National • Environment ministry plans new legislation to stop seasonal fires
Politics • Susilo Bambang Yudhoyono and Boediono elected, says commission
Terrorism • Police mount intensive manhunt after bombings
Security • Authorities to check IDs of new residents in crowded neighborhoods
Law & order • Attorney General hints at evidence on corruption at crime-fighting unit
Health • First swine-flu related death reported, 343 cases identified
Economy • Moody’s ratings agency says bombings will have no impact on economy • Rebound in spending benefits car, motorcycle industries

Business briefs
Macroeconomy
• Finance minister hints at need for deputy minister
Investment
• Public-private approach in East Java shipbuilding cluster
• Jakarta regional government plans international harbor
State concerns
• House backs Rp5.5 trillion budget to offset impact of bombings
• Minister calls for increase in cement production capacity
SOEs
• Flag carrier Garuda announces aggressive expansion plan
Private sector
• Bombing hotels to re-open, tourist industry reports some impacts
Banks
• Non-performing loans less than 5%, says central bank
Power
• Gorontalo power project to be completed in 2010
Oil & gas
• Regulator not keen on House bid to curb cost-recovery program
• First half oil output marginally under target
Mining
• Newmont accepts price of $494 million for 14% unit stake
• First-half coal output at 72 million tons

NATIONAL
Govt. to come down hard on fires
Minister of State for the Environment Rahmat Witoelar said new legislation would give his ministry greater powers from September to deal with anyone involved in illegal slash-and-burn activities, instead of having to rely on other government agencies, The Straits Times reported.

Using fire to clear land is illegal in Indonesia, but lack of enforcement has been a constant criticism of its efforts to tackle the problem.

“We will be getting handcuffs of our own... It may sound dramatic but I think this is where the greatest need is. It shows that we mean business.”

The minister was speaking on the sidelines of a ceremony with his Singapore counterpart to mark the handover of an air and weather monitoring station in Muaro, Jambi on Friday.

It is one of three in the regency funded by Singapore under a $1 million joint effort to tackle smoke haze.

The three facilities, operational since last December, measure wind speed and direction, rainfall, temperature and relative humidity. Hourly readings of the level of air pollution will be relayed to officials in Jambi and Singapore.

Witoelar also raised concerns about the El Nino weather pattern, which is developing over the equatorial Pacific Ocean, bringing back the haze.

“It is a fact that this year's dry season will be a severe one. If El Nino were to strike, I am sure there will be some fires, but nothing compared to 2006,” he said.



POLITICS
President re-elected, election commission states
President Susilo Bambang Yudhoyono was officially re-elected in final results announced by the General Election Commission (KPU) on Saturday, Reuters reported.

However rival candidates Megawati Sukarnoputri and Vice President Jusuf Kalla will file complaints to the Constitutional Court, officials from both camps said Saturday.

Under Indonesian law, presidential candidates have up to three days to file complaints after the unveiling of the official vote count.

Megawati won 26.79% of votes in the July 8 poll and Kalla 12.41%, while Yudhoyono received 60.8%, according to the final count released by the KPU.

Dr. Yudhoyono denied there had been widespread foul play in the election and said opposing candidates had the right to launch a peaceful challenge.

Supporters of Kalla have alleged that electoral lists contained around 20 million duplicate names, while backers of Megawati and Prabowo have also complained about widespread problems with electoral lists.

I Gusti Putu Artha, an election commission member, told Metro TV the Constitutional Court would decide whether the complaints should be investigated. The court has two weeks to investigate and make a decision.



TERRORISM
Police in massive manhunt following blasts
A suspected terrorist was arrested in Balikpapan, East Kalimantan on Thursday night by the National Police anti-terrorist Detachment 88 as a manhunt intensified in the wake of the July 17 blasts in Jakarta in which nine people died, including two suicide bombers, Detikcom reported.

The suspect is believed to have been involved in a plan to blow up an oil refinery belonging to state-owned PT Pertamina in Balikpapan, a source said, adding police seized a sketch of Pertamina oil refinery unit VI in Balikpapan.

“The suspect is now being moved to the National Police headquarters in Jakarta for further investigation,” he said.

East Kalimantan Police chief Insp. Gen. Andi Masmiyat refused to comment on the arrest.

Police said they had stepped up the hunt for alleged terrorist mastermind Noordin M. Top who is believed to be behind the attacks on the JW Marriott and Ritz-Carlton hotels in Jakarta.

National Police chief Bambang Hendarso Danuri said investigators were in a "race" to catch Top, whose network is linked to al Qaeda and the Jemaah Islamiyah (JI) regional Islamist movement.

"This is a race between us and that group," he said, referring to the network which goes by various names including Brigade Firaqul Maut (Dare-to-Die Brigade).

He mentioned Syaifudin Zuhri, alias Sabit, who was caught in the Central Java district of Cilacap on June 21, and several other people believed linked to Top and JI who had been detained in recent months.

Zuhri is the uncle of Top’s father-in-law and provided training and advice to a cell that was arrested in Palembang, Sumatra, last year, according to a report released Friday by the International Crisis Group (ICG) think tank.

Police said they were also searching for Top’s father-in-law, who disappeared after bomb-making material was found buried in the yard at his Cilacap house days before the hotel attacks.

On Wednesday, police said they arrested a would-be suicide bomber in Central Java, The Associated Press reported.

Central Java Police chief Maj. Gen. Alex Bambang Riatmojo said the man was arrested in Cilacap and has ties to the Jemaah Islamiyah (JI) network. He was identified only by the initials ZA.

It was unclear whether he is suspected of involvement in the suicide bombings at the J.W. Marriott and Ritz-Carlton hotels in Jakarta on July 17.

Riatmojo said Thursday that the suspect admitted "that he was indeed prepared as a suicide bomber."

JI has carried out four previous attacks in Indonesia and is suspected in the latest blasts that killed seven people and wounded more than 50.

Separately, the wife of Noordin Top, the region's most-wanted militant because of his role in a string of bomb attacks in Indonesia, did not know his real name and thought he was a teacher, her lawyer said on Thursday, Reuters reported.

Malaysian-born Top is one of the prime suspects behind last week's near-simultaneous suicide bomb attacks in Jakarta.

Arina Rochmah was detained by the police under Indonesia's terrorism law, her lawyer Achmad Michdan said, adding that she could be charged for harboring or hiding information about a terror suspect.

Michdan said Rochmah had no knowledge that her husband, Abdul Halim, was Noordin Top, although she admitted he was seldom at home due to his work teaching at an Islamic boarding school in South Sulawesi.

In Makassar, South Sulawesi, a man identified as Taufan Haji, 45, was arrested in possession of five identity cards, two passports, nine credit cards and four ATM cards on suspicion of links to Top, Kompas reported.



SECURITY
Jakarta: Dense neighborhoods target of upcoming raids
In the wake of the recent bombings in Jakarta, where suicide bombers used false identity cards to enter two major hotels, the Jakarta administration will ramp up its inspection of ID cards, particular those held by people from outside the city living in rented houses or rooms, The Jakarta Post reported.

The inspection will be conducted simultaneously across the city’s five municipalities early next month, an official from the monitoring division of the Citizenship Agency, Edison Sianturi, said Friday.

“We will prioritize densely populated areas, where there are many rooms or houses being rented to people from outside Jakarta,” Sianturi said, refusing to specify the areas.

Police investigations have revealed that terrorists often stay in densely packed residential areas with rooms for rent, where they will not attract attention or have to answer too many questions.

The terrorists who bombed the Mega Kuningan business district last week used a false ID card to book a room at the JW Mariott Hotel.



LAW & ORDER
AGO may have ‘proof’ of KPK corruption
Attorney General Hendarman Supandji hinted on Friday that his office had found sufficient evidence of corruption within the Corruption Eradication Commission (KPK) to warrant an investigation, the Jakarta Globe reported.

His statement follows a recent meeting between the AGO and police. “The meeting was held recently, but we can’t announce the results yet,” Supandji said, adding that the meeting was basically an informal discussion.

While the meeting was informal in nature, it ended with several instructions to both the police and state prosecutors, he said without elaborating.

“We can reveal everything in detail only after a formal order to investigate the matter is issued,” Supandji said.

Police sources told the Jakarta Globe recently that several KPK officials were suspected of accepting bribes when investigating a corruption case involving PT Masaro Radiokom, a private company.

The allegations came after police tracked cash flows into bank accounts of KPK officials. Police have deployed a special team from the Criminal Investigation Directorate to Singapore to collect more evidence.

Masaro was investigated by the KPK for allegedly bribing lawmakers in an attempt to win a project in the procurement of an integrated radio communication system for the Forestry Ministry.

AGO hints at more action on former BIN deputy
The Attorney General’s Office indicated on Thursday that it would likely request a Supreme Court review of the acquittal of former top intelligence official Muchdi Purwoprandjono on the charge of ordering the murder of human rights activist Munir Said Thalib, the Jakarta Globe reported.

Prosecutors do not believe Pollycarpus Priyanto, a former Garuda pilot who was sentenced to 20 years in jail for carrying out the September 2004 murder, acted alone nor have a personal motive for what is widely believed to have been a political assassination.

“Thalib was killed by Pollycarpus. The question is what for,” said Abdul Hakim Ritonga, deputy attorney general for general crimes, adding that he believed someone else was behind the murder.

However, prosecutors cannot act on Purwoprandjono’s acquittal until they receive an official copy of the court verdict, Ritonga said.

“I have instructed the head of the South Jakarta Prosecutor’s Office to ask for the copy from the Supreme Court. We need to learn the court’s considerations in making the decision,” he said.

Under the country’s laws, requesting a case review at the Supreme Court requires the petitioner to present new evidence.

Munir, the founder of the Commission for Missing Persons and Victims of Violence (Kontras), died of arsenic poisoning aboard a Garuda Indonesia plane en route to Amsterdam.



HEALTH
Govt. reports first swine flu-related death, cases at 343
The Health Ministry on Saturday reported its first death linked to swine flu after a six-year-old girl who had severe pneumonia died in a Jakarta hospital, Agence France-Presse reported.

"During her stay at the hospital, the patient's condition kept getting worse and she died on July 22," Health Ministry Director General for Disease Control Tjandra Yoga Aditama said on the ministry's website.

"The child already had health problems since several years ago and delayed development... this patient had severe pneumonia and the result from Polymerase Chain Reaction has shown that she was positively infected by influenza H1N1," he said.

As of July 24, Indonesia had recorded 343 swine flu cases.



ECONOMY
Moody’s affirms post-bombing optimism
Moody's Investors Service affirmed its positive outlook on Indonesia's Ba3 sovereign rating on Friday, saying the deadly blasts in Jakarta on July 17 would have a "very fleeting and minimal impact" on its financial markets, Reuters reported.

"Although this latest terrorist attack comes as a shock after four years of quiet, it is unlikely to imperil Indonesia's overall political stability or severely dent its economic outlook," it said in a statement.

The business community also remained in positive move. A gathering of top business players and economic ministers in Jakarta on Wednesday resulted in assurances of confidence from representatives of foreign investors in Indonesia's economy, The Jakarta Post reported.

James Castle, a survivor of the bombings and who many regard as the single most important adviser to foreign investors through his consultancy CastleAsia, said he and fellow foreign investors were confident about the economy and the business climate that was conducive to investment.

Bank Indonesia (BI) was also upbeat, linking a stronger rupiah to continuing optimism over the economy.

Deputy governor Hartadi Sarwono said the dollar may stay below Rp10,000 in the near term due to the country’s positive economic outlook after the presidential election, with both global and domestic factors supportive, Dow Jones reported.

Sarwono said the July 17 blasts at two luxury hotels, which killed nine people and wounded 53, would have a limited impact on the rupiah.

Sarwono added that on-year inflation is likely to be lower this month than in June. Consumer prices will likely rise by around 3% compared with 3.65% in June, and some room remains for more central bank rate cuts, Sarwono said.

However, Sarwono said the room for rate cuts going forward is "limited" because of the risk of inflationary pressures from strengthening commodity prices and the El Nino weather phenomenon, which is expected to cut harvests.

BI's policy rate is now 6.75%, and most analysts expect another 25-basis point cut next month.

Another BI deputy governor, Budi Mulya, said on Friday the bank will continue to maintain stability in the rupiah, Reuters reported.

"We are monitoring. We will maintain (low) volatility so that there won't be excessive volatility," Mulya told reporters when asked about the strengthening rupiah.

The rupiah gained 0.5% to Rp9,995 per dollar on Friday, strengthening past the key 10,000 level for the first time since June.

There were also signs of a rebound in consumer spending, with both car and motorcycle producers saying the decline in the market as a result of the global crisis would be less dramatic than expected, with motorcycle sales, a key indicator of confidence, likely to be down only 20% rather than the 40% fall originally projected.

Domestic car and motorcycle manufacturers revised their sales targets for the next 18 months as the Indonesian International Motor Show kicked off in Jakarta on Friday.

Analysts believe car sales will rise more than 11% in 2010, Bambang Trisulo, chairman of the Indonesian Automotive Industry Association (Gaikindo), said on Friday, The Jakarta Globe reported.

He said nationwide vehicle sales may exceed 500,000 units in 2010, up from an estimated total of 450,000 this year — a 25% decline from 2008.

Gaikindo earlier reported that vehicle sales rose 10% month-on-month in June.

The Indonesian Motorcycle Industry Association (AISI) said on Friday that it had raised its industry sales forecast this year, to a decline of less than 20%, from an earlier projected drop of 40%, Bloomberg reported.

Gaikindo said Wednesday new car sales in Indonesia in the first six months of this year fell 28% from a year earlier to 10,246 units, Dow Jones reported. New motorcycle sales in the country fell 17% to 2.54 million units.



BUSINESS BRIEFS
MACROECONOMY
2Q growth at 3.7%: Official
The economy is estimated to have grown by 3.7% in the second quarter of this year, bolstered by ongoing strong consumption, a Finance Ministry official said on Friday, The Jakarta Post reported.

“Consumption is still strong, though not as strong as the first quarter,” Anggito Abimanyu, the ministry’s head of fiscal policy, said of the performance of the economy in the second quarter.

The estimated rate of growth is below the 4.4% recorded in the first quarter.

Abimanyu said activity would most likely accelerate in the third quarter due to an increase in investment. The ministry forecasts full-year economic growth at 4.3%.

The Central Bureau of Statistics (BPS) will announce the official growth rate figure next month.

Earlier, Finance Minister Sri Mulyani Indrawati said she was confident of achieving economic growth of 4% to 4.5% this year despite the bomb attacks on two hotels in Jakarta, Reuters reported.

Separately, MS Hidayat, head of Indonesia's Chamber of Commerce and Industry (Kadin), told a news conference that he expected any negative impact from the bombings to be limited.

Govt. aims to raise Rp2T in debt sale
The Finance Ministry said Thursday it expects to raise Rp2 trillion ($199.4 million) in an auction of government debt paper this week as part of its funding of the budget deficit, Reuters reported.

The ministry said in a statement it plans to sell treasury bills maturing in 2010 as well as fixed rate treasury bonds maturing in 2022, 2028, 2038.

The ministry raised Rp3 trillion at its last debt auction on July 14, above its target, on the back of expectations of better economic conditions.

The ministry on Friday began to offer its sixth series of local-currency retail bonds with a maturity of three years and a coupon of 9.35%. The offer will stay in place until August 7 and settlement will be August 12, Dow Jones reported.

Finance Ministry may need deputy minister: Indrawati
Finance Minister Sri Mulyani Indrawati has hinted the ministry may need a deputy minister due to the heavy workload she now handles, The Jakarta Post reported.

"It's the president's decision whether a ministry or government agency needs such a position, and whether, objectively, it has a scope of work that requires its minister to be in several places at once," Indrawati said Wednesday after a meeting at the House of Representatives.

"Take the finance minister; in this case, the frequency of attendance in doing the job as a government representative to discuss the budget at the House becomes a factor,” she said

"The finance minister must also go on many trips to fulfill international commitments, particularly through Indonesia's role in the G20 and other forums."

The Finance Ministry also needs to control the many directorates general under it, with branches spread across the country, adding to the workload of the minister, Indrawati added.

Article 10 of the 2008 state ministries law says the president may appoint a deputy minister to a certain ministry if the minister is handling a heavy workload that needs special treatment.

H1 tax revenues down 2.8%
The government raised Rp253.19 trillion ($25 billion) in tax revenues in the first half of this year, down 2.8% from a year earlier because of slowing economic growth, Director General of Tax Darmin Nasution said in a statement, Reuters reported.

Tax revenues, which included income tax on oil and gas commodities, reached Rp260.56 trillion in the first half of 2008.

Non-oil and gas tax revenues in the period January to June 2009 were down by 0.18% to Rp225.79 trillion from Rp226.06 trillion in the same period last year.



INVESTMENT
Govt., private firms build shipbuilding industrial cluster
The government, in partnership with private companies, is constructing an industrial cluster for shipbuilding on 400 hectares of land in Lamongan, East Java.

The cluster, estimated to be worth Rp5.9 trillion, will have the capacity to produce two large vessels and repair 100 vessels a year.

The total investment will include the construction of production facilities, supporting infrastructure and public facilities.

Soerjono, director for Maritime Industry and Engineering Services at the Industry Ministry, said the government would control 26.6% of the total investment, while the East Java administration would control 2.8%.

"In that cluster, there will be six 50,000-DWT shipbuilders, 14 10,000-DWT shipbuilders and supporting facilities," Soerjono said Thursday.

Budi Darmadi, Director General for Transportation, Telecommunication and IT Industries at the ministry, said the cluster would commence operation next year, starting with the production of small vessels.

He said the existing national capacity of 165,000 DWT per annum would be unable to meet increasing demand predicted to peak at 500,000 DWT in the next five years as an influx of orders was expected from Asia and Europe.

Darmadi added annual domestic demand amounted to 590 general cargo ships, including 50 container ships, 12 bulk ships, 70 tugboats, 44 passenger ships, 80 fishing vessels and 25 roll-on/roll-off vessels.

The government investment is being made through state-owned PT Dok & Perkapalan Surabaya (DPS). The rest of the investment, 70.8%, is divided among three private investors: PT Dok Pantai Lamongan, PT Lamongan Industrial Shorebase and PT Lamongan Marine Industry.

The new cluster in Lamongan will support the ongoing operation of another shipbuilding cluster in Surabaya - the Surabaya Shipbuilding Industry Cluster (KIKAS), in operation since 2006.

The cluster was established in Surabaya under the auspices of the Industry Ministry.

Currently, the core members are shipbuilders including state-owned PT PAL and privately owned DPS, PT Dumas Shipyard, PT Adiluhung and PT Ben Santosa.

Chinese automakers eye investment in Indonesia
Two Chinese automakers are studying possible investments in Indonesia, the Industry Ministry said, Asia Pulse reported.

Transport Director General Budi Darmadi said the two, one of which is the producer of the Sokon brand, plan to build factories to produce multipurpose vehicles (MPV).

The Chinese principals have already secured investment licenses from the Investment Coordinating Board (BKPM), Darmadi said, adding they are ready to invest up to Rp2 trillion ($200 million) each.

Meanwhile, Industry Minister Fahmi Idris said the impact of the global financial crisis is having an effect on the country's automotive industry, Kontan reported.

Idris predicted the industry would grow 8% this year as against last year growth of 12.6% with capacity utilization falling to 55% from 83%.



STATE CONCERNS
Govt. urged to prepare Rp5.5T for bombing impact
The Budget Committee at the House of Representatives has asked the Finance Ministry to prepare Rp5.5 trillion from the state budget to anticipate the impact of the July 17 bombings, Kompas reported.

“The use of funds will be in the hands of the government,” committee vice chairman Suharso Monoarfa said after meeting with Finance Minister Sri Mulyani Indrawati on Wednesday.

Monoarfa said the government may spend up to Rp5.5 trillion on extra security measures following the hotel bombings, which may push the budget deficit up to the original projection of 2.5% of GDP.

Monoarfa earlier said the House and the government agreed to widen the budget-deficit target for this year to 2.4% of GDP from 1.9% set last year.

Govt. asks for cement production boost
State Minister of State Enterprises Sofyan Djalil is asking state cement producers to increase their production capacity in order to fulfill the country's growing demand for the basic commodity, The Jakarta Post reported.

"We predict the country will need 140 million metric tons in the next 10 years," Djalil said during a signing of a memorandum of understanding between state power company PT Perusahaan Listrik Negara (PLN) and cement producers PT Semen Gresik, PT Semen Padang and PT Semen Tonasa in Jakarta on Friday.

"So far we only produce 46 million metric tons to provide for the country’s annual demand," he added.
Govt. push for APEC regional trade financing
Indonesia has proposed the establishment of regional trade financing cooperation within the Asia-Pacific Economic Cooperation (APEC) forum, BBC Monitoring Asia Pacific reported on Thursday.

“The cooperation so far is bilateral among individual members," Trade Minister Mari Elka Pangestu said in Singapore on Tuesday

She said trade financing was very important for developing export-oriented SMEs. "It is the SME that needs insurance. We hope there will be trade relations among SMEs of APEC members," said Pangestu.

"Recovery from the current crisis will require coordination and close linkage of steps in the financial and trade sectors," she said.

The ministers agreed that the dialogue process had to be continued and increased, not only to overcome the (financial) crisis and streamline ways to recovery but also to create APEC economic resilience in the long term.

Pangestu added that APEC had to pay attention to capacity development programs that would affect SMEs and community groups badly in need of them, Antara reported.



SOEs
SOEs’ dividend payments up 300%: Minister
State Minister for State Enterprises Sofyan Djalil said Thursday that SOEs’ dividend payments to the state over the past five years had risen by up to 300%, Asia Pulse reported.

SOEs` net profit went up 77% to Rp78 trillion ($7.8 billion) in 2008 from Rp44 trillion in 2004, while assets increased 38% to approximately Rp2000 trillion.

He attributed the achievement to the significant improvement of state firm operations as a result of the application of improved procurement systems and procedures through e-procurement, among other steps.

Other factors were the application of good remuneration mechanisms and the formulation of management contracts with tighter and measurable key performance indicators, as well as direct synergy and cooperation without involving third party and efficient healthcare spending.

"These all have led to a better corporate culture to create added value at state firms," he said. "The improved performance of Garuda Indonesia is one of the examples of the state firms` positive development."

He also cited state power company PT PLN, which managed to save hundreds of millions of dollars by renegotiating a project last year, while state bank PT Bank BRI has become the best bank in three consecutive years.

SOEs’ capital expenditures which stood at Rp128 trillion last year were projected to increase to Rp152 trillion this year, while in 2004 the figure was only Rp32 trillion.

Garuda to increase fleet size, passenger numbers
Flag carrier PT Garuda Indonesia plans to acquire 64 new aircraft to increase its fleet to 116 aircraft by 2014 and aims to increase its net profit by around five times in the same period, chief executive Emirsyah Satar said Thursday, Dow Jones reported.

Satar said some of the new aircraft will be leased and some will be purchased.

Garuda will take delivery of four Airbus A330-200 aircraft this year, Satar said, adding the airline will also acquire 50 Boeing 737 Next Generation aircraft and 10 Boeing 777 Extended Range aircraft.

Garuda hopes to increase its net profit to Rp3.7 trillion by 2014, from Rp669 billion last year, he said.

Garuda is targeting an increase in passenger numbers to 27.6 million by 2014 from 10.1 million last year, he said, adding that net profit this year should increase, but didn't elaborate.

Telkom set to acquire two ICT firms
PT Telekomunikasi Indonesia (Telkom), Indonesia’s largest telecoms company, is set to acquire shares in two firms in the information communication technology (ICT) sector, as it seeks to strengthen its non-core business, The Jakarta Post reported.

The company has yet to disclose the names of the companies but president director Rinaldi Firmansyah said recently a price had been agreed with one of them.

Firmansyah hinted the value of the acquisition would be less than the Rp598 billion spent to increase Telkom’s share ownership in PT Infomedia Nusantara by 49% last month, while the value for the other company would be “below Rp500 billion”.

He added the budget had been allocated for in this year’s capital expenditure, which, according to earlier reports, could reach up to Rp21 trillion, about Rp14 trillion of which has been allocated for phone business expansion.

Both acquisitions, Firmansyah said, were for majority ownership in the companies.

Krakatau Steel to increase direct sales
State-owned steelmaker PT Krakatau Steel is trying to boost its revenue by increasing direct sales to up to 75% of total sales, The Jakarta Post reported.

"Direct selling is more efficient because Krakatau does not need a third party when selling its products," said Krakatau marketing director Irvan K Hakim.

Last year, only 5.2% of the company's products were sold directly to end-users.

"We predict the increase in direct sales will boost our annual revenue by a minimum of Rp120 billion ($120 million)," said Hakim.

To boost its direct selling program, the company will allow delayed payments for sales of between 20 and 50 tons, and will implement a cash-and-carry mechanism for smaller buyers.

Krakatau, the world's fifth largest steel producer, is targeting revenues of Rp1.5 trillion ($1.5 billion) this year, compared to last year's Rp300 billion, when the price of steel was below expectation.



PRIVATE SECTOR
Ritz-Carlton, JW Marriott to re-open soon
The Ritz-Carlton and JW Marriott hotels in South Jakarta will be ready to re-open soon, a little more than a week after deadly twin bombings at the two international hotels, the Jakarta International Hotels Association (JIHA) said Wednesday, The Jakarta Post reported.

JIHA chairman Poul Bitsch said that the decision to stay in operation in Jakarta was a rational one.

Culture and Tourism Minister Jero Wacik added the government had agreed to allocate Rp94 billion ($9.3 million) for the ministry's tourism recovery program.

As of Sunday, the Indonesian Hotel and Restaurant Association said 2,000 foreign tourists had cancelled their plans to visit Indonesia in August due to security concerns.

The JIHA reported all five- and four-star hotels in Jakarta had seen an average 10% decline in occupancy rates since the bombings.

The chairman of the Association of Indonesia Tours and Travel (Asita), Ben Sukma, said Friday Indonesia suffered only minor tourists visit cancellation as a result of the bomb blasts, Xinhua reported.

He said cancellations to North Sumatra and West Sumatra stood at 5-10%, consisting of tourists from Malaysia, Singapore, and Western Europe.

"We saw cancellations to Jakarta of 20-30% or 7,000 tourists from South Korea, China, Taiwan, and Europe. We haven't counted domestic tourists," Sukma said.

Bandung in West Java saw no cancellations while Yogyakarta saw cancellations at 2-5%.

Bakrie sees palm output up 17%
PT Bakrie Sumatra Plantations said on Tuesday it expects its palm oil output to rise 17% to 420,000 tons in 2010, boosted by increased output from maturing plantations, Reuters reported.

Bakrie Sumatra, the world's 15th largest listed palm plantation firm by market value, would also seek about $110 million in bank loans next year to finance the planting of around 36,000 hectares of new palm oil estates, president director Ambono Janurianto said in an interview.

Two banks had previously indicated their support for the expansion plans a year ago, but a sharp drop in palm oil prices, coupled with the global financial crisis and recent bomb attacks in Jakarta, could make it more difficult to raise funds, he said.

"We are keeping all the channels open. We will keep trying to find ways to get funding although the circumstances are quite difficult, especially after recent incidents," Janurianto said.

In mid 2008, Bakrie Sumatra raised $80 million through a private equity fund, in which it owns a 36% stake, to partly finance plans to increase new palm oil plantations by 50,000 hectares by 2011.

The $80 million of funds will be used up to plant around 14,000 hectares and therefore the rest of the program must be funded by bank loans, Janurianto said.



BANKS
Banks’ NPLs estimated below 5%: BI
The non-performing loans (NPL) of local banks are estimated not to exceed 5% this year as the economy recovers and banks work hard to offset NPLs, a Bank Indonesia (BI) official said on Thursday, Asia Pulse reported.

BI deputy governor S Budi Rochadi added that positive growth in bank credits was visible since June.

"BI estimates that bank credits will this year still grow by 15% from last year. It is true that the growth will be lower than last year when it was 24% to 25% but 15% this year is still high considering the circumstances," he added.

The absorption of third-party funds was also showing an upward trend, reaching Rp1,783 trillion ($178.3 billion) in May from Rp1,705.3 trillion in late December 2008.

Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) called on banks to lower interest rates on credits in line with the reduction of BI's key rate to 6.75%.

"I appeal to banks to cut their lending rates soon so that investors will be able to borrow money at relatively lower interest rates," chairman of Kadin`s foreign investment committee Chris Kanter said.

He said lending rates at present were still at the 13% level while a fair rate would be in the range of 10% to 11%.

BRI set to acquire Bank Bukopin
PT Bank Rakyat Indonesia (BRI) said it was eyeing several banks including PT Bank Bukopin to support its plans to consolidate its business in the retail sector, Asia Pulse reported.

BRI president Sofyan Basir said the bank has enough cash to buy a mid-sized bank with a strong presence in the SME and consumer business sector.

A source at the office of the State Minister for State Enterprises said BRI, Indonesia's second largest bank in assets, was set to finalize the acquisition of Bukopin by the end of this year.

Japan’s SMBC to tie up with BCA: Report
Sumitomo Mitsui Banking Corp (SMBC) reportedly will form a partnership with PT Bank Central Asia (BCA) in wholesale operations to bolster services designed to support Japanese firms operating in the country, Reuters reported.

The deal is believed to be the first such tie-up between a major Japanese bank and an Indonesian institution that will specifically target corporations, the Nikkei daily said.

The partnership will allow SMBC to receive a stable supply of rupiah. Demand is growing among firms to settle accounts in rupiah since last fall's financial turmoil, the Nikkei said.

SMBC, the core banking unit of Sumitomo Mitsui Financial Group Inc, intends to help Japanese companies manage funds locally by offering cash management services, as well as provide more loans.

Bank Permata gets capital injection of $100M
Publicly listed lender PT Bank Permata has received additional capital of $100 million raised from the sales of subordinate medium-term notes (MTN), Asia Pulse reported.

Bank Permata president Steward D Hall said the additional capital improved the capital adequacy ratio of the bank to 13% from 10.9% in March.

Stronger capital would give the bank greater flexibility to grab any opportunity to grow, he said.

The 12-year notes, carrying an annual interest rate of 9.75%, were entirely bought by its majority shareholders, Standard Chartered Bank and Astra International, both a 45% shareholder of Bank Permata.


POWER
PLN seeks $1B in loans for power program
State-owned power company PT PLN plans to seek between $900 million and $1 billion in loans to help fund its crash 10,000 MW electricity capacity expansion program, company officials said Tuesday, Bisnis Indonesia reported.

PLN vice president director Rudiantara said the company will seek the funds from overseas banks.

"We will seek loans with the most beneficial pricing," he said.

Rudiantara added that the company plans to issue Rp1.5 trillion in rupiah-denominated bonds in October or November.

Moody's has set a Ba3 rating for PLN and non-secured bonds worth $2 billion with positive prospects following a proposal from PLN subsidiary Majapahit Holding BV for a $450 million bond issuance with 7.25% coupon maturing in 2011.

Gorontalo power plant to be completed in 2010
A coal-fired power plant with a capacity of 2 x 25 MW in Anggrek, North Gorontalo regency, is to be completed early in 2010, Asia Pulse reported.

Gorontalo Governor Fadel Muhammad said on Thursday that construction of the project has reached the stage of land leveling and construction work would start on September 27.

He said the power plant is very important to the region, where maximum power consumption had reached 32 MW.

The completion of the project has been delayed for a year because of land clearance problems, Muhammad said.


OIL & GAS
BP Migas pans House’s cost recovery cut proposal
Upstream oil and gas regulator BP Migas has criticized a proposal by the House of Representatives to cut the cost-recovery ceiling from $11.5 billion to $10 billion this year, saying that the reduction would have an impact on oil and gas output, The Jakarta Globe reported.

“We are being told to increase output, improve the quality of our human resources and produce more added value for the country, while at the same time having to reduce costs,” BP Migas chief R. Priyono said on Thursday. “It will be difficult.”

The House’s budget committee on Wednesday proposed that the cost-recovery ceiling should be reduced to help lower the budget deficit, in the event that the Indonesian crude price falls to $58 a barrel, or if national oil production fails to reach the government’s target of 960,000 barrels a day.

H1 oil output hits 99.15% of target
Oil output in the first half of 2009 hit 951,793 barrels per day (bpd), or 99.15% of the targeted 960,000 bpd, the upstream oil and gas regulator BP Migas said, The Jakarta Globe reported.

BP Migas head R. Priyono said oil output was expected to increase significantly in the second half, with the BP-led Tangguh field in West Papua due to start producing 7,000 bpd of condensate starting this month.

The giant Cepu oil field, straddling the border between Central and East Java, is expected to start pumping 15,000 bpd by the end of August.

Tangguh LNG plant plans to ship 56 cargoes in 2009
The BP-led Tangguh project in West Papua plans to ship 56 cargoes of liquefied natural gas (LNG) this year, an official of upstream oil and gas regulatory body, BP Migas, said on Wednesday, Reuters reported.

"The first cargo to Fujian from Tangguh is already on the way now. Tangguh plans to ship 17 cargoes to Fujian this year and eight cargoes to POSCO and 12 cargoes to K-Power," R. Priyono, chairman of BP Migas, told reporters.

He said Tangguh also plans to ship 19 cargoes to US firm Sempra Energy this year.

Tangguh has sent one cargo to South Korea's POSCO which was shipped earlier this month. The project also has a supply contract with South Korea's K-Power.

Tangguh has several foreign supply contracts, including a 2.6 million tons per year contract with China National Offshore Oil Corp (CNOOC).

US firm Sempra Energy 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.

"We are looking to turn some of the gas from Tangguh to the domestic market. We are seeking a domestic company for Tangguh gas and there will be business-to-business negotiation," Priyono said.

Meanwhile, Priyono also said buyers in the key markets of Japan, Taiwan and South Korea have canceled orders for 10 LNG cargoes from the Bontang plant in East Kalimantan and two cargoes from ExxonMobil’s Arun plant in Aceh, The Jakarta Globe reported.

However, the cancellations have not been as extensive as expected when the financial crisis first struck at the end of last year, he said.

On Tuesday, a Bontang plant official said the government will cut planned LNG exports from the plant this year by 10 cargoes to 297 cargoes at the request of buyers.

S. Korea’s STX to decide on oil refinery project
South Korea's STX Corp. will decide by Monday whether it will join a plan to build an oil refinery in a bay northwest of Jakarta, Director General of Oil and Gas at the Energy and Mineral Resources Ministry Evita Legowo said Tuesday, Dow Jones reported.

"If STX join in, there will be a change in the ownership composition," Legowo said.

A report said the three original investors in the refinery - PT Pertamina, National Iranian Oil Refining and Distribution, or NIORDC, and Malaysia's Petro Field - invited STX to invest after they encountered difficulties raising funds for the project. STX has been reported to be seeking a 40% stake.

Pertamina and NIORDC hold 40% each and Petro Field holds a 20% stake in the refinery, which has a planned refining capacity of 300,000 barrels a day.

The total cost for the refinery is estimated to be between $3 billion and $4.7 billion.

Legowo said the refinery's first unit, with a daily capacity of 150,000 barrels, is expected to start operating in 2014.

State-owned oil company Pertamina currently operates seven refineries across the country with a total daily output of 950,000 barrels.



MINING
Newmont to sell 14% stake in unit for $494M: CEO
Newmont Mining Corp. confirmed Thursday it has reached an agreement to sell a 14% stake in its gold mining unit in West Nusa Tenggara for $494 million, said Richard O'Brien, Newmont's president and chief executive, The Associated Press reported.

Newmont said Thursday it is waiting for government officials in Indonesia to designate buyers for the shares before the process can be concluded by the arbitrators' deadline at the end of September.

State Minister for State Enterprises Sofyan A. Djalil has thrown his full support behind the appointment of state mining company PT Aneka Tambang (Antam) to be the buyer of the 14% stake, The Jakarta Post reported on Friday.

"We plan to send a letter of request to the Finance Ministry to advocate for Antam's purchase of the stake. There have already been informal talks between the government and Antam," Djalil said on Wednesday.

Responding to prospects that his company may have the right to buy the Newmont share, Antam president director Alwinsyah Loebis welcomed the plan, saying the acquisition would add value to the company.

Aside from its nickel business, Antam also has gold mining operations. Loebis added that Antam might establish a consortium to finance the acquisition.

"We cannot reveal the names of other companies in the consortium right now, or whether we will take a majority in the consortium or not, as it will depend on the negotiations," he said.

The divestiture was ordered in April by international arbitrators, ending a three-year dispute between the Indonesian government and PT NNT over how the mining company should divest shares as required under its contract to operate in Indonesia.

Newmont has a 45% stake in the subsidiary, PT Newmont Nusa Tenggara. Japan's Sumitomo Corp. has a 35% stake and Indonesia's PT Pukuafu Indah the remaining 20%. The subsidiary operates the Batu Hijau mine on Sumbawa Island.

H1 coal output at 72M tons: Official
Indonesia's coal production reached 72 million metric tons during the first six months of the year, a government official said Tuesday, Dow Jones reported.

The Director General of Minerals, Coal and Geothermal Resources, Bambang Setiawan, said the output accounted for 31% of the government's target of 230 million tons for the entire year.

Coal exports reached 52 million tons during the January to June period, Setiawan said.

Kepco buys $5.1M-worth stake in Adaro
State-run utility Korea Electric Power Corp. (Kepco) on Thursday said it has acquired a 1.5% stake in coal miner PT Adaro Energy for $51 million, Dow Jones reported.

With the stake purchase, Kepco will be able to secure 3 million metric tons of soft coal annually, it said in a statement.

Last year, Kepco bought 64 million tons of soft coal from overseas, 40% of which was from Indonesia, it said.

Meanwhile, Adaro’s key shareholders intend to consolidate their shareholdings into a separate investment holding company to be called PT Adaro Strategic Investments.

The holding company will directly own a 43.91% stake in Adaro Energy. The key shareholders won't reduce or increase their interest in Adaro Energy.

The move consolidates the shares of Adaro Energy's five key shareholders - the Rachmat family, the Thohir family, the Subianto family, businessman Edwin Soeryadjaya and businessman Sandiaga Uno.

Berau Coal draws local, Chinese bids: Sources
PT Indika Energy and China's Huaneng Power are among the companies that have submitted bids for a majority stake in coal miner PT Berau Coal, according to sources, in a deal that could value Berau at more than $1 billion, Reuters reported.

Thailand's top coal miner Banpu may also bid for the stake while mining giants Xstrata and Peabody Energy have previously expressed interest in the stake.

Sources said Berau -- Indonesia's fifth-largest coal miner -- has generated strong interest as it is rare for controlling stakes in Indonesian energy firms to be put on the market. The stake offers a steady supply of quality Indonesian thermal coal.

Berau, which has a 1,200 square km concession area in East Kalimantan, produced 13.2 million tons of coal in 2008 and aims for production of 15 million tons this year.

Armadian Tritunggal -- an investment firm controlled by businessman Rizal Risjad -- is selling its 51% controlling stake in Berau.

The sale is being run by Deutsche Bank, Bank of America's Merrill Lynch, and former Merrill banker Sheldon Trainor's PacBridge Capital Partners..

Armadian Tritunggal may elect to keep a portion of its controlling stake, a source had previously said.

Berau is a joint venture between Tritunggal, Dutch firm dan Rognar Holding B.V. and Japanese firm Sojitz Corp, with Rognar and Sojitz owning 39% and 10% stakes.

Shenhua unit to invest $331M in S. Sumatra project
China Shenhua Energy Co. said late Thursday that one of its units, in which it owns a 70% stake, plans to invest $331 million in building an open pit coal mine and two coal-fired generators in South Sumatra, Dow Jones reported.

Under the plan, the open pit coal mine will be able to produce 1.5 million tons of coal yearly, while the two generators will have an annual capacity of 150 MW.

The company said construction work on the project has already begun, and that the two power generators will be able to begin operation by June 2011.

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