudiantara, the project needs a total of $5.9 billion and
Rp32.30 trillion for power plants and transmission wires. "We have so far secured $3.3 billion and
Rp27.8 trillion."
Chinese banks have so far signed financing commitments for a total of $2.53 billion.
Mochtar said PLN had been in talks with lenders about the possibility of swapping PLN's dollardenominated loans for China's yuan to help reduce foreign exchange costs, as urged by Finance
Minister Sri Mulyani Indrawati.
"(But) the lenders seem reluctant, as the swap deals are only valid for three years, while PLN's
loans are for 13 years," he said
Meanwhile, the draft plan has been finalized for the second phase of the 10,000 MW power
program, which will generate an additional 9,706 MW of electricity in 78 areas, but the power
stations may not all be finished by the 2014 deadline, program head Yogo Pratomo said on
Tuesday, The Jakarta Globe reported.
Pratomo said PLN may need some time before starting construction of the power plants this year,
as the final draft still needed to be approved by the Energy and Mineral Resources Ministry. The
state secretary will also discuss the plan after the ministry gives the green light for it to go ahead.
PLN, Malaysian TNB to build power transmission project (NEW) State power company, PT
Perusahaan Listrik Negara (PLN), and Tenaga Nasional Berhad (TNB), a Malaysian power
company, have decided to construct a $450 million power transmission project throughout the
Malacca strait between Malaysia and Sumatra, Energy Business Review reported on Friday.
The project would enable power import and export between the neighboring nations, PLN
president director Fahmi Muchtar said.
Both countries have decided to conduct serious discussions regarding the project, and a meeting
would be conducted in June 2009, Muchtar was quoted by the Bisnis Indonesia as saying.
He also asserted that a concrete agreement is likely to be signed by both the countries by the end
of 2009, which will be followed by its application.
The main objective of the agreement would be tackling the power supply deficiency in certain
areas by utilizing the excess in other parts of both the countries. This would be feasible through
power imports and exports between Indonesia and Malaysia.
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OIL & GAS
Oil, gas investment commitments reach $17M
Indonesia received investment commitments worth $17 million from oil and gas contractors
following the conclusion of the government's 2009 Work Program and Budget in Indonesian Oil,
an official said Wednesday, Xinhua reported.
“The value could be more or less. However, we are optimistic they will follow through with their
investment commitments since most are large contractors,"said Abdul Mun'im, deputy director of
oil and gas at upstream oil and gas regulator BP Migas.
Mun'im said the contracts are dominated by Chevron Pacific Indonesia, Total E&P Indonesie,
Conoco Philips and Inpex.
Mun'im said the investment commitment figure was far above the government's target of $14
million initially set for this year.
There are 142 oil and gas exploration firms and 67 oil and gas production firms currently
operating in Indonesia, he was quoted as saying by Bisnis Indonesia.
Cepu early production phase to last until 2011: Official
Cepu block will only produce a maximum of 20,000 barrels per day (bpd) of oil from 2010 to as
early as the third quarter of 2011, an official from upstream oil and gas regulator BP Migas told
the House of Representatives Commission VII overseeing energy and mineral resources, The
Jakarta Post reported.
BP Migas planning deputy Achmad Luthfi told lawmakers the early production facilities for
producing 20,000 bpd would only be completed in August.
"The facilities have the capacity of 20,000 bpd. We expect the facilities to begin production in
August, but the first production, of course, will not immediately reach 20,000 bpd. We expect the
production of 20,000 bpd to be reached sometime in 2010," said Luthfi.
He said the level of production would be stagnant at 20,000 bpd until as late as the third quarter
of 2011.
"The permanent facilities will only be completed in the third quarter of 2011," he said.
Earlier, the government said it expected the block to begin producing 20,000 bpd from January
until December this year.
This production level was included in the government's 2009 state budget oil assumptions.
The Cepu block, discovered in March 2001, is located near the border of East Java and Central
Java and has proven reserves of 600 million barrels of oil and 1.7 trillion cubic feet of gas.
Pertamina eyes BP stake in NW Java block
State-owned oil and gas company Pertamina is looking to buy BP's 46% stake in the Offshore
North West Java (ONWJ) block, Platts reported.
Pertamina will team up with local company PT Indika Energy to make a bid for the block, a
Pertamina official said Monday.
"We will appoint an advisor to help us buy BP's stake in the Offshore North West Java block,"
Pertamina's spokesman Basuki Trikora Putra said.
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Apart from Pertamina, local oil and gas company Medco Energi International is also interested in
buying the stake, Reuters reported.
"The ONWJ block has been an important part of our portfolio for many years. However, it does
not fit with the company's long-term strategy," Nico Kanter, BP's Indonesia head of country said
in February.
BP plans to complete the divestment by the end of 2009, he said, adding that Indonesia remains
a core area for the company.
Apart from BP, which is the operator, the other stakeholders in ONWJ are CNOOC (36.72%),
Inpex (7.25%), Orchard Energy (5%), Itochu (2.57%) and Talisman (2.45%).
BP previously declined to give a selling price for its stake, saying the information was
commercially confidential.
BP said the sale would not affect BP's other interests in Indonesia, which include the $5 billion
Tangguh liquefied natural gas project in Papua.
MINING
Bukit Asam sees 20% revenue growth this year
State coal miner PT Tambang Batubara Bukit Asam expects a 20% rise in revenue this year on
the back of higher prices and sales volumes, the firm's president director Sukrisno said on
Thursday, Reuters reported.
"Coal prices fell from a record high, but prices early this year were much better than the same
period in 2008," Sukrisno told reporters.
Bukit Asam reported revenue of Rp7.216 trillion ($698 million) in 2008, up from Rp4.12 trillion in
2007. In the first three months of this year, the firm booked revenue of Rp2.33 trillion.
The company has said it aims to boost sales by 13% to 14.5 million tons in 2009.
"Sales volume will also increase which would help revenue to grow by 20% in 2009," he said.
Coal prices have fallen from a record peak of $201 a ton hit in July last year.
Bukit Asam will also increase its coal transportation by train to 11.6 million tons this year, from
10.3 million tons by adding more trains, Sukrisno said, adding that this would help to increase
sales.
The company -- Indonesia's second-largest listed coal miner by market value -- has said it
planned to increase coal production to 50 million tons a year within five to six years thanks to
several projects including railway expansion and coal mine acquisitions.
It has already said it would form a joint venture with state train operator PT Kereta Api Indonesia
to upgrade existing rail links from its coal mines to a port on the southern tip of Sumatra. The
South Sumatra l governor also plans a new rail project estimated to be worth $1 billion.
Once the new provincial rail link is completed, Bukit Asam will be able to deliver 20 million tons of
coal a year to a port on the southeast side of Sumatra.
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INCO revises down capex plans
PT International Nickel Indonesia (INCO) has revised down its capital expenditure budget for this
year by more than a quarter to reflect a slump in global demand, the company said on Tuesday,
Reuters reported.
INCO has revised down its spending for this year to $166.4 million from $228.8 million initially
planned in February.
"This review reflects a change in the priority and scope of existing projects," the firm said in a
statement.
INCO's net profit fell 87.7% to $17.2 million in the first quarter of this year due to significantly
lower prices.
INCO produced 16,200 metric tons of nickel-in-matte in January-March this year, down from
20,100 metric tons a year ago. It had said it might cut output by 20% this year from last year if
prices remained weak.
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