RI cashes in on South Korean president's visit

Andi Haswidi, The Jakarta Post - 2006-12-06 09:29

Jakarta, December 5, 2006 (JP) - A number of trade and investment agreements were signed Monday by Indonesia and South Korea aimed at promoting and strengthening bilateral relations between the two Asian nations.

On the trade promotion front, the Investment Coordinating Board (BKPM) and the Korean Trade-Investment and Promotion Agency (KOTRA) agreed to facilitate what BKPM chairman Muhammad Lutfi said was a growing interest among Korean businesses in investing here.

"I hope that next year, the BKPM, with the support of KOTRA, can come up with various ways of attracting investment," KOTRA director general Min Kyung Sun said.

The memorandum of understanding (MoU) was signed by Lutfi and KOTRA president Ki-Hwa Hong.

The MOU signing was part of the 13th joint meeting of the Indonesia-Korea Economic Cooperation Committee (ECC) in Sultan Hotel in Jakarta, held in tandem with the visit of South Korea President Roh Moo-hyun to Indonesia.

At the same venue, an agreement on the development of small and medium enterprises (SMEs) was signed by PT Permodalan Nasional Madani (PMN) and the South Korea Small Business Corporation (SBC), which will allow greater exchanges of information and experts on SMEs between the two countries.

To date, one expert from the SBC, Kwan Woong Lee, has been stationed in Indonesia to help the PMN strengthen its programs in support of local SMEs.

Another agreement signed was a mid-term financing contract between the Korea Export Insurance Corporation (KEIC) and state-owned steel producer PT Krakatau Steel.

Signed by KEIC director Kim Song Woong and Krakatau director Dainulhay, the contract is for Krakatau Steel to partly supply a steel construction project in Korea that is estimated to be worth US$500 billion.

Joint Korean-Indonesian company, PT Korindo, also announced its plan to expand its pulp, paper and biodiesel businesses next year by acquiring 400,000 hectares of plantation land.

"We need an extra 200,000 hectare for our biodiesel business and another 200,000 hectare for our pulp and paper business," Korindo vice president Lee Byung Ki said.

Since 1998, the company has invested in 34,000 hectares of oil-palm plantations, producing 45,000 tons of crude palm oil per year. "We are also planning to establish cassava farms for the production of raw materials for bioethanol. For that, we will need 40,000 hectares," he said, without mentioning locations.

Korean business group SK Corporation will also invest in Indonesia, Lutfi said.

"This company will build a factory either in Tangerang or Bekasi," he revealed without elaborating, except to say that the project would be worth some $400 million.

According to Trade Ministry figures, total trade between the two countries in 2005 reached $9.95 billion, with Indonesia enjoying a surplus of $4.44 billion, an increase of 46.02 percent compared to the 2004 surplus of $2.98.

Aquatico to invest $15 million in PAM Jaya

December 5, 2006

Jakarta (ANTARA News) - Singapore-based Aquatico Pte Ltd. said on Tuesday it will invest US$15 million in Thames PAM Jaya (TPJ) if PT PAM Jaya and the Jakarta administration approve its plan to buy Thames Waters` 100 percent stake in TPJ.

"We will use the US$15 million in fresh fund to build water processing installations to produce drinkable water and new pipelines," said Rosan P Roeslani, president director of PT Recapital Advisor which owns Aquatico.

He said Aquatico was waiting for the green light from the Jakarta governor and PAM Jaya to buy the shares.

Aquatico is the winner of a limited tender for Thames` 100 percent stake in TPJ.

Thames sold its stake following the decision of its headquarters in London to focus on Europe and Amerika. Consequently, it must sell all its stakes in Asia including Thailand, China, and Indonesia.

Pertamina eyes $1 bln refinery expansion with SK

By Muklis Ali, Reuters - 2006-12-05 10:55

JAKARTA, Dec 4, 2006 (Reuters) - Indonesia's state oil and gas company, PT Pertamina, plans to cooperate with South Korea's SK Corp. (003600.KS: Quote, Profile , Research) in a $1 billion expansion of its Dumai refinery, the president of Pertamina said on Monday.

The capacity of the refinery in Sumatra island will be raised to 170,000 barrels per day (bpd) from 120,000 currently.

"We will start a study on it next year and it could take two to three years to build," Pertamina's president director, Ari Soemarno, told reporters.

"We will also study which crude oil we will use to be processed whether sweet crude or sour crude," he added. Last week, Pertamina signed an agreement with Japan's Mitsui & Co (8031.T: Quote, NEWS , Research) to build a new gasoline cracking unit also costing about $1 billion at its Cilacap refinery.

Indonesia's ageing refineries badly need an overhaul, but foreign investment plans have not been followed through, hindered by sketchy regulations and an uncertain legal climate.

In April, SK Corp., South Korea's top oil refiner, signed a joint venture with Pertamina to build and operate a lubricants plant in Indonesia.

The plant due to be built at the Dumai refinery by the first half of 2008, will produce 7,250 bpd of group III base oil.

On the deal with Mitsui announced last week, Pertamina's processing director Suroso Atmomartoyo has said the new unit in Cilacap would have a capacity of between 40,000 bpd and 50,000 bpd and the company planned to start building it by 2008 at the latest and expected it to begin operations in 2010.

Largest Bio-ethanol Factory to be Built

Friday, 01 December, 2006 | 15:40 WIB

TEMPO Interactive, Bandung: Bio-ethanol producer of South Korea LBL Network Ltd has signed a Memorandum of Understanding with West Java Province and the governments of Kuningan, Subang, Sumedang and Indramayu regencies to build a factory for processing yams to bio-ethanol in West Java. Bio-ethanol is a mixed material for premium gas.

The West Java government will give facilities to people in Kuningan, Subang, Sumedang and Indramayu to plant yams, the Manihot esculanta trans species. The four regions will be the base for planting yams. “The project will be aimed at developing the bio-ethanol industry,” said President and CEO of LBL Network Co. Ltd Kang Yong-soo in Bandung yesterday (11/30).

In its operation, the South Korean company has invited PT Mitra Sae International as the administrator of joint operation in developing the premium factory. The material is a mixture of premium and 5 percent ethanol using yams as its raw material.

According to Diractor of PT Mitra Sae International Tony Firmansyah, the factory that is to be built has manufacturing capacity of 200 million liters of ethanol per year. The location will be of around Indramayun Sumedang or Subang. Total investment, including working capital is US$100 million. “This the largest bio-ethanol industry in Indonesia,” he said.

In order to meet the production target, he said, fresh yams totaling 1.2 million tons per year will be required as the raw material. It is estimated that the fresh yams need 23 thousand hectares of land. However, to preserve the continuation of yam production, 50 thousand hectares of land is required.

Ahmad Fikri

Sumitomo Develops Tanjung Jati B III-IV

Friday, 01 December, 2006 | 15:42 WIB

TEMPO Interactive, Jakarta: PT PLN (Persero) will increase the capacity of the Steam-Powered Electric Generating Plant (PLTU) of Tanjung Jati B Unit III and IV by 2x660 megawatt. The project is a development from Tanjung Jati B Unit I and II, that will be carried out by Sumitomo—a Japanese company which is targeted to be in operation in 2007.

Director of Human Resources and Organization of PLN (state electricity company) Djuanda Nugraha Ibrahim said that PLN is still negotiating the power purchase agreement (PPA) with Tanjung Jati B operator PT Central Java Power. “This is an IPP or private electricity generator wherer PLN only buys the electricity,” he said yesterday (11/30) in Jakarta.

He has explained that Sumitomo—as the contractor of supply and construction of PLTU Tanjung Jati B unit III and IV—will build the generator with the same construction as the previous two units. The negotiation of power purchase is planned to have an initial agreement in January 2007. Afterwards, within six months, the signing of PPA can be done. “It will only be operated in mid-2010 since construction will take around 36 months,” he said.

The building of two additional units of PLTU Tanjung Jati B, Djuanda said is financed by the Japan Bank for International Corporation. The financial institution has given a commitment whose value is still awaiting the PPA agreement.

MUHAMAD FASABENI

Three Local Contractors Compete to Build Kuala Namu Airport

Anton Aprianto, Tempo / Tempo Interactive

Jakarta, 29 November, 2006 (TEMPO) - Three local contractors, PT Wiratman & Associates, PT Virama Karya and PT Citra Konsumalindo, are competing in the tender of Kuala Namu Airport construction in North Sumatra, which is targeted to start in November 2007.

According to Eddy Haryato, PT Angkasa Pura II’s Managing Director, the tender winner will be announced in December. The tender winner, he said, in addition to acting as contractor will also be the technical designer of the airport. “The technical design concept will be worked on for nine months then the construction can begin,” said Eddy. Physical construction that does not require designs, such as roads and water channels, has been carried out since June.

Eddy said he hoped that the airport construction could be completed by the middle of 2009 at the latest.

So it is expected that in November 2009 Kuala Namu can replace Polonia Airport, Medan. “Because, Polonia's capacity will be overloaded in 2009,” he said. It is planned that Kuala Namu airport will be built in two stages. The first stage is the main infrastructure construction such as land side and air side. In this stage, Kuala Namu is targeted to be able to accommodate eight million passengers per year.

The second stage is a finishing stage to be a hub port so that the airport can accommodate 25 million passengers every year. Angkasa Pura II will be the operator and manager of Kuala Namu Airport. The financing of the airport will be borne by Angkasa Pura II and the government.

Eddy explained that the construction of land side including terminal and hangar was estimated would cost Rp1.3 trillion. This fund requirement will be met with Rp600 billion from the company and the remainder by bank loans.

For the air side including runway, navigation system and tower, investment needed is around Rp2.3 trillion, which will be completely financed by the government.

Indonesia to publicize winner of bid of power plants projects next week

Xinhua
Indonesian Ministry of Mines and Energy is to announce the winners of bid for two steam-powered electric generator projects in Suralaya of Banten province and Paiton of East Java province next week, an official of the ministry said in Jakarta on Thursday.

The four bidders of the projects involve three companies from China and one from Japan, according to the ministry.

Yogo Pratomo, the ministry's coordinator for the acceleration of the projects building, said that now the ministry was evaluating the price on the bid.

"The winners will be announced next week," he told reporters after meeting with Vice President Jusuf Kalla at his office here.

The project with each capacity of 600 mega watts is part of the government's plan to establish 10,000 mega watts power plants, which will be complete within three years, Indonesian Minister of Mines and Energy Purnomo Yusgiantoro has said.

The vice president quoted by Pratomo as saying that the projects aims to reduce the country's dependency on fuel.

Indonesia will reduce the use of fuel oil to generate power from 30 percent at this time to 5 percent in 2009.

The country has a huge supply of coal but its oil production has been declined due to aging of some oil wells and the slow of finding new well.

Indonesia's power plants have total capacity of 25,000 mega watts, but the demand grow by 6 to 7 percent or 2,000 to 3,000 mega watts annually, according to the minister.

Gorontalo province to build Indonesia's first nuclear power plant

Jakarta (ANTARA News/Asia Pulse) - The province of Gorontalo in northern Sulawesi is set to build Indonesia's first nuclear power plant.

Gorontalo Governor Fadel Muhammad said a company owned by the provincial administration will team up with a Russian-based firm to build a 70 megawatt nuclear power plant, starting next year.

The nuclear plant will deal with a shortage in power supply in that province, said Muhammad. The National Atomic Power Agency (BATAN) said a tender for a unit of the nuclear power project will be held in 2008, with construction set to start in 2010 for completion in 2016.

Indonesia, Japan sign energy contracts worth USD 2 bilion

Tokyo (IOGNews/Asia Pulse) - Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro announced on Tuesday, that an Indonesia-Japan Energy Round Table meeting has produced three new contracts on oil, gas and energy collectively worth USD2
billion.

"There are three contracts worth USD 2 billion, one of which is for LNG trading between state oil company PT Pertamina BP Berau and Tohoku Electric Power...that is valued at USD 1 billion," the minister said.

The other two agreements, worth USD 500 million each, were for the construction of thermal power plants in Tanjung Jati and Cirebon, West Java.(antara)

Affin hired to help raise US$308m for BumiGas plants

Business Times - 2006-11-29 11:49

Kuala Lumpur, November 29 2006 (Business Times) - AFFIN Investment Bank Bhd has been hired to help PT BumiGas Energi raise US$308 million (RM1.12 billion) to help finance the construction of two power plants in Indonesia.

The bank has been appointed the adviser and lead arranger for the exercise, which is due to be finalised by the end of the year, it said in a statement recently.

BumiGas has formed a special purpose vehicle (SPV) to develop, finance, build, operate and maintain the geothermal power plants.

Unlike gas or coal-fired plants, geothermal power plants use the natural heat of the earth, like dry steam, to generate electricity.

This is Affin's first cross border deal in Indonesia.

Shareholders of the SPV include Malaysian-based Transmit Nanyang Engineering Construction Sdn Bhd (TNEC) with 60 per cent shareholding, Indonesia-based PT. Bumigas Energi with 30 per cent and an Australian company Prime International with 10 per cent.

"I am confident the offer will be fully subscribed by private investors especially since TNEC (who is the major shareholder of Bumigas) is expected to be the main investor of the bonds," Affin Investment Bank president and chief executive officer Datuk Sheikh Awab Sheikh Abod said.

The two geothermal power plants are under a 15-year concession awarded to BumiGas, at the end of which the independent power producers (IPPs) will be transferred to PT. Geodipa Energi.

PT GeoDipa Energi is a joint venture company of PT Pertamina (Persero) and PLN (Persero) (Perusahaan Listrik Negara), two of the biggest state-owned companies in Indonesia.

It has been mandated by the Ministry of Finance of Indonesia and the Government of Indonesia to produce electricity from geothermal energy and sell the electricity produced to PT Perusahaan Listrik Negara.

The construction will take approximately four years with an estimated cost of US$400 million (RM1.45 billion).

"We are pleased to appoint Affin Investment Bank to secure financing for this venture. We are confident that with their growing regional prowess they should have no problem to attract investors," BumiGas chairman H.M. Wijaja said in a statement.

Indonesia Bakrie Sumatera plans $66 mln capex in 07

Reuters / Yahoo Finance - 2006-11-29 11

JAKARTA, Nov 28, 2006 (Reuters) - Indonesian plantation company PT Bakrie Sumatera Plantations Tbk plans to triple capital spending next year in its effort to boost revenue and expand its palm oil business, its chief said on Tuesday.

Bakrie Sumatera, controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie, said it plans 600 billion rupiah ($65.7 million) in capital spending next year compared with 200 billion budgeted for this year.

"The money will also be used to finance the construction of a biodiesel plant and to build new palm oil mills," the company's President Director Ambono Janurianto told reporters. He did not elaborate.

Janurianto said the company expects revenue growth to be 30 percent and operating profit to grow 35 percent this year. The company expects next year's revenue growth at 35 percent and a 20 percent increase in operating profit.

In 2005 the company posted revenues of 883.31 billion rupiah and operating profit of 223.16 billion.

According to Reuters Estimates, the company's revenue will increase to 1.09 trillion rupiah and 1.26 trillion in 2007.

Bakrie Sumatera plans to jointly build the country's first biodiesel plant with construction firm PT Rekayasa Industri to meet a surge in demand for renewable energy.

The $25 million plant would have the capacity to produce between 60,000 and 100,000 tonnes of biodiesel a year as a substitute for diesel fuel.

Indonesia, a member of the OPEC oil producers' cartel but forced to import a quarter of its fuel, is scrambling for alternative energy sources as its oil and gas reserves dwindle and soaring world oil prices increase the burden of its fuel subsidies.

RI, Japan agree on yen loan amounting to US$16.151 million

Jakarta (ANTARA News) - Indonesia and Japan reached agreement on a 1.869 billion yen or around US$16.141 million to Indonesia for funding a survey and program planning of the Jakarta Mass Rapid Transport(MRT) system.

Information on the agreement from the Indonesian embassy in Japan, said the exchange of documents of the agreement took place between Indonesian Foreign Minister Hassan Wirajuda and his Japanese counterpart Taro Aso in Tokyo on Tuesday.

A Mass Rapid Transport system is badly needed in metropolitan Jakarta to overcome traffic jams which had been posing a serious problem especially during morning and afternoon rush hours as the result of inadequate road infrastructure and excessive dependence on road transporation.

The information also said that the Jakarta MRT project was designed to improve the capacity of passenger movements in Metropolitan Jakarta by the construction of a 14.5 km railway track, partly underground, between Lebak Bulus and Dukuh Atas, at a cost estimated at 110 billion yen.

The yen loan was actually a special term for economic partnership with an interest rate of 0.40 percent per year, and payable in 40 years including a grace period of 10 years, and the procurement of goods and services.

The Japanese government hoped that the loan would give a greater contribution to the improvement of the functions of Jakarta city and the restoration of a conducive investment climate in the capital city, in addition to stabilizing international environment in Japan and strenghthening the relations between the two countries through building a stable Indonesia.

The agreement brought Indonesia`s debts in the yen to 4,42 trillion.

Earlier, Transportation Minister Hatta Rajasa said in the Indonesia Infrastructure Summit that the the central government through the state budget provided around 15 percent, or US$120 million, in counterpart fund for the MRT project.

The construction of the MRT project will be shared by Japan and Indonesia each with 30 percent, and the remaining 40 percent will be decided through an international tender.

New Fast Ferry Jetty and Mooring Dolphbins for North Jetty - Ulee Lheue Port

Design and Construction of New Fast Ferry Jetty and Mooring Dolphbins for North Jetty - Ulee Lheue Port, Banda Aceh, NAD, Indonesia

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UNDP Indonesia
Deadline: 01-Dec-06

Design and Construction of New Fast Ferry Jetty and Mooring Dolphbins for North Jetty - Ulee Lheue Port, Banda Aceh, NAD, Indonesia
Request for Proposal
Reference Number: 2006/897

View Attachment

New megaplex hopes to blitz movie theater industry

Yuli Tri Suwarni, The Jakarta Post, Bandung

The newly opened nine-screen Blitz Megaplex in Bandung, West Java, offers a new option for movie fans in an industry that has been dominated by 21 Cineplex.

Blitz opened its first megaplex this month in Bandung's Paris van Java shopping mall. It plans to open megaplexes in more cities, with its ultimate goal to become a major player in the country's movie theater industry.

"It's a daring idea, opening a movie theater in Bandung, where there have not been many moviegoers," said Yana Mulyana, a spokesman for Kharisma Jabar Film, the sole movie distributor in West Java.

The chairman of the All Indonesia Movie Theater Companies Association, Edison Nainggolan, warmly welcomed the new megaplex.

"It means they believe Bandung is a safe city, because a movie theater business will die in a city with poor security," Edison told The Jakarta Post in Bandung.

The arrival of Blitz could also herald a revival of a movie theater industry that has been flagging in recent years.

Edison said that in the 1990s, Indonesia had around 3,300 movie screens belonging to more than 500 companies.

But fewer and fewer people have been going to the movies, partly the result of the explosion in affordable VCD and DVD machines and cheap, pirated discs.

"The number of moviegoers has sharply decreased, leaving only around 400 screens left in the country," Edison said, adding that several cities in West Java, such as Banjar, Ciamis and Majalengka, no longer had a movie theater.

Though there is no official data, Yana said there were now only 40 movie theaters across West Java with 144 screens.

He said the decline in the number of moviegoers started in 1994. That year, the province had 213 theaters with 417 screens, which could accommodate 137,000 viewers. By 1997 there were only 160 theaters with 359 screens and 102,000 seats.

"With the large trade in pirated VCDs and DVDs at such low prices, people can easily watch movies at home without having to pay for expensive tickets or spend money on transportation," Yana said.

Before the arrival of Blitz, there were only 10 theaters in Bandung with a total of 41 screens. Most of these surviving theaters, Edison said, are located in shopping malls.

Since opening Blitz has drawn in good crowds, including many students and young executives. Part of its early success is the choice offered by Blitz, which features nine screens. Previously, the largest theater in the city was the seven-screen Ciwalk21.

Fikri Fadillah, a 27-year-old businessman, was elated with the new theater.

"The service is good and the prices are competitive, not too expensive," he said.

Ticket prices at the theater are Rp 25,000 for Hollywood offerings and the latest Indonesian films, and Rp 15,000 for independent movies.

Bandung Institute of Technology student Aditya Himawan, 21, said it was good to have a movie theater that would screen independent films.

"Maybe because the theater is still new, the sound quality is great and the place is neat. In other places, out of five screens, only two are good quality," he said.

Blitz's arrival was also greeted by producer-director Nias Dinata, who said the theater would help Indonesian films stay in theaters longer.

"Filmmakers will have more space to screen our films in the country, because right now there are not enough movie theaters ...," she said.

Blitz marketing director Wendy Soeweno said the market for movie theaters was wide open, considering the lack of entertainment facilities in the country.

"People need more entertainment facilities to give them a break from their routines," Wendy said.

She said Blitz would open its second theater, an 11-screen megaplex with 3,200 seats, in Jakarta before the end of the year.

RI absorbs only 53 pct of its loan commitment: minister

Jakarta (ANTARA News) - State Minister for National Develoment Planning/Head of the National Development Planning Board (Bappenas) Paskah Suzetta said Indonesia had absorbed only about 52 percent of the current US$15 billion foreign loan commitment.

"The foreign loan commitment amounts to about 15 billion US dollars of which only about 52 percent had been disbursed," the minister said here on Thursday.

He said that most of the foreign loans could not yet be disbursed because of obstacles in preparing land for infrastructure projects.

"All are program and project loans. The largest portion of the loans are for the development of instructure projects," he explained.

He said that his office was evaluating Indonesia`s program and project loans in order to make a final decision on which of the programs or projects had to be continued or stopped.

"I cannot reveal how much of the loans will be used and how much will be returned. We will look at the various aspects, including the project`s readiness and the terms and conditions," Paskah said.

Touching on the platform of Indonesia`s debts at the Asian Development Bank (ADB) which reached one billion US dollars a year but for this year still accounted for 400 million US dollars only, Paskah said that the withdrawal of the loans were based on an evaluation of the Indonesian government.

"They set aside a platform at US$1 billion but we are stuck to the evaluation on our readiness to utilize it in the form of program or project loans," the minister added.

On the occasion, the minister also explained the agenda he would take to Japan when he joins President Yudhoyono`s visit to Tokyo later this month.

He said that there was a possibility that a loan agreement for the construction of a mass rapid transport (MRT) project would be signed.

"Initially there was a delay in the MRT project but following negotiations with Japan, we finally reached agreement on the terms and conditions concerning the use of local contents in the project," the minister said.

He said that Indonesia and Japan had agreed that local contents reached 30 percent, local contents from Japan 30 percent and the remaining 40 percent to be put on an open international tender.

Indonesia, China sign energy, mining cooperation agreement

Friday, November 24, 2006 06:11 WIT

Beijing (IOGNews) - China and Indonesia agreed to expand cooperation in energy and mineral resources, as Indonesian President Susilo Bambang Yudhoyono said energy security would be a "key factor" in future bilateral ties, state media said on Sunday.

Yudhoyono and Chinese Vice Premier Huang Ju attended a signing ceremony for a memorandum of understanding on energy and mining cooperation on Saturday in Shanghai on Saturday, DPA reported citing the official Xinhua news agency.

Energy security is a "key factor in allowing China and Indonesia to achieve peace, stability and development", the agency quoted the Indonesian president as saying.

"Win-win economic cooperation is the foundation of the strategic partnership between China and Indonesia," Huang was quoted as saying.

The two leaders attended the second Sino-Indonesian energy forum in Shanghai on Saturday, following the first forum in Bali in 2002.

Earlier this year, the two sides agreed that Indonesia's Tangguh gas field will provide 2.6 million tons of liquefied natural gas annually to south-eastern China's Fujian province from 2009 to 2034.

The report gave no details of any new initiatives in Saturday's agreement.

Yudhoyono is also scheduled to attend a forum marking the 15th anniversary of formal dialogue between China and the Association of South-East Asian Nations on Monday and Tuesday in the southern Chinese city of Nanning. (Antara)

Development of a Water Quality Management System

Pilot and Demonstration Activities
Development of a Water Quality Management System for the West Tarum Canal of the Citarum River Basin

Asia Development Bank

The growing population in West Java's urban areas has brought pollution to the Citarum River Basin, leading to the dwindling of water quality. This PDA will pilot the establishment of a water quality monitoring and management system for the West Tarum Canal.

The growing population in West Java's urban areas has brought pollution to the Citarum River Basin, leading to the dwindling of water quality. This PDA will pilot the establishment of a water quality monitoring and management system for the West Tarum Canal.

Read more ..

Govt, Russia to sign 12 agreements

Abdul Khalik, The Jakarta Post, Jakarta

Indonesia and Russia will sign 12 different agreements, including ones on cooperation in the fields of military, energy and gas, and space exploration, during President Susilo Bambang Yudhoyono's visit to Moscow later this month.

Russian Ambassador to Indonesia Mikhail M. Bely said that besides witnessing the signing of the agreements, President Yudhoyono and his Russian counterpart Vladimir Putin would discuss a wide range of issues related to political and economic cooperation as well as global matters, including North Korea's and Iran's nuclear programs.

"All the agreements will serve as a legal framework for wider and more concrete cooperation in the future," the ambassador said during a press conference here Thursday.

Yudhoyono, who will make official visits to Japan and then Russia from Nov. 26 to Dec. 2., will also address a business forum at the Kremlin, with more than 100 businesspeople from Indonesia expected to attend.

The Foreign Ministry's director general for Europe and America, Eddhi Hariyadi, confirmed the two presidents would discuss a number of issues, including areas of possible cooperation in the political and economic fields, before witnessing the signing of around 12 agreements.

Indonesia and Russia are expected to sign an agreement that would enable Jakarta to purchase US$1 billion in military equipment for its Army, Navy and Air Force between 2006 and 2010

"It is known that Indonesia is keen to obtain more military equipment and technology and Russia has a lot to offer. Indonesia has announced its intention to purchase military equipment worth $1 billion from us. I can confirm that we have received a formal official request from the Indonesian government. It will be negotiated during the visit," Bely said.

Defense Minister Juwono Sudarsono announced last week that Indonesia had agreed to purchase $1 billion in military equipment from Russia in an effort to diversify its arms sources.

He said the purchase would prevent the country from being totally dependent on American military products, which is important in the event the U.S. imposes another arms embargo on Jakarta.

Four Russian Sukhoi combat aircraft were delivered to Indonesia in 2003, and Bely said the two countries were now closing a deal on the purchase of additional Sukhoi to strengthen Indonesia's Air Force.

"There are also plans to buy Russian carriers and submarines. Indonesia has a long purchasing list to be obtained from Russia. And we are ready to discuss the terms of credit export during the visit," the ambassador said.

In energy cooperation, Bely said Russia was willing to participate in oil and gas projects here, including possible participation in a gas pipeline project between Kalimantan and Java. The Bakrie Group recently won the tender to develop the pipeline.

He said Bakrie Group was set to meet with Russian energy and gas companies to discuss the pipeline project.

Russia and Indonesia will also sign an agreement on the peaceful use of nuclear energy, which could open the door to cooperation in the construction of a nuclear power plant here.

Indonesia has long wanted to build nuclear power plants to diversify its energy sources. Its initial plans were shelved in 1997 in the face of mounting public opposition and the discovery and exploitation of the large Natuna gas field.

But the plans were floated again last year, with the country's oil and gas reserves continuing to run thin and increasing threats of power shortages.

The government has chosen Ujung Lemah Abang on the Muria peninsula in Central Java as a possible site for the first plant, which could have an output of 1,000 megawatts.

In aviation and space exploration, Indonesia and Russia are negotiating to use Biak island as a launching pad for communication satellites.

Indonesia's Antam plans second alumina plant

Reuters - 2006-11-23 14:15:43

JAKARTA, Nov 22, 2006 (Reuters) - Indonesian miner PT Aneka Tambang Tbk is planning to build its second alumina plant with an annual capacity of 600,000 tonnes, the president director said on Wednesday.

"The smelter grade alumina plant will be located in Bintan island (off Sumatra) with commercial operations expected to start in 2009," Dedi Aditya Sumanagara told reporters.

Antam corporate secretary Ashur Wasif said a Chinese investor was interested in helping finance the project estimated to cost up to $250 million. He declined to name the investor.

"The construction of the plant is expected to begin in the end of 2007," Wasif told Reuters.

Earlier this year, the company said it plans to build a chemical-grade alumina plant in Tayan, West Kalimantan with an annual capacity of 300,000 tonnes.

Antam (ATM.AX: Quote, Profile, Research) has signed an agreement with three foreign firms to jointly develop the $220 million alumina plant in Tayan that will process high quality bauxite reserves into chemical grade alumina for the domestic and international market.

Chemical grades are used in the manufacture of ceramics, spark plugs, paint and plastics, while smelter grades are those from which aluminium is produced.

Indonesia's Astra Agro plans 2007 capex of $77 mln

Reuters - 2006-11-23 14:18:55

JAKARTA, Nov 22 (Reuters) - Indonesia's largest listed plantation firm, PT Astra Agro Lestari Tbk (AALI.JK: Quote, Profile, Research), plans to increase capital spending in 2007 to 700 billion rupiah ($76.65 million) to expand its oil palm plantations and build new mills, its finance director said on Wednesday.

The company has said it will spend between 500 billion and 600 billion rupiah this year.

"It will be used to expand by 15-17,000 hectares oil palm plantations in East Kalimantan and to build two new palm oil mills in Southeast Kalimantan and Riau, with construction expected to begin early next year," finance director Julie Syahtari told reporters.

The plantation unit of the country's leading auto retailer, PT Astra Agro International Tbk, currently manages 201,412 hectares of oil palm plantation.

ADB to Assist Indonesia with $428 Million for Infrastructure Development

MANILA, PHILIPPINES - ADB will help Indonesia carry out critical reforms needed to develop the country’s infrastructure and drive economic growth.

The Infrastructure Reform Sector Development Program (IRSDP) will offer more than $428 million in loans and grants to the Government of Indonesia to help improve the country’s investment climate and tap the power of the private sector in meeting Indonesia’s huge infrastructure needs. These will be supplemented by a $7.6 million grant from the Government of the Netherlands for a project development facility.

“Indonesia has the potential for dynamic economic growth in the years ahead,” says Rajat M. Nag, Director General of ADB’s Southeast Asia Department. “The development of infrastructure is vital to the growth Indonesia needs to create jobs and bring people out of poverty. Ensuring adequate quantity and quality of infrastructure services is critical for restoring Indonesia’s competitiveness.”

Before the Asian economic crisis in the mid-1990s, Indonesia spent about 6% of its gross domestic product on infrastructure. Today, that figure is down to around 2%, and the country’s economy has suffered as a result. About 50 million people have no access to treated water, 90 million are without electricity, and close to 200 million have no direct access to a phone or sewage network.

The poor are the hardest hit by the lack of infrastructure. Roads in poor condition keep people in poverty by denying their access to economic opportunities. Nearly one out of five rural villages in Indonesia is inaccessible for part of the year.

The Indonesian Government estimates that the country needs about $65 billion in infrastructure investments over the next five years, with $25 billion to be met by the Government budget, $14 billion by domestic banks, insurance and pension funds; $10 billion by development partners, and $16 billion by private sector investors.

The ADB program will assist Indonesia in improving the policies, laws and institutions that are needed to attract large scale private sector infrastructure investments. It will also help streamline the infrastructure responsibilities of the national and local governments.

“The public sector alone cannot meet the investment needs. The private sector has to be brought in. But private investors look for a level playing field between the public and private sectors, clarity of regulatory framework, and transparency in the bidding process,” says Ramesh Subramaniam, ADB Principal Economist based at its office in Jakarta. “The program supports the Government in implementing reforms in these important areas.”

The program is planned to be undertaken as a cluster of three subprograms, the first of which is backed by a loan of $400 million from ADB's ordinary capital resources. This has a 15-year term, including a grace period of three years, with interest determined in accordance with ADB's LIBOR-based lending facility.

Support under each of the two subsequent subprograms up to 2010 will be determined based on needs, as well as progress made.

One of the most critical constraints to infrastructure development is the lack of adequate project preparation. Besides the $400 million loan, the program also includes a loan of $26.5 million equivalent from ADB’s concessional Asian Development Fund to help the Government establish a project development facility to prepare infrastructure projects well, make them bankable, and bid them out in a transparent manner.

The concessional loan has a 32-year term, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per annum subsequently.

A further $2 million grant from ADB will support the Government in implementing a risk management framework under IRSDP.

BAPPENAS, the National Development Planning Agency, will be the executing agency for the program.

ADB's Board of Directors recently endorsed a four-year country strategy for Indonesia that proposed about $3.36 billion in loans and another $47.6 million in grants. ADB’s assistance will be focused on infrastructure development, improving the financial sector, supporting government decentralization, accelerating the achievement of the Millennium Development Goals (MDGs), and environmental protection.

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Jaya Ancol to pump Rp 350 billion into investment projects

Andi Haswidi, The Jakarta Post - 2006-11-22 17:18

Jakarta, November 22, 2006 (The Jakarta Post) - Arguably the biggest theme-park operator by assets in Southeast Asia, PT Pembangunan Jaya Ancol plans to pump Rp 350 billion (about US$39,000) into new property and theme-park projects during the course of 2007.

"There is still a market niche that needs developing," the company's president director, Budi Karya Sumadi, told an investor forum Tuesday at the Jakarta Stock Exchange (JSX).

Budi said that around Rp 200 billion would be invested in the company's property business within the Ancol Jakarta Bay City, while the remaining Rp 150 billion would go on procuring new attractions for the Dunia Fantasi amusement park, buying a Beluga white whale for its water park, revitalizing the Atlantis swimming pool and improving Ancol beach.

Ancol Jakarta Bay City is a 552-hectare leisure complex that includes amusement parks, a golf course, a beach pool, clubs, hotels, townhouses and marina bay.

Budi said that around Rp 200 million of the proposed investment would be sourced from the company's retained earnings while a number of financing options were being considered for the remainder.

"We have two options; it's either through issuing bonds or launching a rights issue that could increase the number of company shares by between 10 and 15 percent," he explained.

Budi said that the second quarter of next year would be the right time to decide on the financing options as part of the development project would already have commenced by that stage.

According to company figures, Pembangunan Jaya Ancol books an average revenue increase of between 10 and 15 percent each year. Total revenues are expected to increase to Rp 670 billion this year, up from Rp 617.9 billion in 2005 and Rp 542.8 billion in 2004.

The company is 72 percent owned by the Jakarta provincial administration, 18 percent by PT Pembangunan Jaya and 10 percent by retail investors after a stake in the firm was sold to the public in 2004.

The firm, which was listed on the Jakarta Stock Exchange (JSX) in late 2004, registered net income of about Rp 124.5 billion last year, up from Rp 110.6 billion in 2004 and Rp 105 billion in 2003.

"The growth in our visitor numbers has been consistently steady despite lower purchasing power at the present time. We even managed to achieve growth during the 1998 crisis," Budi said.

He stressed that continuous innovation and new investment was the key to the firm's steady growth during its three decades in existence, adding that the company intended to develop the Ancol area into a major culinary-vacation destination for the upper-income-bracket market.

US$1.1b PGN pipeline expected to come onstream next month

The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has been drafted in to inaugurate a US$1.1 billion pipeline linking South Sumatra and West Java some time before the end of this year.

The pipeline, which will be operated by state-owned gas distributor PT Perusahaan Gas Negara (PGN), will supply between 300 million and 400 million standard cubic feet of gas per day (MMSCFD).

PGN's newly appointed president director, Sutikno, said Friday in Jakarta that the construction work was now 85 percent complete.

"We hope that operations can commence on Dec. 21," he said following an extraordinary shareholders, which endorsed his appointment as the company's top executive, replacing WMP Simanjuntak.

The project, comprising two pipeline tracks spanning a total of 1,106 kilometers from Grissik in South Sumatra to Rawa Maju in West Java, started last year.

"We hope we will be able to get additional gas supplies of about 300 million MMSCFD next year, thanks to this project," said PGN finance director Djoko Pramono.

The company said last year that when the pipeline came onstream, the company would see its 2007 revenues triple from the Rp 4.4 trillion (US$488 million) recorded in 2004.

The company booked a 22 percent revenue increase to Rp 5.4 trillion in 2005, as compared to 2004.

The gas distributor's net profit in the first nine months of this year rose 251 percent to Rp 1.5 trillion from Rp 427 billion a year earlier, while revenues from gas sales and transmission as of Sept. 30 jumped to Rp 4.9 trillion from Rp 3.9 trillion in the same period last year.

The meeting also endorsed the appointment of new development director Adil Abas, and also appointed Sutikno to double up as the company's business director.

Djoko was also named director for general affairs, while Simandjuntak was appointed to the company's board of commissioners.

PGN is the dominant player in the Indonesian natural gas market.

Next year, the company is planning to build another pipeline connecting Medan in North Sumatra and Duri in Riau. The 465-kilometer pipeline, which will have a total capacity of 250 MMSCFD, will cost about $490 million.

Gadang eyes more utilities projects

Friday November 17,2006, thestaronline

KUALA LUMPUR: Gadang Holdings Bhd aims to increase its investment in the utilities sector, said managing director and chief executive officer Datuk Kok Onn.

He said the company's foray into treated water supply concessions in Indonesia had enabled it to develop steady recurrent revenue.

“Only 20% of the Indonesian population has treated water supply, so we see huge potential to grow this business,” he told reporters after the company AGM yesterday.

Gadang has three treated water supply concessions in Indonesia at present. It acquired PT Taman Tirta Sidoarjo, which produces 200 litres of treated water per second, last year.

The other plants are PT Bintang Hytien Jaya (BHJ) in Kota Tangerang, which has a production capacity of 1,050 litres per second and PT Sarana Catur Tirtakelola (SCTK), which would supply 400 litres per second when the plant is completed early next year.

Gadang said the capital investment for BHJ and SCTK over the next five years was expected to be more than RM100mil while the annual revenue from the division was expected to climb from the present RM4mil to over RM50mil by 2010.

It is also in negotiations to acquire new concessions, which have a combined output capacity of 1,500 litres per second.

Kok said the company’s engineering division had an order book worth RM430mil, which was expected to last about a year.

“We foresee some new jobs coming in,” he said, adding that Gadang was optimistic of securing infrastructure and building projects under the Ninth Malaysia Plan and the Private Finance Initiative scheme.

The engineering division has tendered for local projects worth more than RM1bil and expects to secure some deals within the next few months.

Meanwhile, Gadang's property division has about 100 acres land bank worth over RM100mil. Around 80% of it is located in the Klang Valley and the balance in Johor.

The group is also now in talks with some parties in China for water and real estate projects.

Energizing The Economy

Energizing The Economy
Indonesia is likely to confront looming power shortages due to insufficient capacity expansion in the face of 7 to 9 percent yearly increase in demand. Over 70 million people in Indonesia, mostly the poor, still do not have access to electricity.
Read the Brief [pdf 1.5mb]

For more information on World Bank in Indonesia, please visit: http://www.worldbank.org/id

The Road to Economic Growth

The Road to Economic Growth
The road sector accounts for the major share of domestic freight and inter-urban passenger land travel in Indonesia, playing a crucial role in linking communities and markets throughout the country. Read the Brief [pdf 1.1mb]

For more information on World Bank in Indonesia, please visit: http://www.worldbank.org/id

Flow of Funds, Flow of Water

Flow of Funds, Flow of Water
Today, fewer than 20% of households in Indonesia have access to piped water, which is inexpensive and still of reasonable quality compared to alternative sources. The situation has deteriorated in recent years, as the sector can no longer rely on central government grants and loans, formerly major sources of funding. Read the Brief [pdf 674kb

For more information on World Bank in Indonesia, please visit: http://www.worldbank.org/id

Jakarta may take over Pertamina's geothermal areas

JAKARTA, Nov 14 (Reuters) - The Indonesian government plans to take over 15 geothermal working areas from Pertamina in 2010 if the state oil and gas firm does not develop the projects and tender them to other companies, a mines and energy ministry official said on Tuesday.

A lack of investment and uncertainty over government regulation has caused difficulties for Pertamina in developing the projects, located on the islands of Sumatra and Java, the company has said.

Pertamina has 142 megawatts (MW) of geothermal power plants in Kamojang, West Java, and plans to expand to 900 MW by 2010.

"The government will tender the geothermal areas to other companies if Pertamina does not develop the projects by 2010," ministry official Sutisna Prawira told Reuters.

Pertamina upstream director Sukusen Soemarinda said the firm was seeking partners to develop geothermal projects.

"Chevron has shown interest to co-operate with Pertamina in developing geothermal projects. We plan to discuss (this) with them," Soemarinda said.

U.S. energy major Chevron Corp. currently has about 520 MW of geothermal power plants, located in West Java.

Geothermal power plants use hot water or steam from beneath the earth's surface to generate electricity.

Indonesia, dotted with hundreds of active and extinct volcanoes, has estimated potential to produce 27,000 MW of electricity from geothermal sources.

Indonesia, Asia Pacific's only OPEC member, is also the world's largest exporter of liquefied natural gas (LNG) and has huge coal deposits.

Danareksa to join $500 million cement project in Central Java

Blontank Poer - The Jakarta Post - 2006-11-09 11:20:14

Jakarta, November 9, 2006 (JP) - State-owned trust company Danareksa has agreed to partly finance the construction of a Rp 4.5 trillion (about US$500 million) cement plant to be built by Semen Gerobogan in Central Java.

Semen Gerobogan general manager Tonny Santoso said Tuesday that Danareksa had signed a letter of intent (Lol) 'to become one of the financiers for the cement plant, which when completed will have a production capacity of 2.3 million tons a year.

However, Tonny refused to disclose any details on the size of Danareksa's investment in the project.

"For sure, three months after the signing of the Lol. we will start the preparations for the construction of the cement plant," he said.

The plant will occupy about 2.500 hectares of land, including a lime mining concession area. For the first stage of the project, only 60 hectares of land will be used for the factory facilities and another 1,000 hectares for lime mining.

The deal signed by Danareksa and Semen Gerobogan was one of 38 investment agreements signed during the Central Java Infrastructure Business Forum, held Nov. 5-7 at the Quality Hotel in Surakarta.

The agreements cover 27 infrastructure projects, including waste treatment, water, railways and the agribusiness. The agreements have a total value of about Rp 6.56 trillion.

Even though the investment commitments failed to reach the initial target of Rp 14 trillion, Central Java Governor Mardiyanto hailed the forum as a success.

"We hope all the projects can be realized so they will be able to support the local economy and create more jobs for locals," he said.

Investors from China, Taiwan, the Netherlands, France and Malaysia attended the forum.

Indonesia, China sign deal on six energy projects worth $ 5b

(The Jakarta Post Via Thomson Dialog NewsEdge) from The Jakarta Post, October 30, 2006

The Indonesian government has signed an investment contract with the Chinese government on six energy projects worth up to US$5 billion.

As reported by Antara from Shanghai, the contract was signed by Indonesia Energy and Mineral Resources Minister Purnomo Yusgiantoro and China's Planning Committee and State Reform Minister Ma Kai, and was watched by President Susilo Bambang Yudhoyono and Senior Vice Prime Minister Huang Zu in Shanghai last Saturday during the Indonesia-China Energy Forum II.

Purnomo said the six projects included the establishment of a chemical factory for producing liquid coal in South Sulawesi worth $687 million, involving PT Sumber Gas Sakti Prima from Indonesia and Chenda Engineering Corporation of China and Sinchuan Chemical Industry Holding.

The two nations will also cooperate in enhancing coal energy plus other chemical research programs by establishing a plant in Kunming province, China, estimated to be worth between $300 million and $1 billion and involving PT Antarniaga Nusantara Indonesia, Yunan Chemical Industry Group and China National Chemical Engineering Group Corporation.

One project is the establishment of a steel factory and iron ore facility in Sukabumi, West Java, worth $300 million, involving PT Ciracap Sumber Prima and Yunan Geology and Mineral Resources.

A power plant, worth $170 million, capable of delivering two times 100 megawatts will also built in Jeneponto, South Sulawesi, involving PT Bosowa Energi and Chenda Energy Corporation of China.

Another power plant, estimated to worth $2.1 billion, will also be established in South Sumatera. It will be capable of delivering four times 600 megawatts of coal-powered electricity, and will involve PT Tambang Batu Bara Bukit Asam, the State Power Company, PT Indika Inti Energy and China Huadian Corporation.

Lastly, the contract includes plans to establish joint work worth $1.5 billion between the Energy and Resource Ministry and the China National Offshore Oil Corporation to explore crude oil beneath the Aru Island.

"Cooperation in the energy sector is something that is relatively new in the long history between Indonesia and China, but this is the area that will increase the geo-political and geo-economic relations between the two countries," President Yudhoyono said.

The president also said that he hoped that within a decade Indonesia could be the largest bio-energy provider in the world and that foreign investment from countries such as China could make this come true.

The president is in China to bolster economic cooperation between the two countries and is expected to return home on Tuesday.

Truba wins contract to build power plant

JAKARTA, November 8, 2006 (Bloomberg)

PT .Truba Alam Manunggal Engineering, an Indonesian engineering and construction company, said it has secured a contract to build a power plant for PT Central Pertiwi Bahari.

"The $60 million project is expected to commence early next year," Corporate Secretary Jenty Tjandradjaja said.

Truba's share price jumped Rp 15, or 7.1 percent, to Rp 225 on the Jakarta Stock Exchange on Tuesday. That's the biggest gain since a 64 percent increase on Oct. 16, the day the shares started trading on the exchange.

Arabica Coffee Industry

(BKPM - Indonesia)

General Information

Bengkulu Province on the Island of Sumatra has been designated by the Government of Indonesia as a priority area for the development of Arabica coffee plantations. This is due to the fact that the highland soil in Bengkulu is very suitable for this type of coffee. We would therefore like to invite any interested investors to consider locating their Arabica coffee projects in this area.

The area proposed for development is in the Kabupaten Rejang Lebong, at an altitude of around 1,100 m above sea level. There are several main market access routes, namely via Lampung Province or South Sumatra for sea cargo and West Sumatra for airfreight.

The total area planned for conversion to coffee plantations is 4,500 ha, consisting of 1/3 nucleus area and 2/3 plasma area which can be developed in a partnership scheme with the existing smallholders in the area. The plantation project has prioritized the conversion of both not yet developed hillside and mountain terrain, as well as terrain which is presently is planted with Robusta crops.

The proposed processing industry project would produce roasted, soluble and instant coffee with a product capacity of 3000 tons per annum. Confectionery products are also an additional output with a proposed capacity of 200 tons per annum. The land allocated for value-added processing is estimated to occupy 5 ha of the total project area.

In general, the area proposed for this project has good infrastructure. Most roads are passable, although some sections need intensive maintenance. Electricity is available, and water supplies are abundant from local springs. Telecommunications services are available from both the government and private wireless network.

Market Prospect

Both export and domestic markets have strong prospects for Arabic coffee sales. When value added production is expanded to include soluble and instant coffee, the export market potential becomes even more attractive. The production output is estimated to reach 0.7 -1 tons/ha, somewhat higher than present average smallholder production.

Indonesia's national strategy is to increase the competitiveness of its coffee products in world markets. This strategy includes the adoption of new technologies, the enlargement of production areas, the provision of a secure long-term business climate, and intent to produce environmentally friendly products.

The coffee business is estimated to increase by 2.72% per annum through to year 2005. Domestic consumption is expected to increase by 1.65% per annum,while exports will increase by around 3.4% per annum.

Financial Information

The assumptions developed in the financial analysis are:

a. Land equity equal to US$ 150,000.
b. Nucleus planting (1,500 ha) including the seeds, input and labor during 2 (two) years: US$ 400/ha per annum.
c. Plasma planting (3,000 ha) including the seeds in labor during 2 (two) years: US$ 2,400,000.
d. Construction of main processing plant, storage facilities including purchasing and maintenance of equipment: US$ 650,000.
e. No purchasing of raw material required except 10% local price of average plasma production of 2,000 tons/annum.
f. Export product value: US$ 3,000/ton
g. Interest rate no more than 10% per annum. h. Annual depreciation for building and machinery: 8%.