[Indonesia] Economy & Trade [Archive]

Yamauchi

April 26th, 2005, 07:20 PM

Rupiah is at 3 year low, expected to hit IDR10,000 against the dollar this week...

FX Asia: Bk Indonesia Rate Hike Unlikely To Boost Rupiah

JAKARTA (Dow Jones)--Bank Indonesia's plan to hike interest rates to support the tumbling value of the rupiah against the U.S. dollar will boost market sentiment but won't address the currency's core problem of rising oil prices, which are fueling massive dollar purchases by domestic state firms, analysts said.

Bank Indonesia Governor Burhanuddin Abdullah Tuesday unveiled a rupiah defense plan that includes a pending increase in the benchmark Sertifikat Bank Indonesia, or SBI rate, of 15 to 20 basis points, the use of forward transactions to protect the currency and a move to "monitor" state-owned Pertamina (PTM.YY)'s dollar purchases.

That news and Bank Indonesia intervention helped spur a rebound in the rupiah's value with the U.S. dollar closing at IDR9,688 Tuesday, down from a-more-than three-year high of IDR9,810 earlier in the day and Monday's close of IDR9,750.

The central bank's moves are welcome, but they won't put much of a dent in the voracious domestic appetite for dollars powered by high oil prices, said JP Morgan Chase Bank's Asian foreign exchange strategist, Claudio Piron.

"The risk is we may see (the dollar) touch IDR10,000 by year's end," Piron said. "The central bank can watch Pertamina, but understand that Pertamina has a budgeted rate of $24 a barrel and outside that they have to go to the market to buy dollars (to purchase supply)."

At 1025 GMT, the front-month June Brent contract on London's International Petroleum Exchange was down 41 cents at $53.99 a barrel in electronic trading, but above an intraday low of $53.88/bbl. Front month Nymex crude was trading 66 cents lower at $53.91/bbl.

Piron said that Bank Indonesia had been "resting on its laurels a bit" in responding to the recent rupiah decline, but that movements in the currency reflect a healthy managed currency and shouldn't be cause for market gloom.

"Generally speaking, the currency is responding to the macroeconomic environment...but (Bank Indonesia) has to get (support measures) just right because sentiment is fragile and if they overstep they may panic the market," he said.

A weaker rupiah threatens the financial performance of local firms, which have substantial dollar debt, and could hurt Indonesia's most prolonged period of economic growth since the Asian financial crisis of 1997-98. Indonesia's government of President Susilo Bambang Yudhoyono has projected an average annual rise in gross domestic product of 6.6% from 2004 to 2009, outpacing 5.1% GDP growth last year.

The rupiah's decline has also prompted the central bank to consider introducing a new generation of money market management tools, including a currency swap instrument, to reduce U.S.-dollar buying by state-owned firms. Bank Indonesia's Senior Deputy Governor Miranda Gultom told Dow Jones Newswires that the bank's board of governors would discuss the currency swap tool in a meeting Tuesday, without elaborating.

Interest-Rate Rise May Not Help Rupiah Long Term

The psychological impact of Bank Indonesia's moves to support the rupiah will likely help keep the U.S. dollar at IDR9,500 to IDR9,600 for the next few weeks, but projections beyond that period remain "quite hazy," said ABN Amro Bank Asian sovereign and foreign exchange strategist, Emmanuel Ng.

Ng said that raising interest rates to absorb excess liquidity won't influence domestic companies' purchases of dollars to pay foreign currency debts.

"I think the market will have a positive spin on (the rupiah support measures) because it shows that Bank Indonesia is being proactive," he said.

"But raising interest rates will only have transitory impact," Ng said. Monitoring "Pertamina and the use of forward transactions would have the most impact because those two measures would actually address the real dollar (transactions)."

That view was echoed by Citibank economist Anton Gunawan, who said the current circumstances behind the decline in the rupiah mirrored those in May to July 2004.

Bank Indonesia helped stem the rupiah's slide against the dollar at that time by trimming the estimated $30 million that Pertamina spends daily on oil supplies. It did that by limiting those purchases to state-owned bank transactions closely monitored by the central bank.

Gunawan said the central bank's efforts to bolster the value of the rupiah against the dollar may get a boost from a massive U.S. currency injection from an unlikely source: U.S. cigarette manufacturer Philip Morris.

Philip Morris, a unit of the world's biggest tobacco company Altria Group Inc. (MO), said last month that it will pay $2 billion to buy a 40% stake in Jakarta-listed PT Hanjaya Mandal Sampoerna (HMSP.SK) from a group of major shareholders. Sampoerna is Indonesia's third-largest cigarette maker by sales.

Philip Morris will make a general offer for the rest of Sampoerna which, if fully accepted, will lift the value of the total acquisition to $5.2 billion, including around $160 million in debt.

The rupiah may benefit from an influx of U.S. dollars timed to meet an end-May payment deadline for a portion of the Sampoerna acquisition, Gunawan said.

"(Philip Morris) has already brought in about a billion, probably...and if they bring some more money in then the rupiah value can go to IDR9,400 to IDR9,500, he said.

Alvin

April 27th, 2005, 07:23 AM

RI, China work on $507m projects
Rendi A. Witular, The Jakarta Post, Jakarta

The governments of Indonesia and China have agreed to jointly work on infrastructure projects in Indonesia worth US$507 million as a follow-up to the bilateral strategic partnership signed by the two nations' presidents on Monday.

The two projects are the completion of the ongoing Suramadu bridge linking Surabaya and Madura island in East Java worth $177 million and the construction of the $330 million Jatigede dam in West Java.

"During the ministerial level meeting for the strategic partnership, the Indonesian and Chinese governments agreed to invest in infrastructure projects," Minister of Public Works Djoko Kirmanto said at the State Palace on Tuesday.

Indonesia, the world's fourth most populated country, signed an agreement on strategic partnership with the world's most populated country, China, to help expand bilateral trade by 42 percent from $14 billion to some $20 billion over the next three years.

Included in the agreement is the Memorandum of Understanding (MOU) on infrastructure and natural resources cooperation.

For the initial phase, Djoko said, the Chinese involvement in developing local infrastructure projects would be by providing soft loans for the construction of the Suramadu bridge and the Jatigede dam.

The Suramadu bridge, which is expected to become the country's longest bridge, is currently being financed by the central government and the East Java administration.

The 5,438-meter-long bridge is estimated to be completed by 2006, with the loan from China expected to be disbursed this year. The bridge is primarily aimed at boosting the economy on Madura island, which has been left largely untouched by development.

"The loan from China was initially scheduled to be disbursed last year. However, it was later postponed because the Indonesian government could not meet several conditions set out by the Chinese government," said Djoko.

The conditions include the provision of funds by the Indonesian government amounting 10 percent of the project value for financing the initial construction of the bridge within one year.

Djoko, however, said that during the recent ministerial meeting, China had agreed to revise the condition by allowing Indonesia to provide only 5 percent of the funds each year for a two-year period to help finance the construction.

Aside from the Suramadu project, Djoko added, China was also eager to be involved in the planned Jatigede dam.

The dam is located in Sumedang regency -- some 130 kilometers southeast of Jakarta -- and it is expected to provide water for some 100,000 hectares of rice fields along the northern Java coast, particularly in West Java province.

The dam will address the continual problems of drought and flooding in West Java, particularly in Sumedang.

Alvin

April 27th, 2005, 07:30 AM

The World Bank bi-annual report on East Asia was released today.

For Indonesia: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/EXTEAPHALFYEARLYUPDATE/0,,contentMDK:20467056~menuPK:550232~pagePK:64168445~piPK:64168309~theSitePK:550226,00.html

Alvin

April 27th, 2005, 09:54 AM

World Bank East Asia Economic update
Asia Update - Indonesia

Sadly, the closing days of 2004 will be remembered for the tragic tsunami that claimed at least 200 thousand lives in the Indonesian Province of Aceh. Economically the estimated impact of the disaster, measured at replacement cost, is calculated at US$4.5 billion, equivalent to 2.2 percentage points of national GDP or 97 percent of Aceh’s GDP. Absent the recovery effort the direct impact of the tsunami would have lowered national GDP growth by 0.1-0.4 percent in 2005. However, unprecedented donor support is expected to fund activities that will increase growth by 0.3-0.5 percent leaving the net impact close to zero.

The government is currently laying out its relief and recovery strategy with continuing broad donor support. The donors grouped in the CGI (Consultative Group on Indonesia) pledged US$1.6 billion of assistance to Aceh related activities in late January. Additional substantial assistance is coming from private donations from companies and NGOs. On March 26th, the government released a draft 11 volume Aceh Reconstruction Masterplan. Key recommendations include:

a new reconstruction implementing agency with broad oversight authority and strong governance controls located in Banda Aceh (capital of Aceh province);
the development of community based solutions to restoring land tenure and housing compensation; and
a decision against a widely debated exclusion zone that would have prevented people from returning to their homes.
However, despite the tragic tsunami, market sentiment has been very strong as indicators continue to improve and confidence strengthens. The Jakarta stock exchange composite index has risen 33 percent since the inauguration of the new government. Other positive signs include improving international and domestic risk premiums, for example, a declining yield spread over US treasury bonds for Indonesian international paper. In response, international rating agencies raised credit ratings, for example, Fitch raised the rating from B+ to BB- in January 2005. S&P also raised rating from B to B+ in December 2004. In Q4 2004, the economy expanded by 6.7 percent the highest quarterly growth rate since 1997.

For the full year 2004 growth was 5.1 percent above expectations and the budget projection at 4.8 percent. Economic drivers shifted from consumption to investment with second half 2004 investment growing a striking 19 percent, while private consumption grew by 4.4 percent and government consumption declined by 2.5 percent. The investment to GDP ratio rose from 18.9 percent in 2003 to 21.0 percent in 2004, the first time it has been over 20 percent since the crisis, but still well below pre-crisis levels closer to 30 percent. In 2004 Indonesia also reached highs in exports and imports. Goods exports and imports reached US$71 billion and US$46 billion respectively. However, a long term lack of investment worsened the oil balance from –US$2.4 billion in 2003 to –US$5.0 billion in 2004, although the overall oil and gas balance remained positive at US$1.6 billion, due to offsetting gas sales. With rapidly rising imports, including capital goods, the current account surplus shrank significantly to US$2.9 billion, much less than US$8.1 billion in 2003. Another positive sign was the turn around in net FDI to a positive US$1.0 billion, again the first positive balance since the crisis.

The fiscal outlook also improved especially with the cut in fuel subsidies. On March 1st average fuel prices were increased by 29 percent. Household kerosene prices were left unchanged at Rp.700 per liter (about 7 US cents) while non-kerosene prices were increased between 22-39 percent, for example premium gasoline was increased by 33 percent. The 29 percent average increase in fuel prices is estimated to reduce fuel subsidies by Rp.20 trillion or over 2 billion USD. The government is proposing to reallocate about half these savings to maintaining the budget deficit target (below 1 percent) and half to programs designed to alleviate poverty especially for programs on education (scholarships), healthcare, and rural development.

According to Bank estimates, the increase in fuel prices will add 1.5-2 percentage points to the inflation rate. While concerns about the effectiveness of program targeting remain, the impact on growth is expected to be positive as resources are reallocated to more productive (and less regressive) areas such as infrastructure and social spending. The preliminary 2004 budget outcome indicates a deficit of Rp.29 trillion (1.2 percent of GDP) with fuel subsidies at Rp.69 trillion (3 percent of GDP). This decline in the budget deficit from 2003, when it was 1.7 percent, combined with a 13 percent increase in nominal GDP resulted in a continued improvement in the government debt to GDP ratio which fell from 60 percent in 2003 to 54 percent in 2004.

The government has just submitted a revised 2005 budget to address increased expenditures and revenues related to Aceh, the Paris Club moratorium, higher oil and fuel prices (and their impact on subsidies) as well as some changes to macroeconomic assumptions. In this new submission the budget deficit is estimated at 0.8 percent of GDP, an increase of 0.1 percentage points over the current 2005 budget. Expenditures related to Aceh, on budget, are estimated at Rp.11 trillion (about 1.2 billion USD).

The Bank foresees a continuing pick up in the economy, with real GDP growth rising to 5.5 percent in 2005 and 6.0 percent in 2006. The pick up in GDP growth will be based on the current economic and investment momentum and a relatively supportive external economic environment. Indonesia’s capacity utilization is historically high, in other words, the potential demand for investment is strong. Fiscal policy is beginning to evolve from ‘macroeconomic stability through fiscal consolidation’ to ‘support for higher quality growth’ and more resources will be available for capital spending. However sustaining growth beyond the current cyclical upturn will require continued reforms to the investment climate.

Alvin

April 27th, 2005, 10:09 AM

Investment key to Indonesia growth, says World Bank
Wed Apr 27, 2005 12:00 AM ET

WASHINGTON, April 27 (Reuters) - Indonesian economic growth should reach 5.5 percent in 2005 and hit 6.0 percent next year, but the challenge will be maintaining that momentum, the World Bank said on Wednesday.
"This growth is expected to be driven by economic and investment momentum, together with a supportive external economic environment," the development lender said in its twice-yearly report on East Asian economies.

It said increases in investment and productivity will be necessary to keep growth nourished at around 6 percent.

For the past few years consumption, supported by rapid growth in consumer credit, were the biggest drivers of growth in Indonesia, the bank said.

Annual growth in Indonesia last year reached 5.1 percent and the government has estimated it would be between 5.5 and 6.0 percent this year, making it the only Asian economy where growth would exceed last year's pace.

The World Bank said real investment growth will need to average 14 percent and total factor productivity -- a rough measure of efficiency -- will have to be 2.3 percent to 3 percent to keep growth stimulated, the bank added.

It noted that a fuel price hike on March 1 would put upward pressure on prices in coming months as it feeds into transportation costs.

Still, the bank made no comment on the possibility of the government raising interest rates despite a gradual increase in consumer price inflation in January and February.

While Indonesia was one of the countries hardest hit by the Dec. 26 Asian tsunami, damage mainly to the remote Aceh province will have little bearing on overall growth, the World Bank said.

The leading agency for tsunami reconstruction, the World Bank said Indonesia's tsunami damage to assets was about $2.9 billion and the impact on future cash flows are around $1.5 billion.

"The direct impact of the tsunami is estimated to lower the national GDP growth rate by 0.1 to 0.4 percentage points in 2005," the bank said, adding, "However, the final impact would depend on offsetting impact of reconstruction activities."

David-80

April 27th, 2005, 10:22 AM

Wow, rupiah is rebounding back, its not 9570 from 9810 two days ago! I guess BI is on the market right now. And the market is taking profits, so i would say, 9400-9500 for couple weeks from now.

cheers

Sielo

April 27th, 2005, 11:01 AM

MP Evans Grp Sells Malaysia Estate, Invests In Indonesia

Wednesday April 27, 2005, 4:58 pm

DJ MP Evans Grp Sells Malaysia Estate, Invests In Indonesia

Edited Press Release

LONDON (Dow Jones)--MP Evans Group PLC said Wednesday it will sale of a 660-hectare Malaysian estate for GBP4.3 million and an Investment in a 12,000-hectare Indonesian oil palm project.

The company said that the transactions represent the first stage of the implementation of the board's new strategy adopted since the Company's recent merger with Bertam Holdings PLC and Lendu Holdings PLC.

The company said: "As described in the documents relating to the merger, the new strategy is to divest the Group's relatively low-earning Malaysian plantations and reinvest the proceeds in the higher-earning Indonesian palm-oil and Australian beef-cattle sectors. With regard, specifically, to Indonesia, the aim is to acquire 50,000 hectares of land which is suitable for oil-palm development, in addition to the Group's existing plantations.

"Sale of Sungei Reyla Estate In line with this strategy, and as part of the means of financing the expansionary programme in Indonesia, we are pleased to announce the sale of the first of the Malaysian plantations, the 660-hectare Sungei Reyla Estate, for a total selling price of RM31.4 million, approximately GBP4.3 million.

"This sale is subject to 5% Malaysian Real Property Gains Tax and the related tax charge is expected to be approximately RM1.4 million (approximately GBP0.19 million). The sale is also conditional upon the approval of the Malaysian Foreign Investment Committee and the Estates Land Board. These permissions are expected to be received within six to nine months."

The company also said Wednesday that it has signed agreements relating to the commencement of a project in the northern part of Bangka Island, which lies off the south east coast of Sumatra, Indonesia.

The project consists of the acquisition and development of approximately 12,000 hectares which will be planted with oil palms and nearby there will be a smallholders' cooperative comprising up to a further 5,000 hectacres. A crude palm oil mill will be constructed to process the fruit from both the project and the smallholders' land. The site is well placed, being near a port from which palm oil can be shipped, and is in an area with suitable rainfall and soil conditions. The project will be managed from within the Group by a Malaysian general manager.

The investment in the project will be routed through an Indonesian company, PT Gunung Pelawan Lestari ("GPL"), which will be owned as to 90% by the Group and 10% by the Indonesian partner, Mr Karli Boenjamin, who is an eminent Indonesian businessman with extensive experience of oil palm developments on the island.

With regard to the financing of GPL, it is anticipated that the total funding requirement will be in the region of US$45 million, with the peak requirement arising in 2009. It is intended that this will be provided by a combination of funds from within the M. P. Evans Group PLC and external loans. The plan is to develop the project at the rate of approximately 4,000 hectares per annum and it will be some six years from now before all of the plantings are considered mature by which time earnings from the first plantings should have commenced. The implementation of the project is conditional upon the necessary local approvals but the board is confident that there should not be any difficulty in obtaining these.

2004 results announcement The preliminary results for 2004 are expected to be announced on 9 May 2005. The figures relate to the results, cash flows and net assets of the Rowe Evans Investments PLC Group as it was at Dec. 31, 2004 - in other words, prior to the merger with Bertam and Lendu. The merger took place on Feb. 2, 2005 when the Company changed its name to M. P. Evans Group PLC and the accounts of the enlarged group will only reflect the merger after that date.

Alvin

April 27th, 2005, 12:19 PM

haha didn't realise you posted that news. I posted it in Industries thread.

David-80

April 27th, 2005, 12:44 PM

Wow, look at this Forex reserves..no wonder BI has so much power in market intervention.

Indonesia's Forex Reserve up Sharply to US$37.32 BLN in April

JAKARTA, April 27 Asia Pulse - The country's foreign exchange reserve rose sharply to a record high of US$37.32 billion in the third week of April from US$35.96 billion a week before.
In the second week of April the country's foreign exchange reserve fell after hovering between US$36 billion and US$37 billion since February, Bank Indonesia spokesman Erwin Riyanto said on Tuesday.

Erwin said the increase in the third week of April was caused mainly by earnings in and from the sales of government bonds, oil and gas, and foreign loans.

Meanwhile, the primary money in circulation totaled Rp182.2 trillion (US$19 billion) by April 21, up from Rp180.1 trillion a week before.

Alvin

April 27th, 2005, 03:45 PM

Good news...but Indonesia is only getting a tiny fraction of what THailand will get..

Expanding Toyota to invest more than US$500m in Thailand, Indonesia

TOKYO (AFP): Toyota said Wednesday it will invest more than US$500 million on a major boost for production in Asian hubs Thailand and Indonesia as it tries to take General Motors' crown as top global automaker.

The announcement came just one day after Toyota announced it would become the first Japanese carmaker to build a manufacturing plant in Russia with an investment of $140 million.

Toyota Motor has set a goal of boosting group output 25 percent by 2008 to 9.7 million vehicles from 7.7 million in 2004 to overtake struggling giant, General Motors of the United States.

Toyota said in a statement it would invest 456 million dollars in Thailand, its biggest production base in Asia after Japan.

It will spend $380 million to build a third plant in Thailand in suburban Bangkok. The factory will be able to produce 100,000 Hilux Vigo trucks a year by early 2007.

Toyota also said it will spend 76 million dollars to expand capacity at its Gateway assembly plant in Chachoengsao, about 130 kilometers (80 miles) east of Bangkok, from 110,000 vehicles a year to 200,000 by 2006.

Toyota said Thailand is "positioned as a production and export base for pickup trucks, SUVs (sports utility vehicles) and diesel engines."

Toyota's third biggest Asian production center is Indonesia and it will spend $50 million with its mini-vehicle making subsidiary Daihatsu Motor to boost annual production by nearly half over the next two years to 214,000 vehicles.

Toyota said Wednesday that in the financial year ended March its global output increased 9.2 percent to 6.88 million vehicles, with production at overseas plants up 14.1 percent to 3.13 million.(*)

Alvin

April 27th, 2005, 03:47 PM

Associated Press
Indonesia Economy May Grow by 5.5 Percent
Wednesday April 27, 7:56 am ET
By Michael Casey, Associated Press Writer
Indonesia Says Economy on Pace to Grow by 5.5 Percent Despite Disasters

JAKARTA, Indonesia (AP) -- Indonesia's economy is on pace to grow by 5.5 percent this year despite the December tsunami and other disasters, the planning minister said Wednesday.
Sri Mulyani Indrawati, in an interview with The Associated Press, predicted that the Dec. 26 tsunami and the March 28 earthquake on Nias island that left more than 129,000 dead and nearly 600,000 homeless would increase the poverty rate in those areas. But she said it would not impact the country's growth rate, since the areas did not contribute significantly to the country's overall economy.

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"This year, the growth target is only 5.5 percent," she said. "We are still very optimistic that we will meet those targets."

She said the government has proposed spending 300 million rupiah (US$31,000 (euro24,000) in each of 11,000 villages across the country to improve schools, roads and bridges and create jobs.

The country's unemployment rate was 9.9 percent at the end of 2004 and government has a goal of reducing it to 5.5 percent by 2009.

"We are going to allocate a significant amount of money ... for building village infrastructure through labor intensive activities," said Mulyani, an economist who previously worked for the International Monetary Fund.

"It's shown in the past that it was always effective in creating jobs and sustaining income level of the people," she said. "We are not only reducing poverty but creating jobs."

In its twice-yearly report on East Asia, the World Bank said Wednesday that Indonesia's economy was expected to grow by 5.4 percent and that the investment climate was recovering. But it warned that Indonesia was still uncompetitive by international standards, noting that it takes much longer to start a business and wages are higher when compared to regional competitors.

Indonesian President Susilo Bambang Yudhoyono took office in October with a promise to crackdown on corruption and boost foreign investment. But so far, Yudhoyono's corruption campaign has netted few high-profile suspects and legislation aimed at improving the investment climate has yet to reach parliament.

Mulyani denied that investors were growing impatient with the government's slow pace of reform, only moderating what she admitted were "high expectations" of Yudhoyono when he took office.

"The expectations were very high with this new government," she said. "But when they saw there were a lot of problems that couldn't be addressed instantly, then everyone (reassessed) their expectations. It could be healthy because it will give the government time to work."

Alvin

April 27th, 2005, 04:26 PM

UPDATE:Indonesia Rupiah Rebounds But Oil Threat Lingers
By Phelim Kyne
OF DOW JONES NEWSWIRES

http://us.news2.yimg.com/us.yimg.com/p/ap/20050427/capt.jak10304271045.indonesia_currency_slide_jak103.jpg
Indonesian President Susilo Bambang Yudhoyono responds to a television reporter's question during his visit to the Jakarta Stock Exchange, Wednesday, April 27, 2005, in Jakarta, Indonesia. Yudhoyono Wednesday said Indonesia's economic fundamentals are strong despite a slide in its rupiah currency, and urged people not to panic. (AP Photo/Dita Alangkara)

JAKARTA (Dow Jones)--Bank Indonesia's rupiah support effort, bolstered by President Susilo Bambang Yudhoyono's personal plea for a defense of the currency, fueled a rebound in the rupiah's value Wednesday.

But the threat of high oil prices may cut short the currency's recovery, some analysts said.

The dollar fell to IDR9,573 Wednesday from its close Tuesday of IDR9,688 after the central bank unveiled a plan to support the currency using measures including a pending 15 to 20 basis point interest rate rise, the use of forward transactions and a deal with the Ministry of State Enterprises to monitor state firms' U.S. dollar demand.

But "the risk still remains on the down side for the rupiah," said BNP Paribas senior currency analyst Thio Chin Loo.

"(Official support measures) should bring some relief to the rupiah in the short term, but if oil prices stay high or move higher there will still be demand for dollars from companies, particularly (state-owned petroleum firm) Pertamina (PTM.YY)."

Government measures to support the rupiah could push the dollar down to IDR9,500 in coming days, she said.

Analysts have linked the slide in the value of the rupiah against the dollar to massive dollar purchases by domestic state firms to fund oil imports as well as to service their foreign debt obligations. The Indonesian government and private companies have around $130 billion in foreign debt.

Indonesia's Minister of State Enterprises Sugiharto said Wednesday that his ministry had agreed to allow the central bank to monitor state-owned firms' demand for U.S. dollars. Earlier the same day he told reporters the ministry hoped to get the central bank to agree to sell dollars directly to Pertamina to ease the pressure that the company's daily demand of around $50 million to finance oil imports places on the foreign exchange market

At 1100 GMT the Nymex June contract was up 3 cents at $54.23/bbl.

The central bank "aggressively" sold dollars and dispatched auditors to foreign banks' dealing rooms Wednesday to deter currency speculation, dealers said. Bank Indonesia officials couldn't be reached for comment on those reports.

Official measures to bolster the rupiah culminated with Yudhoyono making a special appearance at Wednesday's closing session of the Jakarta Stock Exchange after he issued a statement earlier in the day calling for intensified official effort to stem the currency's decline.

Yudhoyono Lends Rupiah Psychological Boost

The central bank's rupiah support plan will likely help stem the rupiah's decline and could power a rebound to IDR9,000 by the end of 2005, Standard Chartered Bank economist Fauzi Ichsan said.

"If the rupiah keeps tanking the whole economy is in jeopardy....but the combination of this package of policies should be helpful to the rupiah," he said.

Yudhoyono's personal involvement had lent the market a needed psychological boost that in combination with central bank efforts should help to rupiah to appreciate, he said

"It means the president isn't ignorant about (the rupiah's movements)...now given that statement (the market) now knows he's involved and concerned."

That view was echoed by ING Barings chief economist for non-Japan Asia, Tim Condon, who said the government had moved effectively to address "some of the sources" of the rupiah's recent weaknesses.

Those efforts should help to propel the value of the rupiah against the U.S. dollar to a more "comforting" level of IDR9,200-9,300 in the short to medium term, he said

"They seem to be on top of it...unless something happens domestically, I'd say that probably we're going to see a period of calm starting now," Condon said.

But BNP Paribas' Thio was less sanguine about the longer term effectiveness of official measures to stem the slide in the rupiah even with the cushion of forward transactions and a potential deal to allow Pertamina to buy dollars directly from the central bank.

"Pertamina will still need dollars...the pressure on the spot currency market may ease, but it doesn't alleviate the main problem that oil prices are rising," she said.

Ara

April 27th, 2005, 05:55 PM

I don't know if this is the right thread for this article. This man needs to be sacked immediately, no need to wait for his tenure to be over. I would also would like to see him be prosecuted for battery. He is a disgrace to the country. A grown man chocking a 14 years old boy. :bash: :bash:
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A literal blow to investors in Indonesia
By Donald Greenlees International Herald Tribune
THURSDAY, APRIL 28, 2005

JAKARTA Theo Toemion, the chairman of Indonesia's powerful Investment Coordinating Board, is, like most parents, passionate about his son's sporting activities. Just how passionate became evident one recent Sunday when he went on a violent rampage, assaulting a 14-year-old referee and several parents of other children in a dispute over a junior school basketball match.

The assault on the grounds of the Jakarta International School left an American oil company executive, the parent of one child in the game, with a broken nose. The executive has since been forced to leave Indonesia with his family. Another oil company employee was hit in the back of the head, requiring several stitches.

Almost two weeks later, the wounds from the assault are starting to heal. But the incident has rocked the tight-knit expatriate school community here and deeply embarrassed the Indonesian government as it strives to attract foreign investment.

"A lot of people were upset and a lot of people are still upset," said one foreign witness, who requested anonymity. The children playing basketball "were aged between six and nine," this person said. "They were young kids."

Toemion wields enormous influence over foreign companies investing in Indonesia. The stout, former foreign exchange dealer is essentially the gatekeeper for foreign investors. With so much hinging on the country gaining more investment to keep its consumer-led economic recovery alive, there is a great deal riding on his performance.

On April 17, when Toemion shouted, overturned furniture and punched other parents at the second-grade basketball game between the Mavericks and the Lakers, he was dealing Indonesia's image among investors another unfortunate blow.

President Susilo Bambang Yudhoyono was "furious" and "visibly disturbed" after being told of the incident, said close advisors, who declined to be named.

Witnesses to the incident at the basketball court said Toemion became enraged when his 7-year-old son Daniel, playing for the Lakers, was accused of a series of fouls. Accounts of witnesses and others familiar with the incident, all of whom spoke on condition of anonymity, differ somewhat over the exact sequence of events, but it appears Toemion became agitated when he felt his son was being singled out unfairly by the referee and officials of the game.

By Toemion's own written account, he took particular issue with complaints over Daniel's conduct from the game's coordinator, Michelle Mabee, the wife of an executive with the American energy company ConocoPhillips.

What started as an increasingly angry disagreement over whether Daniel should remain in the game and whether he was guilty of the alleged fouls quickly deteriorated into violence. Toemion says Daniel, who had been "jumping and playing and enjoying the game very much," had been treated "unjustly" by Mabee.

"I concluded immediately that I was dealing with someone displaying a very racist behavior," Toemion wrote.

Witnesses said Toemion lost his temper and slammed his fist repeatedly onto the officials' desk. The referee, a 14-year-old Australian boy, approached Toemion and asked him to leave the premises. Toemion grabbed the boy by the neck, causing some bruising. Several parents also intervened and were struck by Toemion, the witnesses said.

According to one witness, Toemion shouted threats that he could have the non-Indonesian parents thrown out of the country. Among those trying to restrain Toemion were executives from U.S. companies like ExxonMobil, Nike, Unocal and ConocoPhillips.

"The implication was that he could revoke anyone's work permit if he wanted to," the witness said. Another person familiar with the incident said Toemion had advised those present not to bother calling the police, because he "owned" the local police.

The ConocoPhillips executive, David Mabee, coach of the Mavericks, received a call from three people the following day telling him he had to meet Toemion, according to a person familiar with the situation.

Mabee, who had his nose broken in the melee, was told there would be serious consequences if he refused the meeting.

Following this call, ConocoPhillips decided that Mabee, his wife and three children should immediately leave the country for Singapore. A source in ConocoPhillips confirmed that Mabee and his family had been taken out of the country "due to concerns for their physical safety after he had received threats."

Although those injured were reluctant to report the assaults to the police, the U.S. Embassy was informed of Toemion's violent eruption.

An embassy official said the incident had been raised at high levels in the Indonesian government and the police force. The Indonesian police are making inquiries.

A presidential spokesman, Dino Pati Djalal, said that Yudhoyono had asked a minister to investigate the assault.

"The president firmly believes that government officials should uphold a high standard of public behavior," Djalal said.

"He does not tolerate appalling or disrespectful behavior by public officials."

On Sunday, Toemion sent a three-page letter of "sincere apology" and explanation to the headmaster of the Jakarta International School and "members of the community."

In the letter, seen by the International Herald Tribune, he acknowledged the assaults, but also repeatedly justified his actions as the result of provocation.

"My sense of nationalism and Indonesian pride began to dominate and I was prepared to defend myself against all the foreigners who were accosting me," he said in the letter.

Government officials confirmed that Toemion, who was appointed by Megawati Sukarnoputri when she was president, was due to be soon replaced by a close ally of Yudhoyono. The decision to replace him was made before the incident on April 17.

Alvin

April 27th, 2005, 06:07 PM

he should be fired...and dealt with.

Yamauchi

April 27th, 2005, 08:50 PM

My gosh, that man needs to be locked up.

sanhen

April 28th, 2005, 12:51 AM

And he have that important position?
Make me sick.

macgyver

April 28th, 2005, 03:03 AM

Agreed .....
this man was on the position during the Megawati ( PDI-P ) was a President .....
due to " no other she can think of " .... I Guess ...

I think he is a ..... forex speculator .......
who is now ... sad sad sad very sadly ..... owns "the country" ......GOSHH !!!

Alvin

April 28th, 2005, 05:07 AM

something needs to be done about education...

Poor quality of human resources in Indonesia worrisome

DENPASAR, Bali (Antara): The generally low level of education among Indonesians meant the abundant natural resources the country had would continue to go unprocessed, an official says.

According to the United Nations Development Program (UNDP) human development index, Indonesia ranked 111th out of 117 countries, Sumarjati Arjoso, the National Family Planning Board head, said in Denpasar.

Sumarjati attributed the low level to the loose implementation of family planning programs over the last few years, which had seen birth rates jump especially among poor families.

Fast growth rate in the birthrate without adequate economic resources would cause more poverty and backwardness, causing people to become burdens on the state, she said.

Sumarjati reminded her audience of the importance of strictly implemented family planning.

The priority of the program should be to address the higher birthrates of poor families, she said. (**)

Alvin

April 28th, 2005, 06:14 AM

Govt to focus on education, health in eliminating poverty
Urip Hudiono, The Jakarta Post, Jakarta

The government has reiterated its vow to improve the living conditions of people by raising the quality of public education and health services.

Vice President Jusuf Kalla said on Wednesday all public school buildings and community health centers (Puskesmas) in the country would be up to standard within three years.

"We want to reach a level where no more school buildings are in poor condition and in danger of collapse," he said in his opening remarks at a conference on poverty eradication and the UN millennium development goals.

"Nor will there be any Puskesmas that are short of doctors or medicine," the vice president said.

Minister of National Education Bambang Sudibyo said many school buildings in the country were no longer suitable for educational activities, and that repairing them would require Rp 5 trillion (some $520 million) over the next three years.

"We will find a solution for this financial need to meet our commitment within the time frame," he said.

The two-day conference is being organized by the Office of the Coordinating Minister for People's Welfare and the World Bank, and is being attended by representatives of regional administrations as well as non-governmental organizations.

The UN expects its member countries to achieve the eight-point millennium development goals by 2015. These goals include eradicating extreme poverty and hunger, providing universal primary education, promoting gender equality and empowering women, reducing child mortality rates and improving maternal health.

In its medium-term development program, the government aims to reduce the nation's poverty rate from 36.1 million people -- or 16.7 percent of the population -- in 2004 to 8.2 percent in 2009, with intermediate levels of 15 percent this year and 13.3 percent in 2006.

The government also plans to reduce the jobless rate from 9.5 percent of the workforce in 2003 to 6.7 percent in 2009.

Kalla said that to achieve these goals, sufficient economic growth was required, as well as the funding for the development programs.

The government has targeted average economic growth of 6.6 percent over the next five years, and as for the funding, it plans to increase the tax ratio to 19 percent from the current 12 percent.

However, Coordinating Minister for the Economy Aburizal Bakrie said that even 6.6 percent growth would not be sufficient if the country did not do more to create jobs.

"It would not be enough if every 1 percent of economic growth only created jobs for some 200,000 people," he said, comparing those numbers to the estimated 2.5 million people who enter the job market in Indonesia each year.

According to data from the National Development Planning Agency, every 1 percent of economic growth created employment for 215,000 people from 2000 to 2004. In comparison, 1 percent of economic growth created 370,000 jobs in 1994.

Aburizal said the government wanted to boost economic growth through investment in sectors that created lots of jobs, such as agriculture, construction and trade and services.

Alvin

April 28th, 2005, 12:02 PM

Thursday April 28, 1:12 PM
INTERVIEW: Indonesia Minister Faults Govt Rupiah Defense

By I Made Sentana
OF DOW JONES NEWSWIRES

JAKARTA (Dow Jones)--A senior government minister has blamed what she calls a slow official response to pressures in the foreign exchange market for contributing to the recent slide of the rupiah against the U.S. dollar.

I AM :
A Man A Woman
I'M SEEKING :
A Woman A Man

Indonesia's policy makers didn't respond adequately to the "additional pressure" of a changing global economic environment, which helped push the U.S. dollar to a more than three-year high of IDR9,810 on Tuesday, Sri Mulyani Indrawati, Indonesia's Minister of National Development Planning, said in an interview late Wednesday.

Sri Mulyani, a former economist and a former International Monetary Fund official in Washington, is seen as one of the most capable members of President Susilo Bambang Yudhoyono's cabinet. Her blunt criticism of the government's efforts to defend the rupiah echoes many private analysts who say Bank Indonesia, the central bank, reacted tardily to the currency's difficulties.

The rupiah's tumble was a "wake-up call" for the government to move more quickly and proactively to protect the currency, Sri Mulyani said. "I hope it's not too late."

The rupiah lost over 5% of its value against the dollar between late January and early this week. That prompted the central bank to announce a currency support plan Tuesday, including a pending interest rate hike of 15 to 20 basis points and the use of forward transactions that helped the rupiah to rebound Wednesday.

The dollar fell to IDR9,573 Wednesday from its close Tuesday of IDR9,688. The central bank acted after President Susilo Bambang Yudhoyono made a personal plea for official cooperation to stem the rupiah's slide.

Sri Mulyani's comments in the interview suggest a lack of communication or coordination, and possibly even serious economic policy disagreements, among areas of Yudhoyono's government, which was formed last October. That's likely to disappoint investors in Indonesia, who hoped Yudhoyono would run a more decisive and efficient administration than his predecessor Megawati Sukarnoputri.

The remarks by Sri Mulyani also imply the government as a whole may have become more willing to see interest rates hiked in future, if that's necessary to protect the rupiah as U.S. rates rise. Previously, the government has appeared reluctant to see Bank Indonesia hike rates, because it wants low interest rates to sustain economic growth and curb its borrowing costs.

The central bank's actions this week were too slow in coming, Sri Mulyani indicated.

"I must say that maybe policy makers have been responding a little bit late to this kind of (currency) pressure coming from outside," she said.

Sri Mulyani said the government hadn't promptly reacted to challenges posed to the rupiah's stability by the large U.S. budget and trade deficits, the threat of rising inflation globally, and the skyrocketing price of crude oil, which has driven up the dollar purchases which state petroleum firm Pertamina (PTM.YY) needs to fund oil imports. Minister of State Enterprises Sugiharto said Wednesday that the central bank would monitor the dollar demand of state firms including Pertamina to ease pressure on the rupiah.

Indonesia has projected a 5.5% rise in gross domestic product in 2005, outpacing the 5.1% growth last year. The government has targeted average annual growth of 6.6% from 2004 to 2009.

But Sri Mulyani indicated reaching such targets might require more proactive government policies to address economic threats such as the recent rupiah slide.

"(We) can't be complacent about what we've already accomplished...the problem (requires) strengthening, even fine-tuning (our policies) better in a much more timely manner," she said.

Still, she said the fundamental condition of Indonesia's economy was improving and the government remained committed to maintaining macroeconomic stability and improving the investment climate.

"If the market fails to see this, there must be something wrong in terms of the way we communicate this" to the market, she noted.

One reason for the recent weakness of Indonesian financial markets could be that investors are reassessing their initially high expectations of the government, Sri Mulyani said.

"The expectation was very high, and when they see a lot of fundamental problems cannot be addressed instantly, everybody will come out and (reassess) their expectation," the minister said.

"In a way it should be a healthy sign as it gives room for the government to work in a more or less rational way."

David-80

April 28th, 2005, 04:26 PM

Seriously but i blame the financial minister, he made remarks about inflation and the US dollars then it rattles the market afterwards. two days later he reclaim his statement! for those familiar with his remarks, its the MR "I dont care".

cheers

Alvin

April 28th, 2005, 05:28 PM

I thought this was a very clever move...

Indonesia's president launches graft probe on his own office Indonesia

Indonesia's president, Susilo Bambang Yudhoyono, has announced he is launching a graft probe on his own office, bringing his sweeping campaign to root out endemic corruption to the highest level of government.

Mr Yudhoyono says internal audits will be performed on the offices of the state secretariat and state cabinet to investigate possible anomalies within the agencies and their foundations.

Mr Yudhoyono, who came into office last October, has promised to root out bribery and kickbacks that have poisoned the Indonesian economy in the eyes of foreign investors.

He says the planned audits of the state agencies is an "important" move to inspire the public to fight corruption in Indonesia.

< back

Alvin

April 29th, 2005, 02:09 PM

LG Elec targets 20% share of Indonesia's DVD player market

Friday April 29, 2005, 5:37 pm

JAKARTA, April 29 Asia in Focus - PT LG ELECTRONICS INDONESIA (LGEIN) is targeting a 20 per cent share of Indonesia's DVD player market this year, company executive Y.J. Yoon said. He said that demand for DVD players in the country was encouraging.

* Last year, the company held 13 per cent of the local DVD player market.

* Yoon said that based on market research, LG's latest series of 3.5-cm DVD players was the thinnest in the world.

Alvin

April 29th, 2005, 02:13 PM

Friday April 29, 5:36 PM
Jakarta tests 3-mth lows, S'pore down on profit woes
By Ovais Subhani
ADVERTISEMENT

SINGAPORE, April 29 (Reuters) - Indonesian stocks led losses in Southeast Asia on Friday due to lingering worries over a possible interest rate rise, while earnings jitters weighed on stocks in Singapore .

But Malaysian shares rose 0.58 percent and stocks in the Philippines closed 0.90 percent higher.

Singapore's benchmark index finished down 0.70 percent, Indonesian stocks were off 0.84 percent, after testing 3-month lows in early trade. By 0911 GMT, Thai shares were up just 0.15 percent.

Losses in Indonesia were led by banks such as Bank Mandiri , down 1.8 percent and Bank Negara Indonesia , down 1.9 percent, which recently reported a 6 percent fall in first quarter net profit.

"Results by banks have been mixed," said Ferry Yosia Hartoyo, head of research at DBS Vickers in Jakarta.

"Some like Bank Danamon surprised with a big rise but others were lacklustre and valuations are stretched with most of them trading at 2.5 to 2.8 times their book value," he said.

Indonesian stocks have fallen by about 11 percent from a record high of 1,156.96 hit in March, as data showed consumer prices in March rose at their fastest pace in 27 months and raised fears of aggressive rate rises from the central bank.

Southeast Asia's top telco Singapore Telecommunications fell 2.66 percent ahead of its fourth-quarter result due next week, wiping 5.4 points off the market index.

Daiwa Institute of Research said SingTel might report a lower profit due to intensifying competition at home and abroad.

Top lender DBS Group Holdings fell 1.4 percent after posting a lower-than-expected first-quarter profit, hurt by lower returns in its trading portfolio.

In Thailand, the central bank's cut on Tuesday of its economic growth forecast hurt the outlook for banks and construction firms. But gains in energy shares, on a rebound in oil prices, helped offset those losses.

PTT Exploration and Production rose almost 3 percent and Thai Oil was up flat.

In Malaysia investors were seen picking up stocks likely to report better results and pay higher dividends when the earnings season starts in earnest next week.

Telekom Malaysia rose 1.6 percent, a day after it announced several key appointments, including a new group chief financial officer, after a reorganisation and realignment of divisions and functions.

Gains in the Philippines were led by top conglomerate Ayala Corp, up almost 3 percent, and its subsidiary Ayala Land , up 2.6 percent, which said on Thursday that it had doubled its quarterly profit.

David-80

April 29th, 2005, 02:35 PM

But at least JSX is still manage to growth from its previous close last year, unlike most markets in Asia.

Btw I heard rumours in the place that i worked if the reason Sampoerna sold their shares was because the owner was losing so much money because of gambling in Macau. I dont know if this is true or not...but if it is...then i dont know what to say. The shares were sold unpredictable in the market and it was done that quick..raising eye brows from some investors of why do they sold the company.

That story is also similar with UPS (united parcel services), but the different, the owner of UPS actually got a huge amount of money so he can continue UPS operation and even expanding it. The bet was his own company, UPS. This is i heard from my best friend who worked in UPS los angeles back in 2001.

cheers

Ara

April 29th, 2005, 03:47 PM

More about the Theo's case. I don't know why he isn't in jail for assault.
-----------------------------------------------------------------------------
Theo may be replaced: Vice President

JAKARTA (Agencies): Vice President Jusuf Kalla said on Friday that the government was mulling replacing Investment Coordinating Board (BKPM) chairman Theo F. Toemion, in line with an evaluation of his performance during the past three months.

"(The) BKPM is one of the institutions evaluated within the past three months. So don't link the plan to replace him (Theo) with the assault case at JIS (Jakarta International School)," Jusuf said as quoted by Antara.

Kalla would not disclose the names of any possiblereplacements for Theo, saying candidates for the chairmanship post at BKPM and other state institutions had been advanced in the past three months.

Kalla would not answer when asked whether Theo would be replaced by former Association of Young Indonesian Businessmen chairman M. Lutfi, who was also a member of the "Success Team" for the SBY-Kalla presidential campaign.

There has been speculation Theo's position would be under threat, after he allegedly assaulted a teenager and several other people during a children's basketball game at JIS on April 17.

He reportedly threw chairs, before trying to throttle the game's 14-year-old Australian referee after his seven-year-old son was fouled out of the game.

He, along with an associate, also allegedly attacked four American executives and an Australian businessman who attempted to intervene and later threatened to use his position to expel them from the country. One man, an American oil company executivewas left with a broken nose, while another later had stitches to the back of his head.

Other reports also quote witnesses saying Theo had alleged he "owned" the police in the city and warned his victims against making a complaint against him.

The American with the broken nose and his family later left Indonesia for Singapore on the advice of his company, ConocoPhillips, after he received phone calls from three people insisting he meet with Theo.

Ara

April 29th, 2005, 03:51 PM

Another perspective on Theogate. :bash: :bash:

http://www.laksamana.net/vnews.cfm?ncat=48&news_id=8100

Best quote from the article:

Thanks to his actions at JIS, Indonesia will now be known, albeit briefly perhaps, for having an influential investment chief who physically assaults foreign business executives, women and children.

Alvin

April 30th, 2005, 08:52 AM

British companeis in Indonesia focus on infrastructure
Zakki P. Hakim, The Jakarta Post/Jakarta

British companies will likely continue to focus on the country's infrastructure rather than the manufacturing sector for investment opportunities.

British Chamber of Commerce (Britcham) executive director Gary Andrews said on Friday that most British firms in Indonesia had moved into the infrastructure sector, as there was only a limited number of British manufacturing companies here.

"Traditionally, British firms in Indonesia move in the infrastructure sector, including oil and gas, power plants and tap water treatment," he said.

He said that European countries tended to invest more in the infrastructure and service sectors, such as banking and insurance, as well as retail.

Furthermore, Andrews said firms in the United Kingdom might be more interested in investing in the retail sector, considering that Indonesia was a consumer-driven economy.

"Indonesia should intensify promotion in the UK to attract fresh investment, not only in the infrastructure sector but also retail, and maybe manufacturing," he said.

According to Andrews, many British firms in his country lack knowledge on the Indonesian market, preferring to invest in China and India.

In response, the Indonesian Chamber of Commerce and Industry British Committee (KIKI) in cooperation with Britcham has arranged a road show in the UK, scheduled for June, to promote business opportunities in Indonesia.

KIKI chairman Maxi Gunawan said the road show was aimed at matching business opportunities in Indonesia with firms in the UK.

"We hope through the road show the UK private sector has more awareness about Indonesia as an investment alternative to China and India," he said on the sidelines of the launching ceremony of the KIKI club lounge on Friday, which provides a meeting place for businesspeople from both countries.

In the launching ceremony, British Ambassador to Indonesia Charles Humfrey said the time was ripe to promote Indonesia to the UK because the Dec. 26 tsunami has raised people's awareness of the country.

"The European private sector gained new interest in Indonesia after the successful elections last year. Moreover, the tsunami devastation raised Indonesia's profile and more people are looking at Indonesia," Humfrey said.

According to KIKI, UK exports to Indonesia stood at œ398.5 million (US$757.15 million) last year, down from œ452.3 million in 2003. Meanwhile, UK imports from Indonesia reached œ962.7 million in 2004, slightly up from the previous year's œ958.7 million.

The UK's investment is the second biggest in the country after Japan, with last year's total standing at US$1.32 billion, up slightly from 2003's $993.2 million, according to data from the Investment Coordinating Board (BKPM).

sanhen

April 30th, 2005, 09:37 AM

Anyone have a recent photo of this violent/warmonger/love-to-use-position-to-threat other-peole/bastard guy?

Also an investigation is needed to find which police office is owned by him. Something that I know will never happen though.

Alvin

May 2nd, 2005, 11:46 AM

Latest figures:
- March exports reached US$7.25 billion. Cumulative exports for Q1 2005 is 31.39% higher than Q1 2004.
- Y-on-y inflation is 8.12% in March.

Ekspor pada Maret capai US$7,25 miliar
oleh : Gajah Kusumo

JAKARTA (Bisnis): Nilai ekspor pada Maret 2005 mencapai US$7,25 miliar lebih tinggi 13,63% dibanding bulan sebelumnya US$6,38 miliar.

Kepala BPS Choiril Maksum menjelaskan secara kumulatif ekspor Januari-Maret 2005 mengalami peningkatan 31,39% dibanding periode sama tahun sebelumnya.

Inflasi tahunan tercatat 8,12%
oleh : Gajah Kusumo

JAKARTA (Bisnis): Laju inflasi year on year (April 2004-April 2005) sebesar 8,12%, sementara tingkat inflasi tahun kalender (Januari-April 2005) mencapai 3,54%.

Alvin

May 2nd, 2005, 11:57 AM

DATA SNAP: Indonesia April CPI +0.34% On Mo Vs 0.82% -2-

JAKARTA (Dow Jones)--Indonesia recorded 8.12% on-year inflation in April due to higher transportation costs after the government raised domestic fuel prices in early March, the official Central Bureau of Statistics said Monday.

The bureau said on-month inflation in April was 0.34%.

March's on-year inflation was 8.81%, while on month it was 1.91%.

The April inflation figure was lower than the average forecast of four analysts polled by Dow Jones Newswires of 8.63% for on-year inflation and 0.82% for on month.

April's easing inflation is good news for the government of President Susilo Bambang Yudhoyono in the wake of his decision to hike fuel prices an average of 29% in March.

That politically unpopular move powered the sharpest on-month surge in the consumer price index since March 2002, as higher fuel prices triggered corresponding rises in foodstuffs and consumer goods. The fuel price increase was the result of the government's move to cut deficit-inflating subsidies that had ballooned to IDR69 trillion ($7.47 billion) in 2004, or about 3% of total gross domestic product, on the back of rising global oil prices.

The April CPI data appear to substantiate economists' predictions that the fuel price increase would have a relatively short-term impact on inflation and still allow the government to meet its official inflation target of 7% in 2005.

But April's easing inflation won't likely prompt the central bank to reverse its inclination toward higher interest rates.

Last week, Bank Indonesia Governor Burhanuddin Abdullah said the bank would soon raise its benchmark Sertifikat Bank Indonesia, or SBI, interest rate by 15-20 basis points to help counter excess liquidity blamed for a drop in the rupiah against the dollar. The one-month SBI currently stands at 7.7%.

The dollar fell to IDR9,500-IDR9,600 late last week in the wake of a central bank plan to support the rupiah that included the planned SBI hike and measures such as the use of forward transactions to ease pressure on the local currency in the spot market. Early last week, the dollar hit its highest level in more than three years of IDR9,810, due partly to massive dollar purchases by the state-owned petroleum company Pertamina (PTM.YY) to fund oil imports.

Central Bureau of Statistics data indicated that a 0.21% on-month decline in the prices of basic foodstuff prices - likely caused by a supply glut linked to the seasonal rice harvest - contributed to April's slower inflation.

Processed food, beverages and cigarette prices rose 0.57% on month in April, while housing costs grew 0.61%.

Clothing and health-care costs rose 0.33% and 0.30% respectively in April, while transportation/communications and education prices increased 0.44% and 0.12% respectively.

Alvin

May 2nd, 2005, 01:23 PM

DATA SNAP:Indonesia Mar Trade Surplus Up On Exports -2-

JAKARTA (Dow Jones)--Indonesia's trade surplus rose to $2.27 billion in March from $1.62 billion in the same month a year ago due to higher global prices for oil and commodities, the Central Bureau of Statistics said Monday.

March's trade surplus was below the $2.40 billion recorded in February, due to a sustained increase in imports.

Four economists polled by Dow Jones Newswires had forecast an average surplus of $2.32 billion.

The bureau said exports rose 42% in March to $7.25 billion from a year earlier, and edged up 14% from $6.38 billion in February, driven by 48% on-year growth in oil and gas exports to $1.77 billion. Non-oil and non-gas exports increased 41% on year to $5.48 billion.

Choiril Maksum, the chairman of the bureau, told reporters that Indonesia's textile exports during the first three-months of the year rose 30% to $771.2 million from $593.1 million a year before, showing that Indonesia managed to stave off concerns that its textile industry would collapse following the end of the global textile and garment quota system at the end of 2004.

"The concerns that our textile industry wouldn't be able to compete were exaggerated," Choiril said.

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The country's overall imports grew 44% to $4.98 billion in March from last year and climbed 25% from $3.98 billion a month earlier, mainly because oil imports rose 72% to $1.63 billion from last year.

Indonesia, the sole Southeast Asian member of the Organization of Petroleum Exporting Countries, is a net petroleum-product importer, as domestic output can't meet demand. The country's petroleum product imports amounted to $815.3 million in March, while exports reached $185.4 million.

During the same month, exports of crude oil were $824.0 million, while imports were $816.3 million.

Indonesia faces dwindling crude oil output as most of its oil fields have matured, while new exploration has just barely recovered following government efforts to remedy legal uncertainties affecting the sector.

But higher oil prices have a positive effect on natural gas exports, which rose to $757.0 million in March from $646.9 million in February.

Ara

May 3rd, 2005, 10:30 AM

About time he resigned. But it is not enough. He assaulted a child and threaten other people. He must be brought to trial and prove his innocense.
----------------------------------------------------------------------------
Investment Chief Resigns after Assault
May 2, 2005 09:12 PM,
Laksamana.Net - Investment Coordinating Board (BKPM) chairman Theo F. Toemion has announced his resignation after coming under strong criticism for assaulting expatriates at one of Jakarta’s top international schools.

“I feel I am being treated unfairly, the sooner I resign, the better," he was quoted as saying Monday (2/5/05) by Reuters.

He has apologized for the incident at the Jakarta International School (JIS) on April 17, during which he became enraged and punched several foreigners, including executives of US oil companies, after his seven-year-old son was fouled during a basketball game.

Despite his apology, Toemion has claimed his violence was an act of nationalism because he believes his son was unfairly treated due to racism and discrimination. He did not explain why his love of Indonesia had prompted him to send his son to a school attended predominantly by foreigners.

Toemion was due to have submitted his letter of resignation to President Susilo Bambang Yudhoyono on Monday afternoon. "I will definitely submit my resignation letter to the president today… I will meet the president at about 4pm,” he was quoted as saying by detikcom online news portal.

He declined to reveal details of the letter’s content. "I am not yet able to show it to reporters… I will given them a copy later I have appeared before the president," he said.

Vice President Jusuf Kalla last week said the government would soon replace Toemion because of his “poor performance”, but denied the decision was connected due to the school violence.

The US Embassy responded by Toemion’s outburst by saying it was considering denying him entry to the US.

The government welcomed the news of Toemion’s resignation and said it had three possible candidates to replace him as BKPM chief.

"If he really wants to resign, that’s good. He thinks it is time to do so,” Coordinating Minister for the Economy Aburizal Bakrie was quoted as saying by detikcom.

He declined to name those on the short-list to take over BKMP. "I forget because it was prepared a long time ago, since about February or March. So I’ve forgotten… I have proposed three people to replace him,” he said.

Bakrie also denied Toemion was being replaced because the school incident. “The change in the position is routine and not sudden, as it had been proposed a long time ago," he said.

Police are continuing to investigate the attack, even though JIS has declined to issue a formal complaint.

Jakarta Police chief Firman Gani said officers were still questioning witnesses and would later decide whether to declare Toemion a suspect.

ryanr

May 3rd, 2005, 11:44 AM

I really pissed at the media about that!! They dont tell the whole story to why Theo Toemion exploded like that. I know the full story (because i go to JIS) and yes, he did overreact but he did it because of the American's abusive and racist remarks. It is understandable why he would react like that, but it would have been better if he strike the 14 year old referee and cause such chaos. It is just a 2nd grade basketball game!! btw, his brother was there too and he was even more destructive.

JIS families know what actually happened, and many of us are backing Theo on this one. He is a good politician and this is just a result of the media blowing it all up.

Alvin

May 3rd, 2005, 11:56 AM

ryanr

May 3rd, 2005, 11:58 AM

Thats true...the media is siding with the views of the American embassy, other government officials (who want Theo out) and police.

David-80

May 3rd, 2005, 03:29 PM

The reason to not always believe the Media...

cheers

ryanr

May 3rd, 2005, 03:54 PM

:yes: Yup...the media is not always right or truthful.

tata

May 3rd, 2005, 03:58 PM

I read on Suarapembaruan.com, the US government threatened to cancel Theo's visa to enter US?

Ohhhh isn't it great to be the world's only Super Power.....

SUARA PEMBARUAN DAILY
--------------------------------------------------------------------------------

Theo: Tindakan Mereka Sangat Arogan

"Saya sangat sedih," ungkap Theodorus F Toemion, seusai menyerahkan surat pengunduran diri sebagai Kepala Badan Koordinasi Penanaman Modal (BKPM) kepada Presiden Susilo Bambang Yudhoyono, Senin siang (2/5). Bukan insiden baku-pukul di lapangan basket Jakarta International School (JIS) Cilandak yang bikin Theo sedih, melainkan soal UU Investasi yang belum selesai dibahas.

UU yang sudah tiga tahun digodok itu, sejatinya diharapkan bisa jadi batu pijakan mengalirnya arus investasi ke Tanah Air. Tapi, belum sempat menyaksikan UU Investasi disahkan, Theo harus hengkang dari posnya gara-gara insiden di sela-sela pertarungan basket antara The Lakers dan Mavericks yang terjadi Minggu (17/4) lalu.

Theo berpendapat, tindakan yang dilakukan oleh Michelle Mabee, koordinator pertandingan basket itu, terhadap Daniel Alexandra (7), putra bungsunya, sungguh tidak adil dan kelewat batas. Sikap arogan Michelle, yang memaksa Daniel agar dikeluarkan dari pertandingan, betul-betul memperlihatkan sikap yang sangat rasis.

"Tak ada alasan mengeluarkan Daniel dari lapangan," kata Theo kepada Pembaruan, sembari memperlihatkan rekaman ulang pertandingan The Lakers melawan Mavericks secara utuh.

Daniel, dalam rekaman itu, terlihat hanya melakukan satu kali kesalahan, bukan empat kesalahan seperti tudingan Michelle. "Jangan persoalkan dia (Daniel) anak Theo Toemion. Dia hanyalah anak kecil, berumur 7 tahun, warga Indonesia sekaligus murid Jakarta International School yang diperlakukan buruk oleh seorang warga Amerika yang ngotot ingin tim anaknya menang," kata Theo dengan nada tinggi.

Pasalnya, keributan baru muncul setelah Lakers yang diperkuat Daniel bisa unggul 6-4 dari Mavericks yang sebelumnya sempat unggul. Putra Michelle, dalam pertandingan yang digelar Parents Teachers Association itu, bergabung dengan Mavericks.

Kekalahan Mavericks itu diduga jadi biang kekesalan Michelle. Ia lantas "ngamuk-ngamuk" ke Melky, pelatih Lakers, dan meminta agar Daniel dikeluarkan. Melky pun tak urung terheran-he-ran atas permintaan Michelle.

Kemarahan Michelle makin menjadi-jadi saat Theo dan istrinya, Sandra Pinkan Adriana Lolong, mempertanyakan alasan keinginan wanita ekspatriat itu untuk mengeluarkan Daniel dari lapangan. "Rule is rule," teriak Michelle sembari mengacung-acungkan jari telunjuknya, seperti terlihat dalam rekaman.

David Mabee, suaminya yang juga eksekutif di ConocoPhillips, sempat pula didesak Michelle agar menuntut Daniel dikeluarkan dari pertandingan. "Kalau Daniel keluar, tim anakmu bisa menang," kata Michelle.

David tidak lain adalah pelatih Mavericks. Sikap diskriminatif dan terkesan rasis itulah, kata Theo, yang menginjak harga dirinya dan berbuntut adu jotos. "Kalau salah, saya minta maaf," ungkap bekas anggota DPR RI dari PDI Perjuangan itu atas insiden pemukulan yang terjadi.

Tetapi, menurut Theo, siapa pun tidak akan senang kalau anaknya diperlakukan secara tidak adil. Apalagi, fakta peristiwa itu sendiri lalu diputarbalikkan, bahkan diembel-embeli ancaman pencabutan visa oleh pemerintah Amerika. "Arogan sekali," tutur Theo.

Sebagai Kepala BKPM, Theo berpendapat, dirinya justru telah banyak membantu keberadaan para ekspatriat di Indonesia. "Sayalah salah satu orang yang berdiri di garis depan untuk mengundang orang asing berinvestasi di Indonesia," ungkap Theo yang baru saja tiba dari lawatannya ke Eropa tersebut.

Namun, sikap diskriminatif orang asing yang muncul dalam insiden bola basket tersebut tak urung membuatnya sangat kecewa. "Bayangkan, orang asing yang cari makan di Indonesia, kita bela mati-matian kepentingannya di negara ini, kok bisa-bisanya bersikap rasis dan diskriminatif kepada anak kecil," ujarnya lebih jauh.

Kendati berat, keputusan berat harus tetap dijalani. Theo sendiri mengaku posisinya sebagai Kepala BKPM adalah pengorbanan dan pengabdian. Apalagi, di masa pemerintahan Presiden Susilo Bambang Yudhoyono, tidak bisa dimungkiri Theo adalah satu-satunya warisan pemerintah lalu.

"Saya bertahan di sini untuk menunggu tuntasnya UU Investasi. Saya sudah tahu saya berbeda warna. Tapi, warna hati kita tidak akan berubah. Saya tetap Merah Putih," ia mengimbuhkan.

Selama menjabat Kepala BKPM, berbagai konsep pengembangan investasi telah dijalankan. Selain menyelesaikan rancangan UU Investasi, dan menciptakan sistem pelayanan satu atap, tim nasional untuk melindungi investor sudah pula dibentuk.

"Sulit berbicara masalah investasi, karena itu menyangkut stabilitas politik, keamanan, dan penegakan hukum," kata Theo.

Saat diwawancarai CNN, pada hari pertama menjabat Kepala BKPM, Theo sempat berbincang tentang kisah sukses (success stories) lima perusahaan asing yang ada di Indonesia. Menurut Theo, akan sangat tidak adil kalau nasib bangsa Indonesia hanya tergantung pada CNN dan CNBC.

"Maka kami canangkan Tahun Investasi, untuk memenangkan hati dan pikiran rakyat agar lebih menghormati hukum, tidak berbuat makar, dan tidak lagi terjadi anarki yang bikin investor takut," ujar Theo lebih jauh.

Sebab, investasi sangat terkait erat dengan lapangan pekerjaan. Kendati diwarnai Pemilu 2004, upaya mendorong investasi terus berlangsung. Sinyal positif bahkan mulai muncul pada awal 2005.

"Ada pertumbuhan PMA secara signifikan dalam tiga bulan terakhir ini," kata Theo.

Ditopang Keppres Timnas untuk Peningkatan Ekspor dan Investasi, kepentingan investor yang sudah ada benar-benar dilindungi, sembari menunggu kedatangan investor baru.

"Saya bisa mempertanggungjawabkan apa yang saya kerjakan. We are on the right track," tegas Theo, menutup perbincangan.

Dipanggil

Terkait insiden di JIS itu, Theo akan dipanggil dan dimintai keterangan di Polda Metro Jaya.

Kabid Humas Polda Metro Jaya Kombes Pol DrsTjiptono saat dikonfirmasi Pembaruan, Selasa (3/5) mengatakan, sejumlah warga asing yang menjadi korban pemukulan Theo menurut rencana juga akan melaporkan peristiwa tersebut ke Polda pekan depan. Nama warga ekspatriat yang jadi korban pemukulan Theo itu sendiri hingga kini masih dirahasiakan.

"Mereka sekarang masih berada di luar negeri dan akan datang saat pemeriksaan dilakukan," kata Tjiptono lebih jauh.

Secara terpisah, Kapolda Metro Jaya Irjen Pol Drs Firman Gani mengatakan, pemanggilan Theo F Toemion akan dilaksanakan setelah pemeriksaan saksi-saksi dan korban selesai dilakukan.

Tjiptono mengatakan, jika terbukti bersalah, Theo akan terancam dijerat dengan Pasal 351 KUHP tentang Penganiayaan dengan sanksi pidana penjara paling lama dua tahun delapan bulan.

PEMBARUAN/ELLY BURHAINI FAIZAL

--------------------------------------------------------------------------------
Last modified: 3/5/05

Alvin

May 4th, 2005, 08:38 AM

Indonesia govt to launch tender for 22 oil & gas blocks this month - report
05.03.2005, 10:50 PM

JAKARTA (AFX) - The government plans to launch the tender for 22 oil and gas blocks in the third week of this month following an earlier delay, Koran Tempo reported, quoting an official at the Ministry of Energy and Mineral Resources.

It quoted the ministry's director for exploration Novian Thayib as saying that the tender will include two producing oil and gas blocks whose contracts have expired.

He said the two blocks are Mountain Front Kuantan in the Sumatra province of Riau run by PT Caltex Pacific Indonesia and Way Lawi in East Kalimantan run by PT Vico Indonesia.

Tempo said 10 oil and gas blocks will be offered through a direct tender mechanism after some investors proposed to the government the development of certain blocks. The government will approve the proposal if no other party is interested in the block, it said.

The 10 blocks to be tendered directly include the East Kangean block off the coast of East Java, the North East Madura V block also off the coast of East Java, the Bengkulu block, the West Kampar block in Central Sumatra and the Jatiluhur block in West Java, Tempo said citing a document.

Among the blocks to be offered through a regular tender mechanism include two offshore blocks in Natuna, one offshore block in Lampung, four blocks in the Makassar Straits, one block in North East Java, one on/offshore block in Buton and another in Papua.

Tempo said the tender was initially scheduled for March covering 65 oil and gas blocks.

The government delayed the tender pending the completion of new incentives, and also decided to reduce the number of offered blocks to test investors' interest first, the report said.

Last month the government said it is offering a cost recovery incentive for developing marginal oil fields, under which it will pay investors 20 pct more than what it costs to develop economically non-viable fields.

berni.km@xfn.com

bkm/rc

David-80

May 6th, 2005, 04:11 PM

Finally...

Singapore Welcomes Batam as a Free Trade Area

SINGAPORE, May 6 Asia Pulse - The Singaporean government said it welcomes the decision of the Indonesian government to confirm the status of the island of Batam, just south of Singapore as a free trade area and bonded trade zone.
"Indonesia has told Singapore that Batam will be made an enclave and Singapore said they are happy," Chief Economic Minister Aburizal Bakrie said here on Thursday.

Aburizal, who accompanied Vice President Jusuf Kalla on s visit here, said with the status, Batam is expected to grow faster as an industrial and trade center.

He said Prime Minister Lee Hsien Loong and Kalal agreed that trade among member countries of ASEAN of which the two countries are members should be expanded.

(ANTARA)

David-80

May 6th, 2005, 04:43 PM

Indonesian Rupiah Advances on S&P Report: World's Biggest Mover

May 6 (Bloomberg) -- The Indonesian rupiah rose, the biggest move in the world, after Standard & Poor's said it won't cut the nation's credit rating.

A 2.2 percent decline in the currency this year will not hurt the nation's credit rating and its positive outlook, Standard & Poor's said yesterday. The rupiah's weakness had ``occurred against broadly improving economic fundamentals, declining political risk, and slowly returning investor confidence,'' Standard & Poor's credit analyst Agost Benard said in a statement.

The S&P comment ``may attract more investors to Indonesia, which will have a positive effect on the rupiah,'' said Endarto Weltam, treasury manager at PT Bank Finconesia in Jakarta. ``It minimizes the chance that the rupiah will weaken.''

The rupiah rose 0.4 percent to 9,470 against the dollar as of 1:05 p.m. Jakarta time, from 9,510 on May 4. Financial markets in the country were closed for a holiday yesterday. The currency has dropped 8.1 percent in the past year, the worst performer among 15 Asia-Pacific currencies tracked by Bloomberg data. It last week reached 9,806, the lowest since April 2002.

The slump in the rupiah has helped push up the price of imports, and fuel inflation in Indonesia. Consumer prices rose 8.1 percent in April, slowing from 8.8 percent in March, which was the highest in 26 months.

Standard & Poor's on Dec. 22 lifted the nation's long-term foreign-currency rating one level to B+, helping the rupiah gain 0.4 percent that week.

Debt Sales

Indonesia today sold six-day debt, a new maturity, to banks to reduce the amount of rupiah in the financial system.

Bank Indonesia sold 1.72 trillion rupiah ($182 million) of the six-day Fine Tune Kontraksi securities at 5.75 percent at an auction today, the central bank said in Jakarta. The bank has previously sold three-day, four-day, one-month and three-month bills in its money market operations.

The auctions are aimed at soaking up funds at banks, pushing up interest rates and reducing the amount of rupiah lenders have available to buy dollars, Bank Indonesia said last month.

The currency was poised for a second weekly advance, rising 1 percent. It may strengthen to 9,450 today, Weltam said.

The rupiah last week rose 1.1 percent after global fund managers purchased a net 243 billion ($26 million) of Indonesian shares. Such investors on May 4 bought 117 billion rupiah of Indonesian shares, the most since April 26, according to stock exchange figures.

Bank Indonesia

Speculation the central bank will buy the rupiah as a way to extend the currency's advance also drew investors, said Danu Firdiansyah, a trader at EXCO Nusantara Indonesia in Jakarta. Trading volume that was less than usual today after a holiday yesterday may have exaggerated the rupiah's performance, he said.

The central bank on April 27 said it will double sales of one- month bills to weekly, from every two weeks, to drain rupiah from the banking system. It also tightened limits on currency transactions between banks to prevent them from betting against the rupiah, Hartadi A. Sarwono, deputy central bank governor, said on the same day.

The world's biggest movers are selected based on changes in price or yield and are screened for the size of the market and amount of daily trading.

To contact the reporter on this story:
Christina Soon in Singapore at csksoon@bloomberg.net.

Last Updated: May 6, 2005 02:06 EDT

Yamauchi

May 6th, 2005, 05:19 PM

So, hearing racist remarks is justification for assaulting children? Yeah, 'the media' is really the one at fault here.

David-80

May 6th, 2005, 07:07 PM

Maybe what GreyX means, the american parents and his brother were also being destructive too? but the media is not reporting it?

cheers

Ara

May 7th, 2005, 01:11 AM

So, hearing racist remarks is justification for assaulting children? Yeah, 'the media' is really the one at fault here.

Exactly. He was a public official. He should not be violating the law. He was also head of a very important agency. His action is scruitnized. I don't know what lead to his action. I do know that his reaction to it is not appropriate for a man in his position. There are appropriate way to handle situations. He choose to deal with it inappropriately.

Alvin

May 7th, 2005, 05:44 AM

Jakarta to fight graft even if it involved powerful politicians: VP Jusuf Kalla
By Sujadi Siswo, Channel NewsAsia

SINGAPORE : Indonesia's state prosecutors said they would not shy away from investigating powerful political figures linked to corruption.

This promise was made by the country's deputy attorney general for fraud, who is spearheading an investigation into suspected corruption and lending irregularities at state-owned Bank Mandiri.

Vice-President Jusuf Kalla has echoed this promise even though his own family is linked to the probe.

The Indonesian leader gave Channel NewsAsia an exclusive interview during his visit to Singapore.

Bank Mandiri, Indonesia's largest bank, is under investigation for lending irregularities involving more than US$100 million.

Among the loans that caught the attention of the state audit agency were several linked to Indonesia's Coordinating Minister for the Economy Aburizal Bakrie and the family of Vice President Jusuf Kalla.

But Mr Jusuf said Jakarta would not shy away from prosecuting even those in power.

Mr Jusuf said: "You can see in Indonesia - there are governors in jail, so many bupatis - chiefs of sub-districts now in jail; even local legislative members are in jail; the last, now even the members of the elections board in jail.

"That is why if you compare Indonesia from two or three years ago to now, you are facing a different situation when you go in the bueracracy."

Jakarta has also just set up a taskforce of prosecutors, police and state auditors to battle graft in state and private institutions.

Mr Jusuf gave an example by saying that tendering system would be more open and would be announced in the newspaper.

He said there would be special agency to supervise the system for transparency.

So far, Indonesia's six-month-old government had prosecuted several high-ranking officials for corruption, including the Governor of Aceh.

In fact, the country's General Election Commission is now being investigated for alleged misuse of state funds - a probe that has also implicated a Cabinet minister.

Political observers around the region are now watching closely to see if Indonesian prosecutors will stay resolute - even in cases involving powerful political figures.

In Part Two of Channel NewsAsia's exclusive interview on Saturday,
Indonesian Vice-President Jusuf Kalla will speak about the government's peace talks with the Free Aceh Movement. - CNA/de

ryanr

May 7th, 2005, 07:33 AM

Maybe what GreyX means, the american parents and his brother were also being destructive too? but the media is not reporting it?

cheers

Yes exactly.

And in response, i did say he overreacted by being destructive. True, he shouldnt have physically responded to the issue. But the media also exaggerated his actions. And you cannot believe what the American said to him...very insulting indeed. I cannot say it here in public because it is a sealed issue within the JIS community.

macgyver

May 7th, 2005, 08:40 AM

Yes exactly.

And in response, i did say he overreacted by being destructive. True, he shouldnt have physically responded to the issue. But the media also exaggerated his actions. And you cannot believe what the American said to him...very insulting indeed. I cannot say it here in public because it is a sealed issue within the JIS community.

Order to be sealed .... he he he :bash:

sanhen

May 7th, 2005, 09:37 AM

I trust GreyX more than the press so I retract my statement above!

Ara

May 8th, 2005, 03:20 PM

Order to be sealed .... he he he :bash:
Sounds like something BIN would do.

Alvin

May 8th, 2005, 03:24 PM

wow...the first contract for a major infrastructure project signed for Aceh

Indonesia sign $245 mln Aceh highway project
Sun May 8, 2005 06:49 AM ET

LHOKNGA, Indonesia (Reuters) - U.S. Deputy Secretary of State Robert Zoellick signed an agreement on Sunday to build a $245 million road along Aceh's western coast, one of the first of many huge projects to rebuild the Indonesian province after the devastating Dec. 26 tsunami.
The 240-km (150-mile) highway will connect Aceh's provincial capital, Banda Aceh, with the city of Meulaboh, which was almost wiped out by the 9.0 magnitude earthquake and the biggest tsunami ever recorded.

"Our aid mission can offer patterns for private sector projects," Zoellick told foreign journalists under the shadow of a giant coal barge and a freight ship that were swept onto this beach from kilometers out to sea.

"We're talking under a big coal barge that was thrust onto the beach, so it's not your usual project," he said, adding the construction will also feature 113 bridges and culvert crossings.

Almost 230,000 people are feared dead and a half-million are homeless in Indonesia as a result of the disaster, which Jakarta estimates caused 43.7 trillion rupiah ($4.7 billion) in economic losses.

The international community has pledged an estimated $9 billion for tsunami relief and reconstruction for the affected Indian Ocean nations, the bulk of that destined for Aceh.

"There's been a problem in the past with corruption in Indonesia," Zoellick said. "The world's eyes are on Indonesia in the expenditure of funds. So far they have been extremely careful."

He especially praised the recent appointment of Kuntoro Mangkusubroto, a Stanford University-trained engineer and a former mines and energy minister, as the powerful new chairman of the Rehabilitation and Reconstruction Agency in Aceh.

Zoellick said the primary objective of the road is to make a significant contribution to improving employment and the local economy.

Tenders for the road project have already gone out and construction is ready to begin soon after the U.S. Congress appropriates the money, which is expected as soon as this month, aid officials said.

The road project follows one of the biggest humanitarian relief operations in history, in which military contingents from several countries worked hand-in-hand with international relief agencies to provide life-saving assistance to tens of thousands of survivors stranded in cut-off coastal communities.

Helicopters from the USS Abraham Lincoln carrier group alone flew 2,800 relief missions and delivered 4,000 tonnes of supplies to people in Aceh.

Zoellick said a simmering, three-decade old rebellion in Aceh had not interfered with aid operations and said peace talks in Finland with rebel leaders were "a sign of hope" after the tragedy.

He said he offered Jakarta U.S. support once the peace process is established, adding that Washington has head experience in programs that reintegrate rebels back into the community. "If we can help in that sense, we're open to that possibility."

© Reuters 2005. All Rights Reserved.

macgyver

May 8th, 2005, 04:07 PM

He said he offered Jakarta U.S. support once the peace process is established, adding that Washington has head experience in programs that reintegrate rebels back into the community. "If we can help in that sense, we're open to that possibility."

We Indonesian Government thank and appreciate the offer from your excellency,
We are currently capable of solving our problems ourselves ...

Thank You ...

Alvin

May 9th, 2005, 11:30 AM

Summary of the past 3 weeks

B]Indonesia's unruly economy[/B]
By Bill Guerin

JAKARTA - An incident of bullying, threats and violence on a basketball court at Jakarta's top school for expatriate children has brought Southeast Asia's biggest economy firmly back into the international spotlight, for all the wrong reasons. Widespread media exposure of the violent rampage was a major embarrassment to the government, since the alleged perpetrator in the April 17 incident at the Jakarta International School was not some wayward, unruly foreign teenager but Theo Toemion, chairman of the powerful Investment Coordinating Board.

Toemion reportedly attacked a 14-year-old student referee, and parents of other children, over a dispute involving his seven-year-old son. The assault left an American oil company executive - a parent of one of the children in the game - with a broken nose. The executive, fearing violence, has since left Indonesia with his family. Another oil company employee was hit in the back of the head, requiring several stitches. Toemion has claimed his outbreak was an act of nationalism because he believes his son was treated unfairly due to racism and discrimination.

Executives from major US multinationals - ConocoPhillips, ExxonMobil, Unocal and Nike - were among those trying to stem the violence, which probably partly explains the response from the US Embassy's deputy chief of mission, W Lewis Amselem: "We are thinking of forbidding him from visiting America." Toemion, who has held the post since June 2001, has since told the local media that he was resigning, but added that he was "very irritated" by media reports on the incident. A recent report in the International Herald Tribune cited Indonesian officials as confirming that Indonesian President Susilo Bambang Yudhoyono had already planned to replace Toemion, an appointee of previous president Megawati Sukarnoputri, with his own appointee before the incident occurred.

Approved foreign direct investment (FDI) from January to April in Indonesia totaled US$4.28 billion, up 173% compared with the same period a year earlier, but the high-profile incident came during a week that saw other mixed signals for the prospects of the economy and further investment. Though Southeast Asia's biggest economy is forecast to expand 5.5% this year - the fastest growth in nine years - partly on expectations of increased foreign investment, there are still fears that spiraling inflation could stunt growth and hamper economic recovery. Concerns about this, and the weakening of the rupiah against the dollar, came amid a sharp reminder of continued problems with the labor force in the country.

Some good news from Toyota, which forecast that car sales would rise this year by 12% and announced a planned new investment of $50 million in its local subsidiary, Daihatsu Motors, was overshadowed by official confirmation from Japanese trading house Marubeni that it will pull out of its loss-making holdings in the giant Chandra Asri petrochemicals complex. The plant is Indonesia's largest ethylene producer, with a production capacity of 520,000 metric tons/year, as well as 240,000 tons/year of propylene and 300,000 tons/year of polyethylene. Marubeni led a consortium that lent the Indonesian-Japanese joint venture $700 million in the early 1990s. It plans to sell its 24.6% stake in the project by the end of this fiscal year to set up a joint venture with Commerzbank International Trust (Singapore) Ltd, a unit of Germany's Commerzbank AG, incurring a net loss of up to 22 billion yen ($210.2 million) from its joint venture.

Currency and inflation concerns
The rupiah depreciated 1.4% against the US dollar in the final quarter of 2004, against 0.24% in the corresponding period the previous year, and by the beginning of last week had slumped to its lowest level since April 2002, following earlier comments by central bank (Bank Indonesia, or BI) Governor Burhanuddin Abdullah that full-year inflation could soar to 8.8% this year, well over the 2005 budget projection of 7%.

BI then announced that it would raise its key interest rates by up to 20 basis points as part of a package of measures in a currency support plan and aimed at fighting rising inflation. The government has been reluctant to see an increase in rates because it needs low interest rates to sustain economic growth and curb borrowing costs. The announcement came on the heels of a personal appeal from President Yudhoyono for government cooperation to stem the rupiah's slide by, for example, coordinating the purchase of dollars with the corporate sector.

Criticism of the slow official response, which had led to the president's intervention, came from Minister of National Development Planning Sri Mulyani, who blamed pressures in the foreign exchange market for contributing to the slide of the rupiah against the dollar. Mulyani said in an interview that policymakers had not "responded adequately" to the "additional pressure of a changing global economic environment", which was pushing the rupiah lower.

Describing the rupiah's slide as a "wake-up call" for the government, Mulyani had warned against complacency over what had been accomplished so far, citing the need for strengthening and fine-tuning policies in a much more timely manner. "If the market fails to see progress, there must be something wrong in terms of the way we communicate this" to the market, the minister pointed out. One casualty of the steadily weakening rupiah has been PT Telekomunikasi Indonesia Tbk, the country's biggest telecommunications company, which has reported a 34% fall in fourth-quarter net profit, partly due to foreign exchange losses.

Thorny labor issues
Thousands of people across the country took to the streets to mark Labor Day on May 1 with demands for better working conditions and protection of workers' rights. The demonstrators demanded, among other things, that the government stop the dismissal of workers, eliminate the contract system and revoke the Manpower Law that came into effect in 2003.

Alboin Sidabutar, deputy chairman of the All-Indonesia Workers Union Confederation, said labor indicators have been worsening because of the absence of significant changes in the social, political and economic fields over the last seven years. "This is evident in the frequent dismissals of workers, rampant violations of freedom of association by employers and the high unemployment rate," he said.

Sidabutar said the government's failure to take short-term measures to enforce the law, to rid the bureaucracy of corruption and eliminate the high-cost economy has resulted in little change in the investment climate and a lack of job opportunities. "President Susilo and Vice President Jusuf Kalla have been in power almost six months, but the political and economic situation is not recovering. There are many foreign investors who wish to come but no actions have been taken to eliminate the high-cost economy," said Sidabutar.

Corruption
Despite a very public show of addressing corruption and trying to repair the nation's reputation, Indonesia is ranked the sixth-most corrupt country in the world. The Corruption Eradication Commission has exposed strong indications of widespread corruption at the General Elections Commission after an audit report by the State Audit Agency (BPK) indicated widespread corruption in the procurement of materials for last year's legislative election.

The county's largest bank, Bank Mandiri, majority owned by the government, plans to acquire several banks with assets of more than Rp10 trillion ($1.05 billion) this year to increase its customer base to 2 million and fulfill its ambition to be the dominant player in the banking sector. It has a solid asset base of Rp248 trillion and a healthy CAR (capital adequacy ratio) of more than 17.8%. However, the bank is being investigated by the attorney general following irregularities uncovered by a BPK probe of the bank's financial reports.

The probe has so far resulted in at least three arrests of executives of local private companies on charges of loan fraud. Several senior executives, including the bank's president, Edwin Neloe, are being questioned over "28 irregularities" in loans amounting to Rp1 trillion. Minister of State Enterprises Sugiharto put the best spin he could on the news, saying that the investigation isn't about the bank, but only certain individuals. Nonetheless, there are concerns that the ongoing investigation could spark a "rush" on the bank if depositors believe their money is at risk.

A local daily, citing an unnamed source, reported that Jusuf Kalla's nephew owns one of the firms linked to the loan irregularities at Bank Mandiri. The report cites the vice president as saying his nephew's firm, PT Semen Bosowa, is a Bank Mandiri debtor, but the company "wouldn't have any problem" in repaying the loan.

And now, the good news
In the wake of the Toemion incident came a fairly encouraging set of figures released on Monday by the Central Statistics Bureau. It announced that inflation in April had eased slightly as increases in food prices slowed. The Consumer Price Index (CPI) rose only 8.1%, from a year earlier, compared with the 8.8% gain in March, which had been the fastest rate since at least January 2003.

The trade surplus rose to $2.27 billion in March from $1.62 billion in the same month last year on the back of higher oil and commodity prices, though a substantial increase in imports accounted for the surplus being below February's $2.40 billion. Imports rose 22% month-on-month to $4.98 billion while exports soared by 13.63% to $7.25 billion. Non-oil and gas exports were up 8.75% to $5.48 billion in April, though non-oil and gas imports were also up 12.10% to $3.35 billion.

The government also looks eager to try put the Toemion embarrassment behind it as quickly as possible. Presidential spokesman Andi Malarangeng, announcing that the president had issued a decree on the appointment of Mohammad Luthfi as the new chairman of the Investment Coordinating Board, said the change was based on professional concerns and also to give a "new spirit to the investment environment".

Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 19 years as a journalist. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.

Alvin

May 9th, 2005, 11:32 AM

Wednesday May 4, 2:53 PM
GDP Growth of India, China Likely to be Higher in 2005: S&P
ISTANBUL, May 4 Asia Pulse - India along with China and Indonesia may be the only "exceptions" among Asian economies to post an impressive growth in 2005 despite the adverse impacts of global oil price spiral, rise in interest rates and depreciation in US dollar, rating agency Standard and Poor's said today."GDP growth rates for many Asian economies in 2005 is likely to slow toward their medium-term trends, with some below potential. India and perhaps China and Indonesia, are the exceptions to lower growth in 2005," S&P said.

S&P rates India's foreign currency at "BB+" with a "stable" outlook, while it is "BBB+" for China and "B+" for Indonesia. However, S&P warned the Asian economies of the adverse impacts of global oil price spiral, rise in interest rates and a falling greenback.

"Chief among the risks will be the speed of interest and exchange rate adjustments, and duration of sustained high oil prices," S&P credit analyst Ping Chew said on the sidelines of ADB meeting here.

Alvin

May 9th, 2005, 04:05 PM

good article about corruption in Indonesia!

In Jakarta, cleaning house is slow and painful

By Donald Greenlees International Herald Tribune

MONDAY, MAY 9, 2005

JAKARTA Researchers at the Indonesian Institute for Science needed about $15,000 to hold an education seminar last year. But the money had been left out of the annual budget. The only option was to go to the Finance Ministry to request the extra funds.

The news was good. With some juggling of the budget, the state-run institute could hold the seminar.

But there was a catch, said a high-ranking official who tracked the case: The institute would have to sign a receipt for the requested $15,000 but would receive only about half the amount.

This is a common story when dealing with the Indonesian Finance Ministry, anticorruption activists and government officials say.

The story is the same with other parts of this country's notoriously corrupt bureaucracy: Payoffs are a part of doing business here almost any time money is mentioned.

Vows to eradicate government corruption have been mantras that all presidents have been obliged to repeat since the removal of Suharto in May 1998.

Most have paid little more than lip service to demands from international aid agencies and the public for cleaner government.

But President Susilo Bambang Yudhoyono has opened the most determined anticorruption campaign since Suharto's fall. The fate of his presidency and the long-term economic health of Indonesia could hinge on the outcome.

Since his election in October, Yudhoyono has laid out an ambitious program for combating corruption, instituted some administrative reforms and has won praise for permitting investigations into the activities of several senior officials.

On April 28, he tried to lend credibility to his antigraft promises with what some activists regarded as a stunt: He said he would start with his own office.

Officials from state audit and anticorruption agencies would be called in to examine the offices of the president, vice president, state secretariat and cabinet secretary.

"It's at the top of the agenda," said Andi Mallarangeng, a presidential spokesman.

But he added: "Corruption has been rooted in the Indonesian system, so we have to attack it from many directions. You have to have a deterrent effect through prosecutions, but we also have to build up a new system to prevent corruption. We need systemic change as well."

Cleaning out this corruption will be a painfully slow process, observers say.

The watchdog group Indonesian Corruption Watch, for example, says that whenever funds are disbursed to government agencies, Finance Ministry officials take a cut.

"You don't get disbursement of the budget allocated for you unless someone has been paid off," said the official who tracked the Indonesian Institute for Science case.

The official requested anonymity because of fears of retribution from the Finance Ministry, reflecting the power that officials have over potential whistleblowers.

Transparency International, based in Berlin, which monitors and supports efforts to fight corruption around the world, has consistently placed Indonesia near the bottom of a global index that rates perceptions of corruption among business people and analysts.

There are doubts about whether Yudhoyono has either the will or the capability to reduce corruption significantly, or the stamina necessary for what will inevitably be a long haul.

Activists say his efforts since the election six months ago have been well-meaning but ineffectual.

They cite resistance from officials skilled at bureaucratic guerrilla war, the lack of focus on implementation within the government, the absence of tangible benefits with which to muster public support and the widespread habit of business of getting what it wants by paying off politicians and bureaucrats.

"One of the biggest problems faced by the president is how to monitor and ensure his anticorruption program is implemented by each ministry," said Danang Widoyoko, deputy head of Indonesian Corruption Watch.

He added that there would be fierce resistance from poorly paid officials to giving up such extra sources of income.

Government officials have seen anticorruption crackdowns, and presidents, come and go and probably believe they can wait out the latest drive and resume business as usual once the fervor passes.

But there are causes for optimism. The government has tried to signal its seriousness by prosecuting some government officials.

In April, the former governor of tsunami-ravaged Aceh Province, Abdullah Puteh, was sentenced to 10 years in prison and fined 4.1 billion rupiah, or $431,000, for embezzling 11 billion rupiah in state money. He is appealing the conviction.

Yudhoyono, who must sign a release to allow investigations into government officials, appears to be permitting prosecutors to do their job.

Since it was started in March, a crackdown on illegal logging has led to the arrests of several police and military officers and slowed environmental destruction.

The government is also going after powerful businessmen who prosecutors believe bribed their way out of loan obligations to state banks. It hopes that such high-profile prosecutions will set an example and make officials think twice about seeking or accepting bribes.

Still, Widoyoko said the new vigor in prosecuting corruption had yet to net any "big fish." He said it was too early to tell whether it would succeed. Law enforcement itself is regarded as one of the most corrupt segments of government.

Joel Hellman, head of the World Bank's Indonesian governance program, said: "Indonesia has transparency without accountability. That is unusual. Issues get raised but nothing ever happens."

He added: "Until there is a feeling that the police, the courts and the prosecutors are themselves free of corruption, there will always be a question mark over the system."

But the mood has shifted a bit; there is some hope that the airing of the debate over corruption could produce results.

Newspapers now overflow with stories about corruption.

Indonesians are increasingly willing to speak out about the problem, even to acknowledge the part they play in it themselves by acceding to the bribes that figure in nearly everything in daily life, from traffic infringements to the renewal of passports and identity cards.

Last summer, a survey by Transparency International found that Indonesians were the most optimistic people in the world in their expectations that progress would be made in reducing corruption.

Of 1,200 people surveyed from July to August, 66 percent were confident that corruption would decrease by either a "little" or a "lot" in the coming three years.

At the same time, surveys by Transparency International suggest there might be a slight gap between the perception and the reality of how bad corruption is in Indonesia. On the perception index in 2004, Indonesia was rated as seventh worst for corruption out of 133 countries.

But another survey indicated that only 13 percent of Indonesians admitted that they or their families had paid a bribe in the previous 12 months - 22 countries rated worse.

Hellman of the World Bank said he believes that any evidence of tangible progress in establishing cleaner government, particularly in aid dollars being spent on tsunami relief in Aceh, could have an immediate effect on changing perceptions.

Such a change could lift Indonesia's standing on Transparency International's index and have rapid benefits for investment.

But he warned that the government did not have time to waste. "If people don't see serious actions with consequences on the part of the government," Hellman said, "the window will close quickly."

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Yamauchi

May 10th, 2005, 05:33 AM

China and Malaysia uncooperative, says minister of forestry

Rendi A. Witular, The Jakarta Post, Jakarta

Minister of Forestry Malam Sambat Kaban has accused Malaysia and China of turning down Indonesia's requests for cooperation against the trade in illegal forest products with the two nations concerned enjoying massive profits from the highly destructive practices.

Both nations always seemed to avoid signing concrete deals with Indonesia, presumably in order that their businessmen continue to receive the illegal products from Indonesia, Kaban told The Jakarta Post.

"Illegal logging is not only about the country of origin, but also about the receiving countries. Businessmen from China and Malaysia continue to seek our forest products regardless of whether or not they are legal," said Kaban.

He explained that both countries were reluctant to seriously cooperate with Indonesia because it involves an industry worth billions of dollars and helps absorb manpower in their respective countries.

The Indonesian Ministry of Forestry has estimated that illegal trade in forestry products from Indonesia to China, especially raw timber, over the past couple of years amounts to some 9 million cubic meters valued at Rp 18 trillion (US$1.88 billion).

According to Kaban, the failure of Indonesia to sign agreements with China was because China had not yet appointed an agency that would be tasked with the responsibility of following up on Indonesia's complaints.

Aside from that, China also insists that it mostly receives the products from Malaysia rather than Indonesia.

Contrary to that however, Kaban said illegal forestry products from Indonesia are always smuggled to Malaysia or Singapore, and then shipped to Hongkong for "legalization" before reaching their destinations in mainland China.

Indonesia and China signed last month agreements on a strategic partnership aimed at improving the already-good bilateral relations between them that have been built up over more than 50 years.

However, the two countries have so far failed to seal a key agreement on the fight against the trade of illegal forestry products due to a widely different perception on the definition of illegal trade.

Indonesia is also having problems in signing similar deals with Malaysia, with the later insisting that illegal logs or other forestry products flowing into the country are a result of Indonesia's lack of law enforcement.

"We are also facing similar problem with Malaysia on the definition of illegal trade. Our negotiations have been stalled for years due to these differences that are unlikely to be able to be addressed soon," said Kaban.

According to Kaban, however, China and Malaysia had once offered a way for Indonesia to prevent its forestry products from being smuggled overseas by categorizing a number of trees originating in Indonesia as an endangered species under the World Trade Organization (WTO)'s framework.

One of the trees proposed to be included in the WTO appendix 3 category is Intsia palembanica, locally known as merbau, which according to the ministry makes up the lion's shares of Indonesian logs smuggled to China.

"We are currently studying the proposal to include merbau in the appendix 3 so that logs derived from the tree cannot be traded for business," said Kaban, adding that the log is traded for at least $315 per cubic meter.

Indonesia has banned raw timber exports since 2003, following rampant illegal logging at home that has been caused by growing demands for timber both domestically and overseas.

---

Illegal fees 'double RI export costs'

Zakki P. Hakim, The Jakarta Post, Jakarta

While the flow of goods through Tanjung Priok port is increasing, petty officials' pockets are getting fatter too, with illegal fees to blame for often crippling import-export costs, a new report says.

The report from a Ministry of Transportation says the fees for some exporters represented more than a 100-percent increase on their legitimate costs.

Presented to a government-sanctioned special team last week, the report says the cost to export 20-feet and 40-feet equivalent-unit (TEU) containers was 112 percent more than legal costs. Illegal fees also meant the costs of importing regular 20-and 40-feet containers increased by 56 percent and 58 percent, respectively, it says.

The team unsurprisingly recommends the government require all port-related institutes to crack down on the illegal fees, which it says are a key cause of the country's high-cost economy and its failure to compete internationally for investment.

The team will not officially present its findings to the Coordinating Minister for the Economy until Thursday.

Team member and Indonesia Exporters Association (GPEI) secretary-general Toto Dirgantoro said the illegal fees were generally passed on to consumers by producers in the form of increased prices, which made Indonesian goods less competitive in global markets.

Producers here were often hit twice by the fees, he said. High import costs made raw materials more expensive to source and increased local production costs, he said.

"Combined with the high export costs, it would be hard for many of Indonesian products to have (sound) global competitiveness," Toto said.

Indonesia exported and imported a total of 5.5 million TEUs of containers last year.

According to the report, the illegal fees include various "incentives" given to state owned port operator PT Pelabuhan Indonesia (Pelindo) II, along with the customs, immigration, and quarantine offices, port administrator and shipping agencies.

Exporters and importers were subject to Rp 5.59 million worth (US$588) of general fees, he said.

They then had to pay additional fees of Rp 244,500 per 20-feet container and Rp 407,500 per 40-feet container.

These include what was called the Fuel Adjustment Factor, "tips" for forklift operators and container surveyor, and fees for several documents that were supposed to be free, the report revealed.

Importers also had to bear additional fees, paying up to an extra Rp 176,500 per 20-feet container of goods and Rp 201,000 per 40-feet container.

The report did not say mention when the study was conducted.

A separate survey by the Indonesian Textile Association (API) estimated that last year alone, illegal fees totaled Rp 6.8 trillion ($715.79 million).

Both the reports help confirm the Transparency International (TI) survey that ranked Indonesia as the fifth-most corrupt country out of 146 surveyed late last year.

The special team was formed by the Coordinating Minister for the Economy in April. It consists of senior officials responsible for sea transportation, customs, foreign trade and taxation, as well as officials from the Attorney General's Office, National Police and the Office of the State Minister for State-owned Enterprises.

Other members also include representatives from PT Pelindo II, the Indonesian Chamber of Commerce and Industry (Kadin) and other port operators and business associations.

Alvin

May 10th, 2005, 06:25 AM

Koizumi, Susilo to sign investment deal in Tokyo

Ivy Susanti, The Jakarta Post, Jakarta

Japanese Prime Minister Junichiro Koizumi is scheduled to sign an investment agreement with President Susilo Bambang Yudhoyono during the latter's visit to Japan later this month.

Japanese ambassador to Indonesia Yutaka Iimura said the agreement, called the strategic investment action plan, would allow Japanese investors to start investing in Indonesia's technology industry.

"In the past, we invested in labor-intensive industry, such as textiles, but this industry is becoming less competitive and is losing ground to China. So we're shifting our investment focus to technology and the products are mainly for export to countries in the Middle East," Iimura said here on Monday.

Susilo will visit Japan for the first time as president from May 31 to June 2, where he will meet Koizumi and Emperor Akihito. Earlier, Susilo will meet U.S. President George W. Bush in Washington, from May 25 to May 26.

"This visit is important for several reasons. Japan and Indonesia share the same values -- democracy, market economy, human rights and rule of law. Also, we want to be a moderate power and a stabilizing force in the international arena," Iimura said.

He also said that Japan has been a leading trading partner and the number one foreign investor in Indonesia.

In 2004 alone, Japan brought US$9,881 million of trade surplus to Indonesia. In the investment sector, the total amount of direct investment from 1967 to 2004 accumulated to $283 billion, topping foreign direct investment to Indonesia at 14.6 percent.

There are 1,000 Japanese companies in Indonesia, employing 200,000 people.

Iimura said that Koizumi and Susilo would also announce the start of negotiations on the bilateral Economic Partnership Agreement. The partnership's idea came when the leaders met on the sidelines of the Asia Pacific Economic Cooperation Summit in Chile last November, when they agreed to set up an Indonesia-Japan joint investment promotion forum.

"The agreement will include not only the plan for a free trade agreement, but also proposals to improve the investment climate, labor migration and capacity building issues," Iimura said.

"We have not yet talked about a deadline, but we hope it will be accomplished as soon as possible. We already have a similar agreements with Singapore, and we are going to finalize agreements with the Philippines and Thailand," he added.

He said that Japan was seeking to cooperate in the areas of maintaining safe navigation in the Malacca Strait and also disaster preparedness.

He said that Japan wished to share its experience in managing disasters, but Japan would also join France and Australia who had showed interest in cooperating in this area with Indonesia.

Iimura said that Japanese and Indonesian leaders would also discuss issues related to the East Asian Summit, which is scheduled to be held in Malaysia later this year.

The U.S. State Department said on Monday that Bush and Susilo would meet on May 25 to discuss tsunami relief and reconstruction, as well as ways to strengthen further cooperation.

It said in a press statement that both leaders met on the sidelines of APEC Summit last year, but this would be Susilo's first visit to the U.S. after being elected president last October.

Alvin

May 10th, 2005, 04:42 PM

bad news......

Mitsubishi to stop making cars in Indonesia
Tue May 10, 2005 01:52 PM BST
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TOKYO (Reuters) - Loss-making Japanese auto maker Mitsubishi said on Tuesday it would stop building passenger cars in Indonesia next month, closing one of its two vehicle assembly plants as it loses sales to rivals.
Mitsubishi Motors will end production of the ageing Kuda recreational vehicle and Galant sedan at its passenger car plant in Jakarta, whose land lease expires at the end of 2006, a spokeswoman said.

Production volumes at the plant had nearly halved to 4,890 units in 2004 from 8,670 in 2003 and over 10,000 in 2002 as Mitsubishi Motors lost customers to domestic rivals such as Toyota.

Mitsubishi said it would continue to import other passenger cars such as the Lancer and Grandis models from Thailand for the Indonesian market. Production of small commercial vehicles will continue at a separate plant, the spokeswoman said

Alvin

May 10th, 2005, 04:43 PM

EU eases import duty on Indonesia's tuna, shoes

www.chinaview.cn 2005-05-10 18:27:35

JAKARTA, May 10 (Xinhuanet) -- The European Union (EU) has decreased import tariffs on commodities of tuna and shoes from Indonesia, as part of the group's program of generalized system of preferences (GSP).

The facilities could stimulate the growth of Indonesia's exportof the two commodities to the regional market.

"We get the GSP facility for the tuna and shoes, but not for other products," Indonesian Trade Minister Mari Elka Pangestu was quoted as saying by the daily Kompas here on Tuesday.

Herry Soetanto, director general for international cooperation under the ministry, said in accordance with the GSP facility, import tariff on tuna declined to 20.5 percent from 24 percent, while on shoes 13.3 percent from 17 percent.

"Indonesia's opportunity to increase export is higher than other countries which do not get the GSP facilities," Soetanto said.

Currently Indonesia's export to the EU market reaches only 1 percent of the EU's total import. Enditem

Alvin

May 10th, 2005, 04:45 PM

Malaysia to build Jakarta-Bali expressway?

JAKARTA-BALI EXPRESSWAY: Plus eyes RM900 million stretches
By Rizalman Hammin

May 10:
--------------------------------------------------------------------------------

PLUS Expressway Bhd, a majority Government-controlled entity, is believed to have been pre-qualified for five portions of a highway project on the island of Java, Indonesia, people familiar with the matter said yesterday.
Mail Money was told that the five portions are all located in and around the Jakarta vicinity and that the highway is part of the larger 1,500km Java to Bali expressway.

PLUS officials didn’t want to comment on the matter in detail.

“We are not ready to say anything about this. It is still in the preliminary stage,” a PLUS official said when contacted.

It is, however, believed that the portions which PLUS has been pre-qualified for measures about 30km in total.

A decision on the matter is expected to be announced by the Indonesian authorities by year end.

Analysts who cover the stock, say that they are aware of the bid made by PLUS, and they suggest that the cost of the project could be in range of between RM20 million and RM30 million per km.

“The concession period is expected to be between 25 years and 30 years,“ an analysts who cover the stock said.

He also said that if PLUS were awarded the contract, the construction part of the project might possibly be awarded to the UEM Group.

“PLUS does not do construction jobs. If they get the contract, they might give the construction job to other members within the UEM Group, the analyst said.

United Engineering (M) Bhd owns about 46.16 per cent of PLUS, followed by Khazanah Nasional, the Government investment arm with a 20.89 per cent stake.

David-80

May 10th, 2005, 04:59 PM

Wow no wonder Rupiah has been very strong today...while other currencies fell.

Indonesia c.bank absorbs 1.12 trln rph in deposits

JAKARTA, May 10 (Reuters) - Indonesia's central bank said it absorbed 1.12 trillion rupiah ($118 million) on Tuesday by offering a two-day deposit at an interest rate of 3.625 percent to try to support the rupiah.
This is the first time the central bank has offered a two-day deposit after introducing a deposit facility on April 26 for periods from overnight to 14 days, which it has described as a fine-tuning instrument.

The facility was introduced to try to support the rupiah, which fell on April 26 to a three-year low around 9,800 per dollar.

The rupiah strengthened to around 9,460 per dollar at 0740 GMT on Tuesday, up around 0.3 percent from early trading, partly as a result of the central bank's deposit window, dealers said.

They said the deposit facility provides another tool to support the currency, but would not offer a signal on interest rate policy.

"It's more a day-to-day thing with regards to liquidity management and how that could help the rupiah for the day. The central bank also does not want to pay costly rates

For interest rate signals, we are looking more at benchmark SBIs (central bank certificates)," a bank dealer said.

The 3.625 percent rate offered for the two-day deposit is below the rate of 5 percent to 6 percent quoted for two-day rupiah deposits in the interbank money market.

The overnight market rate stood around 0.5 percent to 1.0 percent late in the afternoon.

However, the central bank deposit might offer an attractive alternative to banks that are restricted from using the interbank deposit because of self-imposed lending or risk limits.

"In terms of interest rate offered, that's not very attractive. But in terms of the maturity, it's very attractive considering that it will mature on Thursday, the settlement day for SBIs," a dealer said of the government deposit.

The central bank will hold its regular weekly SBI auction on Wednesday, with settlement on Thursday. The funds invested in the two-day paper would mature on Thursday and could be used to pay for SBIs, dealers said.

sanhen

May 10th, 2005, 06:17 PM

Re. Mitsubishi. They are having lots of trouble lately. Mainly from their vehicle division. Mitsubishi is a very diverse company. In Indonesia they invest in cars, chemical etc.

Yamauchi

May 11th, 2005, 07:47 AM

Good read: http://eb.eiu.com/index.asp?layout=oneclick&country_id=1810000181

Alvin

May 13th, 2005, 03:58 PM

Indonesia's 1st-Quarter GDP Growth Probably Slowed on Oil

May 13 (Bloomberg) -- Indonesia's economic growth probably slowed in the first quarter from the fastest pace in four years as consumers cut spending in response to higher fuel prices.

Southeast Asia's largest economy probably expanded 5.4 percent from a year earlier, according to the median forecast of nine economists in a Bloomberg survey. The economy grew 6.7 percent in the fourth quarter. The statistics office is scheduled to release the report on May 16 after 1:30 p.m. in Jakarta.

Fuel prices rose by almost 30 percent in March after the government of president Susilo Bambang Yudhoyono cut subsidies to reduce its budget deficit, leaving consumers in the world's fourth most-populous nation with less to spend on goods such as cars made by the local unit of Toyota Motor Corp. The Dec. 26 tsunami, which left more than 164,000 people dead or missing, has also curbed growth.

``The effect from the tsunami and high oil prices dampened consumption,'' said Henry Ho, president-director of PT Bank Internasional Indonesia, partly owned by Kookmin Bank, South Korea's largest lender. Economic performance was ``not great.''

Rising interest rates may further cool consumption. The central bank said May 10 it may raise rates ``gradually'' to damp inflation and stem a slide in the rupiah.

Consumer prices rose 8.1 percent in April from a year earlier, having climbed 8.8 percent the previous month. The rupiah has dropped 1.8 percent against the dollar this year, making it the second-worst performer among 15 Asia-Pacific currencies tracked by Bloomberg.

Purchasing Power

``A weaker rupiah and rising inflation could lead to a decline in purchasing power, which could hurt investment and curb economic growth,'' Jimmy Henricus Kurniawan Laihad, president of PT Bank Buana, said in an interview on April 28.

Toyota Motor Manufacturing Indonesia forecasts car sales growth will slow to 12 percent this year from last year's 36 percent.

Still, central bank Governor Burhanuddin Abdullah said May 5 that higher borrowing costs aimed at curbing inflation shouldn't stop the economy from achieving growth of as much as 6 percent this year, compared with 5.1 percent in 2004. Finance Minister Jusuf Anwar said May 4 that proposed corporate tax cuts would help lift growth to 7 percent or more by 2009.

``The trade numbers are okay and investment is coming in,'' said Julian Wee, an economist at IDEAglobal in Singapore. ``There are good prospects for the economy.''

Foreign Investment

Indonesia's exports in March rose 42 percent from a year earlier to $7.25 billion. In the first quarter, total foreign direct investment approvals surged to $4.28 billion from $1.56 billion a year earlier, according to the Capital Investment Board.

The Indonesian government wants to attract new investment in roads, power plants and sanitation projects to boost its economy. It says the country needs $150 billion in such investments over the next five years.

The following tables give forecasts for fourth quarter, 2004 and 2005 economic growth. Figures are percentages:

Company 1st Qtr
2005
-----------------------------------------------
Bank Internasional Indonesia 5.2
Capital Economics 5.0
DBS Bank 5.8
Danareksa Research 5.0
Forecast Singapore 5.1
G.K. Koh 6.6
IDEAglobal 5.4
Thomson IFR 6.4
UBS AG 5.8
------------------------------------------------------------
Median 5.4
Average 5.6
-------------------------------------------------------------
Number of replies 9

To contact the reporters on this story:
Soraya Permatasari in Jakarta at
soraya@bloomberg.net; Arijit Ghosh in Jakarta at
3025 or aghosh@bloomberg.net
Last Updated: May 12, 2005 13:00 EDT

Alvin

May 13th, 2005, 04:25 PM

Indonesia Jan-Apr FDI approvals jumps 90.4% compared to same period last year :okay:

Investasi Asing Meningkat Pesat
Jum'at, 13 Mei 2005 | 19:45 WIB

TEMPO Interaktif, Jakarta:Investasi asing di Indonesia tahun 2005 meningkat pesat dibanding tahun 2004. Pemerintah menyetujui penanaman modal asing (PMA) sebanyak 500 proyek dalam periode 1 Januari-30 April 2005. Dana yang ditanamkan investor asing mencapai US$ 4.936,5 juta.

Sementara, dalam periode yang sama tahun 2004, PMA yang disetujui pemerintah hanya 356 proyek dengan nilai investasi US$ 2.592,5 juta. Data ini dikeluarkan Badan Koordinasi Penanaman Modal (BKPM) di Jakarta, Jumat (13/5).

Selain menyetujui proyek baru, pemerintah juga mengeluarkan persetujuan perluasan usaha PMA yang telah ada sebanyak 144 proyek dengan nilai investasi US$ 862,5 juta.

Kenyataan ini memperlihatkan Indonesia sangat diminati investor asing. Sedangkan adanya izin perluasan usaha menunjukkan PMA yang beroperasi dapat berkembang dan memperluas usahanya.

Negara yang menonjol melakukan investasi di Indonesia, di antaranya Inggris US$ 789 juta, Kanada US$ 533,4 juta, Singapura US$ 430,2 juta, Belanda US$ 322,9 juta, dan Jepang US$ 299,7 juta.

Sementara itu, selama 1 Januari-30 April 2005 pemerintah menyetujui 79 proyek penanaman modal dalam negeri (PMDN) senilai Rp 13.595,7 miliar. Nilai investasi PMDN menurun jika dibandingkan periode sama tahun 2004, sebanyak 76 proyek dengan nilai investasi Rp 17.299,6 miliar.

sutarto

Alvin

May 13th, 2005, 04:56 PM

more good news for domestic investment

Indonesia's Gresik plans $350 mln cement factory

JAKARTA, May 13 (Reuters) - Indonesia's largest cement-maker, PT Semen Gresik Tbk , said on Friday it is planning to build a $350 million cement factory to increase its capacity by 2.5-3.0 million tonnes a year.
"In one or two months the feasibility study will be completed. The investment will be around $350 million," the company's president, Satriyo, told reporters.

He said building would start next year at a site yet to be determined, and the plant was expected to begin contributing to production from 2009.

State-run Gresik, 25.5 percent owned by Mexico's Cemex SA , has said it plans to raise $350 million in bonds to finance the factory.

Gresik's current capacity is 17.2 million tonnes. Last year it produced 15.64 million tonnes. Analysts and industry executives expect demand for cement in the country to increase by 5-10 percent this year.

($1=9,480 rupiah)

Ara

May 14th, 2005, 10:52 PM

Indonesia Ranks Fourth in Software Piracy
May 11, 2005 01:41 PM,
Laksamana.Net - Indonesia has the fourth highest rate of software piracy in the world, says a software industry executive.

Topping the list for the illegal production and distribution of software is China, followed by Vietnam and Ukraine, PT Microsoft Indonesia president director of Tony Chen said Tuesday (10/5/05).

He said Indonesia’s software piracy rate is estimated at 88%, which means that for every 100 copies of a software application, 88 are illegal.

Chen was speaking at the launch of Microsoft’s Indonesia program ‘My First Computer at Home’ in cooperation with state bank BNI. The program is designed to help the bank’s credit card holders purchase genuine computers at lower prices.

According to the Business Software Alliance (BSA), an international grouping of legitimate commercial software producers, Indonesia has achieved some success in combating piracy over recent years. The country’s software piracy rate was estimated at 93% in 1997 but had fallen to 88% in 2003.

Chen said Indonesia would enjoy three advantages if the government manages to further reduce the country’s software piracy rate to 78%.

First, the country would gain at least $3 billion in software sales. Second, about 4,000 jobs in the high-tech sector would be created. Third, the government could increase tax revenues from software sales from $20 million at present to $100 million.

Piracy of computer software, computer games, audio compact discs (CDs), video compact discs (VCDs) and digital video discs (DVDs) is rampant in Indonesia due to police corruption. More than 1 million pirated discs are being produced and distributed in the country every day.

Prices range from Rp3,000 to Rp25,000 per disc, with the highest prices being for rare pirated titles imported from Taiwan. Prices for original discs range from Rp30,000 to Rp200,000.

Regular buyers of pirated films and software say the quality of the discs ranges from dreadful to very good, whereas the genuine discs are of far higher quality.

Police occasionally raid places where pirated discs are sold, such as Glodok in West Jakarta, but these raids are largely symbolic, designed to create the impression that law enforcement exists. Retailers of pirated discs are soon able to resume sales once bribes have been paid.

Offenders are rarely arrested, let alone prosecuted. In an extremely rare legal move against piracy, a Jakarta court in September 2001 ordered four Indonesian computer dealers to pay total compensation of $4.7 million to Microsoft for illegal software duplication.

As part of the effort to fight software piracy, Microsoft Indonesia has since 2003 given 30,000 original software packages and second-hand personal computers to about 15,000 schools and universities across the country. The recipients are required to pay an annual copyright fee of $2.50.

Following are BSA’s most recent press releases on software piracy in Indonesia. The first is about the alliance’s offer of a reward of up to Rp50 million for information on the illegal use of software in business and companies.
http://www.laksamana.net/vnews.cfm?ncat=31&news_id=8138

Yamauchi

May 16th, 2005, 08:19 AM

Should be getting Q1 GDP info in a couple of hours.

Yamauchi

May 16th, 2005, 10:53 AM

As I expected, the economy grew about 1 percentage faster than analyst's expectations.

Indonesia's GDP Grew More Than Expected in 1st Qtr

May 16 (Bloomberg) -- Indonesia's economy grew more than expected in the first quarter as rising consumer spending prompted companies such as PT Telekomunikasi Selular to boost capacity.

Southeast Asia's largest economy expanded 6.35 percent in the first three months from a year earlier, Slamet Sutomo, a deputy head at the Central Statistics Bureau, said at a press conference today in Jakarta. That's more than the median 5.4 percent growth forecast by nine economists surveyed by Bloomberg.

``We slept for seven years, this is the beginning of the awakening for the economy,'' Cholis Baidowi, who helps manage the equivalent of $1.2 billion in Indonesian assets at PT Trimegah Securities in Jakarta, said before the announcement. Growth may reach 6 percent this year if ``big foreign direct investment comes into the infrastructure sector,'' he said.

Indonesia's $258 billion economy, the last in Southeast Asian to recover from the 1997 Asian financial crisis, has been hampered by concerns about security and corruption. President Susilo Bambang Yudhoyono, who took office in October, wants to attract $150 billion in new foreign investment to boost growth to an average 6.6 percent over the next five years.

Indonesia's approved foreign direct investment almost doubled in the first four months of this year, the country's Investment Coordinating Board said earlier today.

The government approved $4.94 billion of foreign investment in the four months ended April 30, compared with the $2.59 billion a year earlier, the agency said in a statement.

Telkom

PT Telekomunikasi Selular spent $126 million in the first quarter on new infrastructure to boost its 19.6 million cellular subscriber base. The company is 35 percent owned by Singapore Telecommunciations Ltd.

PT Semen Gresik, Indonesia's biggest cement maker, on May 13 received approval from the government, its biggest shareholder, to build a $400 million plant to increase capacity as a construction boom fuels demand, Satriyo, the company's president director said.

Indonesia's economy last year expanded 5.1 percent, the most in eight years, as the lowest interest rates in seven years encouraged consumers to borrow funds for cars and household goods. President Yudhoyono wants to boost growth further to help create employment for the 40 million Indonesians who are jobless or do not have regular work.

Alvin

May 16th, 2005, 10:54 AM

Yamauchi...mate, you beat me to it ;)

Yeah, this is great news for the economy. Indonesia is back!!!

Alvin

May 16th, 2005, 11:02 AM

[The Jakarta Post]
Lessons to be learned from China
B. Nicodemus, Brussels

"Get the knowledge, even from China". The question is, "What can we learn from China?". As China is becoming a major player in the world economy, the question can be slightly rephrased: "What does China teach in economy?"

One of my colleagues argues that Indonesia should learn a lot from China, from their economic textbooks if necessary. He might be right. Unlike other developing countries, such as Chile with its Chicago Boys or Indonesia with its Berkeley Mafia, we've never heard about some technocrat graduating from China and learning about its remarkable economic performance.

China is indeed a phenomenon. The dragon enjoyed economic growth at an average of 9 percent per year from 1980 to 2003. Income per capita increased three-fold during that time. In 2003, China was the world's fourth-largest exporter of merchandise and the ninth-largest of commercial services. (Martin Wolf, Financial Times, Feb. 23, 2005).

Based on these facts, China is too important to be ignored. The fact that Indonesia has made new and more vigorous cooperation agreements with China is unsurprising. A move that is very strategic according to the Post in its editorial column. (Indonesia-China partnership, The Jakarta Post, April 27).

However, a closer look into China's experience will give some insight that could also benefit Indonesian development.

Firstly, the role of government is very important in the Chinese economy. It was Deng Xiaoping who started economic reform in 1978. The most significant step was to open the Chinese economy. Foreign investment was invited to push the industrialization process. Infrastructure was built at breakneck pace. As the economy was more open to the world, China started adopting modern management methods.

China's experience has challenged conventional wisdom on the role of government in the economy. From Adam Smith with his invisible hand to the famous Washington Consensus, all are preaching a minimalist role for government.

In economic textbooks, the role of government is very limited. They will be needed normally to fix the so-called market failures as we have in public goods case or externalities problem.

However, the Asian Tigers as well as China now, have confirmed that the real world is not always a mirror of the textbooks. As the World Bank says in The East Asian Miracle, the government plays a significant role behind the remarkable economic performance across East Asian countries. It is very surprising since the World Bank is a Washington Consensus loyalist.

Secondly, China is growing under an authoritarian regime. In China, there is only one big, powerful party, The Communist Party and there is no general election. It seems that, whether we like it or not, democracy is not the one and only way to foster economic development.

Theoretically, as proposed by Ersson and Lane (1996), there are two models made about democracy and its impact on economic development namely the Compability Model and the Conflict Model. The first one says that economic development will take place under a system respecting civil liberties. The system then is more familiar under the name democracy.

On the other side, the Conflict Model says the opposite. Democratic countries, newly established ones in particular, will have difficulties in building a stable government. As a result, the country will be engulfed in political instability and inconsistent policies, which will eventually hamper the process of economic development.

The Conflict Model has been justified again by East Asian countries and indeed by China recently. It is widely known that countries across the region, such as Indonesia and Singapore, enjoyed high economic growth under undemocratic governments.

Despite being undemocratic, China is very successful in providing political stability. The succession in Chinese leadership, from Chairman Mao to Deng Xiaoping, then to Jiang Zhemin and now Hu Jintao, has been very smooth without political turmoil.

Does China have any problems at all? The answer is very clear, no. China is still facing pressure due to human rights violations in Tiananmen Square, a tragedy that led to an arms embargo by the European Union.

In 2004, Transparency International ranked China 71st in the world for corruption. It means the country is still having big problems with their institutions.

Despite these facts, China is increasingly attractive to investors. Foreign companies continue to pour money into Shanghai and Beijing. A booming economy and a competitive business climate are more important all those other problems to most investors.

Indonesia could learn a lesson here. Bad perceptions due to policy in the past as well as corruption should not prevent the country from moving forward.

Moreover, concerning the market or investors, we can also see that their primary concern is profit. As long as a country can provide a high rate of return, no matter if it is democratic or not, they will go there.

In this case, the government and also the people should be above the market. What we have in Indonesia is the opposite. We have all heard this over-repeated mantra, particularly prior to elections: "The next president must be a market-friendly person" or "The Cabinet should be accepted by the market". Why not the opposite? It is the market that follows the government, as is the case in China. The market is very opportunistic. Why should the government live under its command?

Compared to China, Indonesia is one step ahead. We are already a democratic country, but we still can not provide political stability, rule of law or consistent policies. As the first directly elected president, President Susilo Bambang Yudhoyono has more than enough legitimacy to provide all of them. Like China, those three things are also very crucial for Indonesia. Without them, there is no chance to reap the benefits of democracy.

The writer is a postgraduate student in social science at Katholieke Universiteit Brussels. He can be reached at BarlevNicodemus.Marh@student.kubrussel.ac.be

Yamauchi

May 16th, 2005, 11:12 AM

Well, that's a noble thought. Too bad it's not entirely accurate. At the end of the day, China's economic potential comes from the same foundation that has made South Korea, Japan, and Taiwan developed countries in just 50 years after having their economies destroyed. It's basically that the cult of education in China exists today as it has for the last 300 years, resulting in an endless supply of human capital that can be found in a population of 1.3 billion. The most elite, like the gentry of old, enter the booming market place while about 1 billion others live in the countryside as peasants.

Alvin

May 16th, 2005, 12:28 PM

Yama, are you still studying and if so, what are degree are you studying for and when will you be graduating?

-------------------------------------------------------------------

Monday May 16, 4:03 PM
Indonesia Q1 GDP growth outstrips expectations
JAKARTA, May 16 (Reuters) - Indonesia's economy expanded at a higher-than-expected 6.35 percent in the year through the first quarter on stronger investment, the statistics bureau said on Monday.
The expansion took financial analysts by surprise, and reinforced expectations Indonesia can meet its full-year growth target of 5.4 percent despite recent sharp interest rate hikes.

A survey of 10 analysts by Reuters produced a median forecast of 5.5 percent for GDP in the first quarter from a year earlier against an actual 6.65 percent in the previous quarter.

The economy grew 5.1 percent last year.

The higher-than-expected growth was in part due to a pick up in investment. Investment as measured by gross fixed capital formation rose 15 percent in the year through the first quarter.

"This is great and unexpected. It is a very optimistic sign. I think the main driver is investment since with political stability now, investors have realised their pent-up investment demand, " said Fauzi Ichsan, an economist with Standard Chartered Bank in Jakarta. ADVERTISEMENT

Manufacturing, which accounts for around one fifth of GDP, rose 7.05 percent while the building sector rose 8.6 percent. The agricultural sector, which employs around half of the 100 million-strong workforce, rose only 0.43 percent partly due to seasonal factors.

"I think the target of 5.5 percent economic growth this year can be achieved," Ichsan said.

Analysts have said Indonesia needs to grow around seven percent a year to help reduce chronic unemployment.

Yamauchi

May 17th, 2005, 04:38 AM

I'm still studying. My major is East Asian studies while I'm minoring in English literature and economics. I'm applying for a scholarship next summer that would allow me to study in China or Japan for a while (pretty cool). Anyway, I'll graduate in 2007.

Yamauchi

May 17th, 2005, 06:43 AM

Indonesian Govt Aims to Create 2.8 MLN New Jobs This Year

JAKARTA, May 17 Asia Pulse - The government targets to open 2.8 million new jobs this year up from 2.4 million created last year.

Chief Economics Minister Aburizal Bakrie said the target is 7.7 per cent higher than the number of 2.6 million new workers entering the labor market annually on the average.

The government is optimistic that the number of new jobs created will exceed the number of new job seekers, Bakrie said last weekend.

In the first 8 months of 2004, the number of jobless workers was 9.8 million or 22 million including underemployed workers, he said.

The trend is expected to continue in the coming years reducing unemployment rate from 9.5 per cent in 2003 to 5.1 per cent in 2009, to follow the economic growth predicted to rise from 5 per cent in 2004 to 7.9 per cent in 2009.

Meanwhile, it was reported that the number of workers losing their jobs in the formal sector declined sharply in the first quarter of this year as compared to the same period last year.

The report quoted figures from the Labor Ministry said 22,647 workers lost their jobs in the January-March period, mostly due to company closures and downsizing or almost 50 per cent of the 44,350 workers laid off in the same period last year.

An official of the ministry attributed the decline mainly to better economic condition and higher economic growth.
(ANTARA)

Sielo

May 17th, 2005, 10:33 AM

Indonesia's 1ST QTR Car Exports Skyrocket 133 PCT

JAKARTA, May 17 Asia Pulse - Indonesia recorded an on-year skyrocket of 133.2 per cent in first quarter car exports, which reached 23,019 units, a car distributor said.

Publicly listed PT Astra International , the country's largest car maker and distributor, said Toyota and Honda dominated exports

Toyota and Honda, which are assembled in the country by its subsidiaries, accounted for 22,505 units and 487 units respectively of the total exports.

Toyota Kijang Innova, a new product of PT Toyota Motor Manufacturing Indonesia began to dominate car exports from Indonesia late last year.

Other brands exported from the country are Peugeot, Mitsubishi, Daihatsu and Mercedes Benz.

Alvin

May 17th, 2005, 02:16 PM

IMF says it supports RI's policies to boost economy

JAKARTA (Bloomberg): The International Monetary Fund (IMF) said it supports Indonesia's economic policies, which helped the Southeast Asian nation expand more than expected in the first quarter.

Indonesia's gross domestic product expanded 6.35 percent from a year earlier in the first quarter, beating the 5.4 percent median forecast of nine economists surveyed by Bloomberg News.

"We support the economic plans that the government has announced already," Daniel Citrin, director for Asia-Pacific at the fund, told reporters in Jakarta after meeting Indonesia's Vice President Jusuf Kalla.

"Confidence in Indonesia seems to be growing and we very much hope that the government will continue to successfully implement its growth strategy."

The IMF, which in March said that Indonesia must work harder to enforce legislation, improve governance and open labor markets to attract more investment, now says economic growth is spreading in Southeast Asia's biggest economy after the government announcedplans to build public work projects and attempts to lower its fiscal deficit.

Indonesia's economy may expand as much as 6 percent this year, exceeding the government's target, Coordinating Minister for the Economy Aburizal Bakrie said on Tuesday.

"We see that the growth is becoming more broad based and seems to be based more on investment now," Citrin said. "This is a good sign for future growth prospects."

Yamauchi

May 17th, 2005, 08:53 PM

FDI approvals have stalled some over the last two months. Let's hope that it will pick up again soon leading to full year FDI growth in the range of 25-50%.

RI's first quarter GDP grows by 6.35% due to improving FDI

Urip Hudiono, The Jakarta Post, Jakarta

Indonesia's economy had a good start to the year, achieving higher first quarter growth than last year on improving foreign direct investment, the Central Statistics Agency (BPS) said.

The BPS reported on Monday that the country's economy -- as measured by gross domestic product (GDP) -- expanded by 6.35 percent in the first quarter, compared to 4.83 percent in the same period last year. Growth was slightly lower than the 6.65 percent year-on-year growth in last year's final quarter.

Indonesia's economic engine has continued to run at high gear, increasing its production by 2.84 percent from last year's final quarter.

BPS deputy chief for statistical analysis, Slamet Sutomo, said this year's first quarter growth was partly due to a recent production increase in the agricultural sector.

"We just experienced a good harvest, increasing our stock of rice and other products," he said.

Indonesia's agricultural production grew a whopping 17.83 percent during the first quarter as compared to last year's fourth quarter, or 0.43 percent compared to the same period last year.

The service sector saw on-quarter growth of 1.63 percent, while the country's finance sector saw a 1.06 percent increase.

Productivity in the construction and the electricity, gas and water sectors also slowed from last year's fourth quarter by 0.11 and 0.08 percent, respectively.

The government expects several major infrastructure projects on offer this year to help Indonesia's economy achieve 5.5 percent growth this year, and accelerate by an average of 6 percent during the next five years. The country's economy grew 5.13 percent in 2004 with a GDP of some Rp 2.30 quadrillion (about US$242.4 billion).

Slamet said the BPS noted that the country's economy had begun to shift from being driven by consumption to investments and exports.

The agency reported that fixed capital formation increased by 14.98 percent, as compared to the growth in household consumption of only 3.22 percent. Government consumption also slumped to 8.52 percent growth.

"But the slow growth in government consumption is mainly due to the fact that many budget allocations have not been disbursed yet and we expect it to rise in the next quarter," he said.

Exports also continued to be strong, the BPS reported, growing by 13.39 percent, although this was offset by growth in imports of 15.38 percent.

"But most of the imports consist of capital investment that will further add to the economy's stock from the supply side, before the demand side starts to kick in," he said, forecasting further growth in the coming quarters because of this condition.

Data from the Investment Coordinating Agency shows that foreign direct investment nearly doubled in the first four months of this year, with the government approving $4.94 billion in foreign investments during this period, as compared with $2.59 billion in the first four months of last year.

Zorobabel

May 19th, 2005, 05:33 AM

Philip Morris controls 97% of Sampoerna's stake

JAKARTA (JP): U.S. cigarette giant Philip Morris now controls 97 percent of the country's second largest cigarette maker PT Hanjaya Mandala Sampoerna, and has appointed Martin King as the new president, replacing the founder's descendant Michael Sampoerna.

The company's extraordinary general meeting of shareholders held on Wednesday also appointed Philip Morris Asia Pacific President Matteo Pellegrini as president commissioner.

The meeting retains Angky Camaro, Edward Frankel, and Sugiarta Gandasaputra as directors of Sampoerna and adds Salman Hameed, Arndt Kottsieper and Andrew White to the board of directors.

PT Philip Morris Indonesia, the world's largest cigarette maker's local unit, expected to own at least 97 percent of Sampoerna as the public tender offer closed on Wednesday.

"As of close of business Tuesday, May 17, approximately 57 percent of shares were irrevocably tendered at a price per share of Rp 10,600 (US$1.13)," said the company in a statement.

In a surprise move in mid-March, Philip Morris acquired 40 percent of Sampoerna's shares, including those of the founding family, for Rp 18.6 trillion. -- (Leony)

Alvin

May 19th, 2005, 07:11 AM

Thursday May 19, 10:19 AM

Kawasaki To Boost Investment In Indonesia

JAKARTA (Dow Jones)--Japan's Kawasaki Motors Corp. (X.KWM) will invest $20 million to double its cub-motorbike production in Indonesia to 200,000 this year, reports Bisnis Indonesia.

Kunioki Morri, president director of PT Kawasaki Motor Indonesia, Kawasaki's local unit, said that the Japanese company's the investment plan is also aimed at making Indonesia as its base for cub-motorbike production in South East Asia, the newspaper reports.

The company plans to export cub motorbikes to Thailand, the paper reports, citing Morri.

Alvin

May 19th, 2005, 07:39 AM

Government and parliament are now discussing 2006 Budget. A few proposed assumptions for next year's budget and my thoughts:

- GDP growth 5.5% - 6.5% (conservative)
- Oil price US$40-US$45 (optimistic)
- Oil production 1075 barrells/day (optimistic)
- inflation 4.5% - 6.5% (too low)
- SBI (interest rates) 6.5% - 8.5% (realistic)
- US$/Rupiah: 8700-9200 (don't know)

Alvin

May 19th, 2005, 05:18 PM

Thursday May 19, 7:16 PM
Indonesia posts Jan-April budget surplus

JAKARTA, May 19 (Reuters) - Indonesia announced on Thursday it had accumulated a budget surplus for the first four months of the year, but analysts said the windfall was temporary as high oil prices could deepen its projected budget deficit this year.
The government bond market shrugged off the news as dealers said Indonesia's borrowing needs were likely to remain large for the year.

Indonesia chalked up a budget surplus of around 20.6 trillion rupiah ($2.2 billion) in the four months from January to April, the finance ministry told parliament.

The government has forecast a full-year target deficit of 17.4 trillion rupiah, or 0.7 percent of gross domestic product (GDP) for the fiscal year ending December 2005.

In March, it sought to revise the annual deficit to 19.55 trillion rupiah, or 0.8 percent of GDP.

"I don't see any significant impact from the budget news. Sentiment stays firm after the strong demand for bonds at Tuesday's auctions," said a dealer with a large local bank. ADVERTISEMENT

Revenue in the first four months of the year totalled 119.6 trillion rupiah, or around 30 percent of the year's target. Spending stood at 98.9 trillion rupiah, or about 25 percent of the annual target.

The ministry did not provide details, but analysts speculated the surplus probably arose from large tax payments in April as well as lower spending in the first quarter. They said spending typically rises later in the year.

Anton Gunawan, economist at Citibank in Jakarta, said the January-April surplus was higher-than-expected but he forecast a full-year budget deficit amounting to 1.1 percent of GDP.

"The reason is because of the oil prices," he said.

Soaring global oil prices prompted Indonesia to raise subsidised domestic fuel prices by an average of 29 percent in March to reduce budget subsidies.

But analysts said domestic fuel prices were still too low compared with global oil prices, raising costs for the government.

Indonesia is a member of the Organization of the Petroleum Exporting Countries, but has struggled since last year to maintain a status as a net exporter.

Indonesia in March raised its forecast for oil subsidies in 2005 to 39.8 trillion rupiah from 19 trillion rupiah, but analysts said the government could end up paying more for the subsidies if global oil prices remained high.

The government plans to issue up to 43 trillion rupiah of debt in 2005 to help raise budget funds.

The finance ministry sold 4.65 trillion rupiah in auctions of two-year and 11-year bonds on Tuesday, against a target of 2.5 trillion, due to strong demand after 13 trillion rupiah in government bonds matured in the week.

Tuesday's auctions brought the amount of bonds sold by the ministry so far this year to around 26 trillion rupiah. ($1=9,420 rupiah)

Zorobabel

May 19th, 2005, 05:39 PM

There's an article on The Jakarta Post about the global slowdown and one analyst said he thinks Indonesia could achieve 9% growth by 2009. I think that's a little too optimistic, but just thought I would note that.

Alvin

May 19th, 2005, 05:53 PM

Zorobabel

May 19th, 2005, 05:57 PM

G3 economies to slow down, import demand to drop

Zakki P. Hakim, The Jakarta Post, Jakarta

The economies of the United States, Europe and Japan are expected to slow down this year, which will pose a modest threat to Asian exporters including Indonesia, as the decelerating economies will consequently have less demand for imports, a leading economist says.

BNP Paribas Chief Economist for Asia Pacific Andrew Freris said the impact on Asian exporters would be relatively modest, as between 30 percent and 45 percent of Asian trade was done with fellow Asian countries outside Japan.

Citing an example, he pointed out that a third of Indonesian exports between 1998 and 2004 went to Singapore, South Korea, China, Malaysia, India, Thailand and the Philippines.

As demand was about to drop, Freris forecast that global commodity prices would also go down and oil prices would be no exception.

"We forecast that oil prices could go down as far as US$40 per barrel from the current average of $47 a barrel," he said in his presentation, Global Financial Developments and the Implications for Asia and Indonesia, on Wednesday.

The economist said the G3 economies -- the U.S., Europe and Japan -- were to slow down in 2005 with Japan and Europe re-accelerating in 2006.

"Interest rates in the U.S. are to continue to rise until year end, while in Europe, rates are to stay flat until later this year. Interest rates in Japan will not increase until deflation ends," he predicted.

Meanwhile, Freris said, the U.S. dollar was to weaken against the euro and yen, while all Asian currencies, including the rupiah, were to strengthen against the dollar throughout the rest of the year.

He predicted that the rupiah could appreciate to Rp 9,000 to the U.S. dollar in the first quarter next year.

He went on to say that the Chinese renminbi would not revalue in 2005 but register only a widening of the trading bands.

Moreover, he was optimistic that Indonesia could grow at over 9 percent by 2009, if the country could secure foreign direct investment (FDI) of up 25 percent of the gross domestic product (GDP), provide adequate infrastructure and maintain efficiency in the financial sector.

He stressed that Indonesia needed FDI to build the manufacturing sector and boost domestic and foreign trade, in order to accumulate enough foreign exchange reserves to lessen the country's foreign debt.

Alvin

May 20th, 2005, 08:30 AM

IMF hails RI economy, warns about inflation

Riyadi Suparno, The Jakarta Post, Jakarta

After more than a week of assessment, the International Monetary Fund has praised Indonesia's overall economic performance and the policy directions pursued by the government and the central bank, but has sounded warnings over a number of challenges, especially the likely increase in inflation this year.

IMF's Asia & Pacific division chief Odd Per Brekk, who led the IMF assessment team under the terms of the post program monitoring (PPM) arrangement, said on Thursday that he saw positive developments in the country, especially the return of foreign investment, which would in turn help drive economic growth.

He described the 6.35 percent year-on-year growth in gross domestic product (GDP) recorded in the first quarter of this year as "better quality growth" that was supported not only by high consumption but also by improving investment and exports.

"But you also see some signs that the work has not finished," Brekk said. "Therefore, the policy response from the government must continue to be sound."

The most obvious challenge, according to Brekk, would be inflation, which again reared its ugly head in this year's first quarter, and which as of April stood at a year-on-year rate of 8.12 percent. This was simply because of the market's anticipation of fuel price increases and the fact that these turned out to be higher than expected.

The IMF's senior resident representative to Indonesia, Stephen Schwartz, said the IMF shared most analysts projections that inflation would likely surpass the government's target of 7 percent this year. Nevertheless, it would not rise dramatically, but would rather be in the range of between 7 percent and 8 percent.

Aside from inflation, the IMF also warned about continued volatility of the rupiah in the money markets.

Brekk suspected that the rupiah's decline to its current level of around Rp 9,400 to the dollar was driven both by overseas and domestic factors. The main overseas factor was the increase in the U.S. interest rates, while many domestic factors were involved. But the most important was rising liquidity.

Therefore, Brekk said the IMF welcomed the move by Bank Indonesia to increase its benchmark one-month SBI interest rate to 7.9 percent per annum, as well as the increase in the frequency of SBI auctions from bi-weekly to weekly so as to absorb excess money.

In the long run, however, BI would have to pursue lower interest rates in a bid to drive economic growth and create employment.

He also said that the IMF supported BI's move to shift its focus on monetary policy from quantity (base-money) targeting to interest rate targeting as an intermediate step toward inflation targeting.

In the longer term, BI should set the inflation target on a par with its major trading partner, i.e., around 3 percent per annum.

In the financial sector, the IMF also noted that there was still work to be done in the area of banking supervision. The emergence of the banking scandal in Bank Mandiri should serve as a reminder that restructuring of the banking sector was not yet complete.

Schwartz, however, recognized that Bank Indonesia's banking supervision had improved a lot, but said it needed to be further strengthened to reduce risks in the banking industry.

"The next step would be for Bank Indonesia to move toward what they call risk-based supervision," Schwartz said, describing this as "a more common sense approach" in assessing risks in the banking system.

Sielo

May 20th, 2005, 12:51 PM

Indonesia's Matahari To Launch China Retail Store In Aug
Friday May 20, 2005, 6:12 pm
DJ Indonesia's Matahari To Launch China Retail Store In Aug

JAKARTA (Dow Jones Newswires)--Indonesia's PT Matahari Putra Prima (MPPA.JK) plans to enter the Chinese market with the launch of a department store in the city of Shenzhen in southern Guangdong province in August, a senior executive said Friday.

The planned 10,000 square meter outlet will mark the first overseas location for an Indonesian retailer, Matahari's Chief Financial Officer Hendra Sidin told reporters.

"We are open to the possibility of opening stores in other countries if it's feasible," Hendra said, without elaborating.

Matahari will join the growing list of foreign retailers seeking to tap surging consumption levels in China powered by economic growth of 9.5% in 2004. China recorded a 12.2% on-year rise in retail sales to CNY466.3 billion in April, a slight deceleration from the 13.9% on-year growth in March.

China's retail market is attracting greater foreign retailer interest since the government scrapped restrictions in December that limited foreign retailers to joint ventures in a restricted number of cities nationwide. The new rules, part of the commitments that helped pave the way for China to join the World Trade Organization in December 2001, permit foreign retailers to open wholly-owned stores anywhere in China.

Foreign retailers that have already entered the Chinese market include U.K. supermarket company Tesco and France's Carrefour S.A.

Matahari's new Chinese operation is part of a IDR400 billion to IDR500 billion expansion strategy that includes the planned opening of 11 new department stores and 10 hypermarkets in Indonesia in 2005, Hendra said.

Hendra added that the company's sales are likely to rise 25% to 30% this year from IDR5.62 trillion in 2004. Matahari had net profit of IDR125.34 billion in 2004

Matahari began as a a small children's clothing store in Jakarta's Chinatown in 1958 and now operates 79 department stores and 54 supermarkets, including four hypermarkets, across Indonesia.

Zorobabel

May 21st, 2005, 10:36 AM

Gaikindo revises car sales to 550,000 on robust demand

The Jakarta Post, Jakarta

Robust domestic demand on vehicles has prompted the Association of Indonesian Automotive Manufacturers (Gaikindo) to revise its car sales growth target from 520,000 to 550,000 units this year.

"Car sales these days have shown a positive trend despite the fact of increasing global steel and oil prices," Gaikindo chairman Bambang Trisulo said in a statement.

He added that industry players should increase efficiency and reduce high production costs to overcome increasing prices.

Gaikindo said that the projected sales increase was due to the increasing demand of 4x2 MPVs (multi purpose vehicles) or minibuses, easier procedures to obtain vehicle loans, and the consumers increasing purchasing power.

Apart from rising passenger cars sales, Gaikindo also recorded an increase in commercial vehicle demand due to the country's improving economy and the construction of infrastructure projects.

The association also said that demand for four-wheel drive double-cabin vehicles has also increased following the increasing demand for such cars in tsunami-stricken Nanggroe Aceh Darussalam.

Gaikindo recorded a 36 percent increase in sales of 195,224 units in the January to April period, compared to the corresponding period sales of 143,434.

In April alone, the association recorded increased sales of 28.8 percent to 51,264 units this year compared to the same month last year of 39,813.

Alvin

May 24th, 2005, 02:44 AM

Alvin

May 24th, 2005, 03:37 AM

The Chief Economics Minister, Aburizal Bakrie , yesterday said that he expects 2005 economic growth to be in the range of 5.8%-6.2% according to kompas.com.

Alvin

May 24th, 2005, 03:40 AM

he also said that changing the budget's oil price assumption to $40-50 is actually beneficial to the budget i.e. reduces deficit due to higher export income. Apparently there is a non-linear relationship in that range, however if oil price goes up to $60 it will blow up the budget.

Zorobabel

May 24th, 2005, 08:18 AM

Thanks for the info Alvin. It doesn't surprise me, but it's good to hear an official talk about it publicly. Seems like growth will be about 6% this year, give or take a little. There's really a window opening right now. Momentum is starting to pick up, the 'war on corruption' is showing some legs, and all of this is leading up to a major batch of infrastructure projects being offered to investors in Q3. If it goes well, the future is very bright.

Zorobabel

May 24th, 2005, 09:16 AM

Indonesia Q2/Q3 GDP growth seen above 6%

JAKARTA: Indonesia’s economy will keep up its momentum in the second and third quarters, making it easy to reach GDP growth of six percent over the full year, Planning Minister Sri Mulyani Indrawati said on Monday.

She said inflation should stay under seven percent for the full year, despite a recent spike triggered by an average 29 percent hike in domestic fuel prices in March. The economy expanded by 6.35 percent in the year through the first quarter on the back of stronger investment. The government’s 2005 GDP growth target is 5.4 percent.

“There are strong reasons for us to be quite optimistic on the second and third quarter,” Indrawati said in an interview, saying that growth in the year through the second and third quarters, respectively, would be slightly less than the first quarter but above six percent in each case.

“My personal view is that if we look at the trend, I would say that six percent (for 2005) is easily achieved. Six is good enough for the first year of this government,” added Indrawati, widely regarded as one of the best ministers in the cabinet. Indonesia will hold direct local elections across the country in the coming months, which is expected to spark spending on political campaigns and boost consumption.

Indrawati said it was unlikely the government would raise fuel prices again this year after the March increase, adding there was no pressing fiscal need to do so. The price hikes were implemented to trim costly fuel subsidies. reuters
A little more on this...

Indonesian economy seen above 6%
Dean Yates ,Jerry Norton ,reuters
JAKARTA – Indonesia’s economy will keep up its momentum in the second and third quarters, making it easy to reach GDP growth of six percent over the full year, Planning Minister Sri Mulyani Indrawati said on Monday.
She said inflation should stay under seven percent for the full year, despite a recent spike triggered by an average 29 percent hike in domestic fuel prices in March.
The economy expanded by 6.35 percent in the year through the first quarter on the back of stronger investment. The government’s 2005 GDP growth target is 5.4 percent.
”There are strong reasons for us to be quite optimistic on the second and third quarter,“ Indrawati said in an interview, saying that growth in the year through the second and third quarters, respectively, would be slightly less than the first quarter but above six percent in each case.
”My personal view is that if we look at the trend, I would say that six percent (for 2005) is easily achieved. Six is good enough for the first year of this government,“ added Indrawati, widely regarded as one of the best ministers in the cabinet.
Indonesia will hold direct local elections across the country in the coming months, which is expected to spark spending on political campaigns and boost consumption.
Indrawati said it was unlikely the government would raise fuel prices again this year after the March increase, adding there was no pressing fiscal need to do so. The price hikes were implemented to trim costly fuel subsidies.
But actual fuel subsidies this year were still likely to be around 70-80 trillion rupiah ($7.4-$8.5 billion), compared to 39.8 trillion in a proposed budget revision, she said.
The budget figure is based on an average international oil price of $35 a barrel, much lower than recent prices.
Indrawati said there was support within the government to let the market set fuel prices to reduce the political tensions that cuts in subsidies create. However, the poor would need to be taken care of, she added.
Asked if investment was rising because Indonesia was an easier place to do business under the seven-month-old government of President Susilo Bambang Yudhoyono or expectations that it would be, Indrawati said the government’s investor-friendly intentions were plain but it could be another six months for the results to be evident.
She said among the many things on the government’s agenda was to reduce the time taken to start up a business which currently takes 150 days to 30 days, in line with some neighbouring countries.
”We are in the middle of a battle. I am not saying that we are giving the impression that doing business in Indonesia is easy. The transition is not complete yet.“
”We want to create employment and reduce poverty. For that, we need higher quality growth. It’s as simple as that.“
The Q1 economic statistics showed investment, such as in plant, equipment and buildings, rose 15 percent in the year through the first quarter.
That marked a slowdown from 18 percent in the year through the fourth quarter of 2004 but analysts have said the growth rate was still much higher than the largely single-digit increases seen since the Asian financial crisis of the late 1990s.
Businessmen say Indonesia still needs to do much more, such as slashing red tape and tackling corruption.
Foreign investment approvals fell in 2004 from 2003. But approvals in the first four months of 2005 were close to $5 billion, nearly twice as much as a year earlier.
One of the reasons for the increased investment was companies already familiar with the past risks in Indonesia liked the tone of the new government and were going ahead with new spending on that basis, Indrawati said.

Zorobabel

May 24th, 2005, 09:31 AM

Sorry for another post, but something to keep an eye on is Japan. Japan is Indonesia's largest export market and their largest foreign investor. It looks like their economy is going to grow by about 2% this year. I think that will really help exports and boost investment in export-related sectors.

Alvin

May 24th, 2005, 10:33 AM

Southeast Asia: Sounds Of A Building Boom
By Assif Shameen in Singapore
Mon May 23, 4:55 PM ET

During most of the period after the 1997 Asian financial crisis, Francis Yeoh Sock Ping, chief executive of Malaysian construction firm YTL Corp., focused his business away from his home region. Today he runs a power transmission grid in Australia, a water utility in Britain, and construction projects in several other countries. But these days, Yeoh is also busy back home, scouring Southeast Asia for opportunities to build toll roads, bridges, and power plants. "Indonesia is the next big infrastructure opportunity," says Yeoh.

Make that Indonesia, Malaysia, and Thailand -- in fact, all of Southeast Asia. Indonesia in January unveiled a five-year, $145 billion plan to improve infrastructure. The first tranche, 91 projects worth some $22.5 billion, will be under way later this year and includes two coal-fired power plants, an extension of Jakarta airport, and a $1.47 billion gas pipeline. In April, Malaysia said it would spend $4.4 billion to modernize its railways and launch 625 smaller projects. And Thailand has approved $59 billion in spending on projects such as new subways, elevated trains, and a causeway across the Gulf of Thailand. All told, Southeast Asia will spend nearly $30 billion on new infrastructure this year alone, according to investment bank Credit Suisse First Boston (NYSE:CSR - News).

Why the rush to build? Governments across the region have held off on upgrading infrastructure for years, but as private consumption, which fueled growth after the crisis, begins to taper off, officials believe public spending can keep their economies expanding. "Clearly, some countries in Southeast Asia have underinvested in infrastructure, and there is a realization that they have a lot of catching up to do," says Chua Hak Bin, an economist for DBS Bank in Singapore.

No Shortage Of Projects

It helps that money's becoming available. With its economy growing and more revenue flooding in, Indonesia says it can pay for perhaps 20% of its program out of its budget. But most of the construction, in Indonesia and elsewhere, will be paid for through bond issues and help from lenders like the International Monetary Fund and World Bank. Indonesia and Malaysia will also encourage government pension plans to invest in infrastructure projects. And Jakarta is considering legislation to allow private companies to build and operate toll roads and power plants for a profit -- laws already on the books in Malaysia and Thailand.

Some, though, wonder whether foreign investors will want to join the party without major changes in the investment climate. Corruption, an opaque court system, and, ironically, lousy infrastructure have long hurt Indonesia. "It's a chicken-and-egg situation," says Fauzi Ichsan, a Standard Chartered Bank economist in Jakarta. "It's difficult to attract new investment with poor infrastructure, and you need foreign investors to get an ambitious infrastructure program going."

One thing is certain: There's no shortage of potential projects. Developing Asia (excluding China) needs to spend more than $1 trillion in the next five years on roads, power, water, and telecom, Japan's Bank for International Cooperation says. "As the economies in Thailand and Malaysia slow, they need more stimulus like this new wave of infrastructure spending," says Manu Bhaskaran, Singapore-based economist for consultants Centennial Group Inc. Clearly there will be enough work near home to keep Francis Yeoh's YTL busy for years to come.

Zorobabel

May 25th, 2005, 08:31 AM

This would be big...

Indonesia Bank Mandiri Proposes Merger With BNI

JAKARTA (Dow Jones)--State-owned PT Bank Mandiri (BMRI.JK), Indonesia's largest lender by assets, said Wednesday it has proposed to the government a merger with state-owned PT Bank Negara Indonesia (BBNI.JK) in order to establish a new, stronger bank.

"We have proposed to the government to merge our bank with BNI in a bid to set up a bank that could offer financing to huge infrastructure projects," Bank Mandiri President Agus Martowardojo said in a statement during a hearing with members of parliament.

A spokeswoman for BNI, Indonesia's third-largest bank by assets, told Dow Jones Newswires Wednesday that she was unaware of this proposal.

Alvin

May 25th, 2005, 04:50 PM

May 26, 2005

Indonesia's investment hurdles
By Bill Guerin

JAKARTA - A former aide to Indonesia's pro-business President Susilo Bambang Yudhyono took over the reins of Indonesia's powerful Investment Coordination Board (BKPM) last week, at a time when it was officially confirmed that investment approvals in Southeast Asia's largest economy had almost doubled in the first four months of this year. The Central Statistics Agency (BPS) reported that in January to April, US$4.94 billion of investment was approved compared with $2.59 billion in the first four months of last year.

Muhammad Luthfi, a former chairman of the Indonesian Entrepreneurs Association (HIPMI), replaces Theo F Toemion, who resigned after allegations that he had gone on a violent rampage at the Jakarta International School on April 18 made international headlines.

Doing business in Indonesia
The Indonesian cabinet includes several former businessmen, and high on the wish list of the business community has been that coordinated leadership in the new, pro-business government will lead to firm action, not just mere pledges. The most pressing task for Luthfi will be to help finalize the long-awaited draft investment bill, which is expected to expedite coordination among relevant ministries and should slash the time needed to start up businesses.

According to the World Bank's survey, "Doing Business in 2005", Indonesia is one of the slowest places in Asia to start a new enterprise, enforce a contract or go through the process of insolvency. The survey shows that it takes an average of about five months to start up a business in Indonesia. Coordinating Minister for the Economy Aburizal Bakrie has reportedly set a target of cutting the time needed to start up businesses to only 30 days.

"We expect the new BKPM head to immediately finalize the investment bill under the coordination of the trade minister, as domestic and foreign investors have long been waiting for the new legislation," Bakrie said during the official ceremony to install Luthfi. "There is no point in having numerous new investment approvals if none of them materialize."

Minister of Finance Yusuf Anwar and State Minister for Planning and Development Sri Mulyani have both promised to improve legal certainty. Mulyani has said her office and other ministries are working hard to complete infrastructure-related regulations. Of the 11 regulations planned, only three have been completed so far - those on energy, toll roads and water. She also said the new investment law, when enacted, would give better protection to foreign investments by treating them equally and abolishing the current requirement for divestment to Indonesian-owned enterprises after a specified period of time.

Promotion needed
The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) says in its recent study titled "Asia Pacific Trade and Investment Review" that it is important for a potential host country to undertake investment-promotion policies to "fill in information or correct perception gaps that may hinder foreign direct investment inflows".

Japan has invested more than $283 billion in Indonesia since 1967 and Prime Minister Junichiro Koizumi is scheduled to sign an investment agreement with Yudhoyono in Tokyo later this month. Singapore and Indonesia plan a joint investment mission to Japan before the end of the year. Singapore is one of the top five investors in Indonesia, and the two countries signed an investment guarantee pact in February. The UK is the second-biggest investor in Indonesia after Japan, with last year's total $1.32 billion up slightly from 2003's $993.2 million. The Indonesian Chamber of Commerce and the British Committee of Industry (KIKI) plan a road show in the UK in June to promote business opportunities in Indonesia.

So far, however, there has been no mention of any planned go-it-alone investment promotion on the part of the government. The UN body also said that developing countries should undertake investment-promotion policies, increase budgets for investment promotions to attract more foreign equity, and establish one-stop investment promotion agencies that could facilitate foreign inflows by lowering administrative delays and costs.

In Indonesia, BKPM had previously acted as such a one-stop shop and was authorized to process all investment permits and many other licenses related to businesses. However, hand in hand with the reshuffle at the top, the government has now reduced the status of the BKPM, stripped it of its licensing authority, and put it under the Ministry of Trade.

No details have been announced on any new plans to facilitate licensing applications for businesses, though some reports suggest that in the future public notaries will be authorized to do the entire running around between the various ministries and departments to help speed up the process and obtain all necessary permits, thus saving investors the trouble of doing the footwork.

Billions expected
Indonesia's need for foreign investment is particularly acute. The country will need some $150 billion for infrastructure development projects over the next five years. The government is only ready to finance less than 20% of these, with local and international investors expected to put up the rest. Some 91 projects worth $22 billion were offered at the so-called Infrastructure Summit in Jakarta in January and several more, worth around $57.5 billion, are expected to be offered in November.

Bakrie has said that these projects should return around 15% on investments, a view at variance with that of at least one major building contractor. Australian Ray Hodgson, president of PT Leighton Contractors Indonesia, though conceding that investment opportunities in Indonesia are abundant, particularly in infrastructure, said the risks are still high and returns need to be more attractive. "Risk is the key in determining a project's viability and the government tends to underestimate the multitude of risks involved," he told delegates at the Indonesia-Australia Business Conference in Bali last month. Indonesia, he noted, has quite a high investment risk. So investors demand returns in the range of 20-30% a year.

Minister of Transport Hatta Rajasa raised a few eyebrows last week when stating that although five investors had expressed interest in buying a large stake in state-owned Merpati Nusantara Airlines (Merpati), he was not willing to allow foreign airlines to dominate the country's airline sector. "I am against selling up to 49% of a state company, especially an airline, to foreign investors," Rajasa was quoted as saying.

Whether this remark could be taken as evidence of likely parliamentary resistance to the sale of government assets - not an unusual sentiment in Indonesia's corridors of power for even debt-ridden units like the ailing Merpati - is arguable. But the government will need the full support of legislators to run with its plans to help restore investor confidence. It's not so much a lack of policies that discourage investors - it's more the inconsistency in implementing existing policies. The same goes for the legal system. It's a consistent and transparent implementation of existing laws that is lacking and has led in the past to such a high-profile negative image of Indonesia as a place to make large investments.

Yet Vice President Jusuf Kalla told investors at a Singapore business forum last week that the government hoped to make policy changes. "We hope that within two years, we will be making a lot of changes," he said, assuring them that the government would follow through with its pro-business policy. Such a new momentum could all turn out to be very good news on the investment front, if the planned measures are all properly coordinated but, unfortunately, there is a sting in the tail. Any required reforms and legislation that may be needed to make good on pledges and promises made by the government could easily get bogged down in parliament.

Trade Minister Mari E Pangestu said the government was pushing for the new investment bill to be deliberated this year, as it has not yet been listed on the schedule of bills to be debated by the House. The bill will provide guarantees against nationalization and expropriation, and guarantee the right to repatriate profits. "Considering that improving the investment climate is one of the cabinet's priorities, we are seeking ways to put the bill on the legislators' schedule for deliberation this year." The hardest task may be getting legislators to even turn up to debate the bill.

The 550 legislators in the House of Representatives (DPR) are broadly split into two groups - those who support the president and the government, and those who do not. But they have been so busy arguing that they have not passed any laws since taking office last October. Very few bills have been drafted and a plenary session was adjourned this month as fewer than 100 lawmakers were present.

Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 19 years as a journalist. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.

Alvin

May 26th, 2005, 02:02 AM

US$420 million in new investments from Shandong business people..

http://www.bisnis.com/servlet/page?_pageid=127&_dad=portal30&_schema=PORTAL30&vnw_lang_id=2&ptopik=A30&cdate=26-MAY-2005&inw_id=363914

sanhen

May 26th, 2005, 02:12 AM

Yeah, Indo is wayyyy behind.
In Aussie, I can setup my own business for less than 1 hour. Almost everything is online:

1. Apply for tax file number
2. Apply for company number
3. Apply for business number
4. Register business name

Of course there are other steps such as liquor license for restaurant etc that can take weeks. But I think above article only talking then registration steps only (as my list above).

Alvin

May 26th, 2005, 06:07 PM

Pebisnis Amerika Serikat Siap Investasi ke Indonesia
Kamis, 26 Mei 2005 | 22:04 WIB

TEMPO Interaktif, Washington:Sejumlah perusahaan papan atas Amerika Serikat siap mengembangkan sayap bisnisnya di Indonesia.

Philip Morris International Inc. yang baru saja mengakuisisi PT HM Sampoerna bahkan berencana melakukan ekspansi di luar sektor tembakau, di antaranya ke industri makanan.

Presiden Susilo Bambang Yudhoyono dalam lawatannya di Washington, DC, Amerika Serikat, Rabu (25/5) pagi waktu setempat mengadakan pertemuan dengan sejumlah pemimpin perusahaan AS terkemuka.

Mereka adalah chairman Caterpillar Inc. James Owen, Presiden dan CEO AES Paul Hanrahan, Wakil Presiden Altria Corporation Donald Nelson, Wakil Presiden dan CEO Merrill Lynch Jerome P. Kerney, serta CEO Paiton Energy Ronald P. Landry. Malam harinya, Presiden berpidato di podium Kamar Dagang AS.

Kamis (26/5) hari ini, Presiden dijadwalkan bertemu dengan tiga pemimpin perusahaan tambang AS yang beroperasi di Indonesia, yakni Presiden ExxonMobil, CEO ConocoPhillips, dan Presiden Komisaris Freeport McMoran James R. Moffett.

Menteri Perdagangan Mari Elka Pangestu mengatakan, dari pertemuan itu, Philip Morris menyampaikan rencana ekspansinya ke sektor makanan. "Mereka kan punya Kraft, Nabisco. Mereka mulai melihat Indonesia secara optimistis," katanya kepada wartawan Tempo Karaniya Dharmasaputra di Washington.

Menurut Ketua Komite Pemulihan Ekonomi Nasional Sofjan Wanandi, yang ikut mendampingi Presiden, Caterpillar juga secara eksplisit menyatakan bahwa sekarang saatnya mereka untuk masuk. Bahkan Indonesia akan dijadikan basis bisnisnya di Asia.

Tanggapan positif juga datang dari CEO AES. Adanya upaya pemberantasan korupsi membuat perusahaan energi yang berinvestasi di 27 negara ini mempertimbangkan kembali masuk ke Indonesia. CEO Merrill Lynch juga mengapresiasi tindakan tegas pemerintah dalam kasus Bank Mandiri.

Alvin

May 27th, 2005, 07:54 AM

this is the consequence of decentralisation...i hope investors don't get confused ..

West Java govt to offer $16b worth of projects
Zakki P. Hakim, The Jakarta Post, Jakarta

Although the recent Indonesian Infrastructure Summit has yet to bear significant results, the West Java administration is set to hold a similar summit in August to offer some 50 infrastructure projects worth a staggering Rp 150 trillion (US$15.8 billion).

West Java governor Danny Setiawan said his province actually needed at least Rp 200 trillion of investment in infrastructure for its economy to grow by 8 percent in the next five years from the current rate of around 5 percent.

"We need such growth to cut our unemployment rate and alleviate poverty in our province," Danny told a press conference on Thursday.

West Java, home of 39.14 million people, has now 2.4 million people unemployed and 10 million living under the poverty line.

The province had abundant business opportunities in the areas of agriculture, marine industries, tourism, manufacturing, trade and services and human resources, but he said lack of infrastructure was discouraging investment in these sectors.

Therefore, the West Java Infrastructure Summit, to be held in Bandung on Aug. 18-19, would offer projects in sectors such as toll roads, power, airports, seaports, water supply and waste management.

Aside from holding the summit, the governor would also undertake a road show promoting the projects to China and European Union member countries in July.

The projects include building an international airport in Kalijati subdistrict in Majalengka regency -- about three hours drive south of the province's capital city of Bandung-- and a marine harbor in Majalengka's neighboring town of Cirebon.

The Summit would also offer a tap water supply project in Bandung regency worth Rp 100 billion with a rate of return of 21 percent, as well as similar other water treatment projects in other locations within the province with an average return of 20 percent.

The governor also said that the province suffered from a shortage of electricity, having its power supplied from Paiton Energy in East Java. "We need alternative power supplies in the province, be it be sourced from coal, water or geothermal," he said.

He, however, could not give a clear answer on why the province needed to hold a separate event from the series of summits the central government conducted.

The central government held the first infrastructure summit in January offering 91 infrastructure projects worth $22.5 billion that spanned the archipelago. The government is slated to hold another summit offering a second batch of projects worth $57.5 billion.

Although the January event was relatively successful in promoting Indonesia and the projects, foreign investors were still somewhat reluctant to actually take up the offers.

The general attitude of the participants was that they would wait and see when the government would fulfill its promise to enact 11 government regulations and three presidential decrees as the legal basis for the projects.

Danny said he had pledged together with regents and majors in the provinces to do their best in facilitating investment in West Java.

For a start, he vowed that he would slash the time needed to start a business in the province from 154 days at present, to only 30 days in accordance with the central government's target.

Alvin

May 27th, 2005, 07:55 AM

Indonesia's cenbanker sees 2005 growth near 6 pct
SINGAPORE, May 27 (Reuters) - Indonesia's central bank deputy governor said on Friday she expects the country's economy will see a growth rate that will be close to six percent this year.
"The economy has come back with an average growth of five percent in the last three years. It will grow higher this year, close to six percent," the central bank's senior deputy governor Miranda Goeltom said in a speech in Singapore.

Zorobabel

May 27th, 2005, 08:00 AM

Isn't West Java the most corrupt province in Indonesia? It seems a bit weird for them to hold something seperate like that, and I don't think they will be successful in finding investors.

Alvin

May 27th, 2005, 08:04 AM

Isn't West Java the most corrupt province in Indonesia? It seems a bit weird for them to hold something seperate like that, and I don't think they will be successful in finding investors.
is it? How do you know? Its the most populated I believe. and yes it is weird.
Anyway jakarta will host an infrastructure summit of its own, but it'll be exclusively to fund the 85 km inner-city elevated tollroad projects in the next 5 years.

Zorobabel

May 27th, 2005, 08:10 AM

I remember a list on The Jakarta Post from some anti-corruption watchdog listing West Java as the most corrupt, but I could be wrong. Anyway, we'll see what happens. If the projects really do have a return of 20-25% then I'm guessing a lot of Malaysian and Singaporean investors will be interested. So maybe it's good.

Ara

May 27th, 2005, 01:40 PM

Does anybody know about Lion Air buying new Boeings? I could have sworn I've herd it on BBC but not sure.

David-80

May 27th, 2005, 03:53 PM

Its already been discussed in Indonesia Aviation thread.

cheers

Alvin

May 27th, 2005, 04:50 PM

geez, I hope this doesn't discourage potential investors from investing...other than that, this is GOOD news!

Indonesia raises cigarette prices
Philip Morris bought Indonesian firm Sampoerna earlier this year

Indonesia is raising the minimum price of cigarettes by up to 20% in an effort to tackle the high level of smoking related deaths in the country.
Shares in cigarette manufacturers fell in reaction to the news, which could hit consumption in one of the world's most profitable tobacco markets.

Indonesia is one of the few countries with rising sales, attracting recent investment from global firms.

Indonesia is estimated to have about 55,000 smoking related deaths a year.

Disincentive

The Indonesian government regulates the minimum price at which cigarettes are sold.

Prices were left untouched last year after a hefty increase the previous year reduced consumption.

The margins of these companies and demand for their products will be hurt

Rani Sofjan, Mandiri Sekuritas

The Indonesian government said it hoped the price rise would discourage more people from smoking, as well as raising excise duties.

Earlier this year, it also raised the cost of fuel by nearly a third which provoked a wave of protests.

Tobacco generate 90% of excise duties and the price rises will boost annual takings to 31 trillion rupiah ($3.3bn; £1.8bn).

"What we have prepared is not a hike of the excise rate, but the minimum retail price," finance minister Jusuf Anwar said.

"The range will be between 15 and 20%".

Growth market

The majority of Indonesians smoke 'kreteks', clove infused cigarettes which give off a sweet and spicy aroma.

The world's largest tobacco firms have been increasingly attracted to Indonesia as sales decline across North America and Europe.

US company Philip Morris acquired Sampoerna, Indonesia's third largest producer, earlier this year in a $5.2bn deal.

Analysts said the price rises would affect companies' profits.

"The margins of the companies and demand for their products will be hurt," Rani Sofjan, an analyst at Mandiri Sekuritas, told Reuters.

"The price increase will be gradually passed on to customers but the effect from higher costs will happen immediately."

Alvin

May 27th, 2005, 05:16 PM

RI backs UN convention on corruption eradication: Susilo

WASHINGTON DC (Antara): President Susilo Bambang Yudhoyono said here on Thursday that Indonesia fully supported the United Nations convention on corruption eradication, even though his country had yet to ratify it.

"We always support any global effort to fight corruption," Susilo said at a press conference, adding that the UN convention was currently being deliberated at the House of Representatives.

The President said Indonesia was currently involved in an aggressive campaign against corruption.

"It is no longer appropriate for any country to provide a haven for those involved in corruption," he said, adding that closer cooperation with other countries was badly needed, including the creation of extradition agreements.

Susilo said earlier at a dialog with Indonesians living in the U.S. that the government was committed to stamping out corruption.

"We will hunt down those involved in corruption wherever they are, even overseas," he said.

He also said the government was investigating corruption allegations at 58 state-owned companies and three ministries. (**)

Alvin

May 27th, 2005, 05:28 PM

AFX News Limited
Indonesia investment climate improves but 'not a sustainable trend' - ADB
05.26.2005, 06:26 AM

JAKARTA (AFX) - The recovery of both domestic and foreign investment in Indonesia is 'not a sustainable trend' despite a recent pick-up, said Asian Development Bank (ADB) country representative David Green.

'The government does not have to agree on this,' he told reporters, when releasing an ADB survey on investment climate in Indonesia.

He said an increase in investment since late last year is mainly attributable to the successful and peaceful passage of the seven-month long general elections.

He, however, said the removal of political instability is not enough to sustain investment as many other problems still remain unresolved.

'No doubt that there is more investment this year than last. Both domestic and foreign investors seem to have wanted to invest more in Indonesia,' he said.

'But does it mean all problems are resolved? The answer I think is no,' he added.

Green said companies are still complaining about problems ranging from high wages, inadequate infrastructure -- especially in terms of electricity supply -- and legal uncertainty.

'After many years of almost no investment, we see some investors coming back. But that is what I called a small boom, not a sustainable trend towards higher investment, higher growth,' he said.

Over the past two quarters, investment and exports have made greater contributions to the country's economic growth.

GDP growth in the first quarter to March was 2.84 pct, up 6.35 pct year-on-year.

Private consumption rose 3.22 pct year-on-year during the quarter; government consumption dropped 8.2 pct; gross fixed capital formation increased 13.39 pct, while exports were up 13.39 pct and imports rose 15.38 pct.

Coordinating Minister for Economic Affairs Aburizal Bakrie has predicted that, with investment starting to lead growth, GDP growth could surpass the government's initial forecast of 5.5 pct and possibly hit 5.8-6.2 pct.

'Given the same pattern, we believe that the 5.5 pct forecast will be achieved. Growth could even surpass the forecast to reach a higher range of 5.8-6.2 pct,' he said recently.

The ADB survey shows that some key problems hindering investment are: economic and regulatory policy uncertainty and macroeconomic instability; corruption at both the national and local levels; labor regulations, which are more than a concern than labor skills; the cost of financing, which is a bigger issue than access to funding; the high tax rate; and availability of electricity.

The survey finds that informal payments to the central government amount to 4.6 pct of sales, while those to the local authorities amount to 4.8 pct. In both cases, exporters make larger payments than non-exporters do.

On infrastructure problems, the ADB said that more than 60 pct of firms find national and local infrastructure services to be 'somewhat to very inefficient.'

As for labor, it said specific difficulties are lay-off procedures and retrenchment costs. Another problem is rising minimum wages.

Green said if the government fails to address these problems, Indonesia over the next few years will see 'not a boom but a shrinkage of investment.'

aloysius.bhui@xfn.com

Zorobabel

May 27th, 2005, 08:14 PM

http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20041201.G04

There's the link with a little information on the most corrupt administrations. East and West Java are at the top, and Jakarta is #3.

Zorobabel

May 29th, 2005, 02:43 AM

The Economist rose its forecast for Indonesia's 2005 growth to 5.7% again.

http://www.economist.com/countries/Indonesia/profile.cfm?folder=Profile-Forecast

Also, and I hope this isn't improper to talk about, I believe the spending of about $1 billion in grants on reconstruction in Aceh and even more in soft loans will have a fairly significant impact on the Q2 GDP. In spite of high interest rates, I think the second quarter will see a y-o-y growth rate of about 6.7%. We'll see, though.

Alvin

May 30th, 2005, 10:39 AM

Japanese firms to invest $1.4b on Indonesia's Tangguh field

TOKYO (AFP): Eight Japanese energy firms will invest a total of 150 billion yen (US$1.4 billion) to develop Indonesia's Tangguh field through 2035, a news report said on Monday.

The firms will separately develop three sections of the gasfield in remote Papua province for liquefied natural gas (LNG) with British energy giant BP, the Asahi Shimbun said.

The deal will be announced later this week during a visit to Japan by President Susilo Bambang Yudhoyono, who is expected to focus on moving forward negotiations to reach a free trade agreement between the two nations.

The Tangguh field, expected to begin operations in 2008, has natural gas reserves estimated at 14.4 trillion cubic feet.

BP Indonesia has a 37.16 percent stake in the Tangguh project.

LNG exports from the Tangguh field are expected to reach 7.5 million tons annually.

Alvin

May 31st, 2005, 02:15 AM

Indonesia's Inflation Probably Slowed in May for Second Month

May 31 (Bloomberg) -- Indonesia's inflation rate probably slowed for a second month in May after the Southeast Asian nation capped fuel prices.

Consumer prices rose 7.7 percent from a year earlier, according to the median forecast of 12 economists in a Bloomberg survey, after gaining 8.1 percent in April. The Central Statistics Bureau in Jakarta is scheduled to release its inflation report tomorrow 1 after 1:30 p.m.

Inflationary pressures in Indonesia have eased since a 30 percent increase in fuel prices in March pushed the consumer price index to its highest in more than two years. Inflation may start to increase again in July when President Susilo Bambang Yudhoyono's government raises cigarette prices by as much as 20 percent to help cut its budget deficit.

``We think the risk to inflation is on the upside,'' said Sin Beng Ong, an economist at JPMorgan Chase & Co. in Singapore, who expects inflation to accelerate to 9 percent by the end of the year. ``The central bank should have started tightening policy from the end of last year.''

Bank Indonesia, which on April 4 raised its benchmark interest rate by a quarter of a percentage point to 7.25 percent, may increase rates again this year to counter inflationary pressures caused by higher oil prices.

``Our response to that increase in expectations would be to allow interest rates to increase,'' Miranda Goeltom, Bank Indonesia's senior deputy governor, said on May 27. ``However, we would do it in a very measured pace to reach the optimal level of inflation rate as well as to allow the economy still to grow.''

Cigarette Prices

Indonesia on May 23 raised its growth estimate for this year to as much as 6.2 percent because of increased investment. The government had earlier forecast 5.5 percent growth.

Indonesia will raise retail cigarette prices by between 15 percent and 20 percent in July to increase tax revenue, Finance Minister Jusuf Anwar said on May 27.

The rupiah's 2.3 percent decline against the U.S. dollar may stoke inflation by raising the prices of imported goods.

A separate report scheduled to be released on June 1 will probably show Indonesia's exports rose for a 13th month in April, led by sales of palm oil, nickel and other commodities, according to economists.

Exports probably rose 38.2 percent from a year earlier, compared with a 29 percent gain in March, according to the median forecast of 12 economists in a Bloomberg survey. Imports probably rose 35.8 percent. The trade surplus may have widened to $2.35 billion from $2.26 billion in March.

The following table shows the trade surplus in billions of dollars and the percentage changes in exports, imports and consumer prices from a year earlier:

Surplus Exports Imports CPI

Median 2,345 38.2 35.8 7.65
Average 2,313 36.0 36.9 7.71
---------------------------------------------------------------
Forecasts 12 12 12 12
---------------------------------------------------------------
Action Economics 2,200 32.0 34.0 7.60
Bank Internasional 2,400 38.2 37.8 7.28
Citigroup 2,170 29.5 31.2 7.60
DBS 2,200 38.8 44.2 7.74
Danareksa Research 2,391 41.3 42.6 8.04
Forecast Singapore 2,300 34.0 35.0 7.60
G.K. Goh Holdings 2,190 39.3 44.0 7.50
ING Groep 2,426 35.0 32.0 8.00
JPMorgan 2,500 38.1 34.8 7.90
Mandiri Sekuritas 2,450 43.2 43.9 8.01
Thomson IFR 2,500 39.3 36.6 7.70
UBS Warburg 2,020 23.6 26.8 7.60
============================================================
===

To contact the reporters on this story:
Arijit Ghosh in Bangkok at aghosh@bloomberg.net;
Soraya Permatasari in Jakarta at soraya@bloomberg.net.

Alvin

May 31st, 2005, 06:25 AM

Indonesia offers $1.57b in agri-projects to Mideast

Zakki P. Hakim, The Jakarta Post, Jakarta

A group of Middle East investors, spearheaded by the Islamic Development Bank (IDB), was offered 10 agricultural projects during a recent visit to Indonesia, the minister of agriculture said.

The group will soon tour each of the project sites, which have a total value of about US$1.57 billion, Minister Anton Apriyantono said on Monday.

Most of the projects deal with developing or rehabilitating agricultural and rural infrastructure, including irrigation systems.

"We have made a proposal to the IDB for soft loans of up to $1.57 billion for the projects, all to improve our agricultural infrastructure," Anton said.

He said the IDB could provide soft loans at rates as low as below 1 percent per annum, with a three-year grace period and a 12-year payment term.

Aside from the IDB, other funding houses showing interest in the projects are the Kuwait Development Fund and the Saudi Development Fund, although the government has asked the IDB to coordinate the funds and review the projects on behalf of the potential investors.

Other than irrigation systems, there are also projects to develop grass fields for livestock in traditional areas, such as Nusa Tenggara, and to create new fields in nontraditional places such as Aceh and North Sumatra.

Tsunami-stricken Aceh, Anton said, has the potential to develop such fields.

"It is an opportunity for investors in Saudi Arabia to try and help develop livestock in Aceh to meet the high demand (for meat) during the haj season," he said.

Anton held a press conference after concluding an official trip to Qatar, Kuwait and Saudi Arabia from May 21 to May 28.

During the trip, he met with Kuwait Prime Minister Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and the agriculture ministers from Saudi Arabia and Qatar to explore the possibilities for closer cooperation in the farming sector.

He also met with IDB president Ahmed Mohamed Ali, who raised concerns over the implementation of regional autonomy in Indonesia, but still committed to coordinate and forward Indonesia's proposal to other financial institutions in the region.

According to Anton, Indonesia lacks the funds to improve the country's outdated agricultural infrastructure, especially its irrigation system.

"The Ministry of Agriculture gets only Rp 4 trillion ($421.05 million) annually from the state budget. This is not enough to fix our ailing irrigation system, therefore we must seek other (financial) sources," he said.

Anton said 40 percent of the country's irrigation system was damaged due to a lack of maintenance.

The Islamic Corporation for the Development of the Private Sector, an IDB subsidiary, has also offered financing schemes for Indonesia's private sector, including micro-credits for farmers, Anton said.

Alvin

June 2nd, 2005, 03:28 AM

Japan to invest US$10 billion

Jepang Akan Investasi Lagi 10 Miliar Dollar AS

Tokyo, Kompas - Setelah empat tahun mandek, investasi asing dari Jepang dipastikan akan kembali mengalir ke Indonesia di bidang infrastruktur, industri manufaktur, dan jasa keuangan. Bahkan, sejauh ini bisa dipastikan telah ada tujuh kelompok usaha besar di Jepang yang akan menanamkan modal sedikitnya 10 miliar dollar AS yang akan menyerap 280.000 tenaga kerja langsung.

Demikian antara lain hasil konkret dari kunjungan kerja Presiden Susilo Bambang Yudhoyono selama tiga hari di Jepang. "Yang kita rasakan dari kunjungan Presiden Yudhoyono ke Amerika Serikat dan Jepang adalah munculnya kembali kepercayaan dunia usaha dari kedua negara penting itu, yang diikuti keinginan mereka untuk kembali menoleh ke Indonesia sebagai tempat untuk meningkatkan investasi, perdagangan, dan hubungan ekonomi yang lebih luas," ujar Menteri Koordinator Perekonomian Aburizal Bakrie di Tokyo, Jepang, Rabu (1/6), seperti dilaporkan wartawan Kompas Nugroho F Yudho semalam.

Hal itu dikatakan Aburizal seusai mendampingi Presiden Yudhoyono bertemu Menteri Ekonomi, Perdagangan, dan Industri Jepang Soichi Nakagawa, serta pertemuan terpisah dengan Ketua Organisasi Perdagangan Internasional Jepang (Japan External Trade Organization/Jetro) Osamu Watanabe, Presiden Organisasi Kerja Sama Internasional (Japan International Cooperation Agency/ JICA) Sadako Ogata, dan Gubernur Japan Bank for International Cooperation (JBIC) Kyosuke Shinozawa.

Empat tahun Jepang sebagai investor terbesar di Indonesia tidak melakukan investasi baru maupun mengembangkan investasi yang sudah ada di Indonesia. Padahal, Jepang merupakan negara yang sejak tahun 1967 sudah berinvestasi di Indonesia. Penyebabnya, selain adanya negara-negara lain yang lebih menarik dan kompetitif, seperti Thailand dan China, situasi dalam negeri Indonesia tidak cukup kondusif untuk investasi asing.

"Tapi setelah pemilu dan Presiden Yudhoyono terpilih, dan penampilan selama beberapa bulan pemerintahannya telah menunjukkan hasil positif, pihak AS dan Jepang menunjukkan minatnya untuk kembali mengembangkan investasi ke Indonesia. Ini hal positif sehingga kita berharap dalam lima tahun ke depan investasi asing yang masuk akan mencapai dua kali lipat dari sekarang, yaitu bertambah 20 miliar dollar AS. Itu bukan hanya dari Jepang, tapi juga dari AS dan China," ujar Aburizal.

Investasi baru dari Jepang, tambah Aburizal, akan masuk di bidang infrastruktur, seperti jalan, jaringan listrik, pertambangan, otomotif, elektronik, industri tekstil, serta manufaktur semisal kertas, kimia, dan kosmetik. Sebagian besar dari perusahaan Jepang yang telah bersedia meningkatkan investasinya adalah pemain-pemain lama yang memang sudah berinvestasi di Indonesia.

"Seiko-Epson Corporation, perusahaan yang produksi printernya terbesar di dunia-seluruhnya dari Indonesia-misalnya, ingin mengembangkan industri printer komputer dengan target ekspor dua kali lipat dari 900 juta dollar AS saat ini menjadi 2 miliar dollar AS dalam dua tahun, dengan investasi tambahan yang tidak terlalu besar, yaitu 50 juta dollar AS sampai 100 juta dollar AS," ujar Ical, panggilan akrab Aburizal.

"Begitu juga untuk industri otomotif, investor Jepang setuju membantu kita mencapai target untuk meningkatkan industri pendukung sehingga kandungan lokal yang kini cuma 30 persen, dalam lima tahun menjadi 60 persen," paparnya.

Menurut rencana, Presiden akan bertemu dengan pucuk pimpinan dari ketujuh perusahaan besar Jepang tersebut satu per satu Kamis pagi ini di Tokyo, untuk meneguhkan komitmen investasi yang telah dibahas dua pekan lalu, bersama Aburizal Bakrie. Presiden Yudhoyono siang ini juga akan berdialog dengan para pengusaha yang tergabung dalam Nippon Kaidanren, federasi bisnis atau Kamar Dagang dan Industri Jepang, sebelum bertemu dengan Perdana Menteri Jepang Junichiro Koizumi.

Kemarin Presiden Yudhoyono melakukan pertemuan resmi dengan Kaisar Akihito di Istana Kekaisaran Jepang di Tokyo. Dalam pertemuan setengah jam itu Yudhoyono menyampaikan penghargaan atas simpati dan dukungan pemerintah dan masyarakat Jepang yang begitu besar terhadap penanganan bencana tsunami di Aceh. Ia juga menyampaikan keinginannya untuk menjalin kerja sama lebih erat dan lebih strategis dengan Jepang, termasuk kerja sama di bidang ekonomi.

Perjanjian kemitraan EPA

Selain kerja sama konkret berupa komitmen investasi dari beberapa perusahaan Jepang, Yudhoyono juga akan membahas hal-hal yang lebih luas dari sekadar investasi dan perdagangan, tetapi juga bidang ekonomi secara luas, lewat kesepakatan kemitraan ekonomi (economic partnership agreement/EPA). Lewat EPA, kerja sama Indonesia-Jepang tak hanya di bidang perdagangan dan investasi, tetapi juga di bidang peningkatan kapasitas sumber daya manusia sampai masalah pelatihan, perpajakan, atau visa yang menjamin kebebasan keluar masuk ke Jepang bagi tenaga kerja Indonesia.

"Jadi EPA akan menjadi cikal bakal perdagangan bebas atau free trade area (FTA) yang selama ini kita garap. Tapi, EPA lebih luas karena juga memasukkan kerja sama lain di luar perdagangan" kata Ical.

"Hari Kamis ini diharapkan sudah dilakukan penandatanganan nota kesepahaman tentang apa yang kami sebut Strategic Investment Action Plans (SIAP). Ada beberapa aspek yang kami bahas dalam SIAP itu, yaitu masalah iklim investasi, ketenagakerjaan, peningkatan daya saing dan kapasitas, serta masalah pajak dan bea serta cukai. Dengan nota kesepahaman itu, maka secara bertahap EPA di antara Indonesia dan Jepang diharapkan bisa direalisasikan dalam dua tiga tahun mendatang," tutur Ical.

Karena sifatnya yang lebih luas, EPA kelak akan menjadi payung bagi perdagangan bebas antara Indonesia dan Jepang, selain kerja sama ekonomi lainnya. Diakui, meski sifatnya lebih luas, hingga beberapa tahun mendatang diperkirakan ada beberapa hal yang belum bisa diberikan oleh kedua negara untuk masuk ke dalam liberalisasi ekonomi.

"Pihak Jepang sendiri, misalnya, tidak akan begitu saja menyerahkan perdagangan bebas untuk produk pertaniannya. Jepang memilih melindungi sektor pertanian, seperti juga AS," ujar Deputi Menko Perekonomian Mahendra Siregar, yang mendampingi Presiden Yudhoyono sebagai notetaker dalam pembicaraan dengan Menteri Ekonomi, Perdagangan, dan Industri Jepang. *

Alvin

June 2nd, 2005, 06:43 AM

Inflation rate slowed to 7.4% in May: BPS
Urip Hudiono, The Jakarta Post, Jakarta

The country's inflation rate slowed for the second consecutive month in May, after reaching a two-year high in March following the government's decision to increase fuel prices, according to data from the Central Statistics Agency (BPS).

Reporting on Wednesday the latest statistics from the country's consumer price index (CPI), the agency said the prices of goods and services in the country increased by 0.21 percent in May from their previous level in April. On a year-on-year basis, prices rose by 7.4 percent.

These figures seem to indicate inflation is back on the leash, after running loose in March after the government raised domestic fuel prices by an average of 29 percent to cut the fuel subsidy and ease the burden on the state budget.

Inflation slowed to a monthly rate of 0.34 percent and an on-year rate of 8.12 percent in April, as compared to a whopping 1.99 percent monthly level and 8.81 percent on-year level in March.

The government has set an inflation target of 7 percent for this year, revising it up from a previous 5.5 percent estimate in the 2005 state budget.

During its ongoing talks on the revision with the House of Representatives' budget commission, however, the government is likely to change the inflation target again in accordance with recent developments.

Bank Indonesia thinks it is likely inflation will reach 8 percent by the end of the year, while the Regional Representatives Council has recommended the government set its inflation target at 9 percent.

BPS head Choiril Maksum said May's inflation rate was mainly driven by a 0.59 percent increase in health costs, followed by a 0.36 percent rise in household expenditures.

The higher health costs accounted for 0.02 percent of the inflation rate in May, while household expenditures contributed 0.11 percent to inflation.

Health costs rose in particular on higher costs for health care services, Choiril said, while people were paying more for rent as part of their household expenditures.

The prices of processed food increased by 0.23 percent and contributed 0.04 percent to the inflation rate in May, while staple food prices went up 0.13 percent in May after falling by 0.21 percent in April.

"The prices of staple foods increased again because the harvest has passed," Choiril said, mentioning several areas in West Java where the price of rice had started to rise.

Transportation costs, among the areas hardest hit by the fuel price increase in March, increased by a mere 0.04 percent in May, from a 0.62 percent rise in April and a 15.44 percent surge in March.

"As we can see, the inflationary effect of the fuel price hike has passed," Choiril said.

Most analysts expect the year-end holidays, particularly Idul Fitri, Christmas and New Year's, to again push prices up.

Alvin

June 2nd, 2005, 06:44 AM

RI exports jump 31.12% in first four months
Zakki P. Hakim, The Jakarta Post, Jakarta

The robust demand for coal, ore, slag, ash and furniture have helped Indonesia's exports rise by 31.12 percent to US$26.63 billion for the first four months of 2005, from $20.31 billion in the same period last year.

The Central Statistic Agency (BPS) announced on Wednesday that the country's non-oil and gas exports rose to $20.74 billion, up more than a third from last year's $15.59 billion for the same period.

Coal exports, however, which had been the consistent major driver in the non-oil and gas exports since last year, declined in April from the month before, down by 36.55 percent to $235.1 million from $372.1 million in March.

On a year-on-year basis, however, coal exports remained on an upward trend, expanding almost 50 percent to $1.10 billion from January to April this year, compared to $750.4 million for the same period in 2004.

Looking forward, the agency predicted a continued strong demand for the commodity amid high international oil prices, which have revived calls for the use of cheaper alternative energy sources here.

Along with coal's consistent performance, exports also soared for the commodity group encompassing ore, slag and ash; by 200 percent to $1.01 billion during the first four months, from $347.9 million last year.

Furnitures exports, meanwhile, almost doubled to $785.7 million by April, compared to $450.1 million last year.

The European Union, Japan and the United States were the country's top-four export destinations for non-oil and gas products, valued at $3.36 billion, $3.13 billion and $3.06 billion, respectively.

Meanwhile, imports for the first four months, rose 33.85 percent to $18.41 billion from $13.75 billion last year. Non-oil and gas imports reached $13.22 billion by April, up from last year's $10.44 billion.

Indonesia's exports for last year reached an historic high of US$69.71 billion, up 11.49 percent from the year before and boosted by strong sales of non oil and gas commodities, including palm oil, electronics, clothing, coal and tin.

Non-oil and gas commodities last year expanded by almost 11 percent from 2003, valued at record high of $54.13 billion, and made up about 78 percent of national exports.

However, analysts say Indonesia still needs a stronger export performance to help push economic growth higher. In recent years, domestic consumption has accounted for the lion's share of the gross domestic product (GDP), at 70 percent, with exports and investment making up the rest.

Zorobabel

June 2nd, 2005, 07:08 AM

JSX is back on the uptrend.

Alvin

June 3rd, 2005, 12:39 AM

Thursday June 2, 8:27 PM
http://www.kompas.com/foto/utama/utama1.jpg
http://us.news3.yimg.com/us.i2.yimg.com/p/rids/20050602/i/r1171465683.jpg?x=213&y=345&sig=UFI99FChwTDRb0qLhyYA1g--

Japan and Indonesia agree to start formal talks aimed at a free trade deal

Japan and Indonesia agreed on Thursday to start formal negotiations aimed at a free trade agreement as Tokyo steps up efforts to expand trade ties with Southeast Asia.

Japan's Prime Minister Junichiro Koizumi and Indonesian President Susilo Bambang Yudhoyono signed an agreement to begin free trade talks no later than July, the Foreign Ministry said in a statement.

Japan has free trade agreements with Singapore and Mexico and has reached a basic agreement with the Philippines and Malaysia. Trying not to fall behind China, it is currently in talks with Thailand and ASEAN.

"The two leaders ... shared the view that trade and investment liberalization and facilitation as well as bilateral cooperation in various areas would help create a larger market for Japanese and Indonesian businesses and consumers," the ministry statement said.

The two nations agreed to conclude the talks "within a reasonable period of time."

The negotiations would also cover areas such as investment, government procurement and intellectual property rights. ADVERTISEMENT

"I'm confident (the partnership agreement) will lead to a deeper integration between the two countries," Yudhoyono said earlier Thursday.

He expressed hopes that the partnership would boost Japanese investment in Indonesia and promised that his country would work to improve customs and other policies.

"Let me assure you that the government will do its utmost to address (Japan's) concerns," Yudhoyono said.

sanhen

June 3rd, 2005, 01:48 AM

Actually... do you think free trade deal with countries will bring much advantage to us?

Zorobabel

June 3rd, 2005, 02:11 AM

With countries like Japan it is good because Indonesia enjoys a large trade surplus with them. FTA with China or the rest of ASEAN, however, would probably be detrimental to trade for Indonesia.

Alvin

June 3rd, 2005, 07:35 AM

Indonesia's Poverty Rate Steadily Falls

JAKARTA, June 3 (Bernama) -- The number of Indonesia's poor people has steadily dropped along with workers' improved wages in various sectors both in rural and urban areas, ANTARA news agency reported on Friday.

"The farmhands' and industrial workers' improved wages have lowered the poverty rate to more or less the same as the pre-crisis level," the news agency quoted Sasmito Wibowo, a Central Statistics Agency (BPS) official as saying here.

The country's poverty rate reached a record high of 24 percent of its population during the height of the economic crisis in 1998.

According to the news agency, last year the number of Indonesian people living in poverty is estimated at 16 percent of the country's population.

Sasmito said Indonesian workers' wages between 1996 and 1999 tended to decline, sending the poverty rate soaring to 24 percent in 1999 from 17 percent in 1996.

He said the workers' wages increased significantly in 2000, thereby reducing the country's poverty rate.

-- BERNAMA

Alvin

June 6th, 2005, 03:58 PM

Monday June 6, 6:06 PM
Indonesia Revises Up 2005 Growth Target To 6% vs 5.4%

JAKARTA (Dow Jones)--The Indonesian government and the budget committee of the nation's Parliament Monday agreed on a set of new assumptions that will be used to base the current state budget.

Hafiz Zawawi, the deputy chairman of the committee, said in a press release that the they had agreed to revise up the economic growth target to 6% this year from the original target of 5.4%, and inflation to 7.5% from 5.5%.

The budget will assume an average dollar exchange rate of IDR9,300, compared with IDR8,600 earlier, Zawawi said. The dollar closed at IDR9,590 Monday.

The assumption for the average rate of Bank Indonesia's three-month Sertifikat Bank Indonesia notes remains at 8%.

The revised budget will also assume an average Indonesian crude oil price of $45 a barrel, up from $24 originally. The crude oil and condensate output estimate is still pegged at 1.125 million barrels/day, he said.

He didn't say why the government and the parliament committee opted for these assumptions.

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Many analysts had said earlier that the original assumptions of the current state budget, which were drafted last year by the previous government and Parliament, were unrealistic.

Nainawaaz

June 6th, 2005, 05:26 PM

I think the rate of Poverty in the U.S. is close to 10 percent. ...so that is a huge improvement for Indonisia.

Zorobabel

June 6th, 2005, 07:01 PM

The Indonesian government states the poverty rate includes those that makes $1 or less a day. The UN standard is $2 or less a day. Under the UN scheme, the United States has no poverty rate, but we do know the rate is about 12%. It's impossible to compare poverty between two nations like that.

Alvin

June 7th, 2005, 01:26 AM

Indonesia Raises Economic Growth Forecast for This Year to 6%
June 6 (Bloomberg) -- Indonesia raised its economic growth forecast for this year by half a percentage point to 6 percent because companies in Southeast Asia's biggest economy are investing to add capacity and oil prices are rising.

The government raised its inflation rate estimate for this year to 7.5 percent because the rupiah is expected to average 9,300 to the dollar, less than a previous forecast. The estimates will probably be used in the 2005 budget, after the parliamentary budget working committee approves the assumptions today, Hafiz Zawawi, deputy chairman of the working committee, said in an interview.

The growth, the fastest in nine years, may help President Susilo Bambang Yudhoyono boost investment and create jobs for one- fifth of Indonesians who are without full-time work. Indonesia's economy expanded 6.35 percent in the first quarter from a year earlier, compared with a four-year high of 6.70 percent in the fourth quarter.

``Growth may be led by rising oil and gas output and higher oil prices,'' said Song Seng-Wun, regional economist at G.K. Goh Holdings Ltd. in Singapore. ``Consumption may rebound in the second-half, which may boost growth. There will also be an increase in investments.''

Indonesia's parliament may endorse the latest revision to the 2005 budget assumptions tomorrow. The government raised its estimate for Indonesian Crude Price to $45 a barrel from $35 a barrel. Indonesia exports as much as 600,000 barrels of crude oil a day.

The government expects to raise 491.6 trillion rupiah in taxes and other sources, while it forecasts expenditure at 511.9 trillion rupiah, leaving a budget deficit of 20.3 trillion rupiah, or 0.8 percent of gross domestic product, Rama Pratama, parliament member in charge for the budget commission, said in an interview.

The new targets will help the Yudhoyono government work harder, Pratama said. ``We want to see the administration reduce corruption, nepotism, improve the legal system and improve investment climate.''

To contact the reporters on this story:
Soraya Permatasari in Jakarta at soraya@bloomberg.net;

Alvin

June 9th, 2005, 07:08 AM

Teijin to invest in textile sector
Japan's Teijin Ltd. will invest US$1.1 billion in the nation's flagging textile industry, according to Minister of Trade Mari E. Pangestu on Wednesday.

The business giant would provide financial assistance mostly in machinery and human resources for the sector, Mari said.

"It will help our need for capital goods and for building the capacity of our human resources," she said.

Separately, Kadin's chairman Mohamad S. Hidayat said the initiative came from Teijin, which believed that the Indonesian textile industry's major problem was aging machinery, exacerbated by the banking sector's reluctance to give backing.

Considering the situation, Teijin, in cooperation with the Japan Bank for International Cooperation (JBIC), would assist in financing the renewal of aging machinery, mostly in West Java, where about 60 percent of Indonesia's textile exports originate.

Despite its image, textile and clothing remains the country's top export commodity. -- JP

Zorobabel

June 9th, 2005, 08:11 AM

That's a large investment.

Zorobabel

June 9th, 2005, 08:18 AM

Chinese investors eye RI palm oil sector: Govt

Zakki P. Hakim, The Jakarta Post, Jakarta

A group of Chinese investors have committed to investing up to US$8.6 billion in Indonesia's palm oil sector over the next five years, a senior minister said on Wednesday.

Coordinating Minister for the Economy Aburizal Bakrie said, while falling short of identifying the investors, he had asked the Indonesian Chamber of Commerce and Industry (Kadin) to help follow up on the commitment.

Separately, Kadin chairman Mohamad S. Hidayat said the pledge came at a time when Indonesia desperately needs to expand its stagnant agricultural industry, including the palm oil sector.

"The government has asked Kadin to organize local industry players in following up on the commitment, as such investment would need about two million hectares of land," Hidayat said on the sidelines of Kadin's national meeting.

Kadin would organize between 40 and 50 industry players to be involved in the projects, to be located outside Java with Sumatra, Sulawesi and Kalimantan the main options.

President Susilo Bambang Yudhoyono is expected to officially sign the deal during his planned visit to China in mid-July, Hidayat said.

Earlier, the government revealed that the country needed a total investment of Rp 20.52 trillion (about $2.16 billion) for the plantation sector to grow by an average 6.27 percent per annum.

The investment would enable palm oil output to expand by an average 6.21 percent to reach 16.74 million tons in 2009, from the estimated 13.15 million tons in 2005.

Alvin

June 9th, 2005, 08:21 AM

even larger investment... good news.
Yama, do u think Indonesia can sustain a 7-8% growth rate in the medium term?

Alvin

June 9th, 2005, 03:05 PM

INTERVIEW: Visa Intl Forecasts Indonesia Debit Card Boom

Thursday June 9, 2005, 1:00 pm

INTERVIEW: Visa Intl Forecasts Indonesia Debit Card Boom

By Phelim Kyne Of DOW JONES NEWSWIRES

JAKARTA (Dow Jones)--Indonesian consumer enthusiasm for non-cash deals could help U.S. credit card company Visa International (VSA.XX) boost debit-card penetration by double digits annually through 2009, a company executive said.

The number of Visa-branded debit cards in Indonesia almost tripled year-on-year to 6,756,000 in 2004, and the volume of retail sales facilitated by the cards rose 32% in the same period, said James Murray, Visa's executive vice president for South and Southeast Asia.

"I could see (debit) card numbers growing like that for the next three or four years without much trouble," Murray told Dow Jones Newswires Wednesday.

"Before the (1997-98 Asian financial) crisis, the payment card market was really driven as credit cards... (now) the real engine is offering basic electronic payment services to people on the street."

Murray said that Visa, through its network of 17 member banks including Bank Mandiri (BMRI.JK) and Bank Central Asia (BCCA.JK), holds a 65% share of Indonesia's credit and debit card market. That puts Visa ahead of rivals Mastercard International (MST.XX) and American Express Co. (AXP).

The driver of Indonesia's strong debit-card demand is a combination of recent economic revival and a vast untapped market of consumers who still rely on cash for financial transactions.

Indonesia's gross domestic product surged 6.35% year-on-year in first quarter, putting the economy on track for a projected 6.0% expansion for the year. That result would outpace last year's 5.1% rise and place the official target of 6.6% annual growth from 2004 to 2009 within reach.

Growth in Indonesia's currently relatively small number of bank depositors - 60 million in a country of 210 million people - will also likely help deliver new Visa card clients, Murray said.

Tourist Spending Downturn "Dismaying"

Visa statistics indicate that currently only 1.6% of every $100 in consumer spending in Indonesia is done with a debit card, compared to around 8% in Thailand.

Visa will expand its range of debit card services for Indonesia's consumers to include an automatic mobile-phone charge payment system and an automatic cash-transfer system between Visa card holders.

The projections of booming debit card use contrast with what Murray describes as the "dismaying" downturn in foreign tourist credit-card transactions in Indonesia after the massive Dec. 26 earthquake and tsunami that devastated the northwestern province of Aceh.

Murray said foreign tourist Visa credit-card use in Indonesia declined 7% year-on-year from the beginning of January to the end of the week of May 8. That decline threatens an annual $500 million in such transactions in the country.

-By Phelim Kyne, Dow Jones Newswires' Jakarta Bureau; 62 21 3983 1277; phelim.kyne@dowjones.com

Zorobabel

June 9th, 2005, 11:40 PM

Indonesia can easily sustain 7-8% growth in medium term, but it just depends on whether or not they can get investment. Take China and their high growth for example; investment represents almost 50% of their GDP, any nation in the world could maintain 9% growth annually with investments that high. In Vietnam, the next fastest growing economy in Asia, it's at 37% of the GDP. In Indonesia investment is only 17% of the GDP. So SBY is just going to have to go around and keep building investor confidence along with improving the situation on the ground for investors.

Because Indonesia has such a low investment base I think that's why some are predicting the economy might be growing by 9% by 2010.

Alvin

June 10th, 2005, 12:19 AM

Because Indonesia has such a low investment base I think that's why some are predicting the economy might be growing by 9% by 2010.

that could only happen under the most optimistic scenario, wouldn't it?
I was thinking also of capacity constraint and poor infrastructure. Sure, $100 billion worth is due to be built in the next 4 years, but it'll need some time before the benefits flow on to significantly higher investment and economic growth.

Zorobabel

June 10th, 2005, 03:29 AM

Well, $100 billion alone represents a huge part of the economy. If that amount of money were to flow into the economy over 4 years ($25 billion a year) that would mean growth of maybe 12%, which I don't think is going to happen. The spending on building the infrastructure would have a huge immediate impact on the size of the economy, but it will have even larger impacts on the long-term growth.

Alvin

June 10th, 2005, 03:34 AM

Alvin

June 11th, 2005, 04:23 AM

Saturday June 11, 5:48 AM
Reuters Summit-Metal miners eye reform in Indonesia

NEW YORK, June 10 (Reuters) - Indonesia's mineral riches are tempting miners keen to profit from sizzling metal prices, but the country must do more to attract large-scale foreign investment, top executives active in the country said.
The election of President Susilo Bambang Yudhoyono eight months ago has been positive for the mining industry, but some foreign companies remain wary about legal and security issues in the world's fourth most populous country, executives said at the Reuters Mining Summit in New York this week.

"The president is talking a good game. He's talking about reforming, but I'm in the 'show-me' camp," said Pierre Lassonde, president of Newmont Mining Corp. , the world's largest gold miner.

Mining investment in Indonesia, home to some of the world's largest deposits of copper, tin, nickel and gold, has declined since the 1990s due to uncertainty, but President Yudhoyono has made it a priority to wipe out corruption and create a better climate for investors.

"The philosophy is very supportive of foreign investment," said Richard Adkerson, president and CEO of Freeport McMoRan Copper & Gold Inc. , which operates the world's second-largest copper mine, Grasberg, in Indonesia's rugged eastern province of Papua.

"In the long run, Indonesia has enormous potential," said Lassonde. But he added some questions still remain, and said large-scale investors would welcome a more transparent judicial system. ADVERTISEMENT

"In the mining business, your title is the only thing you own. And if you can't defend it in a court of law that is impartial, you own nothing," he said at the summit, held in Reuters New York headquarters.

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On Sumbawa island, Newmont operates Asia's second-largest copper mine, Batu-Hijau, which also produces gold.

The Denver-based company is also embroiled in a legal dispute over the detention of six employees after the Environment Ministry launched a $133 million civil suit for alleged pollution caused by a gold mine in North Sulawesi.

"They're moving, but it's still not resolved," said Lassonde, who vehemently denied Newmont had polluted the area around the mine. Both sides are now seeking an out-of-court settlement.

A positive factor for mining, the executives said, has been that successive Indonesian governments have been consistent in honouring Contracts of Work, which define a company's rights to operate in the country.

"Through Suharto, Habibie, Gus Dur, Megawati and now Yudhoyono, they've all kept to the Contract of Work. That's what has made doing business in Indonesia viable," said Peter Jones, president and COO of Inco Ltd. .

Canada's Inco, the world's second-largest nickel producer, plans to expand capacity at its Indonesian operations by about a third by building a hydroelectric dam.

Jones said PT International Nickel Indonesia Tbk would be able to produce 200 million pounds of nickel-in-matte annually by 2009 from about 160 million pounds currently.

Nickel prices on the benchmark London Metal Exchange brushed near 15-year highs last month, while copper prices set a record high in April.

Freeport's Adkerson said foreign miners were important contributors to Indonesia's economy.

"We are, most years, the largest single income tax payer in the country, foreign or domestic," he said.

Adkerson said Freeport pays a royalty of 3.5 percent on its copper revenues when the metal is priced above $1.10 a pound. When the price is below 90 cents a pound, the company pays 1.5 percent.

The price -- near 16-year highs on the New York Mercantile Exchange's COMEX division -- is currently above $1.50 a pound.

In addition, Freeport pays a 1 percent royalty on gold revenues, he said, and about 30 percent of the mine's work force are from the local area.

The royalties are paid to the central government in Jakarta, which then redistributes part of the sum to the provincial government. (News from the Reuters Mining Summit will be delivered throughout the day Friday to Reuters terminals and to the Reuters.com Web site, http:/www.reuters.com)

Alvin

June 14th, 2005, 02:50 PM

Indonesia's growth forecast raised to 5.4% by Morgan Stanley

JAKARTA (Bloomberg): Morgan Stanley raised its 2005 growth forecast for Indonesia to 5.4 percent from 4.5 percent, citing increased foreign investment in Southeast Asia's largest economy.

"The proactive efforts of the new government to improve the investment climate has vastly improved growth and economic confidence," Daniel Lian, an economist at Morgan Stanley in Singapore, wrote in a note to clients.

Indonesia's economy expanded 6.35 percent in the first quarter from a year earlier as exports of minerals doubled and companies such as PT Telekomunikasi Selular raised investment to expandcapacity. The economy grew 5.1 percent in 2004, the most in eight years.

The government approved $4.94 billion of foreign investment in the four months ended April 30, compared with the $2.59 billion a year earlier, Indonesia's Investment Coordinating Board said in May.

The "investment growth strategy that has been adopted by the government is expected to create jobs," Lian said.

President Susilo Bambang Yudhoyono wants to boost growth further to help create employment for the 40 million Indonesians out of a population of 238 million who are jobless or do not have regular work. (**)

Alvin

June 15th, 2005, 03:29 PM

Pacific rim countries avg economic growth to slow to 4.2 pct in 2005 - PECC
Wednesday, June 15, 2005 7:40:00 AM
http://www.afxpress.com

SINGAPORE (AFX) - The average economic growth of 18 key economies in the Pacific Ocean rim will slow to 4.2 pct in 2005 from 5.4 pct last year and risks could further affect their outlook, a regional think-tank said

The Singapore-based Pacific Economic Cooperation Council (PECC), which brings together government officials, academics and businessmen, said in its 2005-2006 forecast that trade and financial imbalances remained too high in the region

"After a blistering economic expansion in 2004, the Asia Pacific region is poised for slower but still robust growth in 2005," PECC said

"The traditional growth engines in the region -- the United States and Japan -- turned in very robust growth of 4.4 pct and 2.6 pct respectively (last year), pulling along the rest of Asia Pacific," it said

Last year also marked the confirmation of China as a new growth engine for the region, PECC said

"In the course of the year, China overtook Japan as the second most important trading partner for many Asia Pacific economies and also overtook the United States as Japan's most important trading partner," said Yuen Pau Woo, co-ordinator of PECC's forecasting panel

For 2006, the region's 18 economies are projected to grow at 4.2 pct with trade and financial imbalances looming as threats to their economic growth prospects, PECC said

The imbalances refer to the twin US budget and current account deficits, the accumulation of huge foreign currency reserves by Asian central banks and divergent growth rates in the world's major economies

In particular, the US current account deficit is worrisome because the region's central banks have massive foreign reserves denominated mainly in the American greenback

"A sudden loss of confidence in the US dollar could lead to a disorderly decline in the value of the US currency, which could spill over into financial markets and the real economy," PECC said

"Asian central banks play a key role because of the substantial foreign reserves that they hold in US dollar-denominated assets estimated at two trillion dollars in 2004." The US current account deficit is tipped to swell to a record 755 bln usd, or 6.1 pct of GDP by the end of 2005, PECC said

The Pacific region's major economies led by the United States are all poised for slower growth in 2005, the PECC report said

US economic growth will cool to 3.5 pct this year following its "record-breaking clip" of 4.4 pct in 2004

"Last year's growth was led by very strong domestic demand, which saw a sharp increase in imports and further widening of the current acount deficit," PECC said

China's 2005 growth is tipped at 8.5 pct in 2005 from 9.5 pct in 2004 with private consumption to emerge as a growing economic driver

"Fears of a hard landing did not materialise in 2004. Rather, the economy has continued on its breakneck pace of expansion into the first-half of 2005," PECC said

Japan's economy is projected to slow to 1.3 pct this year from 2.6 pct last year

For Southeast Asia, growth in 2005 is also mostly poised to moderate after the region's main economies posted a strong showing last year, PECC said

"The outlook for 2005 is for slower growth throughout the region, in part due to excessive expansion in such areas as construction and consumer spending, and also due to the less buoyant external demand." Thailand's economy is expected to grow by 5.0 from 6.1 pct last year, Indonesia by 5.5 from 5.1 pct, Singapore by 4.7 from 8.4 pct, Malaysia by 5.0 from 7.1 pct, the Philippines by 5.7 from 6.1 pct and Vietnam by 8.5 from 7.7 pct
Hong Kong's economic growth will moderate to 4.7 pct this year from 8.3 pct last year and Taiwan's will slow to 4.0 from 5.7 pct

Fir3blaze

June 16th, 2005, 12:01 AM

Hey guys, remember the projects from the Infrasturcture summit in Feb? any news about them? I hope all the good news about massive infrastructure development in the near future arent just empty promises.

Zorobabel

June 16th, 2005, 03:24 AM

The Infrastructure Summit was basically meant to raise awareness about the upcoming projects that will be offered. The actual tenders for the projects won't start until later this year.

Alvin

June 16th, 2005, 06:33 AM

Sino-Indonesia ties: Economy comes first
Urip Hudiono, The Jakarta Post, Jakarta

If there is anything we can say about the Sino-Indonesian relationship, it is probably the fact that politics have always come second to sociocultural and economic ties.

Indeed, from an anthropological point of view, Indonesians could well trace their ancestral origins to the people who once populated the southern part of China, and -- like the Japanese and Koreans -- have strong influences of Chinese culture that for centuries has been the region's de-facto hegemon.

Chinese merchants, meanwhile, had also been arriving in the archipelago as early as the fourth century, trading ceramics, cloth and wood with locals.

These merchants -- along with workers from China -- eventually became the next wave of Chinese settlers here, and literally a part of Indonesia, as their descendants were born and raised here, but with many maintaining close ties with their country of origin.

So despite Indonesia having had its ups and downs in walking the diplomatic tight rope between the politically divided China (the People's Republic of China) and Taiwan (the Republic of China), socioeconomic relations with both have managed to survive and even flourish to this day.

Indonesia first signed a bilateral trade agreement with China in 1953, after officially establishing diplomatic ties on April 13, 1950. Initial two-way trade value was only US$7.4 million in 1954, but steadily grew to $129 million over the next five years.

Due to its "One China Policy", Indonesia has no official diplomatic relations with Taiwan, yet trade and investment between the two were nevertheless established by as early 1952 through efforts by the region's ethnic Chinese network.

It was through this network as well that economic ties between Indonesia and China were rescued when Jakarta severed its diplomatic relations with Beijing in 1965, following an alleged failed coup d'etat blamed on the Chinese-affiliated Indonesian Communist Party (PKI).

Direct trade between the two countries then ceased, but continued indirectly by proxy through Hongkong and Singapore, averaging some $200 million a year.

Fortunately, direct trade between China and Indonesia was later restored in a 1985 agreement, which preceded a full normalization of all diplomatic ties in 1990. Since then, bilateral trade between China and Indonesia has flourished, with the balance always in Indonesia's favor.

In 2004, the trade value stood at $13 billion, up 31 percent from 2003's $10.2 billion, and almost matching Indonesia's $13.5 billion export-import flow with the United States. For this year, the Indonesian Chamber of Commerce (Kadin) expects trade with China to reach $15 billion, and up to $20 billion in 2006.

In terms of the commodities being traded, data shows that China's exports to Indonesia include electrical machinery and equipment, electronic goods and home appliances, textiles and motorcycles. China's principal import commodities, meanwhile, are mostly resource-intensive goods like crude oil, natural gas, palm oil, paper, pulp and timber.

This two-way trade will likely increase drastically following the signing of a 25-year contract that China awarded in 2002 to Indonesia for the supply of $8.5 billion worth of liquefied natural gas (LNG) from Tangguh in Papua province to China's Fujian province.

Investment from China to Indonesia is similarly on the rise. Data from the Indonesia's Investment Coordinating Board (BKPM) shows that total Chinese investment in Indonesia for the five year period ending 2004 reached $6.5 billion, with investments in the energy sector alone reaching $1.2 billion.

On the other hand, data from the Chinese government shows that Indonesian investments in China have reached at least $2 billion as of 2003.

Indeed, during his visit to Indonesia for the Asian-African Summit in April, Chinese president Hu Jintao said that the increased prosperity of China has allowed its enterprises to become investors, eyeing ASEAN countries -- including Indonesia -- as potential investment destinations.

At that same summit, Coordinating Minister for the Economy Aburizal Bakrie said that a group of Chinese businessmen had committed to invest $10 billion in Indonesia in the near future, in projects such as toll roads, electricity, palm plantations and those in the energy sector.

Current investors from China include the country's two largest oil companies, PetroChina and Chinese National Overseas Oil Company (CNOOC).

Many of China's well-known electronic appliance manufacturers, such as Cang Hung, Kang Cia and TCL, are also investing and marketing their products here in Indonesia. Likewise, motorcycle manufacturer Jia Ling have also set up an assembly and spare parts plant.

Bank of China, meanwhile, resumed its operations in Indonesia in 2003 to help facilitate the fast growing trade and investment between the two countries.

Alvin

June 16th, 2005, 05:33 PM

Published June 14, 2005

INDONESIA INSIGHT
Indonesian anti-graft drive bites

By SHOEB KAGDA
JAKARTA CORRESPONDENT

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THESE are tough times for Indonesia's business community and high-level government servants.

Their world, it seems, has been turned on its head by President Susilo Bambang Yudhoyono's anti-corruption drive that is sweeping all before it. The cozy relationship between businessmen and government officials that was the backbone of wealth creation in the country for the past 35 years is at risk of unravelling as businessmen become skittish and government officials shy away from making any decisions.

All this because President Yudhoyono has opted not to offer protection to either prominent businessmen or high-ranking government officials from corruption investigations. The fact that he himself has opted for an arms-length policy as far as forming close ties with prominent business groups goes, is creating uncertainty within the business community.

Indonesia's business community, in fact, is discovering that the ground rules that applied for more than three decades no longer apply. From president Suharto - who formed open alliances with the likes of the Salim group and Bob Hasan - to presidents Habibie, Abdurrahman Wahid, and Megawati Sukarnoputri, government officials and businessmen made good bedfellows.

The players may have changed from time to time but the rules of the game did not, and it was always the same modus operandi - 'you scratch my back and I scratch yours'.

But now for the first time, both high-ranking government officials and businessmen are finding it difficult to operate in an environment where the ground is shifting. Over the past few weeks, for example, the founder of one of the country's largest and oldest business groups, Ali Markus of the Maspion Group, and the former head of the country's Election Commission have been questioned by the Anti-Corruption Commission and arrested.

Even Cabinet ministers have not been spared with the Minister for Justice and Human Rights, Hamid Awaluddin, being hauled in for questioning by the Commission for his alleged involvement in a multi-million dollar corruption scam involving the election commission. The question uppermost in the minds of Indonesians is, can the president sustain this anti-corruption drive or will he also succumb to the lure of the dollar? It is no secret that many businessmen have tried to approach Mr Yudhoyono with sweet heart deals or offered his family members positions on their company boards.

So far, all approaches and offers have been rejected but the cynics will say this is intended to push up the final price.

One theory is that the president may be applying shock therapy to try and stem the endemic corruption that is eating deep into the nation's social and economic fabric rather than adopting any long term strategy to tackle the problem simply because it is next to impossible to completely root out corruption.

Having taken such a strong stance, Mr Yudhoyono must, of course, be prepared for the consequences as his enemies hit back.

So many people and groups have been marginalised that a strong resistance movement to his government could coalesce around those who have been left out and those who feel aggrieved. If his political opponents in Parliament get their act together and stop fighting among themselves, the two groups could join forces against the president and his team. Next year could therefore be a very critical year for the country, both economically and politically.

If Mr Yudhoyono remains steadfast and continues to enjoy the level of public support he currently does, he might be able to push through his programmes and keep political tensions from boiling over. But, if on the other hand, he cracks under the mounting pressure his political foes will most surely put on him, the country could spiral into political chaos and revert to the old ways of doing business.

To survive 2006, Mr Yudhoyono must deliver on two critical fronts - keep the economy growing fast enough to create new jobs and employment for the 40 odd million Indonesians who are still without work and continue the fight against corruption.

Whether he can manage both given that he will need the support of the economically powerful Chinese community who feel most at loss in the current transition period remains to be seen.

Zorobabel

June 17th, 2005, 12:38 AM

Indonesia May cement consumption up 14 pct y/y

JAKARTA, June 16 (Reuters) - Indonesia's cement consumption, an indicator of economic activity, rose 14 percent by volume in May from a year earlier, the country's largest cement maker said on Thursday.

State-controlled PT Semen Gresik Tbk , 25.5 percent owned by Mexican cement giant Cemex SA , said Southeast Asia's largest economy used 2.70 million tonnes of the building material last month, up from 2.37 million tonnes a year before.

Domestic sales of Semen Gresik alone rose 13.6 percent to 1.23 million tonnes. Including exports, total Gresik sales rose 9.7 percent to 1.42 million tonnes, the firm said on its Web site (www.semengresik.com).

The Semen Gresik group has capacity to produce 16 million tonnes a year. Last year, it produced 15.6 million tonnes -- nearly half total national output.

Last year, Indonesia consumed 30.04 million tonnes of cement, up from 27.54 million tonnes in 2003. Analysts and industry executives expect demand for cement in the country to increase by 5-10 percent this year.

Alvin

June 18th, 2005, 07:31 AM

Auto parts makers eye RI: Govt
The Jakarta Post, Jakarta

Indonesia's promising automotive sales outlook along with the country's positive economic growth and current stable political environment have persuaded some Japanese automotive manufacturers to commit themselves to setting up component plants here, the Ministry of Industry says.

According to the ministry, the pledges were made during industry minister Andung A. Nitimihardja's visit to Nagoya from June 5 to June 10, where the manufacturers said they had noticed improvements in the infrastructure in industrial estates, as well as the investment climate and business licensing procedures in Indonesia.

In a release issued on Friday, the Ministry of Industry said that Suzuki would make Indonesia its worldwide export production base for the APV minivan.

Suzuki -- which has teamed up here with PT Indomobil Sukses Internasional Tbk -- plans to increase its car production from 120,000 units last year to 200,000 units this year.

The Indonesian Automotive Manufacturers Association (Gaikindo) has said it expects to see sales this year increase to 550,000 units compared to last year's 483,000.

To support its manufacturing activities here, Suzuki has brought 30 small- and medium-sized components suppliers to Indonesia to study the possibility of investing here. Suzuki will also build a supporting industrial estate near its plant.

Three Japanese firms visited by Andung -- engine component maker Hamana Parts Industry Co., structural and body parts maker Bellsonica Co. and plastic components maker Sankei -- have all confirmed their interest in investing here, according to the ministry.

In the lucrative motorcycle market -- where five million motorcycles are expected to be sold this year -- Suzuki, Yamaha and Honda had shown interest in increasing production capacity.

The release said, Suzuki would increase its production output from 800,000 units last year to 1.2 million units this year and two million next year, with a corresponding investment of US$200 million.

Yamaha, meanwhile, would open a second plant in January 2006, which would have a production capacity of 600,000 units per annum based on an investment of $80 million.

At least 80 Indonesian workers were currently undergoing training in Japan in preparation for the opening of the new plants.

Motorcycle market leader Honda will open a third, US$100 million plant in October with a production capacity of one million units.

As for motorcycle components manufacturers, they were set to invest $70 million to support Honda's expansion, the release said.

Alvin

June 20th, 2005, 04:08 PM

Monday June 20, 4:49 PM
Indonesia to Prepare Concept for Asean Cocoa Contract
JAKARTA, June 20 Asia Pulse - Indonesia will prepare the concept for Asean Cocoa Contract as a form of cooperation among Asean member countries that are facing discrimination in import duties imposed by China and Europe.
Zulhefi Sikumbang, the general chairman of the cacao association, said Indonesia will host the 8th meeting of Asean Cocoa Club on June 21-22 in Bali to be attended by Malaysia, Singapore, Thailand, Vietnam, the Philippines and Brunei.

The meeting will discuss Asean cocoa cooperation, research to eliminate cocoa disease and to prepare quality standards for that commodity.

Zulhefi said Indonesia will raise the issue of discrimination in import duties especially by the European Union against Asean cocoa.

The European Union imposes 8 per cent-12 per cent import duties on cocoa from Asean against zero per cent on the same commodity from Africa.

(ANTARA)

Alvin

June 20th, 2005, 04:11 PM

INDONESIA: Proton Wira assembly about to start
20 Jun 2005
Source: just-auto.com editorial team

Malaysia’s first national automaker, Perusahaan Otomobil Nasional (Proton), is about to start car assembly in Indonesia at a new plant in the Cikarang industrial park, some 30 miles (50km) east of Jakarta.

Through PT Proton Edar Internasional Indonesia (PEI), which is a 95%-owned subsidiary of Proton Edar Sdn Bhd, the Malaysian car maker is said to have invested around $US35 million in building the assembly plant and related distribution operations, according to local sources.

PEI’s president, Safiun is quoted as saying that CKD kits have begun to arrive in Indonesia and that assembly is imminent. The plant will initially build the Wira compact sedan, which will be supplied to taxi operators, but the company is also contemplating assembly of other models for private motorists in the future.

Demand for new and replacement taxis is very high at present, as the country’s recovery from the 1997-987 Asian crisis continues to accelerate. There are thousands of old pre-crisis taxis still operating on Indonesia’s roads in dire need of replacement. Also, taxi fares - which are regulated by the local government, were hiked by around 35% in March. The prospects for taxi operators have therefore increased significantly despite the sharp rises in fuel prices locally. The main car models currently supplied to taxi operators are the Toyota Limo (basically the Vios imported from Thailand) and the Hyundai Accent, assembly locally from CKD kits imported from South Korea.

The new assembly plant, incorporated as PT Proton Tracoma Motors, is a joint venture between Proton Holdings Bhd and Malaysian parts supplier Tracoma Holdings Bhd, each with 51% and 49% of the equity respectively. The plant is said to have a production capacity of 50,000 units per year and initial orders for 5,000 Wiras.

The plant is expected to assemble the Gen2 and the Arena passenger cars at a later date, according to sources close to the company – including for export to countries such as Thailand and the Philippines.

There is a lot of scepticism regarding Proton’s low key return to Indonesia. The Malaysian firm supplied its aged Saga model to taxi firms in Indonesia in the mid-1990s and its image among consumers is currently very poor. There will need to be significant investment in marketing and brand re-building if Proton is to succeed in this country.

Proton is facing intensifying competition in its home market, with the Malaysian government committed to a gradual easing of market protectionism over the next several years. With limited prospect for volume growth at home, the company is being forced to improve its prospects in overseas markets.

Tony Pugliese

sanhen

June 20th, 2005, 06:22 PM

Proton market is strugling right?

Alvin

June 23rd, 2005, 11:02 AM

Thursday June 23, 02:52 PM

Investment Growth In Indonesia Predicted To Rise 28pct

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JAKARTA, June 23 Asia Pulse - Investment growth in Indonesia in 2005 is expected to reach 28 per cent, compared with 25 per cent of GDP (Gross Domestic Product) in 2004, Capital Investment Board (BKPM) Chairman M Luthfi said here Wednesday.

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"During the first quarter of 2004, the value of approved investment applications climbed steadily to reach US$2.94 billion, but during the corresponding period in 2005, the figure went up to almost US$5 billion," Lutfie told a hearing with the House of Representatives` commission on trade, industry and investment.

Lutfie said the development reflected positive sentiment for the new government, with economic growth in the first quarter of 2005 recorded at 6.35 per cent, year-on-year.

"Of the total economic growth of 6.35 per cent, consumption contributed only 3.22 per cent, with the rest coming from investment. This is good," Lutfie added.

Asked about the policy to cut the board's function and authority under Presidential Decree no. 11/2005, he said the most important thing was to improve BKPM services to the public.

Earlier in the hearing, head of the House commission VI, Khofifah Indar Parawansa, said BKPM would have narrower authority with the issuance of Presidential Decree no.11/2005.

A legislator of the Justice Prosperous faction (PKS), Zulkiefli Mansyah said that BKPM's function as a promotional board did not mean it could not play a bigger role.

"When the BKPM functions as a promotional board, it can perform better than before," Zulkiefli said.

(ANTARA)

Ara

June 23rd, 2005, 12:19 PM

Proton market is strugling right?
It's not a suprise. The quality of their cars is not that good. Too heavy on the petrol.

David-80

June 23rd, 2005, 02:36 PM

Btw, BBC business asia will show a special report about Indonesia. It will be showing How Investment is now back in Indonesia, the former asian economic tiger. The show will air next week.

cheers

Alvin

June 23rd, 2005, 04:12 PM

Btw, BBC business asia will show a special report about Indonesia. It will be showing How Investment is now back in Indonesia, the former asian economic tiger. The show will air next week.

cheers
can you tell me the exact time, david? thanks.

Alvin

June 24th, 2005, 06:36 AM

Barclays Capital opens office here
JAKARTA: Barclays Capital, the investment banking division of Barclays Bank Plc, officially opened an office here on Wednesday evening.

"The opening of the new Barclays Capital Jakarta office is a clear signal of our firm commitment to Indonesia, which we view as an important market for us in Asia Pacific," Robert Morrice, chairman and chief executive of Barclays Capital in Asia Pacific, said in a release.

British Ambassador to Indonesia Charles Humfrey, who attended the opening ceremony, said, "The opening (of the office) is another example of the strengthening ties between British and Indonesian business."

Barclays Capital provides corporate, financial institutions, governments and supranational organizations with solutions to their financing and risk management needs. -- JP

Alvin

June 24th, 2005, 12:04 PM

Summary:
- Minister claims China will invest $10 billion in Indonesia this year, in the areas of infrastructure and agriculture. Yudhoyono will visit China soon.
- the infrastructure projects include a toll road bridge to link Java and Sumatra

Jumat, 24/06/2005 11:26 WIB
Cina siapkan investasi US$10 miliar ke Indonesia
oleh : Djony Edward

JAKARTA (Persbiro): Cina telah menganggarkan dana untuk investasi di Indonesia sekitar US$10 miliar sepanjang tahun 2005, ungkap pejabat. Menteri Perekonomian Aburizal Bakrie memaparkan pemerintah Cina dalam pertemuan KTT Asia Afrika beberapa waktu lalu di Bandung, menganggarkan untuk pinjaman kepada pemerintah Indonesia sebesar US$700 juta. "Presiden Susilo Bambang Yudhoyono telah menandatangani nota kesepahaman atas pinjaman itu dengan Presiden Cina Hu Jintao," ungkapnya di Jakarta. Aburizal mengharapkan Cina akan meningkatkan investasinya dan menyusul negara partner terbesar Jepang sebagai investor asing terbesar di Indonesia. Dikatakan Cina sangat tertarik untuk meningkatkan bisnsi di Indonesia khususnya di sektor pertanian dan infrastruktur. Sumber-sumber yang dihubungi Bisnis mengatakan dalam waktu dekat Presiden SBY akan berkunjung ke Cina guna menindaklanjuti rencana investasi Cina disektor pertanian dan infrastruktur tersebut. Di sektor pertanian, Cina akan menginvestasikan dana sekaligus teknologi pertanian guna meningkatkan produksi beras di tanah air. Cina diketahui sudah mampu menanam padi yang siap panen dalam waktu satu bulan, dengan kualitas dan daya tahan yang lebih tinggi dari padi yang dimiliki Indonesia selama ini. Sedangkan disektor infrastruktur, Cina tertarik untuk membangun jalan tol yang menghubungkan ujung Pulau Jawa dengan ujung Pulau Sumatera. Dengan membuat jembatan Jawa-Sumatera ini diharapkan dapat menciptakan sinergi kedua pulau dan implikasi terhadap semakin lancarnya perputaran ekonomi di kedua pulau tersebut. (dj)

David-80

June 24th, 2005, 12:42 PM

can you tell me the exact time, david? thanks.

It usually air from monday to friday at 9:45AM HK time, do you own Foxtel Alvin? You can search on their daily schedule electronic guidelines.

cheers

Alvin

June 24th, 2005, 04:26 PM

It usually air from monday to friday at 9:45AM HK time, do you own Foxtel Alvin? You can search on their daily schedule electronic guidelines.

cheers
yeah I just saw the ad..its airing Monday 9:30 AM, Sydney time. thanks man.

Alvin

June 25th, 2005, 03:03 AM

US Hails Improving Indonesian Business Climate
June 24, 2005 03:57 PM,

Laksamana.Net - Praising Indonesia’s improving business climate, the US government has announced a project aimed at helping Jakarta to attract further investment, create jobs and reduce poverty.

US Ambassador B. Lynn Pascoe on Friday (24/6/05) welcomed the progress made by President Susilo Bambang Yudhoyono’s government in improving Indonesia’s business climate.

Corruption, poor law enforcement, excessive government red tape, poor policy and security concerns have long been viewed as the main impediments to investment in Indonesia. Yudhoyono has vowed to combat corruption to increase foreign investment.

Addressing a meeting of the Consultative Group on Indonesia’s Investment Climate Working Group, Pascoe said Coordinating Minister of the Economy Aburizal Bakrie and other members of Yudhoyono’s economic team have “made a strong start in improving the business climate”.

“We encourage the government to continue to focus on the crucial task of attracting private investment in order to create jobs and increase economic growth. Maintaining an active dialogue with the private sector and the donor community is an important part of this effort,” he said.

The US, Canada and Japan on Friday together announced a G8 (the grouping of eight of the world's leading industrialized nations) pilot project to assist Indonesia in its efforts to improve the business climate.

The initiative, called the Indonesian Business Climate Pilot, comes from the 2004 G8 Sea Island Summit, where G8 countries committed themselves to help foster entrepreneurship in developing countries to increase jobs and economic opportunity by those most in need.

The G8 project will aim to reduce obstacles to domestic trade in goods and services. It will also introduce local governments to regulatory impact assessment to improve their understanding of cost/benefit and to increase private sector participation in the passage of business regulation.

Yudhoyono and US President George W. Bush welcomed the project at their meeting in Washington on May 25.

The US contribution to the pilot will be a $6 million project – ‘Reducing Barriers to Market Entry and Business Operation’ (Program untuk Memperbaiki Ilkim Investasi or PROMIS) – which will be carried out by the Asia Foundation through a grant from the US Agency for International Development (USAID).

“The United States hopes that the G8 pilot will assist the government of Indonesia in its goals to strengthen its business climate, attracting investors, creating jobs, and reducing poverty,” said a statement from the US Embassy in Jakarta.

“By working closely with our G8 partners, we hope to heighten awareness of the importance of entrepreneurship to the development of Indonesia’s economy and realize practical improvements to the business climate, specifically in the area of business registration in regions and municipalities,” it said.

Canada’s participation in the project addresses business registration issues, specifically for small and medium enterprises, and female entrepreneurs in Sulawesi.

Japan’s contribution will assist in the implementation of recommendations in the Strategic Investment Action Plan (SIAP) of the Indonesian-Japanese High Level Joint Forum on Investment.

Yudhoyono and Japanese Prime Minister Junichiro Koizumi earlier this month issued a joint statement “acknowledging the Indonesian objective of doubling the volume of foreign investment to Indonesia from each investing country, including from Japan, over the next five years, [and] decided to cooperate under the SIAP to achieve its objective by improving investment climate in Indonesia with the president’s strong leadership”.

The SIAP covers impediments to investment in the areas of tax, customs, labor, infrastructure, competitiveness and SME development.

Copyright Theft & Illegal Logging
US and Indonesian trade officials met in Washington earlier this week to discuss intellectual property rights and investment, as well as efforts to combat corruption and illegal logging in Indonesia.

Held over Monday and Tuesday, the talks were part of a regular dialog under a bilateral Trade and Investment Framework Agreement, which could lead to a free trade pact with the US. The two sides had held similar talks in early April and agreed to continue discussions at a third meeting later this year.

The talks were led by Barbara Weisel, assistant US Trade Representative (USTR) for Southeast Asia and Pacific affairs, and Halida Miljani, special assistant to Indonesian Trade Minister Marie Pangestu.

According to a USTR press release, the meeting was “extremely constructive”, addressing a wide range of bilateral and regional issues.

“The bilateral agenda included discussion about work under a joint action plan to improve intellectual property protection in Indonesia. They also discussed addressing market access issues related to customs and agriculture and measures to improve Indonesia's investment climate, including the government's anti-corruption campaign, for which the U.S. Government expressed its strong support,” said the release.

“The two sides discussed the possible pursuit of an understanding to combat illegal logging, which would establish a framework for cooperation to better protect Indonesia's timber resources and sensitive habitats from illegal logging,” it said.

Weisel and Miljani also considered trade capacity building that could support the joint efforts to enhance bilateral trade and investment relationship.

Two-way trade between the US and Indonesia totaled $13.5 billion in 2004, up 12.5% over the previous year. Indonesia is part of the 10-member Association of Southeast Asian Nations, which collectively is fourth largest market of the US.

Alvin

June 25th, 2005, 12:31 PM

RI economic reform on track, World Bank says

Zakki P. Hakim and Urip Hudiono, The Jakarta Post/Jakarta

The Consultative Group on Indonesia (CGI), a grouping of major foreign donors, was satisfied with the way Indonesia's economic reform was going, especially on efforts to improve the investment climate, a World Bank executive says.

Citing the reform process as "on track", Vice President Jemal-ud-din Kessum said on Friday that, "The government is very committed to improving the business climate, we have seen strong anti-corruption efforts recently."

He was speaking at a press briefing after a CGI mid-year meeting at the Borobudur Hotel. Aside from the World Bank, the CGI was also represented by Ambassadors of the United States, Japan, Canada and Britain, who also represented the European Union.

"I am quite satisfied with the direction and pace to reform business climate, but there are still challenges that the government needs to face," he said, adding that the government must provide better strategy or coordinated policy environment conducive to private investment.

Kessum did not provide detailed examples of the progress, but a presentation of an Investment Climate Monitoring Survey at the meeting provided some clues. The survey was initiated by the World Bank, implemented by the University of Indonesia's Institute for Economic and Social Research (LPEM-UI) and funded by the Netherlands government.

The words of encouragement come amid critics at home over the relatively slow pace of economic reform. Investment has been held back in part by a high cost economy due to rampant corruption.

The open unemployment rate, for instance, continued to rise to 9.86 percent last year despite the country enjoying economic growth of 5.1 percent.

"Speaking for the World Bank and also for the members of the CGI, we would prefer to see a systematic approach to this (improved investment climate) that ensures quality investment for the better public interest, rather than a hasty approach that leads to poor quality investment," he said.

Elsewhere on the survey results, it is noted that corruption has dropped sharply, as bribes to government officials as a share of production cost declined from 10.8 percent in 2001 to 6.4 percent in the first semester of this year from the corresponding period last year.

M. Chatib Basri of LPEM-UI said that competition among local administrations to attract investment had apparently reduced informal or illegal fees demanded by local officials.

"Decentralization has been seen as only bringing problems, but now we can see some real benefits out of it," Chatib, who is also an advisor to Coordinating Minister for the Economy Aburizal Bakrie.

However, as there was no such competitive pressure at the national level, the survey revealed that inefficiency and corruption remained a major problem in customs and in the tax office.

The survey, involving 600 medium and large manufacturing firms in five major cities, showed that 82 percent of them have to make informal or illegal payments in their interactions with the customs. The informal fee amounted to 2.3 percent on average of their import value, recording a total loss of as much as $800 million annually, it said.

On value-added tax refunds, 57 percent of respondents said that they had to make informal payments and negotiate with tax officials in order to claim a VAT refund.

The survey also said it took five months to receive the refund, with respondents only receiving on average 87 percent of the net amount claimed.

Photo -- Page 13

Alvin

June 27th, 2005, 03:33 PM

Indonesia July oil product imports to jump 42 pct
SINGAPORE, June 27 (Reuters) - Indonesia's oil product imports by Pertamina will surge 42 percent to 10.73 million barrels in July versus this month, taking purchases to the highest level in three months, industry sources said on Monday.
The increase follows weekend news that Pertamina, whose cashflow problems forced it to scale back imports sharply in June, had received nearly $1 billion from the Indonesian government to cover a fuel-subsidy reimbursement.

"I think we can safely say that the Indonesians are back in the market," a Singapore-based trader said. "The volume is quite comparable though still somewhat less than what they bought before they had the cashflow problems."

State-owned Pertamina cut back imports to just 250,000 barrels per day (bpd) in June, nearly 200,000 bpd less than a March peak, as its cash flow was squeezed by the widening gap between record crude oil prices and low, state-set retail prices.

OPEC member Indonesia is forced to import oil products as its domestic refineries do not produce enough fuel to satisfy demand.

The refiner, Asia's largest buyer of diesel, bought 7.36 million barrels of middle-distillates for July, up 40.5 percent from June and the highest monthly total since April. ADVERTISEMENT

That included 5.8 million barrels of gas oil, 1.2 million barrels of kerosene and 363,000 barrels of jet fuel.

The refiner also bought 3 million barrels of gasoline, up from 1.9 million barrels in June, including 2.4 million barrels of 88-octane and 600,000 barrels of 92-octane, the sources said.

"I think they got the money pretty late in the month and there were some prompt requirements that they could not fulfil despite issuing tenders for them several times," said the trader.

Pertamina had to cancel tenders for two 92-octane cargoes because suppliers were unable to meet the delivery dates.

The two cargoes, a 200,000-barrel parcel for July 1-3 delivery to Balikpapan and a 100,000-barrel lot for July 4-6 delivery to Dumai, are expected to be retendered.

The refiner also bought two 140-centistoke fuel oil cargoes, totalling 370,000 barrels, for July 15-19 and July 23-27 loading from Singapore.

The purchases came after Pertamina President Director Widya Purnama said the company will boost its oil products stock to 18.5 days of demand from the existing 17.2 days by the end of June. The company aims to have stocks to meet 22 days of demand.

However, the purchases are still short of the refiner's stated purchase volume of 11.4 million barrels for July.

On Saturday, Indonesia's Finance Ministry announced that it had paid $963.5 million to Pertamina to cover fuel subsidies for May and for 2003 still owed to the company.

A Pertamina official said earlier this month that a more steady cash flow should be established once parliament passes a new budget, nearly doubling the amount set aside for subsidies. That is expected to happen later this week.

The Indonesian rupiah has been pressured by heavy dollar buying by Pertamina to pay for oil imports. The refiner buys an average of about $800 million a month to finance its imports.

The rupiah was trading at 9,660 per dollar on Monday after falling to a three-year low of 9,800 in April.

Alvin

June 27th, 2005, 04:28 PM

Monday June 27, 05:53 PM

CMA, Maersk Eye US$827 MLN Port Project West Of Jakarta

JAKARTA, June 27 Asia Pulse - France's Compagnie Maritime d'Affretement (CMA) and Denmark's Maersk Line have indicated interest in building US$827 million international port project in Bojonegara, Banten, around 60 kilometers west of Jakarta.

The port project is designed to take part of the load off Jakarta's Tanjung Priok port, the country's largest seaport.

Transport Minister Hatta Rajasa said the two international shipping companies have discussed the plan with him.

The government plans to hold tender to select the contractor to build the port in three phases until its completion scheduled in 2025, Hatta said.

He said a Malaysian shipping line has also indicated interest in taking part in building the project.

(ANTARA)

Alvin

June 27th, 2005, 04:59 PM

ASIAN BUSINESS

A Whiff Of New Money
President Yudhoyono has Indonesia growing again, and investors are back. Can he keep up the momentum?

Indonesia is a society on edge. Security guards brandish automatic weapons in front of all the Jakarta business hotels, poised to ward off potential terrorist attacks. Or check out the headlines: Gas and power shortages have surfaced in East Java because cash-strapped state oil giant Pertamina can't afford to import enough fuel, and the nation's vast energy assets have been terribly managed. In rural Aceh Province, home to a violent separatist movement, life is a struggle in the wake of the tsunami last December that killed 128,000 Indonesians and left 500,000 homeless. Advertisement

Yet behind these grim realities, you sense something more in this sprawling archipelago: the scent of money. The Jakarta composite index has risen 65% over the past year, and the economy is growing at its fastest clip since 1996, up a surprising 6.4% year-on-year in the first quarter. Foreign direct investment commitments, which had collapsed after the fall of Suharto in 1998, have nearly doubled, to $5.5 billion, in the first four months of the year, vs. the same period in 2004. A consumer spending revival, coupled with robust global demand for palm oil, coal, tin, and apparel, is fueling growth. "Whoever puts their foot in here is going to make money over the next three to five years," says Henk Mahendra, Jakarta-based president director of Orient Technology Indonesia, which on May 30 signed a $250 million government contract to build and operate a new international port in Sumatra.

The new optimism and robust economic numbers owe much to the election of President Susilo Bambang Yudhoyono. The retired-general-turned-political-reformer, who earned a PhD in economics last year at the age of 55, took power in October. He beat weakened incumbent Megawati Sukarnoputri in the first direct general election in the nation's history. Yudhoyono has won international praise for his response to the tsunami and his blunt talk about the country's problems, including terrorism and human rights abuses by the military. But what really has the markets smoking is a five-year, $145 billion spending plan he unveiled in January to upgrade Indonesia's creaky infrastructure -- everything from a $178 million airport extension in Jakarta to a $1.5 billion gas pipeline. Cash-strapped Indonesia can ill afford such a massive public spending program, but Yudhoyono says foreign investors will contribute at least $90 billion, then lease the facilities out to cover the costs and make a profit.

Yudhoyono has also made ending Indonesia's endemic graft a personal crusade. The country has been ranked the most corrupt in Asia for four years running, according to Hong Kong-based Political & Economic Risk Consultancy Ltd. That touches a raw nerve with voters. In an interview with BusinessWeek, Yudhoyono said he received 5,000-plus complaints about corruption and red tape when in mid-June he invited Indonesians to call him on his personal mobile-phone number, which he made public. His phone soon crashed, but he got the message: If Indonesia doesn't clean up its act, "we will lose the battle to attract foreign capital and stimulate our domestic economy," he said.

Admittedly, Indonesia enters that battle with some serious handicaps. The nation has been hit by two major al Qaeda-inspired bombings since 2002. And red tape has made Indonesia an expensive, frustrating place to do business despite its large labor force and wages of roughly $80 per month for factory jobs. Its port-handling fees are the highest in Southeast Asia. And foreign businesses must wait about five months to get a license to operate in Indonesia, vs. one month in Thailand and Malaysia, according to the World Bank.

Yudhoyono is committed to changing all that during his five-year term. State money is already wending its way through the economy, as the government has signed off on the first of some $22 billion in infrastructure deals it is expected to approve in 2005. Yudhoyono is promising to deliver 6.6% annual growth -- about what Indonesia needs in order to create jobs for the 2.5 million young people who enter the labor force every year. Otherwise, he may not meet his goals of reducing the jobless rate from 9.5% to 5.1% and pulling half of the 38 million poorest Indonesians above the poverty line.

Some Indonesia-watchers say Yudhoyono may have a tough time meeting those targets. Morgan Stanley (MWD ) economist Daniel Lian is forecasting growth of just 5.4% this year, with government investment accounting for four-fifths of that. It will take a steady flow of foreign investment into all sectors of the economy to give Indonesia the "structural lift" it needs, Lian figures.

The good news is that Indonesia has jumped onto the foreign investment radar screen. Yudhoyono has met with investors to promote the country and has pressed the bureaucracy to speed up license approvals. That has paid off in deals. Malaysia's Maxis Communications ponied up $100 million for Lippo Telecom in February, while Hong Kong's Hutchison Telecom (HUWHY ) spent $120 million for mobile carrier Cyber Access Communications in March. That same month, Philip Morris International Inc. agreed to a $5.2 billion takeover of Indonesia's No. 3 cigarette maker, Hanjaya Mandala Sampoerna.

BARELY MAKING ENDS MEET
Yet keeping that kind of momentum going forward will be hard. Yudhoyono enjoys political popularity, but his legislative clout is limited. His coalition controls less than half of the Parliament, and few in the opposition like Yudhoyono's strategy of kick-starting the economy with big-ticket infrastructure projects when government money is tight and many ordinary Indonesians are barely making ends meet. "The quality of the growth is the big question," says Rama Pratama, a Parliament member from the opposition Islamic Justice & Prosperity Party. And if the economy doesn't grow fast enough to improve the lives of ordinary Indonesians, Yudhoyono's halo might start to tarnish. "I am afraid people's patience will end, and then we will have trouble," says former President Abdurrahman Wahid, a longtime rival of Yudhoyono.

At the same time, another big terrorist attack could unwind the precious economic gains -- a possibility Yudhoyono is keenly aware of. "We are fighting by conducting massive intelligence and police operations to find the terrorist cells," he says, though he concedes that the threat of an attack is "very real." Given everything the country has been through in recent years and the challenges it faces ahead, plenty of Indonesians are desperately hoping Yudhoyono can bring them a run of prosperity and stability -- and perhaps even let the security guards relax their white-knuckled grip on those rifles.

By Brian Bremner and Assif Shameen in Jakarta

Zorobabel

June 29th, 2005, 05:02 AM

I knew it was not smart that the government assumed a price of $45/barrel for oil in the revised budget. As such, it looks like they will have a deficit of over $2 billion for the subsidy budget, which is roughly equivelant to 1% of the GDP. The whole system, I would say, is very "creeky." There is no way the rupiah can strengthen when the government is subsidizing fuel so heavily and at the same time importing billions of dollars worth of it from other countries. I remember one economist group expected the rupiah to gradually weaken over the next few years to around 12,000 to the dollar. It seems like they were right. However, the rest of their report was very rosey.

--------

Indonesia fuel subsidies can go over 100 trln rupiah

JAKARTA, June 28 (Reuters) - Indonesia's fuel subsidies can go over 100 trillion rupiah ($9.6 billion) due to high prices and fuel scarcity in parts of the world's fourth most populous country, its president said on Tuesday.

"Regarding the fuel scarcity with the increase of prices that is so high, the fuel subsidy will grow and can reach more than 100 trillion rupiah, more than what is targeted," President Susilo Bambang Yudhoyono told reporters.

"This will burden the budget very much but the fuel scarcity cannot continue. Our imports became high with the current (world) prices," he said.

In a newly revised budget, Jakarta had nearly doubled its estimate of fuel subsidies this year to 76.5 trillion rupiah ($7.9 billion).

Yudhoyono also said the government might take new steps to increase domestic oil production.

"We are considering a new policy to increase domestic production by intensifying oil deposits that we can still explore," he said.

Indonesia's crude output fell to 936,000 bpd in May, its lowest in 34 years, versus its Organization of the Petroleum Exporting Countries (OPEC) quota of 1.425 million bpd.

Jakarta is considering withdrawing from the cartel after becoming a net importer of crude several months last year, although it managed to keep exports about 45,000 bpd above imports in the first quarter of this year.

Yudhoyono also said Indonesia should use fuel more efficiently and seek new energy sources to lower oil dependency

Indonesia joins other Asian nations, from Thailand and the Philippines to Japan and China, in trying to curb energy usage, the only means they have to ease the pain of high fuel prices.

Unlike most OPEC members, who are growing richer with oil topping $60 a barrel, Indonesia suffers as the central government subsidises the price of retail fuels, more than a quarter of which are imported at international cost.

The reluctance of Jakarta and many other Asian nations to raise domestic prices by scrapping subsidies has allowed demand to grow unchecked by the impact of higher costs, adding fuel to a market already fired up about rising Asian consumption.

Indonesia raised prices by an average 29 percent in March, but gasoline is still a third of the cost in Singapore and diesel prices are less than half. ($1=9,660 rupiah)

Fir3blaze

July 1st, 2005, 12:38 AM

Taken from www.jawapos.co.id

Kamis, 30 Juni 2005,
RI Respons Positif Tawaran Gambia

Untuk Kelola Blok Migas
JAKARTA - Pemerintah Gambia secara resmi menawarkan pengelolaan blok-blok minyak yang ada dinegara tersebut pada pemerintah Indonesia. Hal ini ditandai dengan pembicaraan yang dilakukan dengan Menteri ESDM Purnomo Yusgiantoro.

"Jadi kebetulan Presiden Gambia tersebut merangkap sebagai Menteri Perminyakan sehingga ketika kunjungan ke Gambia, beliau mengemukakan penawaran tersebut pada delgasi Indonesia yang dipimpin olah Presiden SBY," ujar Purnomo Yusgiantoro, Menteri Energi dan Sumber Daya Mineral, di Jakarta, kemarin.

Menurut Purnomo, pemerintah merespons Presiden Gambia Alhaji Dr Yahya AJJ Jammeh yang juga sebagai Menteri Perminyakannya. "Kami akan sampaikan kepada para pengusaha perminyakan Indonesia. Penawaran tersebut terbuka baik untuk pihak Pertamina ataupun perusahaan minyak nasional lainnya," lanjutnya.

Lebih lanjut Purnomo mengemukakan bahwa pemeritnah Gambia telah melakukan studi kelayakan sehingga blok-blok yang memiliki cadangan tersebut terlihat menarik. "Jadi Presiden tersebut sudah membuat gambaran-gambaran mengenai blok migas seperti yang biasa dibuat oleh pak Iin (dirjen migas, tersebut)," sambungnya.

Dikatakan Purnomo bahwa hal itu terkait dengan upaya pemerintah untuk meningkatkan proses eksplorasi blok-blok migas baru baik domestik maupun asing. "Eksplorasi blok migas baru tersebut menjadi salah satu prioritas pemerintah untuk meningkatkan produksi minyak saat ini," sebutnya.

Sementara ketika ditanya mengenai tren rencana negara OPEC untuk menaikkan produksi sebesar kuota sebesar 500 ribu barel sedang dikaji. "Kami sedang mengkaji permasalahan tersebut, ini terkait dnegan kenaikan harga minyak dunia yang saat ini diatas USD 60 per barel," ungkapnya.

Langkah menaikkan kuota tersebut diharapkan bisa meredam terus naiknya harga minyak dunia. "Setelah kami mendapatkan hasil rekomendasi tersebtu, akan segera kami kirimkan pada OPEC," terangnya. (iw)

Alvin

July 1st, 2005, 06:35 AM

Full speed ahead for Indonesia's auto industry
By Bill Guerin

JAKARTA - Indonesia's automotive industry is booming. Easily obtainable credit and low interest rates, coupled with a strong increase in consumer lending by banks and an abundance of new, low-priced models assembled locally, have fueled a car boom that shows no signs of slowing down.

Figures from Gaikindo (the Association of Indonesian Automotive Manufacturers) show that around 483,000 cars were sold in 2004, up 36% on 2003, with sales growing at a pace second only to China. Indonesia is now the third-largest car market in Southeast Asia after Thailand, where an estimated 620,000 cars were sold, and Malaysia, with some 485,000 cars sold last year. This year's first-quarter car sales increased by 38.5% to 93,627 from 67,595 in 2003 and Gaikindo predicts around 530,000 units will be sold by the end of the year. Increased demand could see sales reach 1.3 million cars a year by 2010.

Poor infrastructure, legal uncertainty and a lack of tax incentives have been blamed for declining foreign investment in the sector, but still it remains a key pillar of the economy with investments totaling more than US$7 billion and generating employment of over 300,000. The economy expanded by 5.1% last year, mainly spurred by consumption, and is expected to continue on track, spurring hopes of continued demand for cars.

Car manufacturers across the globe are competing in Indonesia, but domestic manufacturers are little more than assemblers for foreign car makers. International players control 90% of the market, with the rest shared by the US, European and Korean imports, the majority from Europe. Like several other regional markets, Japanese manufacturers have the lion's share of sales. In 2004, Japanese brands (Toyota, Mitsubishi, Suzuki, Isuzu, Daihatsu, Honda, Nissan, Hino and Mazda), either locally assembled or imported, accounted for 81.5% of passenger-car sales.

The homegrown automotive giant, publicly listed PT Astra International, is 42% owned by Singapore's Jardine Cycle and Carriage. Astra leads the pack and last year increased its market share to 45% from 41.5% in 2003. The company sold over 483,000 vehicles, including exports, and saw its net income surge to a record high of Rp5.4 trillion ($577.54 million).

Car makers are also expanding their existing production capacity to meet demand and exploit the market potential from the relatively low ratio of car ownership in the world's fourth most populated country. Less than 1 in 35 Indonesians owns a car, compared with 1 in 14 Thais and 1 in 7 Malaysians, suggesting potential for even more growth.

Massive regional market
Another attraction is the opportunity presented by the ASEAN Free Trade Area (AFTA). This was established in January 1992 to eliminate tariff barriers among the Southeast Asian countries and to integrate their economies into a single production base, creating a regional market of over 500 million people with a combined gross domestic product (GDP) of $682.4 billion.

Under AFTA, tariffs were cut, including those on cars, to between 0 and 5% by 2003. Provided a car has a minimum local content of 40% from any Association of Southeast Asian Nations (ASEAN) country, a car maker has to pay just 5% duty when exporting to member countries of the grouping. Kuala Lumpur, however, won a delay and was allowed to maintain protective tariffs on automobile imports until this year to protect its national auto maker, Perusahaan Otomobil Nasional (Proton).

Proton, despite having left an unimpressive footprint in Indonesia's market in the mid-1990s, is moving south again to target not only the domestic market but also to export. A few years ago, the Proton Saga model, well past its sell-by date, attracted only taxi fleet operators. Proton is Southeast Asia's biggest car maker and faces intensifying competition and limited opportunities for volume growth at home. The company is due to start cranking up its Indonesian assembly lines by the end of this month. Proton's plant, at the Cikarang industrial park some 50 kilometers east of Jakarta, has a production capacity of 50,000 units per year, but annual production is projected at 8,000 units initially.

It will assemble CKD (completely knocked down) units of the Proton Wira compact sedan and the Gen2, but may add the Arena model at a later date. The Indonesian-assembled Protons will be more competitively priced than the Malaysian-made units and will qualify for tax breaks under AFTA. Proton is likely to export assembled vehicles to Thailand and the Philippines.

Japanese dominance
Its continuous presence and long experience in sales and distribution help explain why Japanese auto giant Toyota has done so well in Indonesia. In February 2005, Toyota had a 31.7% market share with 13,899 vehicles sold, compared with 10,717 units sold the same period last year. It plans to increase annual production capacity of its Innovative International Multipurpose Vehicle (IMV), the Toyota Innova MPV, from 70,000 vehicles to around 100,000 vehicles by the end of this year. The expansion will set it back around $40 million. In 2006, Daihatsu will invest around $10 million to increase its annual production capacity for the hot seller Xenia/Avanza, jointly developed with Toyota, from 78,000 vehicles to 114,000 vehicles. The model sells as the Xenia under the Daihatsu brand and as the Avanza under the Toyota brand. Nissan plans to more than triple its annual capacity in Indonesia by 2007, from 12,000 units to 40,000, and plans to mass-produce a global car in Indonesia and other plants in Asia for markets in Asia, the Middle East and Central and South America. Figures released by PT Indomobil, one of the country's largest automobile distributors, show that sales of Nissan cars, only one of the 12 car brands marketed by Indomobil, accounted for 12.5% of the company's 96,000 vehicles sold last year.

Indomobil also distributes for Suzuki, whose cars accounted for 83% of total sales. PT Indomobil Suzuki International (ISI), Suzuki's Indonesian car manufacturing joint venture, last month launched the export campaign for its new APV multipurpose, compact minivan. The vehicle jointly developed by ISI and Suzuki went on sale in Indonesia in September 2004. Monthly domestic sales volumes have since averaged at around 2,400 units. There are plans to make Indonesia the production base for worldwide sales of the vehicle, according to Industry Minister Andung Nitimihardja.

South Korean's Hyundai and KIA are also considering setting up a production base in Southeast Asia to take advantage of AFTA, though there has been no confirmation yet that Indonesia has been shortlisted. Honda assembles the CR-V sports utility vehicle (SUV), Stream MPV and Jazz compact cars in Indonesia. The Stream is exported to Thailand. Similarly, BMW assembles most of its 3 Series and 5 Series sedans in Indonesia and exports the BMW 530i to Thailand.

Odd man out
It's easy to see why the car makers in Asia are optimistic. Emerging markets present the main opportunity for long-term car sales growth and will boost the global car market to over 60 million units by 2009. Prospects for car market growth in Asia are particularly positive and the Pacific Rim countries are forecast to make an additional 5 million units for the world market by 2009. China alone accounts for around 80% of that increase and annual car sales there are expected to top 6 million units by the end of the forecast period.

None of the member states has a market big enough to give the economies of scale needed to justify major manufacturing investments. But the complete liberalization of the region's automotive sector by the full-scale implementation of AFTA cranks up the stakes. ASEAN states have agreed to remove import duties altogether by 2010 for the five founding members of the grouping (Indonesia, Malaysia, the Philippines, Thailand and Singapore) and by 2015, for new members Brunei, Vietnam, Laos, Cambodia and Myanmar as well.

As trade barriers tumble and car makers shut down redundant plants to move production to where it can be done most profitably, the ASEAN market, with 10 countries and around 511 million consumers, becomes even more appealing. Ford has production facilities in Malaysia, Thailand, Vietnam and the Philippines but only has a distribution network in Indonesia. It focuses on sales and after-sales service. Ford (Thailand) exported 20,000 vehicles to 130 countries from the Kingdom, mainly as a result of the AFTA agreements.

Stephen Biegun, vice president of the Detroit-based auto giant's international government affairs division said, "We are betting on the ASEAN Free Trade Area model and also on trade relations among ASEAN nations. We are the biggest cheerleader for ASEAN economic integration because we are the biggest beneficiary," admitted Biegun. This will herald stiffer competition for existing players, but Indonesians who can afford a car will still have plenty of choice for a long time to come.

Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 19 years as a journalist. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.

(Copyright 2005 Asia Times Online Ltd. All rights reserved. Please contact us for information on sales, syndication and republishing.)

Zorobabel

July 1st, 2005, 07:28 AM

FOCUS: Indonesia Coffee Sales Pick Up Amid High Prices
Thursday June 30, 2005, 8:51 pm

By Shahira Yusoff

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Tighter supply in other coffee-producing countries and a weak domestic currency have given the Indonesian coffee market a much-needed boost, according to industry analysts.

Higher international prices and the weak rupiah is already encouraging Indonesian producers to supply all the coffee they can in the near term, analysts said.

"The market is bustling, both demand and supply are equally strong," said a Jakarta-based trader with a leading Indonesian coffee exporter.

"Demand is strong from local roasters and speculators and there's also some spillover of demand due to limited supply in Vietnam, which has forced buyers to look for alternative sources or supply to meet their requirements," he said.

Buyers of Vietnamese coffee, particularly the U.S. and Japan, have increasingly faced a supply crunch in recent months after growers in Vietnam began holding stocks back, expecting prices to rise further.

Hoarding exacerbated the already tight supply in Vietnam, the trader said.

According to the Vietnam Coffee and Cocoa Association, or Vicofa, during the October 2004-September 2005 harvest season, Vietnam - the world's leading producer and exporter of robusta coffee - produced only 12 million 60-kilogram bags, or 720,000 metric tons of coffee, down from 14.2 million 60-kg bags produced in the previous year.

"But since Indonesia is in the midst of its harvesting season, supply is there," the trader cited.

Indonesia is the world's fourth-largest coffee producer after Brazil, Colombia and Vietnam and the world's second-largest robusta producer after Vietnam.

Robusta constitutes 85% of domestic coffee output, with Lampung, south Sumatra and Bengkulu provinces accounting for 75% of the total. The remaining 15% is arabica grown in northern Sumatra, East Java and South Sulawesi.

"Arrivals have been steady to higher, as the harvest is at its peak," said a Lampung-based trader.

He noted that daily arrivals now range from 1,000 tons to 4,000 tons compared with around 500-600 tons last month.

"With prices so high, farmers welcome this much-needed attention (demand)," he said.

"Indonesian farmers were also holding back stocks earlier, waiting for (prices) to go higher, but prices are good now, who wouldn't want to sell?" he added.

Sales Strengthen On High Coffee Prices

Higher coffee prices have been the main factor driving sales amid concerns over lower output in Brazil and Vietnam, said Benny Prakarsa, chief representative of the Indonesian arm of the Geneva-based Socadec S.A.

"Futures prices have rallied almost 60%-70%. Market sentiment is bullish on the back of a drawdown in global robusta stocks," he said.

In its June monthly report, the London-based International Coffee Organization forecast 2005-06 world coffee output at 106 million 60-kg bags, down from 113.98 million 60-kg bags in the previous year.

Dry weather in Vietnam's main producing areas continues to fuel speculation about the size of the next crop, said the report.

According to Vicofa, output for the October 2005-September 2006 crop season is expected to fall 30% due to a prolonged drought.

Brazil's July 2005-June 2006 coffee crop has been forecast at 32.5 million 60-kg bags by the Agriculture Ministry's National Commodities Supply Agency, down from 38.6 million 60-kg bags estimated for this year.

Benny said higher international prices helped boost domestic prices "as the Indonesian physical coffee market closely tracks international coffee futures."

On the London International Financial Futures and Options Exchange, the September robusta contract settled at $1,231/ton Wednesday, up 56% from a year ago.

The September contract on the New York Board of Trade was at $1.0645 a pound Wednesday, up from 73.90 cents/lb in the same period in 2004.

In Indonesia, robusta EK1 grade 4, 80 defects, was quoted at $1,130-$1,150/ton Thursday, up from an average $850/ton in 2004.

Offers for Mandheling grade 3 arabica coffee were around $3,400-$3,500/ton, up from $1,900-$2,000/ton during the same period last year.

Weak Rupiah Also Boosting Domestic Prices

The weaker rupiah has meant that farmers stand to earn more in local currency terms even if international prices hadn't gone up, Benny said.

The Indonesian rupiah was trading around 9,750 to the dollar Thursday, down from around IDR9,000 at the end of June 2004, and IDR8,290 at the end of June 2003.

Benny noted that with farmers enjoying better returns because of higher prices, some of the gains could be reinvested to boost yields.

"Hopefully, the profits earned will encourage farmers to reinvest in their plantations and perhaps we can see an improvement in output in the next season," he said.

The country's overall coffee output is expected to be around 450,000 tons in the October 2004-September 2005 crop year, down from an estimated 450,000-480,000 tons last year, said Nuril Hakim, vice chairman of the Indonesian Coffee Exporters Association.

Nuril attributed the decline to prolonged exposure to erratic weather and poor upkeep of the plantations, especially when prices were low.

The U.S Department of Agriculture has estimated this year's crop even lower at 396,000 tons.

-By Shahira Yusoff, Dow Jones Newswires; 65-6415-4086; shahira.yusoff@dowjones.com

-Edited by Denny Kurien

Zorobabel

July 4th, 2005, 07:30 AM

Indonesia Books US$10.3 BLN Trade Surplus, Jan-May

JAKARTA, July 4 Asia Pulse - The country recorded a surplus of US$10.31 billion in its foreign trade in the first five months of this year, widening from US$8.72 billion one year ago.

The Central Bureau of Statistics (BPS) said the country's exports in the first five months of this year were valued at US$33.88 billion, up from US$25.90 in the same period last year.

Non oil/gas exports alone were valued at US$26.56 billion, up from US$19.82 billion.

In May alone exports were valued at US$7.21 billion, up from US$6.79 billion in the previous month .

BPS chief Choiril Maksum said with the performance until May, the country is expected to book exports worth more than US$70 billion this year.

Sielo

July 4th, 2005, 07:30 AM

Around Asia's Markets: Rebuilding lifts stocks to highs in Indonesia
- Naila Firdausi

MONDAY, JULY 4, 2005
Indonesia's key stock index reached an all-time high in the first quarter and came close to another in the second. Some investors expect more records to be set in the third and fourth quarters.

"I like Indonesia," said Bruno Vanier, a fund manager at Edmond de Rothschild Asset Management in Paris. "The economy has good growth and companies have a positive earnings growth outlook."

The optimism reflects an inflow of international aid after the December tsunami and a surge in foreign investment, which may help the country's economy expand at its fastest pace since 1996.

Companies reliant on consumer spending, including Astra International, the country's largest auto distributor, may help set the pace. Construction companies including Indocement Tunggal Prakarsa, Indonesia's second-largest cement maker by sales, also stand to benefit.

The Jakarta Composite index ended last week at 1,138.99, just 1.1 percent below the record of 1,152.60, set on March 22. The earlier peak followed a 38 percent surge, spurred by Susilo Bambang Yudhoyono's victory in September in the country's first direct presidential election.

Last week, the Jakarta Composite rose 0.3 percent amid a 1.2 percent loss for the Morgan Stanley Capital International Asia-Pacific index, a regional benchmark. The composite index has climbed 13 percent this year, compared with a 2.2 percent decline for MSCI's index.

Yudhoyono took power on Oct. 20 and pledged to revive the economy, attract more foreign investment and fight graft. Two months later, a tsunami struck 12 countries, devastating the Indonesian provinces of Aceh and North Sumatra.

An agency created in May to speed up reconstruction in Aceh has approved $2.8 billion of projects to build schools, ports and roads.

The government accepted $5.48 billion of foreign direct investment in the first five months of 2005, the Investment Coordinating Board said last month. That was almost double the amount a year earlier.

Investment from overseas helped the market rebound from a slump in April, when the Jakarta Composite fell to this year's low of 1,019.88. Stocks declined as the government reported that March consumer prices climbed 8.8 percent, the biggest increase since at least 2002, amid rising fuel costs.

Inflation fell below 8 percent in May, and government reports also showed that cement use increased and car sales rose. The benchmark set its second-quarter high on June 20 at 1,147.71, just 0.4 percent from the record.

The index may climb to 1,200 this year, said Rima Suhaimi, president director of ABN AMRO Asset Management Indonesia in Jakarta.

On June 6, the government raised its 2005 economic growth forecast to 6 percent from 5.5 percent, partly because of rising investment. The economy expanded last year by 5.1 percent, the most since 1996.

Domestic demand may increase this year by 6.3 percent, the fastest pace in at least five years, the International Monetary Fund said in March.

"Corporate earnings will grow and the market will attract more investors," Rima said.

Stocks such as Astra and Telekomunikasi Indonesia, or Telkom, will advance as the country's economic growth accelerates and consumer spending grows, Vanier at de Rothschild said.

Astra's shares have surged 34 percent this year. Car sales at the Jakarta-based company climbed 19 percent in May from a year earlier.

Shares of Telkom have risen 6.7 percent. The company's cellular unit, Telekomunikasi Selular, added 25 percent more subscribers this year through May.

Indonesia's key stock index reached an all-time high in the first quarter and came close to another in the second. Some investors expect more records to be set in the third and fourth quarters.

"I like Indonesia," said Bruno Vanier, a fund manager at Edmond de Rothschild Asset Management in Paris. "The economy has good growth and companies have a positive earnings growth outlook."

The optimism reflects an inflow of international aid after the December tsunami and a surge in foreign investment, which may help the country's economy expand at its fastest pace since 1996.

Companies reliant on consumer spending, including Astra International, the country's largest auto distributor, may help set the pace. Construction companies including Indocement Tunggal Prakarsa, Indonesia's second-largest cement maker by sales, also stand to benefit.

The Jakarta Composite index ended last week at 1,138.99, just 1.1 percent below the record of 1,152.60, set on March 22. The earlier peak followed a 38 percent surge, spurred by Susilo Bambang Yudhoyono's victory in September in the country's first direct presidential election.

Last week, the Jakarta Composite rose 0.3 percent amid a 1.2 percent loss for the Morgan Stanley Capital International Asia-Pacific index, a regional benchmark. The composite index has climbed 13 percent this year, compared with a 2.2 percent decline for MSCI's index.

Yudhoyono took power on Oct. 20 and pledged to revive the economy, attract more foreign investment and fight graft. Two months later, a tsunami struck 12 countries, devastating the Indonesian provinces of Aceh and North Sumatra.

An agency created in May to speed up reconstruction in Aceh has approved $2.8 billion of projects to build schools, ports and roads.

The government accepted $5.48 billion of foreign direct investment in the first five months of 2005, the Investment Coordinating Board said last month. That was almost double the amount a year earlier.

Investment from overseas helped the market rebound from a slump in April, when the Jakarta Composite fell to this year's low of 1,019.88. Stocks declined as the government reported that March consumer prices climbed 8.8 percent, the biggest increase since at least 2002, amid rising fuel costs.

Inflation fell below 8 percent in May, and government reports also showed that cement use increased and car sales rose. The benchmark set its second-quarter high on June 20 at 1,147.71, just 0.4 percent from the record.

The index may climb to 1,200 this year, said Rima Suhaimi, president director of ABN AMRO Asset Management Indonesia in Jakarta.

On June 6, the government raised its 2005 economic growth forecast to 6 percent from 5.5 percent, partly because of rising investment. The economy expanded last year by 5.1 percent, the most since 1996.

Domestic demand may increase this year by 6.3 percent, the fastest pace in at least five years, the International Monetary Fund said in March.

"Corporate earnings will grow and the market will attract more investors," Rima said.

Stocks such as Astra and Telekomunikasi Indonesia, or Telkom, will advance as the country's economic growth accelerates and consumer spending grows, Vanier at de Rothschild said.

Astra's shares have surged 34 percent this year. Car sales at the Jakarta-based company climbed 19 percent in May from a year earlier.

Shares of Telkom have risen 6.7 percent. The company's cellular unit, Telekomunikasi Selular, added 25 percent more subscribers this year through May.

Indonesia's key stock index reached an all-time high in the first quarter and came close to another in the second. Some investors expect more records to be set in the third and fourth quarters.

"I like Indonesia," said Bruno Vanier, a fund manager at Edmond de Rothschild Asset Management in Paris. "The economy has good growth and companies have a positive earnings growth outlook."

The optimism reflects an inflow of international aid after the December tsunami and a surge in foreign investment, which may help the country's economy expand at its fastest pace since 1996.

Companies reliant on consumer spending, including Astra International, the country's largest auto distributor, may help set the pace. Construction companies including Indocement Tunggal Prakarsa, Indonesia's second-largest cement maker by sales, also stand to benefit.

The Jakarta Composite index ended last week at 1,138.99, just 1.1 percent below the record of 1,152.60, set on March 22. The earlier peak followed a 38 percent surge, spurred by Susilo Bambang Yudhoyono's victory in September in the country's first direct presidential election.

Last week, the Jakarta Composite rose 0.3 percent amid a 1.2 percent loss for the Morgan Stanley Capital International Asia-Pacific index, a regional benchmark. The composite index has climbed 13 percent this year, compared with a 2.2 percent decline for MSCI's index.

Yudhoyono took power on Oct. 20 and pledged to revive the economy, attract more foreign investment and fight graft. Two months later, a tsunami struck 12 countries, devastating the Indonesian provinces of Aceh and North Sumatra.

An agency created in May to speed up reconstruction in Aceh has approved $2.8 billion of projects to build schools, ports and roads.

The government accepted $5.48 billion of foreign direct investment in the first five months of 2005, the Investment Coordinating Board said last month. That was almost double the amount a year earlier.

Investment from overseas helped the market rebound from a slump in April, when the Jakarta Composite fell to this year's low of 1,019.88. Stocks declined as the government reported that March consumer prices climbed 8.8 percent, the biggest increase since at least 2002, amid rising fuel costs.

Inflation fell below 8 percent in May, and government reports also showed that cement use increased and car sales rose. The benchmark set its second-quarter high on June 20 at 1,147.71, just 0.4 percent from the record.

The index may climb to 1,200 this year, said Rima Suhaimi, president director of ABN AMRO Asset Management Indonesia in Jakarta.

On June 6, the government raised its 2005 economic growth forecast to 6 percent from 5.5 percent, partly because of rising investment. The economy expanded last year by 5.1 percent, the most since 1996.

Domestic demand may increase this year by 6.3 percent, the fastest pace in at least five years, the International Monetary Fund said in March.

"Corporate earnings will grow and the market will attract more investors," Rima said.

Stocks such as Astra and Telekomunikasi Indonesia, or Telkom, will advance as the country's economic growth accelerates and consumer spending grows, Vanier at de Rothschild said.

Astra's shares have surged 34 percent this year. Car sales at the Jakarta-based company climbed 19 percent in May from a year earlier.

Shares of Telkom have risen 6.7 percent. The company's cellular unit, Telekomunikasi Selular, added 25 percent more subscribers this year through May.

Indonesia's key stock index reached an all-time high in the first quarter and came close to another in the second. Some investors expect more records to be set in the third and fourth quarters.

"I like Indonesia," said Bruno Vanier, a fund manager at Edmond de Rothschild Asset Management in Paris. "The economy has good growth and companies have a positive earnings growth outlook."

The optimism reflects an inflow of international aid after the December tsunami and a surge in foreign investment, which may help the country's economy expand at its fastest pace since 1996.

Companies reliant on consumer spending, including Astra International, the country's largest auto distributor, may help set the pace. Construction companies including Indocement Tunggal Prakarsa, Indonesia's second-largest cement maker by sales, also stand to benefit.

The Jakarta Composite index ended last week at 1,138.99, just 1.1 percent below the record of 1,152.60, set on March 22. The earlier peak followed a 38 percent surge, spurred by Susilo Bambang Yudhoyono's victory in September in the country's first direct presidential election.

Last week, the Jakarta Composite rose 0.3 percent amid a 1.2 percent loss for the Morgan Stanley Capital International Asia-Pacific index, a regional benchmark. The composite index has climbed 13 percent this year, compared with a 2.2 percent decline for MSCI's index.

Yudhoyono took power on Oct. 20 and pledged to revive the economy, attract more foreign investment and fight graft. Two months later, a tsunami struck 12 countries, devastating the Indonesian provinces of Aceh and North Sumatra.

An agency created in May to speed up reconstruction in Aceh has approved $2.8 billion of projects to build schools, ports and roads.

The government accepted $5.48 billion of foreign direct investment in the first five months of 2005, the Investment Coordinating Board said last month. That was almost double the amount a year earlier.

Investment from overseas helped the market rebound from a slump in April, when the Jakarta Composite fell to this year's low of 1,019.88. Stocks declined as the government reported that March consumer prices climbed 8.8 percent, the biggest increase since at least 2002, amid rising fuel costs.

Inflation fell below 8 percent in May, and government reports also showed that cement use increased and car sales rose. The benchmark set its second-quarter high on June 20 at 1,147.71, just 0.4 percent from the record.

The index may climb to 1,200 this year, said Rima Suhaimi, president director of ABN AMRO Asset Management Indonesia in Jakarta.

On June 6, the government raised its 2005 economic growth forecast to 6 percent from 5.5 percent, partly because of rising investment. The economy expanded last year by 5.1 percent, the most since 1996.

Domestic demand may increase this year by 6.3 percent, the fastest pace in at least five years, the International Monetary Fund said in March.

"Corporate earnings will grow and the market will attract more investors," Rima said.

Stocks such as Astra and Telekomunikasi Indonesia, or Telkom, will advance as the country's economic growth accelerates and consumer spending grows, Vanier at de Rothschild said.

Astra's shares have surged 34 percent this year. Car sales at the Jakarta-based company climbed 19 percent in May from a year earlier.

Shares of Telkom have risen 6.7 percent. The company's cellular unit, Telekomunikasi Selular, added 25 percent more subscribers this year through May.

Alvin

July 4th, 2005, 02:07 PM

INDONESIA EYES INCREASED CAR PRODUCTION OF 750,000 UNITS IN 2009

Monday July 4, 2005, 8:01 pm

JAKARTA, July 4 Asia Pulse - Indonesia's Industry Ministry predicted that Indonesia's car production will reach 750,000 units in 2009 from 483,283 units in 2004.

This year's production is forecast to reach 550,000 units.

Secretary General of the Ministry Agus Tjahjana said the government will encourage improvement of skills of Indonesian automotive industrialists in design and engineering.

He noted that multipurpose vehicle has continued to dominate production and sales in the country.

The strong market for Multi-Purpose Vehicles has prompted foreign majors such as Suzuki, Toyota and Honda to make the country their production bases for certain models of their products like Suzuki APV, Toyota Innova and Honda Stream, Agus said.

In order to reach the target, the ministry has prepared mid term plan to increase investment in component industry.

(ANTARA)

XxRyoChanxX

July 6th, 2005, 02:48 AM

so is the economy doing much better...or is it still the same?

Zorobabel

July 6th, 2005, 04:18 AM

It's doing better. Starting from a low base, each year it is growing faster and faster, but it is a gradual process. In a few years Indonesia will have one of the faster growing economies in the world.

tata

July 6th, 2005, 05:59 PM

Zorobabel, are you studying economics... I saw your posts, always have deep understanding of economy and market....
I also wonder if you work in a company like Merrill Lynch, Schwab or the likes...

Zorobabel

July 6th, 2005, 07:42 PM

I wish. I'm just a student, but I study economics a lot in my free time. It's a fun hobby.

Zorobabel

July 7th, 2005, 09:16 AM

The Investment Coordinating Board finally released May's data: http://www.bkpm.go.id/bkpm/file_fact/SUMMARY.doc

FDI approvals (new projects, expansion, and status change) from January-May 2005 stands at $5.48 billion. During the same period last year it stood at $2.8 billion.

Domestic investment approvals (new projects, expansion, and status change) from January-May 2005 were Rp 20,864.4 billion, as opposed to Rp 18,470.0 billion in the corresponding period last year.

Overall, investment approvals in the first 5 months were up more than 62% year-on-year.

XxRyoChanxX

July 7th, 2005, 10:36 AM

thanks for the update!

Alvin

July 7th, 2005, 03:30 PM

Someone told me today that a renowned businessman is in talks with Chinese investors to build a US$10 billion bridge to link Java and Sumatra (Merak and Lampung). It will be a DOUBLE DECKER bridge, i.e. will have rail tracks on one level and highway on another. Thanks for the update, Yama.

AP
Foreign Investment in Indonesia Quadruples
Thursday July 7, 7:18 am ET
Foreign Investment in Indonesia Quadruples in Second Quarter, Signaling Rebound

JAKARTA, Indonesia (AP) -- Signaling an economic recovery, foreign direct investment in Indonesia more than quadrupled during the second quarter to US$2.9 billion (euro2.4 billion) from April to June, an economics ministry official said Thursday.
ADVERTISEMENT

The result far outpaced Indonesia's actual foreign investment of US$577 million (euro481 million) during the April-June period in 2004, said Ministry of Economic Affairs staffer Mohamad Ikhsan, citing data from Bank Indonesia, the central bank.

Economic Minister Aburizal Bakrie said the rebound was largely due an improvement in the investment and political climate since the September election of President Susilo Bambang Yudhoyono.

"The trust is coming back to Indonesia," Bakrie told The Associated Press.

"The stable political situation, a new president elected democratically by the people, the action against corruption," he said listing the factors driving the country's economic resurgence.

Bakrie said corruption -- often cited as a serious impediment to doing business in Indonesia -- "has been taken very serious by the president himself. You can see the improvement of the investment climate."

The increase in actual foreign direct investment in the April to June period is good news for Yudhoyono, who won a landslide election victory on a platform that included jump-starting economic growth that's lagged regional neighbors.

That investment is key to achieving a government target of 6.6 percent average gross domestic product growth from 2004 to 2009. The government has projected an economic expansion of 6.0 percent in 2005, outpacing the 5.4 percent GDP growth last year.

Foreign investors have left Indonesia in droves in recent years due to concerns over rampant corruption, ruinous infrastructure and an unpredictable judiciary. Those concerns contributed to a 26 percent on-year decline in approved foreign direct investment to US$10.3 billion (euros8.6 billion) for all of 2004.

But Bakrie said he expected foreign investment to remain strong in the coming years, led by China, Japan and Singapore.

Singling out China, he said recent, high-level meetings with Chinese leaders have produce commitments of US$10 billion (euro8.3 billion) over the next five years, nearly US$8.6 billion (euros7.2 billion) of that in palm oil plantations. He said that he expects that its investment could reach US$20 billion (US$16.7 billion) in areas like petrochemicals, refineries and coal projects.

"I can see investment from China will be very, very big," he said, adding that it could approach the US$30 billion (euro25 billion) Japan is estimated to invest over the next five years.

David-80

July 7th, 2005, 03:37 PM

Double decker bridge? I hope it will also include railway track. That would be very cool!

cheers

David-80

July 7th, 2005, 03:45 PM

Indonesia posts 18.9 trln rupiah H1 budget surplus

JAKARTA, July 7 (Reuters) - Indonesian government posted a budget surplus of 18.9 trillion rupiah ($1.93 billion) in the first half of 2005, against a 20.3 trillion deficit predicted in the state budget, data from a government official showed. "Revenues were recorded at 191.2 trillion rupiah, and the expenditures stood at 172.3 trillion," Mulia Nasution, a director general at the finance ministry, told reporters on Thursday. ($1=9,772 rupiah)

Alvin

July 7th, 2005, 04:52 PM

Double decker bridge? I hope it will also include railway track. That would be very cool!

cheers
yes, that's what I said, it will include a railway track!

sanhen

July 7th, 2005, 05:27 PM

I wish they include a skylift on the bridge. You know.. like the one in Taman Mini or in Sentosa island.. 30 km a bit too long though hehehe.

Zorobabel

July 7th, 2005, 09:31 PM

I read a news story about Chinese investors being interested in providing a large portion of the capital for the Java-Sumatra bridge a few days ago. I can't find it, but let's hope it materializes.

Fir3blaze

July 7th, 2005, 11:11 PM

Hi guys,

The Jakarta Fair 2005 is on, and i just found their website.

Some pics from the event:

Jakarta Fair by day ...

http://www.jakartafair.biz/images/05_gal_jun4_JPG.jpg

http://www.jakartafair.biz/images/06_gallery1.jpg

and by night ...

http://www.jakartafair.biz/images/03_gal_minggu5_JPG.jpg

http://www.jakartafair.biz/images/002_gal_sabtu9.JPG

FYI, there are a lot more pics on the site http://www.jakartafair.biz

and pics are updated daily. :)

Alvin

July 8th, 2005, 02:16 AM

there's a thread on Jakarta Fair, you might wanna post pics there :)

Zorobabel

July 8th, 2005, 05:42 AM

The Jakarta Post has put up a new article about the corrupt fuel subsidy system. You can read it here:

http://www.thejakartapost.com/detailheadlines.asp?fileid=20050707.A04&irec=3

They should seriously scrap the entire system. It would free up over $8 billion for the government, and the demand for fuel would drop sharply, decreasing imports. The rupiah would strengthen, and that $8 billion could be used on thousands of welfare projects around the country. Too bad it'll never happen.

Alvin

July 8th, 2005, 06:02 AM

Friday July 8, 11:51 AM

US Curbs On Chinese Electronics Exports May Help Indonesia: EMC

JAKARTA, July 8 Asia Pulse - China will likely make Indonesia its main destination for investment in the electronic industry after the US imposed an anti-dumping surcharge on its electronic goods.

Spokesman of the Electronics Marketer Club (EMC) Stefanus Indrayana said China is facing export restrictions in global market for its electronic products, especially in the United States.

Chinese producers, therefore, begin to consider an option to build factories and increase investment abroad to cope with the restriction, Stefanus said.

He said in addition to Japan, China should be considered a partner in developing the country's electronic industry.

It is unfortunate if Indonesia is seen by Chinese producer only as a market dispose of their products, he said.

A number of Chinese TV products already entered the Indonesian market competing with other foreign products such as Japanese and Korean products.

(ANTARA)

Fir3blaze

July 8th, 2005, 12:11 PM

there's a thread on Jakarta Fair, you might wanna post pics there :)

Oops..sorry bout the out of topic post. :)

Alvin

July 11th, 2005, 08:50 AM

Is this feasible??

Monday July 11, 12:21 PM
INTERVIEW:Indonesia Min Plans 50% Cut In Oil Use By 2015
By Phelim Kyne
Of DOW JONES NEWSWIRES

JAKARTA (Dow Jones)--As global oil prices hover around record $60 per barrel levels, Indonesia plans to halve costly domestic crude oil consumption and double liquefied natural gas and coal output by 2015, the country's economic planning czar said recently.

Coordinating Minister for the Economy, Aburizal Bakrie, told Dow Jones Newswires in an interview that the government's ambitious energy diversification and conservation campaign aimed to reduce Indonesia's domestic crude oil consumption to 30% of the country's total energy mix from a current level of 60% within 10 years.

The government will offset that reduction by doubling LNG and coal use from current levels of about 5% and 15%, respectively, in the same time period.

"We've changed our thinking," Bakrie said.

"The government won't any longer use energy (sources) that are expensive and not widely available in Indonesia and (instead) we're going to export more oil."

Indonesia is Asia's only member of the Organization of Petroleum Producing Countries, but dwindling investment in oil exploration has led to falling output and made the country a net oil importer.

The country's oil imports cost $1.269 billion in May, the latest official statistics indicate, and in June, Indonesia's crude oil output declined slightly to 927,800 barrels a day from 968,700 barrels a day in May, a Ministry of Energy and Mineral Resources source told Dow Jones Newswires Wednesday. That result falls short of Indonesia's OPEC quota of 1.425 million barrels a day.

According to Bakrie, key to the energy plan is diverting gas reserves that state-owned oil firm Pertamina and U.S. petroleum giant Exxon Mobil Corp. (XOM) will extract from the Cepu oil block to domestic consumers rather than for export.

"It's important to watch how big the reserves and production of gas that can be produced out of the Cepu Exxon field (because) Cepu has a lot of gas that can be used for (Indonesia's main island of) Java, Bakrie said.

Indonesia and Exxon last month successfully concluded talks allowing the U.S. company to tap Cepu. The Cepu block holds estimated reserves of some 600 million barrels of crude oil and unspecified amount of LNG.

The government is also hatching a national energy conservation policy that will aim to shrink energy consumption by 20% annually beginning this year, Bakrie said, without elaborating.

Economic Fundamentals Sound

President Susilo Bambang Yudhoyono signed a fuel conservation decree Sunday directing government offices to reduce power consumption, the Jakarta Post newspaper reported.

Bakrie said that Indonesia's economic fundamentals remain strong despite the challenges of high imported oil costs and a rupiah that weakened to a more than three-year low of IDR9,790 last week. The currency has since gained traction against the dollar on the back of a government rupiah support initiative.

"The budget can withstand the price of oil up to $70 per barrel (in 2005), but next year we have to do something if the prices are still high," Bakrie said, without elaborating.

Bakrie expects recent investment pledges will help spur up to 6.1% growth in gross domestic product in 2005, outpacing an official projection of 6.0% for the same period.

That will put Indonesia on track for an officially targeted average annual 6.6% GDP growth from 2004-2009, he said. Indonesia's economy expanded 5.4% on-year in 2004.

Combined investment from China and Japan alone is likely to hit $40 billion in the next five years.

Japanese firms signed agreements last week for $20 billion in investment over the next five years, Bakrie said, without elaborating. Chinese state-owned firms are likely to match that investment figure within the same time period, he said, including $8.6 billion to develop 2 million hectares of crude palm oil plantations.

Feasibility studies and discussions with state-owned banks in China for funding that proposed investment are underway, he said, without providing specific details.

"I can see investment from Chinese companies will be very, very big," he said, without elaborating. The two countries signed a strategic cooperation agreement in April aimed at boosting bilateral trade and investment.

Indonesia recorded a 14.8% year-on-year rise in approved foreign direct investment in the first three months of 2005, he said. That result is in stark contrast with the 26% on-year decline to $10.3 billion in approved foreign direct investment in 2004.

Indonesia's actual foreign direct investment more than quadrupled year-on-year to $2.9 billion from April to June 2005, Bank Indonesia data indicates.

Bakrie even put a positive spin on what he said was Mexican cement producer Cemex S.A. De C.V.'s decision to sell its existing 25.5% stake in state-owned Semen Gresik (SMGR.LK) amid talks to expand the Mexican firm's ownership share.

A Cemex spokeswoman in Jakarta declined to comment on that assertion.

"(Cemex's share sale) is a very positive indication...that (foreign firms) are free to do what they want according to their contracts," Bakrie said.

Alvin

July 12th, 2005, 01:35 PM

Tuesday July 12, 07:28 PM

Bank Financing Not Enough To Support Indonesia's Growth Target

JAKARTA, July 12 Asia Pulse - The increase in the value of new credits is predicted to fall short of the 22 per cent target needed to support a 6 per cent growth of the country's economy this year.

The value of new credits approved in the first 5 months of this year fell 9.13 per cent to Rp22.2 trillion (US$2.25 billion), down from Rp24.4 trillion a year ago, data at Bank Indonesia showed.

The sharpest fall of 16.15 per cent was recorded in the amount of investment credit, followed by consumer credits down by 10.55 per cent and working capital credit down by 5.06 per cent.

Banking observer Djoko Retnadi said banks, especially those that are state-owned, tended to restrain from extending corporate credits.

Providing credits for small and medium enterprises will not help much in creating significant economic growth, Retnadi said.

(ANTARA)

XxRyoChanxX

July 13th, 2005, 12:03 AM

aww that sukz

Alvin

July 13th, 2005, 01:40 PM

Domestic and foreign investments rise 43% in first semester

JAKARTA (Antara): Domestic and foreign direct investments rose 43 percent to Rp 39.7 trillion (US$4.18 billion) in the first semester of the year, the Investment Coordinating Board (BKPM) announced on Tuesday.

BKPM chairman Muhammad Luthfi said foreign direct investment recorded a sharp increase of 70 percent to $3.35 billion.

Foreign investment in constructions led the charge with 15 projects valued at $664.3 million, followed by the chemical and pharmaceutical sector with 18 projects valued at $362.8 million, he said.

Domestic investment, however, decreased 13.4 percent to Rp 7.8 trillion in the first semester.

There were 20 projects in the food industry valued at Rp 1.87 trillion, eight projects in the chemical and pharmaceutical industry valued at Rp 1.28 trillion and 14 projects in the textile industry valued at Rp 1.04 trillion.(*)

Alvin

July 13th, 2005, 01:41 PM

BKPM guarantees investment license processing within 10 days

JAKARTA (Antara): The Investment Coordinating Board (BKPM) guaranteed on Wednesday that domestic and foreign investment licenses would be processed within 10 days.

"I guarantee the licensing process will be finalized within 10 days as we strive to continue improving efficiency," Muhammad Luthfi, BKPM chairman, said.

Luthfi said processing investment licenses used to be an arduous and time-consuming process that could take up to 150 days, discouraging investors from doing business or expanding their operations in Indonesia.

BKPM's determination to simplify the procedures for investment licensing, he said, is part of its mandate as outlined in the investment draft bill currently being prepared.

However, he said the 10-day guarantee only applied for the BKPM and not for document processing at other institutions.

"The processing of licenses at other institutions will take up to 85 days," he said, adding that his office would encourage other institutions to cut the time for processing licenses. (**)

Alvin

July 14th, 2005, 04:27 AM

Indonesia 2005 GDP growth forecast raised to 5.63 pct from 5.3 pct - Citigroup
Monday, June 20, 2005 7:50:20 AM
http://www.afxpress.com

JAKARTA (AFX) - Citigroup has raised its forecast for Indonesia's GDP growth this year to 5.63 pct from its earlier estimate of 5.30 pct, noting signs of improving investments

Its revised forecast, however, marks a less optimistic view when compared with the government's revised economic growth forecast of 6.0 pct for this year

Citigroup's upgrade came just a week after another investment bank Morgan Stanley revised upward its forecast for Indonesia's 2005 GDP growth to 5.4 pct from an initial projection of 4.5 pct, citing sustained private consumption and strong private investment momentum

"We think the first quarter macroeconomic performance looks promising enough to generate a better economic growth than previously expected for the year," Citigroup said in a note. "We have been seeing signs of increasing investment, both in terms of real GDP (gross fixed capital formation) and investment approvals issued by the investment coordinating board (BKPM), although they have not been as fast as we initially expected," it said

It said consumption expenditure may still support real GDP growth while net exports contribution is seen disappearing as imports started increasing faster than exports in the second quarter

However, it said a pickup in imports of capital goods and raw materials is encouraging as they reflect increasing economic activities, though some increase in the value of raw material imports was caused by higher oil prices. It also noted that recent visits by President Susilo Bambang Yudhoyono to the US, Japan and Vietnam brought a new dimension to the government’s drive to increase trade and investment in Indonesia, which ultimately may support higher economic growth and provide more employment. "The trips were mostly positive, although there is still a need for coordination and follow-up. The president’s trips were important, but the key is still implementation," Citigroup said

Alvin

July 14th, 2005, 04:29 AM

Indonesia 28/30th for retail expansion potential?? Quite unbelievable, considering recent reports that suggest Indonesia's retail growth and shift from traditional --> modern market is one of the strongest in Asia.

2005 A.T. Kearney Global Retail Development Index
India Tops Annual List of Most Attractive Countries for International Retail Expansion

Country 2005 Rank 2004 Rank Change

India 1 2 1
Russia 2 1 -1
Ukraine 3 11 8
China 4 3 -1
Slovenia 5 4 -1
Latvia 6 6 0
Croatia 7 5 -2
Vietnam 8 7 -1
Turkey 9 8 -1
Slovakia 10 9 -1
Chile 11 12 1
Thailand 12 10 -2
Bulgaria 13 13 0
South Korea 14 14 0
Tunisia 15 15 0
Macedonia 16 N/A N/A
Lithuania 17 17 0
Malaysia 18 19 1
Hungary 19 16 -3
Bosnia and Herzegovina 20 N/A N/A
Saudi Arabia 21 21 0
Romania 22 24 2
Morocco 23 18 -5
Mexico 24 26 2
Egypt 25 20 -5
Taiwan 26 22 -4
Philippines 27 23 -4
Indonesia 28 28 0
Brazil 29 N/A N/A
Pakistan 30 N/A N/A

About the study
A.T. Kearney's Global Retail Development Index ranks 30 emerging countries
on the urgency for retailers to enter the country. The scores are based on 25
variables across four primary categories: economic and political risk; market
attractiveness; market saturation; and time pressure (difference or addition
between gross domestic product and modern retail area growth).

Alvin

July 14th, 2005, 04:35 AM

Selling Southeast Asia
ONCE they were the proud tigers. In the early '90s, the booming economies of Indonesia, Thailand and Malaysia were the rising stars of South-east Asia.
By Seto Nu-wen

23 June 2005
ONCE they were the proud tigers. In the early '90s, the booming economies of Indonesia, Thailand and Malaysia were the rising stars of South-east Asia.

They offered investors cheap raw materials and labour.

But the tigers have been wounded.

Over the last few years, they have been hurt by the threat of terrorism, inconsistent policies, rising costs and a massive financial crisis.

Instead, it is the twin giants of China and India who are pulling in the big bucks.

Their assets? Low costs and giant consumer markets.

Last year, Indonesia, Thailand, Malaysia, the Philippines and Singapore accounted for 4.4 per cent of the world's manufactured exports.

China's share however, went from 2.2 per cent to 5.3 per cent.

But now the South-east Asian tigers are fighting back.

INDONESIA

With its massive population, cheap labour and low standard of living, Indonesia stands as a formidable competitor to China.

Prof Sri Aidingsih, head of economics at Gajah Mada University, says Indonesia's problems are old ones - weak infrastructure, poor governance and corruption.

Now President Susilo Bambang Yudhoyono has pledged sweeping reforms, including an end to corruption.

And some sectors are luring investors once more.

Earlier this year, US giant Philip Morris made a US$5.2 billion (about $8.6 billion) bid for local cigarette company Sampoerna.

Other hot sectors: banks, telecommmunications, cars and information technology.

Indonesia's target is for foreign investment to return to 30 per cent of the GDP, compared to the 23 per cent that it is now.

There is also a massive US$150 billion infrastructure development master plan and plans to amend labour and tax laws for foreigners doing business there.

However, the crucial corruption drive has been plagued with challenges.

Prof Aidingsih believes development must take root in the rural areas first.

THAILAND

Infrastructure-wise, Thailand is better off than Indonesia.

Dr Sakulrat Montreevat, from the Institute of South-east Asian Studies here, said Prime Minister Thaksin Shinawatra's strategy now is to focus on 'a skilled, knowledge-based economy', to take advantage of the country's easy access to markets in Malaysia and Singapore.

Five key industries top Mr Thaksin's priority list: cars, fashion, software, tourism and communications.

Thailand is also spending up to US$59 billion on new subways and elevated trains.

Apart from forging more free trade agreements, 'there is also a move towards making more local companies or SMEs public-listed which would be more attractive for foreign investors,' added Dr Sakulrat.

However, Thailand's upwardly-mobile population has resulted in a rising standard of living, 'compared to its competitors such as Vietnam and China', she said.

Thailand has also been plagued by unrest in the south and the bird flu outbreak.

MALAYSIA

For Malaysia, it's time to catch up.

When Prime Minister Abdullah Ahmad Badawi took over almost two years ago, his focus was on domestic investment.

And it worked: Domestic investment went up 16 per cent to its highest level since 1997.

However, foreign investments fell 16 per cent to RM13.1 billion ($5.7 billion) last year.

The reason, said Mr Wong Chee Seng, an analyst formerly with DBS Securities, is a lack of 'clear guidelines'.

'Unlike Tun Dr Mahathir Mohamad, Datuk Seri Abdullah is less authoritatian. He's more of a consensus builder.'

But he wants changes.

Earlier this year, the PM announced a branding exercise to draw back foreign investors.

In April, Malaysia also said it would spend US$4.4 billion on an infrastructure boost.

Mr Wong said industries such as cars and electronics would be the main draw.

--------------------------------------------------------------------------------

What other Asian countries are doing

Philippines: The government has offered incentives such as less red tape and improvements in infrastructure to make it easier for foreigners to do business.

South Korea: In the works are cash incentives to win back investors and boost job creation. South Korea has been losing out on foreign investment in the last few years amid concerns over militant trade unions.

Bangladesh: The country is positioning itself as an alternative to India by trying to shake off its image of a poor, aid-dependent country riddled with corruption.

The focus has been on infrastructure development and lower interest rates.

Vietnam: The government now accepts 100 per cent foreign-owned enterprises and has abolished discrimination against foreigners for electricity and water prices.

It is a bid to lure back the foreign investors who arrived in the early '90s but eventually left, citing inconsistent policies and cheating.

Alvin

July 14th, 2005, 04:44 AM

Still a lot to catch up, but at least we know that the trend is positive..unlike in the early 00s (under Gus Dur and Mega) when everything was stagnant with little prospects for significant improvement.

-------------------------------------------------------------------

Foreign investors increase stake in Indonesia

By Shawn Donnan in Jakarta
Published: July 14 2005 01:17 | Last updated: July 14 2005 01:17

Indonesia said yesterday actual foreign direct investment rose 70 per cent in the first six months of the year in another sign of confidence in the archipelago's economic recovery and the nine-month-old government of President Susilo Bambang Yudhoyono.

In a rare release of data for realised rather than planned FDI, Indonesia's Investment Co-ordinating Board said foreign companies put $3.4bn (£1.9bn, €2.7bn) into projects in the country in the first half of the year. Were the same number to be repeated in the second-half of 2005, actual FDI in Indonesia for the year would reach $6.7bn, against annual figures of about $30bn in the mid-1990s before the Asian financial crisis.

But the new data coincided with growing anecdotal evidence of an increase in FDI, with local media reporting new foreign investment plans weekly. “Whether it's up 40 per cent or 60 or 80 I don't know,” said Christa Janjic, regional economist for UBS. “But there is a clear trend that FDI is increasing.”

Economists attribute much of the renewed investment to increased confidence in Mr Yudhoyono's government, which has pledged to tackle problems such as corruption and pent-up demand left over from last year's elections.

The new government has yet to fulfil many of its promises to tackle obtuse regulations and other barriers to investment, said Ramesh Subramanian, Asian Development Bank's principal economist in Jakarta. But it continues, he said, to offer a more investor-friendly tone than its predecessors, something that still registers with investors.

The composition of the first-half FDI figures indicates Indonesia is still far from attracting the sort of labour-intensive manufacturing projects that fuelled its mid-1990s boom. The construction sector was the leading contributor to the first-half increase in FDI with 15 projects worth $664m. There are also signs that progress in improving a still hostile investment climate remains slow. A recent World Bank-led survey found it took 151 days to open a business in Indonesia, with seven more weeks, on average, for foreign investments to receive government approval.

A European Commission guidebook unveiled at a forum for EU companies interested in the $145bn in public and private infrastructure investment planned over the next five years advised against investment by companies with no experience of Indonesia.

Alvin

July 14th, 2005, 04:48 AM

The tide is turning, albeit slowly (we hope)...
---------------------------------------------------------------------

Wednesday July 13, 7:14 PM

Foreign investment in Indonesia jumps in first half

JAKARTA, July 13 (Reuters) - Foreign direct investment approvals in Indonesia jumped 71 percent to $5.93 billion in the first half from the same period last year amid an improved economic outlook, the state investment agency said on Wednesday.
The agency, known as BKPM, also said in a statement that domestic direct investment approvals rose 18 percent to $2.58 billion in the first six months against the same period last year.

The BKPM data does not cover certain industries such as oil and gas or banking and insurance, but analysts say the figures are indicative of investor confidence in the economy, still struggling after the Asian financial crisis of the late 1990s.

The agency also said that actual foreign direct investments rose 70 percent to $3.35 billion in the first half of this year compared with the same period last year.

Actual domestic direct investments, however, fell 12 percent to $0.8 billion in the first half of this year against the same period last year, the agency said.

-------------------------------------------------------------------------

China direct investment shows first-half decline
By Philip Lagerkranser and Yanping Li Bloomberg News

THURSDAY, JULY 14, 2005

HONG KONG Foreign direct investment in China fell 3.2 percent in the first half as falling prices and rising costs prompted global manufacturers to cool expansion in what is the world's fastest-growing major economy, the government said Wednesday.

Overseas investment fell to $28.6 billion after declining 0.8 percent in the first five months, the Ministry of Commerce said on its Web site. Contracted foreign investment, or investment pledged but not yet used, rose 19 percent from a year earlier to $86.2 billion in the period.

"There's an oversupply problem, with profits being squeezed," a J.P. Morgan economist, Frank Gong, said at a news briefing. "Those sectors with no oversupply, such as railways, are very hard for foreigners to get in, and there is still lots of government intervention, which may make them unattractive."

The government said Tuesday that it would keep tax breaks for some foreign investors because rising labor costs and raw material shortages had made the need for technology transfers and management expertise more urgent.

The government also pledged to equalize tax treatment for foreign and domestic companies when it joined the World Trade Organization in 2001.

China, which overtook the United States in 2003 to become the world's biggest recipient of foreign investment, is unlikely to fall out of favor with overseas investors, Qu Hongbin of HSBC Holdings said, because labor remains cheap. The average wage in China's towns and cities last year was $1,924, one-eighth the pay of a factory worker in Taiwan.

"Foreign investment has been rising for more than three years; it's not surprising if there's a marginal slowdown," Qu said before the figures were released. "But if you look at the longer-term trend, it is still one of the most attractive places for investment, and nothing will change that."

China attracted more than five times as much foreign investment as Southeast Asia last year and almost 14 times more than India, according to Asian Development Bank figures.

Alvin

July 14th, 2005, 07:26 AM

About time for another fuel price increase?

-------------------------------------------------------------

Higher oil prices pose big threat: KPEN

Rendi A. Witular and Leony Aurora, The Jakarta Post, Jakarta

The government is putting its hard-gained fiscal stability, and in turn the economy, at risk if it insists on staying with the massive fuel subsidy, according to the influential National Economic Recovery Committee (KPEN).

With the fuel problem at home exacerbated by constant threats of a weaker rupiah, higher inflation and rising interest rates, there is some real concern among foreign investors about the country's overall economic stability, KPEN head Sofjan Wanandi said on Wednesday.

"A higher fuel subsidy expenditure will eventually disrupt the country's state budget and affect the currently stable macro-economic condition. Because of that, foreign investors are now reassessing their stance toward us," said Sofjan.

The government is in dire need of foreign investment to help achieve economic growth of 6.5 percent this year and reduce the nation's high unemployment by up to 3 million people.

He said that there was no other option for the government than to reduce the fuel subsidy via raising the domestic fuel prices to keep the state budget sustainable and keep other macro-economic indicators in check.

"We have never thought that oil prices would soar so high to the point that they can severely affect the country's economy. Should there be no immediate action taken by the government, we may end up in another economic crisis," Sofjan warned.

The government has set the fuel subsidy at Rp 76.5 trillion (US$7.88 billion) in this year's state budget, which assumes a crude oil price of $45 per barrel, an exchange rate of Rp 9,300 against the U.S. dollar and fuel consumption at 59.6 million kiloliters.

However, with the oil prices now hovering at about $62 per barrel, rupiah rates at above Rp 9,750 and fuel consumption estimated to soar by 10 percent more than the allocated quota, the government may have to spend Rp 135 trillion, or more, to finance the fuel subsidy.

With such a huge unexpected expenditure, concerns are rife that the country's already over-stretched budgetary position may deteriorate even further, forcing the government to reduce its spending allocations on certain crucial programs, such as those for business infrastructure, education, health and other crucial needs.

Sofjan said that based on the KPEN calculation, the state budget can no longer be sustained if the government refuses to cut the subsidy, with predictions already rife that the oil prices could climb toward $80 a barrel sometime in the third quarter of the year.

Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) reiterated on Wednesday its recommendation for the government to raise domestic fuel prices for general use, except for labor-intensive businesses and public transportation.

Kadin chairman Mohamad S. Hidayat argued that an adjustment in fuel prices based on international market rates would contribute to strong fundamentals in the country's economy over the long term and provide much-needed certainty in prices for industry players.

Aside from Kadin, Vice President Jusuf Kalla and Coordinating Minister for the Economy Aburizal Bakrie -- who are former businessmen -- have lately raised the possibility of increasing fuel prices once again this year in a bid to mitigate the negative effects of its burgeoning subsidy payments.

sanhen

July 14th, 2005, 07:47 AM

I just read on Detik that Energy Minister said Indonesia need to change the way they subsidize the fuel.

I think one way is buy paying the fuel full price up front. And then we ask for the money back during tax return. Only those that have low income deserve to have their money back etc. This way we can encourage people to understand tax and minimize the corruption on fuel subsidy.

But, well, need to fix the tax system first...

Alvin

July 14th, 2005, 03:30 PM

Thursday July 14, 6:05 PM
Indonesian, Chinese Trade Surges in Q1: Report

JAKARTA, July 14 Asia Pulse - Trade between Indonesia and China rose 39.17 per cent to US$3.76 billion in the first quarter of this year, up from US$2.7 billion in the same period last year.
The office of the Indonesian trade attache in China said in a report that China's exports to Indonesia shot up 63.4 per cent to US$1.87 billion, while its imports from Indonesia surged 21.38 per cent to US$1.89 billion.

Indonesian exports of oil and gas rose 67.77 per cent and exports of other commodities increased 9.21 per cent, the report said.

The Indonesian share of the market of non-oil/gas commodities in China fell to 1.06 per cent, down from 1.08 per cent.

Indonesia's exports of oil and gas to China were valued at US$542.55 million, up from US$323.4 million.

Other key commodities exported by Indonesia to China included crude palm oil, rubber, paper and organic chemicals.

XxRyoChanxX

July 15th, 2005, 03:23 AM

so right now is indonesia economy improving or still the same?

Alvin

July 15th, 2005, 03:41 AM

so right now is indonesia economy improving or still the same?
definitely improving!

XxRyoChanxX

July 16th, 2005, 09:32 PM

Awesome!! this thing is back up again~
anyways found this in the thai forum

The world's most expensive cities

source at the end of 2004 by UBS International

London is the most expensive city in the world due to the UK capital’s high cost of renting accommodation. If rents are excluded, Oslo, Copenhagen, Tokyo and Zurich are among the most costly cities in the world. In terms of living costs, Oslo remains the most expensive of the 71 cities surveyed, now followed by Copenhagen, Tokyo, Zurich and London. A basket of goods and services assembled in line with western European consumer habits (excluding rents) costs 15.5 per cent more in Oslo than it does in Zurich – over two-thirds more than the global average. If we include rents in the comparison, the differences from city to city are even more pronounced. The most expensive places to live in this respect are London, Oslo and New York. There have been some significant shifts in the top places since the 2003 edition: Copenhagen has gone from sixth to second-most expensive city, while Hong Kong has fallen from second spot and no longer ranks among the world’s most expensive cities. Our basket is still cheapest in Mumbai, Karachi, Buenos Aires and the eastern European cities of Kiev, Bucharest and Sofia. The cost in these cities is a third or less of the price in Zurich.

Rank-City-Point

1 London 122.4
2 Oslo 109.4
3 New York 105.0
4 Tokyo 104.6
5 Copenhagen 104.1
6 Hong Kong 100.6
7 Zurich 100.0
8 Paris 99.3
9 Chicago 99.1
10 Geneva 98.2
11 Dublin 97.5
12 Stockholm 95.2
13 Basel 92.8
14 Helsinki 91.8
15 Vienna 90.8
16 Lugano 90.3
17 Milan 89.5
18 Istanbul 89.4
19 Amsterdam 86.4
20 Rome 86.2
21 Nicosia 85.7
22 Frankfurt 82.6
23 Luxembourg 81.0
24 Brussels 80.9
25 Athens 79.1
26 Sydney 77.9
27 Seoul 77.7
28 Los Angeles 76.8
29 Taipei 76.6
30 Berlin 76.2
31 Lisbon 74.5
32 Toronto 74.3
33 Madrid 73.9
34 Auckland 71.7
35 Singapore 71.2
36 Barcelona 67.7
37 Montreal 66.7
38 Moscow 66.2
39 Tel Aviv 65.4
40 Miami 65.3
41 Budapest 65.3
42 Dubai 65.3
43 Ljubljana 64.6
44 Shanghai 63.5
45 Johannesburg 62.7
46 Caracas 60.8
47 Manama 58.2
48 Warsaw 55.5
49 Lagos 55.3
50 Jakarta 55.0 LOOk were higher than most sea cities :)
51 Mexico City 54.9
52 Tallinn 52.7
53 São Paulo 51.8
54 Bratislava 49.9
55 Vilnius 48.2
56 Nairobi 47.6
57 Rio de Janeiro 46.0
58 Santiago de Chile 45.8
59 Prague 45.2
60 Bangkok 41.9
61 Bogotá 38.8
62 Riga 37.7
63 Manila 37.5
64 Kuala Lumpur 36.5
65 Sofia 36.4
66 Lima 32.7
67 Kiev 32.7
68 Bucharest 32.2
69 Karachi 29.1
70 Buenos Aires 27.8
71 Mumbai 27.8

Alvin

July 19th, 2005, 04:49 AM

Grup Artha Graha-Sampoerna Boyong Guandong Investasi US$3 Miliar
0 Tanggapan

Selasa, 19 Juli 2005 01:00 WIB - warta ekonomi.com

Grup Artha Graha dan Grup Sampoerna dikabarkan mengajak investasi pengusaha Guangdong Foreign Trade Group Co Ltd di Indonesia. Pengusaha itu akan menginvestasikan berbagai sektor US$3 miliar atau Rp29,4 miliar selama tiga tahun nanti. Sejumlah sektor yang digarap pengusaha tersebut seperti agribisnis, perikanan-kelautan, kerajinan, furnitur, pertambangan umum, migas, keuangan, dan infrastruktur. Langkah itu diharapkan meningkatkan nilai perdagangan dan jasa Indonesia-Cina.

Indonesia-Cina Trade Center (ICTC) didirikan sebagai langkah awal investasi tersebut. ICTC dapat memasarkan produk pengusaha Indonesia ke Cina dan negara lain. Pada November 2005 ICTC akan mulai beroperasional di Jakarta November 2005. Kemudian, Cina Industrial Estate akan dibangun dalam Jawa Barat.

Sebelumnya, kesepakatan kerjasama Grup Artha Graha, Grup Sampoerna, dan Guangdong Foreign Trade Group Co Ltd telah berlangsung di Guangzhou, Cina 15 Juli 2005. Hal itu telah ditandatangani Tomy Winata mewakili Grup Artha Graha-Sampoerna dan Ou Guang mewakili presiden direktur Guangdong Foreign Trade Group Co Ltd.

Pada awal Juli 2005 Guangdong Foreign Trade Group Co Ltd telah berkunjung ke Indonesia seperti DKI Jakarta, Jawa Barat, Jawa Tengah, Lampung, Sulawesi Tenggara, dan Maluku. Langkah ini diharapkan dapat mengetahui potensi bisnis daerah tersebut. Guandong Foreign Trade Group Co Ltd merupakan sejenis badan usaha milik daerah (BUMD) Provinsi Guangdong, Cina. BUMD telah mempunyai 180 perusahaan besar bergerak dalam industri manufaktur, perkebunan, pertanian, property, dan jasa. Mochamad Ade Maulidin

Alvin

July 19th, 2005, 05:44 AM

Oil vital test for Yudhoyono

July 18, 2005

Government ministers have been told to shorten their motorcades. Civil servants are sweating it out at work after turning down air conditioners. TV is off the air from 1am to dawn.

Indonesia - the only oil-importing member of the Organization of Petroleum Exporting Countries (OPEC) - ordered those moves and other energy-conserving measures last week to blunt the effects of soaring crude oil prices that risk blowing the country's budget.

But economists say the steps are mostly symbolic, and serve only to delay a painful reality facing the government - that it must soon cut the ballooning government subsidies that ensure its 210 million people get some of the cheapest petroleum products in the world.

``Removing the subsidies is a big political pill to swallow and ... would create a backlash,'' said Victor Shum, a consultant at Purvin & Gertz, a Houston, Texas-based energy consultancy in Singapore.

``But, fiscally, the government is under pressure to do so. It's a difficult balancing act.''

Regular gasoline currently sells in Indonesia for about 20 US cents (HK$1.56) a liter. Over the last few weeks, state-owned oil company Pertamina has been unable to meet demand for gasoline in major cities across the country, leading to long queues at gas stations and reports of hoarding.

The oil issue is shaping up to the first major political test for President Susilo Bambang Yudhoyono, who was elected last year promising to battle poverty and boost growth in Southeast Asia's largest economy.

Raising fuel prices is a sensitive issue in Indonesia. A small increase in the price of kerosene, a common cooking fuel, hurts the household finances of millions of poor families.

Price increases in gasoline translate into higher costs for basic goods because of increased transportation costs.

Former dictator Suharto was ousted in 1998 in part because of anger at fuel price increases. Yudhoyono's predecessor, Megawati Sukarnoputri, saw weeks of protest when she cut subsidies. In March, Yudhoyono slashed the subsidies and allowed prices of various gasoline products to rise by about 30 percent.

The move - which was accompanied by increased spending on health and education programs for the poor - was praised by foreign lenders and economists, who have long argued that subsidies are disproportionally enjoyed by wealthy car and home owners.

Nationwide demonstrations took place, but they were smaller than predicted and quickly fizzled out. But raising prices again before the end of the year - something Yudhoyono has vowed not to do - would probably trigger large protests.

``We understand that cutting fuel subsidies would have a huge social and political impact, but sooner or later the government will have no other option to do so,'' Indonesian Chamber of Commerce chairman Mochamad Hidayat was quoted as saying by The Jakarta Post.

``The government should be realistic and address the fuel problem.''

Although Indonesia is the sole Southeast Asian member of OPEC, declining investment in oil exploration and extraction in the country has reduced output in recent years and even made the country a net crude importer for several months last year.

With international prices hitting US$60 a barrel and strong domestic demand for gasoline sparked by a recovering economy, subsidies that last year cost the government US$7.4 billion - or about 3 percent of gross domestic product - are rising daily.

The energy conservation measures announced last week will do little to soften domestic consumption, and appear to be mostly symbolic, economists say. There are no legal sanctions for those who violate the various decrees.

TV stations and local cable operations are for now obeying the government request to stop airing at night, but many are questioning its effectiveness.

``As long as this proposal is for the good of the country, then we follow it,'' said Marah Bangun, executive producer for music and sport at national broadcaster TPI.

``But we wonder whether it will do any good. Is TV watching such a great consumer of energy?'' ASSOCIATED PRESS

Copyright 2005, The Standard, Sing Tao Newspaper Group and Global China Group. All rights reserved. No content may be redistributed or republished, either electronically or in print, without express written consent of The Standard.

sanhen

July 19th, 2005, 06:44 AM

Instead of turning off all TV, maybe something like daylight savings can help?

hadiwinata

July 19th, 2005, 02:25 PM

Agree with you, in the other hand it will slow down the economics. Think about it, hundreds of people will lost their jobs just because the regulation to stop the entertainment at night. If i'm the customer, i would just plug my XBOX to my TV, loaded with Home Theatre to get 'entertained'.. how's that ?

Alvin

July 21st, 2005, 09:30 AM

Thursday July 21, 1:18 PM
Indonesia to Have 50 MLN Cellphone Subscribers by Year-End
JAKARTA, July 21 Asia Pulse - The Indonesian Cellular Phone Association (ATSI) has projected the number of cellular phone subcribers till end of this year at 50 million, exceeding its previous projection of 40 million, a spokesman said.
"Till June 2005, a number of cellular phone subcribers reached 40 million. So the target of 42 million numbers till the end of this year will be surpassed," the spokesman, Rudiantara, said after the opening of the Indonesian Cellular Show 2005 here on Wednesday.

He also said that in 2004, the number of cellular phone subcribers reached 32 million.

"The growth of the number of subcribers from year to year is relatively high, reaching an average of 50 percent," he said.

Apart from the high demand for telecommunications services, he said that the growth of the number of subcribers was also encouraged by cellular phone operators to improve their services.

ATSI`s data till June 2005 showed that subcribers of PT Telkomsel had reached 22.5 million, PT Indosat (12.5 million), and PT Excelcomindo (4.5 million).

(ANTARA)

Alvin

July 21st, 2005, 09:38 AM

Cell phone market continues rapid growth
The Jakarta Post, Jakarta

The Indonesian Cellular Telecommunications Association (ATSI) is optimistic that the market penetration of cellular phones in Indonesia next year will reach a level equivalent to 40 percent of the population.

ATSI chairman Johnny Swandi Syam said that the growth in the country's cellular phone industry from January to June was satisfactory, with 10 million new subscribers being signed up, boosting the total number of subscribers to 40 million.

"Regions like Batam, Riau Islands, Yogyakarta and Jakarta recorded average growth of more than 30 percent, which makes us optimistic that 40 percent market penetration will soon be achieved," he said at the opening of the Indonesia 2005 Cellular Show at the Jakarta Convention Center.

Despite the rapid growth, Johnny said that Indonesia's market penetration level lagged well behind many countries in Southeast Asia.

Various sources show that Singapore has 89 percent market penetration, Thailand 41 percent, Malaysia 53 percent, and the Philippines 36 percent.

Johnny said that Indonesia's penetration level today was only about 18 percent.

ATSI secretary-general Rudiantara explained that of the 40 million subscribers, 22 million belonged to Telkomsel, 12.5 million to Indosat, and 4.5 million to Excelcomindo.

Rudiantara said that if the growth continued, the number of subscribers could reach more than 80 million next year.

"ATSI believes that next year, Indonesia's penetration will match that of the Philippines," he said, adding that ATSI's optimism was based on the fact that growth tended to be higher in the second semester.

He also said that the huge investments being made by cell-phone operators here would lead to more services being available to customers.

"So far this year, ATSI has recorded US$1.8 billion in new investment in the industry, already 30 percent higher than the Rp 1.2 billion invested last year," he said.

He said that most of the new investment was focused on the introduction of new technology, particularly 3G.

With 3G technology, cellular operators can provide multimedia facilities at faster speeds and with much more data than the current cellular technology being used here, which is classified as 2.5G.

To support ATSI's drive to introduce 3G, the association is holding the Indonesia 2005 Cellular Show from July 20 to July 24, which will feature 39 operators and authorized dealers nationwide.

ATSI and event organizer Dyandra Promosindo expect around 100,000 visitors to the exhibition, but have set no sales targets.

"The show is intended to introduce the latest developments in cell phone technology and to connect customers to vendors and service providers," Rudiantara said. (006)

Alvin

July 21st, 2005, 09:45 AM

BenQ to tap RI's cellular phone market
The Jakarta Post, Jakarta

Expecting to tap the growing cellular phone market in Indonesia, BenQ, a Taiwanese electronics manufacturer, launched on Wednesday its cellular products here.

"We believe there is a big potential market here. Moreover, the business climate here is improving," BenQ managing director for ASEAN Denny Yao told The Jakarta Post.

Indonesia is the most rapidly growing cellular market in Southeast Asia, recording an average annual growth of 20 percent. However, at present, only 9 percent of its 220 million population, or 20 million people, use cellular phones.

BenQ's Singapore managing director, Lee Kim Huat, said the company had not set a sales target for this year because it would focus on creating product awareness among Indonesians.

"We have a full range of products, from low-end to high-end, which could be offered to all segments here. But firstly, we want to know whether people here are familiar with our brand," said Lee, adding that BenQ also aimed to expand its market in other Asian countries, such as China, Thailand and India.

BenQ launched three of its middle of the range cellular products -- M300, M305 and Z2 -- displayed at the Indonesia 2005 Cellular Show at the Jakarta Convention Center from Wednesday to Sunday.

The company has chosen PT Metrotech Jaya Komunika as its authorized dealer in Indonesia, which has set up after sales service centers in eight cities.

"We agreed to be BenQ's partner because it is the biggest cellular phone producer in Taiwan and among the six biggest in the world," said Metrotech president director Martono Jaya Kusuma. (006)

XxRyoChanxX

July 22nd, 2005, 02:05 AM

reading this news makes me want to get a new HP...

David-80

July 22nd, 2005, 08:54 AM

As of this noon, JSX soared to 1165, another closing high. even its only mid-high. But do you remember how many times JSX touched new high? I lost count of it.

cheers

Alvin

July 22nd, 2005, 10:07 AM

As of this noon, JSX soared to 1165, another closing high. even its only mid-high. But do you remember how many times JSX touched new high? I lost count of it.

cheers
yeah, lost count absolutely since SBY took over.

sanhen

July 22nd, 2005, 10:58 AM

this is the first time. all time high.
the last highest level before correction was 1156 on june 20th.
i told my boss about JSX, and his jaw drop, super performance.

sanhen

July 22nd, 2005, 11:04 AM

On another JSX news...

Five ASEAN stock exchanges link up
July 22, 2005 - 5:09PM
http://www.theage.com.au/news/Business/Five-ASEAN-stock-exchanges-link-up/2005/07/22/1121539141304.html

Five Southeast Asian stock exchanges have linked up to form a regional index base for its equity markets, that it claims will make the ASEAN trade bloc more attractive to investors.

Exchanges in Malaysia, Singapore, Thailand, Philippines and Indonesia - the economic leaders of the 10-member grouping - are involved in the regional indices program, which will be set by London's FTSE Group.

In a joint statement late Thursday, the exchanges said the FTSE-developed index would "help promote the ASEAN economies to both regional and global investors by branding ASEAN as an asset class."

"FTSE will create a set of indices for the trading and benchmarking of financial products such as institutional and retail funds, exchange-traded funds, and derivatives contracts," the statement read.

The stock exchanges did not indicate when the regional index would be precisely launched.

Analysts have said the rise of India and China has made the Association of South East Asian Nations less appealing to international investors.
AdvertisementAdvertisement

Apart from the five countries which form the index, ASEAN also groups Vietnam, Cambodia, Laos, Brunei and Myanmar.

sanhen

July 22nd, 2005, 11:30 AM

Wow.. now JSX is 1172.. I think investor is trying to bring JSX pass the 1200 mark this time.

David-80

July 22nd, 2005, 01:57 PM

Yeah it awesome, I think investors confidence is now back in the country. Politically, Indonesia is now stable and with the Yuan re-evaluate just yesterday, the market seems very excited, although its only 2%. But it indeed will bring more competition to the region.

Indonesia Shares End At Fresh Record High On Telco Gains

JAKARTA (Dow Jones)--Indonesian shares ended at yet another fresh record high Friday as investor sentiment toward local stocks stayed buoyant after Thursday's healthy rally, dealers said.

The Jakarta Stock Exchange's Composite Index rose 14.73 points, or 1.3%, to 1172.244, after rising 1.5% Thursday.

Bear Stearns earlier this week upgraded Indonesian equities to overweight from market weight, which dealers cited as one of the factors behind Thursday's rally. The U.S.-based investment house said in a report that there has been "sufficient" progress on structural reforms in Indonesia.

"Today's and yesterday's rallies were healthy as they were supported by robust trading volume," said a dealer.

However, volume dipped slightly, with 2.1 billion shares worth IDR1.93 trillion changing hands Friday, compared with 2.5 billion shares valued at IDR2.3 trillion Thursday.

Gainers led decliners 71 to 58, with 74 stocks unchanged.

Bellwether Telekomunikasi Indonesia rose 6.4% to IDR5,800 on expectations it will report solid first-half earnings.

Its rival Indosat gained 3.6% to IDR5,750. Indonesia's largest automotive group of companies, Astra International, edged up 2% to IDR12,900.

Cigarette maker Gudang Garam, however, dropped 2.3% to IDR13,000 as its sales are expected to be hurt by the government's decision to raise minimum cigarette prices to boost excise tax revenue.

The nation's largest lender by assets, Bank Mandiri, rose 0.6% to IDR1,590, and the second largest bank, Bank Central Asia, fell 2.1% to IDR3,500 on profit taking.

Dealers expect shares to continue rising Monday, but warn that profit taking is looming.

David-80

July 22nd, 2005, 01:59 PM

Anyone interested with this IPO?

Indonesia's Excelcomindo To Sell USD Bonds After Sep IPO

SINGAPORE (Dow Jones)--PT Excelcomindo will tap the U.S. dollar bond market after its initial public offering slated for September, an official at the Indonesian cellular network operator said Friday.

The size of the deal is as yet undetermined, although press reports have suggested the firm will be in the market for around US$400 million.

The lead managers of the deal will be Commerce International Merchant Bankers Bhd. and UBS AG which also advised on the firm's recent rupiah bond buyback.

The buyback of IDR1.25 trillion in 14.25% coupon bonds due 2008 was completed Thursday at a price of 105%.

"We are hoping that we can get a cheaper cost for the new debt," said the official, who declined to be named.

The buyback came after bondholders declined to allow Excelcomindo to alter the covenant of the bond to allow it to raise more debt. They initially asked the borrower to buy back the debt at 106%. "But they knew that was too high," the official said.

The IPO, expected to raise around US$300 million, is being organized by Commerce International Merchant Bankers Bhd. and Credit Suisse First Boston.

A Malaysian newspaper article said Thursday at such a size, the offer would involve between 15% and 25% of Excelcomindo in subscriber terms.

Telekom Malaysia Bhd., which owns 27.3% of the company, is committed to increasing its stake to between 67.3% and 80.0% by the end of October. It already has management control over Excelcomindo.

Early this month, Standard & Poor's Ratings Services affirmed its B+ rating on Excelcomindo, Indonesia's third-largest cellular phone operator, noting the credit quality was enhanced by the prospective ultimate majority ownership by Telekom Malaysia.

It noted that the firm's debt to EBITDA could increase to about five times from 2.8 times in fiscal 2004. Excelcomindo remains vulnerable to the risk of local currency depreciation as its borrowings and capital expenditure commitments are largest in U.S. dollars while its revenues are mainly in rupiah, it said.

Alvin

July 22nd, 2005, 02:18 PM

David-80

July 22nd, 2005, 02:33 PM

It will ease the inflation, mainly because Rupiah will get stronger thus Oil imports will be cheaper than previously.

cheers

Alvin

July 22nd, 2005, 03:13 PM

Thanks, David.

----------------------------------------------

Jul 23, 2005

Yudhoyono visit nets investment hike

JAKARTA - President Susilo Bambang Yudhoyono's recent visit to Japan prompted the country's private sector to invest US$1.347 billion (Rp13.2 trillion) in Indonesia, a Japanese diplomat said.

The investment would create jobs for 2,900 people, Japanese Ambassador to Indonesia Yutaka Iimura said Thursday.

"We don't know the details but (Japanese companies) reported their investment plans to us after President Yudhoyono's visit to Japan," Iimura said.

Among the Japanese companies that would increase their investment in Indonesia are Daihatsu with US$1.1 billion in 2005 and jobs for 700 people; Honda US$100 million in 2005 and jobs for 1,000 people; Yamaha US$67 million until 2007 and jobs for 700 people; Toyota US$40 million in 2005 and jobs for 500 people; and Nissan US$40 million until 2008 but no details on job opportunities.

Japan is keen to increase its investment in Indonesia after it declined during 2001 and 2002, Iimura said.

In 2000, Japanese investment in Indonesia reached US$1.819 billion but it dropped to US$818 million and US$519 million in 2001 and 2002, respectively.

"But, after that, investment showed an increasing trend and we want to increase it further," the ambassador said.

In 2003, Japan investment in Indonesia has increased to US$1.25 billion and US$1.683 billion in 2004.

Both governments have agreed on the Japan-Indonesia Economic Partnership Agreement (JIEPA), which is in the negotiation process. JIEPA began its first round of negotiation July 14-15 in Jakarta.

The Indonesian delegation was led by Soemadi DM Brotodiningrat, currently Indonesian Ambassador to Washington, while the Japanese delegation was led by deputy Foreign Affairs Minister Mitoji Yabunaka.

The talks produced agreements on some points of JIEPA framework including on goods and services, investment, business climate, property rights, customs, and dispute settlement.

The second round of JIEPA negotiations will be held in October.

(Asia Pulse/ANTARA)

XxRyoChanxX

July 23rd, 2005, 08:13 AM

japan!! yeahh...^__^...!!! hehe.. it's nice to hear that indo's economy is improving...

Zorobabel

July 24th, 2005, 08:23 PM

SBY needs to keep telling people not to be wasteful with energy to ensure prices don't put too large of a drag on the state budget. I read that during the first week of SBY's push for energy conservation that energy use during the peak hours (5pm-10pm) had fallen from 1,500MW to 600MW. It shows that the people of Indonesia have the spirit to help their country greatly, even if it is only voluntarily.

tata

July 24th, 2005, 08:42 PM

Zorobabel

July 24th, 2005, 09:15 PM

XxRyoChanxX

July 25th, 2005, 01:07 AM

nicely put Zorobabel

Ara

July 25th, 2005, 11:34 AM

I'm wondering, AFTA is about to be fully implemented next year. Are we ready for the competition that will be comming from other countries in the region?

Alvin

July 25th, 2005, 12:39 PM

I think it is a good sign, but that's just my opinion. The BBC has a good series going on right now where they are looking at many of the problems facing Africa. The basic conclusion of all the problems found in the series is that Africans are unwilling to pull together to help each other. To a much lesser extent, I think the same is true for Indonesia. Indonesians in the past would often blame the government and say "look at Malaysia" to compare development. Now with SBY they know he is a democratically elected leader, and if you blame the government for your problems in a democracy that means blaming yourself. So people now realize they have to be willing to pull together and work together for a better country, which often means some sacrifice. With parliament totally ineffective it is an encouraging sign that the people are listening to SBY's rule-by-decree, even if he has no means to enforce it.

I wonder how much political capital SBY has left. Its been 9 months now into his government and he still remains quite popular, despite the fuel price hike early in the year. But I'm not sure if he'll survive one or two more petrol price hikes...plus, he's got plenty of political opponents now thanks to his anti-corruption drive....if external conditions (oil price in particular) keep deteriorating, it'll be quite difficult for his government.

Alvin

July 25th, 2005, 12:42 PM

I'm wondering, AFTA is about to be fully implemented next year. Are we ready for the competition that will be comming from other countries in the region?
From what I gather so far, we seem to have been overly pessimistic during the early 00s - I guess we had reason to be so , having a blind & ineffective president, only to be replaced by the mute & no-action Megawati. But it seems that things are improving with SBY at the helm and hopefully in a few years from now our competitiveness would improve significantly.

Alvin

July 25th, 2005, 12:43 PM

Alvin

July 25th, 2005, 12:50 PM

Number cellular users to triple by 2010, says Telkom

JAKARTA (Antara): The state-owned telecommunications company PT Telkom predicted that the number of cellular subscribers would increase three-fold to 90 million by 2010.

"In the next four years, the revenue of telecommunication sector is expected to reach Rp 150 trillion," Telkom President Director Arwin Rasjid said on Monday.

In 2004, the country's telecommunications sector booked a total revenue of Rp 48 trillion, far higher than the automotive sales of Rp 40 trillion, he said.

Meanwhile, President Director of Indosat Hasnul Suhaimi predicted that its subscribers would triple by 2008.

He said that Indosat's subscribers increased by 73.5 percent from 1998 to 30 million in 2004.(*)

Alvin

July 25th, 2005, 12:58 PM

here's a pessimistic view

---------------------------------
'Indonesia set for a fall in free trade era'
Ridwan Max Sijabat, The Jakarta Post, Jakarta

Indonesia will not be able to take advantage of increasing world trade liberalization because many stakeholders here are not even aware it is going on, an official says.

The chief of the Manpower and Transmigration Ministry's Center for Research, Information and Development, Harry Heriawan Saleh, said the government had moved too slowly to anticipate opening markets. Businesses were also ignorant of how they could benefit from the changes to trade rules, Harry said.

"Most investors do not care about free trade, while our national education sector and most professional associations are almost completely unaware of it. The government has done only a little to prepare the necessary policies and regulations and promote the progress Indonesia has made in negotiations (with developed countries)," he told The Jakarta Post here on Thursday.

Harry feared Indonesia would be unable to take any comparative advantages from freer trade.

"This country will become a big market for foreign products and workers while we will not be able to use the same opportunities to sell our products and workers (overseas)," he said.

The Asian Free Trade Agreement (AFTA) is due to take effect next year, with all 10 ASEAN member nations opening up their labor markets in 12 main sectors, including communications, transportation, education, health, finance and tourism. The plan is in line with the World Trade Organization's free trade deadline of 2020; the year developing countries are expected to have removed all of their trade barriers.

Compared to its neighbors, Indonesia was lagging behind in preparing for the free trade era, Harry said.

"Our neighbors, such as Singapore, Malaysia, Thailand and the Philippines, have been making their preparations for the past 10 years, meaning they are ready not only with the sectors that will be liberalized under AFTA, but also with the requirements for foreign workers. These three countries have also made bilateral deals or agreements with developed countries under GATT (the General Agreement on Tariffs and Trade).

"Indonesia has been spending the time defusing the economic crisis that has crippled its economy country since 1997. It has so far struck no bilateral agreements on free trade with other countries," he said.

Indonesian Institute of Sciences (LIPI) researcher and economist Widjaya Adi, meanwhile, expressed optimism that Indonesia could take advantage of the liberal markets, as long as the government intensified its efforts to inform stakeholders.

"The government should firstly liberalize the education sector by adopting developed countries' competence-based education and training curricula and recruit foreign instructors to improve our education quality in line with international standards," he said.

The health sector should then follow suit to help improve Indonesia's medical workers and paramedics, Widjaya said.

Harry and Widjaya agreed that the government and professional associations should encourage all vocational centers to adopt internationally-accepted standards in order to produce skilled and certified workers.

"Liberalized labor markets will not just require diplomas, they will need skilled and competent human resources," Widjaya said.

Blue_Sky

July 25th, 2005, 06:29 PM

1 Luxembourg 77,595
2 Norway 61,852
3 Switzerland 52,879
4 Iceland 52,063
5 Ireland 50,303
6 Denmark 49,182
7 Sweden 42,392
8 United States 41,917
9 Qatar 39,607
10 Austria 39,292
11 Finland 39,098
12 Netherlands 38,320
13 United Kingdom 38,098
14 Belgium 37,730
15 Japan 37,566
16 France 35,727
17 Germany 35,075
18 Canada 34,028
19 Australia 33,629
20 Italy 31,874
21 Spain 27,074
22 Singapore 26,481
23 New Zealand 26,291
24 Hong Kong 24,626
25 Kuwait 22,424
26 United Arab Emirates 22,009
27 Cyprus 21,161
28 Greece 21,017
29 Israel 18,303
30 Bahamas 18,256
31 Portugal 18,105
32 Slovenia 17,606
33 Netherlands Antilles 17,435
34 Brunei 15,764
35 Taiwan (Republic of China) 14,860
36 South Korea 14,784
37 Bahrain 14,728
38 Malta 14,001
39 Czech Republic 12,304
40 Antigua and Barbuda 11,592
41 Saudi Arabia 11,085
42 Hungary 10,978
43 Barbados 10,747
44 Trinidad and Tobago 10,533
45 Oman 10,316
46 Saint Kitts and Nevis 10,130
47 Slovakia 9,305
48 Estonia 9,112
49 Poland 8,082
50 Croatia 7,801
51 Seychelles 7,504
52 Lithuania 6,853
53 Mexico 6,771
54 Latvia 6,559
55 Chile 6,272
56 Gabon 6,035
57 Botswana 5,951
58 Libya 5,701
59 Lebanon 5,434
60 Russia 5,341
61 Mauritius 5,033
62 Malaysia 4,930
63 Turkey 4,744
64 South Africa 4,698
65 Panama 4,689
66 Venezuela 4,627
67 Costa Rica 4,526
68 Grenada 4,394
69 Argentina 4,380
70 Brazil 4,124
71 Belize 4,120
72 Saint Lucia 4,095
73 Equatorial Guinea 4,086
74 Uruguay 3,837
75 Dominica 3,772
76 Saint Vincent and the Grenadines 3,719
77 Romania 3,600
78 Kazakhstan 3,453
79 Jamaica 3,388
80 Bulgaria 3,347
81 Fiji 3,287
82 Tunisia 3,154
83 Serbia and Montenegro 3,142
84 Belarus 3,141
85 Algeria 2,971
86 Iran 2,810
87 Turkmenistan 2,756
88 Thailand 2,665
89 Albania 2,504
90 Peru 2,484
91 Cape Verde 2,479
92 Maldives 2,472
93 Suriname 2,452
94 Bosnia and Herzegovina 2,429
95 El Salvador 2,410
96 Republic of Macedonia 2,404
97 Dominican Republic 2,383
98 Namibia 2,360
99 Colombia 2,358
100 Swaziland 2,298
101 Ecuador 2,255
102 Tonga 2,226
103 Jordan 2,058
104 Guatemala 1,966
105 Samoa 1,821
106 Morocco 1,758
107 Ukraine 1,748
108 Republic of the Congo 1,563
109 Angola 1,550
110 Vanuatu 1,504
111 People's Republic of China (Mainland) 1,411
112 Syria 1,378
113 Egypt 1,297
114 Azerbaijan 1,279
115 Armenia 1,270
116 Indonesia 1,267
117 Paraguay 1,170
118 Bolivia 1,147
119 Sri Lanka 1,088
120 Philippines 1,079
121 Honduras 1,069
122 Zimbabwe 1,045
123 Guyana 1,035
124 Georgia 927
125 Côte d'Ivoire 886
126 Cameroon 882
127 Bhutan 879
128 Senegal 835
129 Djibouti 824
130 Nicaragua 821
131 Moldova 803
132 Kiribati 768
133 Sudan 718
134 Lesotho 702
135 India 678
136 Papua New Guinea 660
137 Benin 642
138 Chad 637
139 Nigeria 626
140 Comoros 620
141 Pakistan 591
142 Yemen 586
143 Solomon Islands 570
144 Vietnam 566
145 Mongolia 547
146 Zambia 537
147 Mauritania 529
148 Kenya 513
149 Haiti 511
150 Ghana 495
151 Laos 451
152 Burkina Faso 449
153 Kyrgyzstan 444
154 Mali 444
155 São Tomé and Príncipe 419
156 Uzbekistan 419
157 Togo 414
158 Bangladesh 408
159 Guinea 382
160 Central African Republic 371
161 Tajikistan 369
162 East Timor 353
163 Mozambique 343
164 Tanzania 323
165 Cambodia 317
166 Uganda 309
167 The Gambia 305
168 Madagascar 276
169 Niger 268
170 Nepal 247
171 Rwanda 235
172 Guinea-Bissau 229
173 Afghanistan 228[1]
174 Sierra Leone 208
175 Malawi 164
176 Myanmar 160
177 Eritrea 157
178 Ethiopia 123
179 Democratic Republic of the Congo 116
180 Burundi 106

Source: International Monetary Fund

Zorobabel

July 25th, 2005, 06:36 PM

Burma needs a new government...

Fir3blaze

July 25th, 2005, 07:52 PM

I read in the media somewhere that a few years ago a lot predicted that our textile industry would bite the dust...but as it turns out, apparently our exports have increased and with China under pressure to keep revaluing the yuan, it may present opportunities for us to increase our exports...not just textiles but in other industries too..

Well, i'm one of those skeptics. IMHO, in this competitive age, we have to be working really hard to secure the future, and the indonesian government is not showing this effort. The role of the government is essential especially that a large proportion of our citizens are unable to improve their own competitiveness by themselves. Today, the role is played largely by industry players themselves, who we can say is the biggest stakeholder in the battle for market. But they can't fight alone. If the government cannot clean up their act and start working for the nation's future, I'm afraid like Zorobabel put it, Indonesia needs a new government.

Alvin

July 26th, 2005, 02:33 AM

Hungary to invest US$4 BLN in South Sumatra for infrastructure: electricity, tollroads, rail line and a new port to support local coal industry.
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Hongaria Tanam 4 Miliar Dollar AS di Indonesia

jakarta, kompas - Presiden Susilo Bambang Yudhoyono menyambut baik rencana pihak swasta Hongaria menanamkan investasi di bidang energi dan infrastruktur sebesar 4 miliar dollar AS di Provinsi Sumatera Selatan.

Selain investasi, pemerintah Hongaria berjanji memberi pinjaman lunak sebesar 25 juta dollar AS kepada Pemerintah Indonesia untuk pembangunan jalan raya di Sumatera Selatan.

Indonesia menyambut baik rencana kerja sama dan investasi di Sumatera Selatan dalam bidang energi dan infrastruktur jalan, ujar Presiden Yudhoyono dalam jumpa pers bersama dengan Perdana Menteri Hongaria Ferenc Gyurcsany, seusai pertemuan bilateral di Istana Merdeka, Jakarta, Senin (25/7).

Seusai pertemuan bilateral, ditandantangani kesepakatan antara Pemerintah Indonesia dan Hongaria mengenai kerja sama ekonomi dan penandatanganan nota kesepahaman mengenai kerja sama pariwisata.

Sebelum pertemuan bilateral, ditandatangani nota kesepahaman pemerintah Hongaria dengan Pemerintah Daerah Sumatera Selatan mengenai rencana investasi dan pinjaman lunak.

â€?Investasi Hongaria ke Sumatera Selatan akan dilakukan di bidang energi dan infrastruktur, antara lain, tambang batu bara dan pembangkit listrik. Kami senang dengan pembicaraan yang berlangsung sangat terbuka, mendalam, dan konstruktif,â€? ujar Gyurcsany.

Seusai pertemuan bilateral, Gubernur Sumatera Selatan Syahrial Oesman menyebutkan, investasi yang akan dilakukan pihak swasta Hongaria ke Sumatera Selatan mencapai sebesar 4 milliar dollar AS.

Investasi itu digunakan untuk membangun lokasi tambang dan pelabuhan batu bara di Tanjung Api-api, pembangkit listrik, dan rel kereta untuk jalur pengangkut batu bara sepanjang 180 kilometer dari lokasi pertambangan ke pelabuhan.

â€?Tim lengkap dari Hongaria akan datang kembali awal September 2005. Tanjung Api-api adalah lokasi baru di kawasan timur Sumatera Selatan tepatnya di Selat Bangka,â€? ujar Syahrial.

Di tempat itu, lanjut Syahrial, akan dibangun pelabuhan berkelas internasional. Pelabuhan ini hanya berfungsi sebagai feeder.

Syahrial mengemukakan, pinjaman lunak dari Pemerintah Hongaria yang ditawarkan sebesar 25 juta dollar AS akan digunakan untuk pembangunan jalan raya menuju Pelabuhan Tanjung Api-api, sepanjang 70 kilometer.

Penandatanganan kesepahaman tadi dilakukan antara saya dan pihak Pemerintah Hongaria yang difasilitasi Presiden Yudhoyono, ujar Syahrial.

Menurut Syahrial, rencana investasi pihak swasta Hongaria sebesar 4 miliar dollar AS dan pinjaman lunak 25 juta dollar AS untuk pembangunan jalan raya itu akan meningkatkan produksi batu bara Sumatera Selatan menjadi lebih dari tiga kali lipat.

â€?Sekarang saja produksi batu bara kami mencapai 9 juta ton per tahun. Dengan investasi ini, produksi kami bisa mencapai tiga kali lipat dari produksi sekarang,â€? ujarnya.

Terkait dengan sejumlah kesepahaman dan perjanjian kerja sama itu, Presiden Yudhoyono mengemukakan, pada musim gugur mendatang, kedua pihak akan membicarakan langkah lanjutan yang lebih konkret dan nyata di Budapest, Hongaria.

Teknologi informasi

Di tempat terpisah, Menteri Koordinator Perekonomian Aburizal Bakrie di sela-sela forum bisnis Hongaria-Indonesia di Jakarta, mengemukakan, Hongaria juga berminat untuk berinvestasi dalam segala bidang di Indonesia. Salah satunya adalah investasi di bidang teknologi informasi.

Aburizal mengatakan, Hongaria memiliki kemajuan di bidang teknologi informasi. Karena itu, mereka ingin bekerja sama di bidang teknologi informasi.

Untuk realisasinya, Aburizal mengaku belum mengetahui secara rinci. Kalau satu sekolah harus ada satu laboratorium teknologi informasi, tentu biayanya sangat mahal, katanya.

Ketua Umum Kamar Dagang dan Industri Indonesia MS Hidayat menuturkan, sebetulnya masih ada kesempatan dan potensi yang dapat digali pebisnis Indonesia untuk kerja sama bilateral ini. (INU/TAV/OSA)

Alvin

July 26th, 2005, 07:23 AM

same news, in English
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Hungarian companies to invest $4 billion in South Sumatra

Rendi A. Witular, The Jakarta Post, Jakarta

South Sumatra's economy is to receive a massive boost following the signing of an agreement worth about US$4 billion on Monday, between the representatives of Hungarian investors and the province's administration.

Visiting Hungarian Prime Minister Ferenc Gyurcsany and economic and transportation minister Janos Koka, who witnessed the signing of the memorandum of understanding (MOU), said the deal would focus more on the development and construction of infrastructure.

"This morning, an MOU with the South Sumatra administration and representatives of Hungarian businesses was signed to develop power, coal mining, port and rail projects," Koka said at the State Palace.

South Sumatra Governor Syahrial Oesman said the projects would include the exploration of a coal mine in Banyuasin regency, the construction of a railroad from the mine to Bagan Siapi-Api port in Riau province and the construction of a power plant to support the mine.

"The $4 billion investment deal is a breakthrough for us. Usually, the central government deals with every major economic activity in our province. But now, we are managing to do it alone," said Syahrial after accompanying President Susilo Bambang Yudhoyono to meet Prime Minister Gyurcsany at the palace.

Syahrial said the coal mining site in Banyuasin was estimated to have a proven reserve of about six billion tons of coal, while its neighboring site in Muara Enim regency had about 13 billion tons.

He said the coal-fired power plant would have a capacity of about 4,000 megawatt (MG), which was significant given the electricity problem in the province.

The Hungarian government has also pledged to provide about $25 million in soft loans for the natural resource-rich South Sumatra to help develop a highway that would link several business areas in the province with Bagan Siapi-Api port.

Meanwhile, during a joint press conference with the President, Prime Minister Gyurcsany offered the government several of its information technology (IT) products and services, as well as a selection of its military equipment.

"Export of Hungarian products to Indonesia is 10 times smaller than imports from Indonesia. We would be very delighted if Indonesia explored several of our IT products as well as our military equipment industry," said Gyurcsany.

According to Indonesian Minister of Trade Mari Elka Pangestu, Indonesia's direct export to Hungary stands at about $96 million annually, while import from the country is less than $10 million.

Mari said that about 50 percent of Indonesian exports to Hungary was in the form of electronic goods, and the remainder was in the form of agriculture produce and food products.

Hungary, which has a population of about 10 million people, has also appealed to the Indonesian government, as well as its business community, to import wheat from Hungary.

Indonesia imports some five million tons of wheat annually, most of which is Australian.

Mari, however, said that importing wheat from Hungary would require greater effort due to the high transportation costs compared to importing it from neighboring countries.

"I think the products with the most potential for us are processing machinery for our forestry industry and IT products. Hungary excels in those sectors," Mari said.

Meanwhile, during a bilateral meeting, the two countries agreed to sign an agreement on economic cooperation and an MOU on the tourism sector.