Wicaksana's double trouble

Distribution company PT Wicaksana Overseas International Tbk is clearly in a big trouble. The company's loss almost doubled to Rp114 billion last year from Rp64 billion in 2004.
Debt problem? Yes. But its operation was even worse. Sales dropped 21%. The company also failed to cut the operating expenses. As a result, Wicaksana booked operating loss of Rp76 billion, increased from Rp50 billion in 2004.
Due to years of losses, Wicaksana's capital deficiency has grown to Rp456 billion with total liabilities of Rp880 billion by the end of 2005.

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Danareksa's poor performance

State-owned investment bank PT Danareksa (Persero) reported net loss of Rp182 billion (US$18.5 million) for financial year 2005 against net profit of Rp32.5 billion the previous year.
According to its financial report published Saturday (April 29), Danareksa booked total revenue of Rp225 billion, dropped sharply from Rp416 billion in 2004.
Why? The company recorded net loss of Rp18 billion in securities trading against net profit of Rp107 billion in 2004. The company's revenue from services also reduced significantly. Not to mention the heavy drop in revenue from issuance fee from Rp53 billion to Rp3.6 billion.
One may argue that Danareksa has huge debts. But the company's interests payment actually decreased last year to Rp128 billion (against Rp143 billion).
Bad loans chanelled in the past also cost the company huge allowance of losses at Rp111 billion. But even without that, Danareksa would still in red.
So, it is a combination of poor loans management in the past and poor performance of its operation last year. Danareksa's president Lin Che Wei, a confidante of state-owned enterprise minister Sugiharto, might has better explanation on why public will not get the dividend from the company this year.
An analyst, and one of the panelists at the presidential candidate debate in 2004 election, Che Wei surely has to proof that he has the capability to turn the state-owned company around.
With total assets of almost US$200 million, people can't afford to live with the loss-making state-owned companies.
Minister Sugiharto moved his office to Danareksa building since late last year for undisclosed reasons. He occupy the office previously for Danareksa's CEO. As a result, Danareksa had refurbished and built new office for Che Wei. Just like when then SOE Minister Tanri Abeng (during BJ Habibie administration) moved to Indosat building.
So, the problem is right in front of Sugiharto's nose. Should be easier to fix. At least the CEO could have been easier to make appointments with the minister, right?

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Reinventing Crony Capitalism, A Research

If you have any interest in Indonesian tycoons, the rise, fall, rise again and maybe fall again...and how politics at play...Reinventing Crony Capitalism might be a good start...

About the business conglomerates in the past, present, and future...Salim Group, Nursalim-Gozali, Eka Tjipta, Sukanto, Prayogo, Riady family, Wings Group, Djarum, Gudang Garam, Sampoerna family, Martua Sitorus-Wilmar Group, Cendana family business (Humpuss, Citra Lamtorogung), Soerdjaja family, Bakrie Family, Bukaka, Bosowa, Mahaka, Medco, Artha Graha, and others...send inquiries to my email at yosardi@hotmail.com.

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Fuel Rationing...is (not) an absolutely stupid idea!

What more can you say? State minister for national development planning Paskah Suzetta smilingly announced government's plan on rationing fuel (bahan bakar minyak, BBM) consumption two days ago. I thought he was joking. But no! He said the rationing would be implemented on big cars and government officer's cars. Why? To save energy and to cut significantly fuel import, he said, amid the world's fuel price hike that almost hit US$80 per barrel.
Is it really a stupid idea?
In August 2005, China's most prosperous city of Guangzhou implement the rationing of gasoline and diesel to cope with a fuel shortage. Guangzhou experienced a monthly shortfall of approximately 12,200 barrels per day of oil products that time.
The same month, President Gloria Macapagal-Arroyo in Philippines ordered fuel rationing for vehicles of government offices and warned the public that "forceful and drastic steps may be needed to prevent a worst-case scenario."The plan mandates government agencies to cut down their monthly fuel consumption to 90 percent of their average consumption.
That's exactly what Samarinda City Administration in East Kalimantan did in October 2005 right after central government raise the fuel price by more than 100%. The local administration cut the fuel allocation for its officers fleet from 150 liter/car/month to 100 liter/car/month.
Last month, two of China’s biggest oil suppliers have begun to ration diesel, triggering lorry queues at petrol stations across two of the country’s most prosperous provinces. Such was the demand that the state-run oil giants Sinopec and PetroChina set a limit on customers of 25 to 50 litres a visit. The rationing appears to be restricted to the southeastern provinces of Zhejiang and Jiangsu, two of the most dynamic regional economies in the world’s second-largest oil consumer.
What's the problem with Paskah's proposal?
Well, the implementation. He said the rationing would only apply to cars with engine capacity of more than 2,000 cc. First, the guys at gas stations should be trained to differentiate which cars are above 2,000 cc. Second, even if they managed to differentiate, can they really enforce and not fooling around with the customers for a higher price? Third, almost 90% of cars in Indonesia have engine capacity below 2,000 cc. So it's looks good only on paper just like economist Revrisond Baswir said to Detik.com.
It's not a totally stupid idea though. Probably government could start with rationing the fuel budget for its fleets, just like what the Samarinda Administration did. Officers could still buy gasoline more than the allocated, but they should pay with their own money. Still, we have to think of its impact, say...these officers would be more corrupt...
How about fuel taxes with incremental rate...say if you buy 10 liters the tax is 5%, 10-20 at 10%, 20-30 at 15%, and so forth...With that, we don't have to worry about budget pressure of the increasing oil price...Just like my fellow smokers who are willing to pay 30% of the puffs to the state coffers...even though I'm not sure if the number of smokers reduced recently...
But I do agree with Revrisond to give priority to reducing significantly the chaotic traffic situation in big cities like Jakarta through MRT, monorail, whatever...
Otherwise we live in a really drunken republic (benar-benar mabok/BBM---my favorite comedy show)...full of foolish ideas.

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Foreign banks recorded better 2005 performance

In contrast to the banks owned by Indonesian or majority controlled by foreign investors, the branches of foreign banks such as HSBC, Standard Chartered, and Citibank reported impressive net profit and asset growth last year. But ABN Amro and JP Morgan recorded heavy drop in net profit due to slashed margin despite impressive asset growth.

Citibank: Assets grew 31.6% to Rp32.3 trillion (US$3.29 billion), while net profit increased 19% to Rp1.099 trillion (US$111.8 million).

HSBC: Assets grew 49% from Rp16.38 trillion to Rp24.45 trillion (US$2.49 billion). The bank reported net profit of Rp446 billion (US$45 million) last year, up 13.8% from 2004.

Standard Chartered: Assets grew 35% to Rp19.72 trillion (US$2 billion), while net profit jumped 77% to Rp638 billion (US$65 million).

ABN Amro: Assets increased 24% to Rp18.84 trillion (US$1.9 billion), while net profit dropped significantly by 60% to Rp193 billion (US$19.6 million).

JP Morgan: Assets jumped 115% to Rp4.2 trillion (US$428 million), while net profit dropped to Rp36 billion (against Rp177 billion in 2004).

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Semen Gresik posts US$104 million profit

The largest cement producer PT Semen Gresik Tbk reported net profit of US$104 million last year, doubled from Rp508 billion in 2004, thanks to improved margin and lower interest expenses.
According to its financial report published today, Semen Gresik recorded total sales of Rp7.53 trillion last year, a 24% growth from Rp6.067 trillion in 2004.
Even though its operating expenses increased significantly from Rp1.09 trillion to Rp1.328 trillion, Semen Gresik managed to book operating income of Rp1.56 trillion, jumped 62% from Rp965 billion in 2004.
The state-owned company's interest expenses also reduced significantly from Rp238 billion to Rp157 billion.
Cemex SA is about to sell its 25% shares in Semen Gresik. Rajawali Group owner Peter Sondakh was reportedly the strongest candidate to acquire Cemex shares in Semen Gresik.

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Medco confirmed Block A acquisition from Exxon

Listed energy company PT Medco Energi Internasional Tbk. (MedcoEnergi) confirmed my earlier report that it won the bidding to acquire ExxonMobil's 50% interest in Block A oil and gas in Aceh.

According to its letter to Jakarta Stock Exchange (JSX) today, Medco Energi through its wholly owned subsidiary, Medco Far East Limited, and its partners, Japan Petroleum Exploration Co, Ltd. (Japex), and Premier Oil Plc. (Premier), have signed a Share Sale Agreement (SSA) with ExxonMobil Block A Investment Limited (ExxonMobil) to purchase 100% shares of Mobil Block A Limited (MBAL), a wholly owned subsidiary of ExxonMobil. MBAL holds 50% of interests in Block A Production Sharing Contract (Block A PSC) located in Nanggroe Aceh Darussalam province.
Upon the completion, MedcoEnergi, Japex, and Premier will each hold 33-1/3% of shares in MBAL, respectively. The remaining 50% interests in the Block A PSC are held by ConocoPhillips Company.
MedcoEnergi and its partners will change the name of MBAL immediately and report the changes to The Indonesian Oil and Gas Implementing Body (BP MIGAS).
The Block A PSC is located in the province of Nanggroe Aceh Darussalam in northern tip of Sumatra island, approximately 45 kilometres west of the giant ExxonMobil-operated Arun gas field. The PSC term period is 30 years which will expire in August, 31, 2011.

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Fresh maneuver on state banks bad loans

As I wrote many times in the past, the major problem for bankers at the state-owned bank in Indonesia is bad loans management amid contradiction of existing laws. The banking law allows banks to give haircut or write-off bad debts. But that's not the case for state-owned banks because of the anti-corruption law article 2 and Law No. 17/2003 about State Treasury.
Attorneys could use article 2 of the Anti-Corruption Law to file corruption charges against bankers of the SOE banks simply because haircut and write-off could be considered a crime against the state because such decisions potentially put the state at financial loss. Meanwhile, the Law No.17 also dictated that state banks should not sell their non-performing loans (NPL) at discount price just like the private-owned banks.
Under such circumstances, the bankers have no guts to manage their NPL even at the alarming level of Rp87 trillion (US$9 billion) in one state-owned bank. These bankers then proposed to establish special purpose vehicle (SPV) to manage the NPL. But that's not the answer. As long as government keep the definition that all the money in a state-owned bank are the state's money, no matter the bank do itself or let SPV do the haircuts and write-offs, prosecutors would still wait next door.
The ministry of finance seems aware of these and come up with bold idea of dividing line, which assets are the bank's assets and which assets are the state assets in the bank. So, NPL would then be categorized as the bank's asset, not the state's.
What to do? Director General for State Treasury Mulia P. Nasution said government is revising the Government Regulation No. 14/2005 about the Settlement of State Receivables. Is it enough? Actually it's not. We need to settle once for all the definition of state asset in a state-owned bank or other state-owned enterprises. Government, Bank Indonesia, and Attorney General's Office should settle the issue if the country want to empower its state-owned enterprises.
Why?
Because even if government revise the regulation, the hierarchy of the government regulation is still below the Laws. Look at what happened with Indonesia Bank Restructuring Agency (IBRA). Former chairman Syafruddin Temenggung is detained for corruption allegation on selling one of the assets at discount price. We need to fix the higher legislations, the laws. IBRA was governed with government regulation and presidential decrees.
I'm afraid revision of government regulation on NPL management would not enough. That would settle the issue in the short-term, but not in the long run.

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Indonesia company secured Iran oil contract

Listed company PT Citra Tubindo Tbk, a producer of tubular pipes, won a contract to supply oil country tubular goods (OCTG) to National Iranian Oil Company (NIOC) worth US$27.32 million.
Citra Tubindo, controlled by Indonesian tycoon Kris Wiluan, won an international bidding conducted by Kala Naft, which handles material supply to NIOC and its affiliates. Delivery should be made this year.
According to Citra Tubindo's letter to Jakarta Stock Exchange yesterday, part of the contract, worth US$10 million, would be processed in Luleh Gostar Esfarayen Seamless Pipe Company (LGE), Iran, in which Citra Tubindo would supervise the production.
Apart of that, Citra Tubindo also secured order of drill pipes worth US$4 million from Kala Naft's London office to supply National Iranian Drilling Company (NDIC).

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Wijaya Karya to be privatized through IPO

The state-owned construction and engineering company PT Wijaya Karya is scheduled to float up to 30% of its shares through initial public offering (IPO) in June. The company is expecting to get Rp600 billion from the IPO and would use the proceeds to expand its business and participate in electricity projects.

Government seems to follow the previous admnistration's decision to float construction and engineering company PT Adhi Karya Tbk.

According to its financial report published late last month, Wijaya Karya reported net revenue of Rp2.6 trillion or around US$300 million, increased from Rp2.47 trillion in 2004. But the company's net profit slightly reduced from Rp71 billion to Rp68 billion.

Besides these two companies, the state also own another construction companies like PT Hutama Karya, PT Waskita Karya, PT Nindya Karya, PT Istaka Karya, and PT Pembangunan Perumahan.

Waskita booked net revenue of Rp2.64 trillion last year, increased significantly from Rp2 trillion in 2004. Pembangunan Perumahan also recorded impressive growth of revenue from Rp1.68 trillion to Rp2.25 trillion and net profit growth from Rp54 billion to Rp67 billion.

Two years ago, Megawati administration launched the initiative to merge these state-owned construction companies. The new administration announced the plan to merge nine construction companies into three. But no progress has been made so far.

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Middle East's growing investment apetite in Indonesia

Indonesia is the country with largest Moslem population in the world. But it's not easy to bring in funds from rich countries in Middle East. The development in the last few months, however, might reflects a growing apetite among the Middle East investors on Indonesia.
Emirates, for example, announced its plan to cooperate with Indonesian flag carrier Garuda Indonesia airline. State-owned oil and gas company Pertamina had agreed last week to work with Saudi Aramco in the Tuban refinery project in which the Saudi Arabia company would feed up to 400,000 bpd of crude. China's Sinopec is Pertamina's partner in the project. Pertamina agreed also to work with International Petroleum Investment Company (IPIC), a company owned by Saudi Arabia government.

An investor from Dubai, Abu Dhabi IslamiInternational Petroleum Investment Company (IPIC),c Bank, was also reportedly planning to acquire small-size banks in the country and convert it to a sharia bank.
Kuwait Finance House would do the same. The company would invest US$25 million to acquire small-size bank and convert it to a sharia bank too.
So far, Bank Muamalat, the first sharia bank in Indonesia, could be considered the biggest Middle East investment in Indonesia. The bank has total asset of Rp7.42 trillion as of December 2005, grew significantly from Rp5.2 trillion in December 2004. The bank booked net profit of Rp156 billion last year. Islamic Development Bank hold 28% shares in the bank, followed by Boubyan Bank Kuwait (21.28%), and Atwill Holdings Limited (15.32%).
Egyptian Orascom, the largest cement producer in Middle East, is preparing to build two cement plants in Central Java with investment up to Rp5.2 trillion (US$540 million).
Late last month, Jakarta Governor Sutiyoso flew to Dubai, Uni Arab Emirates, to meet executives of Dubai Bank Islamic for a proposed US$500 million monorail project funding.
Late last year, for the first time, executives of six major financial institutions visited Indonesia in one team. They were from Islamic Development Bank, Bank of Sharjah (Dubai), National Commercial Bank (Arab Saudi), Saudi Economic and Development Company, Blue Star Group, and Amlak Finance (Uni Emirat Arab).
IDB executive claimed that after WTC bombing in New York (9/11), Middle East investors pulled out 1.4 trillion US dollars from USA and Europe.
Sultan Kamal Bawazier, investor from Saudi Arabia, involved in the US$250 million financing of airstrip project in Kutai Kartanegara (Kukar), East Kalimantan. Kukar is one of the richest regencies in Indonesia, home to major oil, gas, and coal mining operations.
And just days before president Susilo Bambang Yudhoyono start a state visit to some Middle East countries, state-owned PT Bank Negara Indonesia (BNI) Tbk announced its plan to work with Kuwait investor to acquire Indonesian bank and conver it to a sharia bank.

State-owned enterprises minister Sugiharto meanwhile claimed that investment bankers from Middle East are ready to invest US$8 billion in sharia-based instruments such as bonds issued to finance infrastructure projects, including the ambitious 8,000 MW electricity capacity to be developed in the next few years.
President Susilo is scheduled to visit Saudi Arabia, Kuwait, Qatar and Uni Arab Emirates next week in a move to lure in more investors from Middle East countries. If history counts, it seems not easy to attract FDI from Middle East which is long-term investment in nature.
Vice President Jusuf Kalla has better idea. Last month, he asked tourism board in Bali to bring in more visitors from Middle East to the Island. Hm...bold idea. Early success is the decision of Partai Bintang Reformasi (Islamic party) to have its national convention in the beautiful island this week.

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Jakarta to cash in beer shares for schools

Jakarta administration plans to sell its 26% shares in the listed beer producer PT Delta Jakarta Tbk, deputy governor Fauzi Bowo said yesterday as reported by Tempointeraktif.com.
What to do with the proceeds? Fauzi said some would be used to build and improve school facilities. Bold decision!
Delta is the producer of Anker beer, Carlsberg Beer, San Miguel, and non-alchoholic drinks such as Sodaku. Last year the company booked net profit of Rp56 billion (around US$7 million), jumped significantly from Rp38.7 billion.
How much will be the proceeds for Jakarta administration? Well, here's the math. Total Delta shares are 16 million. With market price of Rp27,000 per share, the total market value of Delta shares is Rp432 billion. It means, Jakarta administration's shares of 26% could translate into Rp112 billion. But with premium of 25% above the market price, it could reach Rp140 billion.
The proceeds would be enough to fix Jakarta's poor school buildings if they spend it right!
But why in the first place the administration is willing to exit Delta? Is it something to do with the administration's strong stance against alcohol? I mean, looks strange when the admnistration launched major crackdown on alcohol in the last few months but keep enjoying the dividend payment from companies like Delta, right? Is there any pressure from legislators, especially the fact that PKS controls majority seats in Jakarta legislative?

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Widiono finally named a suspect, gov't keep him in the job!

Eddie Widiono Suwondho, president director of state-owned electricity monopoly PT Perusahaan Listrik Negara (PLN) has been named a suspect in a corruption case.
After months of speculation, police chief Sutanto announced yesterday that Widiono named a suspect with allegation of his involvement in a corruption case being investigated over the cost mark up of a power plant project in South Sumatra. Two PLN directors had previously named suspect in the case.
Widiono is considered a big test for this administration in its major anti-corruption drive mainly because of his strong military family background. His father was former military commander of East Java, while his sister was allegedly involved in military equipment supply during the last years of Soeharto regime.
Widiono has been in PLN CEO since early 2001 and it's not clear who will replace him. But it seems that government is fully support Widiono. SOE Minister Sugiharto stated yesterday that government will not replace Widiono until the court decides that he did involved in the corruption scandal. Sugiharto's stance is completely different with the one he made when ECW Neloe (that time CEO of Bank Mandiri) was named a suspect in a corruption allegation. Neloe was immediately replaced. Neloe was also detained, while Widiono is a free man until now. Court released Neloe two months ago.

Read my previous article for background at:
http://yosef-ardi.blogspot.com/2006/02/electricity-shock-on-widiono-sby.html

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Observers: Mind your words & paychecks!

A friend told me few days ago that one of the largest telecommunication companies in Indonesia had retained two media 'observers' as lobbyist with monthly fee of US$8,000 per month. What's the job? To defend the company's policies in public, lobbying regulators or parliament. Nothing wrong with that. But I hate to see media quoted these guys as 'observers'. Blame the journalists? Sure, because they're too lazy to do little research on who's talking. But these paid observers should tell the truth to public at large too.

I read an advertisement this morning about a seminar about telecommunication and corruption. One of the speakers would be the lobbyist but claimed himself in the ad as media and telecommunication law expert. The other guy would be the moderator of the panel discussion and claimed himself a public policy observer. I smell something.

So I decided to tell my reporters to be careful with these guys, not because they're paid observers but because they didn't tell public that they're representing the telecommunication industry.

That's also my standpoint when it comes to observers like Umar Juoro and Aviliani, both serve as commissioners at Bank Internasional Indonesia (BII) and Bank Rakyat Indonesia (BRI) respectively. They have the rights to be commissioners, but when they make statement, journalist should tell public that these guys are also work for a company that might related to the statements. On the other hand, these paid economists should frankly tell public that they said so representing a company's view.

Journalists should also make it clear to readers on some economists turns legislators. I just can't understand that guys like these mix up things easily and keep the readers in the dark on whether they talk as economists or legislators paid to serve people's interests.

Observers should also tell the truth when submitting op-ed to newspapers. We often see an expert staff for the state-owned enterprises minister and also commissioner in a state-owned bank, under the state payroll, wrote op-ed about SOE policies in newspapers as a lecturer. Or the president of a state-owned investment bank wrote an op-ed with the title as SOE observer.

So, I decided to list down economists or observers currently under the payroll of some companies/agencies:

- Umar Juoro: Economist, commissioner at Bank International Indonesia (BII)

- Aviliani: Economist from INDEF, commissioner at Bank Rakyat Indonesia/BRI (state-owned bank)

- Drajad Wibowo: Economist, legislator from Partai Amanat Nasional (PAN), former commissioner at Bank Negara Indonesia (SOE).

- Sunarsip: Economist, commissioner at BRI

- Didik J. Rachbini: Economist, legislator from PAN

- Pradjoto: Banking law expert, commissioner at Bank Mandiri (state-owned bank) and Bank Internasional Indonesia (BII)

- Arif Arryman: Economist from Econit, commissioner at Telkom (state-owned)

- Setyanto P. Santosa: Economist, commissioner at Indosat
- Muhammad Ikhsan: Economist, expert staff for Coordinating Minister for the Economy, former commissioner at PT Bakrie & Brothers Tbk (owned by Bakrie Family)
- M. Chatib Basri: Economist, advisor to government, commissioner at PT Astra Otoparts Tbk
- Sjahrir: Economist, advisor to president Susilo Bambang Yudhoyono
- Anggito Abimanyu: Economist, Executive at the Ministry of Finance, Commissioner at PT Telkom
- Kurtubi: Economist, staff at Pertamina (SOE)
- Prof Subroto: Economist, advisor to PT Medco Energi Internasional Tbk (oil and gas company); Commissioner at PT DBS Bank Indonesia (a subsidiary of DBS Singapore).

- Prof Sadli: Economist, commissioner at PT Sepatu Bata Tbk
- Sutrisno Iwantono: Economist, commissioner at PT Bank Bukopin Tbk.

- Raden Pardede: Economist, commissioner at PT Bank Central Asia Tbk

- Cyrillus Harinowo: Economist, commissioner at PT Bank Central Asia Tbk

- Prof Roy Sembel: Management expert, commissioner at PT Bank Niaga Tbk
- Prof Din M. Syamsuddin: Chairman of PP Muhammadiyah, chairman of Syariah supervisory board of PT Bank Danamon Tbk (a subsidiary of Temasek Holdings)
- Rijanto: Bank observer, commissioner at PT Bank Panin Tbk

Imagine how much money a commissioner at a state-owned bank could get?

According to the financial report of BRI in 2005, bonus for the management was Rp19 billion with stock option of Rp35 billion. The state-owned bank didn't disclose the salary for both directors and commissioners. Bank Mandiri disclosed it better. Total salary for Mandiri's commissioners was Rp13.8 billion, stock option of Rp169 billion for the management, and bonus of Rp26 billion for the financial year 2005.

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Mitsubishi Chemical expand Indonesia facility US$260 million

PT Mitsubishi Chemical Indonesia, a wholly owned subsidiary of Japan's Mitsubishi Chemical, will expand its purified therephthalic acid (PTA) plant in Merak, Banten province, Indonesia with additional investment of US$249.75 million.

PTA is the main raw material for polyester staple fiber (for textile manufacturers) and PET resin (plastic raw material). PTA is the preferred raw material used to produce Polyethylene Terephthalate (PET) or polyester. The major applications for polyester are in fiber, bottles, films and molded containers. In the textile industry, polyester, alone or in a blend with cotton, wool or other synthetic fiber, is used in fabrics for clothing and home furnishings. For industrial markets, woven polyester fibers are used in automotive tire cord and seat belt application. Polyester resins are also widely used in molded containers for food, beverages and mineral water. Additionally, polyester films is used as a recording medium for audio and video tapes and as film in medical X-ray equipment.

Mitsubishi currently operates a 650,000 t/y PTA plant in Merak, the largest in Indonesia. The new plant would have installed capacity of 400,000 t/y.

Is this the sign of awakening of Indonesia's chemical industry after years of slowdown? What's happened with other PTA producers such as PT Polysindo Eka Perkasa, PT Amoco Mitsui Indonesia, PT Polyprima Karyareksa, and Pertamina?

Await my special report on Indonesian PTA and chemical industry...my favourite topic.

Mitsubishi Chemical's PTA plants are located in four countries. Japan with 250,000 t/y, South Korea through Sam Nam Petrochemical Co (1.6 million t/y), Indonesia (650,000 t/y) and India (470,000 t/y). Besides the PTA, Mitsubishi also operates a PET film plant in Merak with installed capacity of 20,000 t/y.

Mitsubishi is the largest PTA producer in Indonesia. Other producers are:

- PT Polyprima Karyareksa = 480,000 t/y

- PT Amoco Mitsui Indonesia = 350,000 t/y

- PT Polysindo Eka Perkasa = 350,000 t/y

- PT Pertamina = 225,000 t/y

It brings the country's total PTA capacity at 2.1 million tones per year. With conversion factor of 670 kg of paraxylene to produce 1 ton of PTA, Indonesia needs at least 1.3 million t/y of paraxylene. The problem, Indonesia has only two aromatic centers producing paraxylene with combined capacity of 775,000 t/y leaving almost half the demand from import. So why Mitsubishi wanted to expand PTA plant in Indonesia without enough domestic supply of paraxylene? The new plant would bring Mitsubishi's capacity to 1.05 million t/y which translates to 670,000 t/y paraxylene consumption.

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India's ITNL in two Indonesia toll road projects, US$550 million

IL&FS Transportation Networks (India) Limited (ITNL) (previously Consolidated Transportation Networks Limited/CTNL), India's infrastructure giant, has secured investment approval from Indonesia's Investment Coordinating Board to invest in two toll road projects worth US$552 million.

CTNL is the partner in two companies, PT Pejagan Pemalang Toll Road Corporation and PT Pemalang Batang Toll Road Corporation. Partners in these companies are Indonesian PT Sumber Mitra Jaya and PT Punj Lloyd Indonesia (a subsidiary of Punj Lloyd Ltd (India).

PT Pejagan Pemalang Toll Road Corporation would build the 57 KM toll road connecting Pejagan and Pemalang with US$322 million investment, while PT Pemalang Batang would build the toll road connecting Pemalang and Batang with US$230 million investment, all in Central Java province. No information on who own PT Sumber Mitra Jaya.

But a blogger wrote to me that Sumber Mitra Jaya is owned by Pak (Mr) Gon (established player in Contracting business). They are in coal mining (Kideco), coal contract mining (Kideco, Berau, etc) and many other large projects. Pak Gon is an Indonesian businessman with Indian background. No wonder its office at Graha Irama owned by Indorama Group (another Indonesian group with Indian background).

Whatever. But ITNL's involvement could be considered the biggest investment from Indian companies in years.

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DBS posts 103% profit increase in Indonesia

PT Bank DBS Indonesia, a subsidiary of The Development Bank of Singapore (DBS), booked net profit of Rp114 billion last year, jumped 103% from Rp56 billion it booked in 2004.

According to its financial report published this morning, DBS Indonesia also recorded almost 100% growth in total assets from Rp5.23 trillion to Rp10.67 trillion, surprisingly due to massive growth of rupiah denominated deposits. The bank's rupiah and foreign currency loans also increased significantly last year.

DBS owns 99% shares in Bank DBS Indonesia, while the remaining shares owned by businessmen Edwin Soeryadjaya and Sandiaga Uno.

Temasek Holdings is listed among the ultimate shareholders of the bank. Temasek is also the ultimate shareholder of Bank Danamon and Bank Internasional Indonesia (BII). Temasek controls Danamon through Asia Financial (Indonesia) Pte Ltd (69.6%), and BII through Sorak Financial Holdings Pte Ltd (56.78%).

Danamon booked net profit of Rp2 trillion last year with total assets of Rp66.76 trillion, while BII's profit was Rp725 billion with total assets of Rp47 trillion.

Indonesia's central bank would issue new regulation on single presence in which one ultimate shareholder won't be allowed to own shares in two or more banks. This prompted speculation of merger between DBS, Danamon, and BII which would create a bank with combined asset of Rp123 trillion or around US$14 billion.

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Bumi Resources: Divestment & shares buyback

PT Bumi Resources Tbk finally announced formally its plan to divest shareholdings in five companies at US$3.25 billion and the future plans, including the US$250 million shares buyback with the proceeds.
Below are excerpts of Bumi Resources announcement published today in Bisnis Indonesia and Investor Daily:

Companies divested:
- Kaltim Prima Coal (KPC): A company with 28.17 million tones of coal production last year and total proven reserves of 525 million tones. Total revenue was US$1.07bn in 2005, jump from US$659 million in 2004.
- Arutmin Indonesia: A company with 16.75 million tones of coal production last year and total proven reserves of 253 million tones. Total revenue was US$519 million in 2005, increased significantly from US$388 million in 2004.
- Indocoal Resources (Cayman) Limited: A special purpose vehicle (SPV) company with US$161 million revenue and US$26 million net profit last year.
- Indocoal Kalsel Resources: A coal mining with no revenue and Rp55 billion loss last year.
- Indocoal Kaltim Resources: A coal mining with no revenue and Rp55 billion loss last year.

The buyer: PT Borneo Lumbung Energi, owned by Surjadinata Sumantri and Samin Tan. No detail information provided.

Price Tag: US$3.25 billion, well above the fair market value of US$2.04 billion to US$2.49 billion.

Payment: The buyer had deposited US$150 million in cash and would pay the remaining at the completion date of the transaction after deducting with working capital.

What to do with the proceeds: Develop oil and gas business, coal to liquid, upgraded bworn coal technology, venturing into other mineral resources such as copper through PT Citra Palu Minerals (acquired from Rio Tinto) and gold through PT Gorontalo Minerals, alternative energy, and electricity (to build 300-600 MW power plant in South Sumatra).

Buyback shares: Bumi Resources would buyback shares currently owned by public investors up to 10% of its total equity or maximum at Rp2.32 trillion (around US$250 million) or Rp1,200 per share. What to do with the shares bought back? Sell them later on at higher price, debt financing through equity-linked instruments such as exchangeable bonds, and MSOP/ESOP.

The New Look: After the transaction, Bumi Resources would have total assets of Rp33.65 trillion, most of it current assets of Rp32.3 trillion, liabilities of Rp7.62 trillion, and retained profit of Rp26.72 trillion. (These numbers are adjustment to the company's balance sheet as of December 2005).
The income statement would looks like:
- Revenue: Rp68 billion (US$7.6 million), against Rp15.92 trillion (US$1.7 billion) before divestment.
- Operating profit (loss): (Rp181 billion), against Rp2.65 trillion.
- Net profit: Rp25.39 trillion, against Rp1.22 trillion.

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Papua diarrhea outbreak & careless health officers

Tigor Silaban, chief of Papua province`s healh office, blamed careless officers for the dead of 32 residents of Jayawijaya district for diarrhea.

The death of those residents was inseparable from negligence of local community health centers and supporting public health centers` officials who seldom showed up at their work places.
As a matter of fact, it was easy to handle the disease like diarrhea. "If the health officials on duty are on their working places, the sicks will easily get health services and practically the disease will never take a high death toll," he told Antara yesterday.
Health care infrastructure, just like education, is the most important sector that needs bigger attention in Papua. That's why it's understandable if provincial government would allocate around 15 percent of the special autonomy fund for health sector development. Statistics shown us that 18 percent of Papua kids were in a very bad diet.

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Poor performance of sharia unit in Indonesian banks

In the last few years, almost all major banks in Indonesia established sharia units. It's rather a kind of euphoria if we take a serious look on their performance.

Sharia unit at Bank Danamon, the second largest private-owned bank in the country, for example, booked net loss of Rp31.98 billion last year against net profit of Rp615 million in 2004. Temasek Holdings is the majority stakeholder of Danamon.
At Bank Tabungan Negara, a state-owned bank, the unit posts net loss of Rp1.17 billion. The sharia unit of Bank Negara Indonesia (BNI), the second largest state-owned bank, managed to book net profit of Rp6.8 billion, but heavily dropped from Rp32.94 billion in 2004.
Bank Permata, controlled by Standard Chartered, also recorded net loss of Rp6 billion at its sharia unit.
Bank Niaga posts net loss of Rp1.23bn from sharia unit despite huge jump in revenue. BII, also controlled by Temasek Holdings, managed to cut the loss at sharia unit from Rp30bn to Rp14.7bn, but revenue slightly reduced.
But Bank Muamalat, a bank with full sharia principle in its operation, managed to book net profit of Rp156 billion, doubled from Rp74 billion in 2004. Islamic Development Bank (IDB) owns 28% shares of Muamalat, followed by Boubyan Bank Kuwait (21.28%), and Atwill Holdings Limited (15.32%).
BRI, the second largest state-owned bank, recorded impressive revenue growth in its sharia unit, but the net profit of Rp1.96bn is surely too small for the unit with total assets of Rp663.93bn, right?
Sharia banking in Indonesia was formally introduced in 1992 by the issuance of Act Number 7 on dual banking system. To support network expansion and to better encourage the development of Sharia banking in the country, Act No.7 was further amended through Act No.10/1998. An important change in this Ac is the opportunity for conventional banks to open Sharia unit and implement the dual banking system.
It seems that these conventional banks should wait few more years to reap the benefit of the Sharia principle as proved by Muamalat even though some banks might have established the unit simply for 'political protection' or marketing gimmick in the world's most populous Moslem country.
But that's not going to stop Abu Dhabi Islamic Bank (ADIB) to enter the sharia banking business in Indonesia. ADIB announced recently its plan to acquire Indonesian bank and transform it to a full sharia bank.

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Indonesia-US arms-sale conspiracy?

Indonesian military finally admitted its relationship with businessmen arrested in US for a conspiracy in arms-sale. They are, Hadianto Djoko Djuliarso and Ignatius Ferdinandus Soeharli, and Ibrahim bin Amran (Singapore citizen) and David Beecroft (British).
They are charged with trying to smuggle more than 882 sub-machine guns, 800 hand guns, 16 sniper rifles and almost 250 air-to-air Sidewinder missiles.
Kompas quoted Communication Chief of the Indonesia Air Force Sagom Tamboen saying Air Force has cooperation with Hadianto Djoko Djuliarso (40) under a company called PT Ataru Indonesia, for F-5 fighter jet's radar procurement. "That's it, only radar, not arms procurement," he said.
Hadianto, from my research, is the managing director of Ataru Indonesia. In a letter to Russian agencies early last month, Hadianto introduced Ataru as an agent for some industrial and aviation product. Below is Hadianto's letter published in the website www.airshow.ru.
....Recently also we have been appointing as one of registered vendor for our Indonesia Arms (Air Force, Army ad Navy). Recently we are mostly focusing in Air Force area. With our good performance by completing our contracts successfully inclusive of sold one VIP Boeing Aircraft to Indonesia Air Force and supporting by our aggressive marketing team that approaching in daily basis, we have been completing more than 15 contracts in the passed 2 years. Refer to our record to deliver a used VIP aircraft made our customer give us more attention and opportunity. We do believe we could develop you business opportunity in Indonesia. So herewith we would propose you to consider us as one of your sales arm for Indonesia Air Force. Refer to above matter, kindly advise us the possibility to get support for purchase and or repair of AL-31F engine for Su-27 Flanker that own by IDAF. Looking forward to hear best news from you soon. we would send immediately all the necessary legal document and authorization vendor from Indonesia Arms once you need it.
Best regards, PT. Ataru Indonesia Hadianto Djoko Managing Director .

It's clear from this letter that Ataru is not just dealing with radar, but arms-sale in general, even though in www.asianproducts.com Ataru claimed itself as manufacturer of blood circuit for artificial kidneys and other medical equipments.

But Foreign Affairs Ministry denied government's involvement in the transaction. What's actually happen in US?
Below is the article of Ken Kobayashi from The Honolulu Advertiser published Tuesday (April 11) under the title Arms-sale conspiracy claimed.

Two men were charged here yesterday with conspiring to export military aircraft parts to a company in Indonesia in violation of the federal Arms Export Control Act. Ignatius Ferdinandus Soeharli, also known as "Igna," and David Beecroft were charged with conspiring to export the items without a required license from the U.S. State Department. They were charged after they arrived here Friday and met with representatives from an unnamed U.S.-based company to discuss the transactions and also view samples of machine guns and military aircraft parts, according to an affidavit by an immigration and customs enforcement agent.
Soeharli arrived from Indonesia and Beecroft from Singapore, the document said. Undercover federal agents met with the two men as well as two others who were indicted by a federal grand jury in Michigan last week on charges of money-laundering and violating the same federal law, the affidavit said. The two men indicted by the grand jury are Ibrahim Bin Amran and Hadianto Djoko Djuliarso, according to the affidavit.
During the meetings here, Soeharli told representatives from the U.S.-based company he was the financier for the transactions, the affidavit said. The representatives also showed the men samples of MP-5 machine guns and later showed them military aircraft parts that were to be exported, the document said. Amran earlier said the company purchasing the military items was Ataru Indonesia, which was owned by Djuliarso, according to the document. Federal prosecutors here did not return calls for comment on the case.
The affidavit also said:
On Jan. 5, Amran asked the U.S.-based company for a quote on 882 Heckler & Koch MP-5 submachine guns, 800 H&K 9mm handguns and 16 H&K sniper rifles. Amran was quoted a price of $3.3 million and he said he wanted to buy and export the weapons even if he could not get a license.
On March 22, federal agents received confirmation that Djuliarso and Amran ordered various military parts, including a radar assembly transmitter, antenna, amplifier, track-gate error and lock-on detector, and gyroscope. Eight days later, the two sent $447,000 to the company as partial payment.
On Wednesday, Amran sent an e-mail to the company saying "everybody will be arriving on the same flight."
On Friday, the four men facing federal charges arrived at the airport. During a meeting Friday, Amran read off a request for a quote on how many parts for a machine gun he needed for his order.
On Saturday, the company representatives showed the four men facing charges MP-5 machine guns. The representatives also made clear that a license is required for exporting the items. The company representatives and the four men later viewed military aircraft parts that had been ordered.

I think, Indonesian military should explain the whole affair, right from the start of the appointment of Ataru Indonesia and other brokers for the sake of transparency. General beliefs, military is the most corrupt institution, but always manage to escape corruption charges. President SBY, a respected military figure, should proof that this belief is wrong.
Legislators had approved military budget for 2006 at around US$3 billion, 30 percent increase from last year, a huge amount of money that needs public scrutiny over how the military spend that.
Late last month, Indonesian Ambassador to Rusia Susanto Pudjomartono disclosed Russian offer of US$1 billion loan to Indonesia for Sukhoi fighter jets and other military equipments. The arms purchase will also include helicopters and submarines. A bigger team of defense officials were scheduled to visit Russia this month for further discussion.
President Susilo Bambang Yudhoyono plans to visit Russia in June to discuss defense cooperation and the purchase of more Sukhoi fighter jets (at least 12) from Moscow.
But South Korea and China have also made similar offers with Russia especially on submarine supply under a Indonesian Navy's plan to acquire 12 of them before 2024.

Back to the question, is the recent arrest of four businessmen a conspiracy of arms-sale? With whom? How about Indonesian legislator accusation that these guys were trapped by US officers?
Attorneys for Soeharli, Amran and Djuliarso declined on-camera interviews with KGMB9, but all said their clients will enter pleas of not guilty and plan to fight any charges against them.
Attorney Alvin Nishimura represents Djuliarso. Nishimura says Djuliarso is a registered purchasing agent for the Indonesian Air Force and he was merely trying to purchase items for the Indonesian government. Nishimura says Djuliarso was not trying to do anything illegal, but the indictment is specific.

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Teijin Indonesia posts US$29 million loss

PT Teijin Indonesia Fiber Corporation (Tifico) Tbk, a listed unit of Japan's Teijin Limited, reported net loss of US$29.89 million last year (January-December), almost doubled the loss of US$17.1 million in 2004 on poor margin and increasing financial burden.
According to its financial report published today, Tifico recorded total sales of US$272 million in 2005, slightly reduced from US$276 million in 2004 while the cost of goods sold increased from US$270 million to US$275 million.
The polyester staple fiber manufacturer then booked gross loss of US$3.4 million against gross profit of US$5.9 million in the previous year. As the company failed to reduce operating costs, it booked operating loss of US$13.4 million, four times the previous year.
To make things worse, Tifico's financial expenses increased sharply from US$4.3 million to US$8.4 million, resulting in net loss of US$29.89 million last year.
Teijin owns 65% shares in Tifico, followed by Tomen Corporation at 13.4%. Despite the poor performance in the last few years, Teijin decided to sustain the Indonesian unit. In a meeting with president Susilo Bambang Yudhoyono last August, Toru Nagashima, president director of Tifico even promised another US$50 million investment in the country to replace old machinery and establish a new power plant. The Japanese textile raw material giant had shut down its operations in many countries, including in the Philippines.
Teijin also has 30% share in PT Branta Mulia Teijin Indonesia, a joint venture in Indonesia with PT Branta Mulia Tbk, South East Asia's largest tire cord and tire yarn producer. The joint venture produces polyester for tire cord.
Teijin and US giant DuPont operates a polyester film manufacturer in Indonesia under PT Indonesia Teijin DuPont Films with 50.1% and 40.9% shares respectively.

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Forwarding porn emails, two years behind the bars

We sometimes get email with porn contents and love to forward it to friends, right? Well, you'd better be careful to do that in Indonesia once the cyber law deliberated. Police might caught you and send you to jail for two years.
As reported by Detik.com today, the cyber bill categorize the porn email forwarding as a crime. Legislators are currently debating the information and electronic transaction bill. Article 26 of the Chapter VII of the cyber bill stated, "anyone is forbidden to spread electronic information which contains pornography and or porn actions through computers or electronic system."
It's OK to receive a porn email, though! Well, if the article want to prevent Indonesian people from enjoying pornography, why not categorize as a crime as well for receiving porn emails? Isn't this a clear ambiguity of the cyber law when it comes to pornography?
IT observers and practicioners criticize the article saying it's not in line with the initial purpose of the cyber law to give legal protection on electronic transaction. They claimed the cyber law should not regulate such porn issues as the controversial anti pornography and porn action bill has a lot of specific articles to tackle that.
If the article would be approved, no more privacy in email, and that might be a breach to personal rights, becase the police would have access to our emails.
Cyber Law address the issues of virtual property and virtual persons; it covers rights of Net Citizens and regulates the cyber space for a peaceful and harmonious existence of the Internet citizens. But as some says, the biggest challenge before Cyber Law is its integration with the legacy system of laws applicable to the physical world.

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Govt to offload Permata and BII shares

PT Perusahaan Pengelola Aset, a state-owned company established to manage the assets previously controlled by Indonesia Bank Restructuring Agency (IBRA), would offload the remaining shares in two listed banks, Permata and Bank Internasional Indonesia (BII), Tempointeraktif.com reported yesterday.

Raden Pardede, PPA vice president director, said the company had secured government approval early this month. Govt through PPA holds 26.16% shares in Bank Permata and 5.52% shares in BII. PPA is about to appoint financial advisor for the divestments scheduled in second semester.
PPA also has shares in six other banks, 5.04% of Bank Central Asia (BCA), 10.5% of Danamon, 5.25% of Niaga, 2.64% of Lippo Bank, 28% of BTPN, and 6% at May Bank. PPA plans to divest these shares until 2008.
Government controlled majority shares of these banks through a massive recapitalization program that cost tax payers Rp660 trillion (US$70 billion) during 1998-2001 period. Government started the divestment with BCA to Farallon & Djarum in 2001, followed by Niaga to Commerce Berhad (Malaysia), Danamon and BII to Temasek Holdings (Singapore), Permata to Standard Chartered (UK) and Lippo to Khazanah (Malaysia).

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Malaysia's Nadicorp to invest in Indonesian transportation

Nadicorp Holdings, one of Malaysia's biggest conglomerates, has expressed its interest to invest in Jakarta's transportation system, Tempointeraktif.com quoted governor Sutiyoso after a meeting with Nadicorp executives today.
While no specific commitment made, Sutiyoso mentioned Nadicorp's plan to expand its business in Jakarta's busway and railway system connecting Kota Station in Jakarta and international airport Soekarno Hatta in Tangerang, Banten province.
Nadicorp is an investment holding company with a 23 operating subsidiaries engaged in various activities. Under the leadership of Dato' Mohd. Nadzmi Mohd. Salleh, Nadicorp has grown to become one of the largest private bumiputra (indigenous Malay) conglomerates today. Nadicorp has 5 main business units: Transportation, Manufacturing, Property & Plantation, Defence and other support services.

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Medco wins Block A from Exxon

PT Medco Energi Internasional Tbk wins the open bidding to acquire 50 percent working interests in gas field Block A offshore East Aceh at the North Sumatra Basin from ExxonMobil.

PT Surya Energi Raya (SER), controlled by media mogul Surya Paloh---an Acehnese, was reportedly competing Medco in acquiring Exxon stakes, but failed to secure financing.

Medco president Hilmi Panigoro said last year that the comapny would invest US$100 million to develop Block A in Aceh should it win the tenders to buy the concession from ConocoPhillips and ExxonMobil. Conoco owns another half of the production sharing contract and acts as operator.

Block A has estimated reserves of 450 BCF, but the carbondioxide content is high that will make the development cost expensive. Medco estimated that the area would be able to produce some 100 million standard cubic feet per day (mmscfd) at peak production.

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Shell to open five gas stations this year

Royal Dutch/Shell Group will open five new gas stations in Indonesia this year to be located in Jakarta. Shell currently operates three gas stations in the country.
While Shell is selling only non-subsidized fuels, starting next year the company would head to head with state-owned oil and gas PT Pertamina in the distribution of subsidized fuel as well.
Government is planning to push investors to build gas stations outside the Java Island should they want to distribute subsidized fuels. The initial plan was investor should build at least 20 gas stations outside Java Island to be eligible in the subsidized fuel distribution business.
Besides Shell, oil giants such as ChevronTexaco, Petronas and Gulf have expressed their interest in the subsidized fuel distribution.

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AKR Corporindo acquires four China assets

PT AKR Corporindo Tbk, one of Indonesia's largest bulk chemical distribution company, acquired four assets in China with total investment of RMB70.8 million.
According to its letter to Jakarta Stock Exchange today, AKR acquired Guigang Port Company, Guigang Minyun Port, Guigang Lumberyard, and Guigang Honglian Port Co Ltd.

AKR Group is one of Asia Pacific's largest manufacturer of sorbitol & starch-derivatives with plants located in East Java and South China.
The consolidated revenues were Rp 2.83 trillion for the year ended 31st December 2005 compared to Rp2.19 trillion during the year ended 31st December 2004, representing an increase of 29.3%.
This is not the first China acquisition for AKR. Back in 2004, AKR acquired 100 percent shares in Khalista (Liuzhou) Chemical Industries Ltd, China.
In the domestic market, AKR entered the fuel oil distribution business early last year with investment of Rp30bn out of Rp100bn to modify four liquid chemical tanks into oil tanks in four locations in Java Island.
AKR Corporindo had signed a contract with a unit Royal Dutch/Shell Group to transport fuel to up to a dozen Shell-branded gas stations that the petroleum giants plans to open in Indonesia. AKR is reportedly discussing with other oil giants such as BP, Petronas, and Total SA. AKR has also been supplying fuel to industries in East Java since October 2005.

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Lippo Karawaci acquired S$329 million Singapore property

The largest property company listed at Jakarta Stock Exchange PT Lippo Karawaci Tbk acquired a 159,075 ft site in Kim Seng Road, Singapore, at S$329 million, far above its book value at S$59 million.

According to Straits Times (April 11), Lippo bought the site from OCBC Bank. Lippo is also a hot favourite to buy OCBC's shares in retailer Robinson. Lippo Karawaci's market cap by the end of 2005 was US$540 million.

Lippo's competitor in the Robinson deal is PT Mitra Adi Perkasa (MAPI) Tbk, a listed retailer owned by Boyke Gozali and Sjamsul Nursalim.

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The Drunken Republic show & TV business competition

Every Monday night, I enjoy the TV show aired by Indosar titled Republik BBM (Benar Benar Mabok), literally means The Really Really Drunken Republic. Commedian Taufik Savalas act as president and Ucup Keliek as the vice president. Ucup is similar to Ucu, nickname of VP Jusuf Kalla. This is really a funny show. Look at the picture. Mimmicking president Susilo Bambang Yudhoyono and Vice President Kalla. The difference, surely, the president in the show shorter than the VP, while SBY is taller than Kalla.

Communication expert Effendi Gazali is one of the panelists in the TV show along with Wimar Witoelar, former spokes person of Abdurrahman Wahid administration.
Yesterday, Gazali informed the viewers that Indosiar management had asked the stoppage of the program after a meeting at VP Jusuf Kalla's resident on Sunday morning. Gazali said two Indosiar competitors expressed their objection on the program.
Several TV stations owners attended the meeting. They were Anthony Salim (Indosiar), Chairul Tandjung (TransTV), Surya Paloh (MetroTV), Abdul Latif (Lativi), Aburizal Bakrie and Anindya Bakrie (ANTV).
But Kalla's spokes person Mukhlis Hasyim denied the report saying VP Kalla even wanted the protesters to express their criticism through TV shows like Republik BBM.
Well, according to the law, the VP has no rights to ban such TV show. But the Broadcasting Commission has that. The VP must be drunk enough to do such things. Viewers are dizzy with such pressure and should rally behind Indosiar to keep the show alive, right?
I hope we could still enjoy the show tonight. According to the schedule of program, tonight's episode would be about the cabinet meeting to discuss the naughty neighboring country. I bet this is about the recent Australia-Indonesia diplomatic tension.
Political analyst J. Kristiadi from CSIS will appear in the show tonight as a friend of Gazali (president's advisor).
"The issue of stopping the show is a mere business competition between TV stations," Kristiadi said to Detik.com.
How healthy is the TV business?
Indonesia has four TV stations with national coverage which struggling financially. Lativi, for example, has huge bad debts to Bank Mandiri. Metro, TV7 (Kompas Group), and state-owned TVRI are also reportedly in financial trouble. Indonesiar booked net loss of Rp148 billion last year, in contrast to 2004 net profit of Rp125bn due to significant drop in advertisement income.
RCTI, on the other hand, booked net profit of Rp148bn last year, unchanged from the same amount it booked in 2004. SCTV also recorded net profit of Rp65.4bn, improved from Rp52bn in 2004.
I have no information on two other major TV stations, TransTV (owned by Chaerul Tanjung) and ANTV (Bakrie & Rupert Murdoch).

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Rio Tinto to invest US$1bn in Sulawesi nickel mining

Energy Minister Purnomo Yusgiantoro confirmed Rio Tinto Group's plan to invest US$1 billion in a nickel mining project in Sulawesi Island.
Rio Tinto is operating gold and silver mines in East Kalimantan through its subsidiary company PT Kelian Equatorial Mining (KEM). Rio owns 90% shares in KEM which produces 500,000 ounces of gold per year. But due to depleted resources, Kelian mining will no longer in operation by next year.
The World's no.3 mining company had been exploring Central Sulawesi through its another subsidiary PT Citra Palu Mineral for its rich resource of gold, coal, nickel, oil, gas and chromium. Citra Palu obtained a work contract from government in 1997 to engage in mining on a 561,050 hectare area.
Citra Palu's exploration activities were subject to protests from the community of Poboya who rejects the company's plan to turn a protected forest park into an open-cut mine. Indonesian environment and human rights NGOs have formed a coalition to oppose mining in protected forest areas, but somehow the government relaxing the regulation and pave the way for resumming such activities in the name of economic growth.
Rio Tinto is studying a laterite deposit containing nickel on Sulawesi Island, Purnomo said. Rio Tinto and central government officials are in Sulawesi to discuss the plan with regional authorities.
Rio Tinto is considering the venture after nickel prices almost quadrupled since 2001 on demand from Chinese steelmakers. Indonesia has about 16 percent of the world's nickel in laterite, which is more costly to process than other deposits. A global commodities boom has increased Rio's profit eightfold in five years, and may prompt $9 billion of spending on mines.
Rio Tinto and Freeport Indonesia have a joint venture agreement that entitles Rio Tinto to 40 per cent of ore mined as a result of the expansion of Grasberg, Papua in 1998 which Rio Tinto helped to finance.

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Govt to give US$1.4bn to Papua, what to do?

Despite critics from parliament over a partial solution from central government with the plan to disburse US$1.4 billion to Papuan, I have to congratulate the president for his immediate response to the issue of fairer share of the region's exploited resources.
This is not a kind of generosity of central government. Papua deserved it, and may be higher than US$1.4bn if central government conduct a comprehensive audit on all its income from the region.
But what's next?
Well, considering the amount the Papuan normally gets in the past, US$1.4bn is a huge sum of money to spend. Without proper plan of how to spend, I'm afraid the money would go up in the smoke, just like in the past.
If I were the governor of Papua or West Irian Jaya, I'll put education on top of the list of spending, followed by health and infrastructure development, and good governance. Some might suggest Papuan to use the money to buy 10% shares of copper and gold mining company PT Freeport Indonesia. But I don't think this is a wise choice.
Education, health, and infrastructure are the most important issues to be tackled to improve Papuan standard of living. Don't expect a quick fix. Good governance is paramount to combat rampat corruption at the local administration level in the spending of such a huge fund.
Improving the quality of life is not just about economic issue. Central government should seriously handle social issues, especially regarding identity or culture oppression, and military issues to stop further oppression.

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Middle East's growing investment apetite in Indonesia

Indonesia is the country with largest Moslem population in the world. But it's not easy to bring in funds from rich countries in Middle East. The development in the last few months, however, might reflects a growing apetite among the Middle East investors on Indonesia.

Emirates, for example, announced its plan to cooperate with Indonesian flag carrier Garuda Indonesia airline. An investor from Dubai, Abu Dhabi Islamic Bank, was also reportedly planning to acquire small-size banks in the country and convert it to a sharia bank.
Kuwait Finance House would do the same. The company would invest US$25 million to acquire small-size bank and convert it to a sharia bank too.
So far, Bank Muamalat, the first sharia bank in Indonesia, could be considered the biggest Middle East investment in Indonesia. The bank has total asset of Rp7.42 trillion as of December 2005, grew significantly from Rp5.2 trillion in December 2004. The bank booked net profit of Rp156 billion last year. Islamic Development Bank hold 28% shares in the bank, followed by Boubyan Bank Kuwait (21.28%), and Atwill Holdings Limited (15.32%).
Egyptian Orascom, the largest cement producer in Middle East, is preparing to build two cement plants in Central Java with investment up to Rp5.2 trillion (US$540 million).

Late last month, Jakarta Governor Sutiyoso flew to Dubai, Uni Arab Emirates, to meet executives of Dubai Bank Islamic for a proposed US$500 million monorail project funding.

Late last year, for the first time, executives of six major financial institutions visited Indonesia in one team. They were from Islamic Development Bank, Bank of Sharjah (Dubai), National Commercial Bank (Arab Saudi), Saudi Economic and Development Company, Blue Star Group, and Amlak Finance (Uni Emirat Arab).

IDB executive claimed that after WTC bombing in New York (9/11), Middle East investors pulled out 1.4 trillion US dollars from USA and Europe.

Sultan Kamal Bawazier, investor from Saudi Arabia, involved in the US$250 million financing of airstrip project in Kutai Kartanegara (Kukar), East Kalimantan. Kukar is one of the richest regencies in Indonesia, home to major oil, gas, and coal mining operations.
And just days before president Susilo Bambang Yudhoyono start a state visit to some Middle East countries, state-owned PT Bank Negara Indonesia (BNI) Tbk announced its plan to work with Kuwait investor to acquire Indonesian bank and conver it to a sharia bank.
President Susilo is scheduled to visit Saudi Arabia, Kuwait, Qatar and Uni Arab Emirates next week in a move to lure in more investors from Middle East countries. If history counts, it seems not easy to attract FDI from Middle East which is long-term investment in nature.
Vice President Jusuf Kalla has better idea. Last month, he asked tourism board in Bali to bring in more visitors from Middle East to the Island. Hm...bold idea. Early success is the decision of Partai Bintang Reformasi (Islamic party) to have its national convention in the beautiful island this week.

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Playboy Indonesia #1, a smash hit

Have you seen the first edition of Playboy Indonesia edition? I bet some of you bought that, right? I stopped by at a newsstand in Blok M this afternoon right after Tempointeraktif.com reported that the much-awaited-yet-controversial magazine has been published and distributed safely. No major protest like yesterday's workers strike against the revision of Law No.13.

Actually, all I can tell you (or you should tell me) about what's inside the magazine is mainly based on news reports. The AFP took the picture of the first edition today with actrees Andhara Early as the 'Playmate' with the main title Always Happy Early. I was confused with the title until I read the news on Early as the cover girl in full Javanese dress kemben. No nude pictures? No!
Detik.com explained it better. The popular online news disclosed sexy pictures of Andhara, a divorcee and mother of Magali. Andhara got her father's blessing first, though. But the pictures, as explained by news reports, are just like those already published in other magazines here. Sexy? Sure!
It's a smash hit in Tangerang, western part of Jakarta. The publisher, with initial investment of around US$300,000, was optimistic the 3,000 copies printed would be sold out at Rp40,000 (around US$4.5) a copy. But if you're expecting nudity, save your money.
Even so, Indonesian Ulemma Assembly (MUI) insists the magazine falls into pornography category simpy because the name of Playboy as 'the icon of pornography', no matter the publisher claims of 'no nudity inside'. It's a dilemma for MUI because they must see first to make such judgement, right?
Well, I have to buy one, hopefully I'll be lucky enough to get a copy of the magazine. So, I should stop now. For those who want to see more pictures, just surf Yahoo! and click Playboy Indonesia in news section.
I just want to congratulate the publisher for such a brave decision at the time of controversy surrounding the anti-pornography bill.

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Merapi, The Sleeping Volcano

The increasing activity of Merapi volcano has been recorded on Tuesday. Tempointeraktif.com reported few hours ago that authorities have raised the status of Merapi volcano from normal to attention as the magma level increased sharply from 1,000 meters to 500 meters below the peak.
Merapi is located 30 km north of Yogyakarta. Of the 67 eruptions recorded, eleven resulted in fatalities. It is tall (2.8 km high) and has steep slopes. Hot ash-clouds, volcanic bombs, ash fall and lava flows are named primary dangers. Other danger during and following an eruption are called secondary danger, which includes lahars. The most dangerous effect of the Merapi eruption is what the scientist called a pyroclastic flow. Whereas lahar are particularly feared as it can traveling long distance.
The risk of Merapi volcano becomes higher because people living up to an elevation of 1200m. Even, some villages are located at an elevation of 1700 m. For illustration, at an elevation more than 500m, there are about 32 villages with a population of 258.200, with a density of 690 per km² and a population growth of about 3 %. This means that the risk will be high.

Like all volcanoes, Merapi has eruptions of different sizes. Small eruptions happen every 2-3 years, bigger ones every 10-15 years, and very large ones every 50-60 years. The biggest eruptions occurred in the years 1006, 1786, 1822, 1872 and 1930. The 1006 eruption spread ash all over the central part of the island of Java.

While Indonesia contains more active volcanoes than any country on Earth, scientist recorded Merapi as the most active volcanoes (out of 130) in the country and has had at least 12 eruptions that killed people. The name Merapi means Mountain of Fire. The volcano is considered sacred and every year a priest climbs to the top to make an offering.
The latest eruption was on February 10, 2001 when Merapi's status was changed to the maximum of Alert Level 4. The eruption produced a continuous major pyroclastic flow seven km to the River Sat and 4.5 km to the River Lamat. The flow lasted about 2.5 hours, and the ash plume spread 60 km to the east. No fatalities reported, but thousands of people were evacuated.
Stronger eruption was recorded in January 1997. Thousands of people were evacuated. The 1994 eruption killed 69 people.

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Papua might follow East Timor

Many people in Indonesia believes that Papua will never be an independent nation like East Timor. That was also general beliefs in the country prior to the 1999 referendum in East Timor. We took for granted the leaders' opinion that Indonesia had done its best to make sure people in East Timor were happy enough to be the part of the nation-state until the plebicit shown us the opposite.

Could that happen to Papua? I'm not sure, but that's an open 'might'.

Let me give you some latest information that might help answering the question.

First, Papua is no longer a province. We have two provinces, Papua and West Irian Jaya (Irjabar), with various impacts for Papuans future. Most of oil and gas operations, including the US$3 billion Tangguh LNG project developed by Beyond Petroleum (BP), China's CNOOC, and Japan companies, are located in Irjabar. Meanwhile the giant mining operation of PT Freeport Indonesia is located in Papua province.

Second, as a result of the the first, Papuan would have two center of political powers. One in Jayapura, the capital city of Papua and the other in Sorong (Irjabar). Election of governors in both provinces have just been completed. Abraham Actovianus Atururi unanimously won the election in Irjabar. Atururi, candidate from PDI-P, demolished Yorris Raweyai (candidate from Golkar Party). Meanwhile, Barnabas Suebu---also the candidate from PDI-P, won with thin margin over Lukas Enembe from Golkar Party, but the formal announcement pending Supreme Court decision in Jakarta.

Third, suppose that two provinces in Papua finally have leaders of both 'nationalist' parties (PDI-P)---strongly oppose any independence movement---can we conclude that would ease the independence movement in Papua?

We have somewhat 'loyal' leaders in East Timor to Jakarta rule, but people decided to be an independent nation, right?

Fourth, international attention on Papua would surely increase, not the other way around. After the 43 asylum seekers safely arrived and welcomed in Australia, another group entered the territory yesterday. Australia was haven for independent movement activist from East Timor. Papua might follow that. Well, many times during Soeharto years the foreign corps stated that they're supporting the unity of Indonesia when they were encountered with the question of East Timor. So, it's just too naive to simply feel secure when so many leaders from different parts of the world, including George Bush, Tony Blair (a friend call him Bliar), or John Howard pledged their support for Indonesian unity on the question of Papua issue.

Fifth, addressing the Papua issue simply with pouring more money through Special Autonomy scheme might end up with big failure as what we did in East Timor, if we can't win Papuan's heart. Nationalism sentiment in Jakarta is meaningless for those who has no proud at all on this nation. The more we blame others in Papua issue, the likely Papuan will find new friends and a new nation.

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Tempo Scan profit dropped 8.5%

Pharmaceutical and consumer goods company PT Tempo Scan Pacific Tbk booked net profit of Rp296 billion (US$30 million) in 2005, down 8.5% from Rp323 billion (US$35 million) in 2004 on slashed margin.
Tempo Scan, according to its financial statement today, recorded total sales of Rp2.497 trillion (US$254 million) last year, grew slightly from Rp2.37 trillion in 2004. As the company's gross profit almost unmoved to Rp1.08 trillion (against Rp1.07 trillion) and operating expenses grew significantly by around 8 percent, the operating profit then reduced to Rp353bn (Rp382bn in 2004).
With assets of Rp2.345 trillion by the end of 2005, it's profit margin not bad at all. Besides, almost all consumer goods producer feel the heat of slowdown in consumer spending following the fuel price hike and increasing interest rate last year.

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Bimantara's profit less than RCTI, drop 31%

Holding company PT Bimantara Citra Tbk, once the flagship of Soeharto family business, booked net profit of Rp135.99 billion last year, smaller than one of its subsidiaries RCTI (TV station) at around Rp146 billion.

The company's 2005 profit also decreased significantly by 31% from Rp199 billion in 2004, but it booked operating profit of Rp119 billion against operating loss of Rp94 billion in 2004.

Bimantara controls majority shares in three TV stations (RCTI, TPI, and Global TV) and some printed publication (Seputar Indonesia, Genie tabloid, and Trust magazine).
But the company is struggling with telecommunication business. Last year Bimantara planned to divest all shareholdings in Mobile-8 cellular operator. Sinar Mas Group reportedly had interest in acquiring Mobile-8 but later on pulled out. Recently Bimantara has been trying to sell some shares through initial public offering (IPO).
According to its financial report published this morning, Bimantara recorded total revenue of Rp2.276 trillion, increased significantly from Rp1.845 trillion in 2004. Bimantara has total asset of Rp7.42 trillion as of December 2005.
Bimantara has three core businesses: Media & Broadcasting, Transportation & Logistics, and Telecommunications. Meanwhile, subsidiary companies beyond the three core business lines were placed in Investments Portfolio.

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Bumi Resources profit grew 13%

PT Bumi Resources Tbk, parent company of two major coal producers PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported net profit of Rp1.222 trillion (US$125 million) last year, a 13% growth from Rp1.079 trillion (US$120 million) in 2004.

According to its financial report published this morning, Bumi recorded total sales of Rp15.92 trillion (US$1.63 billion) last year, jumped significantly from Rp9.42 trillion (US$1.05 billion) in 2004.

But the company, closely linked to Bakrie Family, booked operating profit of Rp2.65 trillion, only slightly improved from Rp2.45 trillion in 2004.
Bumi has total asset of Rp16.44 trillion (US$1.7 billion) by the end of 2005. It is in the process to divest all the shares in KPC and Arutmin to PT Borneo Lumbung Energi, a company owned by Renaissance Capital with full financing support from Credit Suisse First Boston (CSFB).
While the total transaction was initially put at US$3.2 billion, some investment bankers said recently that the acquisition price might be around US$2.5 billion (including debts). The transaction is pending shareholder's approval expected next month.
Without KPC and Arutmin, Bumi Resources will be a shell company without key assets, like the old days. Bumi, with energy assets in Yemen, was a property company when it acquired Arutmin with financing support from Bank Mandiri and then KPC with CSFB financing.
The management claimed that after the divestment, Bumi will be merged with oil and gas company PT Energi Mega Persada Tbk, also closely linked to Bakrie Family, sometimes in July. The management's early call on US$3 billion coal to liquid project with, among others, SASOL had been denied by the South African giant synthetic oil company.

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It's SBY & JK, not SBY-JK

Partai Demokrat, a party established by president Susilo Bambang Yudhoyono (SBY), claimed the incumbent would run for the second term in 2009 election with new partner as the vice president, The Jakarta Post reported today.
The party executive argued vice president Jusuf Kalla will likely run for presidency for Golkar Party, the biggest party in the House of Representative (parliament). He claimed SBY has screened out around 10 candidates for VP.
The early sign of break-up of SBY-JK, who won unanimous votes in 2004 election, appeared in the months of public debate over cabinet reshuffle and the Aceh peace deal signed in August 2005.

While JK formally denied his plan for presidency, most politicians believe Golkar would promote him as the chairman to compete with SBY.
It's still three years away. But people starts calculating the chances of SBY, JK, Megawati, and other possible candidates. And their respective VPs. What an early call from Partai Demokrat.
We have precedents already. Vice President Hamzah Haz decided to run for presidency when president Megawati chose Hasyim Muzadi as her running-mate in the 2004 election. And both lost the race to SBY-JK.

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Medco profit only slightly increased

In contrast to other oil and gas companies, PT Medco Energi International Tbk booked almost unmoved profit at US$74.7 million last year against US$73.8 million in 2004.
According to its financial report published today, Medco recorded significant increase in sales from US$550 million to US$620 million and operating profit of US$239 million (against US$179 million in 2004), but the company booked US$34 million losses in swap transaction and significant increase in interest payment (US$48 million against US$37 million).

Medco has total asset of US$1.54 billion by the end of 2005.

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Indonesia vs Australia in cartoons: Shifting the core issue

On Monday Indonesian newspaper Rakyat Merdeka ran a front-page caricature showing Mr Howard being mounted on Downer with the Prime Minister saying: "I want Papua!! Alex! Try to make it happen."
Mr Howard dismissed the Indonesian cartoon, although Mr Downer described it as grotesque and "way below standards of public taste".

On Friday, The Australian published the counter cartoon with Indonesia president SBY riding a black man (symbol of a Papuan, the focus of diplomatic tension) saying 'Don't take this the wrong way' with foot note of 'no offence intended' . Indonesia government commenting on The Australian cartoon as a disgusting media war and below standards of public taste. So, both sub-standard cartoons!
These cartoons managed to divert the focus of Papua issue, justice for Papuan. Indonesia government, instead of blaming Australian and the 43 Papuan-asylum seekers, should ask itself of whether the revenue from Papua's mining, fishing, oil and gas, or forestry operations have been returned fairly according to the Special Autonomy Law.
Local politicans should also start with auditing the implementation of special autonomy for Papua, not the rhetoric on Freeport. I'm sure Freeport might have committed wrong-doings in tax, environmental, or real production of copper, gold or silver. Indonesia surely has every authority to conduct the comprehensive audit on these issues. And then we could summon Freeport and renegotiate a better deal, especially for Papuan.
The cartoon issue and the diplomatic tension between Indonesia and Australia should be treated as secondary and derivative issue than the justice for Papuan.
That's why I supported an analyst at local investment bank who is willing to conduct a research on Freeport's financial report, tax issue, and royalty system applied to forestry, fishery, and mining operation in the eastern most province.
"I just want people have better understanding about what's going on from the financial perspective. My heart is with Papuan. I just don't want politicians keep fooling them around," he said last Wednesday.
Great effort, isn't it?
Link to previous articles:
1) Fairer share of Freeport
2) Freeport Politics
3) Timber Barons
4) Mining Companies
5) Oil and gas players in Papua
6) Decentralization of corruption

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