Wednesday, January 18, 2006

US Business Heavyweights are in town, the long wish list

Representatives from 20 heavyweight companies under the US-ASEAN Business Council are in town for a week. The delegation met this week a wide range of government officials including President Susilo Bambang Yudhoyono, VP Jusuf Kalla, Coordinating Minister for Economy Boediono, Finance Minister Sri Mulyani Indrawati, Energy Minister Purnomo Yusgiantoro, Trade Minister Mari Pangestu (most of them studied in US, except VP Kalla), and Transportation Minister Hatta Radjasa.
The group's formal statement on the objetive of the mission is its continued commitment to Indonesia and preparing a message for the international investment community that Indonesia is growing in its importance as an international investment destination for major American companies.

Why are they here? What are their expectations? Below is my version of their wish list when they meet government officials.

1) Boeing: Sell more airplanes to beat Airbus. The almost bankrupt carrier Garuda Indonesia had signed a US$ 2 billion agreement which focuses upon the development and modernization its fleet through operations of 10 Boeing 787-8 Dreamliners and 18 Boeing 737 New Generation series. These new airplanes will be part of Garuda's fleet by 2011. By that time, Garuda might not exist anymore, as government is preparing to sell up to 49% shares.

2) BP: We're confused of the partition of Papua into two provinces at the time we're preparing to build the US$3 billion Tangguh LNG plant in Western part of Papua. We also don't want to repeat our neighbor Freeport McMoRan's mistake to pay the military for protection of the project. Please give us advise!

3) ConocoPhillips: We're going to keep our working interest in Malacca Strait gas field (we don't want to sell it to other parties like our partner Exxon which started the divestment last year) as long as the government is willing to give better deal (50%:50% split on gas output, change the current 60% for government and 40% for contractor scheme).

4) McDermott International: We have been appointed as the main contractor of Tangguh LNG Plant. Well, in the past we had a very good relationship with Mohammad 'Bob' Hasan, Soeharto's golf buddy. We had to cut the relationship for few years as he lived behind the bars. But he is a free man now, so...Or we're thinking of a possible cooperation with engineering companies like Bukaka (VP is the founding shareholder).

5) ExxonMobil: We're fed up with endless dispute over 1 billion barrel of oil reserves in Cepu Block. First of all, you signed the MoU in June appointing us as the operator, but now Pertamina insists to operate that for first five years, then our turn, rotating system for 30 years. Besides, you just splitted up the 10% PI into four local administrations (Central Java, East Java, Bojonegoro, and Blora). It means we have to deal with four administrations should we'll be the operator. Please give us good advise.

6) Freeport McMoRan: The recent report on our payments to military officers in the past few years to protect the gold and copper mine had cost our future while we're afraid of fresh attacks to our facilities in Papua. We paid US$1 billion since 2004 in royalties, taxes, and military expenses. Could you please make a new arrangement for the military? We are in big trouble here as now the Corruption Eradication Commission (KPK) constituted our payments to military as graft.

7) Microsoft: Let's cut a deal. We'll give your offices heavy discounts on legal computer software in exchange of a promise to purchase authorised Microsoft merchandise in the future and launch a major crackdown on a pirated software racket that is believed to be one of the world's worst. Your word is your bond. We had discussed the proposal that emerged from a meeting between Indonesian President Susilo Bambang Yudhoyono and our founder Bill Gates in Seattle on May 2005.

8) GlaxoSmithKline: As the largest vaccine producer in the world, we're planning to complete tests for a bird flu vaccine within the next two years. We heard that our competitor Baxter had cut the deal with Indonesia's ministry of health affairs to produce the vaccine locally in a cooperation with Biofarma, the state-owned company. Is there any possibility that we could get the deal?

9) General Electric: We had invested US$300 million in the country and hold 12.5% shares in Paiton Energy. We heard that the government is planning to raise the electricity tariff by 30% this year. It would be great if PLN could afford to buy our power supply at higher tariff as well.

Oops! We have limited time here as we're entering the next meeting with China business delegates. Members of China delegates are CNOOC (competed with Chevron to acquire Unocal, BP's main partner in Tangguh LNG Project), Petrochina (competing with ExxonMobil to control Cepu Block, one of Pertamina's main partner and is working on a refinery project in Tuban, East Java), Lenovo (acquired IBM's PC business), Huadian Group (planning a giant coal-fired power plant in South Sumatra), and Qian Yuan Hao Biological (exporting vaccine flu to Indonesia) among others.

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Blogger javaricho said...

Spot on Yosef. I think you summed up pretty well

January 20, 2006 9:31 AM  

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