Emaar Jakarta tower to be the tallest in SE Asia

The Jakarta Post, Jakarta | Tue, 05/06/2008 2:01 PM

Dubai-based real estate giant Emaar Properties plans to build a landmark tower in Jakarta, which would be the tallest skyscraper in Southeast Asia, a presidential envoy says.

Special envoy for the Middle East Alwi Shihab said Monday the Chairman of Emaar, Mohamed Ali Alabbar, had proposed the project to President Susilo Bambang Yudhoyono during an informal meeting on Saturday.

"At the moment, we're still looking for the right location in Jakarta for the site of the project... we are ready to build the tower, our homework is to find the right location, " Alwi told The Jakarta Post.

Emaar, the largest land and real estate developer in the Gulf, is famed for its ongoing construction of Burj Dubai in Dubai, which would be the highest skyscraper in the world. The 718 meter-tall building is scheduled to be fully constructed by the end of this year.

Alwi said the Jakarta project was part of the company's commitment to invest in Indonesia.

In March, Emaar signed a joint venture agreement with the state-owned Bali Tourism Development Corporation to build an integrated tourism project in southern Lombok, West Nusa Tenggara, with a total investment of US$600 million. During the initial stage, they would build four luxury hotels, including Ritz Carlton and Giorgio Armani hotels, along with related tourist facilities.

"Emaar has started building its offices in Lombok and is carrying out trainings in conjunction with the tourism ministry for locals to assist in its projects," Alwi said, adding that up until now, the Indonesian government had received investments worth almost $5 billion from the Middle East and that it was targeting to attract $10 billion by 2009.

He said among those committed to invest in the country was Ras Al-Khaimah of the United Arab Emirates, which would bring a total investment worth $1.5 billion to construct an integrated port at Tanjung Api-Api, and a railway line from Palembang to Tanjung Api-Api.

Another company, Dubai Drydock, is ready to invest up to US$1 billion for the construction of a shipyard and an industrial city in Batam.

The envoy said the company had opened its office in Indonesia and had paid for the project's land, while adding that conglomerate company Pacific Inter-Link planned to invest US$500 million in a palm oil refinery plant in Dumai, Riau.

Dubai-based Al Ghurair Group also showed its commitment to invest around $500 million in the renovation and improvement of old refinery plants.

Previously, Saudi Telecom Company's Axis invested US$1 billion in the telecommunication industry. Alwi said the investors hoped to fully realize their commitments soon.

"Some of them complained that bureaucracy in our country has been too slow in responding to their proposals. While it only takes a few months to manage permits in Malaysia, for example, it could take years in Indonesia," Alwi said.

This had caused many of them to invest in Malaysia and Singapore instead, he added. (dia)

Holcim to build new plant in Tuban by 2009 to meet domestic demand

The Jakarta Post, Jakarta | Tue, 05/06/2008 9:40 AM

Publicly listed PT Holcim Indonesia, the nation's third largest cement producer, plans to build a new plant worth US$400 million with an annual production capacity of 3.5 million tons in Tuban, East Java, by the end of 2009.

Corporate communication manager Jeffry Sani said Monday the construction would take around three years to complete.

"So we expect the site to start operations in 2011," he said.

The firm currently has two plants. Last year it produced a combined output of 7.9 million tons of cement, around 80 percent of the two plant's combined production capacity.

President director Tim Mackay is upbeat the new plant would increase company performance.

In the first quarter of 2008, the firm booked a 14.9 percent sales increase to Rp 885.77 billion, resulting in Rp 138.17 billion in net profit. In the same period last year, the company suffered Rp 14.48 billion in losses.

Mackay said Holcim's market share rose last year by 2 percent to 23 percent, with 60 percent of sales coming in Central Java.

"We want to focus on fulfilling domestic needs, especially in Java, instead of exporting," he said.

Of the total 6.96 million tons in sales, 4.9 million tons were sold to the domestic market.

In addition to the Tuban project, Holcim also plans to acquire more small cement plants in East Java, having completed the acquisition of PT Pendawa Lestari Perkasa recently.

"In April 30, we acquired a 100 percent stake in PT Pendawa, which is based in Surabaya."

Pendawa has a production capacity of 700,000 tons a year. (rff)

Medco aims to halt oil output decline

The Jakarta Post, Jakarta, Surabaya | Tue, 05/06/2008 9:40 AM

PT Medco E&P Indonesia plans to spend US$260 million this year on the development of its oil and gas blocks, the company's executive says.

President Director Lukman Mahfoedz said Monday the company would drill 80 wells in existing fields and about 20 wells in exploration areas this year with a total budget of $150 million.

"We need this amount of money to maintain our fields' production because most of their reserves are depleting," he said, adding that the company targeted to produce 47,000 barrels of oil per day (bpd) this year, down from last year's 50,000 bpd.

In addition to the $150 million, Lukman also said the company would spend another $110 million to develop facilities for ongoing gas projects at Blok A in Nanggroe Aceh Darussalam and at the Senoro Liquefied Natural Gas (LNG) plant in Central Sulawesi.

Blok A is still in the development phase and is due for completion in 2010, while progress on the Senoro LNG plant is being delayed by negotiations over gas prices.

In a bid to cash-in on soaring oil prices, PT Medco Energi International, under parent-company Medco E&PT, is targeting a net profit of $92 million this year, Medco Energi President Director Hilmi Panigoro has said.

He said the company's target was based on promising performance in this year's first quarter, when the company booked $23 million in net profit, or a 45.5-percent increase compared to the same period last year.

Medco Argo, another subsidiary of Medco, is set to open new palm oil fields in Lampung next October.

Medco Agro deputy director for engineering Krisdwiarto told The Jakarta Post in Surabaya the new fields would add to company's existing fields in East Kalimantan.

The company plans to cooperate with Japanese firm Itochu, which would provide soft loans for machine procurement. The total value of the oil palm projects has not yet been calculated.

Developers eye low-cost apartments, houses

The Jakarta Post, Jakarta | Mon, 05/05/2008 11:25 AM

The Indonesian real estate association (REI) is to construct 86 subsidized low-cost apartment towers, with 600 units per tower, and 120,000 low-cost houses this year for low-income households.

"We have already built around 40,000 apartments in 61 apartment towers throughout Jakarta. State-owned Bank Tabungan Negara (BTN) has financed 3,000 units," said Alwi Bagir Mulachela, REI general secretary, Saturday.

David Lelij, sales manager of PT Tiara Metropolitan Jaya, subsidiary of major property developer Agung Podomoro Group, said members of the association were committed to providing such facilities at fairly affordable rates.

"We want to provide low-income earners an affordable place to live in the heart of the city," he said at the Real Estate Indonesia Expo 2008 opening.

David said Agung Podomoro were constructing 6,000 units of subsidized low-cost apartments in Kalibata, South Jakarta.

"Demand for low-cost houses is increasing," he said. 

David welcomed high-income earners to invest in the low-cost apartments. 

"But buyers who earn more than Rp 4.5 million (US$488) per month will not be eligible for the government subsidy and they will have to pay the tax as well." 

Under the scheme, the government will subsidize buyers earning less than Rp 4.5 million per month by paying 3 to 9 percent of their interest during a period of up to eight years. The 10 percent tax on units worth a maximum of Rp 144 million ($15,616) will be lifted. 

For houses, the government will provide a subsidy of Rp 7.5 million, Rp 10 million and Rp 12.5 million, depending on buyers' income levels. 

The government is aiming to have 1,000 low-cost apartments built by 2011 throughout the country and at least 1.35 million low-cost houses during the 2004-2009 period to accommodate the needs of low-income earners. 

The government supports developers by simplifying permit requirements to develop low-cost houses and apartments. 

Besides Agung Podomoro Group, Gapura Prima Group, Artha Graha Group and Bakrieland Development are also taking part in the program. (rff)

RI to get $2b in loans from World Bank for development

The Jakarta Post, Sat, 05/03/2008 11:14 AM 

The World Bank will lend US$2 billion for the country's development programs this year, the National Development Planning Board (Bappenas) announced Thursday.

The government could receive even more loans than those previously promised, according to Bappenas director for international financing Dewo Broto Joko Putranto.

"The (additional) loans can be included as loans allocated for 2009," said Dewo, as quoted by Antara.

The board will wait until it learns the exact amount needed to plug this year's state budget deficit before determining how much to propose the World Bank allocate.

World Bank spokesman Randy Salim said the $2 billion in loans would be divided into program loans and project loans.

"About $1.2 billion of the loans will be spent on programs related to climate change, education and infrastructure policy development," Salim told The Jakarta Post.

"On top of this amount, there is another $400 million in programs related to poverty alleviation."

The remaining $400 million, he said, would go toward developing roads, dams and flood-control projects and improving tax administration.

"Indonesia and the World Bank are also negotiating $300-$400 million in additional loans for infrastructure development," Salim said.

This month the World Bank will release its "Infrastructure Development Policy Loan", in which some $200 million will be channeled to support infrastructure improvement in Indonesia.

In a related development, the director general for state debt management, Rahmat Waluyanto, said the government would get an additional $2.9 billion in program loans this year, as reported by Antara.

Of this amount, $1.1 billion would come from the Asian Development Bank and $500-$600 million from the Japan Bank for International Cooperation (JBIC).

Waluyanto said part of the JBIC loan would be spent on programs related to climate change.

"About $1.2 billion worth of the loans will be used to plug the state budget deficit this year," Waluyanto said. (JP/rff)

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Govt to focus on port, railway projects

Aditya Suharmoko, The Jakarta Post, Jakarta | Sat, 05/03/2008 11:14 AM 

The government will prioritize the development of port and railway infrastructure this year to ease the flow of goods and reduce high transportation costs in the country, a minister says.

"Our priority is to reduce bottlenecks in ports and railways, including at Tanjung Priok port, and railways on Java island," Transportation Minister Jusman Syafii Djamal said after a meeting with economic ministers on Friday.

Among development plans for this year, he said, was the modernization of navigation systems in three international airports: Kuala Namu airport in Medan, Lombok airport in Lombok and Hasanuddin airport in Makassar.

He also said the ministry would develop ports designed to load crude palm oil (CPO) as the commodity had become the country's main export.

In the first quarter of 2008, CPO was the major contributor to the rise in the country's non-oil-and-gas exports, which increased 47 percent to $4.4 billion compared to in the same period last year.

To help secure domestic distribution, Jusman said the ministry would fast track permit issuance for coal railway transportation projects to help secure distribution, particularly to state power plants.

"For port and railway projects under development by coal producers, we will speed-up permit issuance," Jusman said.

The ministry stated its budget this year was reduced to Rp 14.11 trillion (US$1.53 billion) after a 7.76 percent cut aimed to reduce state expenditures in response to a surge in global oil prices.

The Finance Ministry has cut the budget allocation to all government offices by a maximum 10 percent to safeguard the state budget, which is burdened by oil subsidies.

Despite the cut, Jusman said the ministry would try to improve the country's transportation system, including by restoring trains and modernizing navigation systems.

He also said the country's transportation and logistics systems needed to be integrated so the ministry could design a complete, multi-year infrastructure development strategy.

"Our transportation and logistics systems must be integrated. The Transportation Ministry will design a master plan to rebuild the country's ports, airports and railways to support logistics," he said.

The Indonesian Chamber of Commerce and Industry has repeatedly said inferior infrastructure would result in increased product prices and burdened customers.

Tata may join Krakatau Steel bidding

The Jakarta Post, Jakarta | Sat, 05/03/2008 11:14 AM

The world's fifth largest steel producer, Tata Steel of India, may enter the race to acquire a stake in state-owned PT Krakatau, joining bidders Steel Arcelor Mittal and BlueScope.

The Industry Ministry's director general for metal, machinery, textile and various other industries, Ansari Bukhari, said Friday the firm had sent a letter to the ministry inquiring how it could take part in the privatization.

"Tata Steel's chief executive, Indronil Sengupta, plans to meet with Minister of Industry Fahmi Idris sometime on May 5 or 6. He has some questions on the government's plan to privatize Krakatau Steel," Ansari told reporters at a press conference in Jakarta.

Tata Steel produces hot rolled coil plates, cold rolled coil sheets and wire rods, similar to those of Krakatau Steel. The firm operates in 24 countries, including India, Vietnam and Bangladesh, and has the capacity to produce 28 million tons of steel annually.

On Wednesday, Ansari announced Australian-based BlueScope Steel had asked to meet with the minister on May 8 or 9 to discuss the privatization.

BlueScope operates 114 steel factories in 17 countries, including four of its largest in New Zealand, Australia, Asia Pacific and North America, each with a production capacity of eight million tons per year.

Tata and BlueScope would have to compete with the world's largest steel maker, Arcelor Mittal, which has already made an offer to acquire a 40 percent stake in Krakatau Steel.

On April 10, Arcelor Mittal's owner, Lakshmi Mittal, met President Susilo Bambang Yudhoyono and stated his interest to invest as much as US$3 billion (Rp 28 trillion) in the country's mining and steel companies.

"With so much interest in Krakatau Steel, we'll make the choice based on the investors' ability to provide up-to-date technologies and financial support," Ansari said.

"And the most important thing is the investments must be able to provide jobs and skills for Indonesians."

The government is still considering the possibility of privatizing Krakatau Steel through an initial public offering on the stock market, or by conducting a strategic sale, where a stake would be sold to selected potential investors.

Ansari said the government's privatization program aimed to double Krakatau Steel's production maximum capacity of 2.5 million tons of steel per year.

Krakatau Steel is Indonesia's largest steel maker with assets worth Rp 11 trillion.

"So Krakatau Steel should be certain it could gain a capacity increase to at least 5 million tons of steel a year by the time we're finished with the dealings," Ansari said. (anw)

Jakarta to deliver on elevated roads plan

Mustaqim Adamrah, The Jakarta Post, Jakarta | Sat, 05/03/2008 11:14 AM

Despite criticism from urban and transportation experts, the city administration is moving forward with its plan to construct elevated roads, including six turnpikes, in the inner part of the city.

Deputy Governor Prijanto said the administration is setting up a special company, called PT Jakarta Toll Road Development, that would help garner 67 percent of Rp 40 trillion (US$4.34 billion) total investment to run the project.

The administration would control ownership in the new company through the city-owned construction firms PT Jakarta Propertindo and PT Pembangunan Jaya.

The remaining 33 percent of the project share would be offered in a public bidding.

"This (new) company has both the concept and the cash. So it has the right to own shares in the project," Prijanto said on Friday at the City Hall in Central Jakarta.

The administration plans to build more elevated roads to reduce traffic woes in the city. Ground-level road constructions are no longer feasible due to limited land availability in the city.

Transportation experts say the elevated roads project will not ease congestion in the city, and instead invite more cars and make traffic jams worse.

According to a survey by Japan International Cooperation Agency, the capital's streets will be paralyzed by 2014 due to rapid growth in the number of vehicles.

Chairman of the Indonesian Transportation Society, Bambang Susantono, said road construction would only be appropriate for the outskirts of the city.

"A good public transportation system is enough to link the inner part of the city. The administration and the central government should be consistent in developing it," he said.

Bambang said the Rp 40 trillion allocated to the project would be better spent in establishing a rail-based rapid transit system linking the eastern and western parts of the city.

However, the administration has scheduled road construction to begin next year in North Jakarta, along with the construction of a Mass Rapid Transit (MRT) construction in the southern part of Jakarta.

The Rp 8.3 trillion MRT project will stretch 14.3 kilometers from Lebak Bulus, South Jakarta, to Dukuh Atas, Central Jakarta and is expected to be finished in 2014.

Governor Fauzi Bowo said the administration had arranged for the two mega projects to be less disruptive to road networks in the city.

CONSUMER HEAVEN

The Jakarta Post | Fri, 05/02/2008 6:11 PM 

Two sales promotion girls add to the appeal of Samsung's new multi-platform, high definition, LCD televisions during the Samsung Digital Partners Audio Video Road Show 2008 in Jakarta on Thursday.

Last year, the company booked a 174 percent increase in sales, unloading more than 600,000 LCD televisions in Southeast Asia and Oceania. (JP/P.J. Leo)

Bumi raises bid for Herald to fend off Antam offer

Fri, 05/02/2008 1:33 PM,  The Jakarta Post 

Publicly listed mining company PT Bumi Resources gained Wednesday approval from shareholders to raise its bid for Australian mining firm Herald Resource Ltd. amid competition from rival PT Aneka Tambang (Antam).

Bumi president director Ari S. Hudaya told The Jakarta Post on Tuesday the approval was necessary for the company to compete with the A$2.50 per share bid made recently by Antam and partner Shenzhen Zhongjin Lingnan Nonfemat Co. of China.

"We need to win approval from shareholders so we can be flexible in determining our bidding price. For us, Antam's offer is deemed comparative," he said before a meeting at the presidential palace.

Bumi is planning to raise its offer to between A$2.62 and A$3.29 a share, up from its previous A$2.25 a share offer.

Bumi's latest offer is estimated to be worth a total of more than A$455 million.

The two rivals seek to control Herald's lucrative Dairi lead and zinc project in North Sumatra, in which Antam already has secured a 20 percent stake.

Herald holds an 80 percent share of mining rights in Dairi, as well as minority ownership of numerous gold mines in Indonesia.

Bumi is the country's biggest coal miner, with assets including Arutmin Indonesia in South Kalimantan and Kaltim Prima Coal (KPC) in East Kalimantan, making Bumi the world's largest producer and exporter of thermal coal.

Ari said Bumi was targeting a 16 percent increase in coal production this year to more than 60 million tons.

"We will spend between US$50 million and $60 million in capital expenditure to help raise our production," he said. -- JP/Rendi Akhmad Witular

BlueScope eyes Krakatau Steel offering: official

Novia D. Rulistia, The Jakarta Post, Jakarta | Fri, 05/02/2008 1:33 PM

Australian-based steel giant BlueScope Steel is interested in acquiring stake in PT Krakatau Steel, the country's largest steel maker, which is set to go on offer under a government privatization program, a senior official said.

The Industry Ministry's Director General for Metal Ansari Bukhari said Wednesday BlueScope had sent a letter to the ministry inquiring how it could take part in the privatization.

"BlueScope's CFO Charlie Elias will be here from May 8 to 9 to meet Minister Fahmi Idris to learn more about the plans for Krakatau," he said, adding that he would also meet the finance and state ministers for state enterprises.

Ansari said the letter was sent to the ministry on April 28, and was signed by BlueScope Steel President Director for Indonesia and Malaysia Rob Crawford.

Ansari also said BlueScope was unlike most Indonesian steel firms in that it produced steel for the automotive sector and not just for infrastructure projects.

"They want to offer their capabilities and experience (in automotive steel), and from our side it's a good thing as we still import around two million tons of this special steel," he said.

BlueScope may have to fight off competition from Arcellor Mittal, the world's largest steel maker, which has stated its intention to acquire a 40 percent stake in Krakatau.

"With many parties keen to participate in the privatization program, we'll select the best possible option for Indonesia," Ansari said.

The government said it would study Mittal's proposal to confirm that any steps taken by the steel giant would not hamper Krakatau's production capabilities.

The government is still mulling over whether to privatize the company through an initial public offering (IPO) on the stock market, or by conducting a strategic sale, where stake would be sold in blocks to selected potential investors.

BlueScope Steel operates 114 steel factories in 17 countries, including four of its largest in New Zealand, Australia, Asia Pacific and North America, each with a production capacity of eight million tons per year.

Krakatau Steel has a maximum capacity of 2.5 million tons per year.

Bakrie Sumatera Plantations Q1 profit jumps 794 percent

Novia D. Rulistia, The Jakarta Post, Jakarta | Fri, 05/02/2008 1:33 PM

The country's fifth-largest plantation owner by value, PT Bakrie Sumatera Plantations, booked a 794 percent increase in its first quarter net profit helped by stronger prices of palm oil.

President director Ambono Janurianto said Wednesday the firm's net profit had reached Rp 165 billion (around US$18 million) by the end of March this year, jumping from Rp 18.5 billion in the same period last year.

PALM OIL CONTROVERSY - Palm oil trees at Pangkalan Kerinci in Riau, Central Sumatra, Indonesia, on Thursday. A WWF study found that deforestation, in many cases to plant biofuel friendly palm oil plants, in central Sumatra's Riau Province over the past 25 years has generated 3.7 gigatons of carbon dioxide. (AP/Achmad Ibrahim)

He said sales in the first three months climbed to Rp 678 billion from Rp 264 billion and that its operational income reached Rp 222 billion from Rp 70 billion a year earlier."This indicates that we're going to be very strong in growth this year, both in land ownership and net profit," he said.

Ambono said the company expected to acquire 200,000 hectares of land by the end of 2011. Currently, the company has a total 106,000 hectares of planted land, up from 52,000 hectares at the end of 2007.

For this year's strategies, the company has set aside US$100 million in cash, $40 million of which will be used to buy a further 26 percent of PT Agri Resources BV (ARBV).

"We plan to increase our share in ARBV from the current 25 percent to 51 percent," Ambono said.

He said 25 million of the fund would be used for the company's capital expenditure worth $25 million, with the remaining cash to finance its joint venture company with Bakrie Sentosa Persada, called PT Indo Green International, in its efforts to turn 50,000 hectares of empty land into CPO plantations.

He said the strategies would help the company increase CPO production to 340,000 tons this year, an 88.8 percent increase from 180,000 tons in 2007, and that Bakrie's rubber production would reach 40,000 tons this year, up from 29,500 tons last year.

The company's total 2008 revenue is targeted to reach Rp 3.5 trillion.

Senoro LNG plant delayed to 2012

Ika Krismantari, The Jakarta Post, Jakarta | Wed, 04/30/2008 1:10 PM

A planned Liquefied Natural Gas (LNG) plant in Senoro, Central Sulawesi, is set to commence operations later than expected as parties involved in the project have yet to reach a deal on gas prices, an official said.

Lukman Mahfoedz, president director of Medco E&P, said the Senoro plant, which would become the country's fourth LNG plant, would start production in the first quarter of 2012 instead of in the second quarter of 2011 as previously expected.

Medco E&P holds a 20 percent participating interest in the project, while state-owned oil and gas company PT Pertamina holds 29 percent and Japan-based Mitsubishi Corp. the remaining 51 percent.

The plant plans to buy natural gas from two gas fields located in Senoro. The first, Toili block, is jointly owned by Pertamina and Medco, while the second, Donggi block, by Pertamina.

"We have extended the target for initial production as negotiations on the gas prices have yet to reach an agreement," Lukman said, adding that Mitsubishi had agreed to buy gas at a non-fixed rate linked to global crude oil prices.

This marks the project's second delay, as the project was initially expected to go online in 2010, but was delayed until 2011 amid similar price uncertainties.

Lukman said the investment needed for the plant's construction had just rose by 16.6 percent to US$1.4 billion from a previous estimate due to metal price hikes.

Upstream Oil and Gas regulator BPMiga's Deputy Chairman for Financing and Marketing Eddy Purwanto said there was uncertainty because his agency was still calculating the budget needed to develop the gas fields supplying the plant.

Indonesia, the world's third largest gas exporter, currently operates two LNG plants. The Arun LNG plant in Nanggroe Aceh Darussalam has a total capacity of 12.5 million tons per year, while the Bontang plant in East Kalimantan has a 18.5 million tons per year capacity.

Under construction is a third plant in Papua, designed to have capacity of 7.6 million tons per year.

British-based oil giant BP, which operates the plant, has targeted operations to begin by the end of this year.

Govt gives Chevron go-ahead to develop Galan gas block

Ika Krismantari, The Jakarta Post, Jakarta | Fri, 05/02/2008 1:33 PM

The government has approved a proposal by U.S. company Chevron to develop gas fields of the so-named Galan block located in deep water off East Kalimantan, a minister says.

"A few days ago, I signed the approval for Chevron to develop a gas block in East Kalimantan's deep waters," Energy and Mineral Resources Minister Purnomo Yusgiantoro said Wednesday.

Purnomo said a persistent surge in oil prices had made the development of deep sea blocks, previously considered problematic and costly, more attractive as the price of gas is expected to soar in line with oil costs.

"The current price of oil has reduced the risks of developing deep sea gas blocks."

Figures from the ministry's Directorate General for Oil and Gas show Chevron has committed to spending up to US$311.64 million to develop the block, which is believed to have the potential to produce an average of 800 million cubic feet per day.

Indonesia, the world's third largest gas exporter is under pressure to increase its gas production to meet gas export contracts, as well as to supply for increasing domestic demands.

Chevron spokesperson Santi Manuhutu said the company had yet to receive the approval letter.

Chevron holds 80 percent of participating interests in the block, while the remainder is owned by Italian oil and gas company Eni.

S'pore exploring possibilities of cooperating with Gorontalo in agriculture

Antara, Gorontalo, The Jakarta Post  | Wed, 04/30/2008 1:52 PM

Vast opportunities exist for Singapore and Indonesia's Gorontalo province to cooperate in the agricultural sector Singapore envoy says.

As city-state with no hinterland, Singapore's economy has relied on trade and port sectors, Singaporean Ambassador to Indonesia Ashok Mirpuri said Wednesday.

Opportunities to invest in other areas such as Gorontalo, known as a corn-exporting province, were worth considering for the sake of common prosperity, he added.

The Singaporean ambassador's visit to Gorontalo is aimed at exploring possibilities in cooperating with the Sulawesi town in agricultural.

Indonesia must adopt new 'clean coal' to halt global warming

Sylvia Darmaji, Analyst , The Jakarta Post | Wed, 04/30/2008 1:10 PM

Indonesia, the world's biggest thermal coal exporter, should adopt new technologies to overcome the threat of global warming.

In the wake of emerging economies, the demand for energy sources has increased over the last few years. Oil prices have grown 194 percent since early January 2007, reaching a record high of US$119.4 per barrel in April 2008.

Consequently, the price of oil substitutes have matched pace, with the price of Newcastle coal rising 248 percent over the same period amid supply strains.

Despite these numbers, coal producers and exporters are seeking even higher prices, especially for higher grade coals, valued around $300 per ton.

Coal consumers, including steel corporations and power companies, have shown little concern for the more than doubling of their 2008 coal supply costs.

Recently, Australia agreed to supply thermal coal to Japan at a premium price of $125 per ton, while China demanded a minimum $135 per ton.

In response to the threat to the environment, many countries signed the Kyoto Protocol with the objective to reduce greenhouse gas emissions.

The participating countries agreed to either reduce their carbon dioxide emissions along with five other greenhouse gases or, if their output levels remained the same or increased, to engage in emissions trading.

In accordance, China has closed 83 small coal-fired generators with an aggregate capacity of 4.7 million kilowatts, 36 percent of what is needed to achieve their target to reduce emissions by 13 million kilowatts during the first three-and-a-half months of 2008.

Eventually, the generators will be replaced by larger and more efficient plants.

National coal production has almost doubled since 2003 to more than 210 million tons last year, 75 percent of which was exported.

Around 85 percent of Indonesia's coal, including 7 billion tons in reserves and an estimated 61 billion tons unmined, is considered to low grade, requiring greater volume per unit of power produced.

Clean coal, one of many alternative fuels under development, is created by gasifying, washing or burning standard coal to remove sulfur dioxide, minerals and impurities. The coal is then re-burned to recover the carbon dioxide. The technology has been seen to enhance efficiency and reduce emissions, and many believe it is the solution to global warming.

Although there are no coal-based power plants in commercial production able to capture all carbon-dioxide, some collection prototype systems are already being tested in plants around the world, while pilot projects are underway to add further improvements.

A study conducted by the International Energy Agency on greenhouse gases found building a coal power plant that could capture carbon dioxide would cost 36 percent more than standard variants.

While Indonesia is building quite a number of coal power plants to meet electricity demands, it should bare in mind the consequences of over usage.

Analyses on cost-benefits must be performed before building more standard coal stations, because the reduction of emissions should be our main priority.

The writer is an analyst at Bahana Securities

Rio Tinto secures deal with govt on tax system for massive project

Ika Krismantari, The Jakarta Post, Jakarta | Tue, 04/29/2008 12:40 PM

Rio Tinto, the world's second largest mining company, announced Monday it reached an agreement with the government over a tax privilege for its planned US$1.5 billion nickel project in Sulawesi.

The tax facility would be given based on a combination of fixed and prevailing rates, the company said in a statement.

Rio Tinto president director Mike Jolley hailed the agreement, saying that it "would provide sufficient certainty for Rio Tinto to support the multi-billion dollar investment."

"The terms are comparable to the tax incentives provided to other industries, and to the development of large scale and high capital projects in remote areas in Indonesia," he said, although the company chose not to give details on the tax rate.

The head of a team representing the government in the negotiations, Bambang Setiawan, said he too had yet to learn of the rate details, but that the Finance Ministry had issued an official letter permitting Rio Tinto the privilege.

Chairman of the Investment Coordinating Board Muhammad Luthfi earlier said Rio Tinto would be granted a fixed-rate tax facility, also known as a nail-down tax system.

Under the fixed-rate system, a company is taxed based on rates which remain unchanged regardless of any amendments made to the tax system, while the widely used progressive system scales tax rates according to income, and are therefore subject to change.

The tax arrangement is among the company's list of items that need to be settled before it can obtain a "contract of work".

The London-based company previously settled on royalties to be paid to the government.

Under the deal, the government will get 1.5 percent of revenues from nickel-in-concentrate and 0.75 percent from refined metal.

The company's next focus would be resolving overlapping concessions with local companies, which are backed by local administrations that have issued smaller businesses mining licenses to operate on Rio Tinto's concessions.

"We have asked assistance from the government to resolve this matter. We hope that we can clear up all the problems," the firm's spokesperson Budi Irianto told the Post.

Rio Tinto plans to mine nickel in Morowali and Konawe regencies, located on the border between Central Sulawesi and Southeast Sulawesi with an initial production expected to reach 46,000 of nickel metal per year.

Numerous mining projects in the country have run aground due partly to legal uncertainties over the jurisdiction of local administrations to manage mining resources, a result of loopholes in existing laws and regulations.

R-Power to buy more coal mines in Indonesia

P B Jayakumar / Business Standard, Mumbai May 02, 2008

Anil Dhirubhai Ambani Group's (ADAG) flagship company Reliance Power, which recently acquired three coal assets with coal reserves of about 2 billion tonnes in the Musi Rawas region of South Sumathra in Indonesia, is close to acquiring more coal mines in the same region.

POWER FUEL

• Reliance to buy the mines with reserves of 2 billion tonnes on a risk-free production-linked model
  
• Since the mines are located in the South Sumatra region which is closer to India's east coast, shipping time will be cut down by two days
  
• Reliance plans to build infrastructure, including a 100-kilometre railway line
  
• The three mines acquired by Reliance Power in Indonesia have coal reserves valued at about Rs 20,000 crore
  
• "Reliance Power has identified a few targets in the same region and negotiations are in advanced stages. It is also scouting for large coal fields in Mozambique and South Africa," said sources close to the development.
  

 

The company plans to buy coal mines on a risk-free production-linked benefit sharing model, which does not involve upfront payment. The three mines acquired by Reliance Power in Indonesia have coal reserves valued at about Rs 20,000 crore. 

Reliance Power plans to invest more than Rs 4,000 crore to develop the assets and extract about 25 million tonnes per annum (MTPA) of coal. It will also build a 100-kilometre railway line and a captive jetty for shipping coal to India. 

The privately-held assets have an exploitation license and, hence, production can start immediately. 

The South Sumatra region is closer to India's east coast, which will help reduce the shipping time by two days compared with the coal fields in Kali Mandan and Bali region where companies, such as Tata Power, partly own mines. 

This geographical advantage will reduce the shipping costs by Rs 60-70 a tonne (10-15 per cent). "The region has many private mines that have production clearances," the sources said. 

Srivijaya Bintangtiga Energy, Bryayan Bintangtiga Energy and Sugico Pendragon Energy - the three acquired coal assets - are spread over 40,000 hectares and have coal reserves of about 2 billion tonnes. The acquisitions were made through Reliance Coal Resources, a wholly owned subsidiary of Reliance Power. 

The company has not made any upfront payment for the assets so far since they were purchased under the production model. 

The coal reserves are adequate to fuel the company's Krishnapattanam ultra mega power project (UMPP), the 1,200 mw Shahpur project in Maharashtra and another large-scale power project for 20 to 25 years. 

The Krishnapattanam UMPP alone requires about 15 million tonnes of coal per annum and Reliance Power hopes to commission the project ahead of the scheduled commissioning by 2013. The Shahpur project is scheduled to take off in a few years and land acquisition will start in three to four months, said sources. 

Reliance Power is currently developing 13 power projects with a combined installed capacity of 28,200 mw, including the Sasan and Krishnapattanam UMPPs.

PLN signs procurement contracts

Jakarta (ANTARA News/Asia Pulse) - Indonesia's state-run power firm PLN had signed two engineering procurement contracts worth US$888.4 million with Chinese companies for the construction of coal-fired power plants, local press said Saturday.

The first contract worth US$642 million was signed Friday for the 700-Megawatt Tanjung Awar-Awar plant in East Java with a consortium of China National Machinery Equipment Corp. (Sinomac), China National Electric Equipment (CNEEC) and local firm PT Penta Adi Samudra.

PLN also signed another contract worth US$247.4 million for the 200-MW Nagan Raya plant in Aceh with China's Sinohydro Corp, reported leading newspaper The Jakarta Post. PLN President Director Fahmi Mochtar said the projects would run for two years, with the first plant starting commercial operations in October 2010 and the second in January 2011.

Ciputra to invest US$1.1 bln in luxury housing project

Jakarta (ANTARA News/Asia Pulse) - Indonesian publicly-traded construction company PT Ciputra Development (JSX:CTRA) said it will build luxury homes worth Rp10 trillion (US$1.1 billion) in Palembang and Balikpapan.

The company has secured lands totaling 200 hectare in Palembang and 23 hectares in Balikpapan for the locations of the project. Construction would be undertaken in phases starting this year, company director Tulus Santoro said, adding that implementation would take 5-6 years in Balikpapan and 10 years in Palembang.

Germany grants 33 scholarships to Indonesian academician

Jakarta (ANTARA News) - The Federal Republic of Germany officially awarded German Academic Exchange Service (DAAD) long-term scholarships to 33 young Indonesian academicians.

The awarding of the scholarships was held at the German embassy here during a farewell party for Mrs Ilona Krueger-Rechmann, Director of DAAD Jakarta Office who will be returning to her country in July this year.

Funded by the German Federal Ministry of Foreign Affairs and Ministry of Economic Development and Cooperation, the Indonesian scientists and professionals will take part in master`s or PhD programs at renowned German universities, German Charge d`Affaires to Indonesia Mr Hans Joerg Brunner said on the occasion.

The scholarship awardees had been selected by a joint Indonesian-German Committee of Scientists.

Since the beginning of the exchange program between the two countries several decades ago, about 25,000 Indonesian students and scientists have studied or done research work in Germany.

In the meantime, Mr Hans Joerg Brunner, the German Charge d`Affaires, in his address said the granting of the scholarships was a manifestation of the Indonesian-German close relations in the field of education.

Strengthening cooperation in the educational sector would contribute to the improvement of human resources in Indonesia. Development in many sectors could only materialize if it was supported with professional and skilled human resources, he said.

Not only in education, but his country would give more attention to economic cooperation, he said, adding the bilateral relations between the two countries were close and harmonious.

"In the future, not only Indonesian students continued their study in Germany, but German students will also get a similar opportunity in Indonesia, he said.

Nowadays, Germany is still popular as a place for higher education of Indonesians.

About 25,000 Indonesian students chosen German universities. Therefore, for Indonesian students, Germany was the first destination in Europe and the fourth in the world.

The German Academic Exchange Service is one of the world`s largest intermediary organization in the field of science and is also supporting the international academic exchange between Germany and other countries.

Under its different exchange programs, DAAD awards around 400 scholarships to Indonesians for academic studies and research work each year.