Thursday, July 2, 2009
Business & Trade updates from Jakarta
- Volkswagen to Invest $140 Million in Its First Indonesia Plant
- Katarina Utama To Sell 210 Mln Shares In IPO July 3-7
- Indonesia's Adhi Karya Secures New Contract Valued At $42 Mln
- Indonesia's Bank Rakyat Disburses $2 Bln In New Credit To State Cos
- RBS In Advanced Talks To Sell Asian Assets To ANZ – Sources
- Indonesian Banks Rates Not Supporting Export Competitiveness
- Indonesian Central Bank Sees Room For Key Rate Cut
- Indonesian Capital Spending May Fall Short Of Target: Minister
- Chinese Automakers Eyeing Larger Share Of Indonesian Market
- Indonesia Records Lower Surplus In May
- Indonesia's Non-Oil/Non-Gas Exports Down 21% In Jan-May
- Indonesia Suffers Trade Deficit With Thailand, China
(Courtesy Joyo News Service)
Volkswagen to Invest $140 Million in Its First Indonesia Plant
By Arijit Ghosh
July 2 (Bloomberg) -- Volkswagen AG, Europe’s largest automaker,
will spend $140 million in the next two years to build its first
factory in Indonesia, where economic growth is helping boost
The automaker plans to build a factory that can make 50,000
Touran multi-purpose vehicles a year, Muhammad Lutfi, head of
Indonesia’s Investment Coordinating Board, said in an interview
in Jakarta today. The government will provide tax incentives to
Volkswagen, he said without elaborating.
Making-multi purpose vehicles in Indonesia is 30 percent cheaper
than in other Southeast Asian nations because of government tax
breaks, said Lutfi. Wolfsburg, Germany-based Volkswagen is also
expanding in China and India as economic growth in Asia helps
more people to buy automobiles while recession damps demand in
Europe and in the U.S.
“It’s important, it’s Volkswagen, a global brand making it in
the country,” Lutfi said.
Volkswagen in a May 11 statement said it will use the Indonesian
plant to export to countries in Southeast Asia. Mathilda Rinta,
a spokeswoman for Volkswagen in Indonesia, didn’t immediately
respond to an e-mail seeking comment.
Indonesia is forecast to expand 4 percent this year, according
to the International Monetary Fund, making it the fastest
growing major economy in Asia after India and China.
The German automaker, already the biggest carmaker in China,
said in May it will invest 550 million euros ($776 million) with
a local partner to expand a factory in the country. Volkswagen
in March opened a 580 million euro factory in India.
Volkwagen’s Automobili Lamborghini SpA’s unit opened its first
Indonesian showroom earlier this year. Indonesian carmakers sold
a record 607,805 cars last year.
Toyota Motor Corp., the world’s largest automaker, has been
making the Innova brand of MPVs in Indonesia since 1977. Honda
Motor Co., Japan’s second-largest automaker, in March said it
will make and sell the Freed minivan in Indonesia this year.
Katarina Utama To Sell 210 Mln Shares In IPO July 3-7
JAKARTA, July 2 (Dow Jones)--Telecommunication equipment company
PT Katarina Utama said Thursday it plans to sell a 25.93% stake,
or 210 million shares, priced at IDR160 a share, through an
initial public offering between July 3 and July 7.
Katarina said in a prospectus that it will list the shares on
the Indonesia Stock Exchange on July 14.
The net proceeds from the IPO will be used to strengthen its
working capital and buy new telecommunication equipment.
PT Optima Kharya Capital Securities is the underwriter.
Katarina posted net profit of IDR1.68 billion, up 35% from
IDR1.24 billion a year earlier.
Indonesia's Adhi Karya Secures New Contract Valued At $42 Mln
JAKARTA, July 2 Asia Pulse - Indonesian publicly traded
construction company PT Adhi Karya (JSX:ADHI) said it has
secured a new infrastructure project valued at Rp420 billion
(US$42 million) in North Sumatra.
The state company will build taxiway in North Sumatra 's new
international airport of Kualanamu, now under construction.
Adhi Karya will team up with PT Duta Graha Indah to build the
project of the transport ministry with share split of 65:35,
Kurnadi Gularso, Adhi Karya secretary, said.
State airport operator PT Angkasa Pura II is expected to start
the operation of the new airport by the end of 2009.
The new airport is built outside the North Sumatra capital city
to replace the old Polonia airport in he city center.
Indonesia's Bank Rakyat Disburses $2 Bln In New Credit To State
JAKARTA, July 2 Asia Pulse - Bank Rakyat Indonesia (BRI) said it
disbursed Rp20 trillion out of Rp30 trillion (US$3 billion) in
new credits approved by the state lender to other state
companies in the first half of this year.
Sofyan Basir the president of the state lender said demand for
credits was weak and the bank management is more selective in
disbursing new credits.
Sofyan said BRI has pledged new credits to 60 borrowers among
state companies this year including those operating in
telecommunications, electricity, and cement sectors.
He said all of the credits are syndicated involving mainly other
major state banks like Bank Negara Indonesia and Bank Mandiri.
RBS In Advanced Talks To Sell Asian Assets To ANZ – Sources
By Vladimir Guevarra Of DOW JONES NEWSWIRES
LONDON, July 1 (Dow Jones)--The Royal Bank of Scotland Group PLC
(RBS) is in an advanced talks to sell its retail and commercial
banking operations in five Asian markets to Australia & New
Zealand Banking Group Ltd (ANZ.AU), people familiar with the
matter told Dow Jones Newswires Wednesday.
The units being eyed by ANZ are in Hong Kong, Indonesia,
Singapore, Taiwan and Vietnam, one person said. This means that
RBS is keen to sell its Asian assets on a piecemeal basis
instead of selling them all in one go.
In May, Melbourne-based ANZ raised A$2.5 billion by selling new
shares to help fund its bid to buy some of RBS's Asian banking
assets, though ANZ didn't specify which assets it planned to buy.
RBS has said previously that it is also selling retail
operations in India, Pakistan, China and Malaysia.
The U.K. bank, now 70%-owned by the U.K. government, is
disposing of assets as part of a massive restructuring plan
after posting a GBP24 billion net loss in 2008, the largest loss
in U.K. corporate history.
HSBC Holdings PLC (HBC) and Standard Chartered PLC (STAN.LN),
both U.K. banks with extensive operations in Asia, were
previously reported to also be interested in RBS's Asian assets.
But another person told Dow Jones previously that HSBC didn't
submit a bid for the assets.
Indonesian Banks Rates Not Supporting Export Competitiveness
JAKARTA, July 2 Asia Pulse - The high bank lending rates at
present are not helping increase the competitive edge of
Indonesia`s export commodities in the world market, a chamber of
commerce and industry official said.
"We have reminded several times that the global economy has
begun to recover as indicated by the recovery of the United
States and European Union inter-bank markets," Chairman of the
Indonesian Chamber of Commerce and Industry (Kadin)`s Permanent
Committee for Internal Trade Affairs, Bambang Soesatyo said here
Based on the developments, Kadin has reminded several times the
monetary authorities of the importance of lowering bank lending
rates so that industries produce export-oriented products while
the real sector would also respond to the economic recovery.
"If our business is not able to respond to the global economic
recovery, we will get nothing because our export commodities
would not be able to compete," Soesatyo said.
Unfortunately, Soesatyo said, although Bank Indonesia (BI) has
lowered its benchmark rate (BI Rate), banks have not yet lowered
their lending rates significantly.
"The lending rates offered by banks at present are not yet able
to increase the competitive edge of our export products," he
He said that because lending rates are still high only large
scale exporters or those who had contracts are able to utilize
"Because of their successful economic stimuli, a number of
Indonesia`s export destination countries have begun to normalize
their demand for commodities. We have to respond to it rightly
so that we will be able to boost our exports," he said.
In the meantime, the Central Bureau of Statistics (BPS) reported
on Wednesday that the country`s non-oi/non-gas exports in the
January - May period dropped by 21.9 per cent if compared with
the same period a year earlier.
"The exports of animal and vegetable fat/oil group experienced a
significant drop by 42.44 per cent in the January - May, 2009
period," Ali Rosidi of BPS said.
Indonesian Central Bank Sees Room For Key Rate Cut
JAKARTA, July 2 Asia pulse - Deputy Governor of Bank Indonesia
(BI) Budi Mulia said there was room for the central bank to cut
its benchmark interest rate as inflationary pressures in June
had remained low.
"There is still room. But we cannot merely look at the monthly
conditions of the economy but the conditions should be seen as a
whole," Mulia said here on Wednesday.
He said that in 2009 inflation was predicted to be lower. It
could even be lower than BI`s prediction at 5 to 7 per cent this
However, he said, his side would remain to use the 5-7 percent
prediction as a reflection of the bank`s prudence so that its
policy would remain credible.
"It is impossible for us to provide something that would only
amuse the market but forget produce," he said.
The Central Bureau of Statistics (BPS) announced on Wednesday
that the June inflation rate was recorded at 0.11 percent and
the January-June calendar year inflation rate at 0.21 per cent.
In line with the weakening of inflationary pressures, the
central bank has continued to cut its key rate every month since
December 2008 until June 2009.
The BI benchmark interest rate at present is set at 7 percent.
The reference rate has been undergoing a cut of 2.5 percent (250
However, the aggressive cuts in the BI rate was not responsively
followed by banks. The lowering of banks lending rates is still
According to another BI deputy governor, Hartadi A Sarwono, this
conditions happened because banks still feared possible risks in
connection with the economic condition of late.
In the meantime, the BPS on Wednesday also announced that
Indonesia`s exports in May 2009 increased 9.5 per cent to
US$9.26 billion compared with those in the previous month.
"But compared with the corresponding period a year earlier, the
May exports are 28.28 per cent lower," BPS deputy chief for
statistics distribution and service affairs, Ali Rosidi, said
here on Wednesday.
Indonesian Capital Spending May Fall Short Of Target: Minister
JAKARTA, July 1 Asia pulse - The Indonesian government`s capital
spending may fall short of target for this year because of
efficiency measures, a minister said.
Capital spending in 2009 were projected to reach Rp74.3 trillion
(US$7.3 billion) compared to Rp79.4 trillion set in the fiscal
stimulus document for 2009, Finance Minister Sri Mulyani
Indrawati said in a working meeting with the House of
Representatives (DPR)`s budget committee on Tuesday.
"The estimate of capital spending for 2009 will be lower than
expected," she said.
The Rp74.3 trillion capital spending included spending on the
construction of roads and bridges worth Rp20.5 trillion,
buildings worth Rp14.1 trillion, machinery and equipment worth
Rp19.1 trillion, networks worth Rp10.2 trillion, and other
facilities worth Rp6.2 trillion, she said.
Despite the lower-than-projected capital spending, the
achievement in 2009 would be better than in 2008 when capital
spending reached Rp72.8 trillion, she said.
Unlike capital spending, the government spending on subsidy was
projected to surge by up to 129.5 per cent this year due to an
increase in crude oil prices, she said.
"Spending on subsidy in 2009 is estimated at Rp160 trillion,
well above Rp123.5 trillion set in the fiscal stimulus document
for 2009," she said.
The projected Rp160 trillion subsidy consisted of energy subsidy
worth Rp102.5 trillion and non-energy subsidy worth Rp57.5
trillion, she said.
The energy subsidy consisted of fuel oil subsidy worth Rp54.3
trillion and electricity subsidy worth Rp48.2 trillion, she said.
The non-energy subsidy was made up of food subsidy worth Rp13
trillion, fertilizer subsidy worth Rp18.4 trillion, tax subsidy
worth Rp18.3 trillion, and other subsidies worth Rp7.7 trillion,
Chinese Automakers Eyeing Larger Share Of Indonesian Market
JAKARTA, July 1 Asia Pulse - Chinese automakers are turning to
Indonesia hoping to grab a substantial share of the potential
market in that country.
In the last two years, four Chinese brands - Chery, Foton, Great
Wall and Geeky have entered the Indonesian market.
PT Foton Mobilindo, the assembler and distributor of Foton
passenger cars in the country, is set to invest Rp100 billion
Meanwhile, PT Geely Mobil Indonesia plans to invest Rp300
billion in the next several years to make the country production
base for Geely cars in ASEAN region.
PT Indomobil Sukses Internasional, which is assembler and agent
for Chery, Foton truck and pick ups and Great Wall, is also
expected to increase investment.
Chinese principals are seeking new markets to dispose of their
growing production amid setback financially suffered by rivals
from Japan and Europe, Frans C Harsono, the marketing director
of Foton Mobilindo.
Indonesia Records Lower Surplus In May
JAKARTA, July 2 Asia Pulse - Indonesia recorded a smaller
surplus of US$1.41 billion in international trade in May from
US$1.74 billion in the previous month, the Central Bureau of
Statistics (BPS) said.
Imports grew by a higher rate than exports resulting in smaller
surplus, BPS deputy chief Ali Rosidi said.
Ali said the country's exports were valued at US$9.29 billion in
May, up 9.52 per cent from April and at the same time imports
surged 17 per cent to US$7.85 billion.
The exports in May, which were 28.28 per cent lower
year-on-year, brought the country's total exports to US$40.74
billion, down 29.24 per cent from the same period last year.
The monthly increase in May was contributed by a 13.3 per cent
rise in the exports of commodities outside oil and gas toUS$8.16
billion as oil and gas exports fell 12.14 per cent to US$1.1
Indonesia's Non-Oil/Non-Gas Exports Down 21% In Jan-May
JAKARTA, July 2 Asia pulse - The Central Bureau of Statistics
(BPS) said Indonesia`s non-oil/non-gas exports in the January -
May period dropped by 21.9 per cent if compared with the same
period a year earlier.
"The exports of animal and vegetable fat/oil group experienced a
significant drop by 42.44 per cent," Ali Rosidi, BPS deputy
chief for statistics distribution and service affairs, said here
He said that other commodities which experienced a significant
increase were grain and metal crust/ash groups which rose 531
Indonesia`s exports to main destination countries such as ASEAN
in May increased 23 per cent, Europe 31.5 per cent, Japan 37.33
per cent and other destinations with an average increase of 4.48
Indonesia`s exports to China in May dropped 10.4 per cent,
In the meantime, Indonesia`s exports in May 2009, according to
the BPS, increased 9.5 per cent to 9.26 billion dollars compared
with those in the previous month.
"But compared with the corresponding period a year earlier, the
May exports are 28.28 per cent lower," BPS Ali Rosidi, said here
The increase in the export performance in May was fueled by the
rise of non-oil exports which rose 13.3 per cent. However oil
and gas exports dropped 12 per cent.
Indonesia`s main export commodities which experienced
significant increase in May 2009 included animal fat and
vegetable group which was up 57.66 per cent from US$771.2
million to US$1.215 billion.
Trade Minister Mari Elka Pangestu said last month that
Indonesia`s non-oil/non-gas exports in 2009 were predicted to
drop by 20 per cent from last year`s value of US$107.8 billion
or higher than earlier forecast at 30 per cent.
"Our initial forecast is minus 30 per cent but now it may be 20
to 30 per cent," she said.
She said non-oil/non-gas exports had declined since October 2008
and were likely to reach bottom in March. "We hope the trend
will rise and therefore contracts will not be as big as in
previous years," she said.
According to the BPS, the country`s non-oil/non-gas exports from
January to April 2009 reached US$26.90 billion or dropped by
22.68 per cent compared to last year`s.
Indonesia Suffers Trade Deficit With Thailand, China
JAKARTA, July 1 Asia Pulse - Indonesia suffered a deficit in its
trade with Thailand and China in May, the country`s statistics
"In general, however, the balance of trade in the month was
still in surplus of around US$1.4 billion," the deputy for
statistics of distribution and services of the Central Bureau of
Statistics (BPS), Ali Rosidi, said here on Wednesday.
Based on the BPS data, Indonesia suffered a deficit of US$171.7
million in its trade with Thailand in the month and US$315.9
million with China, he said.
Indonesia`s exports to Thailand in May reached US$183.9 million
with its imports from that country totalled US$355.6 million.
The country`s exports to China meanwhile were valued at US$740.4
million while its imports from that country reached US$1.1
He said most goods imported from those two countries were
vehicles, machines, mechanical instruments, plastic and plastic
items, paper and cardboard paper.
In general Indonesia`s balance of trade with ASEAN countries as
well as the Europen Union still showed a surplus for the country.
The surplus from non-oil and gas trade reached US$1.611 billion
while in oil and gas trade the country suffered a deficit of
Periodically from January to May it still enjoyed a surplus of
US$7.116 billion in its trade of non-oil and gas items.
In the trade of oil and gas however it had a deficit of US$21.6