Menko Perekonomian memberi pidato saat rapat gabungan Komisi IV, VI, dan VII DPR RI ...
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National • Meteorology agency says El Nino effect may be limited Politics • Constitutional Court upholds legislative seat allocations Terrorism • Killed terrorist identity awaits DNA test Security • Defense minister calls for cool heads on budget expenditure Law & order • Losses to illegal fishing put at Rp30 trillion Health • Indonesia is critical front for fight against AIDS, says expert Economy • Warm reception for retail bond underlines consumer confidence
Business briefs
Macroeconomy
• President tips 5% growth in 2010
Investment
• India to boost investment, says ambassador
State concerns
• Rice surplus tipped at 2.3 to 2.8 million tons
• June tourist arrivals move up 4.1% on year
SOEs
• PT Semen Gresik to build new cement plant in East Java
• Garuda Indonesia begins expansion with new Australia, South Korea routes
Private sector
• Mobile operator PT Excelcomindo plans $300 million rights issue
• Turkish airlines to start services to Jakarta
Banks
• ANZ to rebrand newly acquired Indonesian assets
Power
• Korea Electric Power to build North Sumatra hydro plant
Oil & gas
• Hess to invest $1 billion in Ujung Pangkah field
Mining
• Government confirms plans by BHP Billiton to sell coal asset
NATIONAL
El Nino impact to be muted: BMG head
A return of El Nino could delay the onset of rains in some areas in Indonesia this year, but is unlikely to trigger drought severe enough to threaten key crops, the head of the Meteorology and Geophysics Agency (BMG) said, Reuters reported.
The El Nino weather pattern, driven by an abnormal warming of the eastern Pacific Ocean, can create havoc in weather conditions across the Asia-Pacific region.
The extent of the impact of El Nino in Indonesia, however, depends on other factors including water temperatures around Indonesia and the influence of a weather pattern stemming from the Indian Ocean, known as the dipole mode.
"So we cannot jump to the conclusion that El Nino will bring drought as people fear. We really need to look at other factors carefully," BMG head Sri Woro Harijono said on Thursday.
The previous three major El Ninos -- in 1973, 1983 and 1997 -- caused severe drought in Indonesia.
In those years El Nino reached its strongest level, while at the same time Indonesian waters were colder than normal and the sea surface temperature on the western side of Sumatra was also cold, said Harijono.
"The condition in 2009 is very different than in the previous three major El Nino events. Now El Nino is still weak, while (the Indonesian) sea surface temperature remains warm," she said.
El Nino can create drought because water vapor across most of Indonesia, apart from Sumatra, is sucked away to the eastern Pacific, which is warmer.
Sumatra, which has big plantations of palm oil, rubber and coffee, is not usually affected by El Nino, she said.
The BMG’s latest assessment is for El Nino to remain weak until August, while it may develop to a moderate level in September, October, December and February with a strong El Nino possibly occurring in November and January.
POLITICS
Court backs KPU on legislative seat allocations
The Constitutional Court on Friday ruled the second phase of legislative vote counting by the General Election Commission (KPU) was valid, effectively annulling a contradictory Supreme Court ruling made in July, The Jakarta Post reported.
The Supreme Court verdict, which has been widely criticized, would have transferred 66 seats at the House of Representatives from smaller to larger parties, with a further 1,300 regional council seats changing hands as well.
The Constitutional Court stressed that its decision must be applied to the KPU vote counting method used in the 2009 legislative election.
Constitutional Court chairman Mahfud MD said that generally legal judgments are not retroactive.
“The debate about whether a ruling can be retroactive has nothing to do with this case. The most important thing is to protect constitutional rights,” he said.
The ruling was welcomed by the KPU and most political parties.
UN praises Indonesia on successful elections
United Nations Secretary General Ban Ki-Moon praised Indonesia for successfully conducting the recent legislative and presidential elections, a spokesman for President Susilo Bambang Yudhoyono said, reported Antara.
The General Election Commission confirmed Yudhoyono’s re-election in the July 8 presidential poll while his Democratic Party won the most votes in legislative elections held on April 9.
“Yudhoyono and Ban Ki-Moon pledged to continue building on democratic reforms in Indonesia,” said spokesman Dino Patti Djalal.
Yudhoyono’s sweeping victory has given the former general a strong mandate to push ahead with reforms he started after his first presidential election win in 2004.
Yudhoyono and vice-president elect Boediono, a former head of the central bank, are scheduled to be inaugurated on October 20.
TERRORISM
Top’s ‘death’ needs confirmation
Police on Saturday announced the arrests of five of terrorist mastermind Noordin M. Top’s alleged accomplices, The Straits Times reported
Two were captured in Bekasi on the outskirts of Jakarta and three on Friday in a 17-hour stand-off in Temanggung, Central Java that ended in a barrage of gunfire from police on a small house.
“Our president was a target,” National Police chief Bambang Hendarso Danuri told reporters, saying the information came from an accomplice of two dead men at Bekasi.
During their raid on a rented house in Bekasi, police uncovered up to 500 kg of explosives that could be turned into 100 kg of bombs. Also found was a minibus rigged to be a mobile bomb.
Danuri said the accomplice, who was not named, told police they were planning to detonate the explosives-packed vehicle at the president's house two weeks later, which would roughly coincide with the August 17 anniversary of Indonesian independence.
The two would-be bombers were shot dead as they tried to throw pipe-bombs to avoid arrest at the rented house, said Danuri.
He identified the two as Ari Setiawan and Eko Gepeng and said they had helped terrorist leader Top in the 2004 Australian embassy car-bombing that killed 10 people and wounded scores more.
The house in Bekasi had been booby-trapped. Police believe it was used by Top as a safe house while on the run.
Danuri told the press conference Saturday that Top had decided at a meeting of fellow radicals to target the president in revenge for the execution of the three Bali bombers last November.
Yudhoyono made no comment on Top’s reported death in the Central Java raid and doubts continue over whether a man reported killed in the raid is Top.
Top’s death has been widely reported in local media but the dead man's remains have been moved to Jakarta for DNA testing.
SECURITY
Defense minister urges efficient budget spending
Defense Minister Juwono Sudarsono on Thursday urged caution over hastily spending budget increases for the Armed Forces and the police in 2010, Republika reported.
During a 2010 budget hearing at the House of Representatives on Wednesday, Sudarsono said budget increases should be mainly used for boosting the country’s defense and capabilities of security personnel.
Spending budget increases for the TNI and the police effectively will be a significant challenge, he said.
TNI is expected to mainly use the funds to upgrade and overhaul main weapons systems and purchase spare parts for existing armaments.
In the outlined 2010 budget, Rp40.7 trillion is allocated for the Defense Ministry and Rp25.8 trillion for the National Police.
N. Sulawesi: Security tight ahead of international sail event
ID card raids are being carried out in North Sulawesi ahead of the Sail Bunaken festival in Manado scheduled to begin on August 19, Antara reported.
According to North Sulawesi official Arnold Poli, the raids will be conducted at public spaces and rented houses.
Poli said police, Armed Forces and provincial government personnel are tightening security in the province with officials from at least 30 countries expected to arrive in the area over the next two weeks.
Twenty-nine naval vessels from Russia, China, India, Australia, South Korea and the US, which will be represented by the aircraft carrier USS George Washington and three destroyers, are expected to participate in the Indonesia Fleet Review portion of the event.
Securing the high-profile event and allaying public safety concerns has been receiving considerable attention in light of the July 17 Jakarta suicide attacks.
A demonstration of additional security measures ended in tragedy recently when a police officer was killed and four others were injured when a home-made bomb exploded during a counter terrorism drill.
The police officers were on a rubber boat trying to defuse the bomb when it exploded.
North Sulawesi Governor SH Sarundajang and Bitung Mayor Hanny Sondakh were observing the exercise at the time of the incident.
LAW & ORDER
Rp30T lost annually from Illegal fishing: Official
Illegal fishing by foreign vessels is incurring state losses of Rp30 trillion every year, said a member of the House of Representatives, Antara reported.
According to Syarfi Hutahuruk, the vice chairman of the House’s commission on fishing and maritime affairs, most of the poaching is done by neighboring counties.
“Poachers from neighboring countries are regularly apprehended in Indonesian waters,” Hutahuruk said.
Rampant poaching is also causing environmental damage, with mangrove forests and coral reefs in some area severely damaged due to illegal fishing, he said.
In May, the government pledged tougher action over increasing foreign poaching with Maritime and Fisheries Minister Freddy Numberi saying foreign ships caught poaching will be sunk and all suspects prosecuted to the fullest extent of the law.
HEALTH
Indonesia a key front in curbing HIV/AIDS: Expert
Indonesia, together with India and Pakistan, has become a major front in efforts to curb HIV/AIDS in Asia, said local HIV/AIDS expert Zubairi Djoerban on Friday, Agence France-Presse reported.
The chairman of the International Congress on AIDS in Asia and Pacific made the statement ahead of the congress opening in Bali over the weekend.
"We're concerned about Indonesia, India and Pakistan, where there is an overlapping of drug injecting and unprotected sex,” said Djoerban.
In the three countries, according to him, new infections are still offsetting positive results from preventive actions.
Djoerban added that the International Congress on AIDS -- attended by delegates from 65 countries -- will discuss strategies and try to renew the commitment to fight HIV/AIDS, especially from governments across the region.
Meanwhile, a study by the National AIDS Commission (KPA) in Cirebon, West Java, showed a major increase in the number of HIV/AIDS infections in the regency.
There are approximately 900 HIV/AIDS infections in Cirebon, a jump from 210 in 2007, according to the local KPA.
KPA officials have blamed the spread of the deadly virus in Cirebon on increasing prostitution.
ECONOMY
Govt. scores major success with retail bond
In a major underscoring of the high level of confidence in the economy, the government has raised the target for its sixth issuance of retail bonds to more than double its original target of Rp3.6 trillion, The Jakarta Globe reported.
Strong demand from investors, spurred by the 9.35% interest rate on the three-year bonds, took orders for the debt at Rp6.32 trillion by Wednesday, with two more days before the order closed.
“A number of selling agents have requested an increase in their target limit, and they have been approved,” Bhimantara Widyadjala, the director of the Finance Ministry’s Debt Management office, said on Thursday.
Widyadjala said that the finance minister would decide how much the government would accept in extra orders for the bonds next week.
The government last sold retail bonds in September 2008, raising only Rp2.71 trillion, below the target for the issuance.
Consumer confidence was at its highest level for nearly five years in July, a Bank Indonesia (BI) survey of 4,600 households in 18 cities across the country showed, Reuters reported.
"The smooth presidential election appeared to give respondents a positive signal of economic conditions," BI said.
The survey showed that the consumer confidence index rose to 115.4 in July, up from 109.1 in June. The latest figure was the highest since it hit 119.1 in December 2004. A reading above 100 means more consumers are optimistic than pessimistic.
The government plans to issue up to $3 billion in global bonds, $1 billion in global medium-term notes and the remainder in international sukuk and Samurai bonds, next year to help cover its budget deficit, Finance Minister Sri Mulyani Indrawati said in a statement to the House Tuesday.
Enthusiasm for the retail bonds came as BI on Wednesday cut its benchmark overnight rate 25 basis points to 6.50%, but signaled that its easing cycle may be nearing its end, Dow Jones reported.
"Bank Indonesia is closely watching inflationary potential in 2010, which may arise from recovery in domestic demand and rising global commodity prices," the central bank said in a press release after a monthly rate-review meeting.
"In this context, future monetary policy will be directed to anticipate the potential of rising inflation, in order to contain inflation at 5% in 2010," it added.
BI has cut its policy rate a total of 300 basis points since embarking on its policy easing in December to keep the economy afloat and as inflation continued subsiding.
Annual inflation as measured by the consumer price index slowed to 2.71% in July, a nine-year low, from 3.65% in June, the official Central Bureau of Statistics said Monday.
Although the domestic economy is expected to continue growing this year, the government expects the pace of expansion to slow to between 4% and 4.5% from 6.1% last year.
BI itself said Wednesday that economic growth this year may reach the upper end of its 3.5%-4% forecast.
Indicators:
May
June
June 09/
June 08
Cumulative 2009
Total exports
$9.26 billion
$9.33 billion
-27.21%
$58.54 billion
Non-oil & gas exports
$8.16 billion
$7.88 billion
-19.81%
$42.94 billion
June
(y-o-y)
June
(m-o-m)
July
(y-o-y)
July
(m-o-m)
Inflation
3.65%
0.11%
2.71%
0.45%
Full year 2006
Full year
2007
Full year 2008
First quarter 2009
GDP growth
5.5%
6.3%
6.1%
4.4%
Tourist arrivals
May
June
Growth/loss
(m-o-m)
Growth/loss
(y-o-y)
521,747
550,582
5.53%
4.07%
Source: Central Statistics Agency
BUSINESS BRIEFS
MACROECONOMY
BI sees slower Q2 GDP growth on-year
Indonesia's annual economic growth in the second quarter is estimated to be lower
than the first quarter, Bank Indonesia (BI) deputy governor Budi Mulya said on Friday, Reuters reported.
He said that the inflation rate next year would be at 5% plus or minus 1%, while he estimated bank lending would grow 11-12% in 2009.
Mulya also said BI forecast annual inflation at 4-6% at the end of 2010.
Meanwhile, the flow of foreign funds into the country since early in January had reached $4 billion, Mulya said, Antara reported.
"It can be said that the process of recovery in the financial market is relatively short. Foreign capital has flown back especially through state debentures, BI Certificates and shares and this year to date (January to August) it has reached $4 billion," he said.
He said the incoming foreign funds could be seen from the Jakarta composite index which rose sharply from 1,111 in October 2008 to above 2,300 points now and even to 2,360 on Thursday.
He said he believed the foreign funds would still continue to come as investors were still seeking a place to put their funds.
Economy to grow 5% next year: President
President Susilo Bambang Yudhoyono said Monday the economy will grow at 5% next year after another round of stimulus spending worth more than $6 billion, Agence France-Presse reported.
Dr. Yudhoyono told a plenary session of the House of Representatives that the deficit would stand at 1.6% of GDP for 2010 to cover the additional financial injection, compared to the 2.5% of GDP target for 2009.
He said the government would spend around Rp61.2 trillion ($6.1 billion) to boost the economy next year, slightly less than the Rp70 trillion allocated this year.
Further stimulus spending would help achieve 5% growth in 2010, which is at the lower end of previous government forecasts.
Dr. Yudhoyono said Indonesia was in good shape to weather the global economic storm.
"As a country with an open economy, Indonesia certainly cannot disengage itself from the impact of the downturn of global economic activities," he said.
“Nevertheless, due to rapid and appropriate action, Indonesia has been relatively speaking far better off than other countries,” he said.
Trade surplus dips slightly in June: BPS
Indonesia's trade surplus was relatively steady at $1.38 billion in June, compared with $1.41 billion in May, the Central Bureau of Statistics (BPS) said Monday, Dow Jones reported.
The agency said exports fell 27% in June from a year earlier to $9.33 billion, after contracting 28% in May.
Imports slumped 34% to $7.95 billion, compared with a 33% decline previously.
From a month earlier, Indonesia's exports edged up 0.8% from $9.26 billion, which likely indicated a recovery is in progress, thanks to improved demand from key markets such as China and South Korea, analysts said.
INVESTMENT
Indian firms to boost investments in Indonesia
Indian companies plan to invest heavily in Indonesia over the next five years despite last month’s twin hotel bombings, according to major participants of the Made in India business exhibition, which begins Friday, The Jakarta Globe reported.
India’s Ambassador to Indonesia, Biren Nanda, said at a pre-launch roundtable on Wednesday that Indian investors saw great potential for growth in Indonesia given its substantial natural and human resources.
“Out of 100 delegates, no one has expressed a single concern regarding security here,” he said. “It is universally recognized that Indonesian authorities have done a good job in cooling extremist groups. One incident doesn’t change that.”
He added that the future of economic cooperation between the two countries seemed promising, with Indian investment expected to grow by 50% in 2010 to $6 billion.
Industry Minister Fahmi Idris also said the government has invited India to set up a joint venture to manufacture textile machines and to build turbines for the country’s power expansion program, a project expected to last until 2015, Antara reported.
Indian companies that have already made significant foreign direct investments in Indonesia include steelmaker Essar, petrochemical company Indorama and Bajaj.
S. Korea's Posco may build $2B steel plant
Pohang Iron and Steel Company (Posco), the world's second biggest steel company from South Korea, intends to build a steel plate plant in Cilegon, Banten, an official said on Wednesday, Bisnis Indonesia reported.
The Industry Ministry’s director for metal industry, I Putu Suryawirawan, said Posco will involve state-owned steelmaker PT Krakatau Steel in the construction of a greenfield plant which will produce hot rolled plate.
The new plant is projected to have installed capacity of 2.5 million tons per year and require up to 500 MW of electricity.
Krakatau Steel president director Fawzar Bujang said at least $2 billion will be invested in the project.
The funds will be used to build a blast furnace facility and other infrastructure including a new port capable of accommodating ships with loads of up to 200,000 tons of raw material.
Bujang said that if things go smoothly, a memorandum of understanding between the two companies would be signed before this year's end at the earliest.
Posco would control a majority 60% of shares and the rest would be held by Krakatau Steel.
According to Krakatau Steel data, domestic production of hot rolled plate and hot rolled coil was 2.1 million tons last year or 67.1% of 3.12 million tons of installed capacity, while the consumption was estimated to reach 3.2 million.
Saratoga eyes $300M investment in 2010
Private equity fund Saratoga Capital is looking to invest up to $300 million in the country's resources and infrastructure sector next year, its chairman Edwin Soeryadjaya said on Wednesday, Reuters reported.
"Next year we have a lot of companies in the pipeline. If everything goes as I wish, probably equity-wise it will be around $300 million," he said in an interview.
Saratoga, which has invested $800 million in assets including mining and energy, is in talks with a mineral mining company in Indonesia and also looking into opportunities to invest in toll roads.
"We are now in discussion with a large mining company in Indonesia," he added, without identifying the company apart from saying that it is a non-listed entity.
He also said that Indonesia's second largest coal producer PT Adaro Energy, in which Saratoga owns a stake, is considering buying another coal mine.
STATE CONCERNS
Rice surplus seen at 2.3-2.8M tons in 2009
Indonesia is expecting its rice surplus to reach 2.3-2.8 million tons by year-end, which it aims to keep to cover any shortfall in output next year due to drier weather, the agriculture minister said on Wednesday, Reuters reported.
"As we will have a surplus in stock this year, we don't have to worry about next year and we don't have to import," Anton Apriyantono told reporters.
Apriyantono said the return of El Nino could reduce production by around 1.6 million tons next year, which should be covered by the carry-over stocks from this year.
The Central Bureau of Statistics previously forecast that Indonesia was expected to produce 62.56 million tons of unmilled grains (or about 39 million tons of milled rice) this year, lifting its earlier forecast of 60.93 million tons which it announced in March.
June tourist arrivals up 4.1% on year
Indonesia's foreign tourist arrivals rose 4.1% in June from a year ago, data showed on Monday, Reuters reported.
"Although the global crisis has affected foreign arrivals to Indonesia, the impact hasn't been significant," said Carla Parengkuan, executive director of the Indonesian Hotels Association, adding that the impact might be felt within the next three to six months.
In June, 550,582 foreign tourists visited Indonesia, up from 529,100 a year ago, while in the first half the number rose 2.2% to 2.97 million people.
Indonesia hopes to attract 7 million tourists this year, up from 6.32 million in 2008, although this target was seen as over-optimistic by some in the industry even before the bomb attacks on two luxury hotels in Jakarta last month.
Tourism accounts for about 3% of gross domestic product in the country, but some areas, including Bali, are heavily dependent on tourism for jobs and growth.
The association and the Central Bureau of Statistics did not provide data about trip cancellations.
Govt. may allow lower loan rates for replanting
The Agriculture Ministry has agreed in principle to lower the interest rate paid by plantation owners participating in the government’s plantation revitalization program from 10% to 6%, Minister Anton Apriyantono said on Tuesday, The Jakarta Globe reported.
“We need to discuss it further with the Finance Ministry,” Anton Apriyantono added.
The lower rate was proposed by the Indonesian Chamber of Commerce and Industry (Kadin) as well as several plantation industry associations.
Apriyantono said the decision to set the rate plantation owners would pay at 10% was made when market interest rates were 14% to 16%. Interest rates have since fallen to about 12%, so the rate available to plantation owners could be lowered, he said.
Achmad Mangga Barani, the Agriculture Ministry’s Director General of Plantations, said the ministry had forwarded the proposal to lower the rate to the Finance Ministry last month.
Barani said the Agriculture Ministry had allocated Rp650 billion to subsidize loans for plantation revitalization from 2007 to 2011. However, only Rp200 billion had been disbursed as of the end of last month.
A total of Rp37.4 trillion in bank financing was allocated for the program beginning in 2007, but only Rp4.1 trillion has been borrowed by plantation owners.
SOEs
Semen Gresik to build new plant in E. Java
State-owned cement company PT Semen Gresik will build a new plant in Tuban, East Java, starting mid August, with a total investment of Rp3.5 trillion, Antara reported.
"We hope the new plant will become operational beginning 2012," Semen Gresik president director Dwi Soetjipto said on Friday, adding it is expected to produce 2.5 million tons of cement annually.
PT Semen Gresik also plans to develop a new power plant with a capacity of 2x35 MW in Tonasa, South Sulawesi.
Garuda opens new Australian routes
State-owned national flag carrier PT Garuda Indonesia opened new Australian routes over the weekend, with direct flights from Jakarta to Sydney and Melbourne, company officials said Monday, The Jakarta Globe reported.
Garuda corporate secretary Pujobroto said it had been a big weekend for the airline with it also opening a direct service from Jakarta to Seoul.
The Australian extensions came four months after Garuda stopped flights from Denpasar in Bali to Darwin, the capital of Australia’s Northern Territory, amid protests from Australia.
Pujobroto described the Seoul, Sydney and Melbourne direct links as “part of our effort in making Jakarta the number one hub in Asia.”
Meanwhile, DAE Capital, the aircraft leasing and financial business arm of Dubai Aerospace Enterprise (DAE), delivered the first Boeing 737-800 Next-Generation aircraft to Garuda, Reuters reported.
The delivery is one of eight new B737-800 aircraft to be delivered to Garuda between June 2009 and April 2010.
"This delivery highlights the expansion of our fleet portfolio and the opportunity to work with Indonesia's largest carrier," managing director Omar Bin Sulaiman said.
PRIVATE SECTOR
Excelcom plans $300M rights issue
Indonesia's third-largest mobile phone operator, PT Excelcomindo Pratama, plans to raise $300 million via a rights issue in the fourth quarter, the company said on Tuesday, Reuters reported.
"With the financing, Excelcomindo will be able to reduce debt and improve our capital structure, thus preserving our flexibility to continue investing," president director Hasnul Suhaimi said in a statement.
The target is lower than previously indicated by Malaysian mobile operator Axiata, the controlling stakeholder of Excelcom, in May when its chief financial officer Yusof Annuar Yaacob said Excelcom needed as much as $600 million to improve its capital structure.
Excelcom, 83.8% owned by Axiata, has previously said it plans to increase its free float, which now stands at 0.2%, to make share trading more liquid. Emirates Telecommunications Corp holds the remaining 16%.
Turkish airlines to fly to Jakarta
Turkey’s flag carrier is to commence an Istanbul-Jakarta service on August 31 in a further boost to the country’s aviation links, The Jakarta Globe reported.
“A number of officials will travel on the first flight, including Turkey’s ambassador to Indonesia.” Herry Bhakti, the Transportation Ministry’s Director General of Civil Aviation, said Wednesday.
Bhakti said he issued a license on Monday for the airline to establish a Jakarta office and would try to persuade it to extend the route to Denpasar, Bali.
Turkish Airlines will fly to Jakarta six times a week after making stops in Singapore.
Separately, the president’s special envoy to the Middle East, Alwi Shihab, said that bilateral trade discussions were also under way, including allowing a number of Turkish banks to open branches in Jakarta, as well as possible partnerships for construction projects, and even code-sharing deals between PT Garuda Indonesia and Turkish Airlines.
Bakrieland seeks $51M loan for property, roads
PT Bakrieland Development, the Bakrie group’s property arm, is preparing to start talks to secure a Rp500 billion ($51 million) loan from one of its major shareholders, Avenue Capital, Bakrieland president director Hiramsyah Thaib said on Wednesday, The Jakarta Globe reported.
“We expect to secure the loan in the next two or three months,” he said, adding that the company plans to spend Rp2.5 trillion on its property and toll road projects this year.
With Rp2 trillion in syndicated loans already secured, he said, the company had initially planned to issue Rp500 billion in convertible bonds. Due to the complexity of issuing the bonds, however, Bakrieland has decided to pursue lower-cost shareholder loans.
“We also plan to issue a Rp1 trillion bond next year, which may be conventional or shariah-based, to repay part of the syndicated loan,” he said.
Thaib said the sale was intended to improve the cash position of PT Bakrie Toll Road, which has a number of toll road projects on its books across Java.
The company may open the 35-km Kanci-Pejagan segment of the Trans-Java toll road on a trial basis before the Idul Fitri holiday in late September, he said, adding that motorists would likely be able to use the road for free during the holiday.
Australian and Singaporean investors had expressed interest in a 30% stake in PT Bakrie Toll Road, which could see the company raise up to Rp1 trillion in additional cash, company officials said on Wednesday.
Axiata's CEO Jamaludin Ibrahim said in Tuesday's statement that the free float would be increased when market conditions improve.
BAT Indonesia’s H1 net loss surges 263%
Cigarette manufacturer PT BAT Indonesia suffered a net loss of Rp49.884 billion in the first half of this year, rising by 263% from Rp13.726 billion last year, StockWatch reported on Friday.
BAT Indonesia's net loss during that period was - among others - because of operating expenses that climbed 13.39% to Rp137.108 billion from Rp120.915 billion, which caused operating losses to increase sharply to Rp50.866 billion from Rp23.081 billion.
In 2007 and 2008, the company suffered losses of Rp34.218 billion and Rp86.621 billion each, as other cigarette manufacturers booked profits.
The company's sales dropped 19.07% at Rp216.323 billion in the first half of 2009 from Rp267.303 billion in the same period in 2008.
Plantation firm to conduct IPO in October
PT BW Plantation plans to issue Rp1 trillion ($101.11 million) in shares in October in an initial public offering (IPO) to finance an expansion, a company official said on Friday, The Jakarta Globe reported.
The company plans to offer up to 30% of its shares to the public. If successful, its IPO would be the largest this year to date, with Bank BTN’s Rp1.5 trillion IPO scheduled for December.
“We’re confident that demand (for IPOs) has returned, while CPO prices are better so far this year,” BW Plantation corporate secretary Kelik Irwantono said.
The road show was set for September. The company and its underwriters — PT Danareksa Sekuritas and PT BNP Paribas Securities Indonesia — will promote the IPO to institutional investors in major financial centers such as Hong Kong and London.
The company owns 95,000 hectares of land in South Sumatra and Kalimantan. About half has been planted. “With the proceeds from the IPO, we want to increase the planted area by 30,000 hectares in the next three years,” Irwantono said.
Last year, BW Plantation produced 67,000 metric tons of crude palm oil, while it projects an expansion to 100,000 tons this year. The company booked Rp514 billion of revenue and Rp120 billion in net profit in 2008.
Anis Baridwan, head of surveillance of real sector firms at the Capital Market and Financial Institution Supervisory Agency, said BW Plantation’s IPO plan was submitted this week,
BANKS
ANZ to rebrand acquired Indonesian RBS assets
Australia & New Zealand Banking Group (ANZ) plans to rebrand its recently acquired British lender Royal Bank of Scotland (RBS) assets in Indonesia under the ANZ name within nine months, the bank's Asia Pacific chief executive said on Friday, Reuters reported.
"We will go through regulatory approvals first and then we will rebrand. But yes, our aim is to combine the acquired businesses and call it ANZ," Asia Pacific CEO Alex Thursby told a media briefing.
According to Thursby, ANZ would not target the mass market, but focus on institutional banking and the more affluent end of the retail market.
"Generally across Asia Pacific, I would like to have a balance, around about 55% institutional and 45% retail and wealth," he said, adding that ANZ would have a similar strategy once it had obtained its banking license in India.
Citibank eyes bank acquisition: Official
Citibank would look at opportunities to acquire banks provided these were offered at a "fair price," in addition to growing organically by establishing new branches the country, country officer Shariq Mukhtar said Tuesday, Reuters reported.
He also said Citibank, together with other banks, is holding regular discussions with the central bank, Bank Indonesia, over lifting regulations on foreign exchange transactions and the sale of certain investment products.
The foreign exchange regulations were introduced during the global financial crisis late last year to halt a slide in the rupiah currency.
BNI spends Rp71.6B on creative industries
State-owned bank PT Bank Negara Indonesia (BNI) reportedly has spent Rp71.6 billion ($7.23 million) since 2008 to help the creative industry, The Jakarta Post reported.
“We believe the creative industry is a potential sector,” BNI spokesman Gatot Surjatmodjo said in Jakarta.
He said most of the funds were disbursed to five creative sub-sectors —handicrafts (Rp18.6 billion), fashion (Rp9.92 billion), computer and software (Rp8.85 billion), film, video and photography (Rp8.71 billion) and design (Rp8.04 billion).
Surjatmodjo added the bank has also developed three BNI creative villages, including BNI Tenun Ikat Village in Palembang, South Sumatra, with each village had absorbed Rp2 billion from the bank.
BTN to go public at year end
State-owned PT Bank Tabungan Negara (BTN) expects to go public by the end of this year and will use its June financial report for the purpose, its finance director, Saut Pardede, said, Antara reported.
"We are just waiting for an approval from the state minister for state enterprise," he said on Thursday.
He said he had already submitted three underwriter candidates to the minister but declined to tell their names.
“Technically BTN is ready to undergo the process of public offering. It has also secured a license from the House of Representatives and the Finance Ministry for it," he said.
POWER
Kepco unit to build N. Sumatra hydro power plant
Korea Midland Power Co., a power generation unit of state-run utility Korea Electric Power Corp. (Kepco) said Thursday it had reached a preliminary agreement to build, own and operate a 45-MW hydroelectric power plant near Wampu River, North Sumatra, Dow Jones reported.
Korea Midland said that it signed a memorandum of agreement with South Korea's Daewoo Engineering and local firm PT MPM on the $100 million power plant project earlier Thursday.
Korea Midland will operate the power plant for 25 years after completion, which is slated for November 2011.
The power plant is expected to generate 200,000 tons of carbon dioxide emission rights, it said in a statement.
PLN sells $750M bonds for capex
State power company PT PLN has sold $750 million in 10-year dollar-denominated bonds priced to yield 8.125%, PLN vice president director Rudiantara said Tuesday, The Jakarta Post reported.
"The transaction was closed Monday," Rudiantara said., adding UBS AG and Barclays Capital managed the sale of the notes due in 2019.
"They will be used for PLN's capital expenditure and general purposes," Rudiantara added without elaborating.
PLN claimed the demands for the notes reached $8.6 billion, but the company did not increase the size of the bond issue as $750 million was an optimal figure, Rudiantara said.
"Asian investors bought 44% of the notes, while investors from the US and Europe each bought 28% of the notes," he said.
The government and the House of Representatives have allocated as much as Rp48.16 trillion ($4.86 billion) for electricity subsidies this year, down from Rp83.91 trillion in 2008.
On Monday, the government proposed to allocate Rp40.43 trillion for electricity subsidies in 2010.
However, despite the subsidies from the government, PLN often faces a shortage in investment capital as the electricity rate is lower than the production cost.
PLN's president director Fahmi Mochtar said in June the company needed between Rp3.2 trillion and Rp3.7 trillion of capital expenditure for transmission expansion each year.
OIL & GAS
Pertamina EP reports Rp6T H1 profit
A subsidiary of state-owned oil and gas company PT Pertamina has booked a Rp6 trillion ($606 million) first-half profit and is confident of meeting earnings, revenue and production targets this year, the company’s president director said on Wednesday, The Jakarta Globe reported.
Salis Aprilian, head of PT Pertamina EP, said that the company — the main earner for its parent — aimed to bring in a net profit of Rp10 trillion on Rp29 trillion in revenue for 2009. It booked Rp15.2 trillion in revenue in the first six months.
He also said the government had asked the company to produce an average of 125,500 barrels of oil per day (bpd) this year.
Between January and May, repair work at Pertamina EP’s existing fields and a dearth of new blocks held output to between 118,000 bpd and 120,000 bpd.
However, output gradually increased to 128,000 bpd to 130,000 bpd in June after the company’s Sukowati field in East Java went back online and repairs were completed at sites in Poleng, East Java; Limau, South Sumatra; and Tambun in Bekasi, West Java.
Pertamina EP has an annual production growth target of 15%, and next year the company aims to produce 127,800 bpd from its existing blocks, Aprilian said.
In 2009, Pertamina EP received 60% of parent company Pertamina’s capital expenditures, which consisted of Rp6 trillion for investment and up to Rp7 trillion for operational costs, he said.
Pertamina EP’s average production cost stands at $10.50 a barrel, and for the rest of the year the company is projecting an international oil price of $60 per barrel and an exchange rate of Rp10,000 to the US dollar.
Pertamina’s production is drawn from two subsidiaries. Pertamina EP produces 80% of its parent firm’s total output, while PT Pertamina Hulu Energi manages and develops upstream oil and gas assets through partnerships.
Hess to invest over $1B in Ujung Pangkah oil block
Hess Indonesia said its investment in the Ujung Pangkah oil block, off East Java, is estimated to exceed $1 billion until 2010, Asia Pulse reported.
The oil block was in the second phase development to increase its crude oil production, said Dave Hartell, company director in charge of the Ujung Pangkah project.
Development of the block was already underway since 2006 and was expected to turn out 25,000 barrels of crude oil per day when it started full operation in 2011, Hartell said.
Additional investment this year was for a well head platform, a central processing plant and accommodation and utility platform, he told Bisnis Indonesia.
Hess has produced gas from the block since April 2007, but found oil for the first time in December after drilling nine new wells.
Seven new gas contracts signed
Seven gas deals worth a total of $3.26 billion were signed on Tuesday at the opening of the Asia Pacific Oil and Gas Conference and Exhibition (APOGCE) in Jakarta, The Jakarta Post reported.
Chevron Corp has signed a preliminary deal worth $2.5 billion to buy gas from ConocoPhillips in South Sumatra.
The gas deal will replace a previous agreement under which Chervon swapped around 50,000 barrels per day (bpd) of crude oil from Duri, Riau with around 400 million cubic feet per day of natural gas from ConocoPhillips' gas field in South Sumatra.
Chevron said it requires the gas to inject into the Duri field to enhance oil recovery.
ConocoPhillips and Chevron have agreed to replace the swap agreement with a regular gas sales contract.
Under the new contract, ConocoPhillips will supply between 380 billion British thermal units per day (bbtud) and 450 bbtud of gas to Chevron for 13 years.
Also included in the contracts signed Tuesday was a gas sales agreement between PT Pertamina EP, a subsidiary of state-owned oil and gas company PT Pertamina, and state power company PT PLN.
Under the eight-year contract valued at $377.57 million, Pertamina will supply 28 bbtud of gas to fuel power plants in North Sumatra.
Pertamina wants bigger stake in C. Java refinery
State-owned oil and gas company PT Pertamina wants to have bigger stake in a planned $1.5 billion joint venture with Mitsui & Co to build a refinery in Central Java, the company said on Tuesday, Reuters reported.
Pertamina said previously a preliminary agreement had been reached to build a residue fluid catalytic cracking unit (RFCC) with a capacity of around 60,000 barrels per day (bpd) of gasoline at its existing Cilacap refinery in Central Java.
Under the agreement, Pertamina would take a 20% stake in the project and Mitsui 80%.
"Actually, we don't want to delay this refinery project. We are re-evaluating the business scheme, including shareholder positions," Pertamina president director Karen Agustiawan told reporters.
"We can be a majority holder. We are able to build it by ourselves, but we must honor our partner," she said.
She did not state the size of the stake Pertamina wanted, but the government had previously asked Pertamina to review the project in order that Pertamina should have a bigger role.
Oil output to increase next year: President
Oil and condensate production may increase by 0.5% next year, helped by additional output from new fields including Cepu, Central Java, partly operated by Exxon Mobil Corp, Bloomberg reported.
Output may average 965,000 barrels a day in 2010, while crude oil may average $60 a barrel, President Susilo Bambang Yudhoyono told the House of Representatives Monday.
R. Priyono, chairman oil and gas regulator BP Migas, said last month that output at Cepu may climb to 20,000 barrels a day by the end of this year, from 200 barrels a day in December.
Exxon and state oil company PT Pertamina each owns 45% of Cepu, while local governments hold the rest.
Indonesia is trying to boost output from new fields to meet its energy demand as productivity from aging fields declines.
Output of crude oil and condensate rose to 950,900 barrels a day in June, from 941,584 barrels a day in May, BP Migas said.
MINING
Govt. confirms BHP’s plans on coal project sale
Australia’s BHP Billiton Ltd plans to sell its Indonesian coal project after deciding not to proceed with the project in Central Kalimantan, a government mining official said on Friday, Reuters reported.
"We have received a letter from the firm saying they are resigning from the project and plan to sell their interest to a third party," Witoro Soelarno, secretary at the Directorate General of Mineral, Coal and Geothermal at the Energy and Mineral Resources Ministry, said.
In June, BHP Billiton said it would not go ahead with the Haju trial coal mine in Central Kalimantan because it did not fit with its long-term investment strategy.
"It will be business-to-business and the government will not meddle in," Soelarno said.
In June last year, the firm announced it would invest $100 million to develop the project which was expected to start producing in the middle of this year.
"We are continuing to review our commercial options in relation to the project, including potential sale of our interests," said Indra Diannanjaya, president director of PT Lahai Coal, which is part of BHP's Maruwai coal project.
"We are seeking expression of interest from a number of parties in relation to this option," he said, without elaborating.
