Govt to merge three geothermal companies

The Jakarta Post, Jakarta | Wed, 03/25/2009 6:08 PM

The government is weighing the possibility of merging three geothermal companies, PT PLN Geothermal, PT Pertamina Geothermal Energy, and National Gas Company (PGN), a State Ministry for State Enterprises official said Wednesday.

"A team to oversee the merge has already been formed and is currently in full operation," Deputy for Mining, Strategic Industry, Energy and Telecommunication at the State Ministry for State Enterprises Sahal Lumban Gaol said, as quoted by Antara news.

According to Gaol, the three companies share a vision for the merge, though have yet to decide whether it would take place in the form of a complete merger or form a holding company.

"What's important...they agree that BUMN geothermal development is very important in the effort of finding alternative sources of energy," he said.

He added that Indonesia's relatively untapped geothermal industry carries immense potential for development, such as the Patuha and Dieng mining fields.

"Indonesia's geothermal potential is the best in the world," Gaol argued.

State Minister of State Enterprise Sofyan Djalil had approved of the merge plan for reasons of efficiency.

"The presence of state-owned geothermal sector carries the potential to ease government energy subsidy that can be transferred elsewhere," Djalil said.

He also said that geothermal, when compared with other sources of energy, was advantageous for its renewable nature. (amr)

Foreign investors pledge support amidst economic crisis

Mustaqim Adamrah, The Jakarta Post, Jakarta | Tue, 03/24/2009 8:57 PM

President Susilo Bambang Yudhoyono (right) talks with Acting Coordinating Minister for Economy Sri Mulyani (center) prior to a meeting with representatives from the International Chambers of Commerce for Indonesia at the state palace on Tuesday. The meeting is expected to discuss measures in coping with the impact of the economic crisis. (JP/R. Berto Wedhatama)

Around 40 leaders of foreign chambers of commerce and industry have pledged to stay investing, or even expanding their businesses, in Indonesia despite the global economic crisis.

The investors said they promised to expand their business and work together to weather the global economic crisis on the government’s promises.

“They say Indonesia is one of the world’s best kept secrets … We don’t live here because we have to. We live here because we want to ... because we believe in Indonesia,,” said Peter Fanning chairman of the International Business Chamber.

Sharing similar view, vice Jakarta Japan Club president and chief executive officer Marubeni Indonesia Komuro Seiji said not only would Japanese investors would maintain, “but also expand our business activities in Indonesia”.

The pledge comes with a request to the government to immediately fix flaws to help improve the business and investment climate.

“Things discussed in the meeting generally related to consistency and transparency of regulations. They (business communities) gave few examples,” Trade Minister Mari Elka Pangestu said Tuesday on behalf of the government after two hours and a half of meeting at the State Palace.

She said foreign investors addressed about how many regulations made by the central government clashed with those made by regional administrations, or about inconsistency in regulations made by different government institutions.

“We have repeatedly said we are committed to fixing this issue, and we are fixing (this),” said Mari.

The meeting was led by President Susilo Bambang Yudhoyono and also attended by numerous cabinet ministers, especially on the economy, and National Police chief Gen. Bambang Hendarso Danuri, as well as Indonesian Chamber of Commerce and Industry (Kadin) chairman Mohamad Suleman Hidayat and his Kadin colleagues.

The business players, Mari said, also demanded the government to solve ambiguities in a presidential regulation that governed businesses that were open and closed to foreign investment.

The list is required under the 2007 Law on Investment and governs a total of 338 business sectors, including 69 sectors that would be more open than before and 11 becoming more restrictive.

“The revision (of the regulation) is actually underway and we have discussed this with them,” she added.

She said foreign investors demanded more sectors to be open, but no specific sectors were requested in the meeting.

“We’re always balanced (when it comes to determine which sectors should be open or closed). (The decision relates to) job creation, efficiency improvement, etc,” said Mari.

“If there are sectors that we limit, there must be national interests involved,” she added.

Indonesia's KPC agrees first major China coal deal

Tue Mar 24, 2009 2:20am EDT

SINGAPORE, March 24 (Reuters) - Indonesian miner PT Kaltim Prima Coal last week agreed its first major long-term deal to sell thermal coal to China, with 1 million tonnes to be shipped in the first year, a top company official said on Tuesday.

"It is a long-term deal for supplying coal up to five years. In the first year we'll be supplying 1 million tonnes, in the second year it will rise to 2 million tonnes and will go up to 5 million tonnes," Evan Ball, director of KPC, told Reuters on the sidelines of a mining conference in Singapore.

He did not give any details on prices, saying they were in line with current spot market prices.

KPC is a unit of the country's biggest miner, PT Bumi Resources Tbk (BUMI.JK). It produced nearly 40 million tonnes in 2007, about a fifth of Indonesia's total output.

Indonesia's coal exports have surged over the past few years, making it the world's biggest seller of thermal coal and forcing miners to seek new markets including China, the world's biggest consumer and producer of coal, which is on the cusp of becoming a permament importer of the power plant fuel as well.

China imported over 11.5 million tonnes of Indonesian coal last year, accounting for more than a quarter of its total.

Imports in February rose to their highest in 22 months as a deadlock over domestic price details drove power plants to buy from abroad, where prices have fallen sharply. Benchmark Australian prices slumped last week to a 21-month low of $60, less than one-third their record high last year. (Reporting by Sambit Mohanty; Writing by Jonathan Leff; Editing by Ben Tan)

Total Operating its First Fuel Stations in Indonesia

Tuesday, 24 March, 2009 | 12:37 WIB

TEMPO Interactive, Jakarta: PT Total Oil Indonesia is now officially operating its first two fuel stations at Jalan Daan Mogot and Jalan MT Haryono in Jakarta.

The oil company from France plans to build 500 fuel stations in the Asia-Pacific region.

Senior Vice President of Total Refining and Marketing for Asia-Pacific, Thierry Pfimlin, said that Total has now entered the retail market following its success with the company’s lubricant oil in Indonesia.

“It is a strategic and significant market consideration to enter the fuel retail market,” he said yesterday (23/3).

Total is selling its Performance 95 petrol at Rp6,500 while Performance 92 is Rp5,900; and Performance Diesel is Rp6,900.

Managing Director and CEO of PT Total Oil Indonesia, Piotr Janiw, said that Total offers fuels with high performance and best services to consumers.

Total has 16,000 fuel stations throughout the world, with most of them located in Europe.

RIEKA RAHADIANA

JBIC offers to fund expansion of Indonesia`s Muara Tawar power plant

Jakarta (ANTARA News/Asia Pulse) -- Japan Bank for International Cooperation (JBIC) has offered to provide a loan of US$900 million to finance the capacity expansion of the Muara Tawar combined cycle power plant.

The expansion unit will use the cogeneration technology to generate electricity. The tender for the cogeneration project of Muara Tawar will be held this year, Fahmi Mochtar, the president of the state power utility PLN, said.

The project is part of the second crash program to build power plants with a total capacity of 10,000 megawatts.

Related Article:

Govt eyes overseas loans for power program

Here's how we do it

The Jakarta Post, Tue, 03/24/2009 12:55 PM

Australia and New Zealand Banking Group Ltd. (ANZ) CEO for Asia Pacific Alex Thursby presents the bank's new global brand in Jakarta on Monday. Thursby said ANZ was aiming to be the fourth largest bank in Indonesia by assets by 2012 through its stakes at Panin Bank and ANZ Panin Bank.

"Our retail banking and institutional banking at ANZ Panin has a very clear direction... We own 38 percent of Panin, and as you know they are the *number* seven bank in Indonesia. We believe the two, which go in harmony, will allow us to get to our strategic intent of being, as a banking group, the *number* four player in Indonesia," he said.

ANZ Panin is 85 percent owned by ANZ and 15 percent owned by Panin. ANZ also owns 38.3 percent of Panin.

Thursby also said although bad loans globally would rise this year, Indonesia was now in good position as companies here were "very much underleveraged".

JP/Aditya Suharmoko

RI, Libya boosts relationship through agreements

The Jakarta Post, Jakarta | Tue, 03/24/2009 3:52 PM

Foreign Minister Hassan Wirajuda said Tuesday that Indonesia has signed three agreements with Libya, boosting the two country's relationship.

Wirajuda said that during a bilateral meeting in Yogyakarta both countries signed agreements on political consultation, social welfare and establishing a bilateral joint commission.

The minister said both countries were seeking a more intensive economic relationship.

“Our trade with Libya is worth US$400 million, while Indonesian companies have more than $1 billion worth of projects in Libya,” he said as quoted by state news agency Antara.

Wirajuda said the numbers were far from what both countries could actually come together with.

Last year, Libya and Indonesia signed a deal for the North African state to supply the country with crude oil for the next 20 years. Under the agreement, Tripoli will supply Jakarta with a minimum of 50,000 barrels per day, a figure to rise to 200,000 barrels per day from 2013.

Wirajuda said Indonesia would send its Trade Minister to visit Libya in early April.

“We are hoping to sign further trade agreements during the visit,” he said. (dre)

BTN to issue mortgage-backed securities worth Rp 1 trillion

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Tue, 03/24/2009 11:20 AM

State-run Bank Tabungan Negara (BTN) plans to issue up to Rp 1 trillion (US$86.39 million) worth of mortgage-backed securities within the first half of 2009, BTN treasury director Saut Pardede said Monday.

“We plan to issue Rp 500 billion [of mortage-backed securities], but may increase it by up to Rp 1 trillion depending on the situation,” he said.

Last month, BTN issued the country’s first ever Rp 100 billion of mortgage-backed securities, popularly known as KIK EBA, a move Saut said was “testing the waters”.

He added the securities would have a tenure of between three and seven years, with yields based on the government bonds rate with a maturity period of between three and seven years.

The government and Bank Indonesia have signed a joint decree to boost home loans through the sales of mortgage-backed securities, to help provide decent housing to low-income people and to develop the secondary mortgage market.

State-sanctioned PT Sarana Multgriya Finansial will act as a secondary mortgage facility. This way, banks can get their money back faster and disburse loans quicker to people wanting to buy low-cost houses or apartments.

Saut said BTN would put up as collateral housing and apartment projects so that the securities would have an AAA grade rating.

In addition, BTN also plans to issue Rp 1.5 trillion of senior debts for credit expansion. The bank aims to have a lending growth of 14 percent this year.

Saut also said BTN wanted to buy back Rp 250 billion of bonds the bank issued five years ago. The bonds will mature in 2014.

“If we don’t do the buyback, the interest will rise, increasing the cost of funds. The buyback won’t affect our capital adequacy ratio [CAR],” he said, adding the central bank had approved BTN’s plan.

Also on Monday, BTN president director Iqbal Lantaro announced the bank would cut the mortgage loan rate by 50 percentage points to 14 percent starting from April 1.

Last year, BTN booked a 13 percent increase in profit to Rp 722 billion from Rp 640 billion in 2007. Asset value rose 22.6 percent to Rp 44.9 trillion in 2008 from Rp 36.7 trillion in 2007.

Lending growth surged 43.34 percent to Rp 32 trillion in 2008 from Rp 22.3 trillion in 2007. Bad loans remained healthy at 2.6 percent in 2008 compared to 2.8 percent in 2007, still below the BI maximum tolerance of 5 percent. Third party funds also rose to Rp 31.4 trillion in 2008 from Rp 24.1 trillion in 2007.

RI, China ink US$15b swap deal to boost forex supply

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Tue, 03/24/2009 11:04 AM

Indonesia and China have agreed on a Rp 175 trillion or 100 billion yuan (US$15 billion) currency swap to provide short-term foreign exchange liquidity and help boost bilateral trade and investment, Bank Indonesia announced Monday.

“The swap arrangement will contribute positively to an increase in trade and direct investment between the two countries, help provide short-term liquidity to stabilize the financial market, and help Indonesia overcome tight liquidity from overseas funds,” BI said in a statement.

The deal was signed by BI Governor Boediono and People’s Bank of China Governor Zhou Xiaochuan in China. The three-year arrangement can be extended if both sides agree.

BI said the swap line was on top of the multilateral swap arrangement under the Chiang Mai Initiative, under which Indonesia is set to receive at least $12 billion from Japan, $4 billion from China and $2 billion from South Korea.

“The arrangement will add comfort and confidence [to the market],” said Bank Danamon chief economist Anton Gunawan.

Following the deal, the rupiah rose 1.9 percent to 11,558 per dollar, its biggest gain since Feb. 2, at 4:21 p.m. in Jakarta, Bloomberg reported.

The currency has slid 5.7 percent this year, the second biggest drop among Asia’s 10 most active currencies, excluding the Japanese yen.

Indonesia needs as much funding as possible to add to the country’s foreign exchange reserves, which stood at $53.9 billion as of March 13, according to BI.

Analysts estimate Indonesia needs around $80 billion in reserves to sufficiently cope with the global financial meltdown.

Indonesia has $22.6 billion worth of corporate overseas debt maturing this year that may drain nearly half of the foreign exchange reserves.

Under the Chiang Mai Initiative, Indonesia, under the ASEAN+3 grouping, has a pool of funds whose amount is set to be increased to $120 billion, that can be used to add to the foreign exchange reserves under certain circumstances.

ASEAN+3 includes the 10 ASEAN member states — the Philippines, Indonesia, Thailand, Malaysia, Singapore, Brunei, Vietnam, Myanmar, Cambodia and Laos — and the three East Asian nations of Japan, China and South Korea.

The Chiang Mai Initiative foreign exchange reserve pool is accessible to members in a swap mechanism to boost foreign exchange reserves and address short-term liquidity problems.

Members in dire need of the foreign exchange reserve fund, however, will be subject to an independent surveillance mechanism by other members.

A surveillance by member countries is preferred because most of the ASEAN+3 nations have suffered a traumatic experience from tapping financial support from the International Monetary Fund (IMF), often bundled with seemingly unfavorable and ineffective terms and conditions.

Details of the surveillance will be endorsed in May during the group’s meeting.

Under existing rules, members withdrawing the fund by more than 20 percent of their real need are required to have IMF supervision.

Anton said that to avoid IMF oversight, Indonesia should draw on standby facilities provided by several countries and financial institutions.

The standby facilities, which amount to $5.5 billion, can be used whenever the country needs the money. The World Bank has provided $2 billion, the Japan Bank for International Cooperation $1.5 billion, the Asian Development Bank $1 billion and Australia $1 billion.

Although the facilities are not intended to add to the foreign exchange reserves, but rather to help plug the budget deficit, if the money “is withdrawn, it will add to the foreign exchange reserves”, said Anton.

“Then the government can spend the money in rupiah,” he added.

RMMI to begin work on Indonesian rail project

Commodity Online, 2009-03-23 10:50:00

SINGAPORE: The Government of Ras Al Khaimah was formally awarded a license by the Regency of East Kutai in Indonesia for the procurement, construction and operation of a special purpose rail network.

The project work would be undertaken by PT Trans Kutai Kencana, an Indonesian Special Purpose Vehicle (SPV) of RAK Minerals & Metals Investments (RMMI). PT Trans Kutai Kencana is the vehicle for a joint venture between PT Kutai Timur Investama, the investment authority of East Kutai Regency and Middle East Coal Private Limited (MEC), a SPV of RAK Investment Authority.

The commitment to invest into East Kutai from the Government of RAK was announced earlier this month during the signing of a Government-to-Government socio-economic agreement between RAK and East Kalimantan Province in Indonesia. The signing was witnessed by His Highness Sheikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of RAK, and His Excellency President Susilo Bambang Yudhoyono of the Republic of Indonesia at the World Islamic Economic Forum in Jakarta on March 3, 2009.

“East Kalimantan is the largest producer and supplier of thermal coal to both domestic and international markets. The planned infrastructure will strengthen East Kalimantan’s competitiveness by allowing economical coal transportation from the resource-rich hinterland of East Kutai Regency in a scalable and efficient manner,” said Madhu Koneru, Managing Director of RMMI and Vice Chairman of MEC.

Koneru stated that the first phase of the development program will involve the commissioning of a 17 Million Mt/a coal transportation and handling facility by 2012, while the civil and track work will be completed for a 60 Million Mt/a capacity.

MEC was set up last year to drive investments related to large-scale coal and coal-related infrastructure projects in Indonesia. Headquartered in Singapore, MEC will oversee the construction of the railway and a coal-loading jetty in the province of East Kalimantan. Mr. Koneru shared further updates on the project. “With the completion of the feasibility study by our technical partners ARUP and KMPG and with the license in place, we are definitely set to move forward and fulfill our commitment to build a sustainable investment in Indonesia.”

Global engineering firm ARUP has completed the Detailed Feasibility Study (DFS) and Engineering Design for the 150-kilometer railway line that will connect the district of Muara Wahau to the East Kutai coast in East Kalimantan. The railway will enable the speedy and cost-effective transport of the coal, mined from remote, inaccessible interiors to the coal-loading jetty for easy movement domestically and through to international markets. Construction is estimated to be completed in roughly 30 months upon land and licenses approval. Parallel activities for the construction of ancillary infrastructure is also currently in the pipeline.

ARUP has detailed the railway alignment and transport corridor plan including the requisite foundation infrastructure such as roads and bridges, loading and unloading facilities, terminal and jetty structure, and cargo handling facilities. It has also prepared the procurement costs and construction timetable in close collaboration with consulting firm KMPG, which has developed the overall financial model and risk matrix for the project.

Developing greenfield mineral reserves and investing to build infrastructure where there is none form part of RMMI’s overall long-term strategy. This is done with the objective of securing the power requirements of Ras Al Khaimah as well as mobilizing supply for various markets such as Indonesia, India and Japan, Mr. Koneru said. “Infrastructure investments would allow RAK to maintain a high level of cost management and therefore stabilize prices of energy resources in the long-run,” he added.

PT Trans Kutai Kencana also commences development of a coal-loading jetty with mounted conveyors in the coming weeks. Land acquisition of 250 hectares for the terminal has already been completed. The railway network and the coal-loading jetty infrastructure project is the first initiative under the large-scale socio-economic development partnership between the Government of RAK and the Government of East Kalimantan province, and further cements RAK’s commitment to Indonesia on collaborations for future development, a press release said.

Indonesia Antam's sets aside $37 mln for coal mines

Mon Mar 23, 2009 8:26am EDT

JAKARTA, March 23 (Reuters) - Indonesian state-owned miner, PT Aneka Tambang Tbk (ANTM.JK), has allocated $37 million for acquiring coal mines, the company said on Monday.

Antam said last year it planned to acquire coal mines as it expects coal consumption to rise significantly when it completes a new power plant near its nickel mine in Pomalaa, on Sulawesi island.

"We prepared about $37 million for acquiring coal mines from internal cash. But we don't know yet how much we will actually spend," Bimo Satryo, Antam's corporate secretary said.

"We have not made any deals yet. We are still looking for coal mines," he said.

Antam has said it was conducting due diligence on two coal-mining firms in East Kalimantan as possible acquisitions.

The firm consumes about 200,000 tonnes of coal a year to power its ferro-nickel smelters, but annual consumption may rise to 2 million tonnes once the new power plant is completed.

The $350 million coal-fired power plant, due to be built as a joint venture with an independent power producer, will have a 150-megawatt capacity. It is aimed at reducing ferronickel production costs.

Antam has selected a consortium of PT Nava Bharat and coal miner PT Indika Energy Tbk (INDY.JK) as potential partners in the development of the power plant.

Construction is due to start at the end of 2010 with commercial operations starting in 2013, the firm said.

But the firm said it could initially sell coal, before its power plant is up and running.

Antam, 65 percent-owned by the Indonesian government, is involved in the exploration and production of nickel ore, bauxite and iron sands, smelting of ferro-nickel, as well as the exploration, production and refining of gold and silver.

(Reporting by Fitri Wulandari; Editing by Ed Davies)

RI,China agree on loans for power plants

Erwida Maulia, The Jakarta Post, Jakarta | Mon, 03/23/2009 10:29 PM

China has agreed to soon disburse part of loans some of its banks have committed to lend to Indonesia to finance the latter’s first 10,000 megawatt (MW) crash program undergoing delays because of lack of funding.

Indonesia’s acting Coordinating Minister for the Economy Sri Mulyani Indrawati, who visited China over the weekend, told a press conference here Monday that Chinese banks committed to provide the loans and state electricity firm PT PLN had begun talks over immediate disbursement of the remaining loans.

The Chinese investors have suspended temporarily the release of further disbursements for the program, saying they wanted an increase in interest rates above those agreed before.

Mulyani said Indonesia was expecting the Chinese banks to soon disburse more of their loan commitments to the Indramayu, Suralaya, and Paiton power plants. Negotiations, however, are still on going for the Pacitan, Pelabuhan Ratu and Meulaboh power plants.

Bank of China, Mulyani said, has committed to lend US$592 million (Rp 7.1 trillion) for the Indramayu power plant. The project has been 71 percent completed and is expected to finish by September this year.

China Exim Bank has committed to finance the Suralaya and Paiton power plant projects worth $615 million, only $188 million of which has been disbursed. The projects have been 64 percent completed.

Pacitan, Pelabuhan Ratu and Meulaboh power plant projects worth $899 million in total. China Exim Bank has been committed on financing them, but it is still negotiating with PT PLN the terms of condition and the amount of the funding.

Russia, Main Target for Indonesia Tourism

Monday, 23 March, 2009 | 16:17 WIB

TEMPO Interactive, Jakarta: Despite the global crisis, the number of tourists coming to Indonesia remains high.

Tourists from Russia have been increasing their visits to Indonesia from year to year.

In 2008, 65,000 tourists from Russia visited Indonesia, 40 percent more than in 2007 when there were 46,000 tourists who came to Indonesia from Russia.

“Russia is one of our main markets in East Europe,” said Sapta Nirwandar, Director General of Marketing from the Tourism and Culture Department at the 16th Moscow International Tour and Travel exhibition last week.

In this exhibition that lasted until last Sunday, Indonesia was represented by 19 organizations including hotels and tour agencies.

IRFAN (Moscow)

Local projects promoted for greater autonomy

The Jakarta Post, Mon, 03/23/2009 1:23 PM

In a bid to empower its community with greater autonomy, the regency administration of Cilacap, Central Java, is planning to work on a number of local potential projects by 2010 at the latest, an official has said.

"We have prepared several exclusive projects and are ready to offer them to a number of prospective investors," head of Cilacap's Integrated Licensing Service Office (KPPT) Indar Yuli Nyataningrum told The Jakarta Post recently.

Among the projects is developing the agro-industrial sector such as the people's rubber plantations, goat breeding and cattle rearing for meat production.

She said the people's rubber plantation project would require an investment of Rp 60 billion (US$ 5.2 million) to develop sustainable rubber plantation areas.

"A 5,000-hectare area has been prepared for the project. We hope to extend the area by 1,000 ha each year," Indar said.

The regency administration, according to Indar, has promised to facilitate investors with licensing for the project, as well as providing factory sites and technical guidance.

Tourism, according to Indar, is another sector that the regency administration would develop as part of efforts to empower its people economically. This would include the development of Bengawan Adiraja Sea World, a marine tourism resort and Jambusari Family Park.

Bengawan Adiraja Sea World, she said, was designed as a blend between the undersea world and the two mountains that sandwich the Bengawan Adiraja River not far from the coast.

"It is expected to cost Rp 45 billion to build and is located on a five hectare plot belonging to the regency administration. So, there's no problem with the land," Indar said.

Cilacap, one of the 35 regencies in Central Java, is situated geographically in the most southern end of the province, bordering Kebumen in the east, Ciamis (West Java) in the west and Banyumas in the north.

With a population of 1.7 million people scattered in its 24 districts and 284 villages, Cilacap is potentially rich in marine resources waiting to be tapped.

Its coast is lined with a number of vital facilities including the Tanjung Intan harbor, the state-owned oil and gas company PT Pertamina's Processing Unit IV and the steam-powered electricity generating station.

"We're convincing anyone who wants to invest here that Cilacap has adequate facilities and the infrastructure to do so. We guarantee incentives and security for their businesses," Indar assured.

Owing to the potential projects, she went on, the regency administration had started working on a major project this year, the PLTU Bunton steam-powered electricity generator worth Rp 6 trillion.

The project, which is located in Adipala district some 20 kilometers west of Bunton, is the second that the regency has built. In 2006 Cilacap successfully built the PLTU Karangkandri that has a total daily output of 600 megawatts, Indar said.

"We will also build two LPG (liquefied petroleum gas) stations to supplement the one owned by Pertamina Cilacap," she added.

Separately, Cilacap regency administration spokesman Aris Munandar expressed optimism that the regency would become independent thanks to its richness in natural resources.

"We have an industrial area not far from the port. We have adequate facilities to spur our economic growth," said Aris.

With an average annual economic growth of 4.16 percent and a regional original income of Rp 78.8 billion, Aris said, Cilacap has been projected as a growing industrial city in addition to being the city of fishermen. Cilacap is home to some 35,000 fishermen.

"We are openly offering third parties investment opportunities in a number of projects, both in the agro-industrial and tourism sectors. We welcome investors and guarantee incentives and security," he said.

Minister says RI, China may settle Merpati contract soon

Mustaqim Adamrah, THE JAKARTA POST, JAKARTA | Mon, 03/23/2009 1:22 PM

The government is expecting the protracted contract dispute between ailing state airline company PT Merpati Nusantara Airlines and China's Xi'an Aircraft Industry can be settled this week, State Minister for State Enterprises Sofyan Djalil says.

"We still need more discussions; between Merpati and Xi'an; and between the Indonesian government and the Chinese government," Sofyan told The Jakarta Post recently.

"We're settling this problem. We hope to resolve this by next week (this week) and hope no more talks are required. We'll announce the result next week (this week)," he said.

Acting Coordinating Minister for the Economy Sri Mulyani Indrawati flew to China Wednesday to resolve several problems hampering China's pledge to finance the country's 10,000 megawatt power projects.

These problems include the contract disputes with China and Xi'an.

The dispute started in 2008 when Merpati failed to honor its commitment to pay up US$230 million for the purchase of 15 Xinzhou-60 aircraft, at a price of around $15 million each.

The commitment was stipulated in a contract Merpati signed in 2006 with Xi'an. Merpati used a soft-loan facility from the China Export Import Bank to finance the purchase.

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

Xi'an has said it might take the dispute to international arbitration.

With Merpati's "huge" debts, the dispute apparently widened to the extent that there was growing speculation that the row between Merpati and Xi'an may have played a part in holding back loan disbursements for the 10,000 MW projects led by state power company PT Perusahaan Listrik Negara (PLN).

Chinese lenders would be likely to stick to their positions until the Merpati debts are settled.

Since there were no other options open, Merpati and PLN finally passed on the dispute to the government for settlement.

"Merpati already has had business-to-business negotiations with Xi'an four times (to settle the dispute). But there were no agreements on some points (in our negotiations)," Merpati president director Bambang Bhakti said, after a meeting with Vice President Jusuf Kalla at the vice president's office Friday.

"So, this will go back to government-to-government (talks)," he said, adding the company would only be able to pay for eight aircraft.

"We start making an operating profit but we're still on our way to recover. How are we going to repay our debts?" he said refusing to elaborate.

A presidential palace source said the government would now cover half of the Merpati debts to Xi'an.

PLN president director Fahmi Mochtar has now ensured that Chinese financiers would stick to their commitment to help fund the power projects. The crash energy program needs $8 billion to be completed. PLN has so far secured $6.4 billion.

RI may benefit from Nike's global rationalization strategy

Mustaqim Adamrah, The Jakarta Post | Mon, 03/23/2009 1:22 PM

Indonesia's footwear industry may gain more orders placed by United States-based sports apparel company Nike Inc., following plans by the footwear giant to stop orders at four factories globally as part of a major rationalization program, cutting orders to take account of the global economic downturn, as demand has been slashed by falling purchasing power.

Industry Minister Fahmi Idris said last Friday that none of the four factories that are negatively affected are located in Indonesia.

"Nike says it will stop placing (shoe) orders at four factories but none of them are in Indonesia. Its good news," he told reporters at the ministry, while reading a short message service he received from Nike's country manager for Indonesia, John Richard.

"Indonesia will not be affected by Nike's plan. Instead, Indonesia may have Nike place more orders at factories here," he said.

The move made by Nike is prompted by a double-digit decline in shoe orders in the global market amid the economic downturn, which started to impact negatively on world trade, and on shoe production in Indonesia, in the second half of last year.

The ministry's director general for metal, machinery, textiles and miscellaneous, Ansari Bukhari, said Nike usually placed orders in Vietnam, China and Thailand, as well as in Indonesia.

"Our condition is deemed as the most conducive, compared to other countries (where Nike usually places orders)," he said.

The domestic shoe market accounts for 235 million pairs per annum, including 94 million pairs made by local firms and 141 million pairs imported from abroad.

Every year, national shoe production, mostly for export, amounts to 1.2 billion pairs , including 800 million pairs of sports shoes.

Around 60 percent of sports shoes are orders from Nike.

RI's online ad market to go bigger despite crisis: Yahoo

The Jakarta Post, Jakarta | Mon, 03/23/2009 1:22 PM

The deepening global financial crisis may provide an opportunity for the online advertising industry in Indonesia to expand, Yahoo says.

The US giant Internet service provider said that not only would promotions become more targeted and thus relatively more efficient, but online ad performance can also be measured in real-time

"Based on a study at the end of last year, the online advertising market in Indonesia was estimated to worth more than US$26 million and we see that tracking towards almost $42 million in 2010," Yahoo's senior director for business development in Southeast Asia Pontus Sonnerstedt said last week.

"We are very aware of the economic situation, which puts advertisers in a tough position in terms of the ad budget," Sonnerstedt said. "That is why it is very important that every rupiah is spent on reaching the target audiences."

According to Sonnerstedt, there are many benefits that online can offer to advertisers in times of tight budgeting during the crisis such as real-time measurability and accountability.

"For example, if you run a campaign today, you can actually measure the clicks and response rate of your campaign in real time. If you don't see results, you can always change your campaign immediately," he said.

"By doing that you can optimize your campaign in real time. In any other media it would be difficult and costly and you can't measure the campaign performance in real time."

Sonnerstedt also said another benefit online advertising could offer was much more accurate targeting of prospects and audiences.

"In the digital space, there are many unique ways that you can do targeting such as location, time and age," he said.

Despite the hefty target growth of around 61 percent for the next two years, spending on online advertisements is still relatively small compared to promotions in other media.

Data from the Indonesian Association of Advertising Agencies (PPPI) and Nielsen media research revealed that advertisers spent between Rp 42 trillion (US$3.6 billion) and Rp 47 trillion last year.

The figure was projected to increase by another Rp 5 trillion this year, spent 60 percent on television advertising and 30 percent on daily newspapers.

Yahoo's survey, done with Taylor Nelson Sofres (TNS), based on about 2,000 individuals in eight Indonesian cities shows only 3 percent of the country's internet users often purchase products online.

However, Sonnerstedt believes that online advertisements will still be an interesting investment for advertisers. "eCommerce, as we saw here is quite limited. But you don't advertise to only sell online, you can also advertise to sell offline as well," Sonnerstedt said.

Sonnerstedt said the key for advertisers to reach their target is to combine online and offline media.

"So far, we have seen that the effect of using online and offline advertising has been very encouraging," he said.

The survey also reveals that internet usage is much higher amongst the young segment with over 64 percent of usage by individuals between the age of 15 and 19.

"You can see a very youthful segment of internet users. That means, internet is the proper media if you want to reach the young market," TNS deputy managing director Suresh Subramanian said. (hdt)

India explores investment opportunities in South Sulawesi

The Jakarta Post, Jakarta | Mon, 03/23/2009 2:42 PM

Indian Ambassador to Indonesia Biren Nanda met with South Sulawesi Governor Syahrul Yasin Limpo to explore investment opportunities between the two countries in Makassar on Monday.

"South Sulawesi holds a very important role in Indonesia. Currently, the province has exported various goods to India, such as pine sap, " Nanda said, as quoted by tempointeraktif.com.

Nanda added that his trip to South Sulawesi was part of a means to tap into Indonesia's massive natural reserves.

Some Indian entrepreneurs have already invested in Indonesia's various business sectors, such as textiles, steel, automotive, finance, natural resources, trade, and coal, he said.

During the visit, Limpo introduced various other potential future export comodities from the region, including cocoa and seaweed.

He added that he looked forward to enhancing further ties between the two Asian nations. (amr)

Norwegians to host friendship day

The Jakarta Post, Fri, 03/20/2009 1:11 PM

Norway and Bali may be geographically far apart, but the magic of Indonesia's top tourist destination still lures thousands of Norwegians to its beaches.

But there is a new dimension to this, says Norwegian Ambassador to Indonesia Eivind S. Homme.

"We have 800 Norwegians currently studying in Bali. This is amazing," Ambassador Homme told The Jakarta Post on Wednesday in Jakarta.

This year, around 8,000 Norwegians, both tourists and students, are expected to visit the tourist resort island of Bali.

The Norwegian Embassy and the three Norwegian academic institutions in Jimbaran and Kuta will organize a social event called "Norway-Bali Friendship Day" on Friday. "I am very pleased that more and more Norwegians are discovering the magic of Bali, as this will further develop the close and friendly relations between Norway and Indonesia," Homme said.

Bali Governor Made Mangku Pastika and Homme will inaugurate the event in Canggu, Bali.

Car terminal expansion project on track

Mustaqim Adamrah, The Jakarta Post, JAKARTA | Sat, 03/21/2009 1:04 PM

Going up in the world: Busy cranes and ships at the Tanjung Priok port in North Jakarta. On Friday state port operator PT Pelindo II said that despite a gloomy forecast outlook for Indonesia’s car industry, the construction work on the new extension to the car terminal at the Tanjung Priok port, under pressure for more space to be made available, is already 80 percent completed and the job is likely to be finished in April, one month ahead of schedule. (JP/Ricky Yudhistira)

Despite a gloomy outlook for Indonesia’s car industry amid the global economic downturn, the expansion of the car terminal at the Tanjung Priok port in North Jakarta is not slowing down and is set for completion within the next two months now that almost 80 percent of the works are completed.

State seaport operator PT Pelindo II said it had finished 79.85 percent of the construction so far and may even finish all the project in April, a month earlier than the initial target.

“We are asked to expedite the construction, and our contractor Hutama Karya says it can finish its work by April,” Pelindo II president director Abdullah Saefuddin said when welcoming Vice President Jusuf Kalla, who was inspecting the progress of the construction of the new car terminal.

Kalla was accompanied by Transportation Minister Jusman Syafii Djamal, State Minister for State-Owned Enterprises Sofyan Djalil and Energy and Mineral Resources Minister Purnomo Yusgiantoro.

Saefuddin said Pelindo II was expanding the area of the car terminal, which was first inaugurated on Nov. 29, 2007, by an additional 5 hectares.

Currently, the car terminal spans 12 hectares and can accommodate 3,500 cars. The 5-hectare addition will mean that it will be able to accommodate another 2,500 cars.

Saefuddin said Pelindo II was now even ready to start on the second phase of its expansion plan.

“We’re ready to start our second expansion project of 3.6 ha, located in Kali Baru,” he said.

“The Jakarta administration has started acquiring the land,” he said.

Pelindo II plans to eventually expand the car terminal up to 40 hectares, according to Saefuddin.

The expansion is necessary, he said, because car exports and imports through the Tanjung Priok port would continue to increase and would reach 550,000 units by 2011, since the current economic slowdown would only be temporary.

He said that the expansion was also on the specific request of Trade Minister Mari Elka Pangestu, as well as other port users.

“Yard Occupancy Ratio stood at above 90 percent in the last three months,” Saefuddin said.

Through the port, 99,655 cars were exported and 88,435 cars were imported in 2008, while 15,358 cars were exported and 4,294 cars were imported from the beginning of the year to last Monday, according to Pelindo II data.

The automotive industry is facing hard times amid the global economic downturn, which has severely hit global demand and forced giant global car makers to shut down and layoff, or even dismiss, their workers.

According to Indonesian Automotive Industry Association (Gaikindo) data, car sales reached 66,136 in the first two months this year, a drop of 25.6 percent from 88,887 recorded in the same period last year.

Gaikindo vice chairman Johnny Darmawan had forecast that car sales will plunge 26.1 percent in the first quarter this year, compared to the same quarter last year.

RI, Australia sign fishery agreement

Nusa Dua, Bali, (ANTARA News) - Indonesia and Australia signed a memorandum of understanding on maritime and fishery issues here on Friday evening.

The agreement covers four main sub-areas, namely illegal fishing handling, fishery management, partnership and bilateral cooperation and the MoU Box.

The document was signed by Suseno Sukoyono, an expert staff of the Indonesian minister of fishery and marine resources, and Craig Burns, executive manager of the Australian department of agriculture, fishery and forestry.

The term MOU Box, used since 1974, refers to a sea area located south of a group of isles around Dana and Rote islands in the Indonesian province of East Nusa Tenggara that borders with Australia`s sea territory.

"This was a big leap forward in our relations with Australia with regard to the handling of the two countries` maritime problems. We have now been, according to my term, "in one frequency", " Sukoyono said.

He said several significant leaps had been made in relations with that country. "We have improved our understanding on common capacity building. As we are connected by water we have common interest with regard to optimizing marine potentials. This is very important," he said.

As a result of the common understanding the number of illegal fishing cases has dropped from year to year, he said.

On the case of traditional fishing on the sea border, he said, Australia had been willing to understand it more as part of social and cultural traditions of the Indonesian coastal communities.

"They are willing to understand it. We have had a common understanding regarding cases that appear actually and suddenly. We will remind each other and would avoid unilateral actions in dealing with them," he said.

Craig Burns meanwhile said "progress over supply management and extension of assistence with regard to implementing the agreement has been made. As an example he said based on the MOU Box management of traditional fishing would be done only after joint research.

On the question of traditional fishing, he said Australia was willing to give its understanding. "Therefore, this agreement and understanding are very important. The road map for implementing the agreement will be made soon such on joint research of supply of fish and marine resources in the sea. Monitoring will also be done jointly," he said.

Wika, Jasa Marga to Boost MNA Stake

The Jakarta Globe, Yohanes Obor, March 19, 2009

In an effort to get the stalled trans-Java toll road project back on track, state-owned construction company PT Wijaya Tbk, or Wika, announced on Tuesday that it planned to join PT Jasa Marga Tbk in increasing its stake in road contractor PT Marga Nujyasumo Agung, or MNA.

The firm has stumbled in its bid in to build the Rp 3.22 trillion ($270.5 million) Surabaya-Mojokerto portion of the road.

Jasa Marga said in February that it would start buying up concessionaires on the project, which will stretch from Jakarta’s Tanjung Priok Port to Tanjung Perak Port in Surabaya, East Java Province. The road had been expected to be operational in early 2009.

Government planners set aside Rp 2.8 trillion for land acquisition in 2007 and 2008 for the highway, which the Danareksa Research Institute said would increase the country’s gross domestic product by 0.2 percent for every 100 kilometers completed, adding more than 750,000 jobs to the economy.

MNA, which previously was majority owned by the Moeladi family, was scheduled to begin construction on its 36 kilometers of highway linking Surabaya and Mojokerto, also in East Java, in 2011, but was unable to start the project after investors pulled out.

Wika has now said it expected to buy 20 percent of MNA in two tranches, according to Imam Sudiyono, Wika’s corporate secretary. In the first, the company has signed a sale-and-purchase agreement with the Moeladi family buying 33.3 million shares worth Rp 33.3 billion and 20 million treasury stocks worth Rp 20 billion. It will then buy another 20 million shares worth Rp 20 billion from the Moeladi’s and 46.7 million shares worth Rp 46.7 billion from company’s treasury stocks in April, Imam said.

Jasa Marga in January swelled its stake in MNA to 55 percent, Imam said, leaving the Moeladi’s with 25 percent of the company. Jasa Marga also plans to expand its ownership in three local firms that received concessions for Jakarta’s outer ring road projects, along with one holding a concession on the East Java toll route, for Rp 1.74 trillion.

The firm said it would finance its share purchases through internal cash and the proceeds of its initial public offering, as well as tapping the government’s revolving fund for land acquisition.

Mataram students leave for New Zealand

The Jakarta Post, Jakarta | Sat, 03/21/2009 11:31 AM

Eighteen high school students of Mataram City in West Nusa Tenggara, leaft for in New Zealand on Saturday morning and will stay there for a month as a part of an exchange program.

Mataram mayor M. Ruslan told Antara news agency that the students are expected to spend their time learning everything they can use to make advancement back home.

“New Zealand is well known for its agriculture and farming. You should be able to learn from them,” he told the students during a farewell ceremony.

The students are accompanied by four headmasters of their respective schools. (dre)

Pertamina Launches World’s Biggest LPG Station

Friday, 20 March, 2009 | 12:40 WIB

TEMPO Interactive, Jakarta: The state-owned oil company PT Pertamina (Persero) launched the world’s biggest liquefied petroleum gas (LPG) station in Tanjung Priok, North Jakarta. The station has a capacity of 1,000 metric tons per day.

“Improvement of LPG distribution is our focus,” said Pertamina's Director Karen Agustiawan, Friday (20/3) in Jakarta.

She explained that better infrastructure is needed as the potential market increases due to the conversion program from kerosene to LPG. “The national consumption of LPG was only 3,700 metric tons per day last year. Now it is 6,030 metric tons per day,” she said.

Karen expected that the station reduce the problem of people lining up for LPG.

SORTA TOBING

Indonesia Rejects Gift of Mirage Airplanes

Friday, 20 March, 2009 | 17:23 WIB

TEMPO Interactive, Jakarta:Indonesia has a gift of one squadron of Mirage combat airplanes from Qatar. According to Defense Minister, Juwono Sudarsono, the offer was rejected because of the limited budget available for their maintenance. “The gift is fine, but the maintenance is costly,” he said in his office yesterday.

The offer was made verbally by the Indonesian Ambassador in Qatar, Rozy Munir, six months ago. According to Juwono, all he needed was for him to send a letter to the Qatar Defense Minister.

At a glance, Juwono said, the eight-year old French airplanes would need high maintenance cost. Meanwhile, the budget of the Defense Department and that of the Indonesian Armed Forces’ budget could not afford such an expense. Moreover, they are currently focusing on the maintenance of cargo planes, such as the Hercules. Juwono added that the gift grant did not mean no costs would be involved. “There would still be costs, like mediator fees,” he said.

The Defense Department refused the offer for other considerations as well. According to Juwono, two problems would occur if the offer was accepted: the budget and the additional burden on the air hitter system, creating chaos to the existing system. The Indonesian Air Force currently owns American F-5 and F-16 combat planes and Russian Sukhois.

In terms of air strike capability, Juwono said, more important is the kind of deterrence technology. Quantitatively, we may not have enough airplanes. “That is why we bought the Sukhoi, even though they are expensive,” he said. Hence, our defensive system is still on a par with Singapore’s, particularly if they buy 24 F-15 airplanes next year.

According to Juwono, the Indonesian Air Force was initially interested in the offer from Qatar. However, the problem would arise in the allocation as well as in the availability of spare parts. “We must be certain the spare part manufacturer will still exist. They could well be extinct,” he said.

Japanese Investors Eye Purbalingga

Friday, 20 March, 2009 | 17:28 WIB

TEMPO Interactive, Purbalingga: A number of Japanese investors intend to invest in food production in Purbalingga regency. “At least 171 Jpanese companies are interested in investing in crystal coconut sugar produced by Purbalingga,” said Djoko Triwinarso, Purbalingga Secretariat spokesperson, yesterday.

Two investors, Pooki Teading Co and Asaki Yushi Koogyo, said they were ready to build livestock feed and food industries. However, they submitted some requirements, such as open price standards, quality and continuity.

Purbalingga regent, Triyono Budi Sasongko, said he would support the interest of the Japanese investors. “Beside capital investment, we also hope for a process of technology transfer,” he said.

ARIS ANDRIANTO

West Java Designs Samsat System

Friday, 20 March, 2009 | 17:47 WIB

TEMPO Interactive, Bandung:The West Java government plans to install the Samsat (Single Integrated Administrative System) to connect it with all cities in the province. “When this happens, vehicle taxes can be paid from any Samsat office in West Java,” West Java governor, Ahmad Heryawan, said yesterday. The West Java – Banten bank has installed an online system to be used in all Samsat offices in West Java.

West Java Tax Office chief, Sutrisno, said booths providing online services will be opened in West Java’s major cities. Yesterday, one booth was launched at Pasteur, Bandung. This year, West Java aims to net Rp1,7 trillion in revenues from vehicle taxes.

AHMAD FIKRI

Total Indonesia to Allocate Rp21 Billion to Kutai

Friday, 20 March, 2009 | 12:26 WIB

TEMPO Interactive, Balikpapan: Foreign oil and gas company, Total E&P Indonesia, is allocating Rp21 billion for a corporate social responsibility (CSR) program this year. The budget increases 31 percent over last year which was Rp16 billion.

“The program will be for the local community,” said Total's coordinator for Social and Economy Development, Pandu Wahono, Friday (20/3).

He explained that the community of Kutai Kartanegara is prioritized, as gas and oil exploitation is located in this place. He said there were five sub-districts receiving the program: Semboja, Anggana, Muara Jawa, Muara Badak, and Sanga Sanga.

He said that the program will include physical development for health and education services, economic, environmental, and cultural activity.

“It will be for infrastructure development first and then economic empowerment for the community,” he said.

Total Indonesia is an oil and gas company that has been in Kutai Kartanegara since 1968. Its total production reaches 565,000 barrels per day. It supplies 80 percent of its gas to LNG storage in Bontang, East Kalimantan. Its gas production contributes 30 percent to national gas production.

SG WIBISONO

Indonesia orders temporary halt at Bayan coal mine

Reuters, Fri Mar 20, 2009 8:23am EDT

JAKARTA, March 20 (Reuters) - Indonesia has ordered a coal mining unit of PT Bayan Resources (BYAN.JK) to temporarily stop production for operating outside approved areas, a government official said on Friday.

Bayan said that the move would not hit the firm's production.

PT Teguh Sinar Abadi, which operates a coal mine in East Kalimantan, had operated in areas outside those approved by the government in its feasibility study, said MS Marpaung, director of engineering and environmental at the energy and mines ministry.

"The firm has to make a new feasibility study when exploring a new block," Marpaung said.

"We ordered them to temporarily stop production and to fix the problem before resuming operations," he said, adding the ministry has sent the letter to inform the company.

Teguh Sinar Abadi started operations in 2008 and it is expected to produce 1 million tonnes of coal this year, Bayan said previously in a presentation to investors.

In a statement issued late on Friday, Bayan confirmed its unit had received the government order and had complied with the directive.

It said the unit had moved its operations to other blocks within the same concession that had previously received government approval.

"Bayan does not anticipate any material interruptions to its subsidiary's operations or its coal production targets as a result of this directive from Mining Department," the statement said.

Bayan, Indonesia's eighth-largest coal producer, plans to produce 9.5 million tonnes of coal this year, up 56 percent from an estimated 6.1 million tonnes in 2008, it said.

The firm has eight mining companies with total concession areas of 81,265 hectares (200,800 acres).

The firm expects to sell 10 million tonnes of coal this year, up from 6.7 million tonnes in 2008. It said that demand remained strong and that all coal sales volumes were fully committed. (Reporting by Fitri Wulandari; Editing by Ed Davies)