LOS ANGELES, -- Indonesia is unlikely to raise its planned output to 1.3 million b/d of crude oil by 2009 due to the lack of exploration and development, according to Cyril Noerhadi, finance director of Indonesian oil and gas company PT Medco Energi Internasional.
Noerhadi said the government's target of 1.3 million b/d of crude oil could be achieved only from discoveries and improvement to production from existing fields. He said significant recent discoveries include only wells on the Cepu Block in Centra Java and Jeruk Block in Madura and require development.
Part of wait for production, he noted, involves resolution of a dispute between state-run PT Pertamina and ExxonMobil over operatorship of the Cepu Block.
The dispute between Pertamina and ExxonMobil, each with a 45% stake in the venture, has delayed work in the project.
Noerhadi said the Indonesian government needs to review its fiscal regime to make it attractive to foreign investment. At present, he said, foreign investors prefer oil and gas ventures in Vietnam, Thailand, Russia, and Kazakhstan.
"This is ironical because chances for success in oil exploitation in Indonesia have reached 30%" he added.
His remarks echoed earlier criticism by the 45-member US-Indonesia Business Council, which recommended that the government generate a well-defined oil and gas policy (OGJ Online, Jan. 24, 2006.)
Noerhadi's comments coincided with a government announcement on Feb. 6 that Indonesia produced 955,000 b/d of crude oil and condensate last year, missing its targeted output for the year by 120,000 b/d.
Minister of Finance Sri Mulyani Indrawati said the country set a target of 1.075 million b/d of crude and condensate in the 2005 state budget. She did not offer an explanation for the shortfall.
Despite falling production, the value of Indonesia's oil and gas exports rose 16.58% year-on-year in December 2005 to $1.86 billion, as both oil export volumes and prices rose, according to a report by the Central Bureau of Statistics on Feb. 1.
Despite the improved income, the Indonesian economy has been struggling to keep pace with the cost of the country's own increasing imports of oil. Indonesia consumes 1.35 million b/d and imports about 390,000 b/d.
As a result, on Jan 24, Bank Indonesia said its foreign exchange reserves as of end-2005 dropped to $34.72 billion from $36.32 billion a year earlier, partly due to the oil price spike.
On Jan. 26, PT Pertamina said it may reduce its fuel imports for this year by 20% due to lower domestic consumption brought about after the government raised fuel prices in October 2005.
Pertamina said it reduced its fuel import target for February to 6.4 million bbl from 7.6 million due to sufficient fuel stock. It said fuel imports have fallen from 17 million bbl in September to 12 million bbl in December and to an estimated 8.4 million bbl in January.
Indonesia has an Organization of Petroleum Exporting Countries quota of 1.45 million b/d of crude but has failed to meet the quota since early 2002.
Source:
Eric Watkins, Senior Correspondent
Oil & Gas Journal
February 06, 2006
Monday, February 06, 2006
Optimism grows on coping with oil price hikes , Indonesia is better placed to survive
Brighter growth prospects for Asia over the next 12 months have raised hopes that regional economies will cope should oil prices again breach US$70 (HK$546) a barrel.
Brighter growth prospects for Asia over the next 12 months have raised hopes that regional economies will cope should oil prices again breach US$70 (HK$546) a barrel.
Analysts widely see that level as probable within the next two months. Oil currently hovers a few dollars shy of the record high of US$70.85 reached in August following Hurricane Katrina in the United States.
US$70 was once thought of as a potential breaking point for regional economies with heavy reliance on oil imports. The lesser impact now envisaged marks a welcome change from the pessimism that dominated the markets just five months ago.
"Seventy dollars appears likely but global growth seems solid right now," said David Cohen, a regional economist with Singapore-based Action Economics.
"The data from across the region shows that the Asian economies finished 2005 on a solid note supported by strength in global export demand. That looks likely to continue into the first half of 2006."
Middle East tensions, consumer demand and institutions which increasingly see oil as an investment risk pushing the cost of crude to beyond US$90 a barrel, according to some analysts. BT Pension Scheme plans to invest 1 billion (HK$13.6 billion) in the commodities market.
"This is a huge amount of money in the commodities market," said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo. "Oil prices would be pushed up by this kind of pension fund money. It's a big one we cannot ignore."
That prospect, plus possible sanctions against Iran and unparalleled growth in markets like China and India, has Emori forecasting oil prices of US$90-US$97 in the second half of this year. At those levels, analysts expect inflation to rise, coercing central banks into another round of interest rate hikes, and global economic growth to falter.
However, even at US$90 to US$100 a barrel, Cohen is optimistic the region would weather the economic fallout, if spiraling oil prices are driven more by demand than political risk factors.
"The increase last year reflected a strength in global demand rather than a supply shock - if that continues to hold through this year, then the higher prices should not derail the growth in the region," he said.
"It would subtract some percentage points from world growth but, again, the distinction between higher prices resulting from geopolitical shocks as opposed to resulting from growth in global demand should be made," he said.
Australian growth has been clipped by oil. But Commsec commodities strategist David Thurtell said the outlook remained solid amid surging commodity prices and a stable housing market. "I don't think people are hurting too much," he said.
Indonesia is better placed to survive another shock after substantially reducing expensive fuel subsidies.
Standard Chartered Bank economist Fauzi Ichsan said recent fuel price hikes had caused a fall in demand. Inflation is now expected to ease but a target of 6 percent growth in 2006 is being maintained.
"For 2006, the impact of oil prices is not too big," he said. "Indonesia's balance of payments is improving."
Australia and Indonesia are big energy producers but India, China and Japan are major importers and are more acutely affected by pricing.
"Oil prices are high but they are showing signs of relative stability," said Masaaki Kanno, chief economist at JPMorgan Securities Asia. After a decade in the economic doldrums and painful corporate restructuring, Japanese businesses are returning handsome profits and Kanno insists oil costs will have minimal impact because "the European economy is still vibrant and the US economy is still hanging in there."
Victor Shum, an analyst with Purvin and Gertz, expects oil prices to soar beyond previous record levels, but he believes China will maintain its subsidized pricing regime. "Overriding priority to maintain social stability and control inflation, one can expect oil prices, or domestic refined oil products, to be capped artificially low," he said.
This would ensure Chinese pump prices remain "disconnected from international prices."
However, analysts say India is more vulnerable, with oil the biggest contributor to inflation.
Analyst Paranjoy Guha Thakurta said Indian oil consumption was keeping pace with growth of 7 percent to 8 percent. Had prices held steady last year then inflation would have been 2 percentage points lower.
"For 2006, I am not very optimistic as international demand and supply are very finely balanced," he said.
Source:
The Standard, China's Business Newspaper
February 07, 2006
Brighter growth prospects for Asia over the next 12 months have raised hopes that regional economies will cope should oil prices again breach US$70 (HK$546) a barrel.
Analysts widely see that level as probable within the next two months. Oil currently hovers a few dollars shy of the record high of US$70.85 reached in August following Hurricane Katrina in the United States.
US$70 was once thought of as a potential breaking point for regional economies with heavy reliance on oil imports. The lesser impact now envisaged marks a welcome change from the pessimism that dominated the markets just five months ago.
"Seventy dollars appears likely but global growth seems solid right now," said David Cohen, a regional economist with Singapore-based Action Economics.
"The data from across the region shows that the Asian economies finished 2005 on a solid note supported by strength in global export demand. That looks likely to continue into the first half of 2006."
Middle East tensions, consumer demand and institutions which increasingly see oil as an investment risk pushing the cost of crude to beyond US$90 a barrel, according to some analysts. BT Pension Scheme plans to invest 1 billion (HK$13.6 billion) in the commodities market.
"This is a huge amount of money in the commodities market," said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo. "Oil prices would be pushed up by this kind of pension fund money. It's a big one we cannot ignore."
That prospect, plus possible sanctions against Iran and unparalleled growth in markets like China and India, has Emori forecasting oil prices of US$90-US$97 in the second half of this year. At those levels, analysts expect inflation to rise, coercing central banks into another round of interest rate hikes, and global economic growth to falter.
However, even at US$90 to US$100 a barrel, Cohen is optimistic the region would weather the economic fallout, if spiraling oil prices are driven more by demand than political risk factors.
"The increase last year reflected a strength in global demand rather than a supply shock - if that continues to hold through this year, then the higher prices should not derail the growth in the region," he said.
"It would subtract some percentage points from world growth but, again, the distinction between higher prices resulting from geopolitical shocks as opposed to resulting from growth in global demand should be made," he said.
Australian growth has been clipped by oil. But Commsec commodities strategist David Thurtell said the outlook remained solid amid surging commodity prices and a stable housing market. "I don't think people are hurting too much," he said.
Indonesia is better placed to survive another shock after substantially reducing expensive fuel subsidies.
Standard Chartered Bank economist Fauzi Ichsan said recent fuel price hikes had caused a fall in demand. Inflation is now expected to ease but a target of 6 percent growth in 2006 is being maintained.
"For 2006, the impact of oil prices is not too big," he said. "Indonesia's balance of payments is improving."
Australia and Indonesia are big energy producers but India, China and Japan are major importers and are more acutely affected by pricing.
"Oil prices are high but they are showing signs of relative stability," said Masaaki Kanno, chief economist at JPMorgan Securities Asia. After a decade in the economic doldrums and painful corporate restructuring, Japanese businesses are returning handsome profits and Kanno insists oil costs will have minimal impact because "the European economy is still vibrant and the US economy is still hanging in there."
Victor Shum, an analyst with Purvin and Gertz, expects oil prices to soar beyond previous record levels, but he believes China will maintain its subsidized pricing regime. "Overriding priority to maintain social stability and control inflation, one can expect oil prices, or domestic refined oil products, to be capped artificially low," he said.
This would ensure Chinese pump prices remain "disconnected from international prices."
However, analysts say India is more vulnerable, with oil the biggest contributor to inflation.
Analyst Paranjoy Guha Thakurta said Indian oil consumption was keeping pace with growth of 7 percent to 8 percent. Had prices held steady last year then inflation would have been 2 percentage points lower.
"For 2006, I am not very optimistic as international demand and supply are very finely balanced," he said.
Source:
The Standard, China's Business Newspaper
February 07, 2006
Finance Ministry plans new unit to resolve thousands of IBRA cases
Finance Minister Sri Mulyani Indrawati said her ministry was currently handling some 6,000 "unsolved" cases that were handed over by the now defunct Indonesian Bank Restructuring Agency (IBRA).
"There are 6,000 cases that have not been resolved," she told reporters over the weekend. Sri Mulyani said that a new special team must be set up to handle the cases as existing units within the ministry were already overloaded with other tasks.
"What we need is a kind of presidential ruling to set up the team," she was quoted as saying by Antara over the weekend. She did not elaborate.
IBRA was set up by the government in February 1998, but only began activities a year later, and had the mission of rehabilitating the country's collapsed banking sector in the wake of the 1997 regional crisis. IBRA also had the task of restructuring and selling various assets taken over from indebted bankers to help recover the massive US$75 billion in taxpayers' money used by the government to bail out the banks.
The agency was closed down in February 2004, much later than similar agencies in Malaysia, Thailand and South Korea, but its record in terms of asset disposal was lower, averaging only 28 percent, compared with more than 35 percent in Thailand, 29 percent in Malaysia and almost 40 percent in Korea.
IBRA left much unfinished business after it ceased operation, including unresolved legal cases, a majority of which centered on disputed assets taken over from bankers. The total value of the cases at the time of the closure was estimated at around Rp 25 trillion.
Sri Mulyani's statement came as the country's law enforcers investigate alleged corruption committed by former agency chairman Syafruddin Temenggung in relation to the sale of sugar company PT Rajawali III, which according to prosecutors had caused Rp 500 billion in financial losses to the state. Syafruddin has been declared a suspect in the case.
Sri Mulyani declined, however, to comment on the legal measures being taken against Syafruddin. But anti-graft activists have called on the authorities to also probe other former IBRA chairmen and top officials. Many people have long suspected rampant graft within the agency, with accusations that assets belonging to the state were sold at heavily discounted prices.
Source:
The Jakarta Post,
February 07, 2006
"There are 6,000 cases that have not been resolved," she told reporters over the weekend. Sri Mulyani said that a new special team must be set up to handle the cases as existing units within the ministry were already overloaded with other tasks.
"What we need is a kind of presidential ruling to set up the team," she was quoted as saying by Antara over the weekend. She did not elaborate.
IBRA was set up by the government in February 1998, but only began activities a year later, and had the mission of rehabilitating the country's collapsed banking sector in the wake of the 1997 regional crisis. IBRA also had the task of restructuring and selling various assets taken over from indebted bankers to help recover the massive US$75 billion in taxpayers' money used by the government to bail out the banks.
The agency was closed down in February 2004, much later than similar agencies in Malaysia, Thailand and South Korea, but its record in terms of asset disposal was lower, averaging only 28 percent, compared with more than 35 percent in Thailand, 29 percent in Malaysia and almost 40 percent in Korea.
IBRA left much unfinished business after it ceased operation, including unresolved legal cases, a majority of which centered on disputed assets taken over from bankers. The total value of the cases at the time of the closure was estimated at around Rp 25 trillion.
Sri Mulyani's statement came as the country's law enforcers investigate alleged corruption committed by former agency chairman Syafruddin Temenggung in relation to the sale of sugar company PT Rajawali III, which according to prosecutors had caused Rp 500 billion in financial losses to the state. Syafruddin has been declared a suspect in the case.
Sri Mulyani declined, however, to comment on the legal measures being taken against Syafruddin. But anti-graft activists have called on the authorities to also probe other former IBRA chairmen and top officials. Many people have long suspected rampant graft within the agency, with accusations that assets belonging to the state were sold at heavily discounted prices.
Source:
The Jakarta Post,
February 07, 2006
Lawmakers debate new mining bill to install new system
As the deliberation of the mining bill continues at the House of Representatives, legislators are at odds on the pressing issue of licenses versus contracts to be awarded for companies that wish to develop mineral resources and coal in the country.
The Golkar Party will propose that a "mining activity agreement", which basically serves like the current working contract with mining companies, be included in the draft law, the party's legislator Erlangga Hartanto said on Sunday.
Such a proposal was made to answer the demands of investors in the sector, who have responded negatively to the bill, said Erlangga, whose party has 12 members of the 50 comprising the House's special committee to deliberate the draft law.
The government-sponsored bill, intended to supersede Law No. 11/1967 on mining, aims to replace the "contract of work" system with exploration and production licenses, which will be awarded by local administrations in line with the regional autonomy law.
Legislator Alvin Lie from the National Mandate Party (PAN) said that it would support the government on the issue. "We will have better control over the use of land with licenses," said Alvin. PAN, which has five members in the committee, will also suggest that the license period be cut to 15 years, including exploration and production, from a total of 31 years proposed in the bill.
The Indonesian Democratic Party of Struggle (PDI-P), the second biggest party with 10 committee members, is yet to take a stance on the matter.
"We will see the discussions taking place in the committee's sessions," said legislator Ramson Siagian.
PricewaterhouseCoopers' (PwC) report on the mining industry in 2005, released in January, shows that the licensing scheme dissuades investors from exploring mining prospects in Indonesia. Spending on greenfield exploration in the country continued to decline, standing at US$7 million in 2004, which represented less than 0.44 percent of the $1.59 billion spending worldwide, down from 0.67 percent from $1.05 billion a year earlier.
As the government cannot sign contracts directly with investors, Golkar will propose that a legally incorporated state agency be established to deal with contracts. "This is similar to BP Migas (the Oil and Gas Upstream Regulatory Agency) in the oil and gas industry," said Erlangga.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro has previously said that mining industry could not follow the same system as oil and gas, as mineral resources are left in the hands of local administrations according to the regional autonomy law.
Erlangga said that certain "strategic" minerals could be withdrawn into the central government's authority, but declining to elaborate which minerals would be included.
Meanwhile, Alvin said that PAN would also propose that the terms of payment for the license, including that for royalties, be reviewed every five years, to better reflect current conditions.
Another idea that the faction would try to push through is the yearly installment of post-mining period rehabilitation costs. "If a mining company went bankrupt, we'd have savings to conduct the proper rehabilitation measures," he said.
Source:
Leony Aurora, The Jakarta Post
February 07, 2006
The Golkar Party will propose that a "mining activity agreement", which basically serves like the current working contract with mining companies, be included in the draft law, the party's legislator Erlangga Hartanto said on Sunday.
Such a proposal was made to answer the demands of investors in the sector, who have responded negatively to the bill, said Erlangga, whose party has 12 members of the 50 comprising the House's special committee to deliberate the draft law.
The government-sponsored bill, intended to supersede Law No. 11/1967 on mining, aims to replace the "contract of work" system with exploration and production licenses, which will be awarded by local administrations in line with the regional autonomy law.
Legislator Alvin Lie from the National Mandate Party (PAN) said that it would support the government on the issue. "We will have better control over the use of land with licenses," said Alvin. PAN, which has five members in the committee, will also suggest that the license period be cut to 15 years, including exploration and production, from a total of 31 years proposed in the bill.
The Indonesian Democratic Party of Struggle (PDI-P), the second biggest party with 10 committee members, is yet to take a stance on the matter.
"We will see the discussions taking place in the committee's sessions," said legislator Ramson Siagian.
PricewaterhouseCoopers' (PwC) report on the mining industry in 2005, released in January, shows that the licensing scheme dissuades investors from exploring mining prospects in Indonesia. Spending on greenfield exploration in the country continued to decline, standing at US$7 million in 2004, which represented less than 0.44 percent of the $1.59 billion spending worldwide, down from 0.67 percent from $1.05 billion a year earlier.
As the government cannot sign contracts directly with investors, Golkar will propose that a legally incorporated state agency be established to deal with contracts. "This is similar to BP Migas (the Oil and Gas Upstream Regulatory Agency) in the oil and gas industry," said Erlangga.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro has previously said that mining industry could not follow the same system as oil and gas, as mineral resources are left in the hands of local administrations according to the regional autonomy law.
Erlangga said that certain "strategic" minerals could be withdrawn into the central government's authority, but declining to elaborate which minerals would be included.
Meanwhile, Alvin said that PAN would also propose that the terms of payment for the license, including that for royalties, be reviewed every five years, to better reflect current conditions.
Another idea that the faction would try to push through is the yearly installment of post-mining period rehabilitation costs. "If a mining company went bankrupt, we'd have savings to conduct the proper rehabilitation measures," he said.
Source:
Leony Aurora, The Jakarta Post
February 07, 2006
Foreign companies will receive guidelines on seeking protection
JAKARTA (AP): Foreign companies will soon receive guidelines on seeking military protection for their operations in Indonesia, Minister of Defense Juwono Sudarsono Monday.
All payments to the military should be voluntary and made through a civilian agency, not directly to soldiers or police, Juwono said, citing regulations that could be complete "as early as next week."
His comments follow claims that direct payments by U.S. mining company Freeport McMoRan Copper & Gold Inc. to officers commanding units guarding its massive gold mine in Papua province may have been illegal.
The New Orleans-based company has denied violating Indonesian or U.S. laws, saying it has been transparent about providing support to soldiers in the town of Timika.
Juwono said the practice of paying for protection from the armed forces was not limited to Indonesia, but should be regulated and clearly defined.
"All across the world ... in-kind payments are made in various kinds of arrangement, some legal, some illegal," he said. "It's a matter of scope and degree."
The use of military units to provide protection for foreign enterprises was instituted by former president Soeharto, himself a retired five-star general, as a way of extorting additional funds for the military brass who formed his principal power base.
But since Soeharto's ouster in 1998, the police force -- previously been part of the armed forces -- has been made independent and is now tasked with ensuring domestic security.
The practice of paying Indonesia's corrupt and often brutal military came under renewed scrutiny after a 2002 attack on a convoy of teachers working at Freeport's massive mine in Papua killed two U.S. citizens.
Local and foreign rights groups accused soldiers of taking part in the attack, allegedly to extort more security payments money from Freeport.
Source:
The Jakarta Post
February 07, 2006
All payments to the military should be voluntary and made through a civilian agency, not directly to soldiers or police, Juwono said, citing regulations that could be complete "as early as next week."
His comments follow claims that direct payments by U.S. mining company Freeport McMoRan Copper & Gold Inc. to officers commanding units guarding its massive gold mine in Papua province may have been illegal.
The New Orleans-based company has denied violating Indonesian or U.S. laws, saying it has been transparent about providing support to soldiers in the town of Timika.
Juwono said the practice of paying for protection from the armed forces was not limited to Indonesia, but should be regulated and clearly defined.
"All across the world ... in-kind payments are made in various kinds of arrangement, some legal, some illegal," he said. "It's a matter of scope and degree."
The use of military units to provide protection for foreign enterprises was instituted by former president Soeharto, himself a retired five-star general, as a way of extorting additional funds for the military brass who formed his principal power base.
But since Soeharto's ouster in 1998, the police force -- previously been part of the armed forces -- has been made independent and is now tasked with ensuring domestic security.
The practice of paying Indonesia's corrupt and often brutal military came under renewed scrutiny after a 2002 attack on a convoy of teachers working at Freeport's massive mine in Papua killed two U.S. citizens.
Local and foreign rights groups accused soldiers of taking part in the attack, allegedly to extort more security payments money from Freeport.
Source:
The Jakarta Post
February 07, 2006
SingTel Q3 net profit seen flat as Optus slows
SINGAPORE, Feb 6 (Reuters) - Singapore Telecommunications Ltd., Asia's fifth-biggest phone company, is expected to show almost no rise in third-quarter net profit as a margin squeeze at its key Australian Optus unit outweighs mobile growth in Asia.
Optus, Australia's second-largest mobile operator, faces intense price competition, slowing subscriber growth and regulatory changes that threaten to erode profit margins further in the saturated domestic market, where more than eight in 10 people already own a mobile phone, analysts said.
But SingTel, Singapore's largest listed firm with a market value of about US$26 billion, should continue to enjoy robust contributions from its mobile investments in the fast-growing markets of India, Bangladesh, Indonesia, and to a lesser degree Thailand and the Philippines, they said.
"The near-term outlook for Optus continues to be tough, with further pressure on mobile revenues and margins expected from (regulatory changes) -- indeed, risks continue to be on the downside here," said Merrill Lynch analyst Patrick Russel.
"But SingTel's key mobile associates will continue to be the mainstay of its earnings growth." SingTel is expected to report on Wednesday an underlying net profit -- which strips out goodwill and exceptionals -- of S$755.4 million ($462.3 million) for its third quarter ended December, according to the mean forecast of five analysts polled by Reuters, up 1.1 percent from the year-ago quarter. Estimates ranged from S$721 million to S$780 million.
SingTel, 65 percent-owned by state investor Temasek Holdings, warned in November it might not hit its target of double-digit growth in underlying profits in the year to March 2006. It said it hoped to achieve that goal in the medium term.
It also said full-year group operating revenue would rise, but operational EBITDA (earnings before interest, tax, depreciation and amortisation) would fall. Facing a small home market of just 4.4 million people, where over nine out of 10 individuals own a mobile phone, SingTel has spent S$17 billion ($10 billion) in recent years buying operators in high-growth Asian nations with fewer cellphone users, and in the bigger Australian market. It now derives about 75 percent of revenues and two-thirds of pre-tax earnings from operations outside Singapore.
OPTUS SLOWS, ASSOCIATES SHINE
SingTel owns
21.5 percent of Thailand's Advanced Info Service Plc.,
30.8 percent of India's Bharti Group,
44.6 percent of Globe Telecom Inc. in the Philippines,
35 percent of Indonesia's PT Telkomsel,
and 45 percent of Pacific Bangladesh Telecom Ltd.
SingTel's A$14 billion bid for Optus in 2001 was its largest acquisition. Optus Mobile, which has a third of the Australian market, is SingTel's single-biggest revenue and profit generator.
Optus said it expected revenue growth for the full year to moderate and its operational EBITDA margin to decline from the previous year, but remain above 28 percent. Last year, the Australian Competition & Consumer Commission
(ACCC) cut fees that telecoms companies charge each other when their customers make calls to people on rival networks, and when a fixed-line call from one goes to the mobile network of another.
Rivals Telstra Corp, Hutchison Telecommunications (Australia) Ltd and Vodafone Group Plc have also been wooing new users with aggressive price deals, including capped mobile plans, where users can make a pre-defined volume of calls and/or text messaging for a set maximum monthly fee. But SingTel's regional associates will continue to shine, as double-digit growth at Bharti and Telkomsel compensate for lower contributions from AIS and Globe, which are battling escalating competition in their domestic markets, analysts said.
"Bharti and Telkomsel will continue to be strong drivers of SingTel's growth," said Merrill Lynch's Russel. "But AIS should see some modest recovery in earnings in 2006 as the recent price war dissipates, and Globe's position is stabilising."
Last month, SingTel's parent Temasek agreed to pay $1.9 billion for a stake in Thailand's Shin Corp., which in turn owns 43 percent of AIS. SingTel said at the time it wanted to raise its stake in AIS, but Temasek said it had no plans to sell its stake in AIS to SingTel, according to local media.
Citigroup Smith Barney analyst Anand Ramachandran said he expected the associates to contribute 47 percent of SingTel's group earnings before interest and tax by fiscal year 2008, up from 32 percent in fiscal year 2005. SingTel shares rose 6.5 percent in the October-December quarter, compared with a 3.4 percent fall for Telstra and SK Telecom's 10.6 percent decline.
($1=1.634 Singapore Dollar)
Source:
Reuters, By Jennifer Tan
6 February 2006
Optus, Australia's second-largest mobile operator, faces intense price competition, slowing subscriber growth and regulatory changes that threaten to erode profit margins further in the saturated domestic market, where more than eight in 10 people already own a mobile phone, analysts said.
But SingTel, Singapore's largest listed firm with a market value of about US$26 billion, should continue to enjoy robust contributions from its mobile investments in the fast-growing markets of India, Bangladesh, Indonesia, and to a lesser degree Thailand and the Philippines, they said.
"The near-term outlook for Optus continues to be tough, with further pressure on mobile revenues and margins expected from (regulatory changes) -- indeed, risks continue to be on the downside here," said Merrill Lynch analyst Patrick Russel.
"But SingTel's key mobile associates will continue to be the mainstay of its earnings growth." SingTel is expected to report on Wednesday an underlying net profit -- which strips out goodwill and exceptionals -- of S$755.4 million ($462.3 million) for its third quarter ended December, according to the mean forecast of five analysts polled by Reuters, up 1.1 percent from the year-ago quarter. Estimates ranged from S$721 million to S$780 million.
SingTel, 65 percent-owned by state investor Temasek Holdings, warned in November it might not hit its target of double-digit growth in underlying profits in the year to March 2006. It said it hoped to achieve that goal in the medium term.
It also said full-year group operating revenue would rise, but operational EBITDA (earnings before interest, tax, depreciation and amortisation) would fall. Facing a small home market of just 4.4 million people, where over nine out of 10 individuals own a mobile phone, SingTel has spent S$17 billion ($10 billion) in recent years buying operators in high-growth Asian nations with fewer cellphone users, and in the bigger Australian market. It now derives about 75 percent of revenues and two-thirds of pre-tax earnings from operations outside Singapore.
OPTUS SLOWS, ASSOCIATES SHINE
SingTel owns
21.5 percent of Thailand's Advanced Info Service Plc.,
30.8 percent of India's Bharti Group,
44.6 percent of Globe Telecom Inc. in the Philippines,
35 percent of Indonesia's PT Telkomsel,
and 45 percent of Pacific Bangladesh Telecom Ltd.
SingTel's A$14 billion bid for Optus in 2001 was its largest acquisition. Optus Mobile, which has a third of the Australian market, is SingTel's single-biggest revenue and profit generator.
Optus said it expected revenue growth for the full year to moderate and its operational EBITDA margin to decline from the previous year, but remain above 28 percent. Last year, the Australian Competition & Consumer Commission
(ACCC) cut fees that telecoms companies charge each other when their customers make calls to people on rival networks, and when a fixed-line call from one goes to the mobile network of another.
Rivals Telstra Corp, Hutchison Telecommunications (Australia) Ltd and Vodafone Group Plc have also been wooing new users with aggressive price deals, including capped mobile plans, where users can make a pre-defined volume of calls and/or text messaging for a set maximum monthly fee. But SingTel's regional associates will continue to shine, as double-digit growth at Bharti and Telkomsel compensate for lower contributions from AIS and Globe, which are battling escalating competition in their domestic markets, analysts said.
"Bharti and Telkomsel will continue to be strong drivers of SingTel's growth," said Merrill Lynch's Russel. "But AIS should see some modest recovery in earnings in 2006 as the recent price war dissipates, and Globe's position is stabilising."
Last month, SingTel's parent Temasek agreed to pay $1.9 billion for a stake in Thailand's Shin Corp., which in turn owns 43 percent of AIS. SingTel said at the time it wanted to raise its stake in AIS, but Temasek said it had no plans to sell its stake in AIS to SingTel, according to local media.
Citigroup Smith Barney analyst Anand Ramachandran said he expected the associates to contribute 47 percent of SingTel's group earnings before interest and tax by fiscal year 2008, up from 32 percent in fiscal year 2005. SingTel shares rose 6.5 percent in the October-December quarter, compared with a 3.4 percent fall for Telstra and SK Telecom's 10.6 percent decline.
($1=1.634 Singapore Dollar)
Source:
Reuters, By Jennifer Tan
6 February 2006
Indonesia sends terror suspect to Singapore: police
JAKARTA/KUALA LUMPUR (Reuters): - Indonesia has arrested Singapore's most wanted man, believed to have planned bomb and plane-crash attacks on the city-state's Changi airport, and handed him to Singapore, a Jakarta official said on Monday.
The alleged plots were never carried out. Mas Selamat Kastari was jailed on Indonesia's Riau province in 2003 for 18 months on immigration charges. Police sources said that after his release he faced another immigration problem last year and was incarcerated again, this time in East Java.
It was unclear when he was freed in East Java province but National Police Spokesman Anton Bahrul Alam said police arrested him again two weeks ago.
"And because Mas Selamat Kastari was on the wanted list in Singapore, we handed him over to them," he told reporters.
Malaysia's The Star newspaper, quoting unnamed sources, had reported that Selamat was arrested in Java last week where he had gone to visit his son studying at a religious school. Indonesia and Singapore have no formal extradition treaty.
Selamat, believed to belong to the Southeast Asian Islamic militant network Jemaah Islamiah, had fled Singapore in 2001. Singapore intelligence had information that Selamat had planned to bomb Changi airport in 2002 and had also discussed with Jemaah Islamiah commander and militant cleric Hambali a plan to hijack a plane and crash it into the airport.
Source:
Reuters, February 06, 2006
The alleged plots were never carried out. Mas Selamat Kastari was jailed on Indonesia's Riau province in 2003 for 18 months on immigration charges. Police sources said that after his release he faced another immigration problem last year and was incarcerated again, this time in East Java.
It was unclear when he was freed in East Java province but National Police Spokesman Anton Bahrul Alam said police arrested him again two weeks ago.
"And because Mas Selamat Kastari was on the wanted list in Singapore, we handed him over to them," he told reporters.
Malaysia's The Star newspaper, quoting unnamed sources, had reported that Selamat was arrested in Java last week where he had gone to visit his son studying at a religious school. Indonesia and Singapore have no formal extradition treaty.
Selamat, believed to belong to the Southeast Asian Islamic militant network Jemaah Islamiah, had fled Singapore in 2001. Singapore intelligence had information that Selamat had planned to bomb Changi airport in 2002 and had also discussed with Jemaah Islamiah commander and militant cleric Hambali a plan to hijack a plane and crash it into the airport.
Source:
Reuters, February 06, 2006
Lending growth hampered by high interest rates
The central bank's move to hike its key interest rate to help contain stubbornly high inflation has taken its toll on the banking sector, with the banks seeing slower lending growth last year.
Lending is also expected to remain sluggish this year, as Bank Indonesia (BI) remains cautious about relaxing its monetary policies, which in the end could affect the financing and growth of investment.
In its latest quarterly review on the country's economy, the central bank noted that bank loans as of December last year amounted to a total of Rp 722.4 trillion (some US$76 billion), having increased by only 21 percent from 2004.
"The rise in interest rates during last year's third quarter has affected the ability of lenders to provide loans," BI said in the review.
"Although loans increased by Rp 7.2 trillion from the third quarter, this was a slower pace compared to previous quarters."
Bank loans grew by some Rp 50 trillion during last year's first three quarters. The banking sector saw a nearly 25 percent growth in loans to Rp 595.1 trillion in 2004 from 2003.
BI also reported that the net figure for non-performing loans (NPLs) in the banking sector averaged 5 percent in 2005, up from 1.9 percent during the year's first quarter. The capital adequacy ratio (CAR) of lenders, meanwhile, stood at 19.6 percent, down from 21.7 percent previously.
BI requires lenders to have net NPLs of not more than 5 percent and a minimum CAR of 18 percent.
The central bank tightened its loan criteria for lenders last year, and began hiking its benchmark BI Rate to 12.75 percent to support the rupiah and tame surging inflation.
It is expecting that lending will grow by at least between 15 and 20 percent this year, with BI having recently relaxed its loan criteria to help banks channel more credit.
With the banking sector still likely to face difficulties in increasing lending this year, including for investment financing purposes, BI is forecasting that investment may only grow by between 8.4 and 9.4 percent this year, down from 9.6 to 10 percent growth in 2005.
This is in line with a declining trend in investment growth from some 13 percent in last year's first quarter to only some 3 percent in the fourth.
"The slowdown in investment is mainly due to the still negative business prospects resulting from the recent decreases in the public's purchasing power. Businesses are also seeing their cost of capital increasing due to the recent rise in interest rates," BI said.
The central bank is, however, expecting that the overall investment figures may be helped by government investment in the infrastructure sector, with financing being provided by external sources.
Economic growth, which is forecast to reach between 5 and 5.7 percent this year compared to last year's 5.3 to 5.6 percent, is also expected to be boosted by exports, which may grow by 10 percent.
Source:
The Jakarta Post,
February 06, 2006
Lending is also expected to remain sluggish this year, as Bank Indonesia (BI) remains cautious about relaxing its monetary policies, which in the end could affect the financing and growth of investment.
In its latest quarterly review on the country's economy, the central bank noted that bank loans as of December last year amounted to a total of Rp 722.4 trillion (some US$76 billion), having increased by only 21 percent from 2004.
"The rise in interest rates during last year's third quarter has affected the ability of lenders to provide loans," BI said in the review.
"Although loans increased by Rp 7.2 trillion from the third quarter, this was a slower pace compared to previous quarters."
Bank loans grew by some Rp 50 trillion during last year's first three quarters. The banking sector saw a nearly 25 percent growth in loans to Rp 595.1 trillion in 2004 from 2003.
BI also reported that the net figure for non-performing loans (NPLs) in the banking sector averaged 5 percent in 2005, up from 1.9 percent during the year's first quarter. The capital adequacy ratio (CAR) of lenders, meanwhile, stood at 19.6 percent, down from 21.7 percent previously.
BI requires lenders to have net NPLs of not more than 5 percent and a minimum CAR of 18 percent.
The central bank tightened its loan criteria for lenders last year, and began hiking its benchmark BI Rate to 12.75 percent to support the rupiah and tame surging inflation.
It is expecting that lending will grow by at least between 15 and 20 percent this year, with BI having recently relaxed its loan criteria to help banks channel more credit.
With the banking sector still likely to face difficulties in increasing lending this year, including for investment financing purposes, BI is forecasting that investment may only grow by between 8.4 and 9.4 percent this year, down from 9.6 to 10 percent growth in 2005.
This is in line with a declining trend in investment growth from some 13 percent in last year's first quarter to only some 3 percent in the fourth.
"The slowdown in investment is mainly due to the still negative business prospects resulting from the recent decreases in the public's purchasing power. Businesses are also seeing their cost of capital increasing due to the recent rise in interest rates," BI said.
The central bank is, however, expecting that the overall investment figures may be helped by government investment in the infrastructure sector, with financing being provided by external sources.
Economic growth, which is forecast to reach between 5 and 5.7 percent this year compared to last year's 5.3 to 5.6 percent, is also expected to be boosted by exports, which may grow by 10 percent.
Source:
The Jakarta Post,
February 06, 2006
Indonesia's 2005 oil output 955,000 barrels/day, below target
JAKARTA (Bloomberg): Indonesia produced 955,000 barrels per day of crude oil and condensate last year, missing its target, Minister of Finance Sri Mulyani Indrawati said today.
The country set a target of 1.075 million barrels of crude oil and condensate in the 2005 state budget, she told a parliamentary hearing. She didn't give any reason why production failed to meet target.
Indonesia, the second-smallest producer in the Organization of Petroleum Exporting Countries, has failed since early 2002 to meet its OPEC output target, currently at 1.451 million barrels a day.
Source:
Bloomberg,
February 06, 2006
The country set a target of 1.075 million barrels of crude oil and condensate in the 2005 state budget, she told a parliamentary hearing. She didn't give any reason why production failed to meet target.
Indonesia, the second-smallest producer in the Organization of Petroleum Exporting Countries, has failed since early 2002 to meet its OPEC output target, currently at 1.451 million barrels a day.
Source:
Bloomberg,
February 06, 2006
Indonesia overseas debt $61.04b at end 2005
JAKARTA (Dow Jones): The Indonesian government's overseas debt as of the end of 2005 totaled US$61.04 billion, equal to 22.7 percent of the nation's gross domestic product, Minister of Finance Sri Mulyani said Monday.
Of this debt, 43 percent was denominated in Japanese yen, 22 percent in U.S. dollars, 15 percent in euro and the rest in other currencies, Sri Mulyani said in a written report to be submitted to the Houseof Representatives.
"The government will continue to reduce offshore debt," she said.
Her report didn't mention the amount outstanding of overseas borrowing as of end-2004, but it did say the government's offshore debt level as a percentage of GDP has fallen significantly from 42.2 percent in 2004.
President Susilo Bambang Yudhoyono and his predecessor Megawati Soekarnoputri promised to reduce offshore debts on rising pressure from many political parties here. Some of the parties have also urged the government to seek debt forgiveness from lenders.
The government last year borrowed $2.2 billion from offshore creditors, below its $3.6 billion target, Mulyani said without explaining why the borrowing was below target.
This year the government plans to borrow $3.5 billion from bilateral and multilateral lenders, including $1.5 billion from the World Bank-led Consultative Group on Indonesia, the report said.
Sri Mulyani didn't discuss in detail the government's domestic debt, which is estimated at $70 billion.
Source:
Dow Jones,
February 06, 2006
Of this debt, 43 percent was denominated in Japanese yen, 22 percent in U.S. dollars, 15 percent in euro and the rest in other currencies, Sri Mulyani said in a written report to be submitted to the Houseof Representatives.
"The government will continue to reduce offshore debt," she said.
Her report didn't mention the amount outstanding of overseas borrowing as of end-2004, but it did say the government's offshore debt level as a percentage of GDP has fallen significantly from 42.2 percent in 2004.
President Susilo Bambang Yudhoyono and his predecessor Megawati Soekarnoputri promised to reduce offshore debts on rising pressure from many political parties here. Some of the parties have also urged the government to seek debt forgiveness from lenders.
The government last year borrowed $2.2 billion from offshore creditors, below its $3.6 billion target, Mulyani said without explaining why the borrowing was below target.
This year the government plans to borrow $3.5 billion from bilateral and multilateral lenders, including $1.5 billion from the World Bank-led Consultative Group on Indonesia, the report said.
Sri Mulyani didn't discuss in detail the government's domestic debt, which is estimated at $70 billion.
Source:
Dow Jones,
February 06, 2006
Telkom, Indosat allowed to bid for high-speed phone services
JAKARTA (Bloomberg): PT Telekomunikasi Indonesia, Indonesia's biggest telephone company, its mobile-phone unit and three rivals have been allowed by the government to bid to operate high-speed wireless services.
Telkom's unit PT Telekomunikasi Selular, PT Indosat, Indonesia's second-largest phone company, PT Bakrie Telecom and PT Excelcomindo Pratama, which is controlled by Telekom Malaysia Bhd., will be allowed to bid. The government will offer two or three licenses, and the winners will be decided on Feb. 8, said Basuki Yusuf Iskandar, director general of post and telecommunications.
"The winning bidders must commit to having presence in at least two provinces and providing 10 percent nationwide coverage in the first year," Basuki told reporters in Jakarta on Monday.
Phone companies are hoping to boost their earnings on rising demand in Indonesia, where fewer than one in four of its estimated 238 million people has access to a telephone. Telkomsel and Indosat control more than 80 percent of the nation's mobilemarket.
Indonesia will offer licenses starting at Rp 100 billion (US$11 million) for 5-megahertz frequency.
The so-called third-generation, or 3G, services allow users to download video clips and surf the Internet faster
Source:
Bloomberg,
February 06, 2006
Telkom's unit PT Telekomunikasi Selular, PT Indosat, Indonesia's second-largest phone company, PT Bakrie Telecom and PT Excelcomindo Pratama, which is controlled by Telekom Malaysia Bhd., will be allowed to bid. The government will offer two or three licenses, and the winners will be decided on Feb. 8, said Basuki Yusuf Iskandar, director general of post and telecommunications.
"The winning bidders must commit to having presence in at least two provinces and providing 10 percent nationwide coverage in the first year," Basuki told reporters in Jakarta on Monday.
Phone companies are hoping to boost their earnings on rising demand in Indonesia, where fewer than one in four of its estimated 238 million people has access to a telephone. Telkomsel and Indosat control more than 80 percent of the nation's mobilemarket.
Indonesia will offer licenses starting at Rp 100 billion (US$11 million) for 5-megahertz frequency.
The so-called third-generation, or 3G, services allow users to download video clips and surf the Internet faster
Source:
Bloomberg,
February 06, 2006
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