SMI to revive development of stalled projects

Benget Besalicto Tnb., The Jakarta Post, Jakarta  , |  Sat, 02/28/2009 2:22 PM  

The government has formally established a financial firm to manage the infrastructure fund, PT Sarana Multi Infrastruktur (SMI), which will include a focus on financing several stalled infrastructure projects.    

The deputy to the coordinating minister of economic affairs in charge of infrastructure, Bambang Susanto, said Friday the firm will work on several stalled projects include the Rp 80 trillion (US$9 billion) Trans-Java Toll Road, and the Rp 4.6 trillion Jakarta-SoekarnoHatta railway project. 

The new institution starts operating in April with an initial capital of Rp 1 trillion allocated from the 2009 state budget, and will get more financial support from the Asian Development Bank (ADB) and World Bank (WB), up to Rp 2 trillion. 

"For additional funds we plan to issue bonds. I'm optimistic that it will manage to get a total fund of up to Rp 20 trillion in the next two to three years. With the support of reliable institutions such as ADB and WB, and the prospects for our infrastructure projects, it won't be difficult to realize the target," he told The Jakarta Post. 

Several big infrastructure projects are stalled mainly due to financing and land clearing problems. These include electric power plants, the proposed double-track railway linking Jakarta and Surabaya, and the monorail project in Jakarta. 

Bambang said that the government has also named members of the SMI board of directors and board of commissioners, but refused to elaborate further; saying Minister of Finance Sri Mulyani Indrawati will announce (the details) soon. 

He added that SMI will also be a shareholder in some infrastructure projects. 

"The SMI will act as a holding company as it will later have several subsidiaries. The Indonesia Infrastructure Fund Facility (IIFF) will be one of its subsidiaries," he said 

However, he noted that the SMI would not fully finance the infrastructure projects. It will establish a consortium for every project. In some cases the loans will stand as bridging loans, mainly aimed at securing long term finance.

Petrobras eyes Australia, Indonesia gas opportunities

By Judy Hua, Reuters, Fri Feb 27, 2009 10:08am GMT  

SINGAPORE, Feb 27 (Reuters) - Brazil's state-run energy giant Petrobras (PETR4.SA)(PBR.N) is seeking opportunities for natural gas in Northwest Australia and Indonesia, to expand its energy investments in Asia, a company official said on Friday. 

Petrobras, which gets most of its output from the Americas, has put aside almost $16 billion for its international business in the next five years, and has been spreading its wings by boosting oil exports to China and acquiring a refinery in Japan. 

"Asia can be considered a new frontier for Petrobras. Asia represents lots of opportunities for Petrobras because we need gas and there are gas in Southeast Asia," said Simone Totti Davidovich, Senior Adviser of E&P International Business Development of Petrobras. 

"The countries we are focusing on are mainly Australia and Indonesia. Those are the most important countries, but we are not close to those countries," she told Reuters on the sidelines of an upstream oil and gas conference. 

Davidovich said Petrobras was talking to some firms but did not elaborate on the opportunities it was looking at. 

"We are talking to some companies and we have seen some blocks. I hope it's not that far away. I hope it's in near future." 

Among companies working in natural gas developments in Western Australia are Chevron (CVX.N), Apache Corp (APA.N), Woodside Petroleum (WPL.AX), ENI (ENI.MI) and BHP Billiton (BHP.AX) in a joint venture with Exxon Mobil Corp (XOM.N). 

Petrobras has no oil and gas exploration deals so far in East Asia and Australia. It holds upstream interests in Pakistan and India to explore offshore blocks. 

The company unveiled in January a huge plan to invest $174 billion between 2009 and 2013, up 55 percent from the $112 billion planned for 2008-2012, bucking the wider trend of oil firms cutting their spending amid the economic downturn. 

Davidovich said of the total investment, $15.9 billion would be for its international business, of which 20 percent would go to new businesses, including Asia Pacific. 

NEW FRONTIER 

Indonesia, Southeast Asia's biggest economy, has been offering new exploration rights and financial incentives in a bid to stem an output decline, and is targeting a 50 percent rise to $2.7 billion in spending from oil contractors this year. 

But there could be some obstacles for foreign firms to explore oil and gas in Indonesia, such as the production split. 

"Definitely it's hard to find something interesting with those terms, but it's not impossible. That's why there are so many companies there," Davidovich said. 

"If there are positive returns, we will do that." 

Only last week Brazil signed an agreement with China to supply 100,000-160,000 barrels of oil per day and expects to obtain up to $10 billion in Chinese loans to help develop its huge oil reserves to ensure future oil supplies. [ID:nN19512811] 

In November, Petrobras said it was in talks with top Asian oil refiner Sinopec (0386.HK) on taking a refinery stake in China, but there have been no concrete developments yet as companies face higher costs. 

Petrobras said last year it aimed to upgrade its newly acquired Nansei Sekiyu K.K. refinery.

 (Editing by Ramthan Hussain)

Minister launches Balinese culture study center

The Jakarta Post, Jakarta | Sat, 02/28/2009 1:38 PM  

State Minister of Culture and Tourism Jero Wacik launched Balinese Culture Study Center at the University of Udayana in Denpasar, Bali on Saturday, Antara has reported. 

"The study center is expected to help study and collect the existing and developing positive points in the Balinese culture," the Minister said. 

Minister Wacik said that the Balinese culture has a lot of potential which could be further developed to help boosting creative industry in the local economy by empowering the local communities. 

Separately in the occasion, I Made Bakta, the university's rector, explained that the study center was a program initiated by the Culture and Tourism ministry in cooperation with the National Development Planning Agency.

He said the study center was indeed aimed at using the local cultural values in developing creative industry and economy of Bali Province. 

"The study center is expected to issue study reports on Balinese culture and produce a creative cultural industry," he said. 

With the launching of the Balinese culture study center, there are currently seven local cultures study center in seven universities in Indonesia. (dre)- JP

First made-in-Indonesia APCs handed to Army

Abdul Khalik, THE JAKARTA POST, JAKARTA | Sat, 02/28/2009 11:11 AM  

Local pride: Army soldiers stand by armored personnel carriers (APCs) at the factory of national arms producer PT Pindad in Bandung, West Java, on Friday. The state-owned company handed over the first batch of 20 vehicles to the Indonesian Military (TNI). JP/Abdul Khalik 

In a breakthrough that could turn the country into a military equipment maker, state arms firm PT Pindad handed over Friday the first armored personnel carriers (APCs). 

The 20 APCs, part of 154 vehicles ordered by the Defense Ministry for the Army, were handed over Friday at a ceremony at Pindad's plant in Bandung, West Java. 

Officials say the production of the APCs has boosted the morale of the national defense industry to end the country's dependence on expensive imported war machines. 

"The vehicles have been tested by our experts in different fields of battle, and are proven to satisfy our needs," Defense Ministry director for infrastructure Rear Marshal Eris Heriyanto told reporters after symbolically receiving the vehicles from Pindad president director Adik Avianto. 

"With regard to quality, they match those that we have imported." 

Under the contract, worth Rp 1.1 trillion (US$90 million), the remaining 134 vehicles will be delivered by 2010. 

State banks BRI, BNI and Mandiri have together provided the financing scheme for the production, which will be paid back by the government from the state budget. 

"We will provide Rp 200 billion in standby loans for the production of 154 APCs. We will see if we can cooperate with Pindad in future projects," BRI director Asmawi Syam said on the sidelines of the ceremony. 

Defense Minister Juwono Sudarsono said in his speech read by Aris that the government expected Pindad to move forward to produce other military equipment to replace the country's aging weaponry. 

The Army said it would use the APCs for the country's UN peacekeeping force, infantry and cavalry. 

The six-wheel-drive vehicle, with a maximum speed of 90 kilometers per hour and maximum range of 600 kilometers, uses 70 percent local products. Only the engine is imported from French automaker Renault, Adik said. 

"This is a first in Indonesian and Pindad history, to locally produce an APC," Adik said. 

"And except for the engine, we made all the other parts. You see, we've been trying to seek local engine producers. But for now, there are no local firms capable of supplying such an engine." 

He said Renault was committed to delivering engines for the next orders. 

The quality of the APCs have been internationally recognized, proven by an order of 14 vehicles placed by Nepal, which will use the Indonesian APCs for peacekeeping missions in Cameroon. 

"The price of each of our APCs is only Rp 7 billion, while those that we import cost $1 million," Adik said. 

"That's why our production is highly competitive." 

He added the next step after the completion of the government's order for the APCs would see the company expand its production to include making war vehicles, such as amphibious tanks for the Marines, cannons and other heavy arms. 

"We believe we have the capability to produce any military equipment as long as the government supports us," he said. 

Indonesia has been dependent on foreign suppliers for its military equipment, which many fear could endanger its sovereignty. 

The dependency was proven when the US, under then president Bill Clinton, slapped a military ban on the country for alleged human rights violations, causing much of its military equipment, among the most meager in Southeast Asia, without proper maintenance or upgrades.

Government sets Rp 90 trillion to promote local products

The Jakarta Post, JAKARTA | Fri, 02/27/2009 8:49 AM  

Businesses may see Rp 90 trillion (US$7.5 billion) in extra demand for domestic products this year, as the government intensifies efforts to bolster the local market amid rapidly declining global demand. 

The amount will come from state budget allocations for state ministries and institutions, Fauzi Aziz, the Industry Ministry's director general for small and medium industries, said Thursday.

After the issuance of a presidential instruction favoring local products, a set of implementing regulations will soon be introduced mandating state institutions and ministries to use locally made products to boost the domestic market, already being buoyed by recent import restrictions.

"The 2009 state budget for ministry and institutional spending is around Rp 300 trillion," Fauzi said.

"We're trying to ensure that around 30 percent of that is allocated to domestic product spending."

Under the planned regulation, every government institution must spend on domestically produced goods for operational procurements, such as uniforms and shoes.

Currently, there are around 2.5 million civil servants.

Against the backdrop of slowing overseas demand as the world tips into recession, the government has turned to the domestic market to sustain economic growth.

Since early this year, entry for imports of products such as shoes, textiles, electronics and food and beverages has been limited to certain designated ports to help protect local producers.

Associations representing the textile, shoe and electronics industries have confirmed that orders are now on the rise following the import restrictions, with shoe producers predicting full-year orders to increase by Rp 5 trillion.

Normally, annual sales of shoes reach Rp 25 trillion, including about Rp 10 trillion for locally made ones. 

The impact may be even greater once the planned government regulation on the use of local products comes into effect.

Industry Minister Fahmi Idris, appointed to lead the national team on Domestic Goods Usage Intensification (P3DN), has begun inviting officials from the relevant ministries and institutions to help formulate standards.

Fahmi has so far invited the state minister for administrative reform, the education minister, the National Police chief and the Indonesian Military (TNI) chief.

"We will hold more meetings with other institutions in the coming weeks to hear their input," Fahmi said after the meeting. 

The House of Representatives has approved a six-billion-dollar stimulus package to protect the country from the worst impacts of the global economic crisis, lawmakers said Wednesday.

The parliamentary budget committee has approved the plan worth Rp 73.3 trillion (US$6.15 billion).

“We approved the stimulus in accordance with the government’s efforts to overcome the effects of the global slump,” committee deputy chairman Suharso Monoarfa said.

“We hope that the stimulus can prevent rising unemployment, sustain consumer spending capability and strengthen businesses.”

The stimulus consists of Rp 56.3 trillion of tax incentives and Rp 17 trillion in additional government spending and subsidies. (hdt)

Jakarta to construct 30 ‘smart parks’ at schools

The Jakarta Post  |  Fri, 02/27/2009 9:20 PM  

As part of efforts to boost reading habits among the young, the city administration and the National Youth Group (KTN) plans to build 30 reading parks at schools across the city. 

KTN chairman Dody Susanto said the parks, called Taman Pintar or Smart Park, were meant to give students a place to read. 

“One of the reasons for low interest in reading is the formal situation in the classroom. These parks will offer a new experience for students to read outdoors,” Dody said on the sidelines of a ceremony to officiate the first park at state high school SMA 78 in Kemanggisan, West Jakarta, on Friday. 

West Jakarta education office head Abdul Hamid said as quoted by beritajakarta.com that his office had prepared six schools for a Smart Park.

RI receives $250 million in grants for World Ocean Conference

The Jakarta Post | Fri, 02/27/2009 8:12 PM  

Indonesia has received US$250 million in grants from various countries for the implementation of the World Ocean Conference which will be held in Manado, North Sulawesi, on May 11-15, 2009. 

"Of the total, US$40 million is from the United States," Indroyono Soesilo, chairman of the WOC organizing committee, said in Jakarta on Thursday as quoted by state news agency Antara. 

Six heads of state from member countries of the Coral Triangle Initiative (CTI) would participate in the CTI Summit to be organized on May 15, in parallel with WOC, he said. 

CTI has six member countries, namely the Philippines, Indonesia, Malaysia, Papua New Guinea, Timor Leste, and Solomon Island. Australia and the United States are observers of CTI. 

He also said that US President Barack Obama had appreciated Indonesia's Coral Triangle Initiative. 

North Sulawesi Governor Sandurajang said his province was ready to receive around 1,500 participants from 121 countries during the WOC 2009. 

The province had constructed new eight star-rated hotels to accommodate the WOC participants, he said. 

Marine experts would discuss efforts to save the marine ecology from the impacts of the global warming during the conference.

WOC Website


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Banyuwangi Constructs Biggest Mosque in East Java

Friday, 27 February, 2009 | 17:14 WIB 

TEMPO Interactive, Banyuwangi: The Banyuwangi local administration is disbursing Rp10 billion to complete the construction of Baiturrahman Mosque. Total allocation disbursed for the project since 2005 has reached Rp17 billion. 

According to the mosque construction field coordinator, Iwan Azis Siswanto, the Rp10 billion funds would be used to rehabilitate the main building and the north wing. 

The mosque – located in PB Sudirman Street, Banyuwangi – is targeted to become the biggest mosque in East Java. The mosque is built on a piece of land measuring 5.000 square meters. It will have a similar concept as the Nabawi Mosque in Medina, adorned with a mobile minaret. “The mosque will become the city’s icon,” said Iwan yesterday, adding that its construction will be completed by 2010, requiring a total of Rp19 billion. 

IKA N

Jakarta to turn lights off Saturday

The Jakarta Post | Fri, 02/27/2009 5:33 PM  

Jakarta will take part in a global effort to promote climate change mitigation by turning off the city lights for an hour on Saturday starting 8.30 p.m. 

Director General for Electricity and Energy Consumption J. Purwono said the event was endorsed by the World Wide Foundation (WWF) and a total of 1,000 cities from all across the globe would participate in the event. 

“We support this program. In Jakarta, WWF will cooperate with the local government,” Purwono said as quoted by Antara state news agency. 

WWF Indonesia program director for climate and energy Fitrian Ardiansya claimed that the event would safe a total of Rp 200 million of spending on electricity. 

“The main targets of this activism are the government, business players, communities and individuals,” Fitrian said. 

The event, which is called Earth Hour, starts in Sydney, Australia, in 2007 with about 2.2 million people turning their house lights off for an hour. A total of 50 million participated in the city last year, and also followed by 18,231 companies and 370 cities in 35 countries. (and) 

State Pawnshop Company Targets 1.000 Outlets

Thursday, 26 February, 2009 | 13:57 WIB 

TEMPO Interactive, Makassar:State-owned Pawnshop Company CEO Chandar Purnama said his office has targeted an additional 1.000 outlets in order to loan out Rp48 trillion in credits by end of 2009. The amount of the credit has increased compared to last year’s Rp33,5 trillion. “We are adding the outlets to improve our services,” Chandra said in Makassar yesterday. 

Besides adding more public outlets, the Pawnshop has developed syariah pawnshop outlets. Out of the 2.089 outlets throughout Indonesia, 126 of them are syariah outlets. The expansion of these syariah outlets has been quite impressive. On May last year, there were only 54 syariah outlets, and their numbers already reached 126 units by the end of the year. “Even so, their contribution remains low,” Chandar said. 

According to Chandar, his office plans to have 3.000 outlets by April 1. These outlets will be spread throughout the country and will be located at traditional markets, modern markets, and shopping centers. The Pawnshop is aiming for a target of Rp1,2 trillion gross profit by this year compared to Rp900 billion last year. 

Irmawati

Kuwait oil firm to spend $300m on acquisitions

Mustaqim Adamrah, The Jakarta Post, Jakarta | Wed, 02/25/2009 1:52 PM  

The Kuwait Foreign Petroleum Exploration Co (Kufpec) plans up to US$300 million of investment in the Indonesian oil and gas sector despite slumping oil prices. 

Deputy managing director A. Naser Y. Al-Fulaij said Tuesday the company planned to realize the investment within two to three years by acquiring production facilities from other companies. 

"We may invest $200 million or $300 million in the very short term (around two to three years) in oil and gas," he told reporters after a meeting with Vice President Jusuf Kalla at the vice president's office. 

"We want to acquire more production and reserves in Indonesia. We're looking to make acquisitions . of two to three companies," he said, but refused to disclose the candidate companies. Neither was he willing to name the locations for exploration and production that the company was aiming at. 

He said the future reserves would vary in each company Kufpec would acquire, accounting for around 20 to 30 million barrels, "or more than that . millions of barrels". 

Kufpec, a subsidiary of Kuwait Petroleum Corporation, has been operating in Indonesia for more than 20 years, according to Al-Fulaij. 

Kufpec operates in the exploration, development and production of crude oil and natural gas in Africa, the Middle East, Asia and Australia, and participates in joint ventures with similar companies in exploration and production of oil and gas both as an operator and partner, according to www.kufpec.com. 

In Indonesia, Kufpec already has as partners, United Kingdom-based Premier Oil plc, the United States-based Hess Corporation and Japan Petroleum Exploration Co (Japex), according to Al-Fulaij. 

With its partners, he said, Kufpec operated in the Natuna Sea, on Bangka Island and Seram Island. 

He said the company would consequently double its daily production of 15,000 barrels a day. 

Al-Fulaij said the planned investment would be fruitful despite declining oil prices. 

"The oil price was $40 about three years ago. It was OK then. So, it's OK now," he said.

Airport gets ambassadors in rollerblades

The Jakarta Post, Jakarta | Thu, 02/26/2009 1:58 PM  

Soekarno-Hatta International Airport operator PT Angkasa Pura II launched Wednesday an "Airport Ambassador" program to promote a clean airport environment and provide mobile information services for travelers. 

The program will see company officials patrolling the terminals on rollerblades, doing quick clean actions like picking up stray litter and tidying up mats, and helping airport users in need of information. 

The officials will be able to speak English and Indonesian, and will be recognizable by their orange shirts. 

Angkasa Pura spokesman Trisno Heryadi said the program was aimed at educating the public on the importance of a clean airport, as well as providing a value-added service. 

"The airport is the country's gateway, so it's important to ask for public participation to keep it clean," he said. "Also, it will give airline passengers an additional service by providing them with unique assistance while at the airport," 

The ambassadors will start full duties Friday at Terminal 1A and will move to another terminal after a week. 

"We'll evaluate the program over the next three months and may add more ambassadors for more terminals if we find it a success," Trisno added. 

Soekarno-Hatta, the busiest airport in the country, currently serves 34 million passengers a year. (hwa)

Indo Mines says Indonesia pig iron plant on track

Reuters, Wed Feb 25, 2009 10:41am GMT  

JAKARTA, Feb 25 (Reuters) - Australia's Indo Mines Ltd (IDO.AX) is set to produce 1 million tonnes of pig iron from its project on Indonesia's Java island by 2012, despite the impact of the global credit crisis, an executive said on Wednesday. 

Miners around the world have been carefully examining new projects amid sliding prices and financing woes as the global credit crisis bites. 

Indo Mines has a 70 percent share in PT Jogja Magasa iron, an Indonesian firm planning to mine iron sand and set up Indonesia's first pig iron smelter in central Java's Yogyakarta province. 

The firm, which signed a $1.1 billion mining contract in November last year, will begin exploration of iron sands in 2011 and expects commercial production of 1 million tonnes of pig iron per year to start in 2012. 

"There is no delay for us in term of feasibility study. It is still on schedule (to start production) for 2012," Phil Welten, Indo Mines managing director told reporters. 

"It's difficult to raise funds to do this job. But we believe the market is going to turnaround in the next 12 months to two years when we are going to look for financing," Welten said on the sidelines of a mining conference. 

The firm has said the $1.1 billion investment will include a a 350-megawatt power plant and a port facility. 

Slowing demand from steel makers as car makers and construction activity slows, has pressed miners to reduce pig iron output. 

Global miner Rio Tinto (RIO.AX)(RIO.L) in December suspended operations at an Australian pig-iron plant for at least three months to weather the economic downturn.  

Welten said Jogja Magasa planned to renegotiate an initial agreement to supply 100,000 tonnes of pig iron to PT Krakatau Steel, Indonesia's largest steel producer after the agreement expired last year. 

"We haven't renegotiated it because we were waiting to get our contract of work. So now we have the contract of work, then we'll start looking at what opportunity is there," he said. 

The firm saw good demand for pig iron in the domestic market for wrought iron, Welten said, adding it had also received interest from Malaysian and Chinese buyers. 

Indo Mines is the first mining firm to sign a mining contract for a decade due to confusion over the mining law. 

It is also the last company to be awarded a mining contract before the new mining and coal law was passed in December. 

The previous licensing via a contract of work, favoured by major mining firms, has now been replaced by mining permits running for shorter periods. 

The Indonesian Mining Association has said mining investment in Indonesia may drop below $1 billion this year and there may be no fresh projects as metal prices fall and miners await details from the new mining bill. 

But the government is more optimistic and expects mining and geothermal investment to reach more than $2 billion this year up from $1.65 billion in 2008. 

(Reporting by Fitri Wulandari; Editing by Ed Davies) 

Inco Pushes Back Date of Completion For Karebbe

The Jakarta Globe, Yessar Rosendar, February 25, 2009

Nickel miner PT International Nickel Indonesia Tbk, or Inco, aims to finish developing the $285 million Karebbe hydroelectric power project in South Sulawesi Province in early 2011 instead of its initial target of mid-2010, due to delays in obtaining approval from the Ministry of Forestry, a company official said on Tuesday. 

Arif S. Siregar, Inco’s chief executive, told the House of Representatives’ Commission VII, which oversees the energy sector, that the company has now finalized building designs and secured the government permits required to proceed with construction — including approval from forestry officials. 

He said, however, that the budget for the Karebbe project had expanded due to the construction delays. 

“We’ll start dam construction [related to the Karebbe plant] after May,” Arif said. “Our [capital expenditures] this year are set at just over $200 million. A portion of this will be used to develop Karebbe.” 

The new hydroelectric plant will have a capacity of 90 megawatts per hour, expanding Inco’s hydroelectric generation capacity to 365 MWH. 

The company said earlier that its annual nickel output would increase by 20 percent once the Karebbe plant is completed. 

Inco’s nickel production fell 5.6 percent last year, to 72,400 metric tons from 76,500 metric tons in 2007, below its 2008 target of between 77,000 and 79,000 metric tons. 

Falling nickel prices pushed Inco’s sales down to $1.31 billion last year, from $2.33 million in 2007. As a result, its 2008 net profit fell significantly to $359.3 million from $1.17 million the year before. 

Arif said nickel production fell partly due to a management move in October to improve profitability in the face of declining nickel prices and rising energy costs by turning off all thermal power generators in favor of lower-cost hydroelectric power. 

Inco’s nickel mining operations are currently located in Sorowako, South Sulawesi. The company has predicted that its current nickel reserves, estimated at 80 million tons, could support its operations for the next 30 years. 

Its reserves could rise further due to exploration plans in Bahodopi, in Central Sulawesi Province, and Pomala, in Southeast Sulawesi Province, as well as sites near Sorowako.

Low Cost Flats to be Built in Yogya

Wednesday, 25 February, 2009 | 11:47 WIB 

TEMPO Interactive, YOGYAKARTA:The government of the Special Region of Yogyakarta will build 192 low cost flats in Pringwulung village in Sleman, Yogyakarta, this year. 

The cost for constructing homes for low-income earners is estimated to reach Rp24 billion. 

“The concept is to build a twin block, able to accommodate 192 flats,” said Cipta Karya Housing Development Directorate General chief, Edy Priyatna, yesterday (24/2). 

According to Edy, each flat will be 27 square meters in size, with two bedrooms, one bathroom, and a kitchen. 

The bidding process will be carried out in the near future. 

BERNADA RURIT

Mitsubishi remains upbeat despite crisis

The Jakarta Post, Jakarta | Wed, 02/25/2009 1:52 PM 

Having booked a fairly solid performance in January, coupled with predicted positive economic impacts from the upcoming elections, Mitsubishi is upbeat about meeting its full-year sales target of 60,000 units despite the economic crisis. 

The target, which is around 30 percent lower than last year's sales, has been set in line with a prediction by the Indonesian Automotive Industry Association (Gaikindo) that total auto sales would this year drop by as much as 30 percent as slower economic growth reduces demand. 

"Indonesia's economy will be better compared to Europe and the United States. The huge population will trigger the growth of consumptive products domestically while some commodities are also improving, such as palm oil and rubber," Krama Yudha Tiga Berlian (KTB), Mitsubishi authorized dealer, president director Fumio Kuwayama told a press briefing on Tuesday. 

"Facing the elections, the economy will move faster, just like what happened in 2004. It's very promising and we are optimistic *about meeting the target*," he added. 

January's figures seem to have justified his optimism, with the company selling 5,630 units - around 15 percent higher from a year earlier. 

KTB defied the odds as Gaikindo reported during the same period (January) that all auto sales dropped 24 percent to 32,167 in 2009 from 42,489 units a year earlier. 

In 2008, KTB gained a 42 percent increase in sales compared to 2007 when they sold 61,547 units. 

The company has relied on commercial vehicles, in particular Fuso trucks which account for 60 percent of its total sales, and light commercial vehicles (37 percent). 

The remaining 3 percent is for passenger cars comprising Grandis multi purpose vehicles, Strada Triton sports utility vehicles and Lancer sedans. 

"We have launched our revitalization program by the end of 2007 to increase the passenger cars segment. Our target is to raise awareness *of Mitsubishi* and show our presence to our customers," KTB director of marketing Rizwan Alamsjah said. 

To help cope with the current adverse economic conditions, KTB also plans to soon raise the prices of its vehicles by between 20 percent and 30 percent. 

On Jan. 1, some of the country's leading carmakers already raised their prices by between 5 percent and 13 percent. 

For 2009, Gaikindo has estimated auto sales may decline to as low as 405,000 units, from last year's 605,000.

GarudaFood plans to boost sales by 30%, but delays IPO

Ika Krismantari, The Jakarta Post, Jakarta | Wed, 02/25/2009 1:52 PM  

Food producer, PT GarudaFood, is seeking to increase its sales by 20 percent this year as demand for food and beverages is expected to remain robust despite the global financial crisis. 

Managing director Hartono Atmadja said Tuesday that he was upbeat about the company' prospects, saying sales are targeted to hit Rp 3.65 trillion (US$306.6 million), from Rp 3.04 trillion last year. 

"The growth will be supported by *the sales from* biscuits and beverage products," Hartono said. 

Sharing his optimism, the company forecasts that the country's food industry will grow by up to 15 percent this year, as the demand for food will never stop. 

"We have not even incorporated the *additional* revenue the industry would get from the decline in imported products," Hartono said. 

The government has introduced limitations on the imports of unnecessary products earlier this year by cutting down the number of seaports and airports eligible as the entry point for certain products, with the aim of controlling smuggling products as well as the protecting of domestic markets. 

Under the policy, five categories of goods, namely garments, footwear, toys, electronics, food and beverages can only enter the country through five designated ports and some international airports. 

The Indonesian Food and Beverage Association (Gapmmi) has said that local industry would benefit from the import limitation policy and this could boost local sales by up to 15 percent. 

On the company's plan to go public, Hartono said the company has decided to delay the plan until the first semester of 2010, to wait for a better market environment. 

Garuda had planned to offer a 15 per cent stake to the public in the third semester of last year through an initial public offering (IPO). 

Garuda financial director Samuel Triswandi said the company would still expect to secure Rp 1 trillion from the IPO. 

Last year, Garuda booked a 23 percent rise in revenue up to Rp 3.04 trillion, whilst pushing up its net profits by 74 percent. 

The company however, refused to mention the value of its net profits. 

Data from the Central Statistic Agency (BPS) show that as of the third quarter in 2008, the food industry grew by 10.4 percent from the same period a year earlier. 

Garuda is a subsidiary of Tudung Group, a holding owned by businessman Sudhamek AWS. 

Tudung Group was established three years ago after Sudhamek decided to expand its business to other business sectors, including palm oil.

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PLN secures part of the loans needed for 10,000 MW program

The Jakarta Post, JAKARTA | Wed, 02/25/2009 11:12 AM 

State power firm PT PLN has secured part of the loans needed for its key 10,000 MW program, despite speculation that Chinese banks are holding back on commitments. 

PLN president director Fahmi Mochtar said the power company has just secured a further loan disbursement from the China Export Import Bank (Chexim) for its 10,000 MW power program, which the Chinese investors have pledged will now be made available. 

“We received an additional disbursement of around US$90 million last week from Chexim for our power plant projects in Suralaya and Paiton,” said Fahmi on Tuesday. 

He said that PLN was still in talks with other Chinese banks to renegotiate their commitment terms. 

“We’ve sent a team to discuss the matter with Chexim and they have agreed to increase the drawdown,” said Fahmi. 

The investors — Bank of China, the China Development Bank and the Chexim Bank — have agreed to provide PLN with loans amounting to about $1.48 billion. 

Chexim has so far committed  disbursements of $280 million  for the Suralaya power plant and $330 million for the Paiton power plant. 

The Bank of China has committed to disburse $600 million for the Indramayu power plant, while the China Development bank has committed to disburse $270 million for the Rembang power plant. 

However, the investors have suspended temporarily the release of further  disbursements  saying that they want an increase in interest rates, above those agreed before. 

There is growing speculation that the  row between state airline PT Merpati Nusantara and China’s Xi’an Aircraft Industry may have played a part in holding back  loan disbursements for the PLN  10,000 MW crash energy program. 

Energy and Mineral Resources Purnomo Yusgiantoro told House of Representatives Commission VII  Monday that the Chinese investors wanted the Indonesian government to help settle the Merpati-Xi’an dispute, before they would release all remaining disbursements of loan commitments to PLN. 

“It’s like the loan commitment is being held ‘hostage’,” Purnomo said at that time. 

The Merpati contract dispute started in 2006, when the airline signed a contract with Xi’an for the purchase of 15 Xinzhou-60 aircraft at $15 million each, using a soft-loan facility from the China Export Import Bank. However, after the delivery of two aircraft in 2008, Merpati failed to honor its part of the contract due to its financial problems. Xi’an has said it might take the dispute to  international arbitration. 

The State Ministry of State Enterprises has set up a team, led by Sahala Lumban Gaol — one of the deputies to the minister — to renegotiate the Merpati-Xi’an aircraft contract, but little or no concrete progress has been made on this so far. 

Due in part to its financial problems, Merpati is now placed under a financial restructuring program run by the Asset Management Company (PPA). 

Excluding last week’s deal, PLN have managed to secure around 65 percent of the total financing needed for the 10,000 MW program, which covers the construction of a total of 35 power plants, 10 of them in Java and Bali, with the remaining 25 being off the two main islands. 

Fahmi said recently that the program in total needed $8 billion to be completed. PLN had already secured $5.5 billion and was seeking another $2.5 billion both from local and foreign banks. 

So far contracts for 32 power plants have been signed, and most of these have now  reached the construction phase.  About 7,000 megawatts are scheduled to start operating in 2010, while the remaining 2,000 megawatts  are delayed until 2011 and 2012. 

President Susilo Bambang Yudhoyono has urged PLN to look harder for the financing of the program  with local banks, rather than only foreign investors. 

To anticipate increasing electricity demand, the government has been also been preparing a second 10,000 MW accelerated program, part of which will be directly  PLN’s responsibility, while the rest will comprise independent power producers (IPPs). 

PLN has said that the tenders for some of the projects in the second program would start to be issued at the beginning of the second half of this year. Unlike the first program, which is entirely designated for coal-fired power plants, the second program  includes 12 percent of total power generated by hydro plant, 48 percent by geothermal plant, and 14 percent by gas , plus 26 percent by coal.  (fmb)

RI-China airplane deal in stalemate

The Jakarta Post | Wed, 02/25/2009 5:50 PM  

The row between Jakarta and Beijing intensifies as the latest negotiation on the purchase of 15 airplanes from China’s Zian Aircraft Industry Company (Xian) by Indonesia’s state airline PT Merpati Nusantara Airlines ends with a deadlock. 

“The government met with Xian representatives last week, but failed to reach a new deal,” State Minister for State Enterprises Sofyan Djalil told reporters in Jakarta on Wednesday. 

Sofyan said the meeting discussed the possibility for renewing a deal, which was signed back in June 7, 2006, on the airline purchases. 

Under the initial deal, Merpati agrees buy 15 MA-60 airplanes at a price of US$15 million each. So far Merpati had only bought two airplanes and refrained for paying for the rest after finding that the planes were overpriced. 

Merpati suspects a price mark-up behind the deal as the normal price for a plane with the same specification as the MA-60 is about $11 million at the international market. 

Furious with Merpati bailing out, Xian demands the company to pay Rp 1 trillion ($84 million) in penalty while Beijing is considering canceling its plan to finance the government’s 10,000 megawatt power plant projects. 

Sofyan said the government would continue to engage in negotiation with the Chinese government, but with the main priority of protecting Merpati from losses. 

“We must not let Merpati suffer any losses,” he said. (and)

Stimulus package approved, raised

Aditya Suharmoko, The Jakarta Post, JAKARTA | Wed, 02/25/2009 8:45 AM  

Legislators approved late on Tuesday a provision in the 2009 state budget that enables the government to unleash its much-needed stimulus package, and even increased it by Rp 2 trillion (US$176 million) to help shield the economy from the global economic meltdown. 

The provision centers on Article 23 of the state budget, which can be used under "emergency" conditions only. 

"The emergency conditions constitute, among others, economic growth plunging 1 percent below the government's assumption and the significant rise in government bond yields," said Suharso Monoarfa, vice chairman of the House of Representatives' budget committee. 

The Rp 2 trillion increase, which puts the total stimulus at Rp 73.3 trillion, will be allocated to finance infrastructure projects, which lawmakers consider of high importance to generate employment to protect "people's prosperity", Finance Minister Sri Mulyani Indrawati said in a hearing with the committee. 

Suharso said ministries, government agencies and regional administrations that failed to execute the stimulus for the sake of the people would have their budget allocation cut in the 2010 state budget. 

The increase means the budget deficit is raised to Rp 139.5 trillion, or 2.5 percent of the GDP. The figure is Rp 88.2 trillion higher than the Rp 51.3 trillion stated in the 2009 budget. 

The government will have to finance it by using Rp 51.3 trillion of unused funds from last year's budget and seek additional loans worth Rp 44.5 trillion and program loans worth Rp 1.1 trillion, Suharso said. 

Mulyani said the economy was expected grow by 4.5 percent in 2009, far slower than the 6.1 percent booked last year. 

Exports may contract by 3 percent this year due to the slowing economies of Indonesia's trade partners. 

Investment will also likely be hit, down to 5.9 percent from the 7.5 percent previously expected as the liquidity crunch halts flows of money. 

All these factors, Mulyani pointed out, would contribute to a higher rate of unemployment and poverty. 

As of January, export-oriented industries had laid off 24,790 workers, and were planning to lay off another 25,000 in the coming months. 

However, she said, the impacts to the economy would be much heavier if the government failed to come up with the stimulus. 

With all economic indicators taking a beating, the unemployment rate is predicted to soar to 8.87 percent of Indonesia's 230 million population if the government does not act immediately.

The economic stimulus package, which is expected to take full effect as early as March, is estimated to contain the rate to less than 8.34 percent. 

The stimulus is aimed at maintaining private consumption, the main driver of the economy, growing at between 4 percent and 4.7 percent, Mulyani said. 

Of the total, Rp 12.2 trillion to be allocated to infrastructure projects and empowerment programs for people living in rural areas, considered the most efficient way to cushion massive layoffs.

Indonesia investment agency says FDI jumps 61 pct in Jan

Forbes.com, 02.24.09, 07:14 AM EST 

JAKARTA, Feb 24 (Reuters) - Foreign direct investment in Indonesia jumped 61 percent to 6.39 trillion rupiah ($536 million) in January from a year ago, the state investment agency said on Tuesday, despite the global economic downturn. 

Muhammad Lutfi, investment board chairman, said that the energy, infrastructure, agri-business and agriculture sectors are the main areas expected to attract foreign investment this year. 

Domestic investment rose by a third to 760 billion rupiah in January from a year ago, with total investment up 58 percent to 7.15 trillion rupiah. 

Indonesia, which holds parliamentary and presidential elections this year, has tried to make its investment climate more attractive, but analysts have warned that the country, which is a major exporter of commodities such as palm oil and rubber, could see a slowdown on the back of a slide in commodity prices. 

Investment in Indonesia rose 15.5 percent to $17 billion in 2008, below the target of around $20 billion rupiah, reflecting the worsening global economic conditions. 

The government has announced a fiscal stimulus package, including spending on infrastructure and other projects in order to boost growth and create more jobs. 

It has forecast economic growth of 4-5 percent in 2009, down from 6.1 percent in 2008.

Related Article:

Investment jumps 61% in January

SBY Launches Projects for Aceh

The Jakarta Globe, Sally Piri & Nurdin Hasan, February 23, 2009 

President Susilo Bambang Yudhoyono on Monday inaugurated 13 infrastructure projects worth Rp 715.3 billion ($60.1 million) in Aceh Province, as part of the rebuilding after the deadly tsunami that swept the province in 2004, killing almost 170,000 people. 

The projects were officially inaugurated by the president in a ceremony at the Blang Padang field in the heart of the Aceh capital of Banda Aceh, attended by some 4,000 people, including international guests. 

During Yudhoyono’s two-day visit to the province, he inaugurated projects mostly constructed by the Aceh-Nias Rehabilitation and Reconstruction Agency, or BRR, including the Aceh Tsunami Museum, the Ulee Lheue Seaport, the Banda Aceh Land Transportation Terminal, the Aceh Thanks The World International Park and the Keuliling water dam in Aceh Besar district. 

“I hope the infrastructure projects — which were either built through cooperation between BRR and international donors, or built by the government at a total cost of some Rp 715 billion — can be used to enhance the economy and people’s prosperity,” he said. 

The government has spent a total of Rp 22 trillion to rebuild Aceh, he said. 

As BRR will end its term in April, Yudhoyono said the remaining assets of about Rp 3.5 trillion that the agency had managed, must continue to be used to rebuild Aceh and Nias. 

Widodo AS, the coordinating minister of political, legal and security affairs, who is also a BRR adviser, said that Rp 1.78 trillion from BRR funds would be used for rebuilding designated governmental agencies, and Rp 1.663 trillion for continuing the rehabilitation of Aceh and Nias. 

A total of Rp 1.386 trillion was earmarked for Aceh, while Nias will get Rp 277.45 billion. 

Widodo said that in order to continue BRR’s work, the government had formed a new agency to replace BRR, to be chaired by Paskah Suzetta, the head of the National Plan Development Body, or Bappenas. 

The governors of Aceh and North Sumatera provinces will assume responsibility for future projects at their provincial level, he said. 

“The work period of the new agency will end December 31, 2009,” Widodo said. 

Dozens of college students staged a protest during the ceremony around 2 kilometers from the Blang Padang field where the inauguration was taking place, urging the government to remain committed to the peace process. 

“The president should remain committed to end the propaganda and the intimidation that has often occurred in Aceh in the past few days,” said Sapriandi, the coordinator of the rally. 

The students were referring to a series of violent incidents, including shootings and bombings in Aceh in recent weeks. 

Two students were arrested after a scuffle between protesters and police officers, but were later released without charge.

Rio Tinto says committed to Indonesia nickel project

Reuters, Tue Feb 24, 2009 11:10am GMT  

JAKARTA, Feb 24 (Reuters) - The Indonesian unit of Rio Tinto Ltd/Plc (RIO.AX)(RIO.L) remains committed to a $2 billion nickel project in Indonesia's Sulawesi island, although is waiting for more clarity under a new mining law, an executive said on Tuesday. 

Many global resource firms have been reviewing investment decisions due to a dive in mineral prices, while Rio Tinto has been looking to sell assets in a number of countries to cut its heavy debt load. 

"At this stage, we have no intention of pulling out of the project," Mark Hunter, executive manager of projects at PT Rio Tinto Indonesia, told reporters. 

"Once we see the implementing regulation, we will then review the project," he said. 

Indonesia passed a new mining law in December last year under which the current licensing via a contract of work, favoured by major mining firms, has been replaced by mining permits running for shorter periods. 

Rito Tinto previously applied for a contract of work, but under the new law, along with other firms with applications underway, can continue the project with a mining permit. 

The firm also does not have to go through a tender process, although the government is currently drafting new regulations and has said new permits would not be approved until this was done. 

Rio Tinto has said it plans to spend up to $2 billion on the Central Sulawesi project, which is estimated to have a capacity to produce 46,000 tonnes of nickel metal a year. 

Hunter said the firm still felt the project was a feasible long-term investment despite falling nickel prices. 

Nickel prices MNI3 have slumped more than 80 percent to about $9,450 a tonne since hitting a record high of $51,800 in May 2007, as output cuts by miners have failed to keep pace with the drop in demand from stainless steel producers. 

Another global resource firm, BHP Billiton Ltd (BLT.L), late last year scrapped a study into developing a nickel project in eastern Indonesia, after failing to get a contract in time. 

Initially a resource at Gag Island was being evaluated and then a second resource at Buli in Halmahera was included, following a conditional agreement to form a joint venture with state mining firm PT Antam Tbk (ANTM.JK). 

The agreement with Antam was conditional on obtaining government work permission for the Buli resource by Oct. 31, which was not achieved, BHP said. 

Indonesia has some of the world's largest deposit of gold, nickel, tin coal and copper with international mining firms, including Freeport-McMoran Copper&Gold (FCX.N) and Newmont Mining Corp. (NEM.N), already having operations in the country. 

The Indonesian Mining Association has said mining investment in Indonesia may drop below $1 billion this year and there may be no fresh projects as metal prices fall and miners await details from the new mining bill. 

But the government is more optimistic and expects mining and geothermal investment to reach more than $2 billion this year up from $1.65 billion in 2008. 

(Reporting by Fitri Wulandari; Editing by Ed Davies)

Textile Producers Flooded with Election Orders

Tuesday, 24 February, 2009 | 13:08 WIB 

TEMPO Interactive, Jakarta:The sales of textile and textile products have increased by almost 15 percent because of the 2009 Election momentum. 

Ernovian G. Ismy, the Indonesian Textile Association Secretary General, said that orders from the elections had gone up by between 10 percent and 40 percent compared to the previous election. 

“The demand previously increased by 30 percent,” said Ernovian at the Industry Department in Jakarta, yesterday (23/2). 

According to Ernovian, one party that has ordered in large quantities is Gerindra, which has ordered tee shirts and banners. 

The party ordered five million tee shirts--costing Rp7.000 each--from a textile producer in Bandung, West Java. 

Benny Soetrisno, the Indonesian Textile Association Chairman, said he hoped members would earn Rp5 trillion from the election. 

He stressed however that his association members have requested cash payments. 

“We do not accept payment in installments. We only make orders according to the amount paid,” said Benny. 

The reason for this, he continued, was because in the previous election many textile producers suffered financial losses as there were some parties that failed to pay the amounts required. 

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