Indonesia to Offer PPP Projects Worth $52b

Jakarta Globe, Eko Adityo Nugroho, Nov 06, 2014

Jakarta's government has set the capital's Decent Living Index at Rp 2.5 million
 ($206) for 2015, a strong signal to workers that minimum wages are unlikely
to increase substantially. (Reuters Photo/Beawiharta)

Jakarta. The Indonesian government plans to offer 43 infrastructure projects worth $52 billion to private investors next year, according to an official of the National Development Planning Ministry.

Bastari Panji Indra, a director at the ministry, said the projects will be offered under public-private partnership (PPP) schemes.

The projects offered include airports, monorail and, light rail transits, toll roads, coal transportation trains, ports, and water supply.

The government has published details regarding the projects in the Public Private Partnership Book 2015, which guides infrastructure development in the country.

Speaking on the sideline of Indonesia Infrastructure Week late on Wednesday, Bastari said of the 43 projects, eight are classified as “ready” to be offered, 11 are   “prospective” and 24 are marked as “potential.”

Bastari said the government will offer 10 major airport projects to private investors, including Juwata in North Kalimantan, Tjilik Riwut in Central Kalimantan and Fatmawati Soekarno in Bengkulu.

“Apart from airports, there are also a monorail project, coal transportation by train, water supply and six ports,” Bastari said.

Citing the Public Private Partnership Book 2015, he said the government plans to build an express train line connecting the Halim Perdanakusuma Airport in East Jakarta to the Soekarno-Hatta International Airport in Tangerang, Banten, in order to ease passenger commuting.

The director also announced a light rail transit system in Bandung, West Java, new train networks for South Sumatra, three water supply projects in Semarang, Central Java; Pekanbaru in Riau, and Pondok Gede in Bekasi.

Bastari also flagged a project for waste disposal processing in Bogor and Depok.

Deputy Minister Dedy Supriadi Priatna, who is charged with infrastructure affairs, said the government plans to revise the PPP scheme to attract investors, including with the introduction of a performance-based annuity scheme.

Under such a scheme, private investors contribute to development, financing and the operation of a project with a given concession time.

Once the project is open for commercial use, investors will receive regular payments for providing the service to the public, with a performance standard agreed to by both parties.

The new government under President Joko Widodo has a lot of research to do into the infrastructure sector.

Poor road and toll road conditions, over-crowded airports, over-capacity ports, and a lack of train networks have been cited as the main stumbling blocks to strong and sustained economic growth.

The previous administration under Susilo Bambang Yudhoyono repeatedly offered infrastructure projects to tender, but only a few have been completed.

Poor preparation of projects, complex bureaucracy and low return in investment for the private sector remain major factors that deter investor interest.

Indonesian Military Signs $325 Million Airbus Deal

Jakarta Globe, February 15, 2012

Singapore Air Force’s F-15 and F-16 fly by each other during
the aerial  display on the opening day of the Singapore Airshow
on Tuesday. (AP Photo/Bryan van der Beek)

               

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Singapore. Indonesia on Wednesday signed a $325 million contract with Airbus Military for nine C-295 transport planes to be used for defense, logistical and humanitarian purposes.

The first plane will be sent to the Southeast Asian nation this year, with the remainder scheduled for delivery by 2014.

“This is a proud moment for our country as well as for the Indonesian aerospace industry,” said Indonesian Defense Minister Purnomo Yusgiantoro, at the signing of the deal at the Singapore Airshow.

“The C-295 provides the ideal capacity to respond to Indonesia’s current and future military and humanitarian transport needs,” he added.

The model is a medium-sized transport plane which can be configured for different operational purposes such as ground surveillance, anti-submarine warfare and search and rescue operations.

The planes will be used for “a variety of roles including military, logistical, humanitarian and medical evacuation missions,” according to a statement.

Yusgiantoro did not rule out future purchases of the C-295, saying other branches of the armed forces were interested in the plane.

“The police for instance... are also interested in this. And you know that (the) 295 version that we ordered now is for the Air Force, and probably the army is also interested,” he said.

The deal includes a collaboration between state-owned aviation firm PT Dirgantara Indonesia (PTDI) and Airbus Military, with Indonesia manufacturing parts for the C-295.

The partnership will allow the Indonesian firm to “grow its aerospace business as a tier-one supplier,” said PTDI Chief Executive Budi Santoso.

“This will position PTDI on the global aerospace scene and allow us to enhance our skills and workforce,” he added.

Indonesia’s defense budget totalled $6.39 billion in 2011, ranking second in Southeast Asia behind Singapore.

Agence France-Presse

Boeing Finalizes $22.4b Deal With Lion Air for 230 Planes

Jakarta Globe, Royston Sim - Straits Times Indonesia, February 14, 2012

Boeing announced a $22.4 billion deal with Lion Air on Tuesday afternoon
for 230 airplane orders — the largest deal in its history in terms of dollar value
and total number of airplanes. (Antara Photo/Lucky)  

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Boeing announced a $22.4 billion deal with Lion Air on Tuesday afternoon for 230 airplane orders — the largest deal in its history in terms of dollar value and total number of airplanes.

This deal alone has exceeded the $10 billion of deals signed at the previous Airshow in 2010.

Jakarta-based Lion Air and Boeing finalized an order for 201 737 Maxs and 29 737-900 ERs.

Lion Air will also acquire rights to purchase another 150 airplanes.

The Singapore Airshow runs from Tuesday till Sunday at Changi Exhibition Centre

Related Article:

Indonesia Wants to Change Drug Tests for Pilots

Russian Railways to Build $2.4b Coal Line in Indonesia

Jakarta Globe, February 07, 2012

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State firm Russian Railways plans a $2.4 billion train line on Indonesia’s Borneo island that will initially be used to transport coal, an Indonesian government official said on Tuesday.

The line in East Kalimantan province is expected to start operating by the first quarter of 2017, and will help improve the decrepit infrastructure on the island that has hampered exports of key commodities and put a strain on economic growth.

“The first stage of the railway will be meant for coal, but hopefully we can also use it for crude palm oil, plantation harvests, rubber and people,” Awang Faroek, the governor of East Kalimantan, told a news conference in Jakarta.

The first phase of development, which will cost $1.7 billion, will be for 185 kilometers of railway, with another 60 kilometers added during a second phase.

The railway’s capacity is expected to be 20 million metric tons of coal per year for the first phase, added Andrey Shigaev, a director at the project, which will be funded by both private investors and Russia’s state development bank Vnesheconombank.

Southeast Asia’s largest economy is the world’s top producer of palm oil, the biggest exporter of refined tin and thermal coal, a major nickel miner and home to the world’s second-largest copper mine and largest gold mine. The country’s coal and palm oil assets are mostly located in Kalimantan.

The railway will connect an area close to the Balikpapan port through the Kutai Barat regency to the border to Central Kalimantan province, where the railway is expected to be expanded in the second phase of the project.

“The Russians have expertise in heavy haul rail lines,” said an Australia-based analyst. “Russian Railways are a pretty big operator of rail infrastructure, so I would guess it’s the rail company looking to expand.

“Russia itself doesn’t need to buy coal from anyone, they have a lot of coal of their own so from a strategic point of view, they don’t need to do it.”

Indonesia’s thermal coal output is seen at 350 million metric tons this year, according to industry estimates, fueled in large part by power demand in China and India.

The UAE’s MEC Holdings is currently building a railway to export coal from its Kalimantan mine project, and leading Indian conglomerate Reliance ADA Group is set to invest between $5 billion and $10 billion in mining infrastructure.

“Traditionally, coal in Indonesia has been transported by pretty fragmented means — trucks, small private short railways, barges,” the analyst added.

“It does signal that the producers there and the government is getting a bit more serious in terms of their commitment to scale infrastructure.”

Infrastructure development in Indonesia has been slowed in the last decade because of uncertainties in acquiring land.

However, in December the parliament passed a land bill designed to speed up land acquisition for state projects deemed in the public interest as a way to address the problem.

Economic growth in Indonesia was 6.5 percent last year — it’s highest level since 1996 — while the country attracted record foreign direct investment of close to $20 billion.

Reuters

Indonesia Passes Land Acquisition Bill

Jakarta Globe, December 16, 2011

Indonesian members of parliament approved the final draft of a long-awaited
 land bill on Wednesday that investors hope will speed up land acquisition for
 government infrastructure projects in Southeast Asia’s biggest economy.
(Antara Photo)     

         

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Jakarta. Indonesia’s House of Representatives on Friday approved a long-awaited land acquisition bill investors hope will give a big boost to government infrastructure projects in Southeast Asia’s top economy.

The bill is an attempt to break the bottleneck in infrastructure development that has long been seen as holding back growth in Southeast Asia’s top economy.

It also presents major investment opportunities in a country where roads, ports and airports are overloaded.

The House, also known as the DPR, on Wednesday signaled it would pass the bill. 

A day later, Fitch Ratings gave Indonesia an investment grade rating, which could act as a spur to much-needed investment. 

Fitch had cited weak infrastructure as one reason why it had delayed the upgrade.  

The controversial bill was passed despite a barrage of interruptions from members of the 560-strong parliament.

Shares in Indonesian construction, property and toll road firms have rallied this week on hopes the bill would be passed.

Bankers say the delay in passing the bill has been holding up the dispersal of loans to companies for infrastructure development this year.

The main toll road operator, Jasa Marga had described the impact of the delay on its business as like a race car waiting for a track.  

Sucorinvest sees the bill as positive for firms such as PT Wijaya Karya, PT Citra Marga Nusaphala Persada and PT Adhi Karya. 

Though the bill only applies to government projects, it is likely to benefit privately operated projects on government-bought land.

The government is relying on about $150 billion of private investment between 2010 and 2014 to overhaul its roads, railways and ports.

Without better infrastructure, analysts say the country’s growth may start to slow because of capacity constraints. 

Human rights groups say the bill disregards traditional land rights and could lead to more conflict over land and forced expropriation of property.

Reuters

Indonesia Legislators Give Green Light to Land Bill

Reuters

PT KAI receives US grant to upgrade railway signal system

The Jakarta Post, Jakarta, Thu, 09/15/2011

State railway firm PT KAI on Thursday announced that it had received a grant worth Rp 5.2 billion (US$598,000) from the US Trade and Development Agency (USTDA) to be spent on a strategic plan development study to improve its telecommunication and signaling system.

The grant was handed by US Ambassador to Indonesia Scot Marciel to PT KAI chief director Ignasius Johan, in Bandung on Thursday.

The railway signal system, operated by the train travel chief, is a guide for train drivers, telling them when to start trains, when to stop them and when to travel at certain speeds.

PT KAI signals, telecommunication and electricity deputy chief Ira Nevasa said the company hoped the study would result in a safer, more efficient and better quality operating procedure.

Russia to invest $2.5b for railway construction in Kalimantan

The Jakarta Post, Jakarta | Mon, 08/01/2011

Russia is planning to invest US$2.5 billion for the construction of a railway connecting the Indonesian provinces of Central Kalimantan and East Kalimantan, an official said on Monday.

“The length will be 185 kilometers. It will be used to transport coal,” Rizal Affandi, the deputy for international cooperation at the Coordinating Ministry for the Economy, said after a meeting between Indonesian Coordinating Minister for the Economy Hatta Rajasa and Russian Ambassador to Indonesia Alexander A. Ivanov.

Rizal said the Indonesian government aimed to complete the project within three to five years.

He added that the project was part of the government’s Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI).

Russia agreed to invest after the visit of a number of ministry officials to Russia a while ago, Rizal said, as quoted by tempointeraktif.com.

Indonesia Opens Tender For $15.5 Trillion Jakarta MRT Project Official

NASDAQ

JAKARTA -(Dow Jones)- PT Mass Rapid Transport Jakarta Friday opened the tender for the construction of the first commuter rail line in the country, which is estimated to cost IDR15.5 trillion ($1.8 billion) an official said.

"This is for the construction of the first section, for which IDR12 trillion will be financed by JICA," Railway Director General Tunjung Inderawan told reporters, referring to the Japan International Cooperation Agency.

"Hopefully the construction can start this year and be completed by 2014," Inderawan added.

PT MRT Jakarta announced in several local newspapers Friday that the main contractors for the surface and underground sections of the rail line must be Japanese companies, while the subcontractors may be companies from any country.

Applications must be submitted by May 31, the company said.

Indonesia's capital badly needs a mass rapid transport system as its road network hasn't kept up with the growing number of cars. The city's notorious traffic jams are estimated to cause around IDR12.8 trillion in losses annually.

President Susilo Bambang Yudhoyono has also ordered a study into moving the capital to another area to help ease the chronic traffic problems.

-By Joko Hariyanto and I Made Sentana, Dow Jones Newswires; +62 21-39831277; i-made.sentana@dowjones.com

United States Companies Eye Railways, Airports in Indonesia: Official

Jakarta Globe, April 04, 2011

United States firms are eying investments in Indonesian infrastructure
such as railways and airports but are concerned about graft and a lack of
protection of intellectual property rights, the US under secretary of
commerce said on Monday. (Reuters Photo)

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United States firms are eying investments in Indonesian infrastructure such as railways and airports but are concerned about graft and a lack of protection of intellectual property rights, the US under secretary of commerce said on Monday.

Under President Barack Obama, the United States is trying to improve ties with the world’s most populous Muslim country, including through investment and by boosting bilateral trade of $23 billion a year, which is two thirds of Indonesia’s trade with China.

“We have some American companies that are interested in supporting Indonesian transportation infrastructure needs, particularly in the railway system,” Francisco Sanchez said in an interview with Reuters.

He declined to identify the companies.

Indonesia’s government plans next week to offer investors $32 billion worth of infrastructure projects, including a railway, toll road and power plant, as Southeast Asia’s largest economy struggles to fund an overhaul of its transportation network.

Inadequate infrastructure is seen as both an investment opportunity and an obstacle to growth, and was cited by Fitch Ratings last month as a key risk to the chances of the country winning an investment grade rating in the next 12-18 months.

Other sectors US investors are interested in are health care, agriculture and green energy, said Sanchez, in Jakarta to explore closer commercial ties.

Indonesia opened up health care for foreign investment last year, and is looking to boost food security and expand geothermal power, where U.S. energy major Chevron is already an investor.

Foreign direct investment has picked up in Indonesia in the past year, but there has been far more investment from Asia than from US or European firms, with Japan having pledged more than $50 billion in infrastructure investment.

Indonesian President Susilo Bambang has vowed to tackle corruption, a concern for many investors, though progress appears to have stalled.

Sanchez said further reforms on transparency were needed to attract more investment.

“Corruption, protection of intellectual property rights and overall transparency, all of these will have more long-term impact and positive impact on the Indonesian economy,” he said, adding businesses also wanted an opportunity to have a say on proposed regulations and laws.

Policy flip-flops have been a major concern for investors, particularly in the resources sector with rules aimed at reducing foreign ownership or involvement.

ExxonMobil has been in protracted negotiations over gas fields, while Indonesian regional authorities are competing with the national government to grab a stake in a nickel mine operated by US miner Newmont.

Reuters

France confirms plan to invest in Bandung railway project

Antara News, Fri, February 25 2011

Jakarta (ANTARA News) - France has confirmed its intention to invest 175 million US dollars in Bandung`s Metropolitan Railway project that will connect Padalarang and Cicalengka districts, West Java, a minister said.

"France has confirmed its intention to invest 175 million US dollars in the Padalarang-Cicalengka railway project that is designed to overcome the region`s chaotic traffic congestion problem," Coordinating Minister for Economic Affairs Hatta Rajasa said here Friday after a meeting with French Economic, Finance and Industry Minister Christine Lagarde.

Hatta Rajasa said France was also interested in urban development in Surabaya city, East Java.

On a national scale, France would like to cooperate with Indonesia in developing geothermal energy sources and in extreme climate monitoring efforts being managed by Indonesia`s Meteorology Climatology and Geophysics Agency (BMKG).

"Besides, they are also interested in geothermal energy and environment based industries which will be a government-to-government issue," he said.

France had also confirmed its plan to participate in a nickel smelter project and nickel processing industries in Halmahera, North Maluku, valued at around 5 billion US dollars, through a multinational company, Eramet.

To participate in the nickel smelter project, France was asking for an operation permit valid for up to 50 years while Indonesian government policy only allowed foreign companies to operate for 30 years only with the possibility of extending it every 10 years, Hatta said.

Hatta also hoped the French government would also contribute to the development of Indonesia`s economic regions with an investment of 10 billion US dollars.

Meanwhile, Minister Christine Lagarde said the French economic delegation she was leading was the first to come to Indonesia in the last 14 years. France wanted to step up its investment in and its economic cooperation with Indonesia through ministerial level talks.

"We have also met Vice President Boediono and discussed investment in energy, transportation, water conservation, climate monitoring, railroads, construction and retail companies such as Carrefour," she said.

The French economic delegation`s purpose was also to increase the volume of trade between the two countries which currently still stood at the relatively low figure of about 2.5 billion US dollars.

Editor: Heru

DHL Supply Chain builds multi-user warehouse

The Jakarta Post, Jakarta | Thu, 02/17/2011

PT DHL Exel Supply Chain Indonesia, a subsidiary of Deutsche Post DHL, started the construction of a multi-user warehouse worth €3 million (US$4.07 million) in Cililitan, East Jakarta, on Thursday.

The company's managing director, Abdul Rahim Tahir, said the 10,000-square meter facility, intended for customers in the automotive and technology industries, would be one of the largest of its kind in Indonesia.

“We are sure the need for multi-user warehouses will continue to grow in line with the expansion of various industries as indicated by strong economic growth. That's why we're investing in building more warehouses,” he said.

Tahir added that his company also planned to expand its business networks in Indonesia in the next two years by building other warehouses in nine locations — Aceh, Batam, Jambi, Cirebon, Probolinggo, Tarakan, Palangkaraya, Samarinda, and Manado — with a total investment of between €20 million and €30 million.

The company currently operates in 17 locations across Indonesia. (lnd)

Toyota Plans Low-Cost Car for Traffic-Choked Indonesia

Jakarta Globe, Francezka Nangoy, Ardhian Novianto & Reuters | February 17, 2011

Toyota, through subsidiary Daihatsu, plans to invest 20 billion yen ($238.9 million) to build a factory in Indonesia to produce low-cost cars, Reuters reported on Wednesday. But far from offering freedom, there are fears that a surge of small autos may shut down the capital’s roads.

About 750,000 vehicles are expected to be added this year
to Jakarta's already-choked streets. (Antara Photo)

More car sales will only add to the daily traffic jams in Jakarta, an analyst said. The city administration has predicted total gridlock by 2012, based on estimates of population growth and 15 percent annual rises in car sales.

Daihatsu, which offers vehicles aimed at lower-income consumers, is eyeing production capacity of 100,000 cars per year. The factory is scheduled to begin operations in 2013, producing 50,000 cars in its first year.

The model will reportedly be smaller than Eitos, a low-cost car Toyota launched in India last year, with a sticker price between 800,000 and 900,000 yen.

Toyota Astra Motor and Astra Daihatsu Motor said they had yet to receive details from Japan.

“Daihatsu Indonesia has not received any formal plan from the parent company. Any further details about the new factory have yet to be specified,” said Amelia Tjandra, marketing director of Astra Daihatsu Motor.

Johnny Darmawan, president director of Toyota Astra, also said he hadn’t received notice. “I guess Daihatsu will be the producer for the new car. Daihatsu is the producer for cheaper car types. It could be another collaborated product, such as Avanza and Xenia — similar in design, but aimed for different market segments,” he said.

Jakarta Police data showed total vehicles in Jakarta reached 11.36 million in 2010, 8.24 million of which were motorcycles and 3.11 million were cars and trucks.

Amelia told the Jakarta Globe recently that even in a worst-case scenario — which would include private vehicles being prohibited from buying subsidized fuel and Bank Indonesia raising its benchmark interest rate amid inflationary pressures — car sales would match last year’s pace, a record 764,710 units.

That would put about 12 million vehicles on Jakarta’s chronically jammed roads.

Gunawan, a director at auto loan company Indomobil Finance, said most new cars sold in Indonesia cost around Rp 130 million to Rp 200 million ($14,600 to $22,400). “In the future, I believe car sales will keep growing because the demand for transportation will always there,” he said.

However, Gunawan claimed increasing car sales were not the cause of Jakarta’s traffic woes. He said a lack of viable mass transportation was forcing people to buy their own vehicles to get around.

Darmaningtyas, a director at the Transportation Study Institute, a non-governmental organization, warned that cheap cars would only make traffic worse.

“Small cars are not a solution to traffic congestion. Instead of motorcycles, small cars will be the common people’s choice. Therefore, there will be more cars on the streets and more congestion,” he said.

China is also aiming for a slice of the Indonesian market. Chinese carmaker Geely launched the budget price Panda in January. At Rp 98 million, it is the cheapest 1,300cc-class vehicle in Indonesia, Geely said.

R-Power to invest $5bn in Indonesia

TNN, Jan 25, 2011, 02.38am IST

MUMBAI: In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billion (around Rs 22,000 crore) in two projects-one each in South Sumatra and Jambi provinces. The investment covers coal mining, setting up of railway lines, ports and power projects.

According to a senior company official, who did not wish to be identified, the project in South Sumatra involves development of a 2- billion MT coal mine, a 200-km railway line, a port and a 2,000-MW power project at a cost of $3.5 billion. The project in Jambi involves another coal mining unit, along with a port, railway line and a small power plant. It will cost $1.5 billion without the power project.

Reliance Coal Resources, a subsidiary of Reliance Power, will sign two MoUs with representatives of the governments of both the provinces in New Delhi on Tuesday. Reliance ADA Group chairman Anil Ambani and Indonesian President Susilo Bambang Yudhoyono are exected to be present during the occasion. Fiscal concessions, including land, are being offered to Reliance Power to make it attractive for them to invest in Indonesia, the official said. The investment for the development of the coal mine, rail & port infrastructure and the power project in Sumatra would be made in the next five years.

In 2010, Reliance Power's wholly owned subsidiary Reliance Coal Resources had acquired three coal mines owned by two companies PT Sriwijaya Bintang Tiga Energi and PT Brayan Bintang Tiga Energi in the South Sumatra province. The three mines are spread over 1,25,000 acres and have over 2 billion MT of coal. The Indonesian government is providing the other concessions as Reliance Power would develop the other projects associated with it which include the railway line, port and power.

Coal from these mines will be exported for Reliance Power's Krishnapatnam Ultra Mega Power Project in Andhra Pradesh. which is based on imported coal and also used for its 2000 mw project in Indonesia. These mines would ensure steady supply to the Krishnapatnam Project and also be more economical than other imported coal. Officials said talks are already on with banks to finance the first project in south Sumatra.

Ryaas: Hard to keep Jakarta as capital city

The Jakarta Post, Jakarta | Mon, 01/24/2011

Presidential Advisory Council member Ryaas Rasyid says that Jakarta is becoming more difficult to keep as the capital city and suggests moving the capital somewhere else.

“A capital city does not need mining and other industries. Instead it needs seclusion for the government to work with ease,” Ryaas said during a seminar, titled “The Country’s Capital, Challenges and Hopes” in Makassar, South Sulawesi, on Monday.

Ryaas said that Jakarta had become central to nearly everything, but given its complexities the capital should immediately be moved to another area.

There are two options, according to Ryass, either to move the capital city or the government offices to another province.

“Either somewhere in or off Java. South Sulawesi has been the first to be nominated, and may prompt other provinces to nominate [themselves] as well,” he said, as quoted by tempointeraktif.com.

“We must not be blinded by a concept based on history that Jakarta should be kept as the capital city,” he added.

Perhaps Sukarno decided to locate the central government in Jakarta based on Indonesia’s hard-earned triumph over the Netherlands in the past, Ryass said.

South Sulawesi’s prospects also depend on further examinations of urban planning and other requirements.

The government itself, he said, needs to prepare a preliminary budget both for the country and outside of the country.

Noted businessman Tanri Abeng said that if South Sulawesi wants to nominate itself as the new capital city, it should start promoting multi-cultural perspectives in the city’s life.

Tanri alluded to nagging tensions between different ethnic groups in the city.

“That [anti-multiculturalism] culture needs to be changed. If not, how can we suggest the city to host the capital should its culture fail to accommodate different ethnic groups,” he said.

Related Articles:

Indonesia should learn from Brazil in moving capital city: Observer

President: Relocating the capital city an option

Garuda $500 Million IPO Kicks Off Busy Year in Indonesia

Jakarta Globe, Denny Thomas & Vikram Subhedar | January 04, 2011

Hong Kong. Flag carrier PT Garuda Indonesia launched an up to $500 million initial public offering (IPO) on Tuesday, kicking off a busy year for capital-raising in Southeast Asia's biggest economy.

A Garuda Indonesia airplane undergoes maintenance work in the
Garuda Maintenance Facility at Soekarno-Hatta International
Airport in Cengkareng, Indonesia. The flag carrier launches an up
to $500 million initial public offering (IPO) on Tuesday. (Bloomberg
Photo)

Indonesia's fast-growing economy is attracting interest from foreign investors, encouraging companies to tap equity markets.

Indonesia's benchmark share index .JKSE jumped 46 percent last year, in-part supported by $2.18 billion in foreign portfolio inflows, which was more than double the level in 2009.

Banks are also raising fresh capital to support an expected pick up in lending growth. PT Bank Mandiri Indonesia Tbk BMRI.JK, the nation's biggest lender, was raising up to $1.6 billion to support credit growth, according to a term sheet seen by Reuters.

The Indonesian government had initially planned to launch the Garuda IPO in November last year, but later delayed it for 2011.

The company aimed to list on Feb. 11, the term sheet said.

"IPOs of this size and nature will be a key feature of the industrialisation process driving ASEAN growth," said Singapore-based Geoff Howie, a sales and markets strategist at MF Global, referring to the Association of Southeast Asian Nations grouping.

"As the economic modernisation of Indonesia, Malaysia and Thailand continues, their new and existing financial assets will continue to provide investable economics," he added.

Citigroup Inc C.N and UBS AG UBSN.VX are the international book runners for Garuda's offer.

Reuters

RI, OZ ink A$14.5m deal to improve transport security

Nani Afrida, The Jakarta Post, Jakarta | Wed, 12/15/2010

Indonesia secured on Wednesday AUS$14.5 million from Australia to improve its transportation safety and security standards.

The signing of the Memorandum of Agreement pledging the money was attended by Indonesia's Transportation Minister Fredy Numberi and Australia's Infrastructure and Transport Minister Anthony Albanese in Jakarta.

"Australia will provide AUS$14.5 million for the next four years, starting in July 2010," Fredy Numberi said, adding that the MoU tool the form of an arrangement between the two countries called the Indonesia Transport Safety Assistance Package.

Australia granted AUS$24 million in 2007 for a similar program, which helped finance 700 Indonesians to join a training program on aviation safety.

Albanese said the new fund would finance training programs to produce transport safety inspectors and accident inspectors, as well as joint search and rescue drills.

Indonesia, Japan Sign $24 Billion Agreement on Transport-Network Projects

Bloomberg, By Agus Suhana and Yoga Rusmana - Dec 10, 2010

Indonesia and Japan signed an agreement to build infrastructure valued at up to 2 trillion yen ($24 billion) in Jakarta as the Southeast Asian nation seeks to improve transport links to spur economic development.

Projects under the agreement include a mass rapid transit system to serve the greater Jakarta metropolitan area, developing power plants and a clean water supply, Hatta Rajasa, Indonesia’s coordinating minister for the economy, said in a statement. Development is expected to start in 2013, the statement said.

“The greater Jakarta area is a priority because it’s the country’s largest industrial area,” Rajasa said in the statement, which was posted on the official website of President Susilo Bambang Yudhoyono.

Rajasa signed the so-called Metropolitan Priority Area agreement with Japanese Foreign Minister Seiji Maehara today in Bali, Indonesia. Development is expected to start in 2013, with financing provided by local and foreign companies and through loans, the statement said.

The proposed mass rapid transit system in Jakarta will have a 110 kilometer-long (68 miles) track network to serve commuters from surrounding areas, according to information on the website of PT MRT Jakarta, the company overseeing the construction.

To contact the reporters on this story: Agus Suhana at asuhana1@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editor responsible for this story: Berni Moestafa at bmoestafa@bloomberg.net

Indonesia to make small aircraft to connect regions

Antara News, Saturday, December 4, 2010

Jakarta (ANTARA News) - Indonesia plans to produce the prototype of a small capacity aircraft for air travel to and from regions inaccessible by land in 2013.

"I have coordinated with the National Development Planning Agency (Bappenas), the transportation ministry and the Technology Assessment and Application Agency (BPPT) to produce an N219 type aircraft with a capacity of 19 passengers that could land on a simple airstrip as early as 2013," the director of maritime, aviation and defense equipment of the ministry of industries, Soerjono, said here on Saturday.

He said in this case PT Dirgantara would likely be assigned to build two units of aircraft with a price tag of around US$3.8 million over the next three years.

"According to PT Dirgantara Indonesia (DI) in order to break even sales should reach 27 aircraft. The capital is around US$250 million but for the basic capital for the development a total of US$40 million would be needed," he said.

He said the government would prepare a subsidy scheme for the operating of the aircraft.

"The aircraft is badly needed for the new regions and therefore there will be subsidy in the tickets or fuel," he said.

He said he hoped regional governments and airline companies would buy the planes to operate in regions that need them.

He said the idea was to improve connectivity among regions and spur growth in regions which used to be isolated due to a limited access.

"The government is pushing this program because the number of aircraft operating in regions in Papua, Sulawesi and Sumatra tend to decline while people in the regions need them very much," he said.

Japan readies $52.9b for first corridor

The Jakarta Post, Jakarta | Sat, 10/23/2010 12:27 PM

Japan has earmarked US$52.9 billion to help Indonesia finance projects in the first of six economic corridors intended to sustain the flow of goods in the country and in the Southeast Asia region.

“It may even be increased to $60 billion if needed,” Coordinating Economic Minister Hatta Rajasa told reporters on Friday. The agreement was reached during his recent visit to Japan.

The economic corridors are defined as six economic development highways, mostly located along coastlines, which would connect centers of economic growth in five islands: Java, Sumatra, Kalimantan, Sulawesi and Papua.

Hatta said the first economic corridor, spreading along the east coast of Sumatra to the western part of Java, including Greater Jakarta and Banten, would comprise a total of 44 projects to be developed in two phases 14 projects in the period 2010-2014 and 30 projects in 2015-2025.

Hatta said the projects on the corridor would be developed using various financing schemes.

“Those projects may be financed purely by private sector or using the public-private partnership scheme,” he said, while mentioning coal fire power plants and railway transportations as two of projects would be financed by private sector

According to the Investment Coordinating Board (BKPM), five prioritized projects worth US$4.44 billion are ready to be offered to investors now: The Soekarno-Hatta Airport - Manggarai railway track ($735 million), the Tanah Ampo cruise terminal in Bali ($30 million), the Medan-Kualanamu tollroad in North Sumatra ($475 million), the Umbulan tapwater plant in Pasuruan, East Java ($200 million), and a large 3,000 MW coal-fired power plant in Central Java ($3 billion).

Vice President Boediono has declared those five projects as pioneer projects under the PPP scheme.

Hatta said a strong economic growth engine driven by strong export and investment flows had made Indonesia’s economy more stable.

“We have quite strong macro economy fundamentals,” he said.

However, he said, Indonesia should put more effort into infrastructure development.

“With rapid infrastructure development, we will have faster economic growth,” he said, adding that Indonesia should better promote the development of infrastructure and of the real sector.

The 14 projects proposed for the first phase of development in the first corridor are already listed and will comprise ports, bridges, and toll road developments.

These will include the renovation of the Dumai port in Riau province, the expansion of the Lampung-Panjang road in Lampung province, the developments of coal-fired power plants, provision of road infrastructure for mines and electricity infrastructure in North Sumatra, the renovation of Soekarno Hatta airport, the development of the long-awaited Manggarai-Soekarno Hatta railway, the development of the Lahat-Kertapati coal railway, the development of another coal railway in South Sumatra, the development of the Medan-Binjai toll road, the development of Kuala Namu airport in North Sumatra, the development of the Pekan Baru-Kandis toll road, the development of the 400-kilometer Medan-Pekanbaru road, and the development of the Belawan shipping line in North Sumatra.

Hatta said he would complete the master plan for the six corridors in three months as requested by the president. (ebf)

Ras Al Khaimah Plans $5 Billion Indonesia Venture

Jakarta Globe, Bambang Djanuarto | October 19, 2010

The Argo Gajayana passing through Malang in East Java. Ras Al Khaimah, one of the sheikhdoms of the United Arab Emirates, and Trimex Group plan to invest $5 billion in Indonesian construction projects, including a 130 kilometer railway on Kalimantan. (JG Photo/Afriadi Hikmal)

Jakarta. Ras Al Khaimah, one of the sheikhdoms of the United Arab Emirates, plans to invest $5 billion in Indonesian construction projects as part of a joint venture with Trimex Group.

MEC Holdings, the venture overseeing all of Ras Al Khaimah and Dubai-based Trimex’s Indonesian projects, will spend $1 billion to build 130 kilometers (81 miles) of railway on Indonesia’s part of Borneo island, executive vice chairman Madhu Koneru said on Tuesday. The link will be able to transport as much as 64 million metric tons of coal a year, he said.

“Construction will start in 2012 and we expect to complete the project in 2014,” Koneru said in an interview in Jakarta after meeting Alwi Shihab, Indonesia’s special envoy to the Middle East.

Indonesia, Southeast Asia’s largest economy, is trying to attract investment in infrastructure as President Susilo Bambang Yudhoyono seeks to deliver average growth of 6.6 percent over the remainder of his second and final term ending in 2014.

MEC Holdings will also invest $500 million to develop a coal mine in Muara Wahau, East Kalimantan province, and build a port with an annual capacity up to 34 million tons, Koneru said.

The venture will team up with National Aluminum Co. to build a 500,000-ton aluminum smelter and power plant in East Kalimantan, according to Koneru. That investment may total as much as $3.5 billion, he said.

Bloomberg

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