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Statistik Pengunjung | Hari Ini | 133 |  | Kemarin | 935 |  | Minggu Ini | 3843 |  | Bulan Ini | 24963 |  | Keseluruhan | 289019 |
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Trade and Investment News, 21 July 2009 |
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Untuk versi Bahasa Indonesia, klik disini
Highlights
National
• Clues from fatal hotel attacks point to Malaysian fugitive Noordin M. Top
• Government prepares to fight El Nino effect
Politics
• Aides to the president call on political parties to stop lobbying for positions
Terrorism
• Analysts say blasts a concern, unlikely to dent business commitment
Security
• National Narcotics Agency says drug abuse on the rise
Law & Order
• Praise for Indonesia for low piracy levels in Malacca Strait
• Australia, Indonesia to boost cooperation on illegal fishing
Health
• Hotels ready to protect guests against swine flu
Economy
• Little effect on economic prospects from bombs
Business briefs
Macroeconomy
• First-half growth comes in at 4.1%, finance minister states
• Government to take Samurai debt in stages, look to domestic market
Investment
• Direct investment tipped to rise 7.1% next year
• US keen to assist with revitalization of rail systems
State concerns
• Official outlines plan for production of cheap cars by 2012
SOEs
• PT Garuda Indonesia looks to expansion following lifting of EU ban
• State housing developer, mortgage bank may IPO this year
Private sector
• Improving sales figures for cars, motorcycles
Banks
• Second quarter survey by Bank Indonesia shows bankers in bullish mood
Power
• China bank loans $293 million for Java power plant
• State utility PT PLN cuts use of oil for generation
Oil & gas
• Gulf Petroleum eyes $1 billion gasification investment
Mining
• Minister calls for SOEs to get priority in Newmont diversification
NATIONAL
Terrorist fugitive implicated in Jakarta attacks
Investigators were sifting through two bomb-damaged luxury Indonesian hotels on Saturday, for clues to those behind suicide attacks that shattered four years of stability, Reuters reported.
Although officials could not say who they believed was responsible for Friday's attacks, suspicion is pointing toward Jemaah Islamiah (JI), the radical militant group responsible for a string of deadly attacks that seemed to end in 2005.
The bombers struck the JW Marriott and Ritz-Carlton, luxury hotels popular with businessmen and diplomats and considered to be among the most secure buildings in the capital.
The method, target and type of bombs used in Friday's attacks immediately raised suspicions of involvement by JI and Noordin M. Top, the fugitive Malaysian national who heads a particularly violent offshoot of the network, The Associated Press reported.
While National Police spokesman Maj. Gen. Nanan Soekarna said they "cannot say for sure whether Noordin M. Top led this bombing," others were more certain.
"I'm 200% sure this was his work," said Nasir Abbas, a former JI leader turned police informant who has worked with police on investigations into Indonesia's last three terrorist attacks.
A police investigator also said on Saturday that Noordin was the most likely suspect.
Terrorism expert Sidney Jones agreed that the attacks bore his hallmarks. She told Reuters: “The most important hallmark is the suicide bombing as a method of attack, and also the targeting of iconic Western symbols - both of those are associated more with Noordin than with mainstream JI.”
Police told a news conference on Saturday that nine people were killed and 53 wounded in the blasts, revising a previous death toll after investigators had found it difficult to identify some victims from the remains.
"Of the dead, we believe that three we haven't yet identified include the suicide bombers," Foreign Minister Hassan Wirajuda said earlier.
The casualties included citizens of Indonesia, the US, Australia, South Korea, the Netherlands, Italy, Britain, Canada, Norway, Japan and India.
The blasts are a severe blow for President Susilo Bambang Yudhoyono, who was re-elected earlier this month in a landslide victory on the back of strong growth in Southeast Asia's biggest economy.
After being rocked by a string of attacks against Westerners in the first part of the decade, Indonesia has been widely credited with successfully tackling militant groups.
Questions will now be asked how supposedly tight security was by-passed.
Police said the bombers had checked into the Marriott as paying guests on Wednesday and had assembled the bombs in their room. A third bomb was found and defused in a laptop computer bag on the 18th floor.
"Even as Indonesians are given due credit for all they have done preventing an attack for four years, they should also carefully examine what went wrong with security measures and seek a better understanding of the domestic network that supports terrorism," said the Heritage Foundation's Walter Lohman.
Authorities in Bali raised the province’s security alert to its highest level in response to the bombings.
International reaction to the bombings has been swift.
US President Barack Obama, who spent four years living in Jakarta as a child after his mother married an Indonesian, called Yudhoyono on Saturday and offered American help with the investigation, the White House said in a statement.
"The president and President Yudhoyono reaffirmed the close cooperation between the United States and Indonesia in countering extremism in Southeast Asia and around the world," the statement said.
Lohman said he was confident Indonesia could bounce back from the latest tragedy.
"Indonesia defines resiliency," he said in a commentary. "It will get past the July 17 bombings just as it got past the others."
Govt. readies to fight forest fires, El Nino
President Susilo Bambang Yudhoyono says Indonesia is expecting the effects of an El Nino phenomenon to hit its eastern regions by the end of the year and that the government has been preparing anticipatory measures to tackle the impacts, The Jakarta Post reported.
Speaking after a limited cabinet meeting on Thursday afternoon, Yudhoyono said El Nino was predicted to hit the country by the end of the year and or early next year.
“I met with ministers and state officials in charge of the issue and discussed El Nino’s possible impacts on our food supply and resilience,” Yudhoyono told the press.
He said the government, through the Meteorology and Geophysics Agency (BMG), would continually monitor the development of El Nino, and was ready with several measures to secure food supplies if the warm ocean current attacked.
The measures include advancing the planting period and developing drought-resistant rice seeds, and ensuring that dams and irrigation systems across the country function well.
State Minister for National Development Planning Paskah Suzetta told Antara that El Niño would raise the state budget deficit by 1.5% to 1.7%.
WWF Indonesia and Forest Watch Indonesia said Friday the government should warn forestry companies, plantations and local people living near forests to stop slash-and-burn methods to clear land.
Malaysia and the US have offered to help Indonesia deal with haze resulting from forest and peat land fires that have plagued Riau, The Jakarta Globe reported.
“The Malaysian government has offered aid to tackle the smog and forest fires, and we’ve accepted the offer,” said Syaid Nurjaya, the head of the Riau Forestry Agency.
A number of other countries, including the United States, have also expressed interest in helping the country deal with the fires in Riau, Nurjaya said.
A special US Armed Forces team is scheduled to hold a joint training session on extinguishing peat land fires with Indonesia’s Armed Forces, he said.
POLITICS
Stop the jostling, allies of SBY told
Political parties that supported President Susilo Bambang Yudhoyono’s re-election are being told to calm down amid increasingly rabid and public jockeying for cabinet seats, The Jakarta Globe reported.
One of the most intense battles appears to involve the Prosperous Justice Party (PKS), which on Thursday publicly called on the Golkar Party to join the opposition in the legislature and end its attempts to squeeze into the ruling coalition.
This comes after the president issued a statement saying he hadn’t even started arranging the composition of the cabinet for his second term.
Senior Democratic Party leader Anas Urbaningrum called on parties in Yudhoyono’s coalition to cool down in discussing the ministerial posts, saying the president was determined to create “an ideal cabinet”.
“The elected president has an opportunity to appoint cabinet members from any party,” Urbaningrum said. “The party coalition will surely be respected, but it does not mean the door is closed to parties outside the coalition.”
The Islam-based PKS, which has three seats in the outgoing cabinet and backed Yudhoyono’s campaign, said Golkar should accept the consequences of running Vice President Jusuf Kalla as its candidate.
“It would be better if Golkar served in the opposition for the sake of checks and balances in the House,” PKS member Zulkieflimansyah said on Thursday, denying accusations the party was worried it might not get many posts in the next cabinet.
Political analysts said that even if Golkar wasn’t in the coalition, the Democrats still needed the nationalist party and its grassroots political machine to help run the country and provide balance against Islam-based parties like PKS and PAN.
TERRORISM
Attacks rattle expats, foreign firms heighten security
Most foreign businesses in Jakarta will step up security measures following Friday's twin blasts, but few will consider quitting Indonesia's growing economy, business chiefs say, The Age reported.
"This country is powering ahead. Executives know that if they pull out because of perceived risks they will miss opportunities that others will capitalize on," said prominent expat businessman Geoffrey Gold.
He believes, despite foreigners' outrage at the latest bombings, that company executives know they need to stay in Indonesia.
Australian businessman Peter Fanning, a lawyer who has advised many of the Australian companies now operating in Indonesia, agrees. "Living here, you know there are certain risks," Fanning said. "You factor those in."
SECURITY
Drug trafficking, abuse on the rise: Agency
Bucking regional trends, a rising trend of trafficking and abuse of narcotics in Indonesia is defying government attempts to wipe out drugs by 2015, said the country’s anti-drug agency, The Jakarta Post reported.
National Narcotics Agency (BNN) acting head Comr. Gen. Gories Mere warned of the trend during a seminar in Makassar, South Sulawesi, on Friday.
"Several Asia-Pacific countries, such as Malaysia, Thailand and Singapore, have curbed drug trafficking, while in Indonesia, it is on the rise," he said.
He added there were now between 3.1 million and 3.6 million drug users in the country, or about 2% of the total population.
There has been an increase over the last five years, Mere said. In 2004, drug users numbered between 2.7 million and 3.2 million people, or 1.5% of the population.
The growing number of drug addicts, especially injection drug users (IDU), has also triggered the rising number of people contracting HIV/AIDS in the country.
Mere said that along with rising drug abuse, drug trafficking was also flourishing. The drugs available in Indonesia are no longer smuggled in from overseas, he pointed out, but increasingly being produced inside the country.
"Indonesia now is not only a transit place for drugs, but has become a producer," he said.
Police have been clamping down on drug producers since 2004, but with little effect, he added.
This year police have raided four drug factories in Depok, West Java, and West Jakarta, Tanjung Priok and Pondok Indah, in Jakarta.
In the latest incident, two Iranian nationals were arrested at Soekarno-Hatta International Airport in Tangerang, Banten in possession of 4 kg of crystal methamphetamine worth Rp4 billion (about $400,000) on Thursday.
Customs and Excise officials said they discovered the narcotics when the suspects began acting suspiciously during a routine luggage scan, reported Viva News.
The drugs were hidden in the suspects’ carry-on luggage inside packages of powdered milk, officials said.
Papua: Freeport attacks continue
Gunshots were fired at a convoy of logistics vehicles near a massive gold mine operated by PT Freeport in Papua on Friday while a government minister said there may have been foreign involvement in a spate of deadly attacks and shooting in the same location, Agence France-Presse reported.
The convoy came under fire near Mile 49 between Timika and Tembagapura. No casualties were reported.
In Jakarta, Defense Minister Juwono Sudarsono said on Thursday that "foreign countries" could be behind the series of deadly ambushes that have killed three people.
The attacks by unidentified gunmen near Freeport’s Grasberg gold and copper mine could be an effort by foreign competitors to close the mine down, said Sudarsono.
"What I think is don't let Freeport be closed, because it involves global competition over natural resources. There are a number of countries that have an interest in destabilizing Freeport," he said.
LAW & ORDER
Piracy down In Malacca Strait, other hotspots flare
The latest global piracy report has given high marks to Indonesia and the Malacca Strait, where there were only five attacks over six months, compared with 70 five years ago, The Straits Times reported.
That plunge contrasted sharply with worldwide figures, which showed pirate attacks going up from 182 in 2004 to 240 this year.
For the region, however, the South China Sea passage flanked by Pulau Tioman off Malaysia's southeast coast and Indonesia's Anambas Islands has surfaced as a potential hot spot.
Seven attacks were reported in the area in the first six months of the year, compared with none in the whole of last year.
In its January-June 2009 report card, London-based ICC International Maritime Bureau singled out Indonesians for their “continuing efforts to bring piracy and armed robbery down in their waters'”.
There were more attacks reported in Malaysian waters than in Indonesian waters for the first time in five years, it noted.
Captain Noel Choong, head of the bureau's Piracy Reporting Centre in Kuala Lumpur, said the figures would have been unbelievable five years ago.
He added that the situation in the Malacca Strait would remain under control as long as the three littoral states - Indonesia, Malaysia and Singapore - continued with regular patrols.
Australia, Indonesia to jointly combat illegal fishing
Australia and Indonesia will continue to ramp up joint efforts to combat illegal fishing in waters neighboring the two nations, Australian Associated Press reported.
Australian Home Affairs Minister Brendan O'Connor and Indonesia's Marine Affairs and Fisheries Minister Freddy Numberi signed an agreement on the cooperation in Darwin on Friday.
The commitment is aimed at stamping out illegal foreign fishing activities and boost security in the two countries’ shared maritime border, O'Connor said.
"(It) affirms our shared commitment of combating the threat of illegal fishing," he said in a statement.
"We've had problems in the past where we've had to apprehend fishers. That may continue, of course, but with the close cooperation of the Indonesian authorities we can reduce the need to apprehend and detain poachers,” O'Connor said.
Since 2007, Australia's Border Protection Command and Indonesia's Marine Affairs and Fisheries have been working together to prevent illegal foreign fishing activities in their neighboring waters.
HEALTH
Hotels to provide masks, Tamiflu over swine flu
The rapid spread of the H1N1 flu across Indonesia has triggered a swift response from the tourism industry in Bali and Bandung, West Java, The Jakarta Post reported.
Hotels and restaurants on Bali have been asked to provide masks and antiviral Tamiflu pills to guests. The same measure is also being taken by hotels in Bandung, West Java.
The Bali branch of the Indonesian Hotels and Restaurants Association (PHRI) is calling on its members to give all necessary medical help to visitors suffering influenza-like illnesses.
Bali PHRI secretary Perry Markus said hotels and restaurants on the island could procure the Tamiflu pills and surgical masks from the nearest community health centers and the provincial health office.
"We're on high alert, because Bali is one of the most prominent tourist destinations in the world," he said Thursday.
He also called on hotels to set up in-house clinics and ensure doctors were ready to treat guests exhibiting flu-like symptoms.
In Bandung, the outbreak of the H1N1 variant of influenza A has prompted a similar move by one hotel.
"Hotel employees have been trained on how to deal with suspected H1N1 patients," Novotel Hotel Bandung manager Engkun Kurnia said Thursday, reported Antara.
The Health Ministry confirmed 15 new H1N1 cases on Friday, bringing the total number of cases in the country to 157, Kompas reported.
The cases are concentrated in Jakarta; Bali; Bandung, West Java; Banten; Medan, North Sumatra; Surabaya, East Java, Yogyakarta and Balikpapan, East Kalimantan.
Many of the patients contracted the virus after visiting Australia, Singapore, Malaysia and China.
Head of the Indonesian Red Cross (PMI), Lita Sarana, said the organization will cooperate with the Health Ministry to conduct swine flu awareness campaigns across the country to mitigate H1N1 outbreaks.
In Jakarta, health officials are ordering all clinics across the capital to prepare isolation wards for possible H1N1 flu patients.
ECONOMY
Bombings have little impact on economy: Analysts
The latest bombings at the Ritz Carlton and JW Marriott hotels in Jakarta that killed at least nine people will have little impact on the country's economic recovery, analysts said on Friday, Channel News Asia reported.
While the blasts may hurt investor confidence in the short run, market observers noted that the longer term view is still bullish as fundamentals are in place for growth.
This includes surprise GDP growth in the first quarter of 2009, a positive outlook by ratings agencies on its sovereign rating, and an investor-friendly outcome from recent elections.
The positive outlook assigned by Moody's Investors Service on Indonesia's credit ratings remains intact, said Aninda Mitra, Moody's primary analyst for Indonesia.
"I find it very hard to see a wider or deeper impact on overall political stability or even on the economic outlook," said Aninda Mitra, Moody's primary analyst for Indonesia.
“I don't think that really changes anything. These kinds of incidents can and have happened anywhere so there's nothing unique about Jakarta or Indonesia,” said James McCormack, head of Asian sovereign ratings at Fitch. “It's not going to change our view on credit fundamentals or political stability or any of those issues,” he said.
“Terrorist threats in Indonesia are nothing new,” said Johanna Chua, head of Asian economic research at Citigroup Inc. in Hong Kong. “The economic impact will likely be limited.”
“While tourism and general retail and travel-related activities could be affected by the latest events, we expect the impact to be temporary,” said Chua.
Accor SA, Europe’s biggest hotelier and operator of 37 hotels in Indonesia, said it will push through with plans to develop 15 locations in the country, Bloomberg reported.
The Paris-based company, which has 11 hotels in Jakarta, “remains committed to Indonesia,” Gerard Guillouet, vice president for Accor operations in Malaysia, Indonesia and Singapore, said in an e-mailed statement.
“Global factors are still in favor of Indonesia,” said Fauzi Ichsan, senior economist at Standard Chartered Plc in Jakarta. The economy is “fundamentally strong,” he said.
“Global factors are still in favor of Indonesia: pessimism over the US economy is receding, encouraging global investors to re-enter emerging markets, including Indonesia," Standard Chartered economist Eric Sugandi told Dow Jones Newswires.
The rupiah declined the most in two weeks and hotel stocks slumped after bombings.
The rupiah slid 0.6% to close the day on Friday at Rp10,185 to the US dollar, compared to the close of 10,190 a week earlier. The currency reached 10,075 on Thursday.
Commenting on the potential for further weakness in the rupiah, Peter Redward, head of emerging Asia research at Barclays Plc in Singapore, said Bank Indonesia is in a strong position to support the market in the event of any slide.
On the stock market, the Jakarta Composite Index lost 0.55% to 2,106.35, compared to 2,063.09 a week earlier.
"Obviously the blasts today have dragged down the index. The markets in the region have gone up," Ciptadana Securities analyst Syaiful Adrian told Agence France-Presse.
The cost of protecting Indonesia’s bonds from default rose five basis points to 2.87 percentage points, according to CMA DataVision in Singapore. The contracts rise as perceptions of credit quality deteriorate.
“There could well be a knee-jerk impact,” said Hugh Young, Asian managing director for Aberdeen Asset Management Plc. “Things like this are always a worry but one learns to live with it.”
“The weakness will be short-lived,” said Tim Condon, chief Asia economist at ING Groep NV in Singapore. “Markets will recover and if we go for another protracted period without any follow-up attacks then markets will forget about it and we will go back to the economic fundamentals.”
BUSINESS BRIEFS
MACROECONOMY
H1 economic growth 4.1%, inflation 3.65%: Minister
Indonesia's economy expanded at 4.1% in the first six months of the year while the inflation rate for the same period was 3.65%, Finance Minister Sri Mulyani Indrawati said Monday, Dow Jones reported.
Indrawati told the House of Representative’s financial affairs committee that economic growth will likely expand by 4.6% in the second half of the year, and inflation will likely accelerate to 4.5%.
She didn't give a forecast for full-year growth. However she said last month that full-year growth may be 4.3%. Indonesia's economy expanded 6.1% last year.
According to Indrawati, the budget deficit in the first half of the year was equal to 0.2% of gross domestic product. She said the government forecasts a deficit of Rp127.4 trillion ($12.4 billion) in the second half of the year.
Government revenue is forecast at Rp505.4 trillion in the second half, and government spending at Rp632.8 trillion, she said.
The Indonesia Crude Price averaged $51.60 a barrel in the first half. The ICP will likely average $70/barrel during the second half, she said.
Short-term Sertifikat Bank Indonesia (SBI) notes, a key monetary policy tool, yielded on average 8.53% during the first half. She said SBI yields will likely average 6.47% in the second half.
The dollar averaged Rp11,082 against the rupiah during the first half and will likely average Rp10,000 during the second half, she said. Indrawati's forecasts represent official finance ministry figures that will be used to calculate the state budget.
Indrawati also said on Thursday that in 2010 the budget deficit is forecast at 1.5-1.8% of GDP in a bid to provide stimulus to the economy.
Govt. eyes local debt after samurai bond
The government is considering tapping the local debt market for funding after it issued a smaller-than-expected yen-denominated bond, a Finance Ministry official said on Friday, Reuters reported.
The 35 billion yen ($374 million) bond was relatively small because Indonesia could go to the domestic debt market without weighing on prices, said Rahmat Waluyanto, Director General for Government Debt at the Finance Ministry.
Of the Samurai bond, Waluyanto told reporters that "the yields will likely be much lower," adding that the funds will be used to pay off yen-denominated debt.
The government has signed a deal with the Japan Bank for International Cooperation (JBIC) to guarantee up to $1.5 billion of the planned Samurai yen-denominated bonds sold in Japan by foreign issuers - representing the maximum permitted for the deal.
The Finance Ministry has said it plans to issue the full amount by next year, but may do so in several issuances, depending on market conditions. It also has said the Samurai will likely carry tenors of five or 10 years, or both.
The Samurai bonds will have a triple-A rating thanks to the JBIC guarantee, Dow Jones reported.
INVESTMENT
Direct investment forecast to grow 7.1% in 2010
The government predicted the country's direct investments would grow 7.1% next year, lower than this year's prediction of 7.4% and 11.8% in 2008, Asia Pulse reported on Friday.
The value of direct investment should be able to expand by at least 10% but it would be difficult with the global economic crisis, Finance Minister and Coordinating Minister for the Economy Sri Mulyani Indrawati said.
On Tuesday, chief of the Coordinating Investment Board Muhammad Lutfi reduced the investment growth target to between 9.7% and 10.2% this year from 11% previously set for both foreign and domestic investment.
In 2008, realization of investment reached $17.13 billion, up 20.5% from the previous year.
He said in the second half of the year, foreign direct investment may rise 6% and domestic investment 20%, with total investment worth around $7.3 billion compared with $4.5 billion in the first half, Dow Jones reported.
US explores Indonesia train revitalization project
The US government is exploring chances to assist in the revitalization of Indonesia's trains with a $20 billion 10-year loan to run from 2010 to 2020, an official was quoted as saying on Tuesday, Xinhua reported.
The Transportation Ministry's Director General for Railways, Tundjung Inderawan, said US ambassador to Indonesia Cameron Hume has invited him to discuss projects that should be carried out during the revitalization.
Tundjung said US company General Electric (GE) Transportation would strengthen its penetration in the country by providing locomotives.
"One of the loan proposals for projects from GE Transportation has not been processed. However it is in the blue book of the National Development Planning Agency," he said, referring to the list that includes foreign loan or grant plans for the middle-term.
The chief executive officer of GE Transportation Lorenzo Simonelli was scheduled to sign a memorandum of understanding with PT Kereta Api, the government-run train company, this week in relation to the purchase of 20 locomotive units and leasing of 100 new locomotive units worth $40 million, Bisnis Indonesia reported.
Capital Market Law draft near completion: Bapepam
The Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) has almost finalized its draft of a bill to amend the 1995 Capital Markets Law, which is to be submitted to the House of Representatives for deliberation, The Jakarta Globe reported.
“The revisions are 90% ready,” Bapepam chairman Fuad Rachmany said on Tuesday. The issues covered include demutualization and immunity for regulators for actions undertaken in the course of their duties.
The amendments are needed to allow the demutualization of the Indonesia Stock Exchange (IDX) to go ahead, a key step forward in the bourse’s plans to go public. As per the current legislation, the IDX is owned by 119 securities houses, each of which has an equal voting right.
The demutualization plan would allow the exchange to raise funds from the public to press ahead with its modernization program and help expand the domestic capital market, and is in line with the trend among bourses around the world.
The proposed amendments would provide immunity from legal action for regulators with respect to bona fide actions taken in the course of their work.
“Immunity does not mean we’re above the law, but it will make our job much easier,” Rachmany said, adding that the measure would significantly ease the agency’s investigative process.
Regarding the establishment of a proposed financial services authority to take over the regulatory powers of Bapepam and the central bank, part of the package of bills to be submitted to the new House, Rachmany said more work was needed.
STATE CONCERNS
Govt. hopes to produce cheap cars in 2012
The government will launch a program to produce low-cost cars in the next two years, the Industry Ministry said, Asia Pulse reported.
The national cars will come in two levels - one with prices from Rp60 million ($6,000) to Rp70 million and another at Rp40 million to Rp50 million, said Director General of Transport Equipment Budi Darmadi.
Under the program, the ministry hopes that the country's production capacity would increase by 200,000 units a year.
The Indonesian Chamber of Commerce and Industry (Kadin) should include the low-cost car program in its industrial roadmap to be in line with the government program, Darmadi said.
Darmadi said his office is preparing a draft proposal for incentives acceptable to the government to boost production of low-cost cars expected to start in 2012.
He said he hopes to receive inputs especially from automotive industrialists on the incentives before the proposal is submitted to the government.
Govt. plants 4.3M hectares of timber estates
The government has planted 4.3 million hectares of industrial timber estates (HTI) so far out of its target of 5 million hectares by the end of this year, the Forestry Ministry said, Asia Pulse reported.
Forestry Minister MS Kaban said expansion of HTI to more than 5 million hectares would be completed before 2014.
The government has launched the HTI program to grow industrial tree species to feed timber processing industries to preserve the country's tropical forests.
Director of Plantation Forest Development Bedjo Santoso said investment in HTI projects in 23 provinces since last year has reached Rp24 trillion ($2.4 billion).
Santoso said tree cutting in natural forests would be much reduced after the HTI target has been reached, adding the 5 million hectares would be able to meet demand for raw material from timber processing industries.
So far most HTI projects have been grown with acacia trees mainly for the plywood and paper industries.
Advertising spending to increase in H2: Survey
The outlook for advertising spending is bullish in Indonesia, with advertising revenue expected to increase in the latter of half of 2009, a survey shows, The Jakarta Globe reported.
However, the survey by Nielsen Media Indonesia also showed that print media penetration as a percentage of the population in Indonesia has been declining over the past four years.
The penetration of broadsheet newspapers declined from 28% to 19% from the first quarter of 2005 to the second quarter of this year. Magazine penetration has also dropped, from 18% in the fourth quarter of 2007 to 12% in the second quarter of 2009.
Television still dominates spending in Indonesia, but newspaper advertising revenue has been eating away at TV’s share in recent years, Nielsen said.
TV accounted for 59% of ad revenues in the first half of 2008, down from a peak of 70% in the first half of 2005.
Newspaper market share rose to 37% in the first half of this year; newspapers had only a 25% share in the same period for 2000.
Advertising spending in the third quarter could reach over Rp12 trillion, according to Nielsen, up from Rp11.68 trillion in the second quarter. Last year’s third quarter spending was Rp11.91 trillion.
Advertising spending increased in the first half over the previous year, continuing recent trends. The Rp22.03 trillion spent in the first half of 2009 was up by 12.65% over the same period last year.
“The overall pattern has been repeated since 2004, where every year the third quarter has been the highest advertising spending quarter,” largely due to the Idul Fitri celebrations, said Ika Jatmikasari, associate director of Nielsen Media Indonesia client services.
In the first half of this year, Nielsen said government and political spending rose 173% to Rp2.154 trillion, largely due to elections.
SOEs
Garuda launches expansion plan after ban lifted
State-owned airline Garuda Indonesia plans to start flying to Europe next year and take other steps to expand its operations after the European Union lifted a two-year ban on four Indonesian carriers in response to the country's efforts to improve safety standards, The Wall Street Journal Asia reported.
Emirsyah Satar, the chief executive of Garuda Indonesia, said Garuda would fly first to Amsterdam in the first half of 2010 and would look at other destinations in Europe after that.
As part of its planned expansion - which will double its fleet to 116 aircraft in the next five years, including larger Boeing 777s and Airbus 330-200s - Garuda is also interested in flying to the US, which it doesn't currently serve, Satar said.
This year, Garuda plans to fly 18 new routes domestically and internationally, including from Jakarta to Melbourne, Sydney and Shanghai.
Since taking the helm, Satar has overhauled loss-making Garuda to make it more efficient. Last year, net profit was Rp670 billion ($66 million), up 10 times from 2007, due to higher sales and an effort to weed out corruption in the awarding of contracts, Satar said.
The carrier expects to conclude a $760 million debt restructuring with creditors by September, he said.
The House of Representatives last year agreed to sell a minority stake in Garuda through an initial public offering to raise cash. Satar said he thought Garuda might sell a 15%-20% stake in the first half of 2010.
On Tuesday, the European Union lifted a flight ban on Garuda and three other Indonesian operators -- Mandala Airlines, a low-cost carrier that is controlled by US private equity firm Indigo Partners; cargo operator PremiAir; and Airfast, which runs charter flights.
State developer, BTN may launch IPOs this year
State-owned housing construction company PT Pembangunan Perumahan (PP) and PT Bank Tabungan Negara (BTN) are expected to launch initial public offerings (IPO) toward the end of this year, Asia Pulse reported.
The two state companies would be listed on the Indonesian Stock Exchange (IDX) before the close of the year if the market condition was favorable, State Minister for State Enterprises Sofyan Djalil said.
Initally the government hoped to see at least 10 state companies go public this year but now only BTN and PP were likely to be allowed to list this year, Djalil said.
Ito Warsito, new president of the IDX, said now was the right time for infrastructure, finance and mining companies to go public with interest rate cuts likely to attract investors to the market.
Telkom eyes bigger stake in Malaysia’s Scicom
State-owned telecommunications company PT Telkom said it wants to become the majority shareholder in Scicom Berhad Malaysia, raising its stake to more than 50%, Asia Pulse reported.
Telkom president Rinaldi Firmansyah, however, said there have been no official talks with Scicom, which operates in business process outsourcing.
Telkom already has a 10% stake in Scicom acquired from the Kuala Lumpur Stock Exchange by its subsidiary PT Telekomunikasi Indonesia Internasional.
Firmansyah said Telkom would likely use only around 85% of its capital spending of $2.5 billion set for this year as the price of telecommunications equipment has declined.
PRIVATE SECTOR
June car sales up 10% on month
Domestic car sales rose 10% month-on-month in June to 39,567 units compared with 35,818 in May, an official at the Association of Indonesian Automotive Manufacturers (Gaikindo) said on Tuesday, The Jakarta Globe reported.
“It is easier to buy cars now as the economy is recovering,” Gaikindo chairman Bambang Trisulo said, noting that domestic consumption had risen as inflation and interest rates had fallen.
However, sales in June were 27% below the year-earlier period, when 54,707 units were sold.
In the first half of this year, sales totaled 210,246 units, compared with 292,670 units in the first half of last year, the association’s data showed.
Meanwhile data from the Industry Ministry show the country’s motorcycle production in the year ended May stood at 2,078,774 units of which 2,061,685 units were sold at home. While no comparative figures were released, the motorcycle market is experiencing a similar upswing in line with the four-wheel market, Asia Pulse reported.
Increased local content for Volkswagen car
PT Garuda Mataram Motor (GMM), the sole agent of Volkswagen (VW) in Indonesia, said it will increase the local content for its multi purpose vehicle (MPV), VW Touran, Asia Pulse reported.
By using higher local content the family van could be sold 20% cheaper than its present price of Rp400 million ($40,000) per unit.
GMM sales manager Jonas Chendana said a price adjustment could be made if the rupiah remained stable against the euro and the US dollar.
Expected stronger rupiah stability next year should allow a price cut, Chendana said.
This year the company hopes to sell at least 100 units of VW Touran, launched in the country in May.
Blackberry service centers by August: Official
Blackberry customers in Indonesia should be able to enjoy after-sales services from the smartphone producer, Research in Motion (RIM), by the end of August, the telecommunication authority says, The Jakarta Post reported.
"They're planning to open six service centers and another two in October," said Post and Telecommunications Directorate spokesman Gatot S. Dewa Broto, after a meeting with RIM officials and Canadian Ambassador to Indonesia John T. Holmes.
The directorate earlier on Tuesday threatened RIM that it would postpone certification of RIM products unless the company made service centers available by August 21. Previously, the government set a July 16 deadline for the company to open local service centers.
The telecommunication authority agreed to backtrack on its decision to freeze already-issued certificates. However certification of new models would be frozen until the service operations had opened for business.
Broto brushed off suggestions that the ministry was being soft on RIM, saying the company had shown "a clear willingness to comply with the regulations."
Astra Agro posts earnings drop despite sales rise
Palm oil producer PT Astra Agro Lestari estimated a 26% decline in earnings to Rp3.41 trillion ($341 million) in the first half of the year despite an increase in sales volume, Asia Pulse reported.
The publicly traded agribusiness company sold 494,018 tons of crude palm oil (CPO) in the first half of this year, up from 476,909 tons, valued at Rp4.64 trillion, company spokesman Tjahyo Dwi Arianto said.
Prices fell to an average of Rp6,386 per kg in the first six months of this year from Rp8,299 per kg in the same period last year.
Hero gets approval for $60M loan for store expansion
PT Hero Supermarket secured approval from shareholders at an extraordinary general shareholders meeting on Friday to take $60 million in standby loans to finance land acquisitions and other store expansion efforts, The Jakarta Globe reported.
“We will acquire two pieces of land in the Bintaro and Bumi Serpong Damai [BSD] areas, for Rp191 billion ($19 million) and Rp202 billion, respectively, where we will build two new Giant hypermarkets,” said John Callaghan, the company’s president director.
He said the company had added four new Giant superstores since March.
The transaction for the loans came from the company’s major shareholder, Dutch company Mulgrave, a holding company owned by Dairy Farm, a Hong Kong-based retailer that has significant positions in several Asian countries.
Mulgrave controls 69.7% of Hero and PT Hero Pusaka Sejati has a 27.2% interest, with the public holding the balance.
In the first quarter, Hero booked Rp1.52 trillion in revenue, up by 13.1% from the year-earlier period. Profit rose 22.5% to Rp32 billion, while earnings before interest, tax, depreciation and amortization (Ebitda) rose 28.2% to Rp87 billion.
As of March, Hero managed 436 stores, comprised of 28 Giant hypermarkets, 55 Giant supermarkets, 51 Hero supermarkets, 181 Guardian Health and Beauty stores and 121 Starmart Convenience Stores. In December, Hero managed 398 stores, and had 389 stores as of March 2008.
BANKS
Bankers bullish on Indonesia: BI
Domestic bankers have a positive perception of the country's credit and liquidity risks, implying faster falls in interest rates, a second quarter survey by Bank Indonesia (BI) revealed, Xinhua reported.
The survey showed the bankers predicted that interest rates for working capital loans would be at 11.64% by the end of 2009, compared with 12.75% in a similar survey conducted in the first quarter.
Tony Prasentiantono, head economist at Bank BNI, said that almost all economic indicators in the second quarter were better compared to the previous one. The data on inflation, economic growth and forex reserves kept showing positive development.
He added that economic players were more optimistic following the peaceful presidential election, Kompas reported.
Danamon, BNI report profits, loan growth
PT Bank Danamon and state-owned PT Bank Negara Indonesia (BNI) on Thursday reported profits for the second quarter, Reuters reported.
Danamon’s second-quarter net profit fell 20% to Rp477 billion ($47.25 million) from Rp595.3 billion a year ago, due to the high cost of funds and credit, president director Sebastian Paredes said.
Net interest income in the second quarter climbed 25% to Rp2.345 trillion from Rp1.88 trillion a year earlier.
The lender reported a gross non-performing loan (NPL) ratio of 3.5% in the January-June period, compared to 2.3% a year ago.
BNI, the fourth-largest lender, said net profit doubled in the second quarter but it revised its loan growth target for 2009 down to 14%, from a previous forecast of 16-18%, saying that first-quarter lending was not as high as expected.
"In the first quarter we did not see a pick up in lending so we take a more conservative figure of 14% until the end of 2009," said president director Gatot Suwondo.
Meanwhile, Bimo Epyanto, an assistant to Bank Indonesia’s board of governors, said on Thursday that loans will gradually post higher growth in the coming months without sacrificing quality, The Jakarta Post reported.
Bank loan growth of around 15% is a "reasonable" level to support economic growth, he said.
BNI explores cooperation with Mideast banks
State-owned Bank Negara Indonesia (BNI) is exploring cooperation possibilities with banks from the Middle East, vice president director Felia Salim said on Tuesday, Asia Pulse reported.
"The form of cooperation is still being discussed from various aspects," Salim said without citing any banks BNI had approached.
BNI is meanwhile still processing a cooperation program with the Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of the Islamic Development Bank (IDB), to set up a shariah bank from a spin-off BNI shariah unit.
BNI expects the spin-off of its shariah unit with a capital of Rp500 billion ($49 million) to finish this year so that ICD could immediately invest in it.
Several investors from the Middle East were reported early this year to be entering the banking sector in the country including QIB from Qatar and Kuwait Investment House.
However, the director of shariah banking at Bank Indonesia, Ramzi A Zuhdi, believed the Middle Eastern investors would not enter this year because of the impact of the world financial crisis.
BRI eyes acquiring Bank Bukopin
State-owned Bank Rakyat Indonesia (BRI) is eyeing PT Bank Bukopin, BRI director Bambang Supeno said, Asia Pulse reported on Thursday.
There have been no official talks with Bukopin, but BRI is optimistic the process would go smoothly, Supeno said, adding that a decision would be made after a new cabinet was formed following last week's presidential election.
BRI chief commissioner Bunasor Sanim said the bank management had proposed the plan to acquire Bukopin to its board of commissioners.
BRI failed in its attempt to acquire Bank Tabungan Negara (BTN), another state bank, when the plan was rejected by the House of Representatives.
POWER
China bank extends $293M loan to PLN
The Export Import Bank of China has agreed to provide state power company PT PLN with another loan amounting to $293.23 million for a power plant project in Pacitan, East Java, The Jakarta Post reported.
The power plant is under the PLN's 10,000 MW electricity development program, company president director Fahmi Mochtar told reporters Friday after signing the loan agreement with the bank’s vice president Zhu Xingiang.
"With the latest loan from the Export Import Bank of China, eight of 10 sites across Java have secured financial commitment," Mochtar said.
The construction of the 10,000 MW project power plants is valued at $4.8 billion. The Export Import Bank of China has so far committed to providing $2.8 billion.
PLN reduces oil fuel use by 25% in H1
State power company PT PLN has succeeded in reducing its dependence on oil fuel by 25% in the first half of this year, its president said, Asia Pulse reported.
PLN used only 4.5 million kl of oil fuel in the first six months of this year from around six million kl in the same period last year, Fahmi Mochtar said.
Mochtar said PLN could save oil fuel mainly due to success in the gasification program, adding hydropower and geothermal power also have had a significant contribution.
PLN spokesman Nasri Sebayang said the company saved around Rp6 trillion ($600 million) with the diversification of fuels.
Shenhua unit starts work on S. Sumatra power project
China Shenhua Guohau Power Co., a unit of China’s biggest coal producer, started construction of a power plant and mine in South Sumatra this month, Bloomberg reported.
Building began on the site on July 7 and is due for completion in 2011, parent Shenhua Group Corp. said in a statement on its web site.
The mine will produce about 1.5 million metric tons of coal a year, Shenhua, said.
Shenhua said in January last year the project was due to be completed in 2010. The 300 MW power station is the coal-producer’s first electricity generating project outside China.
OIL & GAS
Gulf Petroleum to invest in $1B gasification project
Priamanaya Group and Gulf Petroleum from Qatar will develop synthetic gas from coal in Lahat, South Sumatra, a report said on Tuesday, Asia Pulse reported.
The feasibility study of the project will be carried out towards the end of this year, Susilo Djiwantoro, Priamanaya chief executive, said.
Djiwantoro said Gulf Petroleum will hold the majority share of 80% and Priamanaya, which has a coal mine in Lahat, will hold 20%.
The coal gasification project will cost at least $1 billion, he said, Bisnis Indonesia reported.
Australian Energy World to invest $720M in S. Sulawesi
Australian investor Energy World Corp. plans to spend $720 million in new projects in South Sulawesi including in the Sengkang gas field, which is integrated with a power plant, Asia Pulse reported.
Energy World already invested $200 million in the Sengkang project including a 190-MW gas fired power plant, chief of the Investment Coordinating Board (BKPM) Muhammad Lutfi said.
The company wants to expand the capacity of the power plant to 320 MW with an additional investment of $130 million, Lutfi added.
It also plans to build a liquefied natural gas plant with a capacity of 2 million tons a year to cost around $590 million, he said.
MINING
Prioritize Newmont stake sale to SOEs: Minister
The State Ministry for State Enterprises on Friday has summoned the directors of state-owned nickel and gold miner PT Aneka Tambang for discussions on taking the 14% stake that US-based Newmont Mining is required to divest, The Jakarta Globe reported.
The ministry will also send another letter to the Finance Ministry on Monday to ask for state firms to be given first option. The State Enterprises Ministry had sent a letter in May asking for priority to be given to state enterprises, but the Finance Ministry gave no commitment at the time.
“If the (president) gives the nod, then our companies will talk directly to Newmont,” said State Minister for State Enterprises Sofyan Djalil.
Energy and Mineral Resources Minister Purnomo Yusgiantoro said on Thursday the government and Newmont Mining Corp. have agreed to value PT Newmont Nusa Tenggara's (NNT) assets at $3.52 billion, Reuters reported.
On Wednesday, deputy at the Coordinating Economics Ministry Wimpy Tjejep told reporters the Finance Ministry may choose to buy the stakes in PT NNT outright or designate other parties to buy the stakes.
The government will decide within the next two weeks who will buy stakes in the unit, Tjejep said, but didn't specify how much of PT NNT will be bought.
The government has said previously it aims to buy 21% of PT NNT, comprised of stakes scheduled for divestiture to local buyers between 2006 and next year.
At least five potential buyers have expressed an interest in the PT NNT stake, including a consortium of three local governments from West Nusa Tenggara backed by PT Multicapital, which is a subsidiary of Bumi Resources.
State-owned enterprises, including miners PT Aneka Tambang, PT Tambang Batubara Bukit Asam and PT Timah have also expressed interest.
PT Pukuafu Indah, an Indonesian mining group, previously bought 20% of the unit, while Newmont and Japan's Sumitomo Corp own 45% and 35% respectively.
June tin exports seen up 59%
Indonesia's refined tin exports are estimated at 8,661.2 tons in June, up 59% from 5,461 tons in the same period a year ago, the Trade Ministry said on Tuesday, Reuters reported.
Refined tin exports for the period January-June amounted to 50,575.2 tons, up 9.2% from 46,321.54 tons in the same period last year.
About 78% of the country’s tin exported in June was shipped to Singapore, while the remainder went to Malaysia, China, Japan, India, Hong Kong, Taiwan, South Korea and the Netherlands, an official at the ministry said without elaborating further.
Indonesian firms win Philippine coal contracts
Philippine electricity producer National Power Corp (Napocor) has awarded contracts to two Indonesian firms for 195,000 tons of coal, a senior official said on Monday, Reuters reported.
One lot of 65,000 tons was awarded to PT Delta Mineral International at $79 per ton, said Edmund Anguluan, head of the state utility's bidding committee. PT Trubaindo will supply two lots of 65,000 tons each, with one priced at $80.93 per ton and the other at $81.03 a ton.
Napocor was hoping to source a total of 390,000 tons of coal for its Pagbilao power plant at the July 1 tender but only managed to award contracts for half of that volume. It had set a budget of $81.08 per ton for the coal scheduled for delivery between October and December.
Anguluan said the firm is planning a re-tender by the end of the month to secure the remaining 195,000 tons.
Another tender for 195,000 tons steam coal for its Sual plant was declared a failure after a lone bidder withdrew after failing to comply with Napocor's requirements, said Anguluan.
Napocor earlier gave the lone bidder, also PT Delta Mineral, more time to sort out its bid.
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