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THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
Main Building, Ministry of
Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta Pusat
Tel: (021) 380-8384 Fax:
(021) 344-0394 Website:
http://www.ekon.go.id
Trade and Investment News, 18 December 2006
Highlights
Politics
Regions
Economy
-
Banks in
India, China
and Australia keen to enter banking sector
-
Budget deficit to come in at around 1%
-
Consumer confidence moves into positive territory
Business
briefs, Macro economy
-
Interest rate cuts to slow, says central bank
official
-
End-of-year financial situation strong, says
finance minister
Investment
State
concerns
-
Cooperation programs on money laundering with
Cayman
Islands, South Africa
-
Asian Development Bank to lend $33.3 million to
help aquaculture projects
S O E s
Private
sector
-
Bakrie Telecom to get national operating license
-
Vehicle sales grow on stronger demand, rising
exports
Banks
Power
-
Government promises no power, fuel price rises in
2007
-
Tender to be held for 30 coal-fired power plants
Oil & gas
Mining
POLITICS
President
Warns About Graft Slowdown
President Susilo Bambang Yudhoyono warned on Monday (11/12/06)
against moves to slow down the anti-corruption campaign, but
said stakeholders should avoid excesses in the fight to root out
graft.
He said authorities should respect the principle of
presumption of innocence and avoid issuing accusations or
conducting investigations based on insufficient information.
"In the first five years of a massive anti-graft campaign,
one always encounters problems, stagnation, even fear,
everywhere. Let's deal with these collectively," he said at the
opening of a three-day national meeting of the Development and
Finance Control Board.
Dr. Yudhoyono urged police, prosecutors and judges to avoid
mistakes that could hamper the country's progress, including
disruptions to the business environment. Attempts to stifle the
anti-graft measures, he said, would remain a challenge in the
long run, but the government would have to remain consistent in
pursuing the fight against corruption.
"We need to stay on track for better future generations," he
said, reiterating the need to create an environment that makes
it difficult for officials at all levels to engage in
corruption.
Deputy KPK chairman
Erry Riyana
Hardjapamekas said on Monday that the public feels disappointed
when the anti-graft drive fails to deliver the desired outcome.
"The public has high expectations and that is understandable,”
he told The
Jakarta Post. He said that to meet those expectations, the KPK was
working hard to come up with better anti-corruption techniques.
New
Electoral System Proposed
A panel of political scientists proposed on Friday (16/12/06)
a scheme for streamlining the electoral system to promote a
healthier political situation.
The panel, from the Indonesian Institute of Sciences (LIPI),
said in an academic draft on several political laws currently
being drafted by the government, that to be eligible to nominate
candidates in future presidential elections, political parties
should be required to garner between 25 and 30% of the popular
vote in general elections.
"Such a mechanism would likely produce two pairs of
candidates to contest a one-off election," LIPI member
Syamsuddin Haris said in a discussion on the draft.
He said increasing the electoral threshold for nominating
presidential candidates would also help develop a healthy
political climate with a strong system of checks and balances.
"It will lead to the formation of two strong camps in
parliament, the governing coalition and the opposition," he
said.
Currently, the law on presidential elections states that a
political party or coalition of parties that win 15% of the
popular vote is allowed to nominate a presidential candidate.
The 2003 law resulted in five pairs of candidates contesting the
2004 presidential election, with a winner being declared only
after a run-off vote.
Another LIPI analyst, Ikrar Nusa Bakti, said an electoral
threshold of 25% would force political parties into alliances.
"If we can't reduce the number of political parties to two, then
at least we can force them into building coalitions," Bakti
said, adding that the current political arrangement was too
cumbersome.
The LIPI team also proposed that political parties be
required to formalize coalitions under the new law, to create
stability and improve ethics in politics. It said the terms and
conditions agreed upon by parties forming a coalition should be
recorded in a state document that would be open to public
scrutiny.
It also recommended that coalitions formed for a
presidential election be required to remain intact for at least
two elections. "With these arrangements, political coalitions
would no longer be a personal matter among politicians, but an
official agreement under the law," Haris said.
The academic draft was created by the LIPI team in
cooperation with the Home Affairs Ministry, which is currently
drafting new laws that will serve as the legal basis for the
2009 legislative and presidential elections.
Malaysia
Praises Intel Cooperation
Malaysia said
on Monday (11/12/06) that sharing quality intelligence with
Indonesia
has prevented militants from launching any major regional terror
attacks since the second Bali bomb blast last year.
"Malaysia
and Indonesia are quite pleased with the situation. There are
many factors behind it," Deputy Prime Minister Najib Razak told
reporters in
Kuala Lumpur.
"One of the factors is that we have been able to have
quality pre-emptive intelligence reports to nip it in the bud,"
he said, according to the Associated Press.
Najib, who is also the defence minister, said by obtaining
intelligence early, authorities could detect groups that plan to
conduct "acts of terrorism" long before they are able to do
anything.
He cited the example of Malaysian police's move against a
local terror group, Darul Islam, in the eastern
Sabah state
before it could mount an attack.
Malaysian police in May said they had crushed the militant
group's underground network, which had collaborated with
Indonesian militants, through multiple arrests between March and
April.
Reports said 12 men -- six Malaysians, three Indonesians and
three Filipinos -- are in custody under a tough security law,
while one male Filipino has been released. The group was
believed to have been a logistics, transportation and financial
support unit for Jemaah Islamiyah (JI) militants.
Date
Set for Bali Bomb Review
The first hearing date has been set for the review of the
death sentence of the three key 2002
Bali bombers, despite a defense plea to move the trial location
away from
Bali,
Australian Associated Press reported on Tuesday (12/12/06).
Denpasar District Court - where the death sentence was first
handed to Amrozi, his brother Ali Ghufron, alias Mukhlas and
Imam Samudra - will hear the reopening of the case for the first
time on December 22.
Lawyers for the trio recently filed a Supreme Court challenge
to the executions, arguing the anti-terrorism law used to
convict the men was retroactive because it was introduced after
the 2002 bombings and could not be applied.
The men were convicted of playing lead roles in the
Bali nightclub
attacks, which killed 202 people, including 88 Australian
holidaymakers. The executions of the three - originally set down
for July – were delayed after their lawyers said they planned to
lodge the judicial review in the Supreme Court months ago.
KL,
Jakarta Boost Border Security
Indonesia and
Malaysia agreed on Friday (15/12/06) to increase cooperation on
border security and set up a joint police committee to tackle
cross-border crime. Timber smuggling, illegal immigration,
criminal gangs and encroaching fishermen are among the main
problems along their long and porous sea and land borders.
Defense Minister
Juwono
Sudarsono said the two sides had agreed "to form a Joint Police
Cooperation Committee where police will (lead) law enforcement
for trans-national crimes.” "The armed forces will also support
police from both countries," he told reporters.
Sudarsono said there were dozens of criminal cases related
to the land and sea borders. "This is why both countries need to
increase security force and equipments. We agree to increase
transport facilities so we can (react) fast," he said.
Malaysian Deputy Prime Minister Najib Razak, who also holds
the defense portfolio, hailed the agreement as "a natural
development because of trans-national problems. We will bring
the police forward more intensively and formalize it."
During their meeting to discuss defense and security
cooperation, Sudarsono said they also agreed to increase
maritime cooperation in the piracy-prone
Malacca
Strait.
REGIONS
Aceh
Peace Monitors Leave After Successful Poll
The European Union-led Aceh Monitoring Mission (AMM) ended its
mission in Aceh on Friday (15/12/06), after the province’s
landmark election which seals the peace process between
Indonesia and the Free Aceh Movement (GAM) and most likely will
result in a former rebel becoming the new governor of Aceh.
Dutch diplomat Pieter Feith, who headed the mission, told
reporters the world community would continue to monitor human
rights and help to reintegrate former fighters into society.
Feith also expressed hope that the winner of the just-concluded
election in Aceh and officials in Jakarta could ensure peace
continued. "A new era will come to Aceh with the establishment
of a new administration to maintain peace," he said.
On Monday (11/12), the province held its first-ever direct
elections for governor, deputy governor and 19 mayor/regents
with the government and international observers, including UN
Secretary General Kofi Annan, saying that it was a great
success.
Former GAM spokesman Irwandi Yusuf, though dropping from his
39.27% lead on the polls Monday night to 32.5% on Saturday, is
projected to win by a landslide. Official results will be
announced on January 2.
Yusuf himself vowed to coordinate with the central government
in pushing for reconciliation, despite the fact the law on the
Truth and Reconciliation Commission was recently annulled by the
Constitutional Court.
"We will consider establishing a commission under the Aceh
administration, but it will be set up in close coordination with
Jakarta since the majority of those allegedly involved in human
rights abuses are security personnel," he told The
Jakarta
Post.
Navy
to Reorganize Bases
The Indonesian Navy will reposition its bases to focus on the
country's outer islands, its chief of staff said.
“The aim is to monitor and defend our territorial waters,”
Admiral Slamet Soebijanto told Detik.com on Wednesday
(13/12/06). The Indonesian Navy headquarters will be in
Surabaya, East Java while the base for the western area will be
in Tanjung Pinang, Riau Islands, for the eastern area in Sorong,
Papua, and for central Indonesia in Makassar, South Sulawesi.
The Navy will also have more patrol vessels to boost security
in the country’s waters. Soebijanto said that currently,
Indonesia has 114 vessels but only 50 of them are working. With
its vast area, the country should have at least 274 vessels, he
said. “However, we are still dealing with limited funds. We will
overcome it gradually,” he added.
W.
Sulawesi Gets First Governor
Home Minister M. Ma'ruf installed Anwar Adnan Saleh and Amri
Sanusi as the new governor and deputy governor of newly
established West Sulawesi for the 2006-2011 period, reported
The
Jakarta Post.
The ceremony, which was held Thursday (14/12/06) during a
plenary session of the West Sulawesi Legislative Council, was
attended by House of Representatives Speaker Agung Laksono,
People's Consultative Assembly Deputy Speaker Aksa Mahmud and a
number of governors, mayors and regents from Sulawesi and
Kalimantan. Over 1,000 people attended the ceremony which was
also marked by local traditional cultural attractions.
The minister urged Saleh and Sanusi to build partnerships with
members of the legislative council to help speed up development
in the province. Ma'ruf reminded the two officials to think of
furthering the interests of the people because the essence of
the establishment of the new province was for the improvement of
people's welfare.
The pair won the regional elections on July 20, beating
governor candidates Hasyim Manggabarani and Arifuddin Katta and
running mates Salim Mengga and Hatta Dai.
ECONOMY
New
Fever for Banks
Indian and
Chinese interests announced they would buy banks in Indonesia,
as Australia’s Commonwealth Bank also said it was eyeing a new
purchase and Bank Lippo said it wanted to acquire a smaller
operator.
Bank of India
is to buy a majority stake in Bank Swadesi early next year,
central bank deputy governor Siti Fadjrijah said Monday
(11/12/06).
"The SPA
(sales and purchase agreement) with Swadesi is likely to be done
in the first quarter of 2007," Fadjrijah told reporters, Antara
news agency said, adding that the bank wanted to take a majority
in the bank, but would continue to work with a local
shareholder.
It will be the
second purchase of an Indonesian bank by an Indian one after the
State Bank of
India
bought a 76% stake in Bank Indomonex last month.
Industrial &
Commercial Bank of China completed its purchase of PT Bank Halim,
Fadjrijah said earlier. She didn't elaborate on the financial
terms of the sale, or the size of the stake purchased.
ICBC, China's
largest lender by assets, announced in September that it had
signed a memorandum of understanding to buy an undisclosed stake
in Bank Halim, a small lender based in Surabaya.
Commonwealth
Bank of Australia (CBA) is also to buy a second retail bank in
Indonesia. The bank revealed it was in discussions with Bank
Arta Niaga Kencana (ANK) that analysts said could be worth about
$30 million.
Surabaya-based
ANK operates 19 branches in Indonesia and employs 349 staff.
Last year it reported a profit of 11.9 billion rupiah ($1.67
million).
The investment
would add to the 21 branches operated through the profitable PT
Bank Commonwealth in Indonesia, of which CBA owns 99.9%.
PT Bank Lippo
said it wants to spend at least $200 million to buy a local
lender next year to expand its consumer-banking and
small-scale-business operations, a senior bank executive said
Tuesday.
And John
McFarlane, CEO of another Australian bank, ANZ, told Dow Jones
Newswires earlier that ANZ would like to increase its presence
in Indonesia where it has a stake in both PT Panin Indonesia
Bank and PT ANZ Panin Bank.
In other news,
the Minister for Finance,
Sri Mulyani Indrawati,
said the budget deficit was expected to come in at between 1%
and 1.1%, below the budget forecast of 1.3%.
A group of
Japanese investors said they would invest $1 billion for
projects in North Maluku, including a desalination plant.
Representatives of the group have met
North Maluku officials to discuss the plan, Asril Ahmad, head of the
North
Maluku administration's information and communication bureau,
said Tuesday.
Ahmad said the
Japanese businessmen also wanted to invest in seaport and
airport expansion, agricultural irrigation networks and tourist
facilities.
On the
manufacturing front, Toyota Motor Manufacturing Indonesia said
it expected a 12% boost in vehicle exports this year to $952
million.
The company
announced it would start exporting its Fortuner SUV to Middle
East markets, and would introduce a new 1500-cc small SUV in a
joint cooperation with Daihatsu, another Toyota group company,
for the local market.
Consumers
remained upbeat about the economy, according to a Bank Indonesia
survey conducted in November.
The consumer
confidence index rose 3.5 points to move into overall positive
territory at 101.6 in November from 98.1 in October, the first
time the poll had been positive for a year.
Consumer
spending, a key driver of the economy, is already up, Reuters
reported. Sales by
Indonesia's
top three motorcycle makers jumped just over 50% last month,
hitting a record monthly volume.
BUSINESS
BRIEFS
MACRO ECONOMY
Slower
Rate Cuts Seen in 2007 - BI
Indonesia is likely to see a slower pace of cuts in benchmark
interest rates next year due to inflationary pressure and to
maintain an attractive interest rate differential for rupiah
holders, a top central banker said on Wednesday (13/12/06).
Senior Deputy Governor Miranda Goeltom also said inflation is
likely to hover at about 5% in 2008 against the 6% expected next
year.
"If we cut the rate by another 300 basis points next year, that
means it will hit 6.75% at times when inflation is at 6% plus
minus one percentage point. In terms of interest rate
differentials, that is not wise and not prudent," Goeltom was
quoted as saying by Reuters.
Bank Indonesia (BI) cut its key interest rate by half a
percentage point the previous week to 9.75%, bringing total cuts
this year to 300 basis points and hitting its lowest in more
than a year.
Annual inflation rate fell in November to 5.27%, the lowest
level in more than two years and a far cry from late last year
when a doubling of domestic fuel prices pushed it to more than
18%. In cutting rates, BI is a standout among Asian central
banks. It has reduced the BI rate seven times this year from a
high of 12.75% as inflation rates fell.
Analysts had said BI may be more cautious about lowering rates
next year if plans to raise civil servants' pay and the minimum
wage are pushed through.
Finances
to Close Year on Solid Ground
Indonesia's finances are expected to wrap up the year in good
shape, with the current account in surplus and the budget
deficit ending up within a slightly lower-than-expected range of
between 1% and 1.1% of the gross domestic product.
This is due to the likelihood of growth continuing to pick up
during the year’s final quarter, despite the recent weakening of
the US dollar, which could affect Indonesian exports, said
Finance Minister Sri Mulyani Indrawati.
"We are comfortable so far with the budget deficit. There are
no problems at all. We see the deficit at between 1% and 1.1%,"
she was quoted as saying by
The Jakarta Post
on Wednesday (13/12/06). "The recent movements in the dollar
are, from the budgetary perspective, also manageable."
She said government spending from January 1 to November 30
reached Rp528.17 trillion, or 75.55% of its initial full-year
forecast of Rp699.1 trillion, XFN-Asia reported.
Over the same period, actual revenue and grants received by the
government reached Rp507 trillion, or 76.92% of its initial
full-year forecast of Rp659.11 trillion. As a result, the
actual budget deficit for the period reached Rp21.17 trillion,
compared to the government's initial full-year forecast of
Rp22.43 trillion and revised forecast of Rp40 trillion.
The minister admitted that a number of problems had affected
this year's budget revenues and expenditures, but said that the
budget is well on track in the final quarter.
"There will be some envisaged spending that won't now take
place. But that's better than spending the money just for the
sake of spending it," she said. "We're optimistic about income
tax revenues, as well as value-added tax revenues on
domestically produced goods, although revenues from VAT on
imported goods may decline a bit."
Tax revenues -- at Rp425 trillion -- make up the bulk of this
year's total Rp659 trillion in budget receipts.
Sri Mulyani explained that revenues from VAT on imported goods
would possibly miss their target due to the economic slowdown in
the first part of the year, and the shifting of growth from the
manufacturing sector to such other sectors as services, trade
and agriculture -- which contained less imported components.
She was upbeat, however, that economic growth would continue to
pick up speed, thus leading also to increased government
revenues.
Growth rebounded to a revised 5.1% and 5.5% in 2006's second
and third quarters, respectively, from 4.6% in the first. It is
expected to come in at a full-year rate of about 5.8% --
slightly better than the 5.6% recorded in 2005 -- and increase
to 6.3% in 2007.
"We'll watch how the momentum of growth plays out, and if we
can maintain the upward trend, then revenues will also improve
next year," she said.
Meanwhile, the central bank said the US dollar will likely move
between Rp9,000 and Rp9,500 in 2007, with an average exchange
rate of Rp9,300.
Consumers
Upbeat About Economy - Survey
Consumers were optimistic about the economy in November for the
first time after more than a year of continued pessimism about
the economy, a central bank survey showed on Monday (11/12/06).
The consumer confidence index rose 3.5 points to 101.6 in
November from 98.1 in October. A reading above 100 means
consumers are optimistic about the future. The last time it was
positive was when it read 101.7 in June last year.
The improving confidence comes after annual inflation plunged
in the fourth quarter of this year as the impact of a big fuel
price rise in October last year faded, allowing the central bank
to sharply cut borrowing costs.
"I think consumer confidence will continue to rise. There
should be no reason for it to fall, especially if economic
conditions remain stable," economist, Helmi Arman of Bahana
Securities, said, according to Reuters.
Consumer spending, a key driver of the economy, is already up.
Sales by the country's top three motorcycle makers jumped more
than 50% last month, hitting a record monthly volume and
providing more evidence of a rebound in the sector.
The country's $6 billion motorcycle market is seen as a
barometer of consumer spending, which sagged in the wake of the
oil price rise last year and the accompanying surge in
inflation.
INVESTMENT
Sun
Business to Buy Content Firm for $6.2m
Sun Business Network Ltd (SBN) said it will buy Maestro Mind
International Ltd, a holding company that owns 95% of mobile
content developer PT Monstermob Indonesia (PMTI) for $6.2
million, XFN-Asia reported.
“PTMI will help us penetrate the rapidly expanding Indonesian
mobile media industry,” SBN's managing director, Ricky Ang, said
in a statement.
“We are confident that PTMI will contribute significantly to
our business in the years to come,” he added.
Nestlé
to Spend $80m on Expansion
Milk processing company, PT Nestlé Indonesia, will invest $80
million to expand the capacity of its factory in Pasuruan, East
Java from 50,000 tons to 93,000 tons a year, senior Industry
Department official Imam Haryono said.
The company is seeking support from its parent company in
Switzerland, Haryono said, according to Antara.
He said the factory needs to be expanded as it already operates
almost at full capacity, while demand continues to increase.
Chinese
Investors May Build Precious Stone Center
Chinese entrepreneurs will explore the possibility of building a
precious stone center and selling jewelry in Bali, Industry
Minister Fahmi Idris said recently.
"I don't have any objection to the Chinese investors' plan so
long as they train our precious stone craftsmen to develop
specific Indonesian products," Idris was quoted as saying by
Antara. He did not name the investors, but said they will come
to Indonesia in March.
Idris said he met with the Chinese investors during a visit to
China some time ago. He said the investors are very well known
in China, especially for their precious stones, notably jade.
The minister said his department might allow the Chinese
entrepreneurs to produce Chinese-style jewelry in Indonesia so
long as they use raw materials from Indonesia, such as onyx.
The government will allocate Rp600 billion ($66 million) for the
building of small and medium industries next year, and has
invited Chinese, Japanese and South Korean precious stone
experts to train Indonesian craftsmen.
STATE
CONCERNS
Agreements
to Combat Money Laundering
Indonesia, through its Financial Transaction Analysis and Report
Center (PPATK), has forged cooperation programs with the
financial intelligence agencies of the Cayman Islands and South
Africa to prevent and combat money laundering, Antara reported.
PPATK spokesman Natsir Kongah said Monday (11/12/06) the
cooperation programs are strategic, considering that the Cayman
Islands is one of the biggest financial centers in the world,
while South Africa is the biggest financial center on the
African continent.
The signing of the agreement between PPATK and the Financial
Reporting Authority (CAYFIN) of the Cayman Islands and the
Financial Intelligence Center (FIC) of South Africa will help
strengthen international cooperation in the fight against money
laundering and other crimes.
At least 350 banks and trust companies are operating in the
Cayman Islands, with about $1 trillion circulating in the
region. The small country is also home to 8,000 mutual funds
and 65,000 corporations. Some 1,000 companies have listed their
shares at the Cayman Islands' Stock Exchange.
According to Kongah, the procedure of PPATK cooperation with
CAYFIN and FIC was based on article 25, point 3, 2002 of the
revised Law No 25/2003 on money laundering, which allows PPATK
to combat money laundering through cooperation programs with
other relevant national and international parties.
The substance of the agreement relates to the exchange of
financial intelligence relating to the prevention and
eradication of money laundering and the funding of terrorist
groups.
ADB
to Loan $33m for Aquaculture Operations
The Asian Development Bank said Thursday (14/12/06) it will loan
the government $33.3 million to develop aquaculture projects.
"ADB will help boost the incomes of 14,000 poor fish farmers in
Indonesia through a loan of $33.3 million to enhance aquaculture
production and productivity in select provinces," it said in a
statement on its website.
The loan, which will have a 32-year tenor, will "support a
government program to promote community-managed freshwater,
brackish water and marine aquaculture development among poor
communities of the country," the statement said, according to
Dow Jones Newswires.
The government will pay 1% interest per annum during the first
eight years of the loan and 1.5% per annum for the remainder,
the statement said.
SOEs
Jiwasraya Overshoots Premium Income Target
State-owned life insurance company PT Asuransi Jiwasraya posted
Rp1.9 trillion ($211 million) in premium income in the first 11
months of the year, exceeding its full-year target of Rp1.8
trillion.
Company president Herri B Simanjuntak said he is optimistic
income would rise to Rp2 trillion by the end of the year, Antara
reported on Thursday (14/12/06).
Simanjuntak said the company's premium income target for 2007
is set at Rp2.1 trillion and investment will increase to Rp450
billion from Rp410 billion this year.
The company’s assets grew to Rp4.1 trillion by the end of the
third quarter from Rp3.7 trillion in the same period last year.
It posted risk-based capital (RBC) at 141% by June, well above
the mining level of 120% set by the Finance Department.
Telkomsel
to Invest $1.5b to Expand Coverage
The country's largest mobile phone operator, PT Telkomsel, said
it will build 5,000 more base transceiver stations (BTS) to
expand its coverage in 2007.
Currently, the subsidiary of state-owned telecommunications
provider PT Telkom already has 15,000 BTS.
Telkomsel will set aside $1.5 billion in capital expenditure to
finance the construction of the new BTS, company president,
Kiskenda Suriahardja, was quoted as saying by Antara.
Telkomsel’s subscribers numbered 32.5 million last month.
PRIVATE SECTOR
Bakrie
Telecom Gets National License
Indonesia has given mobile phone firm, PT Bakrie Telecom,
currently operating only in some cities on Java, a license to
operate nationally, the communications department said on
Wednesday (13/12/06).
"PT Bakrie Telecom will get three channels nationally," the
department said in a statement, referring to three frequency
channels that could be used by the mobile operator, Reuters
reported.
The statement said the move was part of government reforms aimed
at strengthening the sector.
The company, owned by diversified PT Bakrie & Brothers, has
slightly more than 1 million subscribers and expects to end the
year with 1.5 million, on the back of an aggressive marketing
campaign aimed at lower-income users.
Toyota-Astra
Sees 2006 Vehicle Sales Up
PT Toyota-Astra Motor expects its vehicle sales in 2006 to
exceed its target of 120,000 units in Indonesia, an official
said Wednesday (13/12/06).
"I think it (our sales) will exceed our target," Johnny
Darmawan, president director of the joint venture company
between Toyota Motor Corp and PT Astra International, said on
the sidelines of the launch of the Toyota sports utility vehicle
called Rush.
Looking into 2007, Darmawan expects the company's sales to
increase in tandem with the likely rise in overall vehicle sales
in Indonesia. He said total new vehicle sales are forecast to
rise to between 350,000 and 400,000 units in 2007 from about
315,000 units expected this year, amid falling interest rates,
easing inflation, and stable exchange rates.
Toyoto-Astra expects to continue carving out a 35% market share
in 2007 and the introduction of several new product ranges
planned for next year looks set to help boost sales, he added.
The Toyota Rush, a medium SUV jointly developed by Toyota and
Daihatsu Motor Co, will hit the roads in 2007. The 1,500-cc
vehicle was launched Wednesday but the first delivery to buyers
will commence in January, Darmawan said, according to Dow Jones
Newswires.
The Toyota Rush, which has 70% locally made parts, will be
priced between Rp155 million ($17,000) and Rp179 million.
Toyota-Astra's sister company, PT Daihatsu-Astra Motor, was
slated to launch its own version of the SUV on Thursday
(14/12/06). Called the Daihatsu Terios, it will have slightly
different accessories.
BANKS
Bank
Buana, UOB Discuss Possible Merger
Publicly listed Bank Buana Indonesia and Bank UOB Indonesia have
announced that they are considering a merger to comply with Bank
Indonesia's single presence policy.
Under the rule, to be implemented next year, a banker may not
have a controlling stake in more than one bank.
The central bank has suggested that bank owners holding a
majority share of more than one bank, can comply with the rule
either by divesting their stake, establishing a holding company
or through a merger.
"We will study the options and we will make our decision before
the deadline in December 2007," Bank Buana president, Jimmy H
Kurniawan, said, according to Antara.
Bank Buana is 61% owned by the UOB Group, which also owns 99%
of Bank UOB Indonesia.
Banks
Attract Foreign Investor Interest
Bank consolidation efforts got a boost on Monday (11/12/06),
with a senior central bank official confirming stake sales in
local operations to foreign investors from China, India and
Australia.
Relatively lenient regulatory restrictions on the size of
foreign bank stakes are also a potent lure, said Adrian Chee,
Standard & Poor's financial services director. Bank Indonesia
(BI) allows foreign investors to own up to 99% in domestic
banks.
"A lot of other bank systems in the region have tight
constraints on foreign ownership, but Indonesia doesn't have
these restrictions in place," Chee said, according to Dow Jones
Newswires.
Analysts say that the prospect of control is likely a prime
motivator behind the most anticipated deal announced Monday --
the purchase of a more-than-50% majority stake in Bank Halim, a
small lender based in Surabaya, by state-owned Industrial &
Commercial Bank of China.
"ICBC is buying a majority share in Bank Halim... (the stake) is
over 50%," BI Deputy Governor Siti Fadjriah said. Fadjriah
declined to comment on how much ICBC will pay for the Bank Halim
stake.
She also said Bank of India will sign a sales and purchase
agreement with Surabaya-based Bank Swadesi in the first quarter
of 2007, while Australia & New Zealand Banking Group Ltd (ANZ)
and Commonwealth Bank of Australia are also seeking to "buy
banks" in Indonesia.
Commonwealth Bank has bought a more-than-50% share in another
Surabaya-based operation, Bank Arta Niaga Kencana, Fadjriah
said. A Commonwealth Bank spokesman confirmed stake purchase
talks with Arta Graha Kencana were ongoing.
Bank Halim, ICBC's first overseas bank investment, marks the
Chinese lender's efforts to start small as part of a long-term
strategy to develop a regional banking network, analysts say.
Indonesia's medium and small-sized banks, including Bank Halim
and Bank Swadesi, offer foreign investors opportunities for
stakes in geographical "niche players" with a highly attractive
medium-term growth outlook, Chee said.
"The opportunities in (foreign investors') home countries are
already limited, while our market is still big (and) is proven
successful by foreign banks who are here already," Peter B Stok,
chief executive officer of Bank Niaga, said.
An ANZ spokesman in Sydney told Dow Jones that the bank is
interested in expanding its presence in Indonesia in the longer
term, but said "there are no bank (acquisition) opportunities at
present". ANZ chief executive, John McFarlane, said in October
that ANZ would like to increase its presence in Indonesia where
it has a stake in both Bank Pan Indonesia and ANZ Panin Bank.
Fadjriah said that several Middle East-based banks have
expressed interest in buying stakes in existing shariah banks or
establishing new ones in Indonesia.
Japan's Acom Co and Bank of Tokyo-Mitsubishi said last month
they will jointly buy a 75.4% stake in Indonesia's small size
lender Bank Nusantara Parahyangan.
Bank
Niaga to Expand Lending by 25%
Bank Niaga plans to increase lending next year by 25%, its
president director, Hashemi Albakri, said Tuesday (12/12/06).
"The market will be growing well next year. We see it as a
challenge to increase our credit expansion by more than the
market average of 20%," Albakri was quoted as saying by
The Jakarta Post.
Asked where the money for the additional lending would come
from, he said that Bank Niaga has enough funds to cover the
envisaged credit expansion. "If it continues to grow well, we
may need fresh funds for 2008 and 2009. And also, if growth
next year surpasses our target, then we might turn to the bond
market, possibly to the tune of between Rp1 trillion and Rp2
trillion, depending on market conditions," he said.
Bank Niaga’s shareholders have appointed Albakri as new
president, replacing Peter Stok. Albakri formerly served as the
bank's vice president.
The shareholders also appointed company director, Daniel James
Rompas, to fill in the post left by Albakri as vice president.
BI
Hopes for Shariah Market Share at 5% End-2008
Bank Indonesia (BI) hopes Islamic banking will comprise 5% of
the country's banking sector by the end of 2008, up from 1.7% at
present, Deputy Governor Siti Fadjriah said Monday (11/12/06).
"We hope the government would encourage state-owned companies
to place their funds in shariah banks," she was quoted as saying
by Dow Jones Newswires.
Fadjriah said the central bank would introduce measures to
boost shariah banking but did not offer details.
She said the assets of banks using the Islamic code of conduct
in doing business totaled Rp27.14 trillion so far this month,
while Islamic financing totaled Rp19.79 trillion and deposits
Rp20.25 trillion.
POWER
No
Hike for Power, Fuel Prices Next Year
President Susilo Bambang Yudhoyono said the government would not
hike electricity and fuel prices next year to keep a lid on
inflation, Agence France-Presse reported on Wednesday
(13/12/06).
"We do not want to take risks on inflation. We also are taking
into consideration the (issue of) people's purchasing power," he
said during a visit to the head office of state electricity
distributor, PT PLN.
Without any tariff hike, the government would continue to
subsidize both PLN and fuel distributor, PT Pertamina, to sell
power and fuel below their commercial prices. "The government
takes the option to pay a subsidy, though it must be
manageable," the president said.
Prices were last hiked by an average of 126% in October last
year, prompting a spike in average annual inflation in 2005 to
17.11%. For next year, the government has allocated fuel
subsidies of up to Rp68.6 trillion ($756 million) and power
subsidies of Rp25.8 trillion ($284 million).
30
Power Plant Projects on Offer
State-run electricity company, PT PLN, will host a tender for
bidders interested in the construction of 30 coal-fired power
plants with a combined capacity of 3,100 MW later this month.
The 30 power plants, located outside Java, are expected to
operate in two to three years, the company's representative,
Yogo Pratomo, said Thursday (14/12/06), according to Xinhua.
The whole project is estimated to cost $2.5 billion.
Pratomo said Bank Negara Indonesia (BNI) will coordinate and
arrange the funds but is expected to ask other Indonesian banks
to help.
Meanwhile, Shanghai Electric Group Co Ltd, China's largest
power equipment maker, has signed an agreement with PT Truba
Alam Manunggal Engineering to build power plants in the country,
Shanghai said in a statement.
Shanghai and Truba will build a 50-MW coal-fired power plant in
South Sumatra and a 250-MW coal-fired plant in North Sumatra,
together worth $260 million, Reuters reported. Construction
will begin next year, with the plants expected to be operational
in 2008.
Two Chinese firms, China National Technical Import and Export
Corp and Harbin Power, recently won contracts to build power
plants in Indonesia, a PLN official has said. National
Technical won the bid to build a 600-MW coal-fired power plant
in West Java and Harbin Power got the contract to build a
coal-fired power plant in East Java.
A Chinese team is also in Papua in line with the Chinese
government’s plan to build a micro-hydroelectric power plant in
the province. Seven experts from China have been sent to survey
the proposed site of the plant along the Oksibil River in
Pegunungan Bintang regency,
The Jakarta Post
reported.
Leader of the Chinese surveyors, Yan Shuanghong, said the river
is deep enough for a hydroelectric plant that could generate 200
kilowatts to 300 kw of electricity. He said the Chinese
government would provide a grant to build the plant.
OIL
AND GAS
China's
CNOOC, Conoco Win Indonesia Oil Rights
China's CNOOC Ltd, US independent ConocoPhillips, and UK Premier
Oil have won oil and gas exploration rights for 18 blocks in
Indonesia, the Mines and Energy Department said on Wednesday
(13/12/06).
The exploration areas, awarded to the three foreign firms and a
host of local companies, require an investment commitment of
$235 million over the first three years, the department said.
CNOOC won the onshore exploration rights for Batanghari block
in central Sumatra while Conoco Phillips got the oil and gas
exploration rights for Kuma Block off west Sulawesi.
"We will monitor those firms' operations, including their
commitment to explore. Our hope is they will find reserves,
whether oil or gas," Luluk Sumiarso, Director General for Oil
and Gas, was quoted as saying by Reuters. "Their findings are
important for the future of Indonesia's oil and gas development.
The potential is still there."
Former upstream director of state oil firm PT Pertamina Gatot
Wiroyudo, said the Batanghari block has potential for oil and
gas. "The prospect of finding oil and gas in particular are
very bright in central Sumatra. The problem is whether the
company has a correct well to explore," he said.
Premier Oil was awarded onshore and offshore exploration rights
at Buton block in southeast Sulawesi.
Local
Banks Offer Loans for Pertamina Exploration
A number of major local banks have offered to provide loans to
finance oil explorations worth $500 million, to be carried out
by state-owned oil and gas company PT Pertamina.
Pertamina finance director Frederick ST Siahaan said loan
offers have come from state-owned Bank Negara Indonesia (BNI),
Bank Danamon, Bank Central Asia (BCA), and state-owned Bank
Mandiri, Antara reported on Tuesday (12/12/06).
Siahaan said Pertamina had already received offers of $1.35
billion, which are being processed.
BCA vice president Jahja Setiaadmadja said the bank, which is a
joint lead arranger for the loan, is offering $75 million.
Pertamina has named Credit Suisse Group as the lead arranger.
BNI has offered $100 million and Bank Danamon $50 million.
The funds will be used to purchase tankers, and to modify the
Balongan oil refinery in West Java to increase propylene
production from the present 160,000-200,000 metric tons per year
to 300,000 metric tons.
Mitsubishi
Chosen to Build Pertamina LNG Plant
State oil firm PT Pertamina has selected Japan's Mitsubishi Corp
to build a liquefied natural gas (LNG) plant on Sulawesi in a
bid to boost output, a senior company official said Friday
(15/12/06).
The plant will have annual capacity of 2 million tons and
natural gas supplies will come from Pertamina's Matindok and
Senoro fields, operated by PT Medco Energy International, with
combined reserves of around 2 trillion cubic ft, Pertamina's
upstream deputy director, Tri Siwindono, said.
"Pertamina, Medco and Mitsubishi are working together to
conclude a framework agreement and we expect to sign the deal by
the end of the year or early next year," Siwindono told
Reuters. "Construction is expected to kick off next year and it
will start producing in 2009."
MINING
Newmont
to Sell Mine Stake to Trakindo - Report
Newmont Mining and other foreign owners of the Batu Hijau copper
and gold mine in Indonesia are selling a combined 3% stake in
the mine to local firm PT Trakindo Utama for about $100 million,
two sources told Reuters on Friday (15/12/06).
"They will sell 3% to Trakindo. That is quite certain," said
one source familiar with the transaction.
Privately owned Trakindo Utama, the authorized dealer in
Indonesia for Caterpillar products, declined to comment.
Trakindo supplies equipment to the mine.
US-based global mining giant Newmont, and other foreign
stakeholders, including Sumitomo Corp, are selling down their
stakes in Batu Hijau, Asia's second largest copper mine. Foreign
interests now own about 80% of the mine, with Newmont holding a
45% stake.
Lack
of Rain Could Hit Nickel Output
The lack of rain in Indonesia is affecting its energy output,
which could impact nickel output at sites owned by Brazilian
mining giant Companhia Vale do Rio Doce, company president,
Roger Agnelli, said Wednesday (13/12/06).
"If there is a restriction to energy use in Indonesia, it could
affect output at our mines there," Agnelli was quoted as saying
by Dow Jones Newswires.
Vale do Rio Doce acquired its Indonesian nickel holdings when
it purchased Canadian nickel miner, Inco, in October.
PT Inco Indonesia is currently producing at a rate of about
1,400 tons to 1,500 tons of nickel-in-matte per week.
Production cuts may result in Inco just missing its current
production estimate for 2006 of approximately 71,000 tons of
nickel-in-matte, Antara reported.
Mitsubishi
Hopes to Restart Gresik Smelter
Mitsubishi Materials Corp said Thursday (14/12/06) it hopes to
resume operations at its Gresik copper smelter in East Java by
December 20, reported Reuters.
Operations at the plant were halted on October 17 because of
troubles with oxygen supplies to the plant. The suspension is
expected to reduce copper output at the smelter by about 52,000
tons.
A Mitsubishi Materials spokesman said this had been covered by
stocks and by increasing the company's domestic production. He
said that it had also made some purchases in the global market,
but said the company did not provide details about the actual
breakdown.
Mitsubishi Materials said in October that the suspension would
reduce current profits at PT Smelting by about 5 billion yen
($42.53 million). The company owns 60.5% of PT Smelting, the
operator of the facility.
Straits
Asia to Expand Indonesian Coal Mining
Straits Asia Resources Ltd, the Singapore-listed unit of
Australia's Straits Resources Ltd, said it has secured
Indonesian government approval to expand its coal mining
concession area in Sebuku in Indonesia.
The company said its unit, PT Bahari Cakrawala Sebuku, has been
given the green light to explore an additional 6,500 hectares of
land adjacent to its present coal mines in Sebuku, XFN-Asia
reported on Monday (11/12/06).
The new area is estimated to contain about 31.5 million tons of
coal, boosting the group's estimated coal resources to 102.5
million tons from 71 million at present, it said
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