Coal producers required to prioritize meeting domestic needs

Jakarta (ANTARA News) - The government required all coal mining concessionaires to supply all of part of their coal to the domestic market.

Mineral and Coal Director General at the Ministry of Energy and Mineral Resources Simon Sembiring said in Jakarta on Friday that under the contracts with the government the coal producers are required to prioritize domestic consumption, then exports.

"This requirement is carried in the contracts," he said.

The coal production of the 34 coal mining concessionaires accounted for 80 percent of the total coal ouput of the country.

The governmetn has approved a coal production plan of six coal mining concessionaires for 2008 with a total volume of 147 million tons.

The six coal mining concessionaires are PT Kaltim Prima Coal 46.267 million tons, PT Adaro Indonesia 38 million tons, PT Kideco Jaya Agung 22 million tons, PT Arutmin Indonesia 20,304,134 tons, PT Berau Coal 14.134.600 tons and PT Indominco Mandiri 11,167,470 tons.

Earlier, a number of coal consuming companies in Indonesia, including state power company PT PLN had asked the government to introduce the domestic market obligation (DMO) to secure domestic coal supply.

PLN was worried that the coal supply to meet increased need for coal, especially after the operation of the coal-fired power plants (PLTUs) with a total capacity of 10,000 megawatts (MW) in the 2009-2010 period.

They asked the government to pioritize domestic supply, rather than exports.

Meanwhile member of the energy commission of the House of Representatives Tjatur Sapto Edy also asked the government to limit Indonesia`s coal exports with a view to securing domestic supplies.

He also urged the government to strongly deal with coal export price manipulation practices (transfer pricing)as these practices not only caused a loss to the state, but firm action would also limit coal exports.

Exports will indeed give large profits to the producers because they are exempted from royalty and tax payments.

Indonesia eyes selling a 20 percent stake in BNI

Jakarta (ANTARA News) - Indonesia is considering selling a 20 percent stake this year in the country's fourth-largest lender, PT Bank Negara Indonesia Tbk (BNI), state enterprises minister Sofyan Djalil said on Thursday.

The stake is worth around $527.8 million at current market prices.

Djalil said the government is seeking to sell the BNI stake to strategic investors as parts of efforts to help finance the state-budget and strengthen the firm's corporate governance.

Jakarta is considering selling stakes in 37 state firms including BNI this year, as parts of its effort to boost the performance of state enterprises.

The government currently owns about 76.4 percent of BNI, after selling a 23 percent stake in the bank in August. "We will sell a 20 percent stake in BNI through private placement.

We want to make BNI a model state-owned bank, which is managed with a standard good corporate governance," Djalil was quoted by Reuters as saying.

"We will choose strategic investors who have a good reputation, and a good track record with good corporate governance, not just a money."

BNI shares closed 4.2 percent higher at 1,720 rupiah, while the broader market ended 1.63 percent higher.

Indonesia's privatisation drive gained momentum after the 1997-98 Asian financial crisis but has moved in fits and starts.

Many politicians see privatisation as "selling the family silver" and there is opposition from labour unions and others who feel their interests would be better served under state ownership.

PLN to build two thermal plants in Southeast Sulawesi

Makassar (ANTARA News) - State electricity firm PT PLN and a private company will build two thermal power plants with a combined capacity of 40 MW in Southeast Sulawesi province this year.

PLN will also build distribution networks to connect the power plants to the existing interconnection networks, Fauzi Arusman, general manager of the company`s branch in Southeast Sulawesi, said on Thursday.

But he stopped short of revealing the amount of investment needed to build the facilities.

He said the existing power plants with a capacity of 30 MW could not meet power demand particularly during the peak load.

"We have power plants with a combined capacity of 30 MW while our power need during the peak load is 30.7 MW," he said.

Consequently, PLN was compelled to subject its 130,000 customers in the province to rotating power blackouts, he said.

Rp500 bln needed to develop PT Kertas Aceh

Jakarta (ANTARA News) - The government needs Rp500 billion to Rp600 billion in funds to develop state paper company PT Kertas Kraft Aceh, a minister said.

The funds would be raised through the sale of part of the government`s stake in the company to strategic investors, State Enterprises Minister Sofyan Djalil said in a hearing with the House of Representatives Commission XI on finance, national development planning, banking and non-bank financial institutions on Thursday.

The company was finding it difficult to grow due to a shortage of gas supplies, he said adding the funds would mainly be needed to replace gas-fueled machines with coal-fueled ones.

"The machines need to be changed so that the company can operate," he said.

He also said cement paper produced by PT Kertas Kraft Aceh also fell short of standards set by cement makers and that huge investment was needed to upgrade its machines.

PLN short $2.78b to build 35 plants

Ika Krismantari, The Jakarta Post, Jakarta

State electricity company PLN revealed Thursday it was facing difficulties in financing a 10,000-megawatt (MW) coal-fired power plant project after Chinese lenders showed reluctance.

According to copies of documents obtained by The Jakarta Post, PLN is US$2.78 billion short of the $4.8 billion it needs to finance the project which involves 35 plants.

So far, PLN has launched four tenders for 13 plants, all won by Chinese contractors.

However, no more than three plants have secured all the financing required.

Commitments so far include $464 million in rupiah-denominated loans from a consortium of local banks and $853 million in dollar-denominated loans from Barclays in the UK and the Bank of China.

The three coal-fired plants are the 600-MW Labuan plant in Banten, 900-MW Indramayu plant in West Java and 600-MW Rembang plant in Central Java.

The agreements governing the project make PLN responsible for only 15 percent of total financing needed, while contractors must bear the remaining 85 percent by finding third parties to provide the loans.

All of the tender winners expect their financing to come from Chinese lenders, particularly the Bank of China.

However, demands from Chinese lender that the Indonesian government fully guarantee the project stalled negotiations.

Even after the government agreed to the guarantee, the negotiations have drifted without a clear deadline as both government and lenders differ on interest rates.

In turn, the government demands PLN invite bids from alternative lenders so as to meet the target of completing the project by year-end 2009.

"We have to hold tenders to find other banks, as the target of having Chinese lenders as the sole lender to support all of the projects can not be fully fulfilled," said head of the government's power-sector development program, Yogo Pratomo, during a hearing with the members of the House of Representatives Commission VII.

Yogo said the government aimed to have all funding lined up by the end of first semester 2008.

On the basis of project's progress so far, Yogo estimated that no more than six power plants -- a total capacity of 1,950 MW -- would be able to meet the initial target of starting operations in 2009.

As part of the 10,000-MW program, the government wants to have 10 new coal-fired plants with a total capacity of 6,900 MW, in Java, and 25 more with a total capacity of 3,100 MW outside Java, by 2009.

The aim of the program is to reduce dependency on the oil-based fuels currently burned by some 70 percent of PLN power plants.

PLN president director Eddie Widiono said that PLN fuel consumption in 2008 was expected to increase to 10.6 million kiloliters this year, up from last year's 10.2 million, to meet the 2008 national electricity growth target of 5 percent.

IATA wins $50 million contract to lease three choppers

Jakarta (ANTARA News) - Publicly-listed PT Indonesia Air Transport Tbk (IATA) has won a US$50 million contract for the leasing of three helicopters to the West Natuna Consortium consisting of Conoco Philips, Premier Oil and Star Energy for five years.

The contract was signed at the IATA office here on Thursday in the presence of IATA President Commissioner Chappy Hakim, IATA President Director Roekman Prawirasasra, Conoco Philips Vice President for Development and Relations Razief Fikri, Premier Oil Asset Manager Jim Baber and Star Energy Vice President for Operations Engineering Asrini Haznam.

IATA now has six EC155B1 helicopters. "The other three helicopters will be leased to other companies and we are in the process of negotiating with them," Roekman said.

IATA is expected to post a net profit of Rp4.4 billion last year.

Bakrieland to offer Rp 500b in bonds

JAKARTA (The Jakarta Post) : Publicly listed property developer PT Bakrieland Development plans to issue Rp 500 billion (around US$53.2 million) in bonds.

"Some Rp 150 billion of the bonds, Series A, will be offered with a maturity of three years with an interest rate between 11.35 and 12 percent.

"The remaining Rp 350 billion, Series B, will be available with a five-year maturity profile and an interest rate of between 11.95 and 12.95 percent," president director Hiramsyah Sambudhy Thaib told a press conference Wednesday.

He said the book building period would take place from Jan. 23 to Feb. 5, with the bonds to be officially listed at the Jakarta Stock Exchange on March 3.

He said around Rp 350 billion of the proceeds would be allocated to finance several projects, mainly in the development of residential properties such as apartments and office buildings. (tin)

Medco seeks 49 percent production split in Aceh

Ika Krismantari, The Jakarta Post, Jakarta

Upstream oil and gas regulator BPMigas is reviewing a production split for Aceh's Block A oil and gas fields, a senior official says.

A split for the block was only recently determined, giving the government 65 percent of production and the operator the remaining 35 percent.

However, BPMigas deputy chairman Abdul Muin said Wednesday the operator, Medco EP Malaka, had requested a review of the split asking for a higher share, saying the cost of project was expected to rise as a result of soaring energy prices globally.

"The split of 65:35 was determined in favor of the government in December last year, but referring to the project's economic scale, Medco proposed that we change the split to 51 percent and 49 percent," Muin said during a hearing with House of Representatives Commission VII on energy and mineral resources.

"We are still waiting for the government's response to the proposed change in the production split at the three fields -- Alur Siwah, Alur Rambong and Julu Rayeu -- in the block," Muin said, referring to the Energy and Mineral Resources Ministry.

Medco president director Lukman Mahfoedz declined to comment.

Muin said he was optimistic the block would be able to meet its target of starting commercial operations by 2010.

Medco is expected to supply 110 million cubic feet of gas to the Pupuk Iskandar Muda (PIM) fertilizer plant in Nanggroe Aceh Darussalam and 15 million cubic feet to other local industries, from the block's production.

Muin also commented on the Tangguh liquefied natural gas (LNG) plant, whose construction is now 85 percent completed. He said the project's first processing unit (train) was expected to be onstream in October this year, and the second unit in March 2009.

BPMigas deputy for operation Dody Hidayat said Wednesday the body had ordered Japan's largest oil and gas firm, Inpex Holding Inc., the operator of the Masella block in the Timor Sea, to use a floating LNG plant in the area rather than building a gas pipeline from the location

Dody said the company, which operates the block located more than 2,000 meters beneath the sea and is expected to produce around 4 million tons of gas per annum, could lease the facility.

He also urged Inpex to submit its development plan for the project before May, otherwise it would risk its permit being revoked.

Last year, Inpex set aside US$88 million for the drilling of four appraisal wells in the block.

Indonesia`s Bumi almost certain to take over Herald Resources

Jakarta (ANTARA News/Asia Pulse) - Indonesia's largest coal producer PT Bumi Resources is almost certain to take full control of Herald Resources Ltd (ASX:HER), a report said today.

The management of the Australian mining company has agreed to sell all of its shares to Bumi Resources at a price of A$455 million (US$395.21 million), the newspaper Investor Daily said.

Credit Suisse will loan Bumi US$375 million to finance the acquisition Srivastava said Bumi will hold a shareholders' meeting later this month to get approval for the acquisition. Bumi corporate secretary Dileep Srivastava said a final deal is expected to be signed on February 15.

Depok opens train maintenance facility

The Jakarta Post

An electric train maintenance facility in Depok, West Java, was officially opened by President Susilo Bambang Yudhoyono on Tuesday.

The President spoke via remote link-up from Kutoarjo in Central Java.

West Java Governor Dani Setiawan, who attended the launch, said the 26-hectare facility was the largest train depot in Southeast Asia.

Extending 1.3 kilometers in length and 200 meters in width, it has 14 stabling lines that can accommodate up to 224 trains.

The area also contains large office and maintenance buildings, as well as 30 rooms with 120 beds for train drivers and engineers.

The depot was constructed between Aug. 2004 and Aug. 2007 at a total cost of Rp 504 billion, which was provided in state budget allocations and through Japan Bank for International Cooperation loans.

"This way we can maintain our trains better and improve our services for the city's commuters," said Harijogi, the general secretary of the Ministry of Transportation.

Akhmad Sujadi, the spokesman for the Greater Jakarta branch of state-owned railway company PT Kereta Api, said 402 electric train services were offered in the Greater Jakarta area, including between the capital and Bekasi, Bogor, Depok and Serpong.

"We plan to add 56 more services this year," he said.

The President was in Kutoarjo to launch a 64-kilometer double-track railway line connecting Kutoarjo in Central Java and Yogyakarta.

Isolated Maluku regency seeks to pave its way to wealth

M. Azis Tunny, The Jakarta Post, Ambon

East Seram, a four-year-old regency in Maluku, is developing land and sea transportation with the aim of escaping isolation, jump starting development and addressing widespread poverty.

Over the past four years, almost 80 percent of a 528-kilometer highway traversing Seram Island has been finished and the rest is slated for completion within the fiscal year.

"The regency's economy is maturing as subdistricts and villages are becoming connected and more farmland in the regency is under irrigation. More people travel to the provincial capital in Ambon and to other provinces now. And more traders are reaching the locals (in remote areas)," East Seram regent Abdullah Vanath told The Jakarta Post.

Asked why his administration had prioritized infrastructure development, Abdullah said without better infrastructure it wasn't possible to combat poverty.

When it was created, pursuant to the regional autonomy law in 2004, the regency had a total of 3.5 kilometers of asphalted road.

Even today the vast majority of population lives in poverty.

"Like other people, my family was also poor.

"Few people went beyond elementary school because you have to move to Ambon if you want to go high school or university," said Abdullah, citing a 2007 survey which found 78 percent of the population of 17,000 was living below the poverty line.

"My great desire is to complete the ongoing development of the infrastructure before my term ends in 2009 so that by 2010 the regency can start catching up with other regencies in Maluku and other provinces in the eastern part of the country."

Abdullah said, despite the high poverty rate in the regency, he was optimistic the main social problems would gradually be solved.

"Following the development of infrastructure and other facilities such as hotels and ports, investors will come to help explore the rich natural resources and people will seek better livelihoods, send their children to school and live modern lives."

The regency has considerable economic potential due to an abundance of natural resources such as timber, oil and gas. However, geographic isolation from international markets prevents exploitation.

Besides the geographical disadvantages, unpredictable climate conditions hinder farming and fishing.

Inadequate rainfall frequently limits harvests to one a year while stormy seas keep fishing boats from going to sea for long periods.

Sea passage to East Seram can be as difficult as the route overland.

Weeks may go by without the arrival of a cargo or passenger boat -- or even months during periods of bad weather.

Abdullah said that government as well as the people had to work harder to improve life in such a rugged, isolated place. However, he said, progress was just a matter of time.

The formation of the regency was hardly noticed by investors because of the absence of modern infrastructure. Meanwhile, construction materials and the most basic commodities can be extremely expensive due to transportation premiums.

Abdullah, who previously held a senior position in the Maluku provincial government, acknowledged that mismanagement had also affected development. He said a certain part of the development budget had "leaked out" due to weak oversight and law enforcement

"Several local officials, including the chief of the local public works ministry office, have been declared suspects in a road construction graft case and they will be prosecuted in accordance with the law. Law enforcement is a must if we want to create good governance."

Ogan Ilir builds environmental lab

INDRALAYA, South Sumatra (Jakarta Post) : Local energy and mineral resources ministry office has made plans to build an environmental laboratory to monitor the environmental pollution in the province.

The project would cost some Rp 822 million (US$87,400) allocated under the central government 2008 budget special allocation funds for the province.

The laboratory would be mainly responsible for monitoring river water, air quality and waste-water from factories and households, provincial energy and mineral resources ministry office Achyar Muchtar said here on Tuesday.

He said his team would coordinate with the Environment Ministry to get technical guidance to operate the lab and train its staff.

Lombok begins construction of int'l airport

Panca Nugraha, The Jakarta Post, Lombok

West Nusa Tenggara Governor HL Serinata officially commenced the construction work of Lombok International Airport on Saturday, by laying a foundation stone.

The new airport will be located in Tanak Awu village, Central Lombok Regency, around 35 kilometers from Mataram.

The ceremony was attended by West Nusa Tenggara provincial officers, Central Lombok Regent HL Wiratmaja and president of state-owned airport management company PT Angkasa Pura Heru Legowo.

"By laying this foundation stone, people here will see we seriously intend to establish and operate an international airport in the region," Serinata said.

Serinata said he hoped the establishment and operation of a new airport would connect people directly to strategic international businesses.

He said he expected the international airport, which would cost some Rp 150 billion (about US$16.6 million), would bring many benefits to the people of Lombok when it opened in 2010.

Serinata said he expected the airport would bring the island many economic benefits due to the direct international links to Lombok. For this reason, he said, he encouraged people in the region to improve their skills to meet the expected increase in demands.

"I am sure many investors will come here to set up businesses. I hope the job market will open up for local residents. That's why we need to increase residents capabilities," Serinata said.

Heru Legowo said so far only small planes were available for visitors traveling by air to West Nusa Tenggara since the Selaparang airport in Mataram could not accommodate large airplanes.

He said he expected the new and larger airport in Lombok could accommodate bigger planes, like the Boeing 747.

West Nusa Tenggara provincial administration spokesman Ibnu Said his administration supported the construction of the new airport and had allocated funds from the regional budget for it.

"We have allocated Rp 5 billion per year since 2007. The fund comes out of the provincial budget," he added.

While waiting for the airport's completion, the provincial administration announced it planned to develop the tourism sector in Central Lombok.

PT Emmars, a Middle Eastern investor, has signed an agreement with the local administration to develop Kuta Beach in Central Lombok.

PT Emmars would construct several homestays, villas and hotels along the strip of land owned by the Lombok Tourism Development Center in Central Lombok.

RI agrees to install seven radars from US in Makassar Strait

Jakarta (ANTARA News) - The Indonesian government has agreed to install seven radars to be provided by the United States in the Makassar Strait to support security maintenance efforts in the country`s second main sea-lane, a minister said.

"The purpose of installing the seven radars is to support maritme defense and security in the South East Asian region," Defense Minister Juwono Sudarsono told ANTARA News on Tuesday.

He said the US government was committed to helping Indonesia to build its capacity to secure its waters by among other things providing the surveillance radars.

"The proposal to install the surveillance radars in the Makassar Strait was filed in 2006 but it will only be implemented in stages starting in 2008," he added.

Juwono said the main function of the seven radars in the Makassar Strait would be that of preventing acts of terror at sea.

"This accords with ASEAN`s joint commitment on maritime defense and security in the ASEAN region," he said.

In the Asia and Pacific region, including ASEAN and Indonesia, the security of the Sea Lines of Communication (SLOC) was a matter of vital importance to users of these lines in the region, he added.

The US had previously also given five surveillance radars which were set up along the Malacca Strait to support security in the world`s busiest sea lane.

The five radars were now functioning as part of the Integrated Maritime Surveillance System (IMSS) in the Malacca Strait where security was being maintained jointly by Indonesia, Malaysia and Singapore through a coordinated patrol scheme launched in July, 2004.

The three nations` coordinated patrols had resulted in a 70-percent decrease in criminal activity in the Malacca Strait, Juwono said.

Indonesia`s Bumi to launch IPO this year to raise US$222 mln

Jakarta (ANTARA News/Asia Pulse) - Property company PT Bumi Serpong Damai (BSD) plans to sell 30 per cent of its shares worth around Rp2 trillion (US$222 million) in an initial public offering it plans to launch this year.

The company has named CLSA as the underwriters for the IPO to be launched in second half of this year at the latest, a company official said. The fund from the share sales will be used for business expansion, the official told the newspaper Bisnis Indonesia.

Pertamina names consortium to build $283 mln propylene plant

Jakarta (ANTARA News) - Indonesia's state owned oil-and-gas company PT Pertamina said Tuesday it has chosen the consortium of PT Rekayasa Industri (Rekin) and Toyo Engineering Corp to build a propylene processing unit worth 283 million US dollars.

The project is expected to commence operation in October 2010 and will have an annual capacity of 179,000 metric tons, Pertamina president Ari Sumarno was quoted by Thomson Financial as saying.

Propylene can be processed further into polypropelene, which is used as a raw material to produce plastics.

Pertamina currently produces polypropelene at an annual capacity of 42,500 metric tons.

"The production expansion is to meet increasing demand," Soermano said.

The engineering, procurement, construction and commissioning (EPCC) contract between Pertamina and the consortium was signed today, he said.

S. Kalimantan to get another coal-fired power plant

Banjarmasin, South Kalimantan (ANTARA News) - Coal mining company PT Adaro Indonesia plans to build a mine-mouth coal-fired power plant with a capacity of 60 MW in South Kalimantan province in cooperation with construction firm PT Makmur Sejahtera Wisesa.

The power plant to be built on 86 hectares of land at Maridu village in Tabalong district is expected to be operational late next year, spokesman for PT Adaro Indonesia Y Andriansyah said on Tuesday.

Under the cooperation agreement, PT Adora Indonesia will only supply coal to the power plant while PT Makmur Sejahtera Wisesa will bear all the cost arising from its construction.

The area is believed to hold 600 million tons of coal deposits.

Power shortages have forced state electricity company PT PLN to introduce rotary power blackouts in several parts of the province in recent years.

To date, there are two coal-fired power plants with a capacity of 126 MW, three hydro power plants with a capacity of 28.50 MW and 29 generators with a capacity of 86.45 MW.

In addition, PT PLN also buys around 20 MW of power plants from private power plants to meet increasing demand.

BNI sells its stake in Finconesia bank

Jakarta (ANTARA News) - State-owned Bank BNI has sold all its 5,035,095 shares in privately-run Bank Finconesia to PT Dian Intan Perkasa for Rp127.122 billion.

The shares accounting for 48.51 percent of Bank Finconesia`s total shares were sold at Rp25.247 each, Bank BNI Corporate Secretary Elvin G. Masassya said in a report to the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) on Tuesday.

The two banks signed an agreement for the share purchase on December 29 last year.

Gas stations to be moved

The Jakarta Post

JAKARTA: The administration plans to relocate 27 gas stations located in various green areas around the city.

The head of the Jakarta Parks Agency, Sarwo Handayani, said two of the stations to be relocated were on Jl. Sudirman and Jl. Thamrin in South Jakarta.

"Green areas are supposed to be free of concrete buildings," she said Monday, as quoted by tempointeraktif.

She said the agency had allocated Rp 2 billion (approximately US$210,000) for the relocation program.

The agency has asked for Rp 150 billion from the City Council to finance various programs this year.

Biofuel committee seeks mandatory use of biofuels

Ika Krismantari, The Jakarta Post, Jakarta

The National Biofuel Development Committee will propose legislation on mandatory use of biofuel in industry before its tenure ends in August, the chairman said.

Alhilal Hamdi told The Jakarta Post on Monday the committee was coordinating with the government to determine what level of consumption should be mandated.

"We are still discussing it, but I assume the number will be around 1 percent of the total national fuel usage of 60 million kiloliters."

The country consumes around 60 million kiloliters of fuel every year. A government subsidy intended to ease the burden on low income families applies to half of that amount.

Biofuel quotas would apply first to non-subsidized fuels which are predominantly used in industry, Alhilal said.

Alhilal was optimistic the legislation would encourage the use of environmentally friendly fuel.

According to data from the Indonesian Biofuel Producers Association (APROBI), state oil and gas company Pertamina, which acts as the sole buyer for biofuel, currently sells only 75,000 liters per day in that category.

Biofuel producers worry that a decision by Pertamina to reduce the percentage of biofuel in its biosolar and biopremium products from 5 percent to 2.5 percent would hurt their business.

Pertamina said it was scaling back its biofuel operations due to losses in 2006 of Rp 16.9 billion (US$1.8 million) caused by the high price of ethanol and crude palm oil.

The association has since demanded the government make biofuel use mandatory so as to help the newly developed biofuel industry.

The association has 22 members and a total installed capacity of 1.5 million tons.

Under the government's biofuel promotion plan, Indonesia will increase its usage of biofuel to 5.29 million kiloliters by 2010 and 9.84 million kiloliters by 2015.

Poor planning may hamper ambitious tourism program

Agustina Wayansari, The Jakarta Post, Jakarta

Business players and local authorities are concerned that inadequate government planning for this year's international Visit Indonesia tourist campaign has left them without enough time to prepare.

President of the Indonesian Hotel and Restaurant Association for the Jakarta chapter, Krishnadi, said Monday ambitious targets for tourist arrivals weren't in line with official preparations.

"We don't have enough time to prepare and create marketing programs as we only received the announcement during the fourth week of November last year," he said on the sideline of a gathering discussing the business prospects of the campaign.

The Ministry of Culture and Tourism recently launched the Visit Indonesia Year 2008 which targets seven million foreign visitors and foreign exchange revenue of some US$ 6.3 million.

According to Krishnadi, while hotel accommodations are in place, business players are behind schedule on marketing activities as there should ideally be least one year to communicate with the target market.

"Foreigners, unlike Indonesians, always plan ahead. It's not easy to convince them to come to Indonesia for holidays at the last minute," he said, adding that with China hosting the Olympic Games competition would be especially intense.

"People have known about the Olympics for a long time, and may have planed to go there this year."

Indra Surya Fadjar from Horas Tour travel agent in Medan, North Sumatra, agreed with Krishandi, blaming the lack of coordination between government agencies as the main obstacle to the success of the campaign.

"The (Tourism) ministry needs to work more with related institutions, such as the immigration office for better visa management and the transportation ministry on transportation infrastructure," Indra said.

Indra cited experiences with local authorities refusing to grant his company a permit to provide special transportation to tourists traveling in his province merely because there was no bylaw specifically on point.

Indra said illegal fees collected by force by local officials were common and had discouraged local companies from venturing into tourism.

Meanwhile, head of Lampung Tourism Board Taufik Hidayat said the central government was supposed to have better coordination with local agencies in all aspects of tourism promotion.

He claimed that local administrations were responsible only for contributing information for brochures.

Taufik said he wished to remain optimistic but didn't know what the ministry's big picture was for developing tourism and feared the Visit Indonesia might end up more a slogan than a successful campaign.

He said local tour companies weren't being consulted on ministry marketing plans.

Secretary at the ministry's marketing directorate, Hengky Hermantoro, said optimism was in order since tourism was up after the 2002 Bali bombing.

Hengky said last year the country recorded 5.5 million foreign visitors who spent some $5.3 million in aggregate.

"The figure was even higher than the best performance before the (Bali) bombing."

He also said that Indonesia was now a higher profile international tourism destination with many international events being held in the country last year, including the high profile climate change conference in Bali.

Carrefour buys 75% stake in Alfa

The Jakarta Post, Jakarta

Giant retailer PT Carrefour Indonesia officially purchased a 75 percent stake in local company PT Alfa Retailindo worth Rp 674 billion (around US$71.3 million) on Monday.

Carrefour, which focuses mainly on the sale of food, purchased the shares from majority shareholders in Alfa, PT Sigmantara Alfindo, and Singapore-based Prime Horizon Pte. Ltd. at Rp 1,921 per share.

After the acquisition, 20 percent of Alfa's shares are still owned by Sigmantara and Prime Horizon, while the remaining five percent are held by the investing public.

"With this acquisition, Carrefour can strengthen its position as a leader in the sale of food in Indonesia," Carrefour president director Jean Noel Bironneau told a media conference.

The president commissioner of Alfa, Djoko Susanto, said the decision to collaborate with Carrefour was made in order to survive tight competition in the country's retail sector.

"Carrefour is the right partner as it has international skills in managing the supply chain and the distribution network," he said.

He said the company also wanted to focus more on its minimarket business.

Bironneau said while the acquisition was still being processed, Alfa would not open any new stores with the joint brand.

"Alfa has been a strong company, and we want to make it stronger. And for now we will only support the supply chain of Alfa," he said.

Ten-year-old Carrefour operates 37 retail outlets, while Alfa, which was established in Jakarta in 1989, operates 29 supermarket outlets throughout the country.

Alfa's sales dropped 9 percent to Rp 2.4 trillion during the first nine months of 2007, from Rp 2.63 trillion in the same period of 2006.

Carrefour recorded a 14.4 percent increase in sales in the first nine months of 2007 from $908 million in the same period of 2006.(ndr)

Bajaj expanding business

The Jakarta Post, Jakarta

Motorcycle maker PT Bajaj Auto Indonesia is trying to increase its sales of sports motorcycles in Indonesia by launching new products this year, with an intention of establishing a new production plant next year.

Sales and marketing director Dharmesh K. Banerjee told The Jakarta Post at the launching of a new product, Pulsar 200 cc DTS-i, on Monday that the company would launch two more new products in the second quarter.

To support the marketing of the new products, he said, the company, whose headquarters is located in India, would spend US$6 million.

Bajaj also planned to build its first manufacturing plant in Indonesia.

"Maybe in 2009," said Barnejee, adding that the company was currently operating an assembly plant in Cikarang, Bekasi, West Java.

Banerjee further said that this year the company would build 60 new showrooms nationwide, adding its current 40 showrooms in, among others, Greater Jakarta, Surabaya of East Java, Bandung of West Java, Semarang of Central Java, Yogyakarta, Medan of North Sumatra, Jambi, Pekanbaru of Riau, Palembang of South Sumatra, Padang of West Sumatra and Lampung.

Since the launch of its first product in Indonesia in November, 2006, Bajaj had sold 10,000 motorcycles, at around Rp 15.5 million to Rp 16.5 million each, as of the end of 2007.

With the launch of the three new products, Banerjee said, Bajaj expected to more than double its sales this year.

President director K.S. Grihapathy said that Bajaj, therefore, would develop brand awareness among potential consumers.

"In few years to come, we'll be focusing on brand building, service network and distribution to tap Indonesia's sport motorcycle market," he said.

According to the Indonesian Motorcycle Industry Association (AISI), last year's national sales of sports motorcycles rose by 18.3 percent to 379,039 units from 320,359 in the previous year.

Grihapathy estimated that based on the size of the national market, the country could absorb the monthly sales of some 5,000 motorcycles with a price tag of about Rp 20 million.

"Our new product, Pulsar 200, is priced at Rp 20 million. Hopefully, we will get a 10 percent share of that market of 5,000 units," he added.(nkn)

Yudhoyono to commission Kutoarjo-Yogyakarta double track railway

Purworejo (ANTARA News) - President Susilo Bambang Yudhoyono is expected to commission a double-track railway link between Kutoarjo in Purworejo district, Central Java, and Yogyakarta on Tuesday.

"The president and his entourage will arrive here from Yogyakarta on Tuesday to commission the double railway track at Kutoarjo station," state railway company PT Kereta Api Indonesia (KAI) sopkesman Noor Hamidi said here on Monday.

He said the 64-kilometer double railway track from Kutoarjo to Yogyakarta was constructed from 2004 to 2007 at a total cost of Rp900 billion provided by the Japanese government through the Japan Bank for International Cooperation.

According to Noor Hamidi, the construction of the double railway track was intended to improve railway services by increasing train traffic frequency.

He said the president on the occasion would also commission an electric train depot of PT KAI`s Jabotabek (Jakarta-Bogor-Tangerang-Bekasi) division in Depok, West Java, by a teleconference facility at Kutoarjo station.

"The president will sign two plaques and then conduct a teleconference with Depok," he said, adding that after the inauguration, the head of state and his entourage would return to Yogyakarta by a special train.

Retail boom drives $12bn regional textile industry

AMEinfo

Rising consumer spending, increased tourism and rapid growth in new malls and shopping centres is driving massive growth in the Arabian Gulf clothing market, say the organisers of the region's biggest garments and fashion accessories event

The United Arab Emirates and Dubai in particular, is leading the way as it vies to become one of the world's fashion capitals and bids to attract 15 million tourists annually by 2010. Dubai is already the major regional hub for textile imports and re-exports.

Recent statistics from UK-based research company Retail International confirm Dubai's dominance with 30% of the total retail space in the Gulf Co-operation Council (GCC) region. In 2008, Dubai will also become home to five out of the world's seven largest shopping malls.

Motexha, an interactive platform for industry professionals which this year takes place at the Dubai International Exhibition Centre from 31 March to 2 April 2008, continues to drive the region's textiles industry, estimated to be worth over $12bn

'The world's fashion and textile industry cannot ignore the stellar growth taking place in the Middle East market with the UAE the biggest textile fashion market in the GCC,' said Jim Meltz, Show Manager for Motexha at IIR Middle East.

Dubai has secured its position as the regional textile trading hub according to a recent report by the Emirates Industrial Bank. In 2006, Dubai's textile imports were valued at $3.75bn - an average increase of 11% over 2002. Dubai saw an even higher surge in terms of re-exports with 13.3% growth during the period from 2002 to 2006 to almost $2bn.

'The opening last year of the six million square feet Dubai Textile City gives a further boost to the textile trade in Dubai,' Meltz added. 'Fabrics are mainly imported from South Korea, Japan, China, India, Indonesia and Thailand. These products are further re-exported to countries including Iran, Iraq, Saudi Arabia, East Africa and former Soviet Union states.'

Dubai Textile City is expected to become the Middle East point of reference for trade to and from Europe, China, India and even the USA and is spread over six million square feet just ten minutes from Dubai International Airport. The zone's tax-free status will attract global players, giving the $3bn market a boost. Setting up business there entitles owners to 100% import and export tax exemptions, no corporate taxes for first 15 years, no personal income taxes as well as additional support services such as sponsorship and housing.

'The excellent contribution of the emirate's entrepreneurial free zones is an important part of Dubai's phenomenal growth rate,' Meltz said. 'Textiles are regarded as Dubai's second biggest re-export commodity and Motexha continues to support industry growth.'

More than 250 exhibitors from over 25 countries are expected to participate in Motexha 2008 a 12% increase over 2007 with ladies' wear and fashion accessories continuing to dominate the industry mix. The show also features PURE - a dedicated arena for international brands and franchise labels, showcasing mid to high-end brands and new designers.

Motexha has received wide international industry support including from the Apparel Export Promotion Council of India and the Taiwan Textile Federation. Turkey will be among 10 country pavilions participating at Motexha with government supported participation.

Minister says 10,000 more homes expected

JAKARTA (Jakarta Post) : Public Housing Minister M. Yusuf Asy'ari said Friday he expected more than 10,000 people would have a decent house this year through a subsidized sharia "credit" scheme.

The government has allocated Rp 800 billion (US$84.66 million) from the state budget for the house subsidy, nearly triple last year's subsidy of Rp 300 million.

In its 2004-2009 plan, the ministry aims to provide 1.35 million housing units for people who are yet to have a house due to skyrocketing housing prices.

The minister said only people with a maximum monthly income of Rp 2.5 million are allowed to buy the houses.

Last year, the ministry worked together with sharia banks and cooperatives to provide subsidies for 3,933 housing units. The figure was an 800 percent rise from 490 units a year earlier.

India to build power plant in Jambi

JAMBI (Jakarta Post) : Indian energy and mining company India Monnet Ispat and Energy Ltd. confirmed its readiness to construct a 500 megaWatt steam-generated power plant to supply electricity to Sumatra.

Monnet Ispat's president director Sukesh Vij said the project would start this year if the company gained a guarantee of coal supply from the government.

"We are interested in the project because the province has a great coal deposit," he said after a meeting with Jambi governor Zulkifli Nurdin here Friday.

With the project relying on the coal supply from Bungo and Sarolangun regencies, Jambi was expected to sell its power to other provinces such as West Sumatra, South Sumatra and Bengkulu.

The governor said India should build the power plant immediately to show its seriousness in investing in the resources-rich province.

Sarolangun regent Hasan Basri Agus said the regency was estimated to have 339 million tons in coal deposits, enough to supply raw materials to the power plant for 20 years.

Airport railway to finish by 2009

JAKARTA (Jakarta Post) : A railway project to Soekarno-Hatta airport is scheduled to finish by the end of 2009, an official said.

"The design is almost done. We're now waiting for the detailed planning," the president director of PT Railing, Masdhratul Hidayat, said Friday.

PT Railing, a subsidiary of the railway company PT Kereta Api, and the airport operator PT Angkasa Pura, are managing the project. After the details are finished, PT Railing will secure funding.

"We expect the funding will be disbursed by March or April," he said, as quoted by tempointeraktif.com.

"We can't comment on the budget needed for building the railway track as we are still calculating it," he added.

The railway track will pass several train stations, namely Manggarai, Dukuh Atas and Angke. The track will be an alternative means of public transportation to and from the airport besides buses and taxis.

"Each year, 30 million people flock to the airport. So the need for alternative transportation is also increasing," Masdhratul said.

Bakrie & Brothers to buy stakes in 3 firms for $5.5b

The Jakarta Post, Jakarta

Investment company PT Bakrie and Brothers is set to raise Rp 51.3 trillion (some US$5.5 billion) to purchase stakes in three large companies.

Bakrie president director Bobby Gafur Umar said the company would buy 35 percent stake in the country's biggest coal exporter PT Bumi Resources, and 40 percent each in PT Energi Mega Persada (EMP) and PT Bakrieland Development.

The company will spend Rp 36.9 trillion to buy Bumi shares at Rp 5,432 per share, Rp 7.2 trillion for EMP at Rp 1,249 per share and Rp 4.3 trillion for Bakrieland at Rp 556 per share, Bobby said.

To finance the acquisition, Bobby said, the company would first combine two of its existing shares into one, and then raise Rp 40.1 trillion through a rights issue. For the remainder of the fund, the company will sell warrants worth Rp 2.9 trillion and borrow Rp 8.3 trillion.

The shares of the three companies will be bought from the family of Aburizal Bakrie, Indonesia's welfare minister, which also owns 28 percent of Bakrie and Brothers.

"The family has agreed to the sale," Bobby said at a media conference Friday.

"With the right issue we will have strategic investment in five rapidly growing listed companies."

Bakrie and Brothers already controls, among others, PT Bakrie Sumatera Plantations and PT Bakrie Telecom.

"All target acquisitions are high-growth companies in key strategic industries," said Bobby.

"When combining its existing businesses with the new acquisitions Bakrie & Brothers will have a strong strategic portfolio of the hottest sectors in Indonesia."

Bumi stock rose fivefold in Jakarta the past year and Energi Mega more than doubled, according to Bloomberg data, driven by surging coal and energy prices.

Yuanita Rohali, the company's finance director, said the stand-by buyers for the rights issue would be Bakrie Capital Indonesia, Danatama Makmur and Singapore Credit Suisse.

The company hopes to complete the rights issue in April.

On warrant sales, Yuanita said investors would be offered one warrant for every 17 rights shares at Rp 310.

According to Yuanita, the warrants' trading period will run from April this year to March 2011, while its exercise period will run from October this year to April 2011.

Bakrie & Brothers has a market capitalization of Rp 7.5 trillion, with assets in infrastructure projects reaching Rp 2.2 trillion, plantations Rp 5.26 trillion and telecommunications Rp 4.27 trillion. (ndr)

Telkomsel to seek $750 million in financing

JAKARTA (Jakarta Post) : Indonesia's biggest mobile telephone operator Telkomsel plans to seek a minimum of US$750 million to help finance its capital expenditure this year, which is expected to range from $1.5 billion to $1.7 billion.

"The majority of the financing will be in the form of bank loans," Telkomsel's parent company PT Telekomunikasi Indonesia (Telkom) president director Rinaldi Firmansyah told reporters Friday.

"We expect to gather about $200 million to $300 million through a combination of Medium Term Notes (MTN) and bonds."

Rinaldi said Telkom planned to spend around $800 million this year and would seek half of it through financing.

"For Telkom, the combination of MTN and bonds would likely amount to $100 million, while the remainder would come from bank loans."

Telkomsel president director Kiskenda Suriahardja said about 40 percent of the total capital expenditure would be used to finance the expansion of its network coverage.

He added that 45 percent would be allocated to a service quality enhancement program and the rest would be used on strategic investments in related businesses. (and)

Holcim, Mortar join forces to expand horizons

JAKARTA (Jakarta Post) : The third largest cement manufacturer in the country, PT Holcim Indonesia, signed a cooperation agreement Friday with local instant cement manufacturer PT Cipta Mortar Utama.

"We've had a long relationship with Mortar and with this co-branding cooperation I hope we can expand our markets by combining our distribution networks," Holcim president director Tim Mackay said before signing the agreement.

Mortar generally focuses on commercial construction projects, such as the Ritz Carlton and ITC Permata Hijau, while Holcim mainly works in the country's retail sector, especially on housing projects.

Mortar's general marketing manager Jun Suryo Wardhana said the instant cement market was still small in Indonesia, making up only 20 percent of the country's entire cement market.

The primary components in instant cement include silica sand, cement and filler.

Jun said one of the benefits of using instant cement was that people did not have to add sand.

Holcim's production capacity currently stands at 7.9 million tons per year, while Mortar's annual capacity is 600,000 tons.

The Indonesian Association of Cement Producers (ASI) said domestic cement consumption rose last year by 6.6 percent to 34.17 million tons from 32.05 million tons in 2006. (ndr)

Sarolangun has a potential coal reserve of 399 million tons

Jambi (ANTARA News) - The potential coal reserves in Sarolangun regency, Jambi province, according to provisional estimates reached 399 million tons with a calorie of 4,800-6,800.

This is merely a provisional estimate, but a thorough study and research will tell more than that, Sarolangun regency chief Hasan Basri Agus said in Jambi on Friday.

A number of potential foreign investors including from India have started eyeing the significant coal reserves in the regency and planned to build coal-fired power plants.

"The coal reserves if used to run power plants at he coal mine entrances would last 20 to 30 years," Hasan Basri said.

Sarolangun regency not only have potential coal reserves, but also other minerals including natural oil and gas, as well as gold.

Some local investors have started exploiting the coal reserves in the last few years to meet the needs of coal-fired power plants and the Padang cement plant.

The biggest coal reserve in Sarolangun regency is found in Sarolangun and Pauh subdistricts.

The regency is currently focusing one of its mining sectors on coal and oil and gas for its economic development and raising the income of its people.