State plantation company to spend Rp 300 billion on expansion drive

The Jakarta Post, Jakarta | Fri, 04/10/2009 1:39 PM

State-owned plantation company PTPN VII will spend Rp 300 billion (around US$26 million) in capital expenditure this year in support of an expansion drive.

"We've actually set aside total capital of around Rp 500 billion from our internal cash as well as from state banks, but we will only use Rp 300 billion for this year," president director Andi Punoko told reporters on Wednesday.

He said the funds would be used to revitalize a sugar plantation along with the replanting of around 30,000 hectares of rubber plantations and 40,000 hectares of palm oil plantations.

The Bandar Lampung-based company had announced that it would expand its plantation areas by 10,000 hectares for rubber, 8,500 hectares for palm oil and 6,800 hectares for sugar cane.

The move was part of the company's effort to boost production capacity in its sugar refineries in Cintamanis, South Sumatra, to 7,000 tons per year from the existing 4,000 tons and in Bungamayang, Lampung, up to 10,000 tons from the previous 5,500 tons.

With the expansion plan set to continue beyond this year, Andi said the company had also secured supporting long-term loan commitments of up to Rp 600 billion from two state banks, Bank Mandiri and Bank Rakyat Indonesia (BRI).

"Long-term loans with relatively loose requirements from banks are good leverage to fund our activities or expansion plans. This is also an alternative just in case our planned initial public offering (IPO) failed," he said.

The company plans to sell a 30 percent stake to raise up to another Rp 1.5 trillion through an IPO later on this year.

"We will wait for the market to get better before going public, meanwhile we will use the time to replant and revitalize our plantations" he said.

In addition to market volatility, other factors hindering the implementation of the proposed IPO, included various formal and legal aspects, internal preparations, and the current condition of the plantations, according to Andi.

PTPN at present has 62,713 hectares of palm oil plantations, 55,617 hectares of rubber, 18,780 hectares of sugar cane and 1,580 hectares of tea in Lampung and Palembang, South Sumatra. (fmb)

UAE advises Indonesia to sign FTA with GCC

Abu Dhabi (ANTARA News) - The United Arrab Emirates (UAE) has proposed to Indonesia to enter into a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC), Indonesian Ambassador to the UAE M Wahid Supriyadi said.

"Singapore already has an FTA with the six-nation GCC and Malaysia is in the process of establishing the link with GCC," Supriyadi told Indonensian journalists in Abu Dhabi on Thursday.

He said the UAE had made the proposal through its foreign trade minister, Sheikh Lubna Al Qarini, at a meeting with Indonesian Trade Minister Mari E Pangestu in Dubai early this week.

The UAE had made the same proposal to ASEAN member countries when their finance ministers, including Indonesia`s Sri Mulyani, held a roadshow in the Middle East recently, he said.

The GCC groups six Gulf countries, namely UAE, Oman, Saudi Arabia, Kuwait, Qatar and Bahrain. The six countries have a combined population of 40 million.

"Since the onset of the global financial crisis, Gulf countries have become interested in doing business with and investing capital in Asia. Indonesia should use this opportunity," said Supriyadi who has been in UAE post for 11 months.

Speaking about the prospects of widening the market of Inonesian goods in the Middle East in general, the envoy said an "Indonesian Festival" was held in the UAE and other Middle Eastern countries in cooperation with Lulu Hypermarket, the largest hypermarket chain in the UAE which also had 74 branches in the Middle Eastern region.

Supriyadi said the GCC had also concluded an FTA with India and was negotiating another FTA with Europe.

He said during her one-day visit to Dubai earlier this week, Indonesian Trade Minister Mari E Pangestu met with her Somalian counterpart, Abdi Rashid Mohamed Abdi, to discuss efforts to step up trade relations between their two countries.

International Batik Week in Pekalongan

Thursday, 09 April, 2009 | 15:59 WIB

TEMPO Interactive, Pekalongan:The Pekalongan municipality plans to hold the International Batik Week on April 20 to May 3, 2009 to introduce locally-mdae batik to the world. “We will feature seven activities relating to batik,” said Doyo Budi Wibowo, Pekalongan Tourism and Culture Office chief in charge of tourism, yesterday.

According to Doyo, the exhibition will follows the first event in 2007. This year, the committee will present a culinary feast, fashion on the road, batik carnival, a seminar and dialog, cultural and traditional performances, batik design and painting competition, batik-making demonstration, and how to use the canting (small dipper used to apply wax in batik process).

Five countries, 18 provinces, 30 regencies/municipalities, three departments, one ministry, as well as local and international batik lovers and collectors will take part in this event. Four artists will also be performing in the exhibition. “Besides enjoying the art of batik, visitors can also see batik demonstrations and how to use canting as the main tool to paint with fabrics,” Budi said.

The batik exhibition is supported by state-owned railway company PT Kereta Api Indonesia (PT KAI), which has prepared a tourism train to facilitate visitors from outside Pekalongan. Selamet Prihantono, Pekalongan Trade Industry, Cooperative, and Small to Medium Scale Businesses Office chief, said the Pekalongan municipality hoped the event can increase the income of batik makers and artists in Pekalongan. “The event can also generate interest for the international batik business,” he said.

Selamet added that the exhibition will feature a number of batik producing countries in Southeast Asia where they will introduce their own batik pattern and specialities. He hoped the exhibition can bring out creativity and interaction among local batik artists, who have only been marketing their products in their respective countries.

EDI FAISOL

Pertamina gets $3 b standby loan

The Jakarta Post, Jakarta | Thu, 04/09/2009 7:09 PM

State-owned gas and oil firm PT Pertamina has received a standby loan worth US$ 3 billion (Rp 36 trillion) from 13 local and international financial institutions, Antara state news agency reported.

Pertamina's Financial Director Frederick Siahaan said on Thursday that the company had allocated capital expenditures amounting up to $ 2 billion.

“We will use the fund to finance some upstream and downstream projects aimed at boosting oil production and smoothening oil and Liquied Petroleum Gas (LPG) distribution to the public,” he said. (ewd)

12 domestic gas sales contracts signed

The Jakarta Post, JAKARTA | Wed, 04/08/2009 12:09 PM

Domestic demand for natural gas has sharply increased as government boosts gas utilization projects, with the latest signing of 12 natural gas sales agreements between state oil and gas company Pertamina and its business partners on Tuesday.

BP Migas deputy chairman for financial economy and marketing Djoko Harsono said demand for natural gas would continue to increase between 7 to 8 percent per year.

“Demand has sharply increased in the latest five years. We predict demand would be 4.2 billion cubic feet (BCF) per day in 2014,” he said.

At present the daily consumption of the gas is 2.8 billion BCF, so the industry expects major expansion.

The government focus on increased use of natural gas is to help reduce the use of fossil fuel and reduce the burden of fuel subsidies on the state budget.

BP Migas mentioned at the same time in a related press release the importance of the kerosene-to-LPG conversion program, which is also helping to reduce the costs of fossil fuel subsidies to the state budget.

On Tuesday chairman of the Upstream Oil and Gas Executive Agency (BP Migas) R. Priyono facilitated the signing of 12 business contracts on gas sales and utilization nationwide worth a total of US$1.1 million.

“The whole set of contracts will supply 215 MMSCFD of gas per day for power plants, the fertilizer business, and industry,” said Priyono.

He said further that the contracts would also entail new job opportunities for 1.400 workers.

The contracts to supply natural gas to the power sector were between the Pertamina subsidiary Pertamina EP and Palembang Administration-owned PT Sarana Pembangunan Palembang Jaya, to supply power to Palembang, South Sumatra; between Pertamina EP and another Pertamina subsidiary PT Indonesia Power for the Sunyaragi power plant in West Java; between PT Pertamina Hulu Energi, Petrochina and Regional Company Malamoi Olom Wobok; and between PT Pertamina Hulu Energi, PetroChina East Java and PT Gasuma Corporindo.

For the fertilizer industry, the contracts were between BP ONWJ and PT Pupuk Kujang Cikampek; between Pertamina EP and state fertilizer firm PT Pupuk Sriwidjaja; and PT Pertamina Hulu Energi Raja Pempirai, PT Golden Spike Energy Indonesia and PT Pertamina Gas for Pusri; between JOB Pertamina Talisman and PT Pertamina (persero); among PT Pertamina Hulu Energi OK, Talisman OK Ltd., PT Pertamina EP and PT Pertamina Gas for Pusri; and between ExxonMobil Oil Indonesia and PT Pupuk Iskandar Muda.

For industry the contracts were between PT Pertamina EP and PT Sumber Daya Kelola; and between PetroChina International (Bermuda) Ltd. and PT Henrison Iriana.

The above included extended contracts, new contracts and amendment of (previous) contracts with a duration of one to 10 years. The total volume of gas under contract is 473,795 trillion BTU.

“It is hoped these business contracts will boost the government program on fossil fuel substitution as well as helping to speed up the national economy especially in power and electricity and other industry sectors,” said Priyono.

Boeing customer Lion Air gets financing for 30 jets

Indonesian low-cost carrier Lion Air, which has ordered a whopping 162 of Boeing's newest 737-900ERs, has won approval for more than $1 billion in financing support from the U.S. Export-Import Bank, allaying concerns that it would not find sufficient financing.

Dominic Gates, Seattle Times aerospace reporter

Indonesian low-cost carrier Lion Air, which has a whopping 162 of Boeing's newest 737-900ERs on order, has won approval for more than $1 billion in loan support from the U.S. Export-Import Bank, allaying concerns that it would not find sufficient financing.

Ex-Im Bank's board approved $238 million in financing and made a nonbinding preliminary commitment of a further $841 million if Lion Air formally requests it. The bank said the combined amount will support the deliveries of 30 of the 737-900ERs from Boeing.

Bank spokeswoman Linda Formella said the money could be provided either as a loan guarantee or as a direct loan, depending on Lion Air's requirements.

"Ex-Im Bank welcomes this opportunity to support the export of Boeing aircraft to Lion Air," said Ex-Im vice president of transportation, Robert Morin.

Carol Sexton, Southeast Asia managing director of Boeing Capital, the company's financing unit, said in a statement that the financing would support jobs at Boeing in Washington state, and at engine-maker CFM International in Cincinnati, Ohio, as well as at hundreds of suppliers to both.

Last month at a conference in Phoenix, Ariz., Morin said the Ex-Im Bank sees the global credit crunch creating a big shortfall in airplane financing this year. He said the Bank will accordingly increse its financing in the sector, up from the $4-5 billion typical in recent years to around $8-9 billion in 2009.

The bank's explicit purpose is to support jobs in the U.S. by offering export financing.

"This is game day for the Ex-Im Bank," Morin said in Phoenix.

Lion Air's unfilled Boeing orders are worth more than $13 billion at list prices. Market data from aircraft valuation firm Avitas pegs the true value of those jets, after standard discounts, at more than $8 billion.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

State enterprises consortium prepared to buy Newmont shares

Jakarta (ANTARA News) - The State Ministry for State Enterprises is set to buy 17 percent of the investment stake of PT Newmont Nusa Tenggara (Newmont) by way of a consortium of state-owned companies if the government prioritized state enterprises.

"We have already discussed the planned consortium," State Minister for State Enterprises Sofyan Djalil said at his office in Jakarta Wednesday.

He said today (Wednesday, Apr 8) he had sent a letter to the Finance Minister and the Energy and Mineral Resources Minister asking for the nomination of state enterprises as divestment buyers, unless the government used its purchasing right.

Early this month, an international arbitration court won an Indonesian claim requiring Newmont to divest 17 percent of its stake to the Indonesian government.

Within 180 days following the verdict, the divestment must already been realized, otherwise, the government would have the right to revoke Newmont`s contract of work.

Sofyan said under the prevailing regulations the government could hand over a divestment share to another party unless the state had bought it.

Nevertheless, the minister did not dare to speculate what state enterprise would form the consortium, would they be a mining company or otherwise.

The minister had once suggested to support state enterprises like mining companies, like PT Aneka Tambang, for preparations to buy Newmont shares.

"Some state enterprises will be joining the consortium, but regional administrations are also welcome if interested," he said.

Indonesian palm oil industry takes step towards sustainability

WWF-Canon / Alain COMPOST, 07 Apr 2009

Jakarta, Indonesia: A major Indonesian plantation company has become the country’s first certified maker of sustainable palm oil as WWF simultaneously collaborated with the Indonesian Department of Agriculture and others to hold a first-time regional training workshop for small producers.

Musim Mas Group Plantations, is the first company in Indonesia to demonstrate that some of its plantations comply with the Roundtable for Sustainable Palm Oil (RSPO) Principles and Criteria, a set of standards that helps ensure that palm oil is produced in a socially and environmentally responsible way. Indonesia is the world’s biggest producer of palm oil.

The RSPO brings together oil palm growers, oil processors, food companies, retailers, NGOs and investors to help ensure that no rainforest areas are sacrificed for new oil palm plantations, that all plantations minimize their environmental impacts and that basic rights of local peoples and plantation workers are fully respected.

“Musim Mas hopes that its certification will encourage more Indonesian companies to follow suit,” said Liantong Gan, head of Musim Mas’ sustainability department.

Musim Mas’ certification underscores the progress that WWF, and others, have made in efforts to increase the number of palm oil producers that are operating sustainably.

WWF works to ensure that oil palm expansion does not come at the expense of forests by promoting its expansion onto degraded lands. It is also helping to develop guidance for the small holders representing 40 per cent of Indonesia’s palm oil growers.

"WWF is pleased to see progress in Indonesia, but there is much work to be done before sustainable palm oil can be a mainstream reality," said Ian Kosasih, Director of the Forest Programme at WWF Indonesia.

"WWF Indonesia will continue to cooperate with stakeholders to build the capacity of farmers to implement the RSPO guidelines, promote the use of idle or degraded land for oil palm expansion, and put pressure on those companies that persist in converting natural forest for oil palm expansion," Kosasih said.

WWF helped organize the training for 21 training representatives from small Indonesian palm oil plantations from West Sumatra, Riau, South Sumatra, Jambi, and West of Kalimantan.

WWF held the training in collaboration with the Indonesian Smallholders Working Group, the Department of Agriculture, the RSPO Indonesia Liaison Office, Sawit Watch, and various certification bodies. The training stemmed from a memorandum of understanding signed on Feb. 17 between the RSPO and the Indonesian Department of Agriculture.

The objective was to educate trainers on the threats of oil palm plantations to the region’s forests and local species, to motivate smallholders to comply with the RSPO P & C, and to provide practical ways smallholders can comply with these sustainability criteria, including mitigating the wildlife human conflict that often occurs happens in oil palm plantations.

In addition, a syllabus and training modules were developed so that the representatives could take them back to their operations for educational purposes.

The Indonesian Smallholders Working Group is planning to hold further trainings in the five provinces represented at the March training, and follow them up with audits.

As a founding member of the RSPO, WWF has worked since 2002 with a wide range of stakeholders to ensure that the RSPO standards contain robust social and environmental criteria, including a prohibition on the conversion of high conservation value (HCV) areas.

The workshop and Musim Mas’ certification come only months after the first shipment of RSPO certified sustainable palm oil arrived in Europe from southeast Asia.

Several European companies, including Unilever, Sainsbury’s and Albert Heijn, have already made strong public commitments to buy certified sustainable palm oil.

The next RSPO Roundtable meeting and the 6th General Assembly of RSPO members will be held in November 2009 in Kuala Lumpur, Malaysia.

US provides over $1b for RI airline upgrades

Ika Krismantari, THE JAKARTA POST, JAKARTA | Tue, 04/07/2009 11:01 AM

The United States Export-Import Bank approved more than US$1 billion in financing for Indonesian airlines to improve passenger fleets, generate business and create jobs in Indonesia and throughout the region.

In a press statement in Jakarta on Monday, the US Embassy said the financing was made possible after the ratification and implementation of the Cape Town Treaty, which allows Indonesian airlines to save millions of dollars in financing costs.

“This financing allows Indonesian-registered companies to gain very competitive rates and favorable credit similar to the most advanced countries in the world,” said US Ambassador Cameron R. Hume.

“This action by the US is a vote of confidence for the improvement of aviation regulation and the general business environment in Indonesia,” said Henry Bakti, the Indonesian Transportation Ministry’s director general for air transportation.

The financing will allow Lion Air to access $238 million to purchase new Boeing 737-900ER planes and provide preliminary authorization for another $841 million, for a total of 30 new passenger jets.

Last month, national flag carrier Garuda Indonesia announced the bank’s authorized joint financing of $346 million for increasing its’ fleet.

“We are delighted to offer Lion Air the reduced exposure fee available under this treaty, which reduces the legal risks associated with cross-border, asset-backed aircraft financing and leases,” said Robert Morin, Export-Import Bank vice president of transportation.

The loan facility is expected to boost not only aviation safety but also the country’s image, which has been marred by several air transportation accidents.

Since 2007, the European Commission has banned all Indonesian airliners from flying to EC territory in response to the country’s poor safety record. The government has since tried to improve the airline regulatory system and safety in the hope the EC will revoke the ban. EC representatives have promised to lift the ban, acknowledging the progress Indonesia has made. However, Indonesia will still need to comply with the remaining 10 of 60 flight safety requirements set out by the EC before the ban can be lifted.

At least six incidents of aircrafts skidding off the runaway occurred during the first quarter of this year.

While there were no fatalities, these accidents could signal the government’s sluggish effort to revise safety standards despite EC inspections to ensure the ban could be lifted.

Time to roll up sleeves

The Jakarta Post | Mon, 04/06/2009 11:55 AM

Workers assisted by military personnel build temporary homes for the Situ Gintung dam burst victims, in Tangerang, Banten, on Saturday. The Banten administration said it would build temporary homes for 400 residents whose homes were decimated by the calamity two weeks ago. (JP/Multa Fidrus)

Eximbank restructures $88m loans to PT PAL

The Jakarta Post, Jakarta | Mon, 04/06/2009 8:32 PM

Indonesia’s Export Import Bank (BEI) signed a deal to restructure its troubled Rp 1 trillion (US$88 million) loan owed by ailing state shipyard company PT PAL on Monday to help keep the company afloat.

“Our loans to PAL almost reached the maximum limit of disbursed credits, or 25 percent of our total equity which stands at Rp 4.3 trillion,” BEI president director Arifin Indra said on Monday.

He said the bank would still support PAL despite their weak condition by restructuring some of their loan requirements.

“The bank is only restructuring the loans related to working capital for the construction of vessels that are still 25 percent finished,” he said.

PAL has been in financial trouble since it received a contract for the construction of 20 vessels in 2006.

As costs of ship construction soared since then, PT PAL could not cover the increased full production costs and now, the company still has 18 unfinished orders.

The unfinished projects include the building of two vessels ordered by the Navy, four escort tugs worth $6.5 million each ordered by energy company BP Plc and three 38-meter boats ordered by the customs and excise agency.

There is another order for a 50,000 dead weight ton (DWT) vessels ordered by a Turkish private company.

PT PAL also has orders from Italian companies for a tanker with a capacity of 24,000 tons and two tankers with a capacity of 6,000 tons each.

Jakarta allocates Rp 300b to repair damaged roads

The Jakarta Post, Jakarta | Mon, 04/06/2009 8:26 PM

The City Public Works Agency has allocated Rp 300 billion (US$26 million) to repair damaged roads across the city, an official with the agency said Monday.

“A few months ago, we only focused on patching potholes because it would have been ineffective to carry out overlaying projects during the rainy season,” agency head, Budi Widiantoro, said.

“We will start the bidding process next week for the overlaying work. Around 30 contractors have expressed interest in the project contract, but we will only pick 14 or 15 of them,” he said.

Damaged roads have become an increasingly significant problem for the capital as the annual floods inundate the city, slowing traffic and causing congestion.

Eni says finds new oil, gas offshore Indonesia

Reuters, Mon Apr 6, 2009 4:39am EDT

MILAN, April 6 (Reuters) - Italy's biggest oil and gas group, Eni (ENI.MI), has made a new hydrocarbon discovery offshore Indonesia as it aims to boost activity in the region, Eni said in a statement on Monday.

"The Jangkrik discovery, drilled in 400 metre water depth, represents a significant success in Eni's exploration efforts in the Kutei Basin and further confirms the high potential of its portfolio in the area," said Eni, the operator of the Jangkrik structure located east of Kalimantan.

Eni said it planned to proceed with the appraisal of Jangkrik discovery and to assess the technical and commercial viability of a fast-track development of the new field.

Eni said it also participates in the development of the significant gas reserves located in the Rapak & Ganal blocks in the Kutei Basin.

In the nearby Tarakan Basin, Eni has in recent years made two other important hydrocarbon discoveries, Aster and Tulip, both of which are now in an advanced appraisal phase, it said.

Eni holds overall working interests in 11 permits in Indonesia and operates six of them. The offshore activities are located in the deep waters of the Tarakan and Kutei Basins and north of Sumatra Island.

Other activities are in the Mahakam River Delta, East Kalimantan, where Eni has an equity production of about 20,000 barrels of oil equivalent per day. (Writing by Svetlana Kovalyova, editing by Anthony Barker)

Donggi Senoro Asks Japanese Buyers to Extend Gas Sale Deadline

The Jakarta Globe, Reva Sasistiya, April 2, 2009

The PT Donggi Senoro LNG consortium is seeking an extension to the deadline for the signing of definitive gas sale agreements with Japanese buyers, as the project’s development remains uncertain following the government’s refusal to approve the provisional gas sale agreements.

The consortium, made up of state oil and gas firm PT Pertamina, Japan’s Mitsubishi Corp. and PT Medco Energi Internasional Tbk, via its subsidiary PT Medco E&P, submitted the extension proposals to the buyers on Wednesday, after it failed to reach a satisfactory resolution with the government on the provisional agreements, a Pertamina official said.

“We are optimistic that the Japanese buyers will consent to the extension,” Hari Karyuliarto, Pertamina’s vice president of LNG business, said on Thursday. “At same time, we are also making approaches to the government.”

The consortium had provisionally agreed in February to supply the two buyers, Japanese utilities Chubu Electric Power and Kansai Electric Power, with 1 million tons of gas a year each. The deals, worth a total of $7.7 billion, envisaged the supplying of 335 million standard cubic feet of LNG per day over the course of the next 15 years.

According to Medco’s president director, Lukman Mahfoedz, the Japanese buyers had unofficially signaled their consent to the extension.

The Donggi Senoro LNG plant, located in Central Sulawesi Province, was initially set to start production in 2010, but the government recently delayed the project and approval for the provisional gas sales agreements by making them contingent on a number of preconditions.

The preconditions included acceptance of a government-set minimum floor price for the gas, the resolution of a legal dispute between Mitsubisihi and PT LNG Energi Utama, agreement on the domestic market obligation, a revision of the development plan for the plant, and approval for the gas sales by the upstream oil and gas regulator BPMigas.

The price payable by the two Japanese buyers under the provisional sale agreements is based on the Japan Customs-Cleared Crude price, known as the Japan Crude Cocktail, which is designed to allow LNG prices to fluctuate along with crude oil prices. As things stand at the moment, the agreements do not provide for an absolute minimum price for the Senoro gas.

Raden Priyono, chairman of BPMigas, said last month that the government would set a minimum floor price that would kick in if crude prices fell to $40 a barrel or less.

The floor-price proposal came in response to conclusions arrived at in February by a special committee of the House of Representatives on irregularities in the oil and gas sector, which suggested revising the pricing formula for the Senoro block to prevent prices from drifting too low.

The outstanding dispute between Mitsubishi and LNG Energi Utama began last August, when Jakarta-based Energi Utama sued Mitsubishi, demanding more than $709 million in damages and accusing the Japanese company of stealing confidential data to calculate production costs and service fees for the purpose of winning a storage-plant contract. Energi Utama also claimed it had exclusive rights to the Senoro project.

The delay, however, could have wider implications. Japan’s ambassador to Indonesia, Kojiro Shiojiri, sent a letter to President Susilo Bambang Yudhoyono on March 19, warning that if the project fell through, it would not only affect cooperation in the energy sector, but overall Japanese-Indonesian investment relations.

Energy and Mineral Resources Minister Purnomo Yusgiantoro said on Monday that some of the Donggi Senoro gas would be allocated to feed domestic fertilizer plants.

3 Islands in Riau Find That Not All Are Free in FTZs

The Jakarta Globe, Teguh Prasetyo & Dian Ariffahmi, April 3, 2009

Despite the designation of three Riau islands as free trade zones, the government will continue to control the import of primary commodities like sugar and rice into these areas, Diah Maulida, the director general of foreign trade at the Trade Ministry, said on Thursday.

“The flow of goods, especially staple foods, will remain controlled by the central government,” Diah said. “Designating the Batam, Bintan and Karimun islands as a free trade zone does not mean there will be an uncontrollable flow of goods to and from the islands.”

Collectively, the free trade zones are known as BBK.

Trade Minister Mari Pangestu officially handed over the authority to issue licenses to the free trade zone board on April 1.

Despite the fact that the FTZ board expects the three areas to boost exports significantly and generate an estimated 130,000 jobs, Indonesia for decades has hesitated to grant the areas full free trade status.

Batam was given limited status as far back as 1978, affording companies exemption from import duties and income and value-added taxes for export-oriented industries. However, since the start, state, regional and local governments have been ambivalent about granting full status over concerns that it would lead to an uncontrollable flow of goods and result in harm to local producers.

In October 2007, the government, in theory, passed legislation granting the three islands within shouting distance of Singapore full free trade status. But the official launch didn’t come until January and authorities are keeping a wary eye on it. As of that date, all goods flowing to and from the region are subject to Finance Ministry regulations on tax exemptions and customs and excise, Dian said

Licences to authorized exporters and importers will be strictly controlled by the BBK authority board, known as the Dewan Kawasan FTZ, chaired by Ismat Abdullah, the Riau Island governor. The board, she said, is evaluating the performance of exporters and importers.

“At least 118 companies have gotten licenses to export or import their goods to and from the BBK region,” she said.

The import-export companies must make master lists of the products they intend to trade.

“The master list is also a valuable source of reference for customs and excise offices to control the flow of goods to and from the region,” she said.

Import-export rights are to be granted in stages, with the first to be given to liquor and salts. Other commodities such as textiles, steel, plastics, agricultural machinery and some electronic products will be next.

Last week, the Indonesian Association of Forwarder and Expedition Companies, or Gafeksi, proposed that the FTZ authority include the Batam seaport as an international logistics hub for ports in Jakarta, Medan in North Sumatra, Surabaya and Bitung in North Sulawesi. Collectively, the move could save logistics operation costs of as much as Rp 85 trillion ($7.48 billion) per year, the association said.

The Batam seaport management is expecting an unnamed French investor to invest.

MRT project to face challenge in tunnel construction

Triwik Kurniasari, THE JAKARTA POST, JAKARTA | Fri, 04/03/2009 9:14 AM

The construction of the first ever mass rapid transit (MRT) project will face some big challenges, especially with the building of tunnels, said PT MRT Jakarta (MRTJ).

Corporate director of MRTJ, Eddi Santosa, said his office was currently assessing the condition of the soil and buildings where the future MRT lanes would be built.

“We need to conduct this research to ensure the project’s safety,” said Eddi.

“The construction method used to build the tunnel, for example, will affect the duration of the project.”

The tunnel also has to be able to withstand pressure.

“There might be a high-rise building located above the tunnel that has to be removed to ease the pressure on the tunnel,” said Eddi.

The company wants to be prepared for any situation.

“Land subsidence, earthquakes, fires and floodings also have to be taken into consideration before starting the project,” he said.

Land subsidence is an ongoing issue in city because of the high pressure from high-rise buildings and massive ground water exploitation.

Firdaus Ali, an environmental expert at the University of Indonesia, earlier reported the city’s land was sinking 10 centimeters a year on average.

Beside tunneling, Eddi said, MRTJ also faces challenges planning sharp bends on Jl. TB Simatupang and Jl. Fatmawati, both in South Jakarta.

“The bend is sharp because there is also a toll road, so the lane will have to be curved there,” he said.

The Japanese government - through the Japan International Cooperation Agency (JICA) - is funding the MRT project with a 120 billion yen (US$1.2 billion) loan. Acting as the MRT project adviser, JICA will also evaluate the project’s cost to make sure the funds are sufficient.

JICA said it would fund 85 percent of the project, with the state and city financing the rest.

On Tuesday, the central government secured a second loan package from the Japanese government worth 48.15 billion yen.

On March 25, Governor Fauzi Bowo signed an agreement with the government for a 758 million yen grant, which was part of the 1.87 billion yen loan from JICA.

Fauzi said 567 million yen of the grant would be spent on management consulting services, while the rest would be transferred to MRTJ as a capital injection for more consulting services.

The Transportation Ministry is due to start working on the basic engineering design in April this year and is expected to complete the design in early 2010.

The procurement process will most likely start in a couple of months and finish at the end of 2010, with the construction of the actual MRT planned for as early as 2011.

The 14.5-kilometer MRT route - linking Lebak Bulus in South Jakarta to Dukuh Atas in Central Jakarta — should be up and running early 2016.

The route will start from Lebak Bulus and pass through Jl. Fatmawati, Jl. Cipete Raya, Jl. Haji Nawi, Blok M, Jl. Sisingamangaraja, Senayan, Istora and Bendungan Hilir, and end at Dukuh Atas.

About 10.5 kilometers of the route will be overground, while the rest will be underground.

The MRT is expected to carry up to 340,000 passengers per day and take 28 minutes from start to finish. The MRT will connect with other transportation services such as TransJakarta bus.

“If the MRT is ready, Transjakarta bus serving Blok M – Dukuh Atas can stop running because the MRT will offer faster commuting times,” said Eddi.

Cheap car, anyone?

The Jakarta Post | Sat, 04/04/2009 12:45 PM

A prototype of a microcar developed by teachers at Diponegoro University is seen in Semarang, Central Java, on Friday. The lecturers have been trying to create cars fitted with Chinese-made motorcycle engines. With engine capacities of 150 cc and 200 cc, the four-passenger car is projected to cost about Rp 30 million (US$2,700). JP/SUHERDJOKO

Govt to resume Karaha Bodas power project

The Jakarta Post, JAKARTA | Fri, 04/03/2009 10:07 AM

State oil and gas company Pertamina will resume next year the long delayed geothermal power plant project at Karaha Bodas in Garut, West Java, says an official of Pertamina’s subsidiary.

President Director PT Pertamina Geothermal Energy, Abadi Poernomo said Thursday Pertamina was ready to fund the project that would cost between US$50 and 60 million.

“The project will be funded by a corporate loan, from Pertamina to its subsidiary [PT Pertamina Geothermal Energy - PGE],” Abadi said.

Karaha Bodas was originally a joint project between Pertamina, state power company PLN and the US-based Karaha Bodas Company.

Before postponement during the 1997-8 economic crisis, the Karaha Bodas Company and geothermal power plant were controlled by two US companies –Florida Power Energy LLC and Caithness Energy LLC.

It was part of a package of 21 power projects reviewed by the government in 1997. Karaha Bodas was then delayed because of problems related to the economic crisis.

But the delay led to a string of arbitration proceedings, including one filed by Karaha Bodas.

Pertamina argued the delay reflected recommendations of the International Monetary Fund (IMF).

Abadi said PGE had finished the feasibility study and the Karaha Bodas project should start up in 2013.

“The power plant will have a 30 megawatts capacity, but open for capacity expansion if needed,”

The resumed Karaha Bodas project is owned by PGE and is part of the state owned power utility PLN’s second-phase 10,000 MW power generation crash program.

Projects under the first 10,000 MW program belong to PLN, but the second 10,000 MW program includes projects with independent power producers (IPPs).

The total project capacity of the second program will be about 9,963 MW. The IPPs are expected to generate about 40 percent of this total capacity.

The first-phase program was launched in 2006 to meet power shortages and increasing demand for electricity nationwide, especially for the Java-Bali system.

It is planned geothermal energy will play an important role in the second phase of the crash program.

Geothermal energy is expected to power nearly half of the projects in the second phase program. Hydro-power will account for 1,174 MW, with coal and gas providing the remaining 4,056 MW.

Abadi said PGE will sell power from Karaha Bodas to PLN.

“But we haven’t [yet] had a negotiation with PLN concerning the rate ,” he added.

According to Abadi, the sales price for geothermal power is between 7 and 9 US cents per Kwh.

Indonesia, FAO establish food security cooperation

Jakarta (ANTARA News) - The Indonesian government signed a Letter of Intent on food security with the UN Food and Agriculture Organization.

The LoI, according to the foreign ministry, was signed by Agriculture Minister Anton Apriyantono and the FAO director general Jaques Diouff on the sidelines of the FAO Asia Pacific Regional Conference in Bangkok, Thailand, this week.

The signing of the LoI was done also in the presence of the Indonesian Ambassador to Thailand Mohammad Hatta, and the Indonesian Ambassador to Italy Mohammad Umar.

In the Asia and Pacific region, and among the other developing countries, Indonesia was believed to have a high commitment to maintain food security stability. For the Indonesian success, FAO has asked Indonesia to contribute to increasing food security and agricultural development in other developing countries.

In this case, FAO asked for Indonesian help for its experts, technology transfer and other technical assistance to the other developing countries under the South-South Cooperation framework.

The cooperation is also based on Indonesia`s experience in the 1982-2002 period, which has given technical assistance for a number of countries in Asia and Africa.

In his tour of Thailand, the agriculture minister also had a bilateral meeting with his Thai counterpart Theera Wongsamut to discuss Indonesia`s initiative for an RI-Thailand Expert Group Meeting on an exchange of information and the success of the two countries in reaching food security.

Palestinian Ambassadors follow diplomatic training in Indonesia

Jakarta (ANTARA News) - An international diplomacy training which had been going on for almost a month now in Jakarta and in some other cities in Indonesia were followed by 23 foreign diplomats, including four Palestinians who are ambassadors to Bulgaria, Zimbabwe and Tanzania.

Deputy Foreign Minister Triyono Wibowo when opening the training in Jakarta Thursday said that the training for the Palestinian officials was one form of Indonesia`s high commitment to help the struggle of the Palestinian people.

The diplomatic training opened at the foreign ministry on Thursday was a Foreign Service Staff School held from March 30 to April 24, 2009.

The third Sesparlu was attended by 13 senior diplomats from Indonesia and nine diplomats from China, Vietnam, Singapore, Thailand, Brunei Darussalam, Cambodia, Myanmar, Malaysia and Laos as well as four Palestinian ambassadors.

Rp5 Trillion for Steam Power Plants

Thursday, 02 April, 2009 | 13:25 WIB

TEMPO Interactive, Jakarta: The Regional Development Bank formed a consortium to help loan Rp5 trillion for 16 steam power plants in Indonesia. The consortium includes 22 regional development banks and PT Bank Rakyat Indonesia.

Head of the association of regional development banks, Winny E. Hasan, said the power plant project is guaranteed by the government so it is secure.

“Lead managers of the consortium include Bank DKI in partnership with Bank Papua, Bank Jatim, Bank Kaltim, and Bank Sulsel,” said Winny yesterday.

She said that the Regional Development Bank has been giving loans for infrastructure projects like electricity and potable water facilities.

EKO NOPIANSYAH

City aims to build 5m biopores this year

Triwik Kurniasari, THE JAKARTA POST, JAKARTA | Wed, 04/01/2009 11:37 AM

The city administration has set a target of creating 5 million biopores this year in five municipalities across the city in an effort to improve water retention and therefore ease the ongoing water crisis.

The City Environmental Board (BPLHD) said that the city only had 335,590 biopores, far below the recommended 76 million.

BPLHD head Peni Susanti said that the board would require developers to build the biopores in a bid to meet the target.

“The bylaw rules that every building, including malls and hotels, must have absorption wells or biopores,” Peni said, referring to the 2005 bylaw on groundwater.

She said her office was cooperating with the City Building Supervision Agency (P2B) to ensure that developers applying for building permits abide by the regulations.

“We also encourage Jakarta residents to make biopores at their homes,” Peni said.

She said that the biopores could help retain rainwater longer in the soil and therefore maintain the equilibrium of the groundwater table.

The biopore technology was introduced by a lecturer at the Bogor Agriculture Institute (IPB), Kamir Raziudin Brata, in 1976. Biopores are made with a T-shaped iron bore to create a 1-meter-deep hole in the ground with a diameter of between 10 and 30 centimeters. The hole, also containing organic waste, absorbs more rainwater and therefore allows insects and worms to live. Firdaus Ali, an environmental expert at the University of Indonesia, said biopores were not the only way to solve the city’s problem.

“Jakarta is experiencing a serious water crisis due to the massive exploitation of groundwater. Therefore, I fully support the administration’s plan to raise the ground water tax,” Firdaus said. Earlier in March, the administration announced that it would draft a bylaw to increase ground water tax in a bid to prevent exploitation and land subsidence.

The BPLHD reported that groundwater exploitation had caused land to sink about 1.2 meters. The construction of high-rise buildings also speeds up land subsidence.

The tax in wealthy residential areas will increase from Rp 525 per cubic meter to Rp 3,300, and from Rp 8,800 to Rp 23,000 in industrial areas.

“The administration can use the money to develop more sophisticated technology for water absorption... It should also impose stricter sanctions on violators,” Firdaus said.

Besides biopores, the administration has been working with the IPB in developing bio-retention technology. This method uses the chemical, biological and physical properties of plants, microbes and soils, to slow rainwater runoff and retain water.

In addition, the BPLHD reported that as of December 2008, the administration had built more than 83,000 absorption wells capable of retaining 1,154,000 cubic meters of water.

Fifteen countries to join Tour of Singkarak cycling race

The Jakarta Post, Jakarta | Thu, 04/02/2009 4:06 PM

Fifteen countries have so far expressed commitment to participate in the Tour of Singkarak 2009 cycling race to be held in West Sumatra April 29 to May 3, 2009.

Culture and tourism ministry's director general Sapta Nirwandar said in Jakarta on Thursday that the countries include New Zealand, Japan, Thailand, Taiwan, the Philippines, Malaysia, Iran, Australia, Kazakhstan, Uzbekistan, Russia, and Qatar.

"Around 85 percent of the construction works of new routes for the cycling race has been completed," he said as quoted by Antara state news agency.

Participants of the Tour of Singkarak will cover a total distance of 459 km and compete for a total prize of US$60,000.

The race route is to consist of four segments: Padang-Bukittinggi segment (92.3 km), Bukittinggi-Sawahlunto segment (85.1 km), Sawahlunto-Danau Singkarak segment (90.2 km), and Lake Singkarak- lake Kembar - Lake Singkarak segment (188 km).

The cycling race, which is aimed at promoting tourism in West Sumatra Province, will be accompanied by music concerts, a food festival, and a fun bike event.

West Sumatra Province was visited by a total of 1.4 million tourists, including about 100,000 foreigners, last year, he said.

The province has set a target of receiving at least 1.5 million tourists in 2009.

Official Claims New Legislation Is Vindicated As Overseas Firms Line Up for Mining Licenses

The Jakarta Globe, March 31, 2009

The Energy and Mineral Resources Ministry is expected to issue six mining licenses under the country’s new mining law over the next two months to five companies, including to Anglo-Australian miner Rio Tinto and Canada's Barrick Gold Corporation, a ministry official said Tuesday.

The companies are currently exploring under provisional licenses, with four of the five searching for gold, while Rio Tinto is seeking nickel in Sulawesi, Bambang Gatot Ariyono, the ministry's coal and mineral development director, said on the sidelines of a Jakarta meeting to explain the new mining law.

Although the Jakarta unit of PricewaterhouseCoopers complained in February that the new legislation had rendered the investment climate unfavorable as it didn’t offer long-term protection for large-scale capital projects as the old law did, Bambang said the fact that the five companies had sought licenses was testimony that it worked.

Barrick, Canada’s biggest publicly traded company, is exploring in Sumatra's Bengkulu region for gold deposits. PT Nusa Palapa has teamed up with an Australian mining company in Bengkulu, while Canada’s East Asia Mineral Corporation is exploring two sites in Aceh.

Rio Tinto said in January that it remained committed to investing up to $2 billion in a Central Sulawesi project, in which it will explore extensive nickel deposits in Lasamphala district. The plan is to process the ore to pure nickel, which fetches higher prices than less-processed nickel-in-matte, or ferro nickel.

Under the new mining law, passed in December, concessions are limited to 100,000 hectares, which shrinks to 25,000 when production starts. There was no limit under the previous law.

Bambang said the ministry was seeking ways to enlarge the concessions. “We are considering whether to grant more than one license in order to embrace all the acreage they have currently,” he said, adding that the government intended to honor existing contracts of work, including the previous acreage.

Bambang warned, however, that any new mining rights issued by local governments after Jan. 12 would have to comply with the new law. Local governments have yet to report whether they have granted mining rights to companies since that date.

Indonesia has enormous mineral potential, but convoluted red tape and complicated regulations often discourage foreign investors, critics say.

Hard Rock to roll out more Asian hotels

Google/AFP

HONG KONG (AFP) — The head of Hard Rock International said Tuesday the leisure firm was looking to expand its rock-and-roll themed hotel franchise across Asia despite the financial crisis.

Hamish Dodds, president and chief executive officer of the US-based group, said it was working on deals to open Hard Rock Hotels in Tokyo, Beijing, Shanghai, Bangkok, Jakarta and Hong Kong over the next few years.

The group currently manages two hotels in Asia -- one in Pattaya, Thailand, and the other in Bali, Indonesia -- and it is launching three new hotels in Macau, Malaysia and Singapore later this year.

"We have a number of negotiations ongoing in Asia. It's a good time to be looking around," he told AFP in Hong Kong.

"We certainly have better bargaining power now because of the availability of distressed assets and better leases (amid the crisis)," he said.

Dodds said the company has stepped up its search for potential sites and franchise partners in Asia.

In June, the company will open a 300-room Hard Rock Hotel in the southern Chinese gaming hub of Macau.

The new hotel is part of the 2.1-billion-US-dollar entertainment resort complex run by Lawrence Ho, head of Melco Crown Entertainment and son of Macau gaming tycoon Stanley Ho.

Dodds said Hard Rock's parent company, Seminole Tribe of Florida, was one of the most successful gaming businesses in the world and its entry into the Macau market was logical.

"If we are in the gaming business, it makes sense to be in the biggest gaming market in the world, which is Macau," he said.

Hard Rock International owns 124 Hard Rock Cafes and nine Hard Rock Hotels around the world.

Two New Bridges to Be Built in Kalimantan

Wednesday, 01 April, 2009 | 12:49 WIB

TEMPO Interactive, Surabaya: After completing the Suramadu bridge that connect Surabaya city and Madura island, the government plans to build similar bridges in Kalimantan.

“The bridges are the Tayan bridge and the Musi bridge,” said Director General of Bina Marga Hermanto Dadak at the Suramadu launching last night (31/3).

Hermanto explained that the Tayan bridge would be a one-kilometer bridge that connects the south side of Kalimantan island.

It will support access to the road that connects Indonesia, Kucing in Malaysia and Brunei Darussalam.

“The construction will be started soon,” said Hermanto.

While the government is still looking for the right location for the Musi bridge.

ROHMAN TAUFIQ

Abandoned geothermal project in Patuha hots up

The Jakarta Post, BANDUNG | Wed, 04/01/2009 12:15 PM

The government will resume development of a previously abandoned geothermal power plant at Patuha in Bandung, West Java.

“This project must continue as it’s been abandoned for nearly 12 years and the government has paid around US$400 million to the US,” vice president Jusuf Kalla said after a meeting at the plant on Tuesday.

The meeting was attended by state oil and gas company president director Karen Agustiawan, Energy and Mineral Resources Minister Purnomo Yusgiantoro, State Minister for State Enterprises Sofyan Djalil and state utility company PLN president director Fahmi Moechtar.

“I expect Pertamina to finish the first phase of the project, which will provide about 60 megawatts of electricity, by the end of 2010. The initial investment for this first phase is around $80 million and state banks will provide the funding,” Kalla said.

The government has appointed state lender Bank Negara Indonesia (BNI) as the fund arranger for the power plant project, according to the proposal provided during the meeting.

“The power plant will be able to provide around 360 MW of electricity upon completion by 2015,” he added. By then, up to $380 million in investment will be needed, according to the proposal.

The management on the development of the power plant will be handled by PT Geodipa Energi (GDE), a Pertamina subsidiary.

Former president B.J. Habibie halted the development of the plant in the late 1990s because of suspicions of corruption. It was one of ten similar projects halted by President Habibie in that period.

Himpurna California Energy, a US investor group owning the rights on the Patuha power plant project at that time, then demanded the Indonesian government pay their investment losses which they claimed amounted to $400 million.

The geothermal power plant in Patuha, along with a similar power plant in Dieng, West Java, will be part of an ambitious program of projects under the government’s second 10,000 MW power program.

This ambitious power program focuses on generating electricity using mostly environmentally friendly energy sources such as geothermal, hydro and wind. (hdt)

KLM upbeat on Indonesian market, brings in new aircraft

Novan Iman Santosa, The Jakarta Post, Jakarta | Wed, 04/01/2009 2:56 PM

KLM, the Royal Dutch Airline is upbeat about the Indonesian passenger market, describing it as a strong one, despite the current global economic downturn.

"Indonesia is withstanding the global crisis quite well while Singapore, Australia and New Zealand are hit much harder," Air France KLM general manager for the region (comprising Singapore, Indonesia, Australia and New Zealand), Paul Rombeek, told reporters Monday.

"However, we do see worldwide that all economies are in trouble."

Rombeek, appointed in February, quoted IATA suggesting airlines worldwide might suffer losses of up to US$4.6 billion this year.

Meanwhile, Air France KLM country manager Axel Theo Colen said the airline was experiencing a fall of 10 to 20 percent in bookings.

Colen emphasized however that Indonesia reached its budgeted target for the year ending March 31.

"This means that there was growth in Indonesia compared to the 2007/2009 fiscal year," he said.

"Indonesia has big potential despite negative trends in bookings."

Colen, however, declined to reveal any load factor figures from Jakarta saying this was confidential.

KLM serves daily the Jakarta-Amsterdam route via Kuala Lumpur.

Both Rombeek and Colen were speaking before a ceremony to welcome the new Boeing 777 at the Soekarno-Hatta International Airport in Cengkareng, Banten.

Previously the route was served by the 428-seat Boeing 747-400 aircraft which flew the route four times a week. The 280-seat 747-400 Combi (combined with freight) flew the other three times a week.

KLM currently has 15 Boeing 777-200s in its fleet, with two more expected later this year.

The airline also has two Boeing 777-300s with two more expected to arrive in May and August.

The 200 series has 327 seats while the 300 series has 425 seats. Both series have 35 business class seats while the rest are economy seats.

The 300 series will fly every Monday, Wednesday, Thursday and Saturday with the 200 series flying on Tuesday, Friday and Sunday.

The use of the Boeing 777 provides an additional 150 seats per week or an increase of 6 percent.

"Not only is the new airplane a reward for the route for good performance but it also offers a better product to passengers," Colen said.

With better technological advances Colen said the Boeing 777 burned less fuel than the 747.

A round trip with a 747 needs 300 tons of fuel while the 777 only needs some 230 tons," he said.

RI gets loans, including for MRT project

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Wed, 04/01/2009 12:03 PM

The country has secured 71.3 billion yen (US$728 million) in loans, more than half of which is for the Jakarta MRT mass transportation project.

The mass rapid transportation (MRT) project aims to increase the capacity of public transportation and improve the environment, linking Lebak Bulus in South Jakarta and Dukuh Atas in Central Jakarta, routes which now suffer from heavy congestion on a daily basis.

Japan is providing 48.2 billion yen in loans for the construction of the MRT project, Toru Maeda, the head of economic affairs and development at the Japanese Embassy, said in a press briefing Tuesday.

“The loans are for the first phase of the project. We share [the common viewpoint on] the importance of the project,” he said after the signing of an agreement by the acting Ambassador of Japan to Indonesia Takio Yamada and Indonesia’s Foreign Affairs Ministry’s director general for Asia-Pacific and African affairs T.M. Hamzah Thayeb.

The Japan International Cooperation Agency (JICA) and the Transportation Ministry are in talks on the selection of the consultant, to make the design for the MRT project.

“The selection of the consultant is at the final stage,” said Maeda.

After selection, the consultant will spend a year designing the project blueprint, and the tendering process will then take between six months and a year. The MRT project is expected to start construction in 2011, and to be completed in 2015.

Takehiro Yasui, JICA’s senior representative, said the primary consultant would be Japanese as the firm would need to have good experience of this type of project.

He also said 30 percent of the procurement, particularly in technology, should be from Japanese companies, while the rest could be from any international companies.

According to the Finance Ministry, JICA has committed that it will finance 85 percent of the MRT project under special economic partnership terms while 15 percent will be funded by Indonesian central and regional government budgets.

Maeda did not disclose the total amount needed to fund the MRT.

Yasui said the MRT project had first been a business-to-business project, but had been adapted on a government-to-government basis.

The first Indonesia MRT project is expected to have a maximum capacity of 300,000 passengers per day, with an average travel time of 5 minutes and 30 seconds. There will be 17 trains, each having six cars.

Aside from the MRT project, the rest of the 71.25 billion yen loan package is aimed at flood mitigation in selected cities, preventing sedimentation in the Wonogiri multipurpose dam, developing the Bandung Institute of Technology and to provide engineering services for the Java-Sumatra interconnection power transmission line project.