Ireland Eyes Investment in Indonesian Telecoms

Jakarta Globe, Arti Ekawati, May 28, 2010

Irish investors are targeting Indonesia’s communications and banking technology sectors to capitalize on the country’s rising population and robust economic growth.

Patrick O’Riordan, director of Enterprise Ireland for Indonesia, a trade and technology board, said private business in Indonesia was growing rapidly.

“This will demand an easy and safe banking system and telecommunication access in wide areas,” O’Riordan said on Thursday in Jakarta.

To satisfy this demand, investors from Ireland are expected to enter the banking technology sector and share their expertise, including establishing e-learning for Shariah finance and providing more affordable communication in remote areas.

Irish companies Tango Telecom, Altobridge and Openet are set to start business in Indonesia and cooperate with local mobile-phone operators.

O’Riordan said the telecommunication sector had much potential given the rising population and global free trade.

Since the implementation of the China-Asean Free Trade Agreement in January, Indonesia’s import value on telephones has been increasing. Based on Trade Ministry data, the import value on telephone goods from China in January was $138 million, about a 349 percent increase year-on-year.

“Therefore, finding qualified local partner is very important because of Indonesia’s very complex and huge market in telecommunications,” O’Riordan said.

Mark O’Sullivan, sales director for Altobridge for the Asia-Pacific region, said the company had met with several local mobile-network operators to discuss providing services in remote areas.

Many of Indonesia’s 240 million people live in rural areas spread across the country’s 17,000 islands, which are often underserved by communications networks.

“These are potential customers who can be served by local mobile operators by using Altobridge’s Remote Community solution, since we have satellite technology to provide services for people living in remote areas without any basic communication services,” O’Sullivan said.

To run its business in Indonesia, Altobridge would cooperate with more than one operator, as each operator has its own specific customers. O’Sullivan did not elaborate on how much the company planned to invest in Indonesia.

“We are in the process of looking for local-operator partners,” he said.

Richard O’Brien, Ireland’s ambassador to Singapore, said the Indonesian government needed to minimize obstacles for business development to boost foreign investment.

“Investors need transparency and predictability on tax payment. An attractive and predictable tax regime is urged so that people will know what they have to pay,” O’Brien said.

He added that the government should simplify investment procedures by implementing a one-stop service for investment and business licenses.

Based on Enterprise Ireland’s data, the trade balance between Indonesia and Ireland in 2009 was valued at 1.2 billion euros ($1.49 billion). This consisted of 650 million euros of Indonesian exports and 550 million euros of Indonesia’s imports from Ireland.

Irish business to manage Sabang port

The Jakarta Post, Jakarta | Thu, 11/19/2009 1:10 PM

After years of uncertain negotiations, the Ireland-based Dublin Port Company has signed an 18-month business contract with the government to take control of the management of Sabang international port in Nanggroe Aceh Darussalam.

Representatives from Aceh administration and Dublin Port signed a Memorandum of Understanding (MoU) in 2006 to jointly develop the port but no significant developments took place since then.

The agreement was signed on Nov. 13, allowing Dublin Port - through its partner HD Asia Maritime - to take part in the port's management, replacing state-owned port operator PT Pelabuhan Indonesia (Pelindo) I.

Under this agreement, the world's 12th largest port operator would handle all the port's operations and improve facilities, including the container yard, storage facilities, warehouses, and cargo terminals.

"We will also provide top-class security services for the port's customers and carry out marketing promotions to bring more ships to Sabang," said Bernardus R. Djonoputro, the CEO of consulting company HD Asia Advisory, HD Asia Maritime's parent company, during a media conference Wednesday.

The appointment of Dublin Port came as the port is embarking on a massive overhaul that could cost up to Rp 8.8 trillion (US$896 million) up until 2015 at the latest.

Sabang port is operating two piers, each is 180 meters long and 12 meters wide, capable of accommodating ships with dead weight capacity of up to 10,000 tons, with the administration now preparing to build a third pier stretching 423 meters using Rp 1 trillion of state funds.

"The construction of the third pier will finish in 2011," Sabang Area Management Body (BPKS) deputy chairman Nasruddin Daud said.

The final target is to upgrade the port with a total of 2,617 meters of piers, with the government expecting foreign investors to take part.

One of them could be Dublin Port, Bernardus said, adding that the operator was ready to disburse up to $600 million on upgrading.

"We'll see what will happen after this first phase of cooperation. It's very possible for us to invest in developing the port's infrastructure."

Sabang port is 1.4 kilometers in length and 0.8 kilometers wide with a one hectare container yard.

"Today, goods are docked at Belawan port in Medan and carried by trucks to reach Banda Aceh, 620 km away," Nasruddin added.

Banda Aceh is located about 35 miles south of Sabang. "We can save a lot of money if the goods can directly reach Sabang," he said. (bbs)

Waterford Wedgwood shifts to Asia to save company

The Jakarta Post

Anthony Deutsch and Elle Moxley, The Associated Press, Jakarta | Wed, 12/31/2008 8:51 AM  

For more than two centuries, Waterford crystal and Wedgwood china have been symbols of Irish and British craftsmanship. Now, their future may lie in Asia. 

Drowning in red ink, the storied brands, which merged in 1986, have moved most ceramics production to Indonesia to cut costs and now plan the same fate for crystal manufacturing. 

Their headquarters may soon follow. 

Short of funds for operations and loan payments, Waterford Wedgwood PLC is in advanced talks to sell a controlling stake to a U.S. private equity fund for roughly 600 million euros ($846 million) in cash and assumed debt, three people briefed on the negotiations told The Associated Press late last week. 

The prospective new owners may move the company's management and possibly its headquarters to Indonesia, one of the sources said. They would not identify the fund and spoke on condition of anonymity because the talks are confidential. 

With a Friday deadline set by creditors, a deal could come as soon as this week, though the Bank of America-led lender group has extended the company's deadline three times previously. 

Waterford Wedgwood, which lost 75.8 million euros (about $107.2 million) in the six-month period ending Oct. 4, has struggled for several years like other fine china makers, as formal dining trends continue to give way to more informal habits. But the global financial crisis has pushed it to the brink of bankruptcy. As credit dried up, the company could no longer raise money to cover costs. Its shares have collapsed to one-tenth of a euro cent on the Irish Stock Exchange. 

Workers have made Waterford crystal in Ireland and Wedgwood china in England for nearly 250 years. Their crafts have graced the tables of royalty and made innumerable wedding gifts for the better-off in the United States and elsewhere. 

But six years of losses has driven Wedgwood to move all major ceramics production from the green hills of Staffordshire county in central England to the industrial outskirts of Jakarta, Indonesia over the past two years. 

Only a small number of high-end products - hand-painted figurines and the iconic blue and white china - will continue to be made in England. The move to Indonesia, which cost 1,500 jobs in England, follows the opening of a smaller ceramics factory in China in 2004. 

On the Waterford side, half of its crystal production was shifted to Eastern Europe last year, cutting 1,400 jobs in Ireland. Now, the company is looking to move all crystal work to Asia, with Indonesia a prime candidate. 

"This is part of an expansive search for the best partners to work with in Asia," said James Philip Murtagh, senior vice president of Waterford Ltd. 

In the English city of Stoke-on-Trent, where Josiah Wedgwood turned the family business into a global pottery center, the founder's statue still welcomes visitors arriving by train. But the skyline is dominated by dormant bottle-shaped kilns. The canals once used to transport fine china are filled instead with pleasure boaters. 

The move to Indonesia all but brings down the curtain on English clay processing in a region nicknamed "The Potteries." At its peak, the industry employed tens of thousands. 

The latest layoffs in December included Jeanette Seabridge, 55, who started as a teenager on the production line at Royal Doulton, a subsidiary of Waterford Wedgwood. After decades molding delicate ceramic flowers, she held onto her job longer than most because of traditional skills that took her a year to learn. 

"I made 360-400 flowers a day, and at the height of production, there were as many as 80 women working with me," she said. Now heading into early retirement, she has taken a part-time job giving demonstrations at the Gladstone Pottery Museum. 

The $50 million move to Indonesia will cut manufacturing costs in half and hopefully enable the business to turn a profit in 2009 or 2010, depending on the depth of the global slowdown, said Tony O'Reilly Jr., whose family is one of two that together own a majority stake in Waterford Wedgwood. 

The move became inevitable because of rising energy costs, shrinking sales and the falling U.S. dollar, which ate into profits from the important U.S. market, company executives said. 

"We're not leaving Stoke-on-Trent completely, but everyone else has either migrated their product, is sourcing overseas, or sadly has gone out of business," O'Reilly said. In another blow to the town, porcelain maker Royal Worcester & Spode filed for a form of bankruptcy protection in November after failing to find buyers for their factories. 

After onsite training, Indonesians have taken up positions as managers, designers, technicians and painters at a factory that can produce 10 million pieces a year. It will employ about 1,750 workers by early 2009 as severance packages are settled in England, O'Reilly said. 

With an average monthly salary of about 1.8 million rupiah ($150), compared with $1,950 in Britain, their work is vastly cheaper. The reduced costs will enable Waterford Wedgwood to boost spending on marketing and create new products, some with a hint of the Indonesian culture of batik and shadow puppets. 

Initial concerns that Indonesian-made china would fall short of Wedgwood's reputation - some of its tableware sets cost thousands of dollars and become family heirlooms used only on special occasions - were overcome when products began rolling out of the new plant. 

O'Reilly said the Indonesian-made china meets Wedgwood's high standards, which earned it royal status from the queen of England in 1901. 

"There is a culture of artisanship," he said on a visit to the Indonesia factory in November. "Our craftspeople here are as good, if not better, than some of those we have in the United Kingdom." 

Though the packaging will say "Made in Indonesia," all pieces will still be stamped "Wedgwood. England 1759" - labeling the company says is permitted under international trade law.

Related Article:

Wedgwood goes into administration

US fund in talks to take over Waterford Wedgwood

US fund in talks to take over Waterford Wedgwood

By ANTHONY DEUTSCH – Associated Press, 27 December 2008 

JAKARTA, Indonesia (AP) — A U.S. private equity fund is in talks to take a controlling stake in struggling Irish crystal and ceramics manufacturer Waterford Wedgwood PLC for 600 million euros ($846 million), three people briefed on the negotiations said. 

Under terms of the deal, the U.S. investor group would assume roughly 400 million euros in debt, split almost equally between bonds and bank loans, and provide about 200 million euros in new capital, the three individuals told The Associated Press. They insisted on anonymity because the confidential talks are ongoing. 

The deal is desperately needed to save Waterford Wedgwood, a company run by English and Irish managers throughout its more than 250-year history, because it has been unable to raise operating capital in recent months and has posted nearly six years of consecutive loses. 

Without a cash injection it could soon be declared bankrupt. The company has until Jan. 2 — the third postponement from creditors — to make mounting loan payments or face the possible forced liquidation of assets, the individuals said. 

"It's a race against time," one of the people said. "The U.S. equity firm is in the process of due diligence." 

They declined to identify the U.S. investor group, but said talks had also been held with two other potential backers. 

Bank of America Corp., one of Waterford's lenders, acts as an agent for a group of the company's lenders and investors. Bank of America spokeswoman Julie Westermann declined to comment on the ramifications of a possible Waterford deal or the amount of debt Waterford holds. She said doing so would break confidentiality agreements. 

Waterford Wedgwood, know for its high-end crystal and tableware, has been shifting production overseas to cut costs. The Wedgwood ceramics division has moved most of its production from central England to Indonesia, while crystal production has been largely moved from Ireland to Eastern Europe. 

Those shifts have sharply reduced overhead costs, but a combination of the falling dollar, slowing sales of key products and, more recently, the global credit crunch have put its financial future at risk. 

For the six months ending Oct. 4, the company reported its loss rose to 75.8 million euros while first-half sales fell 15.4 percent to 207.6 million euros. 

The company's majority shareholders — the billionaire Irish O'Reilly family and Deputy Chairman Peter Goulandris — currently own a joint 51 percent stake and have poured about 400 million euros into the company to keep it afloat in recent years, one of the officials said. 

The O'Reilly family will be "pragmatic" in considering the offer that will strip it of its controlling stake, one of the individuals said. 

Waterford Wedgwood shares have been virtually worthless for months. They have fallen on the Irish Stock Exchange at one-tenth of a euro cent. This reflects the fact that the company's assets are worth only a fraction of its debts, which grew 7 percent over the past year to 448.9 million euros. 

Additional reporting by Associated Press Business Writer Madlen Read in New York.

Irish businesses seeking joint ventures in RI

The Jakarta Post, Jakarta | Wed, 12/03/2008 10:58 AM  

Irish businesses are keen to invest in the country by setting up joint ventures with Indonesian counterparts to eventually bolster trade between the two nations, Ireland's Ambassador to Indonesia H.E Richard O'Brien said on Tuesday. 

For that purpose, a group of Irish companies and foreign trade executives have arrived in town to meet delegates from Indonesian business, political and academic circles to discuss trade and joint venture prospects. 

"Indonesia is very promising and has a lot to offer," O'Brien said of the reasoning behind the delegation's visit to Indonesia. 

The meetings will involve presentations from experts and entrepreneurs to develop a business agenda between Indonesia and Ireland in various sectors -- in particular telecommunications, energy, transportation and pharmaceutical sectors. 

Several meetings have already been held. 

Currently, Indonesia and Ireland's trade volume remain fairly small, amounting to around 200 million euros, with "120 million euros accounted for by Indonesia's commodity and textile exports to Ireland." 

Micheal Smith, the embassy's secretary for Asia Pacific ICT and energy policy, said Ireland expects to double that amount in three to five years. 

Included among the business delegation are food ingredients giant Kerry Group, telecommunications company Tango Telecom and the maritime management company Dublin Port. 

On Monday evening, the delegation met with representatives of consumer goods giant PT Unilever Indonesia, shipping company PT Berlian Laju Tanker, and state pharmaceutical company PT Kimia Farma. 

No details emerged as yet from the meeting. 

Some Irish companies have already established economic relations with Indonesia. For example, Tango Telecom partnered with PT Lintas Teknologi Indonesia to enhance Bakrie Telecom's text messages services. 

Dublin Port is in a joint venture with Sabang Area Development Institution (BPKS) to pave the way to build an international container port in Sabang, Aceh. 

"We are currently waiting for the approvals from the Aceh government and the Dublin Port's board," Dublin Port's Head of Research for Development and International Sections Ken Whelan said. 

According to Whelan, the joint venture will cost the company an initial investment of around US$5 million. 

"If the port is to be in full operation by next year, it will give us a turnover revenue of around $40 million and a profit margin of $15 million, five or six years down the line." 

Ireland's economy, which for the past five years has received a considerable boost from its technology and telecommunications business sector, is currently being hit by the global economic crisis which is affecting its banks, housing sector and exports. 

"We have a very open economy, and a close relationships to the U.S., which makes us not immune to the crisis," Smith said. (dis)

Riau to offer 50 projects at investment summit

Rizal Harahap, The Jakarta Post, Pekanbaru

Up to 50 potential investment and business projects worth a total of US$1.8 billion will be on offer at the Riau Investment Summit in Pekanbaru on Nov. 7-8.

The projects will range from an international airport, power plant, turnpikes and railways, to agribusiness, Raja Mambang Mit, Riau provincial secretary, said in Pekanbaru on Tuesday.

The summit is intended to help speed up the flow of foreign investment in the resource-rich province, Mambang Mit said, so that "local economy and people could grow even faster."

The province expects 115 potential investors, mostly from overseas, to attend the event, which is scheduled to be opened by Vice President Jusuf Kalla.

Investors from France, China, Malaysia, Middle East, India, Singapore, the Netherlands and Ireland are among those who have confirmed their participation.

The airport project is in line with the province's long-term plan to build an international, much larger, air gate to replace existing Sultan Syarif Kasim II Airport in Pekanbaru.

Other infrastructure projects include the construction of Pekanbaru-Dumai tollroad, Pekanbaru-Dumai-Rantau Prapat and Pekanbaru-Pangkalan Kerinci railways, as well as the development of a gas-fired power plant in Duri and a coal-fired power plant in Dumai.

Aceh teams up with Irish firm to develop Sabang port

Andi Haswidi, The Jakarta Post, Banda Aceh

The Sabang Free Trade Zone Management Board (BPKS) in Aceh province will team up with Ireland's Dublin Port Company (DPC) to develop Sabang into a world-class port at a cost of some Rp 4 trillion (about US$445 million).

BPKS deputy president Nasruddin Daud said Tuesday in Aceh's capital, Banda Aceh, that the two bodies would set up a joint venture company, to be called PT Sabang Hub International Port, in June to develop the port.

The construction of the port, which is expected to begin soon after the establishment of the joint venture company, is scheduled for completion in five years.

Sabang is an island located at the most western tip of the archipelago within the boundaries of Aceh province.

"The total investment, which it is estimated will come to about Rp 4 trillion, will be shared fifty-fifty between Dublin Port and us," he said. "Right now, we are still at the pre-qualification stage for consultants to design the port," he explained.

Nasruddin said that the contract between the BPKS and DPC, which would be signed in June, would run for 50 years.

After the long conflict in Aceh ended following the tsunami disaster in 2004, both the central and provincial governments have agreed to afford Sabang special treatment as the island is believed to have the potential to serve as an import-export hub.

Sabang will now be developed as a free-trade zone, a status that it also held back in the 1960s, and will have the capacity to accommodate ocean-going vessels.

Financing for the development of the port, Nasruddin said, would come from the central government, but would be separate from the funds allocated to the province for reconstruction work, which, in Sabang's case, was being funded by the BRR, provincial government and central government.

"We received Rp 100 billion out of last year's national budget, and Rp 195 billion from this year's budget. In addition, we received Rp 3 billion from the provincial budget in 2006, and will receive another Rp 1.5 billion this year," he said.

"As for the BRR, this year they are going to spend Rp 45 billion on rehabilitating local infrastructure, including the water purification plant and water mains," he said.

Speaking to The Jakarta Post earlier, the director of the Aceh Provincial Investment Coordinating Board, Teuku Zainal Arifin Panglima Polem, said that a "world-class resort" would also be built on Sabang.

"Sabang is an excellent place for eco tourism with its beautiful beaches. It's also the perfect spot for divers. We plan to develop the island as an exclusive resort so as to attract big-spending tourists," he said.

According to a recent BKPS report, some 70 to 80 foreign tourists visit Sabang every weekend, with many of them being NGO officers working in Aceh. Tourists also come from German and other parts of Europe for the excellent diving around the island.