| Embassy of Indonesia - Ottawa Canada | June 24, 2004 |
Indonesian trade and investment news-June 2004
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MACROECONOMY
BI Policies Bite BI also said it will seek to keep the benchmark interest rate on its promissory note (SBI) from increasing in order to keep inflation under control. Governor Burhanuddin Abdullah said the interest rate on SBIs will be maintained at around 7.3%, Antara reported. Burhanuddin said with economic fundamentals relatively strong, the interest rates on monetary instruments would still tend to decline, although more slowly. The rupiah closed last week at 9,375.00 after a week in which it dipped to Rp9,500 but then firmed. The average closing rate of the rupiah during May was Rp9,028 per dollar, 4.8% lower than the previous month's average. In the wake of the BI announcement on new minimum reserve rules, I Wayan Pugeg, managing director state-owned Bank Mandiri, the country’s largest, said Thursday that the bank had no plans to raise interest rates, (10/6/04), Reuters reported. Another major state-owned bank, Bank Negara Indonesia, the second largest bank, indicated rates would also stay down, saying it was targeting a 20% rise in net interest income as consumers took up low-interest loans. Fourth-largest Bank Rakyat Indonesia (BRI) also said it will not change lending rates because of the new requirements. BNI president Sigit Pramono and Bank Permata president Agus Martowardojo both said their banks would not need to raise lending rates. Bank Mandiri will need to allocate an extra Rp4 trillion ($426.9 million) for reserves with the new policy. Pugeg said Mandiri had no plans to increase either credit or deposit interest rates. The additional reserve requirement would come from liquid deposits, he said, suggesting that Bank Indonesia’s plan to reduce liquidity to stop currency speculation would pay off. The reserve requirement for banks with total rupiah deposits higher than Rp50 trillion has been increased to 8% from 5%, with the central bank paying interest of 3% on the additional reserves. As Indonesia entered the third week of its presidential election campaign, the stock market stayed cautious but the lack of any election-related violence began to raise hopes that the doubts on Indonesia would prove short-lived.
Across Southeast Asia, four out of five companies were optimistic, with companies based in China the most bullish, with the Philippines the only company were opinion was solidly for a retreat in business prospects. Going into 2005, US companies in the region are even more confident with 87% projecting a growth in profits. "The message is optimism, optimism, optimism," AmCham Singapore Executive Director Nicholas de Boursac said. CGI meeting Investment in Indonesia grew by only 2.2% in 2003 and the ratio to gross domestic product (GDP) fell by 17.8%, the lowest level since the 1970s. Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti told the CGI Indonesia had done solid work during the two and a half years of the current government. “When we came into office, Indonesia was in serious trouble. Given the complexity of the problem, President Megawati set just a few key priority tasks to turn around the economy. These included repairing relations with the international community, restoring macroeconomic stability and restarting growth and finally closing out the institutions created to deal with the crisis,” he said. “Looking back I think we can say that we have done well on this agenda. Indonesia now, by any standard, has passed the economic and monetary crisis that started in 1997. And, the economy is well positioned for faster and more sustainable growth.” He acknowledged “some early frustrations” with the pace of reform. He argued that Indonesia had already reached the per capita income figure of $1,000 per year, reduced poverty to pre-crisis levels and produced “a more just and equitable path” in the growth of the economy. World Bank country chief Andrew Steer said three problems were facing the economy: an increase in global interest rates, which would compound debt problems, decline in China's economic growth, and high oil prices. The CGI urged Indonesia to do more on reform to promote investment and to boost exports. Indonesia's economy expanded by 4.5% in the first quarter of the year but growth would have been higher had the country better exploited its export potential. Indonesia's exports grew by only 10% from 1996 to 2003, as compared to Thailand's 70% and South Korea's 50% growth. Nor was Indonesia keeping up with the neighbors in benefiting from growth in China’s imports. This situation left the country too dependent on domestic consumer demand, the CGI added. Debt Payments Continue Government offshore debt rose to US$81.97 billion in March from $80.01 billion a month earlier due mainly to the issuance of a $1 billion international bond. Corporate foreign debt fell to $52.39 billion in March from $52.77 billion a month earlier. Offshore debt repayment rose 39% in March to $1.96 billion in March from the previous month, the central bank said. Budget Deficit Aims at 0.8%
of GDP LEGAL Prudential Wins Appeal One of the three judges who made the new ruling, Abdul Rahman Saleh, said the case, brought by a former consultant who claimed he was owed $400,000, and made a claim for around $40 million as well as filing a bankruptcy petition, was a contractual dispute and should never have had a bankruptcy hearing. Prudential was forced to halt its Indonesian operations in the first week after the bankruptcy ruling was handed down but a judge then allowed the company to resume business. SOEs Bank Permata Sale to Start Mohammad Syahrial, president of Asset Management Company (PPA), the new state agency in charge of distressed assets, said the road show would begin in late July. He added that the sale was expected to be sealed by the end of the year. State Minister for State Enterprises Laksamana Sukardi earlier rejected moves by Bank Negara Indonesia for a merger with Permata. "A stand-alone bank status for respective banks creates healthy competition within the banking sector," Sukardi said Monday (7/6/04). Permata is 92% owned by PPA on behalf of the government, is one of a number of banks scheduled to sell this year. The House of Representatives has agreed to sell up to 71% of Permata. Syahrial said the sale had already drawn interest, including from Standard Chartered Bank, which had wanted to buy one of the five banks merged to form Permata, Bank Bali. The other banks were Bank Universal, Bank Arthamedia, Bank Prima Express and Bank Patriot, combing to create a lender with assets of around Rp30 trillion. The government named ABN Amro as financial adviser for the planned sale in Bank Permata, Dow Jones Newswires reported.
The new planes take Merpati’s Boeing fleet to 13 planes, as well as three Fokker-100s, eight Fokker-28s, two CN-235s, seven Casa 212s and eight DHC-Twin Otters. The airline recently abandoned its flight to Tanjung Pandan on Belitung Island because passengers preferred a private competitor’s Boeing aircraft to Merpati’s Fokkers. Meanwhile private carrier Lion Air said it will lease 19 MD-82 and Boeing 737-400 aircraft this year to expand its international and domestic routes. Lion currently operates 23 aircraft. Another carrier, Jatayu, plans to lease four more Boeing 737-300 aircraft.
Fitch Boosts BII Rating “While the cash flows for the transaction have been volatile over the period since closing with the maximum debt service coverage ratio ranging from 7.58x down to 2.0x, the transaction has always remained within its rating parameters,” the statement said. “Fitch believes the transaction continues to perform in excess of its 'B+' rating although it is constrained by the sponsor BII's rating.” BII meanwhile announced that it had entered into a strategic agreement on joint ATM access with Singapore’s DBS Bank. Astra Auto Sales Jump Astra, 39.4% owned by Singapore's Jardine Cycle & Carriage Ltd, said in a statement that domestic vehicle sales last month jumped to 19,713 units from 11,971 year-on-year.
Analysts Tip Higher
Cellular Profits Net income is tipped to rise to as much as Rp5.3 trillion ($572 million) from last year’s figure of Rp4.24 trillion, Wim Timmermans, vice president of Business Control, said, although adding that growth would slow next year. Fewer than one in 10 people own a mobile phone in Indonesia and almost a fifth of the nation's 231 million people will be able to afford one by the end of next year, he said. More than a third of Thailand’s 63 million people have mobile phones, according to a March estimate by the Gartner research group. In the Philippines, 28% of the nation's approximately 85 million people have cellular access. As many as 40 million Indonesians will be able to afford phones next year, Timmermans said. That will translate into as many as 9 million additional subscriptions, he said. Six Companies Suspended The firms are property company PT Bhuwanatala Indah Permai, construction company PT Bukaka Teknik Utama, packaging companies PT Wahana Jaya Perlasa and PT Siwani Makmur, engineering company PT Texmaco Perkasa Enginering (and chemical company PT Eterindo Wahanatama (ETWA). They failed to submit their accounts by the extended deadline of May 28 and had not provided any reason for the failure, a statement said. The JSX said it has further extended the deadline for trading company PT Wicaksana Overseas and textile company PT Apac Citra Centertex to June 11. PT Telekomunikasi Indonesia (and cement maker PT Semen Gresik will be given until the end of the month to submit their accounts. Mastercard Transactions
Boom In 2003, the company recorded a business growth of 32.1% year-on-year with total transactions of $1.25 billion. The number of MasterCards issued rose to 2.82 million in 2003, up 55% on the previous year. In the first quarter this year the number rose to 3.14 million.
Monorail to Start The "green line" monorail will run for 14.8 kilometers through Jl. Sudirman and Jl. Rasuna Said. A second “blue” line will run for 12.2 kilometers from Kampung Melayu in East Jakarta to Roxy in West Jakarta. Jakarta administration secretary Ritola Tasmaya said Wednesday confirmation had been received from the State Secretariat that President Megawati Sukarnoputri would inaugurate the project. The project is to be constructed by PT Jakarta Monorail, a consortium of Indonesian and foreign investors, including Japanese major Hitachi. China to Disburse Suramadu
Loan A memorandum of understanding on the disbursement of the loan to be repayable in eight years, is expected to be signed on June 23, Soeprawoto said. Pelindo Plans New Priok
Terminal The project has been awarded to PT Manggala Krida Yudha under a 30-year joint operation scheme. The terminal will include a dry bulk terminal and a roll-on-roll-off terminal. Interest in Bojonegoro Port A. Syaifuddin, president of state-owned port operator PT Pelindo II, said after a hearing with legislators of parliament’s Commission IV that the port was designed to reduce congestion at Jakarta's Tanjung Priok port. Pelindo is currently constructing the first Rp300 billion stage of the port. Syaifuddin did not name any of the prospective investors, but said they were interested in a joint operating scheme for the project.
Paiton Energy Mulls
Expansion Paiton Energy's president director Ronald P Landry said Monday (7/6/04) the first phase of the expansion of the Paiton power plant would cost about $580 million. He said Paiton Energy would sell electricity from the new power plant to state electricity company PLN for 4.79 cents a kWh, or lower than the restructured tariff of 4.93 cents a kWh it currently receives. Paiton Energy is 44% owned
by Edison Mission, 37% by Mitsui, 14% by General Electric and 5% by
domestic shareholders. Landry confirmed that Edison would sell its stake
in Paiton Energy and a number of investors had expressed interest in
buying the stake. Megawati on Mining Policy
The government issued regulation in lieu of law No. 1/2004 in March, allowing 13 mining firms to resume their operations in protected forests. Megawati said that despite this controversial policy, the government had done a great deal to curb damage to the country's forests. Heavy Equipment Demand Up
40% An official of PT Komatsu Indonesia said demand for the company’s heavy equipment products doubled in the first four months of this year compared with the same period last year.
Exports Rise 2.68% BPS chief Soedarti Surbakti said non-oil/gas exports were up 3.94% from $3.87 billion in March to $4.02 billion. Exports of oil and gas fell by 1.39% from $1.20 billion to $1.18 billion. Crude petroleum exports were down a solid 12.59% but oil exports were up 44.75% while gas exports rose 0.48%. Machinery and electrical appliances led the non-oil/gas export figures, contributing $2.53 billion, followed by machinery ($1.12 billion) and vegetable oils and fats ($1.21 billion). Year-to-date performance of non-oil/gas exports reached $15.49 billion, up 1.16% on the same period in 2003. The trade surplus rose 5.67% from the previous month to $2.05 billion in April as export growth outpaced imports. Imports rose only 0.9% to $3.16 billion, helped by a decline in crude oil imports to $442.6 million from $639.6 million in March. Processed oil imports rose to $420 million from $309.6 million. East Europe Export Push
Continues "Participation in the expo is a significant part of Indonesia's efforts to promote its export products in the international market, especially in Eastern Europe," National Agency for Export Development (Nafed) chief Diah Maulida said Monday (31/5/04). The exhibition is expected
to attract buyers from across Eastern Europe. Products to be exhibited
include furniture, food products, jewelry, handicrafts, toys and garments. |
Source : Office of the Coordinating Minister for Economic Affairs |