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Trade and Investment News , 13 July 2009 |
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Highlights
National • The El Nino weather effect is beginning to bite in Indonesia
Politics • Strong vote for President Yudhoyono in former conflict areas
Security • President says next year’s defense budget will rise 20%
Law & order • Government demands proposed ASEAN human rights body have teeth
Health • Swine flu cases hit 55
Economy • World Bank chief says Indonesian economy placed in “exciting position”
Business briefs
Macroeconomy • Foreign investors increase holdings in government bonds
Investment • Finance minister says 7% investment growth will push economy forward
State concerns • Despite global crisis, coffee exports up 19%
SOEs • PT Telkom expects better profit on stable currency, calmer competitive position
Private sector • Toll road operator wins $240 million in loans for expansion
Banks • Bank loans up by 19% compared to same period last year
Power • PT PLN opens tender for 3.26 million tons of coal for outer island power plants
Oil & gas • Tangguh project delivers first load of LNG to South Korea
Mining • PT Aneka Tambang takes on $40 million gold mine project in Banten province
NATIONAL
Forecasters say El Nino has returned
Scientists said Thursday that the periodic warming of water in the tropical Pacific Ocean, which can affect weather around the world, including Indonesia, has returned, reported Reuters.
The Pacific had been in what is called a neutral state, but forecasters at the National Oceanic and Atmospheric Administration (NOAA) say the sea surface temperature climbed to 1.8 degrees Fahrenheit above normal along a narrow band in the eastern equatorial Pacific in June.
In addition, NOAA's Climate Prediction Center said temperatures in other tropical regions are also above normal, with warmer than usual readings as much as 975 feet below the ocean surface.
In general, El Nino conditions are associated with increased rainfall across the east-central and eastern Pacific and with drier than normal conditions over northern Australia, Indonesia and the Philippines.
In an El Nino year there tend to be more Eastern Pacific hurricanes and fewer Atlantic hurricanes.
The forecasters said they expect this El Nino to continue strengthening over the next few months and to last through the winter of 2009-2010.
"Advanced climate science allows us to alert industries, governments and emergency managers about the weather conditions El Nino may bring so these can be factored into decision-making and ultimately protect life, property and the economy," NOAA Administrator Jane Lubchenco said in a statement.
POLITICS
SBY and Kalla in peace talks
President Susilo Bambang Yudhoyono and his deputy, Vice President Jusuf Kalla, have moved to heal a rift that developed on the election campaign trail, acknowledging they still have more than three months' work ahead of them, The Australian reported.
The government will be replaced on October 20, with Dr. Yudhoyono reinstalled as the republic's sixth president, after he trounced Kalla in last week's poll.
Dr. Yudhoyono has signaled he expects his cabinet to pull together, after most of its members spent several months campaigning for the three presidential tickets.
Publicly taking a phone call from his deputy, Dr. Yudhoyono urged Kalla to continue working "for the good of the nation", describing the conversation as a return to "how we used to talk".
Although the campaign was often muted, Kalla was the strongest and most dynamic in his criticism of the president's leadership.
Dr. Yudhoyono said after taking Kalla's call that "even though the competition was fierce, we can create communication and friendship. The two of us are setting an example that relationships can endure."
SBY excels in conflict-torn regions
Incumbent President Susilo Bambang Yudhoyono won the majority of votes in several previously conflict-torn provinces that were expected to go to Jusuf Kalla because of his role in peace negotiations, The Jakarta Post reported.
According to the results of the Indonesian Survey Circle's (LSI) quick count, Yudhoyono received an overwhelming 93.99% of votes in Aceh, with Kalla and Megawati Sukarnoputri gaining just 4.44% and 1.56% respectively.
Based on preliminary results from the Aceh chapter of the Independent Elections Commission (KIP), Yudhoyono secured 92.32% of the nearly 645,000 votes tabulated by a number of regencies and municipalities in Aceh.
Dr. Yudhoyono's domination in Aceh indicates that many Acehnese people remain drawn to him despite the fact that some believe Kalla was the initiator of the regions' peace talks.
In Maluku and North Maluku provinces, another region which has seen religious conflict in the past, Dr. Yudhoyono again defeated Kalla by a clear majority.
Although Kalla's success in South Sulawesi, his home province, was expected from the beginning, the chairman of Golkar Party failed to reach his highest targeted number of votes.
Based on preliminary vote counting conducted by the South Sulawesi General Elections Commission and quick counts by the LSI and Adhiyaksa Supporting House, Kalla garnered between 64% and 66% of votes.
SECURITY
Second death at Freeport mine in Papua
Another man was reported to have died after being shot by a sniper at the Freeport facility in Papua on Sunday morning, a day after a 29-year-old Australian was shot and killed at dawn Saturday by unknown assailants.
According to Kompas.com, in a report confirmed by other sources, Markus Rante Alo died of his wounds only two hours after he and two other security guards for PT Freeport Indonesia were hit by bullets at Mile 51 in the Freeport operational area.
The site of the shooting was close to Saturday’s killing of Australian Drew Grant, 29, who was shot through the neck while traveling in a vehicle with four other Freeport personnel. Grant, who also died within hours of being shot, was expecting the return of his wife and their newborn child from Australia.
While the incident on Saturday occurred at around 5.30 AM, Sunday’s shooting took place at 10AM local time. The three security guards were taking supplies from Timika to Tembagapura for security personnel hunting Grant’s killer. Kompas.com said Alo was shot in the back, while the other two suffered wounds to the leg.
In the Saturday incident, Grant was the only person hit by what appears to have been a single shot at the vehicle he was in.
The killings are the most dramatic incident at the Grasberg mine, one of the largest open-pit mines in the world, since two Americans and an Indonesian were killed in an ambush in 2002. The second incident came despite heightened security in the area.
President to raise defense budget by 20%
The government is planning to increase its defense budget by 20% next year to Rp40.6 trillion ($4 billion), part of which will be used to replace the country’s aging weaponry, The Jakarta Post reported.
President Susilo Bambang Yudhoyono said in Bandung on Friday that the government would propose to the House of Representatives an increase of Rp7 trillion (approximately $700 million) in the country's defense budget for the 2010 fiscal year from the current Rp33.6 trillion.
"We will incorporate it (the defense budget increase) in our draft for the 2010 state budget. We'll be finalizing the plan within the next two weeks," Yudhoyono said.
"We will then systematically head toward what we call the minimum essential force, which is equal to between Rp100 trillion and Rp120 trillion."
The increasing defense budget, Dr. Yudhoyono said, will be made in accordance with the country’s economic growth.
"This year we predict that our economy will expand by between 4% and 4.5% and with our state budget having exceeded Rp1,000 trillion, we can raise our defense budget so that there will not be such a wide gap between the allocated budget and the minimum essential force," he said.
Dr. Yudhoyono said the government had been unable to allocate a proper amount to the defense budget because it had been struggling to revive the country's economy and people's prosperity since the 1998 Asian crisis.
Yudhoyono made the comment at the handover of 40 armored personal carriers (APCs) to the Army by state weapons manufacturer PT Pindad, the second installment of 150 medium APCs ordered by the government in 2007 as part of its weaponry modernization program.
Defense Minister Juwono Sudarsono said the government had ordered a total of 150 six-wheeled and four-wheeled APCs from PT Pindad in a contract worth Rp1.12 trillion in total, which also included spare parts costs and training and transportation fees.
LAW & ORDER
ASEAN rights body must have teeth: Govt.
Indonesia will push for the creation of a regional human rights body that will have the power to monitor and investigate rights abuses in ASEAN countries, the Foreign Ministry said Friday, The Jakarta Post reported.
"We want the future rights body to be more than just an educational institution on human rights," ministry spokesperson Teuku Faizasyah said.
He added however that it was too early to talk about the kind of sanctions that will be imposed on countries that violate the rights of their citizens.
Southeast Asian ministers will meet in Thailand for the 42nd ASEAN Ministerial Meeting from July 16-23, during which a high level panel consisting of senior officials from member countries will present a document on the creation of the rights body.
US Secretary of State Hillary Clinton is also reportedly scheduled to attend the ASEAN meeting, highlighting the growing importance of the regional group.
The panel is mandated to complete the draft in July, but Faizasyah said it was possible to extend the drafting period should the bloc fail to reach a consensus on the issue. The bloc hopes the rights body will be established by the end of this year.
"It will not be easy (to convince our ASEAN counterparts)," he said. "I know not all ASEAN countries are progressive in terms of human rights. We hope that issue will not obstruct the inclusion of progressive elements into the rights mechanism in the region."
HEALTH
Swine flu cases hit 55
Confirmed cases of swine flu in Indonesia have doubled in the past week, with the national total now standing at 55.
Three foreigners were among 27 new cases of H1N1, which included a dozen confirmed human-to-human transmissions, Health Minister Siti Fadilah Supari said on Thursday, Agence France-Presse reported.
Some of the patients were being treated in hospitals in Jakarta, Bali and Balikpapan, East Kalimantan province, she said.
"Indonesia will keep screening at all airports for foreigners who have travelled to areas where (the virus) is endemic," she said.
Three new swine flu infections were also confirmed at Adam Malik Hospital in Medan, North Sumatra on Friday.
Adam Malik Hospital official Luhur Soeroso said the three new patients, a seven-year-old boy, a seven-year-old girl, and a 14-year-old boy, had tested positive for the H1N1 virus.
In Denpasar, Bali, Sanglah Hospital admitted two more patients suspected of swine flu on Fridaym - a 19-year-old US national and an Indonesian.
In West Java, Hasan Sadikin Hospital in Bandung on Thursday received two patients suffering from swine flu symptoms, according to Antara.
In Yogyakarta, an 18-year-old student returning from an exchange program in the US was being treated at Sardjito Hospital over suspected swine flu.
The health minister said on Thursday the government will continue to isolate suspected swine flu victims and scan airport arrivals for the H1N1 virus despite claims by the WHO that preventive steps were now useless because the outbreak was unstoppable, according to a report in The Jakarta Globe.
“I decided that Indonesia will go on with its current programs,” Supari told a news conference, adding that the Ministry of Health would keep thermal scanners deployed at international airports and seaports, distribute face masks to travelers and quarantine suspected and confirmed swine flu patients.
“We will keep on screening everyone who’s just flown in from abroad and we will still give antiviral drugs to patients, as well as asking travelers to fill out the health alert cards,” she said.
Supari acknowledged that treating patients in hospital isolation rooms and giving them Tamiflu was costly, but said she would err on the side of caution.
Swine flu has spread quickly in the country since the first cases were confirmed last month after a British tourist and an Indonesian pilot tested positive.
ECONOMY
Indonesia in ‘exciting position’: WB chief
Indonesia’s economy is set to emerge a “winner” after avoiding the worst of the global financial crisis, the World Bank’s country director said, Bloomberg reported.
Joachim von Amsberg, a strong supporter of Indonesia since he took up the position, said the country can expand “significantly” more than 7% once President Susilo Bambang Yudhoyono fixes infrastructure including roads, ports and power plants.
“Faster growth and a maturing democracy together put Indonesia in an incredibly exciting position to come out as a winner from this global turmoil,” von Amsberg told Bloomberg in an interview on Thursday. “It shows that Indonesia is a positive outlier in the world right now.”
Indonesia’s move to increase deposit insurance, boost coordination with the central bank and strengthen bank supervision helped the nation largely avoid the worldwide credit crisis, von Amsberg said.
“If the new government shows decisiveness in overcoming some bottlenecks, that will be a huge statement,” he said.
A day after his landslide re-election, Dr. Yudhoyono pledged that he would spur growth in the country to a target of 4%-4.5% in 2009 as interest rates fall to 6% by year-end.
Dr. Yudhoyono also said that Indonesia could escape from the economic crisis by 2011.
Head of the International Monetary Fund’s Indonesia office Milan Zavadjil said Indonesia’s growth may exceed 6% after the election because Yudhoyono has a “strong mandate” to implement his policies.
On Friday, the National Development Planning Board (Bappenas) expressed optimism that economic growth of 9% will be achieved in 2014, although the five-year medium term development plan (RPJM) had been designed on the basis of moderate assessments, Antara reported.
In more reaction to the presidential election, the Indonesia Stock Exchange (IDX) said more companies are set to list their shares on the exchange, following the favorable market condition after Wednesday's peaceful presidential election, The Jakarta Post reported.
Director for corporate grading Eddie Sugito said the election created positive sentiment in the market.
Despite slow progress, with only five companies going public in the first half of this year, IDX president director Ito Warsito is confident of meeting the target of getting 15 companies to go public by year's end.
The Jakarta Composite Index closed the week at 2,063.09 compared to 2,075.30 a week earlier. Dealers said the market had largely factored in the likely victory of Dr. Yudhoyono before the election.
The Jakarta index has gained almost 29% since early April, due in part to expectations of a Yudhoyono victory.
The rupiah closed at 10,190 to the dollar compared to 10,210 a week earlier.
BUSINESS BRIEFS
MACROECONOMY
Foreigners hold Rp88.57T of govt. bonds
Foreign investors held Rp88.57 trillion ($8.8 billion) of the government's rupiah-denominated bonds as of July 9, rising from Rp87.15 trillion at the end of June, government data showed Friday, Dow Jones reported.
The data showed that the total amount of the government's tradable bonds in the local market was Rp555.91 trillion.
Bond dealers said foreigners bought back government debt in recent days as they had expected Wednesday’s presidential election would be peaceful.
New Rp2 trillion bond float
The government expects to raise Rp2 trillion ($197 million) in an auction of government debt paper this week as part of its funding of the budget deficit, the Finance Ministry said in a statement on Thursday, Reuters reported.
The ministry raised Rp2.2 trillion at its last debt auction on June 23, slightly above its target, on the back of expectations of better economic conditions.
The ministry has so far raised around Rp98 trillion out of a gross debt issuance target of Rp142.3 trillion for this year.
Japan agrees to $15.6B currency swap
Japan agreed to provide some $15.6 billion in emergency loans to Indonesia in the event of a severe shortage of foreign currency, a Finance Ministry official said Monday, Agence France-Presse reported.
The 1.5-trillion-yen deal, created under a new assistance scheme announced in May, was the first of a series of agreements that Tokyo planned to conclude with a number of Asian nations, the ministry official said.
Finance ministry representatives from the two countries came to a basic agreement on the deal in Tokyo Monday, the official said on the customary condition of anonymity.
"We will officially sign the deal after discussing details," he said without clarifying when the signing would take place.
He added that the emergency assistance will take the form of a currency swap, aimed at helping Indonesia cope with a shortage of foreign currency in the event of a severe financial crisis.
The deal will allow Indonesia to convert the loan into dollars or euros if it faces a shortage of the major currencies.
Japan plans to sign similar agreements with the Philippines and Thailand, aiming to promote a greater use of the Japanese currency worldwide by providing yen-denominated loans.
Indonesian Finance Minister Sri Mulyani Indrawati said in June that Indonesia still reserved the right to use the loans if necessary, despite the apparent benign condition of the economy.
INVESTMENT
Investment expected to grow 7% this year: Minister
Finance Minister Sri Mulyani Indrawati hopes investment will grow 7% to support the economy, enabling it to grow 4% this year, Asia Pulse reported.
"If growth is still quite strong we hope investment in the second quarter and in the second semester could grow higher than in the first quarter which was recorded at 3.5%," she said on Wednesday.
She said investment growth was expected to come from foreign direct investment, bank credits, expenditure at state-owned and private companies and also from the capital market.
Data from the finance ministry show investment is predicted to grow 5.6% and the economy 4.1% in the first semester this year.
Foreign direct investment in the first semester this year is predicted to reach $4.549 billion or up on $3.5 billion in the same period last year.
For the second semester it is predicted to reach $1.704 billion, down from $4.419 billion recorded in the same period last year.
Foreign portfolio investment in the first semester this year is predicted to be minus $1.178 billion, down from minus $288 million in the same period last year.
Foreign portfolio investment in the second semester of 2009 is predicted to reach $420 million, up from minus $1.309 billion in the same period last year.
Meanwhile, according to the Investment Coordination Board (BKPM) total investment, foreign and domestic, in the first semester reached $7.3 billion, The Jakarta Post reported.
BKPM data shows that foreign direct investment (FDI) in the first semester this year reached $5.39 billion, a drop of 48% compared to the same period last year. The number of FDI projects increased to 614 from 561 projects in the same period last year.
BKPM chairman Muhammad Lutfi said Monday the transportation, warehouse and telecommunication sectors recorded the highest FDI value at $1.2 billion. The value for chemicals and the pharmacy sectors is $958.4 million, followed by construction sector at $481.4 million. Trade and service sectors accounted for $441.2 million, while metal, machinery, and electronics attracted $306.5 million.
By country of origin, investors from the Netherlands invested the most at $1.1 billion, followed by Singapore with $793 million and South Korea with $471 million.
Domestic investment more than doubled to $1.9 billion compared to the same period last year. The figure for domestic investment projects also increased to 134 projects from 107 projects in the same period last year.
Lutfi said five top domestic investment sectors are chemicals, food and beverages, textiles, mining, and plantations.
The contribution of actual domestic investment was 26.8% of the total investment secured in the first semester of 2009, increasing 8% compared to the same semester last year.
According to BKPM, this combined foreign direct investment and domestic investment would create an additional 152,000 jobs for local workers.
This will help compensate for jobs lost to export industries and promote economic growth.
Govt. to build palm oil industrial clusters
The government will build integrated clusters of palm oil industry in Seimangkel, North Sumatra and in Melangke in North Sulawesi, Asia Pulse reported.
The cluster projects will include palm oil plantations and palm oil-based industries, Plantation Director General Achmad Mangga Barani said.
The clusters are expected to be operational in the next two years, Barani said, adding work is already in progress starting with land clearing.
In the first phase, the government plans to build biodiesel plants with a total capacity of 400,000 tons a year to be followed with construction of crude palm oil (CPO)-based industries, he said.
This year, the country hopes to turn out 21 million tons of CPO, 60% of which are to be processed locally to produce palm oil derivatives like cooking oil and margarine as well as biodiesel, he said.
He said currently the country has 7.1 million hectares of palm oil plantations and has exported most of CPO production.
Last month, a number of big palm oil producers have reportedly shown interest and agreed to invest in an upstream palm oil industrial cluster in Dumai, Riau, including PT Wilmar, which had already invested Rp7 trillion to build the port facility and expand production capacity.
More companies set to go public after election
More companies are set to list their shares on the Indonesia Stock Exchange's (IDX) board, seeing favorable market conditions after Wednesday's peaceful presidential election, The Jakarta Post reported.
The IDX director for corporate grading, Eddie Sugito, says the result of the presidential election has created good sentiment in the market, with the incumbent President Susilo Bambang Yudhoyono having unofficially secured re-election in a single-round vote.
Despite only five companies going public in the first half of this year, IDX president director Ito Warsito is confident of meeting the target of getting 15 companies to go public by year's end.
Local mall operator PT Metropolitan Kencana was scheduled to officially list its shares on the local bourse's main board Friday, after offering 10% of its shares to the public.
Telecommunications equipment service provider PT Katarina Utama will follow suit next Tuesday, after selling 40% of its shares to the market.
Coal company PT Garda Tujuh Buana listed its shares on IDX after the company's previous initial public offering (IPO) held from July 1 to 3, when the company offered 73% of its shares to the public at a price of Rp115 a share, and managed to secure Rp210 billion.
Garda is the fifth company to have gone public recently, after PT Sumber Alfaria Trijaya, operator of the Alfamart chain of mini-marts, cell phone distributor PT Trikomsel Oke (TRIO), used car financing firm PT Batavia Prosperindo Finance (BPFI) and local mobile IT infrastructure provider PT Inovisi Infracom (INVS).
The index has risen 13.4% this year, as Indonesia's ability to weather the global economic crisis attracts more investors.
STATE CONCERNS
LPEI to finance $2.5B in exports: Official
The Indonesian Exports Financing Agency (LPEI) is ready to help finance $2.5 billion of exports throughout 2009, a ministry official said Tuesday, The Jakarta Post reported.
"With its own capital of about $400 million, plus (an additional) $100 million (from Japan), and gearing ratio of five times, LPEI can finance about $2.5 billion in exports," said Edy Putra Irawadi, deputy in charge of industry and trade at the Coordinating Minister of the Economy.
If economic conditions remain stable, LPEI's financing will help support export growth of about 7.2%, he said.
LPEI will plug the gap between the ability of the banks to finance exports and the real needs of exporters, Irawadi said.
H1 coffee exports seen up 19%
Indonesia's coffee exports in the first half of 2009, helped by good harvests, were estimated at 207,600 tons, up about 19% from a year ago, Reuters reported.
In June alone, the world's second-biggest robusta producer exported 70,504 tons of beans, up 76% from a year ago, trade data obtained by Reuters on Thursday showed.
"The exports rise is a signal that demand remained strong despite the global crisis, good news for countries like Indonesia which rely on exports of agriculture products," said Terbit Satrio, an official at the local chapter of the Indonesian Coffee Association in East Java.
Bean exports via East Java's main port of Tanjung Perak rose 53% in the first half to 33,228 tons, making it the second-biggest port for coffee exports after Panjang port in Lampung.
The country’s coffee output has been estimated to grow 3% to 689,000 tons this year, with robusta accounting for about 80%.
However, according to Rachim Kartabrata, executive secretary of the Association of Indonesian Coffee Exporters, robusta output may record a 10% on-year fall due to unseasonal rain in southern Sumatra, while Arabica may stay stable, Dow Jones reported.
Indonesia exported 437,000 tons of coffee beans in 2008, up from 321,404 tons in 2007, on a combination of higher coffee prices, bumper harvests and stocks left over from 2007.
China steel makers facing dumping charge
The Indonesian Anti Dumping Committee (KADI) said it has found strong indications that steel products imported from China have been sold at dumping prices in Indonesia, Asia Pulse reported on Friday.
KADI chairwomen Halida Miljani said the alleged dumping has caused injuries to local producers of similar products.
The committee is conducting investigation into a petition from steel maker PT Gunung Garuda representing all producers of H&I Section of steel products in the country.
Miljani said she could not yet announce the result of the investigation, which is still in progress, Investor Daily reported.
SOEs
Telkom eyes profit growth in 2009
PT Telkom, the country's biggest telecoms firm, said Thursday it expects profit growth to recover this year after a drop in 2008 thanks to a steady rupiah and less intense price war, Reuters reported.
Telkom also expects to acquire two small telecoms-related companies by the end of the year, chief executive Rinaldi Firmansyah said in an interview.
Firmansyah said he sees profit growth of around 5% to 10% this year. “Net profit is hopefully good, because the rupiah is strengthening so we are optimistic. We expect revenue to grow in single digit, in the middle of the range."
Telkom, which has a stock market value of $16.92 billion, reported net profit of Rp10.6 trillion ($1.05 billion) in 2008, down 17% from the previous year, while revenue was up 2.1% in the year.
It reported a 22% fall in its first-quarter net profit due to foreign currency losses.
Telkom shares have risen 17.4% so far this year, underperforming a 53.75% gain in the market.
Telkom has been forced to slash prices in recent years due to competitive pressure.
"The tariff was quite high and when suddenly new players entered, the tariff came down. So you see in the last one or two years the telecommunication industry was hit quite badly. But I think it was just a short-term impact," said Firmansyah.
Telkom had said in February that it was considering buying a stake in state-owned Telecommunication Company of Iran (TCI). The sale of TCI is part of a wider drive by the Iranian government to speed up the sale of state-owned companies.
It is also seeking to increase revenue from non-traditional sources of income including the launch of internet protocol television (IPTV) services, in a bid to defend its dominant position in the fixed-line and fast-growing cellular markets.
The company sees opportunities to expand in areas such as internet, broadband and wireless services and plans two acquisitions in areas such as infrastructure and content by the end of the year, Firmansyah said.
On Monday, Telkom said it plans to buy a cellular tower management company this year to centralize management of its tower infrastructure, and may acquire a second information services firm, Dow Jones reported
PRIVATE SECTOR
Motorcycle sales forecast to surge on interest cuts
Sales of motorcycles in Indonesia in the second half of this year after a 17% fall in the first six months, Asia Pulse reported on Friday.
The interest rate cut will mark a turning point in the market of motorcycles, chairman of the association of motorcycle industry Gunadi Sindhuwinata said.
Earlier this week Bank Indonesia cut further its benchmark interest rate by 25 basis points to 6.75% on low inflation a move expected to be followed by creditor banks.
Around 80% of motorcycle purchases in the country are financed with credits mainly by financing firms, Investor Daily reported.
Motorcycle sales shrank 17% to 2.54 million units in the first half of this year from 3.06 million units in the same period last year on weak purchasing power of the people.
Nusantara secures $240M in loan for toll roads
Publicly traded infrastructure company PT Nusantara Infrastruktur has secured a new loan of Rp2.4 trillion ($240 million) to acquire two sections of toll road in Banten, Asia Pulse reported.
The acquisition of the toll roads valued at Rp3 trillion is expected to be completed in August, a company director Danni Hasan said.
The company will put up Rp600 billion and the rest to come in loan from a consortium of six local banks, Hasan said.
He said the toll roads are expected to be operational in the first half of 2010 and will contribute significantly to the income of the company.
BANKS
Bank lending up Rp7.74T in May
Bank lending rose further in May, up Rp7.74 trillion ($762.95 million) from April and a 19% growth from the same period last year, the latest data from Bank Indonesia (BI) shows, The Jakarta Post reported.
As of May, outstanding loans reached Rp1,305.38 trillion, up from Rp1,297.64 trillion in April, BI data reveals.
Rupiah-denominated loans stood at Rp1,091.83 trillion in May, while foreign-currency-denominated loans were at Rp213.55 trillion.
On Monday, BI said new bank credits reached Rp13 trillion ($1.3 billion) in the first half of this year with disbursement stronger in May and June with the largest part of the credits, dominated by state banks, were for working capital.
Total disbursement in the first half of this year was 17%-18% higher than in the same period last year, Asia Pulse reported.
Bank Mandiri to revise 2009 business plan
Bank Mandiri will revise its business plan following a Bank Indonesia (BI) rate cut and foreign exchange fluctuations, Mandiri president director Agus Martowardoyo said, Antara reported.
"Although the bank's credit expansion remains unchanged, expansion of credit in foreign currencies will be lower than rupiah credits," he said.
The appreciation of the rupiah will suppress Mandiri’s expansion of credits in foreign currencies, he said.
Bank Mandiri earlier predicted credit growth in 2009 of between 17% and 18%.
Martowardoyo said there had almost been no change in corporate net profits. "Net income margin and fee-based income have remained relatively unchanged," he said.
BEI to sign $210M syndicated loan
Bank Ekspor Indonesia (BEI) will sign a $210 million syndicated loan on Friday to help refinance the lender's loan and support future export financing, Bank Mandiri said, Reuters reported.
Bank Mandiri , one of BEI’s mandated lead arrangers and bookrunners, contributed the biggest portion of that syndicated loan by lending $35 million to BEI, according to a statement.
A total of 16 banks participated in that syndicated loan, including Bank of Tokyo-Mitsubishi UFJ, Oversea-Chinese Banking Corporation and Krung Thai Bank.
On Monday, BEI signed an agreement with the Japan Bank for International Cooperation (JBIC) for the disbursement of a loan worth $100 million as part of a trade financing facility supported by Japan, The Jakarta Post reported.
BEI president director Arifin Indra said JBIC had agreed to disburse the loan after lawmakers passed a law earlier this year enabling the transformation of the bank into a sovereign firm called the Indonesian Export Financing Agency (LPEI) whose task is to give export financing for small and medium enterprises.
BTN plans to issue up to Rp700B bonds: Source
State-owned PT Bank Tabungan Negara (BTN) plans to issue up to Rp700 billion in three- and five-year bonds later this year, Bisnis Indonesia reported Friday.
"The amount being prepared is Rp500 billion, but it could be raised to Rp700 billion if demand is good," the daily quoted an unnamed source as saying.
The mortgage bank has named PT Mandiri Sekuritas and PT CIMB-GK Securities Indonesia as co-lead arrangers for the planned issue, the source said.
Bank Panin plans Rp1.5T bond issue
Publicly-listed PT Bank Panin plans to raise about Rp1.5 trillion ($148 million) from a bond issue in the third quarter, its corporate secretary said on Thursday, Reuters reported.
"We're still monitoring the market, such as demand and interest rates, so we cannot say the exact date yet," Jasman Ginting said.
The bank, ranked ninth by assets among Indonesia's lenders and partly owned by Australia and New Zealand Banking Group (ANZ), has appointed Indopremier Securities, Bahana Securities, Danareksa Sekuritas and Evergreen Capital as underwriters.
Danamon raises stake in Adira unit
PT Bank Danamon, the country’s sixth-largest bank by assets, on Thursday executed its option to raise its stake in subsidiary PT Adira Dinamika Multi Finance from 75% to 95%, The Jakarta Globe reported.
Data from the Indonesia Stock Exchange revealed that Danamon bought 20% of Adira’s shares, worth Rp1.42 trillion ($141 million), from Mega Value Profits for Rp7,135 a share, almost double Adira’s market price.
Danamon president director Sebastian Paredes had earlier said the company planned to raise its stake in Adira as part of its plan to take advantage of the higher interest-rate margins available in the consumer financing business.
Currently, 20% of the bank’s outstanding loans come from Adira.
POWER
PLN opens tender to buy 3.26M tons coal
State power company PT PLN has opened a tender to buy 3.26 million tons of sub-bituminous coal per year for power plants in islands outside Java, a company official said on Friday, Reuters reported.
The coal, to be supplied for 20 years, is for coal-fired power plants being built in the first part of the government's crash program, which will add 10,000 MW of generating capacity to ease chronic power shortages. A second program will add another 10,000 MW of capacity.
PLN needs a total of 31.9 million tons of coal a year for the first part of the 10,000 MW crash power program, in which most of the new coal-fired power plants are still under construction.
Three new coal-fired power plants with total generating capacity of 1,960 MW are expected to start commercial operation later this year.
PLN has secured supply contracts for 15.3 million tons and is in the process of signing contracts for a further 13.2 million tons.
The coal will be supplied to power plants in Aceh, North Sumatra, West Sumatra, Bangka Belitung Islands, Riau, Lampung and South Kalimantan as well as two power plants in West Java which are under construction.
OIL & GAS
Tangguh delivers first LNG to S. Korea
The first delivery of liquefied natural gas (LNG) from the BP-led Tangguh project in West Papua for South Korea took place on Monday, the Ministry of Energy and Mineral Resources said, Dow Jones reported.
The LNG was delivered to South Korea on board the Tangguh Foja tanker.
"The first LNG delivery from the Tangguh field will strengthen the position of Indonesia as one of the world's main LNG producers," said chairman of upstream oil and gas regulator BP Migas R. Priyono.
Total investment in the LNG project is estimated at $5 billion.
The consignment, for South Korea's POSCO, marks the commencement of the gas processing facility on which construction began after a BP Plc-led consortium secured a permit from the government in 2005.
Tangguh has several foreign supply contracts, including a 2.6 million tons per year (tpy) contract with China National Offshore Oil Corp (CNOOC).
US firm Sempra Energy also has a 20-year contract to lift 3.6 million tpy with the right to divert half to customers other than its own terminal in Mexico.
The project also has a supply contract with South Korea's K-Power.
Pertamina to invest $120M for LPG storage plants
State-owned oil and gas company PT Pertamina plans to spend $102 million to build four liquefied petroleum gas (LPG) storage terminals with total capacity of 30,000 tons, a company official said on Monday, The Jakarta Globe reported.
Pertamina is seeking to build two LPG storage plants with 10,000-ton capacities in Tanjung Priok, Jakarta and Tanjung Gerem, Banten, as well as two 5,000-ton facilities in Lampung and Bali, Achmad Faisal, Pertamina’s marketing director, said.
“The construction of the plants is expected to start at the end of this year, and they will require 18 months to finish,” Faisal said.
Pertamina is also selecting a contractor to build 10,000-ton LPG storage facilities in both Sulawesi and Medan, North Sumatra. If the bidding goes according to schedule, construction of these plants is also expected to begin by the end of 2009.
Pertamina’s LPG program, which is aimed at encouraging people to switch from kerosene to LPG for cooking, is expected to save the government Rp20 trillion ($1.92 billion) this year by replacing 4.1 million kiloliters of kerosene.
MINING
Brazil’s Vale backs E. Java copper, gold project
Brazil's Vale, the world's second-largest miner, has backed a potentially large copper and gold project in East Java that could see it spend $40 million to acquire a 60% stake, Reuters reported on Friday.
Project manager, Australian-listed Intrepid Mines Ltd, said Vale had been granted an option to take up the stake in the Tujuh Bukit sulphide copper and gold project.
Intrepid said Tujuh Bukit has a potentially large gold-silver-copper system underneath a near-surface gold-silver oxide cap. Intrepid and PT IMN would retain sole rights to the oxide gold-silver deposit.
Intrepid and its Indonesian partner, PT Indo Multi Niaga, will retain the remaining 40% interest.
Drilling in the copper-gold zone has intercepted wide zones of mineralization, including one hole intercepting 627 meters of 0.5 grams per ton gold and 0.5% copper per ton.
Antam plans $40M gold project in Banten
State-owned miner PT Aneka Tambang (Antam) said on Friday it plans to spend $40 million to develop the newly-acquired Cibaliung gold project in Banten, Reuters reported.
Antam has completed the ownership transfer of PT Cibaliung and spent $8 million on the acquisition, Bimo Satryo, Antam's corporate secretary said.
“We plan to spend $40 million to develop the project until it starts production,” Satryo said in a text message.
Antam signed a Heads of Agreement with ANZ Bank and Australian firm Arc Exploration Limited earlier this year for the transfer of ownership of PT Cibaliung Sumber Daya, which operates Cibaliung gold project.
PT Cibaliung was previously 95%-owned by Arc while Antam owned the remaining 5%.
Antam expects Cibaliung to start production in the second half of 2010. The gold mine is expected to produce 500 kg of gold next year and will have a full production of 2,000 kg at the start of 2011.
Antam has said it expects gold output to reach 3.8-4 tons next year, increasing from 2.8 tons in 2009 with the acquisition of the Cibaliung project, which has a mine life of six years.
Nusantara Smelting to build copper smelter
PT Nusantara Smelting said it is optimistic its plan to build a copper smelter in Bontang, East Kalimantan will be implemented by September 2010, Asia Pulse reported.
A number of foreign banks, including from Europe and South Korea, have indicated interest in financing the $1.1 billion project
Company president Juangga Mangasi said the smelter is expected to be operational in 2013 with an annual production capacity of 200,000 tons of cathodes.
The raw material will be supplied by PT Freeport Indonesia and PT Newmont Mining Corp. which have large copper mines in the country, Mangasi said.
Nusantara Smelting said it is discussing a partnership with a copper company in Europe.
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