Business briefs
Macroeconomy
• Foreign reserves hit $56.6 billion, above projections
• Bank Indonesia optimistic interest rates can be cut further
Investment
• Volkswagen confirms Indonesia plant development program
• Pencil maker Faber Castell to expand operations in Indonesia
State concerns
• President promises to concentrate policies on steps for poor, unemployed
• Tax chief Darmin Nasution named as senior deputy governor at Bank Indonesia
SOEs
• Government raises 2009 dividend target for sector
• Net profit falls by 23.4% at PT Telkom
Private sector
• Cement maker PT Holcim seeks loans for takeover of Malaysian affiliate
• Car sales drop 28% through April, says industry association
Banks
• Bank Rakyat Indonesia predicts loan growth at 18%-22% this year
• Shariah banking sector continues to grow
Oil & gas
• 13-bank consortium to lend $650 million for Pertamina capital expenditure
• Crude output falls in April but gas production increases
Mining
• Berau Coal assessed for possible initial public offering

NATIONAL
WOC declaration adopted
Wrapping up an arduous two-year negotiation process, 76 countries, including Indonesia, on Thursday signed a pact to protect oceans and coastal areas from the impact of climate change, Antara reported.

Representatives from the 76 countries officially adopted the Manado Ocean Declaration after four days of meetings at the World Ocean Conference in the North Sulawesi capital of Manado.

“All participants have unanimously agreed on the points that have been delivered and the next step will be to bring the declaration to Copenhagen,” said Maritime Affairs and Fisheries Minister Freddy Numberi, referring to the UN Framework Convention on Climate Change (UNFCC) in December in Denmark.

Numberi said the declaration reflected participants’ political will “that oceans and coastal area issues will be included in future climate change negotiations.”

The declaration contained 35 paragraphs and highlighted the need for financial resources and incentives to help developing countries protect oceans and seas, for renewable ocean technologies, and for funding for more research into the impact of climate change on oceans and the role of large bodies of water in fighting the harmful effects of climate change.

Arief Havaz Oegroseno, head of the Indonesian delegation, said the declaration also invited parties to the UNFCCC to submit adaptation project proposals for coastal and ocean management to the Adaptation Fund Board.

Numberi denied accusations by NGOs that the declaration did not adequately protect the fisheries sector, saying the statement included all actions necessary to secure the livelihoods of coastal communities in Indonesia or elsewhere.

Numberi said that the declaration was not a scientific document but a political one.

Following the WOC, six member countries of the Coral Triangle Initiative (CTI) agreed to push ahead to create a secretariat and work out funding later in a bid to protect the region’s fast-diminishing coral reefs, said Numberi.

Officials of the six nations -- Indonesia, Malaysia, the Philippines, Papua New Guinea, East Timor and the Solomon Islands -- were expected to sign what was termed a CTI Leader’s Declaration.

The secretariat is in the very early stages. Only the US has confirmed funding, allocating $40 million over five years.

The body is seeking $70 million from the Global Environmental Fund, which addresses the funding of global environmental issues, particularly climate change adaptation and mitigation.

Although no decision has been made on the location of the secretariat, Indonesia is considered the likely location although the Philippines is reportedly also vying for the site, which can be expected to generate one of the world’s top marine research centers.

Indonesia speaks out over ‘arbitrary’ Suu Kyi charges
Indonesia urged fellow ASEAN member Myanmar on Friday to release opposition leader Aung San Suu Kyi and drop "arbitrary" new charges against her, going against a non-interference policy in member states’ internal affairs, Agence France-Presse reported.

"The Indonesian government is very concerned about the arbitrary detention of Aung San Suu Kyi and we are hoping for a legal process so we know the basis for her detention," foreign ministry spokesman Teuku Faizasyah said.

The 63-year-old Nobel Prize winner and democracy leader is facing five years' jail for allegedly breaching the terms of her house arrest after a US man swam to her lakeside house.

She has already spent most of the past two decades confined to her home after winning 1990 elections which were never recognized by the ruling military authorities.

"The charges against her are not appropriate. Why should Aung San Suu Kyi be detained when it was the American national who swam across the waters to her house?" Faizasyah said.

"For the time being, we don't see any good coming out of the trial, if it were to take place. Our main position is to call on Myanmar to release Aung San Suu Kyi. We are following the issue closely and expecting a comprehensive report from our embassy in Myanmar on the situation," he said.

Indonesia is a founding member of the 10-state Association of Southeast Asian Nations (ASEAN), which has a general policy of non-interference in member states' internal affairs.

The Jakarta-based ASEAN secretariat has made no comment about Aung San Suu Kyi's impending trial, which has drawn strong international condemnation.

Myanmar last year ratified ASEAN's new charter which seeks to set standards of human rights and democracy for member states.



POLITICS
Three-way race set for presidential election
President Susilo Bambang Yudhoyono is set for a three-way race in elections on July 8 after former President Megawati Sukarnoputri on Saturday cemented her coalition plans with the Greater Indonesia Movement Party, Reuters reported.

Yudhoyono, a popular reformer who is heavily tipped to be re-elected, also faces a challenge from Vice President Jusuf Kalla, also finalized his presidential ticket at the General Elections Commission in Jakarta on Saturday.

On Friday, Yudhoyono confirmed his vice presidential running mate would be central bank governor Boediono.

Yudhoyono's approval rating of 67%, against 12% for Megawati and 2% for Kalla, makes it almost certain he will win a second term, bar some unexpected blow.

The outcome of the presidential vote could affect the pace of reforms that are critical for attracting investment, creating jobs and driving economic growth which slowed in the first quarter of 2009 to its weakest in five years

"He (Boediono) will help me to overcome the economic crisis," Yudhoyono told a ceremony in Bandung.

Boediono, 66, is a respected technocrat who has held high-profile jobs in the cabinet and central bank during Indonesia's crisis years of the late 1990s and subsequent recovery.

His candidacy, which had been widely expected, has been seen as market-friendly and was welcomed by analysts because of his clean image.

"Boediono is probably the cleanest out there," said Anton Gunawan, chief economist at Danamon Bank. "Even when he was a minister he still lived in his own house and doesn't like to have the official car."

Boediono confirmed on Friday he had submitted his resignation as central bank governor, news that prompted a stock market sell-off on concerns about the course of monetary policy.

Megawati, who lost to Yudhoyono in 2004 elections, will run with Prabowo Subianto, a former general who has faced questions over his human rights record in the Suharto era.



TERRORISM
Terrorist suspects nabbed in E. Kalimantan
Personnel from the National Police’s Detachment 88 anti-terrorist squad detained two terrorist suspects in separate arrests in East Kalimantan last week, Detikcom reported.

Police on Monday announced the arrest of Abuzar, wanted over a 2002 attack on a Police Mobile Brigade post in Loki village, Maluku. Five officers were killed in the attack.

The second suspect, identified by the initials LK, was allegedly involved in communal violence in Poso, Central Sulawesi between 2000 and 2006.

“The two men were hiding but we tracked them down,” the source said, adding the suspects would soon be transferred to National Police headquarters in Jakarta.

Police have already arrested three suspects in connection with the Loki violence. Four others remain at large.



SECURITY
ASEANPOL to help beef regional security
The Association of Southeast Asian Nations (ASEAN) will establish a headquarters in Malaysia for its police body ASEANPOL, to boost regional crime and security cooperation, The Macau Times reported.

The headquarters would be the first for ASEANPOL and represents a stepping-up of the organization which until now has been mostly a forum for regional police chiefs.

ASEAN consists of Indonesia, Malaysia, the Philippines, Singapore and Thailand, Brunei, Myanmar, Cambodia, Laos, and Vietnam.

Malaysian Home Minister Hishammuddin Hussein told the Bernama news agency that the association would be tasked with curbing crime in the region, especially the drugs trade and people trafficking.

The announcement came at the 29th ASEANPOL conference in Hanoi, Vietnam last week, which was attended by the police chiefs from the 11-member ASEAN, including Indonesian Police Chief Danuri, as well as Australia.

Australia said it will provide extra training and support to ASEANPOL.

At the meeting, Australian Federal Police Commissioner Mick Keelty said Australia plans to help train regional police to tackle people smuggling.

Indonesia has seen a spike in people smuggling, with over a thousand illegal Afghan migrants caught since the beginning of the year, the majority on their way to Australia to claim asylum.

India looks to increased cooperation with Indonesia
India’s Defense Ministry may re-draw India's defense strategy to its southeast, giving extra importance to relations with Indonesia, Indian specialist journal Defense News reported.

Some active-duty and retired Indian military officials have suggested more diplomacy with Jakarta and joint exercises with Indonesian troops, Indian Defense Ministry sources said

A senior ministry official said India and Indonesia have been strengthening their defense ties for some time, and the two countries have explored the possibility of joint production of weapons and military equipment.

The two countries have also discussed joint patrols by Indian and Indonesian warships in the Strait of Malacca, the sea route to the east for ships including oil tankers from the Arabian Gulf.

An Indonesian diplomat said that Jakarta is interested in buying the BrahMos supersonic anti-ship missile, jointly developed by India and Russia.

Indonesia is also interested in the co-production with India of radars, electronic equipment and artillery weapons, the diplomat said.



LAW & ORDER
Two arrested over Rp220B Bank Mandiri fraud
Two people have been arrested over a Rp220 billion ($21.2 million) fraud case at Bank Mandiri in Jelambar, West Jakarta, police said, Indo Pos reported.

A spokesman from Jakarta Police special crimes unit said the two suspects are the head of Bank Mandiri’s Jelambar branch and one of the bank’s local customers.

Jakarta Police spokesman Chrysnanda Dwi Laksana said on Wednesday that it was certain that the funds had been taken out of the account in an unconventional way.

The perpetrator had tapped into the account through professional use of sophisticated information technology, which classified the case as cybercrime. The police will involve the Indonesian Financial Transaction Reports and Analysis Center in the investigation, he added.

According to police, the case started with a fund disbursement on February 4. At the time the bank received a check totaling Rp220 billion from the North Aceh government.

The suspects reportedly placed the Rp200 billion in a three-month deposit account and sent the rest of the money to multiple accounts owned by other suspects who are currently on the run.

When the deposit account expired on May 4, the bank’s branch head withdrew the money and transferred Rp198 billion into his accomplice’s account by means of a fake recommendation letter signed by the North Aceh government treasury, said police.

Police blocked several accounts allegedly owned by several suspects and seized Rp2.03 billion in cash from the two arrested suspects.

Jakarta Police spokesman Sr. Comm. Chrysnanda said his officers are still questioning more witnesses including the auditing team at Bank Mandiri central branch.


HEALTH
H1N1 fears raised as Malaysia confirms first case
Malaysia's top health official confirmed Friday the country's first case of Influenza A (H1N1) amid fears that some of those exposed to the infected patient could have gone on to Indonesia, Agence France-Presse reported.

"I can confirm (that it) is the first case in Malaysia," health ministry director general Ismail Merican said.

Acting Health Minister Kong Cho Ha, who addressed a hastily convened press conference, said the patient was a 21-year-old male student who arrived on a flight from the US on May 13, giving no further details on his identity.

He said the patient came down with fever, sore throat and body aches the day after his return and was admitted to the Sungai Buloh quarantine facility in central Selangor state on the same evening and is now in stable condition.

The government has urged all passengers who travelled on Malaysian Airlines flight MH091 from Newark in the US to Kuala Lumpur that landed at 7:15am on May 13 to contact the ministry for further instructions.

He said there was a fear that some of those exposed to the infected patient may have gone on to Indonesia.

Officials could not immediately confirm how many Indonesians were on board or if any passengers continued onto Indonesia.

A number of suspected swine flu patients have been receiving treatment in Indonesia but none have so far contracted the disease.

The latest World Health Organization figures show the number of laboratory-confirmed H1N1 flu cases worldwide is 7,520 in 33 countries.

A total of 65 people have died from the disease, most of them in Mexico, WHO figures show.



ECONOMY
Govt. raises debt target
The government has raised its target for the amount of bonds to be sold this year by almost 50%, apparently to take advantage of the attractiveness of Indonesia’s offerings in international markets.

Rahmat Waluyanto, the Finance Ministry's Director General of Debt Management, told a press briefing on Wednesday that the government had bumped up its bond market fund-raising target in a “gross calculation” to Rp142.3 trillion ($13.7 billion) for the year, The Jakarta Globe reported.

The figure was an increase from the earlier target of Rp99.6 trillion, he said, adding that the figure had been raised in part because the country needed money for its fiscal stimulus package.

Before the target was raised, Indonesia had already achieved over 80% of its goals, and still has a $1.5 billion Samurai bond in the pipeline. With the new target, Waluyanto said, the government has achieved 62.84% of its gross bond proceeds target for this year.

The government raised Rp5.375 trillion ($518.8 million) in a debt auction on Tuesday, outstripping a target of Rp2 trillion, supported by expectations for lower rates and improving conditions in the bond market, Reuters reported.

Waluyanto also sought to clarify reports by local media quoting National Development Planning Board (Bappenas) officials as saying that the country did not need to draw on standby loans.

He said that if market conditions prove unfavorable, the government could still opt to draw upon the $5.5 billion in standby loans it has secured from such sources as the Asian Development Bank, the World Bank, and the governments of Japan and Australia, to plug this year's budget deficit.

The Central Bureau of Statistics reported on Friday that the economy grew at an annual rate of 4.4% in the first quarter of 2009, the slowest pace in five years, Reuters reported.

The Finance Ministry had forecast annual growth of between 4.3% and 4.8% for the first quarter.

While the figure represented a significant slowdown in growth, Bloomberg reported that Indonesia’s economy grew at the fastest pace in Southeast Asia last quarter, spurred by domestic consumption.

Consumer sentiment in Indonesia improved steadily through the first quarter before turning optimistic in April for the first time since December 2007, Bank Indonesia (BI) surveys of more than 4,300 households in 16 cities show.

Spending by consumers jumped 5.8% in the first quarter from a year earlier, from 4.8% in the fourth quarter. Investment increased 3.5%, while exports were down 19.1%.

Meanwhile, annual inflation in June is expected to ease to around 5%, BI deputy governor Hartadi
Sarwono said on Friday.

Annual inflation was 7.31% in April, the lowest since December 2007, helped by easing food prices. Annual inflation was 7.92% in March.

With Governor of Bank Indonesia Boediono resigning from the position on Friday to run with President Susilo Bambang Yudhoyono in the July 8 elections, it was unclear who would head the bank.

Director General of Tax Darmin Nasution earlier that week was appointed as senior deputy governor, replacing outgoing Miranda Goeltom.

Boediono told a press conference on Friday night that he had submitted his resignation to the president, The Jakarta Post reported. "In accordance to the regulation, I resign. And I have thoroughly discussed about this with my partners at Bank Indonesia's board of governors," Boediono said.

"I see that the market is calm now, and that makes me feel quite relaxed with my resignation in such times," he added.

Boediono said without an active governor, the central bank would "operate under mechanism ruled by existing law".



BUSINESS BRIEFS
MACROECONOMY
2009 forex reserves higher than predicted: BI
Indonesia’s foreign exchange reserves stand at $56.6 billion, higher than earlier predicted, Bank Indonesia (BI) deputy governor Hartadi A Sarwono said on Friday, Antara reported.

Sarwono said the foreign exchange reserves were still safe despite foreign debt repayment pressures.

"Foreign exchange reserves must be made available as they are needed to deal with a possible shock," he said.

He said the budget surplus stored in foreign exchange reserves was higher due to the first quarter trade surplus of $1.8 billion.

Exports of non-oil and gas commodities during the first quarter had reached around $20 billion in the first quarter, $2 billion higher than BI’s prediction.

“Although the value of non-oil and gas exports is above estimates they remained affected by the global financial crisis," he said.

BI sees room to cut rates further
Bank Indonesia (BI) sees room to cut interest rates further on the back of lower inflation, its senior deputy governor said on Thursday, Reuters reported.

“The BI rate is dependent on inflation,” BI Senior Deputy Governor Miranda S. Goeltom said.

The central bank has forecast annual inflation of between 4.3% and 4.6% in the second quarter and at the lower end of the 5-7% range in the full year of 2009.

BI has slashed its key interest rate six times by a total of 2.25 percentage points since December, bringing the rates down to 7.25% earlier this month - the lowest since the rate was introduced - after annual inflation eased to 7.31% in April.

However, commercial banks have been slow to adjust lending rates despite the monetary easing by the central bank, a crucial factor to help boost growth.

BI said in a statement on May 5 that deposit rates have fallen 126 basis points from December to April while lending rates for working capital have been cut by just 16 basis points.

“We already met the banks and encouraged them to lower lending rates. We listened to the banks to find out their difficulties in lowering lending rates,” Goeltom said.

BI expects loans to grow around 15%-16% this year, about half of the 30% loan growth last year.

Govt. to sell more retail bonds: Finance Ministry
The government plans to sell its sixth retail bond (ORI006) in August, the Finance Ministry said on Wednesday, The Jakarta Post reported.

"Our aim in issuing the retail bond is to attract bigger participation from individual investors, as government bonds normally target institutional investors," Rahmat Waluyanto, the ministry's Director General of Debt Management, told a press briefing.

"Only Indonesian citizens are allowed to buy retail bonds. By strengthening domestic investment, we can prevent mass redemption by foreign investors, which can affect market stability," he added. The amount is yet to be determined.

According to Waluyanto, a retail bond is interesting to retail investors because there is no default risk, and the return is higher than (bank) deposit rates.

Finance Ministry's director of debt Bhimantara Widyajala said the government would offer ORI006 by the end of July, expecting to sell it in August.

ORI006 will be sold at Rp3 million per unit, with a maximum purchase of Rp3 billion, and have a three-year maturity, he said. The coupon has yet to be decided.



INVESTMENT
VW seals Indonesia assembly deal
The biggest European car maker, Volkswagen, said on Monday it had signed a partnership in Indonesia to produce models for both domestic and export markets, Agence France-Presse reported.

VW and the Indonesian group Indomobil plan to build VW cars in Jakarta, concentrating on the family van, said a statement which confirmed the deal.

Output capacity would be progressively enlarged, the German group forecast, as VW aims to gain market share in both Indonesia and other Southeast Asian countries.

The statement quoted VW board member Christian Klinger as saying that "global market developments demonstrate the importance of timely positioning in growth regions."

Klinger had indicated in a press interview last week that a partnership in Indonesia was pending, but did not provide details.

Faber Castell to increase investment in Indonesia
German pencil maker Faber Castell will continue to increase its investment in Indonesia through product diversification, company officials said, Antara reported.

"Indonesia has been chosen as our main investment target in Asia because it can produce international standard products at competitive costs," Faber Castell International Indonesia managing director Yandramin Halim said.

Indonesia's population and its manpower are other factors behind the decision, he added.

Faber Castell Indonesia currently has three factories in Bantargebang, Bekasi, producing 2B pencils; in Cibitung, Bekasi, producing color pencils and in Palembang, Sumatra.

IDX expects 15 firms to launch IPOs this year
The Indonesia Stock Exchange (IDX) expects 15 companies to launch initial public offerings (IPOs) later this year, IDX director Eddy Sugito said Thursday, Dow Jones reported.

Two of the 15 companies, PT Metropolitan Kencana and PT Protelindo Telekomunikasi Indonesia, may list shares in the third quarter of this year, Sugito told reporters.

"The two will sell a minimum 10% of their stakes through IPOs," Sugito said.

PT Batavia Prosperindo Finance plans to sell a 45% stake while PT Katarina Utama plans to sell a 33% stake later this year, depending on the market situation, he added. Sugito did not give the names of the other companies.



STATE CONCERNS
Focus on protecting poor, workers: President
The government this year will focus on shielding people from the impact of the global financial crisis, President Susilo Bambang Yudhoyono said Tuesday, The Jakarta Post reported.

"The right and realistic theme for these two years is (economic) recovery. It is not about achieving the highest growth possible, but protecting the people from the impact of the crisis," said Yudhoyono, while opening the 2009 National Development Planning Meeting in Jakarta on Tuesday.

Yudhoyono cited seven priorities: preventing unemployment, protecting the property sector, reducing inflation, maintaining people's purchasing power, protecting the poor, stabilizing the price of food and energy and maintaining growth between 4% and 5%.

He said both central and local governments should draft their 2010 budget in line with the priorities to help the economy cope with the global downturn.

Tax office chief is new BI senior deputy governor
The House of Representatives on Monday appointed the Director General for Taxation, Darmin Nasution, as the new Bank Indonesia (BI) deputy senior governor to replace Miranda S. Goeltom, who will end her tenure in June, The Jakarta Post reported.

Ahmad Hafiz Zawawi, the chairman of the House's Commission XI overseeing financial affairs, said 40 lawmakers from 10 factions attended Nasution’s confirmation hearing as senior deputy governor.

At a meeting with the House, Nasution said BI, as a supervisory body, should prevent players in the financial sector from "excessive risk taking", adding that a new agency -- the Financial Services Authority (FSA) -- would help manage this problem.

"Creating a credible BI is a definite prerequisite ... There is a weakness in BI's governance structure," Nasution, known for his success in cleaning up the highly corrupt tax office, told lawmakers.

Nasution supported the division between FSA and BI, with FSA focusing on the supervision of the financial sector and BI acting as the monetary authority.

Infrastructure guarantee fund to be set up
The government may set up a guarantee fund by June as part of ongoing efforts to draw more private investment into infrastructure, a senior government official said Wednesday, Dow Jones reported.

While several aspects of the operation of the fund remain under discussion, the government has earmarked Rp1 trillion as "seed" capital to attract private sector funds into infrastructure projects, said Bastary Pandji Indra, director for public-private partnerships at the National Planning and Development Board (Bappenas).

“The government will also seek loans from multilateral agencies to boost the fund, which will help the government fulfill its commitment in providing guarantees for infrastructure projects,” Indra told reporters.

In April the government secured a commitment from the Asian Development Bank to provide up to $140 million funding for its Indonesian Infrastructure Financing Facility (IIFF), which will provide long-term debt and equity to infrastructure investors who find such funding difficult to obtain on the commercial market.

The facility aims to leverage the funds it provides to increase private-sector capital flowing into Indonesia by six or sevenfold.

Contractors move forward in Q1
Construction companies are beginning to feel the benefit of Indonesia's recovery efforts, with government infrastructure work helping boost employment, The Jakarta Globe reported

The largest state-owned contractor, PT Wijaya Karya (Wika), has secured contracts worth Rp2.7 trillion ($262 million), a jump of about 26% from Rp2.1 trillion during the same period last year.

The company said it hoped to secure Rp3.7 trillion in new contracts by the end of the first half, or about 40% of its anticipated Rp9.4 trillion in new projects for the year.

“We expect that most of the work will take the form of government projects,” said Bintang Perbowo, Wika’s president director. “We’re currently participating in a number of tenders for government infrastructure projects and will hopefully have secured the contracts by July.” He declined to give details of the tenders.

Wika recorded unaudited revenue of Rp1.26 trillion for the first quarter, compared with Rp1.1 trillion in the year-earlier period.

Separately, private contractor PT Duta Graha Indah has also secured Rp148 billion in new contracts, including projects for the construction of roads in Nias Islands, North Sumatra, by the end of March.

Duta Graha said government infrastructure projects in the first three months had produced positive growth for the company of about 62.3% compared with the same period last year.



SOEs
Govt. lifts SOE dividends forecast
The government plans to take Rp29.08 trillion ($2.8 billion) in dividends from state-owned enterprises this year, higher than its previous projection of Rp26.1 trillion, despite already cutting several companies’ dividend percentages in order to help them cope with the global crisis, The Jakarta Globe reported.

This is the third time the government has revised its dividend target this year, from its most pessimistic outlook of Rp26.1 trillion in April, a reduction from the most optimistic outlook of Rp30.8 trillion in January.

“We have 10 major sectors out of 36 that have contributed about 98% of this year’s dividends,” State Minister for State Enterprises Sofyan Djalil said during a hearing with the House of Representatives on Wednesday.

“All of them improved their performance last year and contributed about Rp28.6 trillion in dividends,” he said.

The ministry also announced a positive outlook for SOE profits for 2009, despite the gloomy economic outlook this financial year, with a net profit increase of about 11% to Rp79.3 trillion.

Telkom's net profit drops 23.4% in Q1
State-owned telecommunication company PT Telkom booked a 23.4% drop in its first-quarter net profit in 2009 on the back of higher costs, The Jakarta Post reported.

Telkom's net profit was down Rp2.5 trillion ($240 million) in the first quarter from Rp3.2 trillion in the same period a year earlier, a report issued by the company said on Monday.

The biggest fall in revenue came from its fixed line services, which dropped by 17% to Rp2.1 trillion, while interconnection revenue fell by 15% to Rp1.9 trillion. Data and internet services also decreased 6% to Rp3.7 trillion.

Meanwhile, first-quarter costs and revenue costs jumped 11% and 93% respectively to Rp9.4 billion and Rp533 billion.

Revenues from cellular services increased by 9% to Rp6.5 trillion from a 40% increase in the number of cellular customers to 72.1 million and a 60% increase in call time usage.

In 2008, the company's net profit dropped 17% to Rp10.6 trillion from Rp12.8 trillion due to foreign exchange losses.

Jasa Marga to build Cengkareng-Serpong toll road
State-owned toll road operator PT Jasa Marga announced Monday it plans to build a new toll road linking Cengkareng to Kunciran and Serpong in Tangerang, Banten by 2011, The Jakarta Post reported.

Jasa Marga’s finance director Reynaldi Hermansjah said the company will partner with several private firms to build the 26.4 km toll road, which needs a total investment of Rp3.8 trillion ($360 million).

The company said it will use Rp1.9 trillion of the money to buy land, Rp1 trillion to construct the Cengkareng to Kunciran toll road and another Rp900 billion for the Kunciran-Serpong section.

Jasa Marga is currently working on a number of toll roads across Java, including the Bogor Ring Road in West Java, the Semarang-Solo toll road in Central Java, the Gempol-Pasuruan toll road in East Java and the Surabaya-Mojokerto toll road in East Java.

The company said it aims to finish all the projects by 2012.

Semen Gresik to sign $600M loan for expansion
The country's largest cement producer PT Semen Gresik will sign a loan agreement worth Rp6.3 trillion ($604.8 million) with a number of local banks this month, finance director Cholil Hasan said Tuesday, The Jakarta Post reported.

"The loan will be used to finance part of capital expenditure of $1.3 billion to be spent within five years, from 2008 to 2014,” Hasan said.

Hasan said the signing would be the follow up to a memorandum of understanding signed in December with Bank Mandiri, the lead arranger for the loan agreement.

The 2008-2014 expansion plan aims to significantly boost the production capacity of the company’s cement plants - both from the existing plants and proposed new ones - and to construct new power stations.

For 2009 alone, the company targets to spend $297 million, or equal to about 22.8% of the total proposed capital budget.

The funds will be used to finance production optimization projects and improve processes by removing production bottlenecks, increasing production capacity by another 1 million tons this year to bring it up to 19 million tons.

Semen Gresik president director Dwi Soetjipto said that the demand for cement would recover in the next semester as the government's stimulus package particularly for infrastructure projects would compensate for lower private sector demand.

Perum Pegadaian set to go public
State pawn shop operator Perum Pegadaian is set to go public, saying it would prefer Indonesian investors buy its shares rather than foreign interests, The Jakarta Post reported.

“The Indonesian investors know that many people still live in poverty so they will not only be eager to earn big profits," Perum Pegadaian president director Candra Purnomo told reporters during a public announcement on Thursday.

According to Purnomo, the company helps poor people, who usually borrow an average of Rp100,000 ($9.70). "We hope we can still help those people after it goes public," he said.

According to Purnomo, the company has almost completed preparations for the plan and is waiting for approval from the state minister for state enterprises and the finance minister.

The company has more than 3,000 branches throughout the archipelago and serves more than 16,000,000 costumers annually.

In 2008, the company made Rp901 billion in profit. It has set a target of Rp1.2 trillion for this year



PRIVATE SECTOR
Holcim Indonesia seeks loans for acquisition
Cement maker PT Holcim Indonesia is seeking as much as $40 million in medium-term loans from local banks to help finance the acquisition of a Malaysian company it is affiliated with for approximately $50 million, The Jakarta Globe reported on Monday.

Roughly a fifth of the acquisition will be financed via internal cash flows.

“We are negotiating with several local banks to secure rupiah loans. We hope to make an announcement next month,” said Tim Mackay, Holcim Indonesia’s president director.

The company plans to acquire Holcim Malaysia for above its fair value, he said. An independent appraiser has priced the Malaysian affiliate at $40.3 million.

Holcim Indonesia will also assume $13.1 million of loans held by parent Holderfin, which would raise the value of Holcim Malaysia to $53.4 million, slightly higher than the $50 million price that Holcim Indonesia is pursuing.

Car sales down 28% through April: Gaikindo
Car sales from January to April were down 28% to 134,868 units from 187,246 units in the same period last year, according to the Association of Indonesian Automotive Manufacturers (Gaikindo), The Jakarta Globe reported.

Non-sedan car sales reached 129,990 units, down 26% from the same period last year of 175,405 units.

The sedan car segment dropped to 4,878 units from 11,841 units in the same period last year.

Indofood may boost bond issue by 50%
PT Indofood Sukses Makmur may raise the size of a five-year bond issue planned for June to Rp1.5 trillion ($144.8 million) from Rp1 trillion, an underwriter said on Wednesday, Reuters reported.

"If we receive a good response and there's a healthy demand for the bonds, Indofood may raise its issuance target to Rp1.5 trillion," Rusmin Kasim, a director at DBS Vickers Securities Indonesia, told a news conference.

Indofood has appointed PT DBS Vickers Securities Indonesia, PT Danareksa Sekuritas, PT ING Securities Indonesia, PT Kim Eng Securities, and PT OSK Nusadana Securities Indonesia as underwriters.

The proceeds will be used to refinance Rp976 billion of maturing debt and for working capital.

Astra Agro secures $150M loan for expansion
Publicly traded agribusiness company PT Astra Agro Lestari said it will secure a loan of $150 million in July to finance business expansion, Asia Pulse reported.

The subsidiary of Astra International plans to build crude palm oil (CPO) processing factories in East Kalimantan, company director Santosa said.

The company will build two factories with a processing capacity of 30 tons and 45 tons of fresh fruit bunches per hour, Santosa said.

The company will finish the construction of a CPO factory now being built in Jambi this year, he added.

Astra Agro hopes to start harvesting 57,000 hectares of new oil palm plantations in the next three to four years.

In the first quarter of this year the company reported Rp1.4 trillion ($135.8 million) in net income, down 38% from the same period last year with net profit shrinking 74% to Rp217.7 billion on weak demand since the last quarter of 2008, Investor Daily reported.



BANKS
BRI sees loan growth
PT Bank Rakyat Indonesia (BRI) said on Monday it expects its lending to grow 18-22% this year, higher than the central bank's target for the sector of 15-16%, Reuters reported.

Indonesian authorities have been putting pressure on banks to crank up lending in order to help shield the economy from the global economic crisis. Many banks have been reluctant to cut lending rates, citing the need to keep extra cash amid market uncertainty, despite a series of central bank interest rate cuts.

“Lending expansion will be carefully selected and prioritized on small, micro and medium-sized businesses,” the state bank said in a statement. It aimed to keep such lending to 80% of its total loan portfolio.

“To support lending growth, the bank will strengthen its third-party deposits, which are expected to increase 15%.”

The bank also said that its gross non-performing loans this year were expected to be below 5% and that it should maintain profit growth at 10-15% in 2009.

Indonesian bank loans' growth is expected to halve to around 15-16% in 2009 from about 30% last year.

Shariah bank assets creep higher in Q1
The performance of shariah banks in Indonesia in the first quarter of 2009 was relatively good, the director of the shariah bank directorate at Bank Indonesia, Ramzi A Zuhdi, said Thursday, Antara reported.

According to Zuhdi, total assets of the shariah banks in the period rose to Rp51.6 trillion or 3.2% from the same period last year which was recorded at Rp50 trillion.

Although assets grew gross non-performing loans in the banks were above 5%, he said.

"This was because of the impact of global economic crisis. The net non-performing loans however could stand at 3.22%," he said at an Asia Pacific Conference Exhibition.
OIL & GAS
Pertamina offered $650M loans by 13 banks for capex
Thirteen banks have offered $650 million in loans to state-owned oil and gas company PT Pertamina to finance its capital expenditure this year, The Jakarta Globe reported on Friday.

Frederik Siahaan, Pertamina’s chief financial officer, said it planned total capital expenditure of Rp21.9 trillion ($2.1 billion), mostly for energy projects and exploration and exploitation activities.

Siahaan said about Rp8.8 trillion, or 40% of the total, would come from external sources, of which the company has already secured Rp2.3 trillion from BNP Paribas, HSBC and Sumitomo Mitsui Banking.

The loans would finance a polypropylene project at the company’s processing plant in Balongan, Central Java, which has a production capacity of 250,000 metric tons a year of the polymer.

Siahaan said that about Rp14.4 trillion of Pertamina’s capital spending this year would go to developing its upstream division, and could involve acquiring an upstream company. “We are looking for opportunities now, and if there’s a company available, we’ll pick it up,” he said.

April crude output falls, gas up
Crude oil output in April fell 1.1% to 822,700 barrels per day (bpd) compared with 831,965 bpd in March, due to technical problems at several fields, a senior official at upstream oil and gas regulator BP Migas said Tuesday, Platts reported.

Indonesia pumped 115,300 bpd of condensate in April, 6.3% less than in March and the lowest pumped so far in 2009.

Crude and condensate output in April together fell 1.8% to 938,000 bpd compared with 955,025 bpd in the previous month.

Meanwhile, Indonesia produced 7.796 billion cubic feet per day (bcfpd) of gas in April or 0.1% more than in March at 7.789 bcfpd.

Indonesia produced 7.788 bcfpd of gas in the first quarter of 2009, higher than the production target of 7.56 bcfpd.

The government initially targeted to produce 7.326 bcfpd of gas in 2009, Finance Minister Sri Mulyani Indrawati said.

Total E&P Indonesia is expected to contribute 2.66 bcfpd, Pertamina 1.1 bcfpd and the new Tangguh project 500,000 million cubic feet per day, Oil and Gas Director General at Energy and Mineral Resources Ministry Evita Legowo has said.

Saipem wins $280M gas project deal
Italian offshore contractor Saipem has been awarded a new contract by Premier Oil Natuna Sea to develop the Gajah Baru field, Energy Business Review reported.

Saipem, which is part of a consortium with PT SMOE Indonesia, will work on the Central Processing Platform, the Wellhead Platform, a connecting bridge and a 16-foot gas export pipeline.

The field is located in the Natuna block A in the West Natuna Sea, operated by Premier Oil Natuna.

Govt. expects to sign Chubu, Kogas LNG deals
The government hopes to sign by June an agreement to sell liquefied natural gas (LNG) fromTangguh gas block to Korea Gas Corp., and may ink a further deal to sell LNG from Tangguh to Japan's Chubu Electric Power Co., the head of the upstream oil and gas regulator BP Migas said Thursday, Dow Jones reported.

"To increase government revenues, BP Tangguh and BP Migas have determined to sell LNG diverted from Sempra," Raden Priyono told reporters.

Priyono said the government hopes the deals with the two companies will secure "high prices" for the LNG.

BP Plc unit BP Tangguh operates the block. US firm Sempra Energy has an offtake agreement for 3.6 million metric tons a year of LNG from Tangguh, and is allowed to divert half of that volume to other customers.

The government in July reached an initial agreement with Kogas to supply up to 1 million tons of LNG to the Korean firm, but has yet to determine final volume and pricing.

The Tangguh gas project will deliver its first liquefied natural gas (LNG) export to China by the end of June, Energy and Mineral Resources Minister Purnomo Yusgiantoro said Thursday, The Jakarta Post reported.

This delivery is later than the government's initial target of April, but Yusgiantoro saw no problem in the delay.

"We expect one cargo of LNG from Tangguh to be delivered by the end of June," Yusgiantoro said, adding buyers in China have agreed with the schedule.

Biodiesel exports projected to rise 20%
Indonesia’s exports of crude palm oil-based biodiesel in 2009 are projected to rise around 20% from 490,000 tons in 2008, Antara reported.

"Exports will rise because demand will also rise as oil supply will probably drop quite a bit," second deputy chairman of the Indonesia Palm Oil Council (DMSI), Sahat Sinaga, said on Friday.

Sinaga said the export rise needed to be supported by improved port infrastructure and called on the government to immediately provide a special pipe network for the distribution of the commodity.

In 2009, Indonesia’s CPO production is estimated to reach 20 million tons and exports would reach 15.5 million to 16.5 million tons including biodiesel.

In 2008, the country’s CPO exports reached 14.29 million tons, with 33% sold to India.

Sembcorp unit secures $158M Indonesia rigs deal
Singapore's Sembcorp Marine - the world's number two builder of offshore oil rigs - said on Monday its Indonesian unit secured a $158 million contract for the construction of two offshore platforms, Reuters reported.

Sembcorp said its Indonesian unit PT SMOE Indonesia is part of a consortium with PT Saipem Indonesia that has secured a contract worth $430 million.

The project is expected to be completed in 2011 and will carry 140 million cubic feet of gas to Sembgas in Singapore.



Medco plans $96M bonds issue
PT Medco Energi Internasional, the country’s biggest publicly traded oil and gas company, will offer Rp1 trillion ($96 million) in bonds to finance its working capital and capital expenditures this year, financial director Cyril Noerhadi said Monday, The Jakarta Post reported.

Medco’s bonds, to be issued in two series, will be offered in tenors of three and five years, with yields of between 12.6% and 13.6%, and 13.37% and 14.37%, respectively with a maturity date in 2012 and 2014.

Andi Sidharta, a director at PT Bahana Securities, said the offering period for the bonds had been set for June 9-11, followed by a listing on the Indonesia Stock Exchange on June 17.



MINING
2009 coal output revised down: Industry
Indonesia's coal output this year may be about 9%, lower than initially expected due to the global crisis, a top industry official said on Thursday, Reuters reported.

Coal production in the first quarter fell 1.39% to 58.07 million tons, compared to 58.90 million tons in the same period of 2008.

"There were no cancellations from buyers, but they reduced the shipment volumes," Bob Kamandanu, the newly elected chairman of Indonesia Coal Association said.

"With the situation, production is most likely to hit 240 million tons. If demand improves in the second half, it could be much higher but it will not reach 265 million," he said.

Indonesia exported 44.79 million tons of coal in the first quarter, down 11.2% from 50.49 million tons in the January-March period last year, Kamandanu said.

However, Indonesia's overall coal exports for 2009 should still top the 206 million tons shipped in 2008 as coal demand was expected to recover in the second half helped by Chinese and Indian demand, Kamandanu said.

Kamandanu said coal prices were likely to hover between $65 and $70 until the end of the year.

Berau Coal reviewed for possible IPO
Coal miner PT Berau Coal is being assessed for a possible initial public offering and the due diligence should be completed by the end of June, president director Bob Kamandanu said on Thursday, Reuters reported.

"We were informed by shareholders that a team of banks would be conducting due diligence for the purpose of an IPO," Kamandanu said.

Deutsche Bank, Bank of America's Merrill Lynch, and PacBridge Capital Partners, are conducting the due diligence.

The team will review assets to determine the firm's market value and whether to go ahead with the IPO, he said.

US coal miner Peabody Energy and Anglo-Swiss miner Xstrata plan to bid for a majority stake in Berau Coal in a deal that may be valued at around $1 billion, two sources with direct knowledge of the deal have said.

Berau Coal -- which has 1,200 square km concession area in East Kalimantan -- produced 13.2 million tons of coal in 2008 and aims to produce 15 million tons this year.

April tin exports down 22.5% on year
Refined tin exports fell an estimated 22.5% in April due to slow demand, data showed on Tuesday, and shipments are likely to stay weak as producers consider tin prices are still too low, Reuters reported.

Tin exports fell to 6,082.37 tons in April from 7,857.92 tons a year ago, Trade Ministry data showed.

"Tin exports in April were down because overall demand for the metal was weakening," Alberth Yusuf Tobogu, director of mining product exports, said.

Indonesia exported a total of 32,040.89 tons in the January to April period, down 5.2% from 33,809.85 tons in the same period a year ago.

About 79% of the April exports went to Singapore, while the remainder went to Malaysia, Taiwan, Thailand, India, China, Japan and Hong Kong, the ministry said.

Adaro net profit, revenue to rise in 2009
Indonesia's largest coal producer by market value, PT Adaro Energy, expects double-digit growth in revenue and net profit this year, an official at the firm said on Tuesday, Reuters reported.

"We still believe in double-digit growth for both," said operating director Ah Hoo Chia, when asked about the outlook for revenue and net profit for 2009.

Adaro, which has a market capitalization of $3.64 billion, sells to 48 customers in 18 countries worldwide, including power utilities Thai Power and Indonesian state power company PT PLN. Exports account for 70%-72% of its sales.

Adaro expects to produce 42-45 million tons of coal this year, up from 38.5 million tons in 2008, and aims to increase production to 80 million tons per year in the next five years.

The firm reported a ten-fold increase in net profit last year to Rp887.2 billion ($85.63 million) while revenue rose 56% to Rp18.09 trillion despite a global economic downturn that has led to a sharp drop in commodity prices.

It also turned to a first-quarter net profit of Rp1.145 trillion this year from a Rp12 billion loss a year earlier, thanks to higher average achieved selling prices of Envirocoal.

Indika expects 2009 coal output up 14%
PT Indika Energy said on Monday it expects coal output to rise about 14% to nearly 25 million tons this year after finalizing the acquisition of engineering firm PT Petrosea, Reuters reported.

Coal production at PT Kideco Jaya Agung, in which Indika has a 46% stake, should reach 24 million tons this year, while Petrosea should add an additional 850,000 tons, Aziz Armand, Indika's finance director, said.

Indika, which produced 22 million tons of coal in 2008, expects coal production to reach nearly 28 million tons in 2010, including 26 million tons produced by Kideco and two million tons by Petrosea, Armand said.

In February, Indika Energy agreed to buy an 81.95% stake in Petrosea from Clough International Singapore Pte. Ltd, for $83.8 million. Petrosea has a 50% stake in local coal miner PT Santan Batubara.

The firm is now seeking shareholders approval for the purchase of an 82% shares at Petrosea.

"We will hold a tender offer for the remaining 18% in the third quarter of this year," Armand said.

Indo Tambangraya sees 2010 coal output up 25%
Coal miner PT Indo Tambangraya Megah expects coal output to increase by up to 25% next year as production kicks in at new mines, the company's president said on Tuesday, Reuters reported.

Commercial production at a mine at its PT Bharinto Ekatama unit is expected to start at the end of 2010, Somyot Ruchirawat said.

"For production in 2010, we will try to increase from Bharinto, the East Block and PT Trubaindo Coal Mining. It will be a 20%-25% increase from the 2009 production target," Ruchirawat said.

The company plans to produce 20.5 million tons this year, up from 17.8 million tons in 2008.

The company said it was also looking at buying coal mines to increase output, but did not elaborate on a timeframe.
 

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