Prosecutors have named former chief of the Indonesian Bank Restructuring Agency (IBRA) Syafruddin Temenggung as a suspect in the illegal sale of state assets, estimated to have caused losses of Rp 500 billion (US$51 million).
However, he has yet to be remanded in custody, Attorney General Abdulrahman Saleh said Friday. He said Syafruddin was charged with selling assets of sugar company PT Rajawali III in Gorontalo province in 2003 for Rp 84 billion, while their value was up to Rp 600 billion.
"Since Friday we have named him a suspect and also imposed a travel ban on him," said Attorney General's Office spokesman Mashyudi Ridwan.
The investigation into Syafruddin began in July 2005. The Attorney General's Office has questioned almost 15 IBRA officials linked to the corruption case.
IBRA was established in 1998 to restructure and sell more than RP 400 trillion in assets it took over from local banks after the government bailed them out amid the 1997-1998 Asian financial crisis. Proceeds from the asset sales were to be used to help finance the state budget.
IBRA was dissolved in April 2004 after improvement in the country's economy.
However, the prosecution of Syafruddin may be challenged by Presidential Decree No. 15/2004 on IBRA's dissolution, under which the President granted legal protection to all agency officials in the carrying out of their duties.
The decree also absolved IBRA officials of all responsibility if they committed mistakes in their reports to the government. In apparent defiance of the decree, the Attorney General said the investigation into the graft case would go ahead.
The office is also investigating other former IBRA officials in connection with the assets of convicted former banker David Nusa Wijaya, which were sold without the required permission of prosecutors as the executor in the case.
David, a former director of the now defunct Bank Umum Servitia, received Rp 1.291 trillion in Bank Indonesia Liquidity Support, which became a nonperforming loan.
The Attorney General's Office confiscated his assets. David later fled the country, living in Singapore and the U.S. He was returned by U.S. authorities to Indonesian police custody last month.
Officials also interrogated Hesti, the IBRA employee responsible for David's assets, and planned to summon other IBRA officials as part of their investigation.
Source:
The Jakarta Post
February 04, 2006
Saturday, February 04, 2006
Garuda negotiating with creditors
(JAKARTA) Garuda Indonesia is still negotiating with its creditors on possible options for the settlement of the airline's US$794 million in debts, the Jakarta Post reports.
'There has been a meeting with our creditors, but we are still waiting for their agreement,' Garuda chief executive Emirsyah Satar said on Thursday, following the signing of a cooperation agreement between the airline, the Indonesian Advocates Association and the Indonesian Indigenous Businessmen's Association in Jakarta.
He declined, however, to disclose the outcome of the meeting held last month in Singapore. 'Garuda has already proposed that a portion of the debt be restructured. But we cannot make any statements as the figure has not been finalised yet,' he said.
Garuda has total debts of about US$794 million, which consists of US$510 million owed to the European Credit Agency (ECA), US$130 million to its medium-term bond and promissory note holders in Singapore and US$150 million to Bank Mandiri and state airport operators Angkasa Pura I and II.
Mr Emirsyah said that ECA representatives will visit Indonesia in the first or second week of February to discuss the debt problem with representatives of the Office of the State Minister for State Enterprises, which directly oversees the airline. He further said that the company was paying instalments of about US$80 million annually on the debt.
Meanwhile, the Central Jakarta Commercial Court on Thursday turned down a bankruptcy petition filed by IT consultants PT Magnus Indonesia against the national flag carrier, according to the Jakarta Post.
Magnus filed the bankruptcy petition against Garuda after accusing the latter of failing to pay its fees.
Source:
The Business Times, Singapore
February 4, 2006
'There has been a meeting with our creditors, but we are still waiting for their agreement,' Garuda chief executive Emirsyah Satar said on Thursday, following the signing of a cooperation agreement between the airline, the Indonesian Advocates Association and the Indonesian Indigenous Businessmen's Association in Jakarta.
He declined, however, to disclose the outcome of the meeting held last month in Singapore. 'Garuda has already proposed that a portion of the debt be restructured. But we cannot make any statements as the figure has not been finalised yet,' he said.
Garuda has total debts of about US$794 million, which consists of US$510 million owed to the European Credit Agency (ECA), US$130 million to its medium-term bond and promissory note holders in Singapore and US$150 million to Bank Mandiri and state airport operators Angkasa Pura I and II.
Mr Emirsyah said that ECA representatives will visit Indonesia in the first or second week of February to discuss the debt problem with representatives of the Office of the State Minister for State Enterprises, which directly oversees the airline. He further said that the company was paying instalments of about US$80 million annually on the debt.
Meanwhile, the Central Jakarta Commercial Court on Thursday turned down a bankruptcy petition filed by IT consultants PT Magnus Indonesia against the national flag carrier, according to the Jakarta Post.
Magnus filed the bankruptcy petition against Garuda after accusing the latter of failing to pay its fees.
Source:
The Business Times, Singapore
February 4, 2006
Indonesia may make Calpers' investment list this year
It's one of 17 emerging markets shortlisted from 27 by consulting group
(NEW YORK) A new report prepared for Calpers, the biggest US pension fund, has found that Indonesia now meets certain standards, making it eligible for investment.
Calpers, with US$165.8 billion under management, periodically reviews the markets that it plans to invest in using a seven-factor model defined by the Investment Committee of Calpers, the report said.
The report, which recently became available on Calpers website, was prepared by consulting group Wilshire Associates. It reviewed 27 emerging markets according to criteria such as political stability and investor protection.
While Indonesia made the list, China, Colombia, Egypt, Morocco, Pakistan, Russia and Venezuela remained with rankings below the acceptable level.
The rest of the approved list comprises Argentina, Brazil, Chile, Czech Republic, Hungary, India, Israel, Jordan, Malaysia, Mexico, Peru, the Philippines, Poland, South Africa, South Korea, Taiwan, Thailand and Turkey.
The Wilshire study is subject to a review by the Calpers board. Markets that do not meet the standards have an opportunity to argue for inclusion.
Sri Lanka fell below the acceptable threshold but is eligible to be given a one-year 'cure period' during which it has an opportunity to improve its score.
The report noted that of the 27 markets that were reviewed, Pakistan and Egypt made the biggest improvement over the past year, while India and Sri Lanka had the greatest declines. The scoring system, which has undergone some revision in its methodology from last year, uses 3.0 as the highest ranking.
The three country parameters of the study are political stability, transparency, and productive labour practices, and the market factors are liquidity and volatility, regulation, ease of access, and settlement efficiency and transaction costs.
Information released in by the Philippine government showed that the country improved its rating to 2.13 from 2.0 a year earlier. The 2.0 level has been the threshold for deciding which markets are acceptable for investment.
India scored 2 out of a maximum 3 for 2006, falling from 2.25 last year, according to the study. India and Peru were added in 2004. Pakistan scored 1.8 compared with 1.63 last year.
An announcement of Calpers's final decision is expected in April.
The list is a reference point, investor Paras Adenwala said.
'Calpers is well respected,' said Mr Adenwala, who manages the equivalent of about US$250 million of stocks as chief investment officer at ING Investment Management India in Mumbai. 'There are a lot of investors who look at Calpers for guidance.'
Overseas demand for Indian stocks helped the benchmark Sensitive index to a record as investors tapped the second-fastest pace of growth among the world's 20 biggest economies. The Mumbai stock exchange's benchmark Sensitive Index, or Sensex, has risen 4.8 per cent this year.
Source:
The Business Times Singapore,
Reuters, & Bloomberg
February 4, 2006
(NEW YORK) A new report prepared for Calpers, the biggest US pension fund, has found that Indonesia now meets certain standards, making it eligible for investment.
Calpers, with US$165.8 billion under management, periodically reviews the markets that it plans to invest in using a seven-factor model defined by the Investment Committee of Calpers, the report said.
The report, which recently became available on Calpers website, was prepared by consulting group Wilshire Associates. It reviewed 27 emerging markets according to criteria such as political stability and investor protection.
While Indonesia made the list, China, Colombia, Egypt, Morocco, Pakistan, Russia and Venezuela remained with rankings below the acceptable level.
The rest of the approved list comprises Argentina, Brazil, Chile, Czech Republic, Hungary, India, Israel, Jordan, Malaysia, Mexico, Peru, the Philippines, Poland, South Africa, South Korea, Taiwan, Thailand and Turkey.
The Wilshire study is subject to a review by the Calpers board. Markets that do not meet the standards have an opportunity to argue for inclusion.
Sri Lanka fell below the acceptable threshold but is eligible to be given a one-year 'cure period' during which it has an opportunity to improve its score.
The report noted that of the 27 markets that were reviewed, Pakistan and Egypt made the biggest improvement over the past year, while India and Sri Lanka had the greatest declines. The scoring system, which has undergone some revision in its methodology from last year, uses 3.0 as the highest ranking.
The three country parameters of the study are political stability, transparency, and productive labour practices, and the market factors are liquidity and volatility, regulation, ease of access, and settlement efficiency and transaction costs.
Information released in by the Philippine government showed that the country improved its rating to 2.13 from 2.0 a year earlier. The 2.0 level has been the threshold for deciding which markets are acceptable for investment.
India scored 2 out of a maximum 3 for 2006, falling from 2.25 last year, according to the study. India and Peru were added in 2004. Pakistan scored 1.8 compared with 1.63 last year.
An announcement of Calpers's final decision is expected in April.
The list is a reference point, investor Paras Adenwala said.
'Calpers is well respected,' said Mr Adenwala, who manages the equivalent of about US$250 million of stocks as chief investment officer at ING Investment Management India in Mumbai. 'There are a lot of investors who look at Calpers for guidance.'
Overseas demand for Indian stocks helped the benchmark Sensitive index to a record as investors tapped the second-fastest pace of growth among the world's 20 biggest economies. The Mumbai stock exchange's benchmark Sensitive Index, or Sensex, has risen 4.8 per cent this year.
Source:
The Business Times Singapore,
Reuters, & Bloomberg
February 4, 2006
Bakrie Telecom plans Rp 1 trillion investment this year
As part of its aggressive expansion plans, growing CDMA operator PT Bakrie Telecom is set to invest about Rp 1 trillion (about US$105.2 million) to develop its telecommunications infrastructure.
Bakrie Telecom president Anindya N. Bakrie said Friday that the company would use about Rp 600 billion of the proceeds from its initial public offering (IPO) to partly finance the expansion plan.
"The cash from the IPO will be part of the Rp 1 trillion to be spent this year on investment," he said at a press conference following the listing of the company's shares on the Jakarta Stock Exchange (JSX).
The company sold about 5.5 million new shares, about 29.29 percent of its total shares, at Rp 110 per share during the IPO two weeks ago.
Anindya also said that the firm would issue warrants in August to raise an additional Rp 150 billion, and would consider other possible financing schemes to achieve the investment target.
Bakrie Telecom, under the brand name Esia, now provides mobile services on the 800 MHz frequency to almost 400,000 customers in Jakarta and Bandung.
The company will also expand its services to 15 cities outside Jakarta, West Java and Banten, bringing on board a total of 1.3 million additional customers. It has signed an agreement with another telecommunications operator, PT Indosat, to use the latter's network in these areas. In return, Indosat will be able to use Esia's network to provide coverage in Jakarta, West Java and Banten.
Although Bakrie Telecom suffered total losses of Rp 112 billion up to September last year, Anindya was optimistic that the firm would turn the corner this year.
Bakrie Telecom is also one of five companies participating in the government tender for 3G high-speed mobile telecommunications services.
The Directorate General of Posts and Telecommunications confirmed Friday that Bakrie Telecom, along with PT Telkomsel, PT Exelcomindo, PT Telkom and Indosat, had passed the pre-qualification process in the 3G competition. They will now submit final bids on Tuesday and Wednesday.
If Bakrie Telecom wins a 3G license, it will finance the construction of its 3G infrastructure from other financial sources, Anindya said. "But this is an entirely different project from our network expansion this year. Whatever happens as regards the tender, it will not affect our plan to develop our CDMA infrastructure in West Java and Banten," he said.
Source:
The Jakarta Post, Jakarta
February 04, 2006
Bakrie Telecom president Anindya N. Bakrie said Friday that the company would use about Rp 600 billion of the proceeds from its initial public offering (IPO) to partly finance the expansion plan.
"The cash from the IPO will be part of the Rp 1 trillion to be spent this year on investment," he said at a press conference following the listing of the company's shares on the Jakarta Stock Exchange (JSX).
The company sold about 5.5 million new shares, about 29.29 percent of its total shares, at Rp 110 per share during the IPO two weeks ago.
Anindya also said that the firm would issue warrants in August to raise an additional Rp 150 billion, and would consider other possible financing schemes to achieve the investment target.
Bakrie Telecom, under the brand name Esia, now provides mobile services on the 800 MHz frequency to almost 400,000 customers in Jakarta and Bandung.
The company will also expand its services to 15 cities outside Jakarta, West Java and Banten, bringing on board a total of 1.3 million additional customers. It has signed an agreement with another telecommunications operator, PT Indosat, to use the latter's network in these areas. In return, Indosat will be able to use Esia's network to provide coverage in Jakarta, West Java and Banten.
Although Bakrie Telecom suffered total losses of Rp 112 billion up to September last year, Anindya was optimistic that the firm would turn the corner this year.
Bakrie Telecom is also one of five companies participating in the government tender for 3G high-speed mobile telecommunications services.
The Directorate General of Posts and Telecommunications confirmed Friday that Bakrie Telecom, along with PT Telkomsel, PT Exelcomindo, PT Telkom and Indosat, had passed the pre-qualification process in the 3G competition. They will now submit final bids on Tuesday and Wednesday.
If Bakrie Telecom wins a 3G license, it will finance the construction of its 3G infrastructure from other financial sources, Anindya said. "But this is an entirely different project from our network expansion this year. Whatever happens as regards the tender, it will not affect our plan to develop our CDMA infrastructure in West Java and Banten," he said.
Source:
The Jakarta Post, Jakarta
February 04, 2006
Adam Air may sell 20 percent stake to Australia's Qantas
Locally owned regional airline Adam Air is considering selling about 20 percent of its shares to Australia's Qantas in a bid to create mutual benefits for both airlines.
"They want to buy about 30 percent of our shares, but we are only prepared to offer them 20 percent as we're planning to sell another 20 percent during an initial public offering (IPO) in Singapore next year," Adam Air chief executive officer (CEO) Gunawan Suherman was quoted by Antara as saying Friday.
He added, however, that the Qantas deal had not yet been finalized.
Qantas CEO, Geoff Dixon, and the airline's chief financial officer, Peter Gregg, visited Soekarno-Hatta Airport in Jakarta on Friday to take a closer look at Adam Air's operations.
The Australian airline, Gunawan said, had decided to make Indonesia its second hub after Australia.
"They are preparing to enter the domestic market before the Association of Southeast Asian Nations (ASEAN) liberalizes the transportation of cargo in 2008 and passengers in 2010," he said, adding that he expected the deal would benefit both companies.
Qantas, he said, would also provide training for Adam Air employees.
Adam Air, one of Indonesia's fledgling budget airlines, plans to almost triple the size of its fleet to 50 aircraft within three years to support the expansion of its domestic and international services.
The airline currently operates 20 planes, flying to 39 destinations, including Malaysia and Singapore.
"We are hoping to operate 40 planes by the end of 2006," executive vice president Dave Laksono told The Jakarta Post last week.
The airline started its domestic operations in December 2002 with Boeing 747-400 and Boeing 737-500 aircraft made between 1997 and 2000.
Qantas, which stands for Queensland and Northern Territory Aerial Services Limited, was founded in Queensland in 1920.
It is widely regarded as one of the world's leading long distance airlines and one of the strongest brands in Australia. (01)
Source:
The Jakarta Post, Jakarta
February 04, 2006
"They want to buy about 30 percent of our shares, but we are only prepared to offer them 20 percent as we're planning to sell another 20 percent during an initial public offering (IPO) in Singapore next year," Adam Air chief executive officer (CEO) Gunawan Suherman was quoted by Antara as saying Friday.
He added, however, that the Qantas deal had not yet been finalized.
Qantas CEO, Geoff Dixon, and the airline's chief financial officer, Peter Gregg, visited Soekarno-Hatta Airport in Jakarta on Friday to take a closer look at Adam Air's operations.
The Australian airline, Gunawan said, had decided to make Indonesia its second hub after Australia.
"They are preparing to enter the domestic market before the Association of Southeast Asian Nations (ASEAN) liberalizes the transportation of cargo in 2008 and passengers in 2010," he said, adding that he expected the deal would benefit both companies.
Qantas, he said, would also provide training for Adam Air employees.
Adam Air, one of Indonesia's fledgling budget airlines, plans to almost triple the size of its fleet to 50 aircraft within three years to support the expansion of its domestic and international services.
The airline currently operates 20 planes, flying to 39 destinations, including Malaysia and Singapore.
"We are hoping to operate 40 planes by the end of 2006," executive vice president Dave Laksono told The Jakarta Post last week.
The airline started its domestic operations in December 2002 with Boeing 747-400 and Boeing 737-500 aircraft made between 1997 and 2000.
Qantas, which stands for Queensland and Northern Territory Aerial Services Limited, was founded in Queensland in 1920.
It is widely regarded as one of the world's leading long distance airlines and one of the strongest brands in Australia. (01)
Source:
The Jakarta Post, Jakarta
February 04, 2006
Friday, February 03, 2006
Minimize Banking Espionage; Telkom and Bank Indonesia in financial network JV
(JAKARTA) State-owned PT Telkom, Indonesia's largest telecommunications company, announced on Wednesday it had jointly set up a new business venture with the central bank to provide financial network services to the banking industry, reports The Jakarta Post.
Telkom said in a statement that the new firm, named PT Finnet Telkom, was 60 per cent owned by the company through its subsidiary, PT Multimedia Nusantara, while the remaining 40 per cent was owned by Bank Indonesia through its affiliate, PT Mekar Prana Indah.
The paper says the two companies have injected around 10 billion rupiah (S$1.7 million) as start-up capital into the new firm.
Telkom said Finnet was being set up to avail of prospects in the financial data and banking network businesses, which are currently dominated by PT Aplikanusa Lintasarta - a subsidiary of Telkom's smaller rival, PT Indosat.
The government had earlier urged Telkom to form a new company to reduce what it claimed was the risk of 'banking espionage' on the part of certain shareholders of Indosat.
Said Didu, the secretary to the state minister for state enterprises, said that among the options for reducing the purported risk would be for Telkom to compete head-to-head with Indosat.
Lintasarta, which is 69.46 per cent owned by Indosat, provides high-speed data communications and corporate network services, and pioneered the development of the electronic banking transfer system in Indonesia.
Source:
The Business News, Singapore
February 3, 2006
Telkom said in a statement that the new firm, named PT Finnet Telkom, was 60 per cent owned by the company through its subsidiary, PT Multimedia Nusantara, while the remaining 40 per cent was owned by Bank Indonesia through its affiliate, PT Mekar Prana Indah.
The paper says the two companies have injected around 10 billion rupiah (S$1.7 million) as start-up capital into the new firm.
Telkom said Finnet was being set up to avail of prospects in the financial data and banking network businesses, which are currently dominated by PT Aplikanusa Lintasarta - a subsidiary of Telkom's smaller rival, PT Indosat.
The government had earlier urged Telkom to form a new company to reduce what it claimed was the risk of 'banking espionage' on the part of certain shareholders of Indosat.
Said Didu, the secretary to the state minister for state enterprises, said that among the options for reducing the purported risk would be for Telkom to compete head-to-head with Indosat.
Lintasarta, which is 69.46 per cent owned by Indosat, provides high-speed data communications and corporate network services, and pioneered the development of the electronic banking transfer system in Indonesia.
Source:
The Business News, Singapore
February 3, 2006
Jakarta, BP still in LNG price talks with CNOOC
Indonesia and BP plc are still negotiating with CNOOC Ltd, China's No 3 oil company, for a higher price for liquefied natural gas (LNG) from the Tangguh project, said Energy and Mineral Resources Minister Purnomo Yusgiantoro.
'I can't give you details but we're in the middle of negotiating on higher prices,' Mr Purnomo told reporters in Jakarta yesterday.
Indonesia wants to earn more for its LNG after crude oil prices rose to a record last year. CNOOC's original agreement to buy gas from the Tangguh plant in Irian Jaya province was based on a maximum oil price of US$25 a barrel. Oil reached US$67.19 yesterday in electronic trading on the New York Mercantile Exchange. Prices are 44 per cent higher than a year ago.
Indonesia in 2002 agreed to a record-low price to supply LNG to China, matching the tariff offered by Australia's North West Shelf.
Since then, European and US benchmark prices have risen more than sevenfold, prompting LNG producers to demand higher prices from Asian buyers under new contracts.
CNOOC may pay more than it earlier agreed for LNG from Tangguh, Kardaya Warnika, chairman of Indonesia's state oil and gas regulator BPMigas said on Jan 20.
Source:
Bloomberg, February 03, 2006
'I can't give you details but we're in the middle of negotiating on higher prices,' Mr Purnomo told reporters in Jakarta yesterday.
Indonesia wants to earn more for its LNG after crude oil prices rose to a record last year. CNOOC's original agreement to buy gas from the Tangguh plant in Irian Jaya province was based on a maximum oil price of US$25 a barrel. Oil reached US$67.19 yesterday in electronic trading on the New York Mercantile Exchange. Prices are 44 per cent higher than a year ago.
Indonesia in 2002 agreed to a record-low price to supply LNG to China, matching the tariff offered by Australia's North West Shelf.
Since then, European and US benchmark prices have risen more than sevenfold, prompting LNG producers to demand higher prices from Asian buyers under new contracts.
CNOOC may pay more than it earlier agreed for LNG from Tangguh, Kardaya Warnika, chairman of Indonesia's state oil and gas regulator BPMigas said on Jan 20.
Source:
Bloomberg, February 03, 2006
Indonesia growth will improve in '07: survey
Indonesia's economic growth is forecast to accelerate in 2007 to more than 6 per cent after clocking in at 5.1-6.0 per cent for this year and 2005, a central bank survey released yesterday showed.
Growth in South-east Asia's largest economy has been expected to be shaved lower after the government hiked fuel prices last October by an average of 126 per cent, and also dramatically tightened monetary policy.
The survey of 94 economists, analysts and economists carried out in the final quarter of last year also predicted that the inflation rate, which has spiked since the fuel price hike, would improve to 7.1-8.0 per cent in 2006.
Inflation for 2005 stood at 17.11 per cent, the highest level since 1998, easing slightly to 17.03 per cent on a year earlier from January according to figures released on Wednesday.
The rupiah was expected to stay in a range of 9,501-10,000 against the US dollar, according to those surveyed.
Factors seen as limiting growth meanwhile were high interest rates, high inflation, inconsistencies in government policies, corruption, unemployment and poverty, they said.
Indonesia's President Susilo Bambang Yudhoyono swept to power in late 2004 pledging to clean up rampant corruption here which has long been seen as a key deterrent of foreign investment and a brake on growth.
Source:
AFP, February 3, 2006
Growth in South-east Asia's largest economy has been expected to be shaved lower after the government hiked fuel prices last October by an average of 126 per cent, and also dramatically tightened monetary policy.
The survey of 94 economists, analysts and economists carried out in the final quarter of last year also predicted that the inflation rate, which has spiked since the fuel price hike, would improve to 7.1-8.0 per cent in 2006.
Inflation for 2005 stood at 17.11 per cent, the highest level since 1998, easing slightly to 17.03 per cent on a year earlier from January according to figures released on Wednesday.
The rupiah was expected to stay in a range of 9,501-10,000 against the US dollar, according to those surveyed.
Factors seen as limiting growth meanwhile were high interest rates, high inflation, inconsistencies in government policies, corruption, unemployment and poverty, they said.
Indonesia's President Susilo Bambang Yudhoyono swept to power in late 2004 pledging to clean up rampant corruption here which has long been seen as a key deterrent of foreign investment and a brake on growth.
Source:
AFP, February 3, 2006
Thursday, February 02, 2006
High inflation set to persist this year
Although the latest figures from the Central Statistics Agency (BPS) show year-on-year inflation slowing for the second month in a row to 17.03 percent in January, high inflation is set to continue looming large over the economy this year.
Despite the lower figure, monthly inflation still increased by 1.36 percent in January, in contrast to deflation of 0.04 percent in December.
The high inflationary pressure seems likely to persist amid increases in food prices resulting from seasonal floods that are likely to continue in many parts of the country for the rest of this month. This could prompt the central bank to further hike its benchmark interest rate to reduce price pressures.
"January's inflation was mainly driven by a rise in staple food prices, particularly of rice," BPS director Choiril Maksum said.
"We recorded increases in rice prices of between 2 and 23 percent, contributing up to 0.6 percent to this month's inflation rate."
Staple food prices as a whole were the largest contributors to January's inflation, rising by as much as 4.26 percent and contributing 0.94 percent to the inflation rate.
The price of rice rose despite the government importing 110,000 tons to secure stocks and stabilize prices. Flooding across the country has been threatening the rice harvest, which is likely to further push up rices prices.
Besides staple food prices, consumers also saw a 0.70 percent rise in transportation, communication and financial services costs, which contributed 0.18 percent to January's inflation rate. Another main contributor was processed foodstuffs, whose prices increased by 0.94 percent.
However, the prices of gasoline, kerosene, cooking oil and vegetables and fruits fell.
Apart from headline inflation, the BPS also reported that core inflation, which excludes volatile prices, such as those of food, and regulated prices like utility rates, was up 0.72 percent month-to-month and 9.68 percent year-on-year.
The BPS, in collaboration with Bank Indonesia, has started this year to report core inflation, which the central bank relies on in deciding its macroeconomic policy.
The government has officially targeted full-year inflation of 8 percent in this year's budget.
Year-on-year inflation stood at 18.38 percent in November, the highest level in six years, as costs rose following the October fuel price hikes and as a result of increased food consumption during the Idul Fitri season.
BI has forecast that monthly inflation will remain at 3.19 percent in the first quarter before easing to 2.36 percent in the fourth quarter, ending up at a year-on-year level of between 7 and 9 percent. The forecast has already factored in possible power rate hikes, although only up to a maximum of 30 percent.
Commenting on the possible electricity hikes, Choiril said that an increase of between 15 and 40 percent could up inflation by between 0.4 and 1 percent.
"If electricity prices rise by 30 percent, then inflation will increase by 0.9 percent," he said. "And this is just the direct effect -- we have yet to calculate the knock-on effects."
Separately, Finance Minister Sri Mulyani Indrawati said that monthly inflation was expected to remain high until March at the earliest.
"Afterward, we expect inflation to ease," she said. "We will from then on be particularly cautious about months with holidays and the year-end in order to keep inflation at those times in check at below 1 percent."
Source:
The Jakarta Post
Despite the lower figure, monthly inflation still increased by 1.36 percent in January, in contrast to deflation of 0.04 percent in December.
The high inflationary pressure seems likely to persist amid increases in food prices resulting from seasonal floods that are likely to continue in many parts of the country for the rest of this month. This could prompt the central bank to further hike its benchmark interest rate to reduce price pressures.
"January's inflation was mainly driven by a rise in staple food prices, particularly of rice," BPS director Choiril Maksum said.
"We recorded increases in rice prices of between 2 and 23 percent, contributing up to 0.6 percent to this month's inflation rate."
Staple food prices as a whole were the largest contributors to January's inflation, rising by as much as 4.26 percent and contributing 0.94 percent to the inflation rate.
The price of rice rose despite the government importing 110,000 tons to secure stocks and stabilize prices. Flooding across the country has been threatening the rice harvest, which is likely to further push up rices prices.
Besides staple food prices, consumers also saw a 0.70 percent rise in transportation, communication and financial services costs, which contributed 0.18 percent to January's inflation rate. Another main contributor was processed foodstuffs, whose prices increased by 0.94 percent.
However, the prices of gasoline, kerosene, cooking oil and vegetables and fruits fell.
Apart from headline inflation, the BPS also reported that core inflation, which excludes volatile prices, such as those of food, and regulated prices like utility rates, was up 0.72 percent month-to-month and 9.68 percent year-on-year.
The BPS, in collaboration with Bank Indonesia, has started this year to report core inflation, which the central bank relies on in deciding its macroeconomic policy.
The government has officially targeted full-year inflation of 8 percent in this year's budget.
Year-on-year inflation stood at 18.38 percent in November, the highest level in six years, as costs rose following the October fuel price hikes and as a result of increased food consumption during the Idul Fitri season.
BI has forecast that monthly inflation will remain at 3.19 percent in the first quarter before easing to 2.36 percent in the fourth quarter, ending up at a year-on-year level of between 7 and 9 percent. The forecast has already factored in possible power rate hikes, although only up to a maximum of 30 percent.
Commenting on the possible electricity hikes, Choiril said that an increase of between 15 and 40 percent could up inflation by between 0.4 and 1 percent.
"If electricity prices rise by 30 percent, then inflation will increase by 0.9 percent," he said. "And this is just the direct effect -- we have yet to calculate the knock-on effects."
Separately, Finance Minister Sri Mulyani Indrawati said that monthly inflation was expected to remain high until March at the earliest.
"Afterward, we expect inflation to ease," she said. "We will from then on be particularly cautious about months with holidays and the year-end in order to keep inflation at those times in check at below 1 percent."
Source:
The Jakarta Post
Temasek eyeing PT Chandra Asri: Report
SINGAPORE (AFP): Singapore's Temasek Holdings is stepping up its global buying spree by offering to buy control of Indonesia's biggest petrochemical firm PT Chandra Asri, a newspaper reported here Thursday.
The Business Times said the state-linked investment firm had signed a letter of intent to take a controlling interest in the petrochemical firm, whose production complex is located on the western tip of Java island.
The newspaper said Temasek was "close to paying" an estimated US$700 million for a stake in Chandra Asri, which is owned by Japan's Marubeni, Malaysia's Glazers and Putnam and Indonesian investors.
This would raise Temasek's Indonesian investments to $3 billion since 1997, it added. A spokeswoman for Temasek said it had no comment to make on the report. Temasek normally announces only completed deals. Its global portfolio now exceeds $60 billion.
In Indonesia, the Temasek group has direct or indirect stakes in telecommunications firms Indosat and Telkomsel, Bank Internasional Indonesia and Bank Danamon Indonesia.
News of the Chandra Asri offer closely follows a Temasek-led group's purchase of shares in a Thai telecommunications firm, Shin Corp, from the family of Thai Prime Minister Thaksin Shinawatra.
Temasek's fully-owned subsidiary PSA International has also made an offer for British port giant P and O that has been topped by Dubai-based rival DP World in what is shaping up to be a high-stakes bidding war.
Source:
The Jakarta Post
February 02, 2006
The Business Times said the state-linked investment firm had signed a letter of intent to take a controlling interest in the petrochemical firm, whose production complex is located on the western tip of Java island.
The newspaper said Temasek was "close to paying" an estimated US$700 million for a stake in Chandra Asri, which is owned by Japan's Marubeni, Malaysia's Glazers and Putnam and Indonesian investors.
This would raise Temasek's Indonesian investments to $3 billion since 1997, it added. A spokeswoman for Temasek said it had no comment to make on the report. Temasek normally announces only completed deals. Its global portfolio now exceeds $60 billion.
In Indonesia, the Temasek group has direct or indirect stakes in telecommunications firms Indosat and Telkomsel, Bank Internasional Indonesia and Bank Danamon Indonesia.
News of the Chandra Asri offer closely follows a Temasek-led group's purchase of shares in a Thai telecommunications firm, Shin Corp, from the family of Thai Prime Minister Thaksin Shinawatra.
Temasek's fully-owned subsidiary PSA International has also made an offer for British port giant P and O that has been topped by Dubai-based rival DP World in what is shaping up to be a high-stakes bidding war.
Source:
The Jakarta Post
February 02, 2006
Hutchison's Indon unit to lose 3G edge with more players
(HONG KONG) Hutchison Telecommunications International Ltd's (HTIL) Indonesian mobile unit will soon lose its place as one of only two operators licensed to run both 2G and 3G services, with the Indonesian government likely to award 3G spectrum to another two local operators, according to the South China Morning Post.
Big market: Indonesia's mobile subscriber numbers are expected to grow by 30% this year to 61 million. The newspaper quoted analysts as saying that while Cyber Access Communications would first roll out 2G services in Indonesia, they feared that the 60 per cent-owned unit of HTIL would miss out on the emerging mobile market's peak subscriber growth because of its slower-than-expected 2G network roll-out.
Gatot Broto, a spokesman for Indonesia's directorate-general of post and telecommunications, was quoted as saying that the government would auction 15 megahertz (MHz) of spectrum in its second round of 3G spectrum auction next Tuesday. Another 20MHz is expected to be auctioned in 2008.
'(One likely scenario) is for the government to split the 15MHz so that one winner would get 10MHz, and another, 5MHz,' said Mr Gatot.
The current round has generated keen interest from seven firms, including operators Telkomsel, Indosat and Excelcomindo. The only other operator with a combined 2G and 3G nationwide licence is Natrindo Telepon Seluler, which is 51 per cent owned by Malaysia's Maxis Communications.
Analysts say a 3G operator needs at least 10MHz of spectrum for a service roll-out. Mr Gatot said Cyber Access had already returned 5MHz of its paired spectrum to the government after it appealed to the two existing 3G licensees last September for a partial return of their 3G spectrum.
The administration wanted the spectrum back for a second round of auctions for operators such as Indosat and Telkomsel, who were reportedly upset about not securing any 3G spectrum in the first round in 2003. Cyber Access now has 10MHz of unpaired 3G spectrum.
With less 3G spectrum, Cyber Access would probably have to build more base stations to add network capacity to compensate for the lost spectrum - a move likely to increase its investment cost, one analyst said.
Meanwhile, analysts do not expect Cyber Access to launch a 2G service until early next year, later than its original launch target set for this year.
HTIL said last month that the first 2,000 cell sites, built by Siemens, were not expected to be completed until the second half of this year.
Richard Moe, an analyst at Macquarie Research, said operators such as Telkomsel would probably be more aggressive in building a network than newcomers such as Cyber Access, as it already had 9,000 base stations in the country.
With a mobile penetration rate of just 20 per cent, Indonesia's mobile subscriber numbers are expected to grow by 30 per cent this year to 61 million, before growth slows to just 20 per cent by 2008. That compares with a growth rate of 55 per cent last year.
Mr Moe said Cyber Access's delayed launch means it would have already missed out on the country's peak subscriber growth rate.
Source:
The Business Times Singapore
February 2, 2006
Big market: Indonesia's mobile subscriber numbers are expected to grow by 30% this year to 61 million. The newspaper quoted analysts as saying that while Cyber Access Communications would first roll out 2G services in Indonesia, they feared that the 60 per cent-owned unit of HTIL would miss out on the emerging mobile market's peak subscriber growth because of its slower-than-expected 2G network roll-out.
Gatot Broto, a spokesman for Indonesia's directorate-general of post and telecommunications, was quoted as saying that the government would auction 15 megahertz (MHz) of spectrum in its second round of 3G spectrum auction next Tuesday. Another 20MHz is expected to be auctioned in 2008.
'(One likely scenario) is for the government to split the 15MHz so that one winner would get 10MHz, and another, 5MHz,' said Mr Gatot.
The current round has generated keen interest from seven firms, including operators Telkomsel, Indosat and Excelcomindo. The only other operator with a combined 2G and 3G nationwide licence is Natrindo Telepon Seluler, which is 51 per cent owned by Malaysia's Maxis Communications.
Analysts say a 3G operator needs at least 10MHz of spectrum for a service roll-out. Mr Gatot said Cyber Access had already returned 5MHz of its paired spectrum to the government after it appealed to the two existing 3G licensees last September for a partial return of their 3G spectrum.
The administration wanted the spectrum back for a second round of auctions for operators such as Indosat and Telkomsel, who were reportedly upset about not securing any 3G spectrum in the first round in 2003. Cyber Access now has 10MHz of unpaired 3G spectrum.
With less 3G spectrum, Cyber Access would probably have to build more base stations to add network capacity to compensate for the lost spectrum - a move likely to increase its investment cost, one analyst said.
Meanwhile, analysts do not expect Cyber Access to launch a 2G service until early next year, later than its original launch target set for this year.
HTIL said last month that the first 2,000 cell sites, built by Siemens, were not expected to be completed until the second half of this year.
Richard Moe, an analyst at Macquarie Research, said operators such as Telkomsel would probably be more aggressive in building a network than newcomers such as Cyber Access, as it already had 9,000 base stations in the country.
With a mobile penetration rate of just 20 per cent, Indonesia's mobile subscriber numbers are expected to grow by 30 per cent this year to 61 million, before growth slows to just 20 per cent by 2008. That compares with a growth rate of 55 per cent last year.
Mr Moe said Cyber Access's delayed launch means it would have already missed out on the country's peak subscriber growth rate.
Source:
The Business Times Singapore
February 2, 2006
Jakarta to delay enforcing some bad-loan regulations
Bank Indonesia will delay enforcing some bad-loan rules because it needs more time to build a system to monitor the credit-worthiness of borrowers, Deputy Governor Maman Somantri said.
The central bank will delay enforcing rules where by lenders must classify a loan as bad, even if it is not overdue, if the borrower has defaulted on debts to other banks, Mr Maman said in an interview on Monday.
The rules were to have come into effect in mid-2005, and the delay underlines the challenges faced by lenders and the central bank in assessing whether borrowers are credit-worthy or not. Still, it may allow lenders such as PT Bank Mandiri and PT Bank Negara Indonesia, the nation's two biggest banks, to reclassify some non-performing loans as good.
'This is certainly good news for state banks,' said Tjandra Lienandjaja, a banking analyst at BNP Paribas Peregrine in Jakarta. 'Their non-performing loans will certainly decline and loan-loss provisions will also decline as well. That will help profit at the lenders to increase.'
The central bank will not delay the enforcement of rules under which all banks participating in a syndicated loan, where a group of lenders join to provide funds to a borrower, must reclassify loans if there is a delay in repayment, Mr Maman said. It will also not delay enforcing rules for loans greater than 25 billion rupiah (S$4.3 million), the central bank said in a statement.
The central bank cannot enforce the rules for other types of loans such as ones given to individuals and small companies of between 500 million rupiah and 25 billion rupiah until it has completed construction of a system to track defaults. The implementation of the rule for such loans may be delayed for as long as one and a half years, the statement said.
The loan-classification rules, which force banks to prepare for possible losses if a borrower appears to be at risk of default, are among reforms introduced after the 1997-98 Asian crisis.
The collapse in the value of the rupiah left hundreds of companies unable to pay back foreign currency debt, triggering thousands of defaults by both companies and individuals.
The banking industry almost failed, forcing the government, backed by the International Monetary Fund, to orchestrate a 450 trillion rupiah bailout of the industry.
'Indonesian banks usually have enough time to digest any of Bank Indonesia's regulations, but for this regulation lenders didn't have much time. That affected state lenders like Bank Mandiri and Bank Negara,' said Fendi Susiyanto, who helps manage about US$170 million at PT Bank Permata in Jakarta.
'Still, if Bank Indonesia is now trying to delay the implementation, it shows inconsistency.'
Mr Maman said the central bank plans to rate banks on a scale of one to five to take account of their overall corporate governance and transparency. To that end, Bank Indonesia is pushing banks to set up audit and remuneration committees. -
Source:
Bloomberg
February 2, 2006
The central bank will delay enforcing rules where by lenders must classify a loan as bad, even if it is not overdue, if the borrower has defaulted on debts to other banks, Mr Maman said in an interview on Monday.
The rules were to have come into effect in mid-2005, and the delay underlines the challenges faced by lenders and the central bank in assessing whether borrowers are credit-worthy or not. Still, it may allow lenders such as PT Bank Mandiri and PT Bank Negara Indonesia, the nation's two biggest banks, to reclassify some non-performing loans as good.
'This is certainly good news for state banks,' said Tjandra Lienandjaja, a banking analyst at BNP Paribas Peregrine in Jakarta. 'Their non-performing loans will certainly decline and loan-loss provisions will also decline as well. That will help profit at the lenders to increase.'
The central bank will not delay the enforcement of rules under which all banks participating in a syndicated loan, where a group of lenders join to provide funds to a borrower, must reclassify loans if there is a delay in repayment, Mr Maman said. It will also not delay enforcing rules for loans greater than 25 billion rupiah (S$4.3 million), the central bank said in a statement.
The central bank cannot enforce the rules for other types of loans such as ones given to individuals and small companies of between 500 million rupiah and 25 billion rupiah until it has completed construction of a system to track defaults. The implementation of the rule for such loans may be delayed for as long as one and a half years, the statement said.
The loan-classification rules, which force banks to prepare for possible losses if a borrower appears to be at risk of default, are among reforms introduced after the 1997-98 Asian crisis.
The collapse in the value of the rupiah left hundreds of companies unable to pay back foreign currency debt, triggering thousands of defaults by both companies and individuals.
The banking industry almost failed, forcing the government, backed by the International Monetary Fund, to orchestrate a 450 trillion rupiah bailout of the industry.
'Indonesian banks usually have enough time to digest any of Bank Indonesia's regulations, but for this regulation lenders didn't have much time. That affected state lenders like Bank Mandiri and Bank Negara,' said Fendi Susiyanto, who helps manage about US$170 million at PT Bank Permata in Jakarta.
'Still, if Bank Indonesia is now trying to delay the implementation, it shows inconsistency.'
Mr Maman said the central bank plans to rate banks on a scale of one to five to take account of their overall corporate governance and transparency. To that end, Bank Indonesia is pushing banks to set up audit and remuneration committees. -
Source:
Bloomberg
February 2, 2006
Indonesian military's new day?
An Indonesian parliamentary committee sent President Susilo Bambang Yudhoyono's nomination to lead the armed forces to the full Parliament on Thursday after the nominee assured them of his commitment to rein in corrupt military business interests and prevent human rights abuses.
Djoko Suyanto, who currently heads the air force, said he would cooperate with the attorney general's office on human rights cases, although he added that the responsibility for any unsuccessful prosecutions would lie with the civilian justice system.
Suyanto, who studied in 1983 at Nellis Air Force Base in Nevada, told the parliamentary defense committee Wednesday that he favored total civilian control over the military and would eliminate participation by military officials in the political process.
He also said that he would support the government's efforts to investigate the military's involvement with business interests. In many parts of Indonesia, the military is engaged in legal activities such as owning hotels and shopping centers, but it is also linked to illegal operations, such as logging and gambling. In particular, Suyanto said, he supported the efforts of a group of cabinet ministers that is auditing the military's business practices.
"The military is not allergic to change," Suyanto, 55, told the committee. A final vote on the nomination is expected Tuesday. Widjajanto, a lecturer at the University of Indonesia and a military analyst, said Suyanto, if approved, was likely to continue the initial reforms of the outgoing military leader, General Endriartono Sutarto.
"His whole experience is based on combat, and he has no track record of abuse or human rights violations," Widjajanto said. "And because he has always been involved with military operations, he has never been involved with politics."
Recent efforts to overhaul the military, notably its involvement in politics, have produced better relations with the United States. The Bush administration has encouraged closer ties with the military, seeing it as possible partner in its campaign against terrorism.
In November, the administration lifted prohibitions on the sale of lethal American equipment after restoring training for Indonesian armed forces earlier in the year. Washington had cut military assistance to Indonesia in 1991, after the army cracked down on the independence movement in East Timor, formerly an Indonesian province, and sanctions were further tightened in 1999 after the army killed more than a thousand civilians there.
Suyanto defended the military's organizational structure, which is left over from the three-decade rule of Suharto, who was ousted in 1998, even though some critics of the military want to dismantle it. Suyanto said the structure was helpful as an "early warning system" against terrorism because it gave the military a presence at all levels of the country, from provinces to districts to villages. He said he intended to keep it, despite concerns that the structure encourages involvement by the military in civilian affairs.
During the hearing Wednesday, lawmakers expressed concern that the commander of the air force, the smallest branch of the military, would have trouble asserting control over the army, which is the most powerful branch of the Indonesian military.
"I think he is the best for the job," said H. Ade Nasution, one of the members of Parliament who questioned Suyanto. "But he will have to assert his authority with confidence if he wants to control the army."
Meaningful reform of the military, some believe, will depend on the extent to which Parliament and the president insist on change. "There are still parts of the military, especially the army, that is resistant to reform," said Ikrar Nusa Bhakti, a military affairs expert at the Indonesian Institute of Sciences.
Source:
Peter Gelling International Herald Tribune
THURSDAY, FEBRUARY 2, 2006
Djoko Suyanto, who currently heads the air force, said he would cooperate with the attorney general's office on human rights cases, although he added that the responsibility for any unsuccessful prosecutions would lie with the civilian justice system.
Suyanto, who studied in 1983 at Nellis Air Force Base in Nevada, told the parliamentary defense committee Wednesday that he favored total civilian control over the military and would eliminate participation by military officials in the political process.
He also said that he would support the government's efforts to investigate the military's involvement with business interests. In many parts of Indonesia, the military is engaged in legal activities such as owning hotels and shopping centers, but it is also linked to illegal operations, such as logging and gambling. In particular, Suyanto said, he supported the efforts of a group of cabinet ministers that is auditing the military's business practices.
"The military is not allergic to change," Suyanto, 55, told the committee. A final vote on the nomination is expected Tuesday. Widjajanto, a lecturer at the University of Indonesia and a military analyst, said Suyanto, if approved, was likely to continue the initial reforms of the outgoing military leader, General Endriartono Sutarto.
"His whole experience is based on combat, and he has no track record of abuse or human rights violations," Widjajanto said. "And because he has always been involved with military operations, he has never been involved with politics."
Recent efforts to overhaul the military, notably its involvement in politics, have produced better relations with the United States. The Bush administration has encouraged closer ties with the military, seeing it as possible partner in its campaign against terrorism.
In November, the administration lifted prohibitions on the sale of lethal American equipment after restoring training for Indonesian armed forces earlier in the year. Washington had cut military assistance to Indonesia in 1991, after the army cracked down on the independence movement in East Timor, formerly an Indonesian province, and sanctions were further tightened in 1999 after the army killed more than a thousand civilians there.
Suyanto defended the military's organizational structure, which is left over from the three-decade rule of Suharto, who was ousted in 1998, even though some critics of the military want to dismantle it. Suyanto said the structure was helpful as an "early warning system" against terrorism because it gave the military a presence at all levels of the country, from provinces to districts to villages. He said he intended to keep it, despite concerns that the structure encourages involvement by the military in civilian affairs.
During the hearing Wednesday, lawmakers expressed concern that the commander of the air force, the smallest branch of the military, would have trouble asserting control over the army, which is the most powerful branch of the Indonesian military.
"I think he is the best for the job," said H. Ade Nasution, one of the members of Parliament who questioned Suyanto. "But he will have to assert his authority with confidence if he wants to control the army."
Meaningful reform of the military, some believe, will depend on the extent to which Parliament and the president insist on change. "There are still parts of the military, especially the army, that is resistant to reform," said Ikrar Nusa Bhakti, a military affairs expert at the Indonesian Institute of Sciences.
Source:
Peter Gelling International Herald Tribune
THURSDAY, FEBRUARY 2, 2006
JI preparing Malaysian students for militant activities
KUALA LUMPUR: Jemaah Islamiah (JI) has a house in Pakistan where students from Malaysia and Singapore are indoctrinated and prepared for militant activities.
Gungun Rusman Gunawan, a brother of Ridwan Ishamuddin (better known as Hambali, a key man in al-Qaeda's operations in South-East Asia who was captured in Thailand in August 2003) revealed this in his confession to the Indonesian police last year.
A source disclosed the contents of the confession to The Star recently.
Gungun and 18 others, including 13 Malaysians, were picked up by the Pakistan Federal Agency and the United States Central Intelligence Agency in Karachi in September 2003 for suspected militant activities.
The arrests were based on information gleaned from US interrogations of Hambali, who had been under US custody at a secret location after his capture.
Gungun: Said the students in Pakistan were closely knit and met weekly in the home.The Malaysians, pursuing religious courses in Karachi universities, were arrested under the Internal Security Act after they were deported. Eight were released after being questioned by police.
Gungun, who was deported to Indonesia after his arrest, is now serving a four-year jail sentence in his homeland for helping to finance the Jakarta J.W. Marriott hotel bombing.
In his confession, Gungun said Malaysians who made frequent visits to the house after completing their studies in Pakistan would be persuaded to undergo a military stint in Afghanistan.
He told police that he was ordered to set up the house by Abdul Rahim, the youngest son of jailed Indonesian Muslim leader Abubakar Ba'asyir - who has been accused of heading the JI network in Indonesia.
The house was set up at Johar Square, Karachi, in 2000. Kompak (an Indonesian militant group allegedly involved in a series of bomb blasts in the Poso region as well as in the Muslim-Christian conflicts in the Moluccas) paid for its rental.
The confession did not specify if the house still exists or how many Malaysians had gone to Afghanistan after the Pakistani authorities and the CIA arrested Gungun and the 18 others.
Gungun revealed that recruits for the Afghan military stint had to undergo a 40-day tadrib (military training) before they were introduced to light weaponry for 20 days.
“They were exposed to the theory and handling of AK-47 assault rifles and Pulemyot Kalashnikov general purpose machine guns.
“They were also introduced to RPG (rocket propelled grenade) guns, M-16 rifles and a wide range of pistols.” Gungun, a former student of the Abu Bakar Islamic University, said the recruits were also taught how to read the compass and maps and use explosives like Molotov bombs, grenades, anti-tank mines and TNT.
He added that Malaysian and Indonesian students in Pakistan were closely knit and met weekly at the home. “The brotherhood also saw them forming a study group called al-Ghuraba under Abdul Rahim’s tutelage.” , according to the source, the authorities are concerned that the so-called study group could be part of a JI sleeper cell that could be activated any time.
“Based on Gungun’s evidence, the police in Indonesia, Malaysia and Singapore are working together to identify those who had been to the house,” said the source. In July last year the Pakistani government deported hundreds of foreign students, including some 200 Malaysians, in a move to curb militancy in the country.
This followed their finding that two out of four Pakistan-origin terror suspects involved in the London bombings on July 7 had studied at the same madrasah (religious community school). The Pakistani move had also put the Malaysian authorities on a similar alert. “The Malaysian police would be keeping an eye on local students who return home as a precautionary measure,” said the source.
EDDIE CHUA, The Star Malaysia
Thursday February 2, 2006
Gungun Rusman Gunawan, a brother of Ridwan Ishamuddin (better known as Hambali, a key man in al-Qaeda's operations in South-East Asia who was captured in Thailand in August 2003) revealed this in his confession to the Indonesian police last year.
A source disclosed the contents of the confession to The Star recently.
Gungun and 18 others, including 13 Malaysians, were picked up by the Pakistan Federal Agency and the United States Central Intelligence Agency in Karachi in September 2003 for suspected militant activities.
The arrests were based on information gleaned from US interrogations of Hambali, who had been under US custody at a secret location after his capture.
Gungun: Said the students in Pakistan were closely knit and met weekly in the home.The Malaysians, pursuing religious courses in Karachi universities, were arrested under the Internal Security Act after they were deported. Eight were released after being questioned by police.
Gungun, who was deported to Indonesia after his arrest, is now serving a four-year jail sentence in his homeland for helping to finance the Jakarta J.W. Marriott hotel bombing.
In his confession, Gungun said Malaysians who made frequent visits to the house after completing their studies in Pakistan would be persuaded to undergo a military stint in Afghanistan.
He told police that he was ordered to set up the house by Abdul Rahim, the youngest son of jailed Indonesian Muslim leader Abubakar Ba'asyir - who has been accused of heading the JI network in Indonesia.
The house was set up at Johar Square, Karachi, in 2000. Kompak (an Indonesian militant group allegedly involved in a series of bomb blasts in the Poso region as well as in the Muslim-Christian conflicts in the Moluccas) paid for its rental.
The confession did not specify if the house still exists or how many Malaysians had gone to Afghanistan after the Pakistani authorities and the CIA arrested Gungun and the 18 others.
Gungun revealed that recruits for the Afghan military stint had to undergo a 40-day tadrib (military training) before they were introduced to light weaponry for 20 days.
“They were exposed to the theory and handling of AK-47 assault rifles and Pulemyot Kalashnikov general purpose machine guns.
“They were also introduced to RPG (rocket propelled grenade) guns, M-16 rifles and a wide range of pistols.” Gungun, a former student of the Abu Bakar Islamic University, said the recruits were also taught how to read the compass and maps and use explosives like Molotov bombs, grenades, anti-tank mines and TNT.
He added that Malaysian and Indonesian students in Pakistan were closely knit and met weekly at the home. “The brotherhood also saw them forming a study group called al-Ghuraba under Abdul Rahim’s tutelage.” , according to the source, the authorities are concerned that the so-called study group could be part of a JI sleeper cell that could be activated any time.
“Based on Gungun’s evidence, the police in Indonesia, Malaysia and Singapore are working together to identify those who had been to the house,” said the source. In July last year the Pakistani government deported hundreds of foreign students, including some 200 Malaysians, in a move to curb militancy in the country.
This followed their finding that two out of four Pakistan-origin terror suspects involved in the London bombings on July 7 had studied at the same madrasah (religious community school). The Pakistani move had also put the Malaysian authorities on a similar alert. “The Malaysian police would be keeping an eye on local students who return home as a precautionary measure,” said the source.
EDDIE CHUA, The Star Malaysia
Thursday February 2, 2006
Wednesday, February 01, 2006
Suyanto likely to come out fit, proper
Air Marshall Djoko Suyanto, the sole candidate for the post of Indonesian Military (TNI) chief, is only days away from starting his job, with Wednesday's fit-and-proper test at the House of Representatives a mere formality, insiders say.
Suyanto is President Susilo Bambang Yudhoyono's only choice for the military's top job. "Djoko Suyanto is the best candidate," said Ade Daud Nasution of the Reform Star Party, a member of the House Commission I working group on defense that will interview Suyanto.
Theo Sambuaga, a Golkar Party legislator who heads the commission, said the session would be open to the public. "We will focus on his personality, morality and track record." However, more sensitive topics like personal wealth would not be discussed, Theo said.
Golkar believes Suyanto could drive reform in the TNI and improve soldiers' professionalism. The military's image has been tarnished over recent years, with top soldiers accused of involvement in human rights abuses and illegal businesses.
National Mandate Party (PAN) legislators said they would focus their questions on Suyanto's vision of human rights issues. "Human rights is a serious concern for us," legislator Djoko Susilo said. Any challenge is likely to come from the opposition Indonesian Democratic Party of Struggle faction, which favors former Army chief of staff Gen. Ryamizard Ryacudu to replace the retiring Gen. Endriartono Sutarto. Marshall Suyanto, 55, graduated from the Military Academy in 1973, the same year as Yudhoyono, a former Army general.
Source:
Muninggar Sri Saraswati
Jakarta Post
February 02, 2006
Suyanto is President Susilo Bambang Yudhoyono's only choice for the military's top job. "Djoko Suyanto is the best candidate," said Ade Daud Nasution of the Reform Star Party, a member of the House Commission I working group on defense that will interview Suyanto.
Theo Sambuaga, a Golkar Party legislator who heads the commission, said the session would be open to the public. "We will focus on his personality, morality and track record." However, more sensitive topics like personal wealth would not be discussed, Theo said.
Golkar believes Suyanto could drive reform in the TNI and improve soldiers' professionalism. The military's image has been tarnished over recent years, with top soldiers accused of involvement in human rights abuses and illegal businesses.
National Mandate Party (PAN) legislators said they would focus their questions on Suyanto's vision of human rights issues. "Human rights is a serious concern for us," legislator Djoko Susilo said. Any challenge is likely to come from the opposition Indonesian Democratic Party of Struggle faction, which favors former Army chief of staff Gen. Ryamizard Ryacudu to replace the retiring Gen. Endriartono Sutarto. Marshall Suyanto, 55, graduated from the Military Academy in 1973, the same year as Yudhoyono, a former Army general.
Source:
Muninggar Sri Saraswati
Jakarta Post
February 02, 2006
Prices of Pertamax, other fuels up
State oil and gas firm PT Pertamina is to raise the prices of high-octane premium gasoline and most fuels destined for industrial users by as much as 13 percent, based on a new distribution policy and increases in global crude prices.
Starting February, the company will apply different pricing policies to the unsubsidized Pertamax and Pertamax Plus in each distribution area, Pertamina's fuel division head, Achmad Faisal, said Tuesday. "We'll apply different prices for areas outside Java, depending on distribution and transportation costs," he said.
In Java, Pertamax will be sold at Rp 5,300 per liter (56 U.S. cents), 6 percent higher than the January price, and Pertamax Plus at Rp 5,400 per liter.
The highest price for Pertamax will be in Makasar at Rp 5,650 a liter, 13 percent higher than January's price. Meanwhile, the lowest price for Pertamax Plus will be in Batam at Rp 5,350 per liter, cheaper than in Jakarta.
Pertamina will also raise the prices of most fuels sold to industrial users in February. The price of kerosene will increase the most, 7.9 percent, to Rp 5,740 per liter from Rp 5,320 per liter in January, while the price of premium gasoline will increase by only 3.8 percent to Rp 4,930 per liter.
The price of fuel oil, however, will fall by 2.9 percent to Rp 3,380 per liter.
Pertamina has calculated the new prices based on Mid Oil Platts Singapore (MOPS) prices between Dec. 15 and Jan. 15.
"Global oil prices are on the upward path again," said Pertamina president director Widya Purnama. Crude prices have climbed by 19 percent since Dec. 1 due to tensions over Iran's nuclear research program and rebel attacks in Nigeria. Crude prices in New York rose as much as 0.4 percent to $68.65 early Tuesday, gaining for the fourth straight day.
Widya said the base price for premium gasoline would be $68.16 per barrel, kerosene $79.83 per barrel and diesel fuel $71.62 per barrel. Pertamina is also considering effecting price adjustments every two weeks, instead of once every month.
"We want our prices to better reflect the fluctuations taking place in the global market," said Faisal. He did not say, however, when the firm might start doing this.
Source:
Leony Aurora, The Jakarta Post, Jakarta
February 02, 2006
Starting February, the company will apply different pricing policies to the unsubsidized Pertamax and Pertamax Plus in each distribution area, Pertamina's fuel division head, Achmad Faisal, said Tuesday. "We'll apply different prices for areas outside Java, depending on distribution and transportation costs," he said.
In Java, Pertamax will be sold at Rp 5,300 per liter (56 U.S. cents), 6 percent higher than the January price, and Pertamax Plus at Rp 5,400 per liter.
The highest price for Pertamax will be in Makasar at Rp 5,650 a liter, 13 percent higher than January's price. Meanwhile, the lowest price for Pertamax Plus will be in Batam at Rp 5,350 per liter, cheaper than in Jakarta.
Pertamina will also raise the prices of most fuels sold to industrial users in February. The price of kerosene will increase the most, 7.9 percent, to Rp 5,740 per liter from Rp 5,320 per liter in January, while the price of premium gasoline will increase by only 3.8 percent to Rp 4,930 per liter.
The price of fuel oil, however, will fall by 2.9 percent to Rp 3,380 per liter.
Pertamina has calculated the new prices based on Mid Oil Platts Singapore (MOPS) prices between Dec. 15 and Jan. 15.
"Global oil prices are on the upward path again," said Pertamina president director Widya Purnama. Crude prices have climbed by 19 percent since Dec. 1 due to tensions over Iran's nuclear research program and rebel attacks in Nigeria. Crude prices in New York rose as much as 0.4 percent to $68.65 early Tuesday, gaining for the fourth straight day.
Widya said the base price for premium gasoline would be $68.16 per barrel, kerosene $79.83 per barrel and diesel fuel $71.62 per barrel. Pertamina is also considering effecting price adjustments every two weeks, instead of once every month.
"We want our prices to better reflect the fluctuations taking place in the global market," said Faisal. He did not say, however, when the firm might start doing this.
Source:
Leony Aurora, The Jakarta Post, Jakarta
February 02, 2006
Tuesday, January 31, 2006
U.S. congressman backs SBY for Nobel Peace Prize
President Susilo Bambang Yudhoyono has been nominated for the 2006 Nobel Peace Prize by an American congressman for his role in resolving the decades-old conflict in Nanggroe Aceh Darussalam.
The President also deserves the prestigious prize for his unwavering commitment to Indonesian democracy within his first year in office, Democratic congressman Robert Wexler said.
The congressman, a senior member of the House International Relations Committee and co-chairman of the Congressional Indonesia Caucus, said Susilo achieved a dramatic breakthrough by ending the 29-year-old armed conflict with the signing of a peace agreement on Aug. 15, 2005, between Jakarta and the Free Aceh Movement (GAM).
Wexler met Yudhoyono during a visit here last August, and said at the time the U.S. did not support any separatist movement or threat to the country's territorial integrity.
While Yudhoyono has been praised for helping push through the peace agreement, many have credited Vice President Jusuf Kalla for his contribution to the process.
On his website www.wexler.house.gov , the Florida congressman also noted that Indonesians had endured much hardship in the past year, most notably the devastating Dec. 26, 2004 tsunami which claimed the lives of more than 120,000 people in the province.
Wexler's letter to the Nobel Committee, which was posted on the website, said that despite the natural disasters and the bird flu outbreak, Yudhoyono and his administration should be "commended for remaining firmly committed to addressing the political, economic and humanitarian needs of their nation".
The President, he said, has worked to help restore rights to the Acehnese -- from human and political rights to representation in governance -- and showed that he is a true reformer and campaigner for peace.
Presidential spokesman Andi Mallarangeng said the President and his administration welcomed the nomination. "We don't work to get a Nobel or any other prize. But we'd be very delighted with any appreciation of our work," Andi told Antara news service.
Presented annually since 1901, the Nobel Prize is given to outstanding achievements in peace, literature, medicine, physiology, chemistry and physics.
The laureates for the Peace Prize are selected by the Norwegian Nobel Committee, which comprises five members appointed by the Norwegian parliament, and the lists are usually announced in mid-October each year.
Last year's Peace Prize was split between the Austrian-based International Atomic Energy Agency and its director general, Egyptian Mohamed El Baradei.
The Jakarta Post, Jakarta
February 01, 2006
The President also deserves the prestigious prize for his unwavering commitment to Indonesian democracy within his first year in office, Democratic congressman Robert Wexler said.
The congressman, a senior member of the House International Relations Committee and co-chairman of the Congressional Indonesia Caucus, said Susilo achieved a dramatic breakthrough by ending the 29-year-old armed conflict with the signing of a peace agreement on Aug. 15, 2005, between Jakarta and the Free Aceh Movement (GAM).
Wexler met Yudhoyono during a visit here last August, and said at the time the U.S. did not support any separatist movement or threat to the country's territorial integrity.
While Yudhoyono has been praised for helping push through the peace agreement, many have credited Vice President Jusuf Kalla for his contribution to the process.
On his website www.wexler.house.gov , the Florida congressman also noted that Indonesians had endured much hardship in the past year, most notably the devastating Dec. 26, 2004 tsunami which claimed the lives of more than 120,000 people in the province.
Wexler's letter to the Nobel Committee, which was posted on the website, said that despite the natural disasters and the bird flu outbreak, Yudhoyono and his administration should be "commended for remaining firmly committed to addressing the political, economic and humanitarian needs of their nation".
The President, he said, has worked to help restore rights to the Acehnese -- from human and political rights to representation in governance -- and showed that he is a true reformer and campaigner for peace.
Presidential spokesman Andi Mallarangeng said the President and his administration welcomed the nomination. "We don't work to get a Nobel or any other prize. But we'd be very delighted with any appreciation of our work," Andi told Antara news service.
Presented annually since 1901, the Nobel Prize is given to outstanding achievements in peace, literature, medicine, physiology, chemistry and physics.
The laureates for the Peace Prize are selected by the Norwegian Nobel Committee, which comprises five members appointed by the Norwegian parliament, and the lists are usually announced in mid-October each year.
Last year's Peace Prize was split between the Austrian-based International Atomic Energy Agency and its director general, Egyptian Mohamed El Baradei.
The Jakarta Post, Jakarta
February 01, 2006
Antimoney laundering watchdog may get more power
The government plans to crank up the powers of the country's antimoney laundering watchdog amid the global fight against the crime.
According to a draft on the revision of Law No. 25/2005 on Money Laundering, the watchdog's powers will include taking over the investigation of cases from the police as well as freezing assets and halting financial transactions linked to the alleged crime, Kontan economic weekly said in its latest edition.
Yunus Husein, who is the chairman of the watchdog Financial Transaction Reports Analysis Center (PPATK), confirmed the report Sunday, but said the draft had yet to be submitted to House legislators because it was still under discussion by related government institutions.
He disclosed that nonbank institutions such as public accountants, property agents and developers, jewelry and antique shops, car dealers, lawyers and non-governmental organizations (NGOs) would also be affected by the proposed changes.
"They will have to report suspicious transactions to us," Yunus told The Jakarta Post.
"We will also get the authority to postpone such transactions and give administrative sanctions to those who fail to report them."
He explained the proposed changes were based on the recommendations made by the Financial Action Task Force (FATF), the global antimoney laundering watchdog, in 2003.
Article 59 of the draft, Kontan said, stipulates that the agency has the authority to investigate any suspicious money-laundering cases.
PPATK's current task is to analyze incoming reports and present them to the police for further investigation. There has been criticism of the police for slow investigations of the crimes. About 15 police officers have been accused of involvement in money-laundering activities.
Yunus was cautious in evaluating the new responsibilities proposed for the watchdog.
"Personally, I think it will be difficult to investigate, as we lack the human resources and abilities."
He noted that several experts insisted that PPATK become a "super body", which may trigger unrealistically high expectations.
"The draft features limited investigation authority -- we cannot detain people but we can freeze assets," Yunus said.
PPATK's name will be converted into using "agency" or "commission" in line with prevailing regulations regarding institutions reporting straight to the President.
Yunus said the draft would be presented to legislators for deliberation by mid-year. "I hope it will be prioritized by the House."
The FATF, set up by the Organization for Economic Cooperation and Development, removed Indonesia from the list of Non-Cooperative Countries and Territories (NCCT) in February last year.
The FATF will review Indonesia's position in its plenary session in Cape Town, South Africa, in mid-February to decide whether the country can be removed from its monitored status and taken off the list.
Reports of suspicious transactions at the end of the year jumped to 3,311, lodged by 106 banks and 26 nonbank institutions, from 1,256 reports by 69 banks and 10 nonbank institutions recorded in January last year, PPATK said.
Source:
The Jakarta Post, Jakarta
February 01, 2006
According to a draft on the revision of Law No. 25/2005 on Money Laundering, the watchdog's powers will include taking over the investigation of cases from the police as well as freezing assets and halting financial transactions linked to the alleged crime, Kontan economic weekly said in its latest edition.
Yunus Husein, who is the chairman of the watchdog Financial Transaction Reports Analysis Center (PPATK), confirmed the report Sunday, but said the draft had yet to be submitted to House legislators because it was still under discussion by related government institutions.
He disclosed that nonbank institutions such as public accountants, property agents and developers, jewelry and antique shops, car dealers, lawyers and non-governmental organizations (NGOs) would also be affected by the proposed changes.
"They will have to report suspicious transactions to us," Yunus told The Jakarta Post.
"We will also get the authority to postpone such transactions and give administrative sanctions to those who fail to report them."
He explained the proposed changes were based on the recommendations made by the Financial Action Task Force (FATF), the global antimoney laundering watchdog, in 2003.
Article 59 of the draft, Kontan said, stipulates that the agency has the authority to investigate any suspicious money-laundering cases.
PPATK's current task is to analyze incoming reports and present them to the police for further investigation. There has been criticism of the police for slow investigations of the crimes. About 15 police officers have been accused of involvement in money-laundering activities.
Yunus was cautious in evaluating the new responsibilities proposed for the watchdog.
"Personally, I think it will be difficult to investigate, as we lack the human resources and abilities."
He noted that several experts insisted that PPATK become a "super body", which may trigger unrealistically high expectations.
"The draft features limited investigation authority -- we cannot detain people but we can freeze assets," Yunus said.
PPATK's name will be converted into using "agency" or "commission" in line with prevailing regulations regarding institutions reporting straight to the President.
Yunus said the draft would be presented to legislators for deliberation by mid-year. "I hope it will be prioritized by the House."
The FATF, set up by the Organization for Economic Cooperation and Development, removed Indonesia from the list of Non-Cooperative Countries and Territories (NCCT) in February last year.
The FATF will review Indonesia's position in its plenary session in Cape Town, South Africa, in mid-February to decide whether the country can be removed from its monitored status and taken off the list.
Reports of suspicious transactions at the end of the year jumped to 3,311, lodged by 106 banks and 26 nonbank institutions, from 1,256 reports by 69 banks and 10 nonbank institutions recorded in January last year, PPATK said.
Source:
The Jakarta Post, Jakarta
February 01, 2006
Monday, January 30, 2006
Trade and Investment News, 30 January 2006
Source:
The Coordinating Ministry for Economic Affairs
Republic of Indonesia
Highlights
Politics
• Two of nine alleged heroin smugglers from Australia face the death sentence
• Rice welcomes assistance on Myanmar
• Jakarta to assist Korean relations
• Three former directors of Bank Mandiri face 20 year sentences for alleged corruption
Regions
• The draft bill on governance in Aceh goes to the House of Representatives
Economy
• Investment almost doubled during 2005
• Nomura International upgrades Indonesia to overweight
Business Briefs
Macroeconomy
• Economic growth projected strong
• Rupiah at 11-month high
• Demand for fuel products stays low
• Bank Indonesia watches Fed move
Investment
• Investment in Indonesia almost doubles in 2005
• President Yudhoyono appeals to labor unions to help build a positive investment climate
• Japanese car manufacturers to make Indonesia a regional production base
State concerns
• The government completes its review on import duties for 9,209 products
SOEs
• State asset management company PPA plans to sell remaining minority stakes in three banks
• Telecoms regulatory body BRTI agrees in principle to a proposed 30% increase in local call rates
• Semen Gresik said its cement sales grew 4.5% to 16.34 million tons in 2005
Private sector
• Three companies to bid for third generation (3G) cellular licenses
Banks
• Banking sector looks to higher loan expansion
• Bank Indonesia encourages closer links with rural credit banks
• Banks to assist textile sector
• Malaysia's Khazanah Nasional keen to see mergers with Lippo
Power
• A 600-MW thermal power plant to come on stream, easing pressure on the major Java-Bali
Mining
• Defense Minister orders probe into Freeport Indonesia financial support for security forces
POLITICS
The Coordinating Ministry for Economic Affairs
Republic of Indonesia
Highlights
Politics
• Two of nine alleged heroin smugglers from Australia face the death sentence
• Rice welcomes assistance on Myanmar
• Jakarta to assist Korean relations
• Three former directors of Bank Mandiri face 20 year sentences for alleged corruption
Regions
• The draft bill on governance in Aceh goes to the House of Representatives
Economy
• Investment almost doubled during 2005
• Nomura International upgrades Indonesia to overweight
Business Briefs
Macroeconomy
• Economic growth projected strong
• Rupiah at 11-month high
• Demand for fuel products stays low
• Bank Indonesia watches Fed move
Investment
• Investment in Indonesia almost doubles in 2005
• President Yudhoyono appeals to labor unions to help build a positive investment climate
• Japanese car manufacturers to make Indonesia a regional production base
State concerns
• The government completes its review on import duties for 9,209 products
SOEs
• State asset management company PPA plans to sell remaining minority stakes in three banks
• Telecoms regulatory body BRTI agrees in principle to a proposed 30% increase in local call rates
• Semen Gresik said its cement sales grew 4.5% to 16.34 million tons in 2005
Private sector
• Three companies to bid for third generation (3G) cellular licenses
Banks
• Banking sector looks to higher loan expansion
• Bank Indonesia encourages closer links with rural credit banks
• Banks to assist textile sector
• Malaysia's Khazanah Nasional keen to see mergers with Lippo
Power
• A 600-MW thermal power plant to come on stream, easing pressure on the major Java-Bali
Mining
• Defense Minister orders probe into Freeport Indonesia financial support for security forces
POLITICS
Government Wins Rice Vote
The government received the support of the House of Representatives (DPR) over its policy on limited rice imports, with a plenary session on Tuesday ( (21/1/06) rejecting a move for an investigation of the program.
The imports supported by 184 legislators voting against a probe, 151 calling for a full-fledged investigation and 107 backing the motion for an inquiry.
The vote cleared the political and legal hurdles presented by opposition legislators, who had questioned licenses to import 110,000 tons of medium-grade rice from Vietnam.
The government wants the imports to keep prices stable at a time when stocks at the State Logistics Agency (Bulog) are below the minimum requirement, making market intervention to restrain prices difficult.
In Tokyo, visiting Vice President Jusuf Kalla said the debate over the government's rice import plan was natural in any democratic country.
"If the House of Representatives (DPR) conducts an inquiry or interpellation into the government's decision to import rice, I think it is a normal thing, “ he told the Indonesian community on Tuesday. “The government in a democratic country should be controlled and in Indonesia it is Parliament’s right to do so.”
Kalla said that unlike more technologically advanced Japan, Indonesia’s agricultural output and consumption figures can only be done manually.
"The rice production figure, which is issued by the Central Bureau of Statistics (BPS), is the same as that issued by the Agriculture Department, but to calculate consumption is more difficult so there is a difference with Bulog figures,” he said.
Kalla noted that the main issue with rice was not the decision over the desirability of importation, but rather the response of the stock to unexpected increases in demand resulting from a natural disaster.
The vice president was in Tokyo on the last leg of an overseas trip to promote trade and investment relations with Belgium, Finland and Japan.
Earlier on Tuesday, Kalla paid a courtesy call on Japanese Prime Minister Junichiro Koizumi, held a business meeting with Japanese businessmen and attended a seminar on investment and trade held by the Japanese Chamber of Commerce and Industry.
Two Australians Face Death Sentence
A smiling Andrew Chan nodded and muttered "no problem" when prosecutors on Friday (27/1/06) demanded he be executed for his role as the alleged "godfather" of the nine Australians arrested in Bali last year for smuggling eight kilograms of heroin.
Prosecutors want Chan, 22, and fellow alleged ringleader Myuran Sukumaran to go before firing squads, another six members of the heroin smuggling syndicate to spend their lives in prison and the only female accused, Renae Lawrence, to serve 20 years.
Appearing unfazed by his potential fate, Chan smiled and nodded as prosecutor Olopan Nainggolan presented evidence to the Denpasar District Court.
It was Chan who had continued reading in the Denpasar airport lounge on April 17 after the four couriers were arrested with more than eight kilograms of heroin. Only a tip-off from Lawrence resulted in police arresting Chan shortly before boarding the flight to Sydney.
Chan had helped strap the heroin to the couriers' bodies, and it was Chan who, the couriers claimed, said he would have their families killed if they disobeyed instructions. Assistant prosecutor Sinaryati said Chan had "tightly overseen" an international smuggling syndicate as its financier.
"It is clear for us that the defendant is the engine that moved the activities, supported by Tan Duc Than Nguyen and Myuran Sukumaran, and the others were the drug couriers." Chan and Sukumaran were the "financiers and benefactors" of a highly organized syndicate, Nainggolan said.
Militant Declared Suspect
One of several militants detained on suspicion of ties to Malaysian fugitive Noordin Mohamad Top, has been was officially declared a terrorist suspect, police spokesman Brig. Gen. Anton Bachrul Alam said on Monday (20/1/06).
Subur Sugiarto was arrested on a bus in central Java province on his way to Jakarta the previous week, but police did not say at the time what possible charges he faced.
Sugiarto allegedly made the videotape of a masked man identified by police as Top threatening attacks on America, Australia, England and Italy.
In the tape, seized from Top’s hide-out in November, the man pointed at the camera and warned countries that support the wars in Iraq and Afghanistan: "You will be the target of our next attack." Alam said one other militant arrested about the same time was also officially declared a terror suspect on Monday.
Abu Sayaf, was allegedly linked to a semi-automatic handgun that was used by a member of Jemaah Islamiyah in a recent bank robbery. Intelligence officials earlier said the militant group may be running short of cash and turning to bank robberies to help finance their operations.
Meanwhile, police on Tuesday announced the arrest of yet another suspect with ties to Top and said he was providing authorities with information on the fugitive's whereabouts.
The suspect, identified only as Catur, was detained on Monday in Central Java, the latest of at least 11 alleged militants arrested in the region in recent weeks.
Catur is accused of playing a role in "assisting" Top. Officers have a week before they have to release or formally declare him a suspect.
Yenny Wahid Joins SBY
President Susilo Bambang Yudhoyono has appointed Yenny Zannuba Wahid, the daughter of former president Abdurrahman Wahid, as one of his expert advisors, presidential spokesman Andi Malarangeng said on Friday (27/1/06).
Working under Cabinet Secretary Sudi Silalahi, she will the president’s assistant for politicall communication. Wahid’s second daughter declared her personal support for Dr. Yudhoyono when he ran in the 2004 presidential elections and has often accompanied him on visits to Islamic boarding schools.
She started her working life as a journalist at the Sydney Morning Herald, later going on to earn a Masters degree in public policy and management from Harvard University.
US Seeks Help on Myanmar
US Secretary of State Condoleezza Rice has expressed the hope that Indonesia and the United States can cooperate in seeking a solution to the political stalemate in Mayanmar. Receiving new Indonesian ambassador Sudjadnan Parnohadiningrad on Monday (20/1/06), Rice said Indonesia could play an important role because of its experience in negotiating a difficult political transition.
President Susilo Bambang Yudhoyono is planning a visit to Myanmar next month as part of his interrupted swing through the 10 Association of Southeast Asian (ASEAN) states.
The US has been an increasingly vocal critic of Myanmar’s military rulers, particularly over their decision to extend the house arrest of pro-democracy leader Aung San Suu Kyi. Rice said Indonesia has achieved great progress in the defense of human rights and as a predominantly Muslim country, it can represent moderate Muslims around the world.
Rice said the US would also seek Indonesian cooperation in helping to deal with other issues, including international terrorism and Iran’s nuclear program.
Sudjadnan, who met with the secretary of state to submit his credentials, said Indonesia appreciated the recent positive change in US policy towards Indonesia.
Jakarta as Korean Peacemaker
Indonesia said Monday (23/1/2006) it will try and arrange a meeting between defense ministers from the two Koreas later this year as part of efforts to reduce tension on the peninsula.
After talks with his South Korean counterpart in Jakarta, Indonesian Defense Minister Juwono Sudarsono said the diplomatic initiative was meant to complement ongoing six-nation talks on the North's nuclear program.
Sudarsono said he planned to visit South Korea later this year to facilitate a meeting between defense ministers from the two Koreas. He gave no more details.
South Korean Defense Minister Yoon Kwang Ung said President Susilo Bambang Yudhoyono told him that Indonesia wanted to join efforts to resolve the problem on the Korean peninsula. "For that purpose, the president promised to send his envoys to our country and North Korea as
(peace) initiators," he said.
Indonesia has historic ties with both Koreas. It is a major trading partner and investment destination of the Republic of Korea, it has historic ties with the Democratic Republic. Former President Megawati Sukarnoputri has maintained links with Kim Jong Il.
Banker Faces 20-year Jail Term
Prosecutors on Thursday (26/1/06) sought 20-year jail terms for three former executives of the country's largest state bank accused of multi-million dollar corruption.
The recommendations for the three former Bank Mandiri executives were based on proof that they had embezzled funds to the tune of Rp160 billion ($15.9 million), chief prosecutor Baringin Sianturi said.
Baringin told the South Jakarta district court that the three -- individually or in conjunction with others -- were guilty of "enriching themselves" and "causing losses to the state or the nation's economy."
The three are former president Edward Cornelis Williem Neloe, 61, former director for risk management I Wayan Pugeg, 58, and the former coordinator for corporate and government affairs, Sholeh Tasripan, 49. The three allegedly approved loans to a private company without properly ascertaining the client
was bona fide and capable of repaying the loan. They have been detained since May 2005.The trial resumes in two weeks. At least three executives of the company which received the loans are to be tried separately.
Second Bank Fugitive Charged
A second former banker has been brought back from overseas, this time Singapore, to face charges over a Rp170 billion ($17.9 million) graft case, presidential spokesman Andi Malarangeng said on Friday (27/1/06).
Atang Latif, former president of the now defunct PT Bank Bira, was escorted back to Jakarta, where he was formally accused of misusing the money – part of the Rp325 billion in liquidity support funds that Bank Indonesia made available to the bank at the height of the 1997-98 financial crisis.
A state audit later revealed that 95% of the Rp144.5 trillion in loans the central bank provided to the banking industry at the time had been stolen.
Earlier, Indonesian police and the US Federal Bureau of Investigation (FBI) nabbed the former president of the now defunct PT Bank Umum Servitia in San Francisco for embezzling $139 million.
"The president has instructed the police and all law enforcement officials to continue their good work so that all crooked officials who must meet their obligation to the state are returned home," Mallarangeng said.
Sudharmono Laid to Rest
Sudharmono, a former vice president and one of the country's best administrators, died on Wednesday (25/1/06) after a long bout with Parkinson’s disease that left him in a wheelchair.He lay in state at his Jl. Senopati residence before being buried at the Kalibata Heroes Cemetery
on Thursday in a ceremony led by President Susilo Bambang Yudhoyono.
Sudharmono, who would have turned 79 on March 12, was admitted to the Metropolitan Medical Center (MMC) two weeks ago suffering from respiratory difficulties. He is survived by his wife Emma Norma and three children.
Born in the East Java town of Gresik, Sudharmono was known as a hardworking but low-profile official after he took up his post as Golkar chairman. He was particularly close to former president Suharto as one of the leader's six vice presidents.
A retired three-star Army general, Sudharmono served as state secretary for three consecutive terms from 1973 to 1988 under the New Order regime. He led Golkar from 1983 to 1988 and was vice president from 1988 to 1993.
Sudharmono first made his mark in the final days of the Sukarno regime, ordering the decree that banned the Indonesian Communist Party (PKI) after an abortive coup. He later chaired the military's Supreme Operations Command (Koti).
His military career began during the war of independence in the 1940s in East and Central Java as a member of the Ronggolawe Division. After the war, he studied at the Military Law College and subsequently worked as an army prosecutor.
REGIONS
Aceh: Draft Bill to DPR
The government finalized the draft bill on governance in Aceh and delivered it to the House of Representatives (DPR) for discussion on Thursday (26/1/06).
Under the terms of the August peace pact between Jakarta and the Free Aceh Movement (GAM), Indonesia must come up with a set of laws by March 31 that give Aceh the right to control most of its affairs.
"We have submitted it to the parliament today and there is a special chapter on local political parties," Progo Nurjaman, secretary general of the home affairs ministry, told reporters. According to the peace deal signed in Helsinki in August last year, while Aceh elections will be held governed by the new bill later this year, the government has 18 months from the signing date to provide an environment suitable for the operation of local parties.
ECONOMY
Poll of Analysts Projects Growth 5.6%
Finance Minister Sri Mulyani Indrawati said the government had received a message on restraint in power rate rises from Bank Indonesia (BI).
“BI and the government will jointly ensure that inflation meets our budgetary targets,” Indrawati was quoted as saying by AFX on Thursday (26/1/06).
Bank Indonesia (BI) Governor Burhanuddin Abdullah said earlier that inflation for the year of 8% was feasible with a rate rise averaging 30%.
“Any hike should be at a maximum 30%," Abdullah told reporters. At 30%, the economy could still grow by 5.4%, he added.
World Bank Country Director Andrew Steer said growth could be as high as 5.5%, and encouraged the government to push ahead with plans to push funds into the market to boost economic activity.
A poll of analysts by Reuters saw a median projection for growth at a relatively high 5.6%.“Analysts expect the infrastructure and telecommunications sectors to expand at a robust pace due to increased government spending and foreign funds,” Reuters reported. High interest rates were likely to crimp the pace of expansion, it said.
Figures released by the Investment Coordinating Board (BKPM) said foreign investment almost doubled last year, boosted by spending in the transportation and telecommunications industries.
Overseas investors spent $8.91 billion on 909 projects in 2005, compared with $4.6 billion on 544 projects in 2004, the agency said in a report, Bloomberg News reported. "It was better than expected," said Winang Budoyo, an economist at Mandiri Sekuritas in Jakarta told the agency. "We had expected the figure would not jump that much. Some sectors, such as telecommunications, still offer good prospects, with high demand and relatively low penetration rate."
A number of Japanese automotive majors are also considering new investments in Indonesia, with talk of plans to turn the country into a production base for regional markets. Industry Minister Fahmi Idris said Friday that Toyota Motor Corp., Mitsubishi Motors Corp., Daihatsu Motor Corp., Honda Motorcycle and Yamaha Motor Corp. were set to upscale their operations in Indonesia in the near future.
Speaking at the opening of a new $70 million plant for Yamaha motorcycles, he said he had been told by the companies while he was in Japan that they intended to make the country a production base. Toyota Motor Manufacturing Indonesia confirmed that it would invest more in the country. The minister said Mitsubishi would spend around $50 million this year.
Nomura International upgraded Indonesia to overweight from neutral, recommending that investors increase the proportion of their holdings in Indonesian bonds, citing improving chances of a credit upgrade.
BUSINESS BRIEFS
Govt. to Consider Inflation in Power Hike
The government will take into account the full-year inflation target of 8% in its plan to raise electricity rates, Finance Minister Sri Mulyani Indrawati said.
“BI (Bank Indonesia) and the government will jointly ensure that inflation meets our budgetary targets,” Indrawati was quoted as saying by AFX on Thursday (26/1/06).
She pointed out that the government “respects” BI Governor Burhanuddin Abdullah’s statement that full-year inflation could exceed 8% if the government raises power rates by more than 30%. So far, the size and timing of the rate increase have not been decided. Indrawati said a decision will be made after PLN's production costs are audited by the Supreme Audit Board. The audit is expected to take about a month.
"If power prices are increased by around or more than 30%, there are risks that inflation rate will be higher than targeted. We have discussed this with the government. Any hike should be at a maximum 30%," Abdullah said, according to Reuters.
Meanwhile, the World Bank (WB) said Indonesia's economy is set for moderate growth this year as the country recuperates from last year's slowdown amid lingering high oil prices.
WB country director for Indonesia, Andrew Steer, said on Wednesday that Indonesia could expect GDP growth of between 5% and 5.5% this year, with consumption and investment continuing the slowdown that began last year, The Jakarta Post reported. "Although Indonesia's consumption-driven economy has recently shifted to a more sustainable, investment-oriented one, investment has suffered from the recent high interest rate environment," Steer said.
Steer was upbeat that an economic rebound is on the cards later in the year, saying that "a healthy 5% economic growth is better than an unhealthy 6% one."
Rupiah at 11-Month High
The Indonesian rupiah hit an 11-month high on Thursday (26/1/06) on increased overseas demand for local stocks and high-yielding bonds, dealers said, according to Reuters.
The rupiah traded as strong as 9,285 per dollar, its highest level since March 3, 2005. Dealers in Jakarta said that the interest rates paid by local bonds, among the highest in Asia, were attracting foreign investors. Money has also been flowing into Jakarta stocks, they said.
"It's related to stock and debt inflows," said one dealer in the capital. "We suspect Singapore banks are actively selling dollar-rupiah." Meanwhile, the government on Tuesday (24/1/06) sold Rp3.8 trillion worth of treasury bonds
under the FR0033 bond series at a weighted average yield of 12.94%, the Finance Department's Director General for Treasury Mulia Nasution said.
A further Rp2.05 trillion worth of bonds under the FR0034 series were sold at a weighted average yield of 13.34%, he said according to XFN-Asia.
The FR0033 and FR0034 series carry fixed rates and will mature on March 15, 2013 and June 15, 2021 respectively, the department earlier said.
Nasution attributed the high demand to the so-called January effect, when the financial markets traditionally stage a rally at the start of the year largely on optimism. Tuesday's bond auction was the government's first for the year.
At an average weighted yield of 12.94% for the seven-year bonds and 13.34% for the 12-year bonds, the yields are relatively low compared to Bank Indonesia's one-month benchmark rate of 12.75%, Nasution said.
"This means investor confidence in our fiscal policy is strong," he said, adding that about 85% of Tuesday's buyers were banks and the rest were pension funds. Succeeding bond sales are tentatively scheduled for February 14, March 14 and April 11, he added.
The government plans monthly bond issues to help finance the state budget deficit and refinance maturing bonds. Nasution said Rp13 trillion worth of treasury bonds are maturing next month.
Lower Pertamina Dollar Demand Boosts Rupiah
State oil and gas company PT Pertamina's dollar demand for fuel imports has dropped by as much as 30% from up to $2 billion a month previously, amid lower fuel consumption, Bank Indonesia (BI) Deputy Governor Aslim Tadjuddin said.
“Pertamina previously imported fuel oil at the rate of $1.5 billion to $2 billion per month. The decline in its dollar demand by up to 30% is very helpful (for the rupiah),” Tadjuddin was quoted as saying by AFX. Consequently, the impact of high world oil prices on the rupiah should be less significant than it
was before, he said. Pertamina said it might cut fuel imports this year by about 20%, citing a drop in domestic consumption after fuel prices rose in October.
BI Awaits US Fed Move
Bank Indonesia (BI) is awaiting the outcome of this week's meeting by the US Federal Open Market Committee (FOMC) and some local factors before deciding the next direction of domestic interest rates, Governor Burhanuddin Abdullah said, according to XFN-Asia.
He would not say if the recent strengthening of the rupiah against the US dollar would enable the central bank to start lowering its key reference BI rate.
"Let's see on February 7," he said, referring to the central bank's board of governors' meeting to decide on local interest rates.
He said there is an expectation that the US Fed may need to increase its key rate one more time before ending the rate hike cycle.
The FOMC will meet on January 31 and is widely expected to hike official rates by 25 basis points to 4.5%.
Should the Fed raise its key funds rate as analysts anticipate, Abdullah said, "I think the interest rate differential will still be high enough at 8.25%."
He said Bank Indonesia will also assess domestic macroeconomic conditions, which are still moving in line with central bank's expectations.
BI End-2005 Forex Reserves Down
Bank Indonesia (BI) 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, which made oil imports last year more expensive, AFX reported.
The decline would have been bigger had there been no global bond sales by the government, which raised $2.5 billion, the central bank said.
It said base money in 2005 rose to Rp239.78 trillion from Rp199.45 trillion the year before, with money in circulation rising to Rp144.87 trillion from Rp126.9 trillion previously. Its net domestic assets as of December 30 stood at Rp65.98 trillion compared to Rp28.6 trillion in the previous year, it said.
INVESTMENT
2005 FDI Nearly Doubles
Foreign direct investment (FDI) in Indonesia almost doubled last year, boosted by spending in the transportation and telecommunications industries, the Investment Coordinating Board said.
Foreign investors spent $8.91 billion for 909 projects in 2005, compared to $4.6 billion for 544 projects in 2004, the board said in a report, according to Bloomberg. FDI approvals also increased by 30% to $13.57 billion for 1,648 projects last year, from $10.41 billion for 1,226 projects the previous year. Most of last year's approved FDI proposals came from Singapore (203 projects worth $3.93 billion), the United Kingdom (104 projects worth $1.52
billion) and Japan (76 projects worth $1.17 billion).
"It was better than expected," said Winang Budoyo, an economist at Mandiri Sekuritas. "We had expected the figure would not jump that much. Some sectors, such as telecommunications, still offer good prospects, with high demand and relatively low penetration rate. This sector will likely continue leading the investment for this year."
The government wants to attract $426 billion of investment in the next five years to build roads, power plants and ports. The board said domestic investors spent Rp30.67 trillion ($3.23 million) for 214 projects in the country in 2005, double the Rp15.26 trillion spent for 129 projects the year before.
Local investors mostly focused on the food, paper, printing, agriculture and plantation sectors. Realized foreign and domestic investment projects last year provided employment for 278,859 workers, compared to 206,298 workers in 2004. The 467 approved projects still in the pipeline are expected to provide jobs for 407,743 workers, and result in exports worth $28.07 billion,
reported The Jakarta Post.
The board's figures don't include investment in the oil and gas industry or banking and non-bank financial institutions because their investment licenses are issued by other government agencies.
Support Investment, Labor Unions Told
President Susilo Bambang Yudhoyono called on labor unions on Friday (27/1/06) to support the investment climate by not playing politics.
Yudhoyono said protests on labor problems should be conducted peacefully and within the law to avoid tarnishing the image of local workers. "Labor unions, government and the business community should live together in harmony. They
should settle any labor problems in a sincere manner, and avoid turning them into an excessive political movement," he said during the inauguration of a new Yamaha motorcycle factory in West Java.
Yudhoyono ordered the departments of industry and manpower and transmigration, as well as local administrations to maintain regular communication with the business community to ensure that workers receive proper wages and health benefits.
Japanese Car Giants Mull New Investments
A number of Japanese car manufacturers are mulling new investments in Indonesia as part of plans to turn the country into a production base for the regional market, The Jakarta Post reported.
Industry Minister Fahmi Idris said on Friday (27/1/06) that Toyota Motor Corp, Mitsubishi Motors Corp, Daihatsu Motor Corp, Honda Motorcycle and Yamaha Motor Corp are set to upscale their operations in Indonesia in the near future. "During my recent visit to Japan, these companies told me they intended to invest more in Indonesia and to make the country one of their production bases," Idris said in a speech delivered during the opening of a new Yamaha motorcycle factory in West Java.
He said Toyota and Mitsubushi would invest and Mitsubishi this year to boost the production capacities of their factories in Indonesia.
Toyota Motor Manufacturing Indonesia spokesman Irwan Priyantoko confirmed that the Toyota Group, which also includes Daihatsu, would increase its investment in Indonesia this year.
Car sales this year are expected to come in at between 450,000 and 500,000, lower than the 534,000 sold last year as higher interest rates begin to bite.
However, many analysts believe that next year's sales could hit a new record.
Motorcycle sales this year are expected to hit a new record of more than 5 million compared to 4.6 million last year, making Indonesia the world's third largest motorcycle market after China and India.
Meanwhile, president director of PT Yamaha Motor Manufacturing West Java, Yoshiteru Takahashi, said during the opening ceremony that his company had invested $70 million on building its new plant, which could produce 600,000 motorcycles annually.
With the new facility, the company hopes to produce a total of 1.9 million motorcycles this year compared to 1.23 million last year, making it Yamaha's largest production base outside Japan.
STATE CONCERNS
Revision of Import Duties Finalized
The government has completed its review on the import duties for 9,209 products as part of an effort to eliminate price distortions in the domestic market and comply with global free trade agreements, the Finance Department said.
The government will start reducing or eliminating import duties in February on a total of 11,171 products. The new maximum duty on these products will be 5% and the process will be completed by 2010, further opening up the domestic market to competition from imports.
On the upside, however, this will also help local manufacturers and exporters secure cheaper raw materials. "We actually wrapped up the tariff harmonization process in December last year, and reviewed the import duties on a total of 9,209 products," Finance Minister Sri Mulyani Indrawati was quoted as saying by The Jakarta Post on Thursday (26/1/06).
Indrawati explained the revisions were necessary to simplify the current tariff system, which was contributing to distortions in the prices of goods on the local market, while still ensuring appropriate protection for local products.
She acknowledged the new tariff structure could have a slightly adverse effect on state revenue, but stressed the importance and benefits of Indonesia complying with global trade agreements. Business groups welcomed the finalization of the revision process.
Dept. Calls for Rattan Export Ban
Industry Minister Fahmi Idris has asked the Trade Department to ban the export of raw rattan to ensure a sufficient supply for local furniture producers.
Idris said he hopes the Trade Department would discuss the proposed ban in February, as rattan exports have caused acute shortage for local furniture makers.
"We will coordinate with the trade and finance departments, and local municipal administrations to discuss this problem. Some local rattan companies are complaining they need to export more of their products to see a profit," he said, according to The Jakarta Post.
SOEs
State Firm to Sell Stakes in 3 Banks
State asset management company, PT PPA, plans to sell its remaining minority stakes in three banks this year, in a bid to raise funds to help finance the state budget deficit, its head said on Friday (27/1/06). The planned sale comes after the country's stock and bond markets made strong gains recently, due in large part to increased inflows of foreign capital seeking high-yielding assets, Reuters
reported.
PPA chief Mohammad Syahrial said it plans to sell a 5% stake in Indonesia's sixth largest lender Bank International Indonesia (BII), a 26.17% stake in the seventh largest lender Bank Permata, and a 2.4% stake in mid-sized lender Bank Lippo.
"If it is possible in the first quarter, yes, we will sell. We'll see the market. If the second quarter is still good, let's see," he told reporters. PPA is also planning to sell a 28.39% stake in Bank Tabungan Pensiunan Nasional (BTPN) this
year, Bisnis Indonesia reported.
It will offer the stake first to BTPN's majority owner Admiro Corp, which owns a 71.6% stake in the bank, PPA corporate secretary Renny Rorong said.
BTPN, which operates 28 branches, focuses on serving retired civil servants. As of September 2005, its assets were valued at Rp4.2 trillion.
PPA is tasked to manage and sell assets taken over by the state from non-performing debtors following the Asian financial crisis of 1997-1998.
The government has set a target for the agency to raise Rp2.35 trillion ($251.2 million) this year, a substantial amount of which is expected to come from asset sales.
Proposed Phone Rate Hike Approved
Indonesia's telecommunications regulatory body, BRTI, has agreed in principle to a proposed 30% increase in PT Telkom's local call rates to cover rising costs, AFX reported. “In principle, they (BRTI) agreed to our numbers,” Telkom vice president for service and tariff, network and solution Alex Palit said on Thursday (26/1/06). He said BRTI has yet to present its views to the government.
Telkom proposed to raise rates for local calls by 30% and cut charges for domestic long distance calls by 18.5% under a tariff re-balancing scheme.
The last rate adjustment was in April 2004. Telkom raised local call rates by 28.21% but lowered charges for domestic long distance calls by 0.045 to 20.71%. On average, the telephone tariffs rose by only 9%, leaving room for another hike.
Semen Gresik 2005 Sales Up 4.5%
Indonesia's largest cement maker PT Semen Gresik said its cement sales grew 4.5% to 16.34 million tons in 2005 from 15.64 million tons the previous year as strong domestic sales offset a drop in exports, XFN-Asia reported. The company said it sold 14.28 million tons in the domestic market during the year, up 6.5% from 12.4 million tons in 2004, while exports dropped 7.7% to 2.06 million tons from 2.23 million.
Meanwhile, the country’s annual cement consumption growth slowed to 4.9% in 2005 from 9.1% the previous year as the economy slowed, industry data showed on Thursday (26/1/06), according to Reuters. Semen Gresik said total domestic cement consumption, an indicator of economic activity, rose to
31.51 million tons in 2005 from 30.04 million tons in 2004. This year, domestic cement plants are expected to increase production and exports but their
growth will probably slow to less than 10%, the Industry Department’s Director General for Chemical Industry, Benny Wahyudi, said early last week. This year, the property and housing sectors are expected to grow by 25%, he said, adding that the construction of 523 km of toll road would need some 10,000 tons of cement. The cement sector would also be boosted by the development of about 1 million houses in Javaand in other regions.
PRIVATE SECTOR
3 Operators Bid for 3G Frequencies
The tender of third generation (3G) cellular service frequencies has attracted three bidders -- PT Telkomsel, PT Indosat, and PT Excelcomindo Pratama, the Information and Communication Department said.The department plans to offer nationwide 3G services on frequencies of 1,940-1,955 MHz and2,130-2,145 MHz.
BANKS
Banks Expect Higher Lending
The banking sector expects lending this year to surpass last year's figures, spurred by the central bank's plan to lower its key interest rate and ease several policies which hamper banks from channeling more credit to help finance the economy.
Lending institutions are still awaiting concrete measures from Bank Indonesia (BI) on loosening up its rate and banking policies, as well as the government's commitment to expedite infrastructure and procurement projects to contribute to financing, The Jakarta Post reported on Monday (23/1/06).
Lending increased by 21% on the average as of October 2005 over 2004's total.
Bank Central Asia (BCA) vice president Jahja A Setiaatmadja said his bank expects at least Rp10 trillion ($1 billion) in additional loans this year, because credit applications increase amid a lower interest rate environment.
"We had earlier expected to be able to expand our credit by only Rp8 trillion, but recent conditions have convinced us that we may do better," he said.
"If BI lowers its rate by 1.5 percentage points, then we can also start lowering our credit interest rates from 16% at present. BI's planned banking policy revision, especially lowering the minimum reserve requirement of banks, is also expected to increase our liquidity, enabling us to use it for more loans this year."
BCA, the country's second largest lender by assets, channeled Rp50 trillion in loans as of September last year, up from the Rp35 trillion it disbursed during the same period in 2004.
Bank International Indonesia (BII) director Sukatmo Padmosukarso is likewise optimistic, expecting lending growth to reach 40% this year. "We hope to better, or at least match, our high credit growth during last year's first quarter," he said, noting the lender's total loans of Rp20 trillion last year.
In another favorable move for the banking sector, BI Governor Burhanuddin Abdullah recently said the central bank would reconsider several policies so banks could channel more credit. Its plans include lowering the minimum reserve requirement for banks; easing lending terms to small- and medium-sized firms; and revising BI's strict uniform loan collectibility classification.
Setiaatmadja noted that a boost in lending might only occur in the second quarter, when BI fully implements its policy revisions.
Bank Negara Indonesia (BNI) expects lending to grow by up to 24% in 2006 from the expected 9% rise to Rp62.9 trillion in 2005, its president Sigit Pramono told Dow Jones Newswires recently. "We hope the interest rate would stay steady from the second half of 2006," Pramono said. "Expected higher loan growth should help improve other key financial figures this year."
Bank Rakyat Indonesia (BRI), the country’s fourth largest lender, expects its loans to grow by 15% to 20% this year despite high domestic interest rates, its chief Sofyan Basir said on Thursday (26/1/06). "Although interest rates would remain high, we will keep improving BRI's financial condition," he said after an extraordinary shareholders' meeting.
Other banks remain cautious in evaluating their lending prospects this year despite BI's incentives. Bank Mandiri corporate secretary Ekoputro Adijayanto said his bank had not revised its 15% lending growth forecast. The country's largest lender channeled Rp101 trillion in loans as of 2005's third quarter.
Data from the central bank shows loan disbursements from the banking sector reached Rp719.9 trillion ($76.5 billion) as of October 2005, up 21% from its amount in December 2004.
Banks Urged to Lend More to SMEs
As part of efforts to give small and medium enterprises (SMEs) more access to capital, the central bank is encouraging commercial lenders to link up with rural credit banks (BPRs) to increase lending to the sector, reported The Jakarta Post.
A total of Rp1.56 trillion ($166 million) was injected into the sector through such schemes last year. Bank Indonesia (BI) Governor Burhanuddin Abdullah also said he hoped for more involvement by foreign banks in lending to SMEs through such linkage programs. "We are grateful to the banks that already have linkage programs with the BPRs for the provision of loans to the SMEs as this plays an important part in supporting the real sector,” Abdullah said during a signing ceremony on Thursday (26/1/06) for a Rp197.6 billion linkage program package involving 13 banks and 39 BPRs.
Among the credit agreements signed were ones for Rp90 billion in loans from Lippo Bank, Rp28 billion from Bank Negara Indonesia (BNI), and Rp25 billion from Bank Mega. Abdullah said lending to SMEs would prove to be profitable for the lenders as this sector has one of the lowest non-performing loan (NPL) ratios.
Figures from the central bank showed that lending to SMEs based on linkage programs amounted to Rp1.56 trillion last year, with a total of 22 banks operating such programs in collaboration with 1,833 BPRs. The government has been trying to strengthen the SME sector, which managed to survive the
late-1990s economic crisis relatively intact, to create more jobs for the country's millions of unemployed. SMEs provided about 12 million jobs in 2002, and employed more than 95% of the workforce last year.
Domestic Banks to Help Textile Firms
A number of domestic banks, among them Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Danamon and Bank Central Asia (BCA), have made an initial commitment to provide loans to the country's ailing textile industry, an official has said.
The Industry Department's Director General for Textile Industries Ansari Bukhari however that the loans would only be extended to companies with good financial track records operating in the weaving and spinning industries, The Jakarta Post reported.
The banks have agreed to meet with potential borrowers and discuss possible loans with them. Indonesian Association of Textile Producers (API) secretary general Ernovian Gysmi said the textile restructuring committee would probably hire an independent auditor to short-list the companies eligible to receive loans. "The banks will only support those that have good financial track records and prospective markets," he said.
He noted that upstream industries like spinning and weaving would be prioritized, as greater efficiency at this level would eventually trickle down to the downstream sectors, like the garment industry.
Khazanah Eyes Small Indonesian Banks
Malaysia's Khazanah Nasional Bhd is keen on acquiring small Indonesian banks to be merged with Bank Lippo, where it holds a controlling stake, Bisnis Indonesia reported. “We are still identifying and holding talks to find the right banks to be acquired and merged with Lippo,” the report quoted Bank Lippo president Joseph Luhukay as saying.
The Malaysian government’s investment arm, through its unit Santubong Investment, holds an 87.5% stake in Bank Lippo. Khazanah also has a stake in Commerce Asset Holding Bhd, which controls a 63.5% stake in Indonesia's Bank Niaga.
Meanwhile, Bank Indonesia (BI) Governor Burhanuddin Abdullah said a number of major local investors have expressed interest in acquiring several small banks facing difficulties in meeting the central bank's minimum capital adequacy requirements.
"I have heard that a number of businesspeople are willing to buy these financially weak banks. They are proposing taking over a number of small banks and merging them into a larger bank," Abdullah was quoted as saying by Antara on Wednesday (25/1/06). He said many small banks would likely face difficulties in meeting a minimum capital requirement of Rp80 billion by 2007 and Rp100 billion by 2010. "We are studying the possible options that may be used to help the banks satisfy the capital adequacy requirements," he said.
As of last December, at least 27 banks had less than Rp80 billion in capital.
POWER
C. Java Power Plant to Operate in February
A 600-MW thermal power plant in Cilacap, Central Java is scheduled to begin operating and entering state power firm PT PLN’s Java-Bali transmission system next month, Antara reported. General manager of PLN's Java-Bali Electricity Supply Center, Muljo Adji, said on Tuesday (24/1/06) the first unit of the Cilacap plant, with a capacity of 300 MW, will begin operating in
February, and the second unit, also with a capacity of 300 MW, in April.
The Cilacap plant is one of three non-oil power plants with a total capacity of 2,660 MW, which will come online this year to support the Java-Bali grid that supplies electricity to heavily populated Java island.
The other two are the 740 MW gas-fueled plant in Cilegon, West Java, expected to come on stream by April and the 1,320 MW Tanjung Jati B coal-fueled plant in Central Java, with the first 660 MW unit operating in July and the second unit in November. The three non-oil plants will increase the Java-Bali grid’s capacity from 19,615 MW to 22,275 MW, far above the estimated peak load of about 16,000 MW in 2006, Adji said.
Medco, PLN Sign Gas Supply Deal
Indonesia's largest listed energy firm, Medco Energi International, has signed long-term gas supply agreements, including one with state electricity company PT PLN that will help tackle power shortage, Reuters reported on Tuesday (24/1/06). Medco will supply 62 billion cubic ft of gas from its fields in South Sumatra to a 100-megawatt (MW) PLN power plant in South Sumatra for seven years from 2007.
The company also signed a preliminary agreement to supply 139 billion cubic ft of gas to state gas distributor PT PGN for nine years from 2008. PGN will supply the gas to industries in South Sumatra.
PLN has said it will cut the use of oil products to generate electricity by about 18% this year as it looks to counter soaring crude costs. Some 30% of PLN's power plants use oil products, such as diesel and fuel oil.
OIL AND GAS
S Korea Seeks to Develop Ethanol
South Korea has sought cooperation with Indonesia in developing ethanol as an alternative to fuel oil, Antara reported. "We have 50 years of experience in using ethanol as alternative energy, therefore we ask Indonesia to jointly develop ethanol production. Indonesia has the raw material and Korea has
the technology," former South Korean prime minister Chang Yuei Lim said during a discussion organized by the United Development Party (PPP) on Tuesday (24/1/06).
With its abundant supply of cassava, raw material for ethanol, Indonesia is expected to become the largest ethanol producer in Southeast Asia.
Chang expressed his optimism that Indonesia would rake in huge profits from producing ethanol and at the same time settle problems brought about by the high fuel price. Senior United Development Party politician Aisyah Amini said the ethanol industry should be developed in Sumatra, where the land and climate are suited to cassava cultivation.
MINING
Probe Ordered on Freeport Payments
Defense Minister Juwono Sudarsono said he has ordered an investigation into the legality of US mining giant Freeport McMoRan Copper & Gold Inc's financial support for security forces in Papua.
"I have asked the inspector general of the defense forces to look into this matter and verify whether these payments have been made," Sudarsono was quoted as saying by Dow Jones on Wednesday (25/1/06).
The pending military investigation into Freeport-McMoRan's financial support for security forces posted around the company's massive Grasberg gold mine reflects the widening fallout of a New York Times report last month that Freeport-McMoRan paid military and police officials in Papua nearly $20 million from 1998 to 2004.
"Based on government policy, all provisions of security support by foreign companies should be made through an Indonesian civil executing agency," he said. "Direct payments (by firms to military personnel) are illegal and shouldn't remain (and this view is) also in line with the Foreign Corrupt Practices Act in the US, which disallows this kind of behavior."
The Times report prompted "informal inquiries" from US government agencies about the firm's financial payments to Indonesian security forces that Freeport-McMoRan is fully cooperating with, Adkerson said in a fourth quarter 2005 earnings conference call the previous week.
Source:
THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS REPUBLIC OF INDONESIA
Main Building, Ministry of Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta PusatTel: (021) 380-8384 Fax: (021) 344-0394 Website: http://www.ekon.go.id
Indonesia's Sampoerna Reschedule Shareholder's Meeting to Feb 17
PT HM Sampoerna said it has rescheduled a special shareholders` meeting to Feb 17 after failing to achieve a quorum at last Friday`s meeting.
The meeting was supposed to vote on proposals to license the production and sale of Sampoerna`s cigarette brands overseas and to license Sampoerna to produce and sell locally Philip Morris International Inc`s brands such as Marlboro.
Last Friday`s meeting needed a quorum of 50 pct, plus one of the company`s minority shareholders, but the turnout was only only 9 pct. It was the first meeting held by the company to seek independent shareholders` approval since Marlboro producer Philip Morris acquired a stake of more than 97 pct in the company last May.
According to the existing regulations, the company can lower the quorum at a third meeting with the approval of the capital market watchdog, Bapepam, should it also fail in a second attempt to acheive the required numbers, XFN-Asia reported.
Source:
ANTARA News Jan 30, 2006
The meeting was supposed to vote on proposals to license the production and sale of Sampoerna`s cigarette brands overseas and to license Sampoerna to produce and sell locally Philip Morris International Inc`s brands such as Marlboro.
Last Friday`s meeting needed a quorum of 50 pct, plus one of the company`s minority shareholders, but the turnout was only only 9 pct. It was the first meeting held by the company to seek independent shareholders` approval since Marlboro producer Philip Morris acquired a stake of more than 97 pct in the company last May.
According to the existing regulations, the company can lower the quorum at a third meeting with the approval of the capital market watchdog, Bapepam, should it also fail in a second attempt to acheive the required numbers, XFN-Asia reported.
Source:
ANTARA News Jan 30, 2006
Monday, October 17, 2005
Indonesian Reform: The Markets Vote Yes
It has been a challenging year for Susilo Bambang Yudhoyono, who became Indonesia's first directly elected President last October. In December his government had to cope with the aftermath of the devastating Indian Ocean tsunami. In recent months he has faced warnings from international organizations that bird flu, which has killed a handful of Indonesians, could hit his nation of 220 million hard. And soaring oil prices have put heavy pressure on government finances, thanks to expensive fuel subsidies.
The suicide bombings at the resort area of Bali on Oct. 1, which killed 22 and wounded more than 90, appeared to be another blow. The bombings were the first terror attacks since the former general took office, and they came at a tense time. Hours earlier, Yudhoyono had finally put into force controversial cuts in fuel subsidies and 100%-plus price rises on goods such as gasoline and kerosene. Yudhoyono had feared that the move would spur protests like those that led to Suharto's ouster when he raised prices in 1998.
A Shift in Focus
Ironically, the bombings may be helping Yudhoyono by distracting Indonesians. The President rushed to Bali, vowing to intensify his campaign against extremism. The bombings take "the limelight away from protests," says Sidney Jones, Southeast Asia project director for International Crisis Group.
Indeed, in the days just before and after Oct. 1, only small protests broke out. The largest, in Jakarta, numbered 3,000, far smaller than in earlier years. "This government has sold its policies better," adds Jones.
Yudhoyono's bold, if delayed, reform is winning high marks from economists. He "made up for past criticism of acting too slowly on fuel subsidies by delivering a larger-than-expected hike in prices," says Euben Paracuelles, an economist for DBS Bank in Singapore. By cutting the subsidies from $14 billion to about $4 billion, the government is expected to keep its budget deficit to 1% of gross domestic product this year. That includes monthly payments of $10 to be offered to Indonesia's poorest families to ease the pain of higher prices.
The markets are taking developments in stride. Rather than plunging, the Jakarta stock market rose 1.1% from Sept. 30 to Oct. 5, and the rupiah strengthened 1.5% against the U.S. dollar. Since hitting a four-year low on Aug. 30, the rupiah has risen 18%. To curb inflation, Bank Indonesia just lifted interest rates 100 basis points, to 11%. "Markets have taken the view that the government is doing everything it can against terrorism and to cut subsidies," says Robert Adair, head of research at Jakarta brokerage CIMB-GK Goh. Encouraged, the Finance Ministry sold a $1.5 billion international bond issue on Oct. 5.
But the good feelings won't last unless Yudhoyono keeps moving on both the economy and security. Critics fault Jakarta for failing to arrest two Malaysian-born terrorist suspects believed to be behind the latest Bali incident and other bombings since the bigger Bali attack in 2002. Critics also think the government should put a stop to recruiting by extremists. "Terrorism is very high on the President's agenda, and the government has arrested dozens of extremists and terrorists," replies presidential spokesman Dino Patti Jalal. Despite all the problems, Yudhoyono enjoys a 50%-plus approval rating. He'll have to juggle wide-ranging demands to keep it that way.
source:
BusinessWeek
OCTOBER 17, 2005
The suicide bombings at the resort area of Bali on Oct. 1, which killed 22 and wounded more than 90, appeared to be another blow. The bombings were the first terror attacks since the former general took office, and they came at a tense time. Hours earlier, Yudhoyono had finally put into force controversial cuts in fuel subsidies and 100%-plus price rises on goods such as gasoline and kerosene. Yudhoyono had feared that the move would spur protests like those that led to Suharto's ouster when he raised prices in 1998.
A Shift in Focus
Ironically, the bombings may be helping Yudhoyono by distracting Indonesians. The President rushed to Bali, vowing to intensify his campaign against extremism. The bombings take "the limelight away from protests," says Sidney Jones, Southeast Asia project director for International Crisis Group.
Indeed, in the days just before and after Oct. 1, only small protests broke out. The largest, in Jakarta, numbered 3,000, far smaller than in earlier years. "This government has sold its policies better," adds Jones.
Yudhoyono's bold, if delayed, reform is winning high marks from economists. He "made up for past criticism of acting too slowly on fuel subsidies by delivering a larger-than-expected hike in prices," says Euben Paracuelles, an economist for DBS Bank in Singapore. By cutting the subsidies from $14 billion to about $4 billion, the government is expected to keep its budget deficit to 1% of gross domestic product this year. That includes monthly payments of $10 to be offered to Indonesia's poorest families to ease the pain of higher prices.
The markets are taking developments in stride. Rather than plunging, the Jakarta stock market rose 1.1% from Sept. 30 to Oct. 5, and the rupiah strengthened 1.5% against the U.S. dollar. Since hitting a four-year low on Aug. 30, the rupiah has risen 18%. To curb inflation, Bank Indonesia just lifted interest rates 100 basis points, to 11%. "Markets have taken the view that the government is doing everything it can against terrorism and to cut subsidies," says Robert Adair, head of research at Jakarta brokerage CIMB-GK Goh. Encouraged, the Finance Ministry sold a $1.5 billion international bond issue on Oct. 5.
But the good feelings won't last unless Yudhoyono keeps moving on both the economy and security. Critics fault Jakarta for failing to arrest two Malaysian-born terrorist suspects believed to be behind the latest Bali incident and other bombings since the bigger Bali attack in 2002. Critics also think the government should put a stop to recruiting by extremists. "Terrorism is very high on the President's agenda, and the government has arrested dozens of extremists and terrorists," replies presidential spokesman Dino Patti Jalal. Despite all the problems, Yudhoyono enjoys a 50%-plus approval rating. He'll have to juggle wide-ranging demands to keep it that way.
source:
BusinessWeek
OCTOBER 17, 2005
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