  MACRO
ECONOMY Indonesia likely to see credit rating upgrades despite elections– itigroup Citigroup said it expects Indonesia to receive another credit rating upgrade from Moody's Investors Service and Standard & Poor's Ratings Services this year, citing strong market confidence in the economy despite the upcoming general elections. It said Indonesia's stable outlook on its mid single-B ratings from Moody's and Standard & Poor's do not reflect the "underlying credit improvements" in this country. "We believe there is a good rationale for a positive outlook and an eventual one-notch upgrade from Moody's and Standard & Poor's evolving later this year," Citigroup said in research paper. Citigroup predicts market confidence in the economy will be resilient regarding political developments during the upcoming elections. "We believe a relatively smooth election process, continued fiscal prudence and strong investor interest in the government's debt issuance, to help fund its requirements this year, will be conducive to rating improvements," it said. Indonesia will hold legislative elections next month and for the first time also a direct presidential election, scheduled for two rounds in July and September. Although analysts predict political and economic stability will remain intact throughout the elections, market concerns over political uncertainties have prompted selling across the board in the stock market since last week. Last year, Moody's upgraded Indonesia's foreign currency country ceiling for bonds and the foreign currency rating of Indonesian government bonds to B2 from B3. It raised the foreign currency country ceiling for bank deposits to B3 from Caa1; and the domestic issuer rating of the government to B2 from B3. Standard and Poor's raised Indonesia's foreign currency rating to B from B- and the local currency rating to B+ from B. It raised the short-term foreign currency rating and the short term local currency rating both by one notch to B. (AFX-Asia) Indonesian inflation hits lowest rate in four years Indonesian consumer prices fell in February to 4.60 percent year-on-year, the country's lowest inflation rate for four years, the Central Bureau of Statistics said Monday. The consumer price index was down 0.02 percent from the previous month, with the fall driven by food prices, bureau chief Sudarti Surbakti said. His deputy Slamet Mukeno said the February figure, which compares with a 4.82 percent rise in January, was the lowest annualised rate in four years. The official government inflation forecast for this year is 6.5 percent. The government has won praise from the International Monetary Fund in the past two years for bringing down high inflation and interest rates, and stabilising the rupiah. This year it is following its own economic policies after ending the tight supervision of the IMF on the implementation of a reform program in the past five years (AFP). Indonesia January trade surplus falls slightly month-on-month Indonesia's trade surplus declined to 2.28 billion dollars in January from 2.40 billion in December, but was up from 2.02 billion a year earlier, the Central Bureau of Statistics said Monday. Bureau chief Sudarti Surbakti said both exports and imports declined month-on-month but were slightly up compared with January 2003. She said exports declined to 5.03 billion dollars in January from 5.22 billion the previous month, but were up from 4.99 billion a year earlier. Non-oil and gas exports also declined to 3.83 billion from 4.06 billion in December but were up from 3.79 billion a year earlier. Imports declined to 2.75 billion dollars in January from 2.82 billion in the previous month but were up slightly from 2.74 billion a year earlier. Non-oil and gas imports fell to 2.05 billion from 2.25 billion but were up from 2.03 billion a year earlier. "The non-oil and gas exports' big fall was seen in exports of electrical and machinery equipment which dropped by 153.7 million dollars," Surbakti said. She said Japan was the largest export destination, followed by the United States and Singapore. Exports to the three countries made up almost 39 percent of the total non-oil and gas exports. BANKS Bank Lippo Sells The Indonesian Bank Restructuring Agency (IBRA) closed the sale of a 52.05% stake of PT Bank Lippo Wednesday (25/2/04), deputy chairman I Nyoman Sender said, Reuters reported. "We have received Rp1.205 trillion ($143 million) from (the sale)," he told reporters. The announcement came only two days before the official close of the agency. In the wake of the sale announcement, a special shareholders meeting added new directors representing the new majority owner, the Swissasia Global consortium. Joseph Luhukay was retained as the bank's president while Lee Heok Seng and Mark McKenny became directors, with Reiner Silhavy, Jan G. Cherim, James C. Ng and Christopher Williams appointed as new commissioners. Mochtar Riady remains president commissioner while Silhavy from Swissasia Global has been named vice president commissioner. The shareholders also retained I Nyoman Tjager, Djisman Simandjuntak and Roy Edu Tirtadji at the board of commissioners. Bank Indonesia gave its green light to the sale Tuesday after the consortium supplied documents disclosing its source of funds and the identities of its owners, as required by central bank regulation. Swissasia Global members include Swissfirst Bank AG, Swissfront (Lie) Opportunities, VP Ventures Ltd, Matrix Capital Partners and Ferrel Opportunities Capital. More Loans for SMEs Bank Indonesia will increase pressure on the banking sector to allocate loans to small and medium-sized enterprises (SMEs), Bank Indonesia Governor Burhanuddin Abdullah said Friday (27/2/04), The Jakarta Post reported. "We'll ask the banks to allocate a greater amount of loans to the SME sector) this year. I'm confident that 2004 will be much better because of the higher economic growth target," he said, adding that SMEs needed to improve their management ability and business administration skills to make them more bankable. He pointed out that of the Rp42.3 trillion ($5 billion) lending target for the SME sector last year, only around half was absorbed. The relatively low absorption rate was because many of the SMEs were not bankable, partly due to their lack of documentation. The central bank had recently set up a consultancy center to assist SMEs to fulfil requirements for loans. The BI Governor was speaking after opening an international workshop on microfinance and rural finance. Bank Niaga Net Jumps PT Bank Niaga said Wednesday (25/2/04) its 2003 net profit rose 231% last year due to a jump in net interest income, Dow Jones Newswires reported. The bank said in a written statement its net profit rose 231% to rp467.25 billion from Rp141.12 billion a year earlier. Net interest income rose 96% on-year to Rp937.85 billion from Rp478.87 billion in 2002, it said. The bank, 52.82%-owned by Malaysia's Commerce Asset Holding Bhd., said interest income from lending contributed almost 70% of the bank's net interest income. PRIVATE SECTOR Makro Expansion Dutch giant wholesaler Makro will open four new outlets this year and remodel existing stores to accommodate a wider range of fresh foods. Company president Simon Collins said at the opening of the remodeled fresh food area at Makro’s East Jakarta store that the first of the new stores would open in Palembang, South Sumatra, in April. A decision on the three other stores had not been made yet, Collins said. The remodeling at existing stores had been achieved at a cost of Rp7 billion ($828,402). Bank Buana Expansion Plan PT Bank Buana Indonesia is planning to merge with or acquire several other banks or financial institutions to drive higher growth, director Pardi Kendy said Wednesday (25/2/04). He said the bank will issue bonds valued at Rp500 billion ($59.5 million) to boost its capacity to finance long-term credits and to maintain its capital adequacy ratio (CAR) at a safe level, Antara reported. The bonds will be for 10 years with a call option in the fifth year and carry a coupon rate of 13-13.3675% in the first five years. Trimegah to Issue Bonds PT Trimegah Securities said it plans to issue bond valued at Rp300 billion ($35.7 million) in April to raise funds to expand its working capital, Antara reported. Director Rosinu said on Wednesday (25/2/04) the majority shareholders of the securities company - PT Dwipa Miranda Lestari and PT Philadel Terra Lestari - have each sold 1,020 million shares to United Investment Inc from Malaysia. The deal made the Malaysian company the majority shareholder, owning 55.89% of Trimegah. TRADE More Export Attention to Poland Indonesia’s push to establish stronger links with non-traditional trading partners continued last week with attention on prospects with Poland. Jaka Singgih, head of the Indonesian Chamber of Commerce and Industry's foreign affairs section, said there were hopes of increasing exports to Poland of natural rubber, coffee, tea and spices. Visiting Polish President Aleksander Kwasniewski and Indonesian Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti attended a meeting of the Indonesia-Poland Economic Forum in Jakarta Thursday (26/2/04) at which closer trade links were discussed. Textiles and food were other items with potential for export to Poland, and Poland was interested in investments in Indonesia’s coal mining industry. INFRASTRUCTURE Green Light for Jatigede Dam The government would soon make a start on construction of the Jatigede Dam in Sumedang regency, West Java, in a bid to improve water control in the area, according to Basuki, Director General of Water Resources at the Ministry of Settlement and Regional Infrastructure. He said the dam was the only way to improve water supplies in dry weather and reduce flooding during the wet season, The Jakarta Post reported. Basuki said the House of Representative supported the plan to build a dam to hold 650 million cubic meters of water and supply water to 90,000 hectares of ricefields in the area. the dam would cost the state Rp600 billion, not including land acquisition costs, and take five years to complete. Trans-Sulawesi Railway Network Plan The government is planning to build a 1,900-km trans-Sulawesi railway that will connect four provinces in the Indonesian island of Sulawesi, head of South Sulawesi`s office of the Ministry of Transportation, Sulham Hasan, said Wednesday (25/2/04). The project will start this year with first stage 150-km section connecting Makassar with Pare-Pare district. The network will connect four provinces in Sulawesi, namely of South Sulawesi, Central Sulawesi, Gorontalo and North Sulawesi Ports Open to Private Sector State-owned port operator PT Pelabuhan Indonesia will soon lose its monopoly in port operations in the country, Sea Communications Director General Tjuk Sukardiman said, according to Antara. He said the government is studying ways to revive the country's navigation industry including port management and a presidential instruction is expected to be announced soon on the empowerment of the navigation industry allowing the private sector to operate ports. POWER Jakarta Garbage-fired Plant Planned PT Indonesia Power will partner the Jakarta city administration and a US company, International Construction and Marketing Company to build a $4.7 billion, 1,600-MW garbage-fired power plant in Jakarta. The US partner will finance the project, which will include a garbage recycling facility and a water distillation plant. If successful, the project will solve a number of Jakarta’s problems simultaneously: the need for power, a useful means of disposing of garbage, and a source of clean water. MINING Coal Reserves Mines and Energy mPurnomo Yusgiantoro says the country had proven reserves of about 5.3 billion metric tons of coal at the end of last year. He told a parliamentary hearing that unproven coal reserves were 50.1 billion tons, with most found in 17 provinces including South Sumatra and East and South Kalimantan. About 99% of the coal mined is thermal coal. E. Kalimantan Coal Output to Rise The East Kalimantan provincial administration predicts coal production of 70 million tons of coal this year, up from 60 million tons last year. The head of the regional mining and energy office, Masrihadi, said 17 coal mining companies operate in the province. He said two new coal mining companies, PT Makmur Sumber Jaya in Kutai regency and PT Mandiri Inti Perkasa in Bulungan, have started operations and are expected to contribute 1 million tons to coal production this year. OIL & GAS TPPI Signs Loan Agreement PT Trans-Pacific Petrochemcial Indotama (TPPI) signed Thursday (26/2/04) a $400 million loan agreement with the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI) to resume construction of its long-delayed Tuban petrochemical project. Mohammad Syahrial, outgoing deputy chairman of the Indonesian Bank Restructuring Agency (IBRA) that owns a 70% stake in TPPI’s parent company, PT Tuban Petrochemical Industrie, said Japanese creditors agreed to the loan to finalize construction of an aromatic plant at TPPI's petrochemical project in Tuban, East Java. Construction of the project has been at a standstill since the economic crisis in the late 1990s. Around 70% of the project has been built and it may require 24 months to complete. Once finished, it will have an annual installed capacity of 3.6 million tons. Kalimantan-Java Gas Pipeline The government will pursue a plan to build gas pipeline from Kalimantan to Java despite another plan to build a liquefied natural gas (LNG) terminal in Java. Oil and Gas Director General Iin Arifin Takhyan said the LNG terminal project will be the top priority, but development of the two projects will depend on a feasibility study now being conducted by state-owned gas company Perusahaan Gas Negara (PGN). Despite the pipeline project, the LNG terminal will still be needed for gas transported by ship from other regions such as Papua and Sumatra, Iin said. TOURISM Number of tourist arrivals in January reached 358,369 The number of tourist arrivals to Indonesia through 13 main entry points in January reached 358,369, up 28.29 percent from the corresponding period last year, an official said on Monday. Although January's figure was 1.93 percent lower than the 365,440 tourist arrivals in December, "this constitutes a good start for the prospects for tourism in Indonesia", Soedarti Surbakti, spokesperson for the Central Bureau of Statistics, said. Falls in tourist arrivals from December were registered at seven entry points, including Polonia airport in Medan, North Sumatra, by 16.68 percent; the Entikong border in West Kalimantan by 15.03 percent; Sam Ratulangi airport in Manado, North Sumatra,by 7.90 percent; Soekarno-Hatta airport in Jakarta by 7.79 percent; Batam in Riau by 7.75 percent; and Adi Sumarmo airport in Surakarta, Central Java, by 2.81 percent. The number of tourist arrivals in Bali rose by 10.24 percent from 99,435 in December to 109,613 in January. Other international gates registering increases in the number of tourist arrivals were Hasanudin airport in Makassar, South Sulawesi, by 186.81 percent, Mataram in West Nusa Tenggara by 15.81 percent, Tanjung Pinang in Riau by 9.68 percent, TanjungPriok Port in Jakarta by 1.43 percent and Juanda airport in Surabaya by 1.26 percent. Soedarti also said the hotel occupancy rate in 10 tourist destination cities in December, 2003, reached an average of 45.99 percent, up 1.91 percent from November's figure of 44.08 percent.Jakarta had the highest occupancy rate with 51.27 percent in December, up 11.89 percent from November. "The hotel occupancy rate in Bali also increased by 1.52 percentage points from 49.10 percent in November to 50.62 percent in December," she said. (Antara) |