Alaksir Jakarta blog

Indonesian statistics agency BPS announced in its release today that inflation for November was 0.12 percent, which is considerably lower than 0.45% last month, and is actually the lowest in five month.  The agency also announced that year-to-date inflation was 11.10% and year-on-year was 11.68%.  The government has targeted inflation for this year to reach 11.4%.

Jambi province is preparing an industrial area focused on downstream agricultural and plantation industries at Muara Sabak Port for which all the supporting infrastructures, including the new port, are expected to be completed by 2010.

The new port at Muara Sabak, upon its planned completion in mid next year, will replace Talang Dukuh Port as the main economic gateway to Jambi province. As part of its efforts to boost economic growth, the province’s administration has consistently tried to attract investors interested to establish agriculture and plantation related facilities.

According to Jambi’s Head of Economic and Development Office, Mr. Hasvia, the new port will significantly reduce transport time to and from the province. He also said that two French and Chinese investors have expressed their interest to establish biodiesel manufacturing facilities in the planned industrial area.

Jambi’s main commodity offerings include CPO, rubber and tea. Several areas in the province, most notably Sarolangun and Bungo regencies, are also known to produce coal with low to medium calorific values.

Indonesian private equity firm Northstar Pacific Partners agrees to takeover US$575 million, or a majority amount of PT Bakrie & Brothers Tbk’s debt to Odickson Finance SA in exchange for ownership in coal miner PT Bumi Resources Tbk (BUMI).

Odickson, a British Virgin Island financial institution, gave a short term loan totaling US$1.086 to the Indonesian conglomerate in April this year as part of an effort to consolidate the company’s ownership in its publicly listed subsidiaries.

Ironically, with the current global crisis setting in, Bakrie has been forced to compromise its stake in its group of companies, particularly its 35% ownership in Indonesia’s biggest exporter of power station grade coal, BUMI, to pay off the pile of debts it has collected.

Analysts have been skeptical whether the deal with Northstar, an Indonesian affiliate of American private buyout firm TPG Capital (TPG.UL), would go through as BUMI controls PT Kaltim Prima Coal and PT Arutmin Indonesia, both of which are Bakrie’s prize assets.  Bakrie announced earlier this month that it agreed to sell its entire 35% stake at BUMI, but news sources indicated it may only end up letting go 20-25%.

The current crisis sees banking customers shifting to major banks, which offer a greater degree of security.

Over the last three months, for example, Bank Negara Indonesia (BNI) has seen its deposit increase by Rp17.1 trillion, from Rp135.5 to Rp152.6 trillion.  According to BNI spokesperson Bien Subiantoro, new time deposit accounts at the bank amount to Rp10 trillion.

Bank Central Asia (BCA) and Bank Mandiri are also enjoying large growth of third party funds with deposits increasing by about Rp7.1 trillion for BCA.

The Indonesian government plans to open an international trade promotion center at Chile.  This is one of the results of the Indonesian delegates’ tour around South America earlier this month.

The government will also form strategic cooperation with Chile as well as Brazil and Mexico.  Minister of Trade Marie Elka Pangestu said, “Cooperation with Brazil will be focused on the agricultural sector, including commodities such as soybean, sugar and biofuel, with a transaction value of US$2 billion.  We already have an Indonesia Trade Promotion Center at São Paulo to promote trade with our country there.  Brazil is the biggest market in Latin America.”

Added Marie, the government has also established a promotion center at Mexico, which has generated US$300 million in transactions.  She also said that the government’s effort to increase trade with South America is part of its strategy to diversify Indonesia’s export markets.

Robert Tantular, an owner of Bank Century, which is currently under control of the government’s Deposit Guarantee Agency, was arrested by the police on Tuesday night (25 Nov).

Tantular is a member of the founding family of Bank CIC, which later merged with Bank Pikko and Bank Danpac to become Bank Century in 2004. He is one of three Bank Century executives and owners currently wanted by the police, although police and government authorities previously stated there was no instruction for any arrest in relation to the bank’s government takeover.

Tantular is charged with violating the Indonesian banking law and could face up to 15 years of imprisonment and Rp200 billion (about US$16 million) in maximum fine.

The Jakarta Composite Stock Index (JCI) opens strong this morning with 1.53% gain or 18.30 points to 1,211.45 as Bumi Resources (BUMI) continues its rally. Overall, all manufacturing sectors are gaining at the IDX this morning.

BUMI was top gainer with 11.76%, while Indo Tambang (ITMG) rose 5.48%, Astra Agro Lestari (AALI) 6.33%, Astra International (ASII) 2.89%, Bukit Asam (PTBA) 3.93% and Bank Danamon (BDMN) was up 6.45%.

However, the Rupiah was depreciated further against the Dollar by 150 points to Rp12,150/US dollar.

Former Minister of Agriculture Bungaran Saragih predicted that commodity prices, currently in steep decline, will begin to reach positive trends by the end of next year’s first half.

By that time, said Saragih during a seminar on agribusiness, domestic and global prices will reach a new equilibrium as consumers adjust to new prices.

He also said that the current decline in agricultural commodity prices is offset by lower transport costs due to even steeper decline in fuel prices and the depreciation of the Rupiah against the greenback.

Commentator Tungkot Sipayung of the Bogor Institute of Agriculture, who also spoke during the seminar, agreed that the agricultural sector is overall in a better shape than other sectors during the current crisis. He argued that demands in this sector are still strong as Asian markets are seeing a growing middle class that resulted from solid economic growth in the region during the last five years.

He further encouraged the government to steer the direction of Indonesian exports toward the Asian market.

Government spokesperson Bayu Krisnamurthi said on the same occasion that the crisis will nonetheless affect the domestic market, and as such agribusiness investors need to be prepared with a downturn strategy, at least during the next six to eight months.

The government is going to cash in more than Rp100 trillion (US$8.06 billion) to speed up fiscal spending and improve monetary liquidity, writes Bisnis Indonesia.

Attending the 2008 Investor Summit & Capital Market Expo today, Finance Minister Sri Mulyani said, "I have Rp120 trillion (US$9.68 billion) at Bank Indonesia. I have to spend it for DIPA (government budget implementation statement) in one month. And in fact, during the next 30 days, the government is planning to redeem more than Rp100 trillion of that money."

Indonesian telco provider PT Telekomunikasi Indonesia or Telkom (IDX: TLKM) will be looking to secure Rp9 trillion (US$725 million) bank loan to meet 30-40% of its capital expenditure next year, writes Bisnis Indonesia.

Telkom CEO Rinaldi Firmansyah said that Rp22.5 trillion (US$1.8 billion) of capital expenditure will be made next year to construct telco towers, expansion of network and transmissions, of which 60% will be procured by its mobile provider subsidiary Telkomsel.

Commenting about the plan, Firmansyah said, "Bank loan is preferable to issuing bonds or securities at the moment, which wouldn’t seem to attract many buyers in the midst of the global crisis.

The company’s financial disclosure for Q3 of 2008 indicates Rp44.60 trillion (US$3.6 billion) in operating income and Rp8.92 trillion (US$719 million) in net income. It has a total of Rp86.02 trillion (US$6.9 billion) in assets and Rp44.63 trillion (US$3.6 billion) in liabilities.