Wednesday, March 11, 2009

Business & Trade updates from Jakarta

14 Reports: (Courtesy Joyo News Service)

- Negative national export growth rate forecasted this year : Bappenas

- Indonesia To Back Planned Yen Bonds With Infrastructure Projs

- Indonesia May Seek Additional Stand-By Loan Of $1 Billion

- Indonesia's Bank Mega To Maintain Moderate Ldr

- Oil and Gas are Primary Sources of Income for Indonesian State in 2008

- Thales Alenia Space Gets Work On Indonesian Satellite

- Indonesia's Bakrie Telecom To Earn $40 Mln From Tower Sales

- Indonesia Daihatsu Exports Down Slightly In February

- FIF Indonesia To Issue Bonds Valued At Us$45 Mln Next Week

- Indonesian Footwear Maker Facing Bankruptcy Suit

- Indonesia's Pelindo III To Spend $90 Mln On New Port Project

- China Co To Start Indonesia Palm Oil Production Next Jun-Exec

- Indonesia's Bulog Secures Loan Pledge From Three Banks

- Indonesia's PTPN To Produce 15 Mln Oil Palm Seedlings A Year


The Jakarta Post [website] March 11, 2009

Negative national export growth rate forecasted this year : Bappenas

The Jakarta Post, Jakarta

The National Development Planning Agency (Bappenas) predicted on Wednesday that the national export growth rate would reach minus six this year.

"Export growth rate will be negative around six percent because there will be a decrease in both volume and pricing in fuel and gas exports, as well as goods and services," Bappenas Macro Planning Director Bambang Prijambodo said on Wednesday, as reported by

He added that for the non-fuel and gas sector there is a 20 percent potential decrease in export earnings, roughly estimated to around USD$ 21.6 billion when compared to last year at $108 billion.

According to Prijambodo, the decrease in Indonesian exports are expected as all markets were suffering from economic recession due to the global economic downturn.

"The Asian tigers are also in recession. Thailand has predicted a minus one export growth, Singapore has similarly declared a negative growth as well. They are our highly potential markets," he said.

Prijambodo also argued that despite the fact that a weakening Rupiah would render Indonesia cheap as a tourist destination, foreign travellers would not necessarily jump at the opportunity due to financial wariness. (amr)


Indonesia To Back Planned Yen Bonds With Infrastructure Projs

JAKARTA, March 11 (Dow Jones)--The Indonesian government's proposed issuance of yen-denominated bonds will be backed by more than 100 planned infrastructure projects, a government official said Wednesday.

Those projects, which include electricity, toll road, water-transportation ports, airports, railway and housing concerns, will require total financing of IDR320.08 trillion ($27 million), said Lukita Dinarsyah Tuwo, deputy for development financing at the Ministry of National Development Planning.

Separately, the ministry's deputy for infrastructure Dedy Supriadi Priatna said that the government has allocated IDR105.12 trillion for the projects, which will be jointly developed with private investors.

The government has said it wants to issue a total $1.5 billion of yen-denominated bonds in the Japanese market over the next two years to help finance its budget.

The finance ministry has mooted the sale of a shibosai bond - a Samurai bond sold directly to investors via private placement.

The government hopes to issue around $500 million by June, but may issue up to $1.5 billion if it generates enough demand. The Japanese government via the Japan Bank for International Cooperation has agreed to guarantee the planned bonds if they are backed by infrastructure assets.


Indonesia May Seek Additional Stand-By Loan Of $1 Billion

JAKARTA, March 11 Asia pulse - Indonesia may have an opportunity to get an additional stand-by loan of US$1 billion under the Asian Development Bank's plan to increase its capital by up to 200 per cent.

The head of fiscal policy of the ministry of finance, Anggito Abimanyu, said here on Tuesday every member state was required to contribute to the plan.

"The need is huge so that it is divided among members according to their contribution, about Rp400 billion (US$33.6 million) a year as of 2010 in five years. It means we have to pay around Rp400 billion but we will also have a facility to borrow up to US$1 billion. It means we pay our contribution but will also get a benefit which is bigger," he said.

He said in its position as the sixth biggest shareholder in the ADB Indonesia was ready to participate in increasing the ADB's capital.

"We will get a facility for a contingency loan which is far more beneficial than the cost that we will pay," he said.

Earlier foreign donors confirmed their support to a stand-by loan for Indonesia worth US$5.5 billion for a two-year period. Finance minister/acting coordinating minister for the economy Sri Mulyani said the foreign donors would also realize Indonesia's idea to form a public expenditure support facility (PESF).

"The World Bank's board of directors on March 3, 2009 approved a US$2 billion worth of loan for Indonesia through a deferred drawdown option," she said. She said Japan, Australia and the ADB welcomed the World Bank's decision and confirmed their support for it.

The PESF is one of the Indonesian government's efforts to deal with the impact of the current global financial crisis and part of a series of comprehensive steps taken by the country to deal with the challenge including a fiscal stimulus package worth US$6.1 billion that had been approved by Parliament.

"The government will take fiscal policies continuously. The PESF is a contingency act planned to maintain international and domestic markets' confidence and to boost the country's capacity to seek funds needed to finance development," she said.

The government could access stand-by loans and bond securities made available in the facility to finance its infrastructure, social and other important programs when markets could not provide the needed funds at a reasonable cost. In view of that
the facility assures that the government would not reduce spending and public services because they are badly needed in view of the impact of the current global crisis, she said.

Japan would contribute up to US$1.5 billion to the PESF while Australia would add up to US$1 billion.


Indonesia's Bank Mega To Maintain Moderate Ldr

JAKARTA, March 11 Asia Pulse - Indonesia's PT Bank Mega (JSX:MEGA), said it is set to maintain its loan to deposit ratio (LDR) at a moderate level of 70 per cent to remain liquid amid the imminent threat of economic recession.

Kostaman Thayib, a director of the publicly traded lender, said credit expansion must be proportional to prevent mismatch that could lead to liquidity problem.

"The bank will set out with a moderate credit expansion this year targeting a growth of 15 per cent from Rp19 trillion (US$1.7 billion) last year," Kostaman said.

Adding that the bank still recorded an increase in the amount of third party fund to exceed Rp30 trillion amid the tight competition.

"Expensive funds or deposits still account for the largest portion of 60 per cent of the third party funds with savings contributing only 18.8 per cent and giro 21.2 per cent, he was quoted as saying by the newspaper Bisnis Indonesia.

"In the future the bank will seek to change the composition with cheap funds to make up for the largest portion," he said.


Global Insight Daily Analysis March 11, 2009 Oil and Gas are Primary Sources of Income for Indonesian State in 2008

Tom Grieder

Oil and gas production remains the major source of state income in Indonesia, accounting for US$35 billion, or 30% of total income in 2008, the Antara news agency reports. According to Djoko Harsono from BPMIGAS, "the success of the upstream oil and gas industry is the result of good performance of the upstream oil and gas regulatory agency amidst the current global crisis." In 2008 the government aimed to produce 977,000 b/d of oil, in 2009 the target is 960,000 b/d.Significance: Yearly declines in Indonesia’s oil and gas production have been offset by rising crude prices over the last few years which have assured hefty contributions to the state budget from exports. The launch of the major Cepu oil block in December 2008 and the commissioning of the BP-led Tangguh LNG project in Papua promise to arrest the decline in output somewhat over the coming year.

In addition Pertamina's attempts to secure farm-ins to blocks in the latter stages of development will help ensure the state reaps some benefits from new production, although it could alienate some investors. However, the collapse in crude prices, which is likely to be sustained over the course of 2009, will
drive down government income from the sector over the coming year while attempts to redirect gas exports to the domestic market in order to meet the 2.8 year-on-year (y/y) increase in demand could also drive down revenues


Thales Alenia Space Gets Work On Indonesian Satellite

PARIS, March 11 (Dow Jones)--Thales Alenia Space said Wednesday it has been chosen to supply the communications payload for a satellite being built by Russia's ISS-Reshetnev Co., formerly NPO-PM, for Indonesian telecommunications operator PT Telekomunikasi Indonesia Tdk.

Terms of the contract weren't disclosed.

Thales Alenia Space is two-thirds owned by French defense electronics company Thales SA (HO.FR) and one-third by Finmeccanica SpA (FNC.MI) of Italy.


Indonesia's Bakrie Telecom To Earn $40 Mln From Tower Sales

JAKARTA, March 11 Asia Pulse - PT Bakrie Telecom (JSX:BTEL) hope to soon earn Rp450 billion (US$40 million) from the sales of 543 telecommunication towers through tender.

The tender winner will be announced later this week, company vice president M. Danny Buldiansyah said. He said the subsidiary of the Bakrie Group would spend the fund this year to expand the company's capacity and coverage.

Among the bidders in the tender included PT Solusi Tunas Pratama, PT Tower Bersama, PT Protekindo, PT Retower, PT Padi Mekatel and PT Powertel, the newspaper Bisnis Indonesia said.


Indonesia Daihatsu Exports Down Slightly In February

JAKARTA, March 11 Asia Pulse - Indonesian exports of Daihatsu cars in completely built-up form (CBU) fell slightly by 9.5 per cent to 1,179 units in February from 1,303 units in the previous month.

The February exports, however, represented a 224 per cent increase year-on-year, the car maker PT Astra Daihatsu Motor (ADM) said.

ADM vice president Sudirman MR said the global financial crisis began to bite, weakening demand in some countries of export destinations.

Multipurpose vehicle Gran Max, which was growing in demand abroad, was the largest contributor to the exports, which included Terios, Avanza and Rush models of MPV, Sudirman said.

The company will exports 35 units of Gran Max to Malaysia and 300 units to Saudi Arabia, the newspaper Bisnis Indonesia said.


FIF Indonesia To Issue Bonds Valued At Us$45 Mln Next Week

JAKARTA, March 10 Asia Pulse - PT Federal International Finance (FIF) Indonesia is preparing to issue bonds valued at Rp500 billion (US$45 million) next week or a big cut from Rp1.5 trillion previously planned.

Soehartono, the president of the financing company said the company decided to cut the amount as the market condition is not stable.

The company would issue more bonds if the condition improve , Soehartono said, adding, investors may turn to bonds after the recent cut in the benchmark interest rate of Bank Indonesia to 7.75 per cent .

FIF has named a number of underwriters including Kresna Sekuritas, Trimegah Securities and Indo Premier , the newspaper Investor Daily said.


Indonesian Footwear Maker Facing Bankruptcy Suit

JAKARTA, March 11 Asia Pulse - The Indonesian supplier of Adidas shoes PT Prima Inreksa Industries (PII) is facing a law suit calling for its bankruptcy over its failure to repay debts.

The plaintiffs are leather supplier CV Cisarua to which PII has a debts of around US$168,000 and Bank Negara Indonesia (BNI) to which its debt was valued at US$37.25 million.

"The litigation is out last resort. We have tried the mediation process, but it always ended up with {II saying they don't have the money to pay the bills," Yakobus Eko Cisarua , a lawyer representing CV Cisarua told the newspaper The Jakarta Post.

Yakobus said PII could hardly continue operation with 5,000 workers if it had no money.


Indonesia's Pelindo III To Spend $90 Mln On New Port Project

JAKARTA, March 11 Asia Pulse - Indonesian State port operator PT Pelabuhan Indonesia (Pelindo) III said it will spend Rp1 trillion (US$90 million) for the first phase of development of a new port in Teluk Lamong, East Java.

Construction of the multifunction port , which is expected to be fully operational in 2011, is estimated to cost Rp2.5 trillion, Pelindo III President Suprihat said.

The Teluk Lamong ports will serve as an expansion of the country's second largest port of Tanjung Perak in the East Java capital of Surabaya. The new port to occupy a 50 hectare plot of land will reduce congestion at Tanjung Perak , Suprihat was quoted as saying by the newspaper Bisnis Indonesia.


China Co To Start Indonesia Palm Oil Production Next Jun-Exec

KUALA LUMPUR, March 11 (Dow Jones)--China-based Tianjin Julong Group's oil palm plantation in Indonesia is expected to start producing palm oil by next June, a company executive said Wednesday.

The group established the first Chinese oil palm plantation - of about 12,000 hectares in Central Kalimantan - in Indonesia three years ago.

"We expect our first harvest from anywhere between 2,000 and 3,000 hectares by the middle of next year," the executive said on the sidelines of a vegetable oils conference.

Tianjin Julong is an integrated oil and fats company, one of China's largest palm oil importers by volume. Its oil palm plantation in Kalimantan is operated by its Indonesian arm PT Graha Inti Jaya.


Indonesia's Bulog Secures Loan Pledge From Three Banks

JAKARTA, March 11 Asia Pulse - Bank Rakyat Indonesia (BRI) (JSX:BBRI), Bank Mandiri (JSX:BMRI) and Bank Bukopin (JSX:BBKP) have pledged a loan of Rp17 trillion (US$1.5 billion) for state logistics company Perum Bulog for rice procurement.

The fund is Rp2 trillion larger than the spending of Bulog for domestic rice procurement last year but it is still short of its requirement for the same purpose this year.

Bulog will need around Rp23 trillion for the procurement of 3.8 million tons of rice from farmers this year.

Bukopin alone pledged up to Rp8 trillion or Rp2 trillion larger than its commitment of Rp6 trillion but lower than realization of Rp9.3 trillion it provided last year for rice procurement by Bulog.

The big loan provided by Bukopin for Bulog is in line with the bank's core business orientation to financing commodity sector , Bukopin Finance and Planning Director Tri Joko Prihanto said.

In addition the credits provided for Bulog carry small risk as it is fully guaranteed by the government, he was quoted as saying by the newspaper Bisnis Indonesia.


Indonesia's PTPN To Produce 15 Mln Oil Palm Seedlings A Year

JAKARTA, March 11 Asia Pulse - Indonesian state plantation company PT Perkebunan Nusantara (PTPN) IV in Medan hopes to produce 15 million oil palm seedlings a year from a new nursery it is building in North Sumatra.

The company is building a 150 hectare nursery in the regency of Serdang Bedagai to produce high yield variety seedlings, its President Dahlan Harahap said.

The nursery is developed to become a profit center expected to start commercial production in 2016, Harahap told the newspaper Bisnis Indonesia.

PTPN IV itself will need 5 million seedlings a year and the rest will be sold to other plantation companies, he said.

Its planning and development Director Haslan Saragih said in the past five years the company has built 13,700 hectares of new oil palm plantations in that province.

Saragih said this year it will cooperate with another state company PTPN I to build 12,000 hectares of new oil palm plantations in West Aceh. More oil palm seedlings, therefore, will be needed for the new plantations, he added.

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