Arwin resigned, Rinaldi the new CEO

Shareholders finally appointed Rinaldi Firmansyah as the new CEO for PT Telekomunikasi Indonesia (Telkom) Tbk after Arwin Rasyid resigned from the post, Detik.com reported. Other directors, Garuda Sugardo, John Welly, and Guntur Siregar also resigned.

So, Telkom's new BOD line-up is as follows:
CEO: Rinaldi Firmansyah (former CFO)
Director for Network: I Nyoman GW
Director for HR: Faisal Syah
Director for consumer: Ermady Dahlan
Director for Enterprise & wholesale: Arief Yahya
Director of finance: Sudiro Asno
Director for compliance & risk: Prasetyo
Chief Information Technology: Indra Utoyo
Board of Commissioners: Reinstalled & extended till March 2009. WOW!
So, can we conclude this is a big win for Tanri Abeng's gang?
"Arwin actually tried to do good things to clean up Telkom. But you know there are people inside & outside the company that losing out the cakes. They cornered Arwin and kicked him out completely so they could resume their activities," one Telkom executive said.
"It's clear the reshuffle at Telkom is a result of high politics at play. Rinaldi is good, but don't ask whether he is clean or not. Don't look that way. You gotta look at it as part of political deal," an investment banker said.
"The fact that Tanri Abeng's team is firm in their position clearly shown the political deal," an analyst said.
But Arwin has been regarded as President SBY's man. How come that the president let him go while VP Jusuf Kalla's man Tanri Abeng is maintained there until 2009?
"Well, we can't say whether Rinaldi is the president's man or VP's gang. He could probably the man of both guys. He may also has established relationship with MSOE Sugiharto during Bahana years when Sugiharto was CFO at Medco, while Bahana was the advisor. So, we can't simply conclude that way," one political analyst said.
Hm...two years before election, everybody's looking for something!

READ MORE!!!

Kiskenda dropped, it's Rinaldi Firmansyah?

Latest rumor on Telkom CEO, it's not Kiskenda as I posted last night. President SBY, upon the request of Minister of Finance Sri Mulyani Indrawati, finally picked finance director of PT Telkom Tbk, Rinaldi Firmansyah, as the new CEO of Telkom to replace Arwin Rasyid. Kiskenda was tipped as the strongest candidate, but dropped in the last minutes of high level discussion.

People close to the SBY's inner circle said, initially Kiskenda was the front runner because of his track record at Telkomsel. But Sri Mulyani managed to persuade SBY to select Rinaldi instead. The formal announcement would be made very soon after the shareholders meeting in the couple of minutes.
Below is Rinaldi's CV:

PERSONAL DATA
Name : Rinaldi Firmansyah, CFA, MBA, Ir.
Place and date of birth : Tanjung Pinang, 10 Juni 1960
E_mail : rinaldi_f @telkom.co.id
EDUCATION:
•Chartered Financial Analyst (CFA) – AIMR, Charlottesville, USA, 1998
•Master of Business Administration (MBA) – IPMI Jakarta – Indonesia, 1988
•Graduate of Electrical Engineering (Ir) – Institut Teknologi Bandung (ITB),1985
WORKING EXPERIENCE
- PT Telekomunikasi Indonesia, Tbk. (TELKOM), 2004-2007, Finance Director/CFO
- PT Bahana Securities, 1997-2003
- PT Tirtamas Comexindo (holding company of Hashim Djojohadikoesoemo), 1991-1997
- Citibank, 1988-1991

AWARD
- Best Chief Financial Officer in Indonesia- Asia Money Polls 2004
- Award for highest score during the examination of CFA level – I 1996
Preparation program – IPAF
- The University of Western Ontario Award of Outstanding Performance
1988 in Business Analysis Course – IPMI

ORGANIZATION EXPERIENCE
President, Asosiasi CFA Indonesia (ISIP)
Member of Endowment Fund Committee – Ikatan Alumni ITB, 2003 – present
Member of Boards – Ikatan Alumni Elektro ITB, 2003 – present
Member of Disciplinary Committee – BEJ (Bursa Efek Jakarta), 2003
Head of Research and Development (LITBANG) – APEI, 2002 – 2003
(Asosiasi Perusahaan Efek Indonesia)
President, IPMI MBA’s Class of Eight 1988
Head of Training, Merpati Putih Martial Art Organization – Bandung, 1982 – 1984

READ MORE!!!

JSX meltdown, shaky deals

JSX composite index dropped almost 100 points this morning on what some say the effect of China meltdown. It has rebounded before the closing of first session at 1,706, but still a drop of around 60 points. What are the impacts of the meltdown to major divestments at Bumi Resources (KPC & Arutmin) and Energi Mega Persada (Kangean block)? Divestments were expected to raise a combined USD1.35 billion. But do they still have the apetite to buy at that level?

READ MORE!!!

Joke of the day: City adm to acquire Garuda

When I read The Jakarta Post article; Jakarta legislative council is urging the city admnistration to purchase a stake in ailing flag carrier Garuda Indonesia, I can't help to raise a question: Why would the city invests Rp3.2 trillion in the airline business while the city needs to fix the poor public infrastructures or clean up the city's muddy-smelly rivers?

But even if the administration would invest in Garuda, I wouldn't be surprised. As the Post reported, since Sutiyoso first came to power in 1997, his administration has injected Rp2.7 trillion in 62 city-owned companies while these companies only contributed 1.5% of the city's total revenue last year.
Look at how the council's economic commission head Nurmansjah Lubis (Prosperous Justice Party/PKS) argued the rationale behind the Garuda move; "it would be a previlege for Jakartans to own the national airline an we are sure that it would make a great contribution to the city budget."
First of all, I doubt the councilor really read Garuda's financial statement. It would take years if not decade for the company to make profit.
Second, I think Jakartans would prefer to have subway train than own stakes in Garuda.
Mr Nurmansjah's concern on Garuda is legitimate. But I think that's not we, the Jakartans, need the most. It's like Jakarta 'senator' Marwan Batubara (also from PKS?) who actively waged nationalism sentiment in Cepu oil and gas block dispute. Marwan's concern on Cepu is also legitimate, but I don't think Jakartans elected him as their 'senator' to talk about Cepu in East Java while he said nothing of the current floods that punished Jakartans for almost a month.

READ MORE!!!

Kiskenda, new Telkom CEO front runner

President SBY as the chairman of Tim Penilai Akhir (TPA or Final Assesment Team) has reportedly picked Kiskenda Suriahardja, CEO of Telkomsel, as the new CEO for PT Telekomunikasi Indonesia (Telkom) Tbk today, people close to The State Palace said. Kiskenda would be formally proposed as Telkom CEO to replace Arwin Rasyid in a shareholders meeting Wednesday. But things could change as other members of TPA proposed Rinaldi Firmansyah, finance director of Telkom, as an alternative candidate.

Kiskenda is one of the four candidates proposed by Ministry of State-Owned Enterprises to TPA. Other candidates are Garuda Sugardo (deputy to CEO of Telkom), Sarwoto Atmosoetarno (Head of Infrastructure Division at Telkom), and Rinaldi Firmansyah (finance director of Telkom).
"Except that President would change his mind," he reminded the situation when Rasyid was appointed in June 2005. That time, Garuda almost got the driving seat with strong support from VP Jusuf Kalla.
Kiskenda was appointed CEO of Telkomsel, a subsidiary of Telkom, in March 2005. He was the head of Telkom's Greater Jakarta operation prior to the promotion.
Telkom's strong workers union (with 25,000 members) had suggested to MSOE Sugiharto to give priority to candidates from inside the company.
Other strongest alternative candidate is Rinaldi, currently the CFO.
As for Arwin, he has been tipped as the CEO for Indosat, the second largest telecommunication provider behind Telkom which is controlled by Singapore's Temasek Holdings.

READ MORE!!!

The President's bad aura & the curse of betrayal

More and more people down there believe on what the soothsayers said the president's bad aura when commenting the country's continuous misseries & disasters. Some say it's a curse of the leaders tendency to get their power with betrayals. Most of us would not believe, or may say it's bullshit, but some believe in that and we can't simply discount as part of the political game. What?

"Most of my friends believe the curse of the leaders' betrayals. We've never experienced that before," a hair dresser said.
"The president is a nice guy. But somehow, my colleagues believe on his bad aura behind all of the disasters," my taxi driver said this morning.
I remember last Saturday when I had foot therapy, the massaseur told me of how his friends started to believe the soothsayer's views.
I wonder whether some politicians have taken benefit out it. Most well educated people would not buy. "But you have to remember, when it comes to politics, it's not about how many educated people voted for you. It's about how many people, educated or uneducated, voted for you," a friend said.
I tried to ask three executives about the curse, bad aura, and disasters. All of them are well educated. "I don't believe. But people down there believe, and politicans might take that opportunity. Off course I would not vote somebody based on the aura thing. But you can't ask people not to consider that mysticism'" one of them said.
Sri, a nurse at one of clinic in Jakarta, told me that "I voted for SBY. But I'm afraid if I vote for him again," she said and frankly admitted how she share the mysticism.
She just didn't care when I tried to explain how the mother nature sometimes angry and that's nothing to do with someone's aura.
It's like talking about how superstitious things have kept Soeharto in power for more than three decades. Or those conglomerates who go to Gunung Kawi and give offerings as thanksgiving, things that considered odd for those who claim themselves 'rational human being'.
We just can't discount such perception in parts of our society. And it's a political communication challenge for the president's inner circles.

READ MORE!!!

Corporations performance so far (2)

Three banks have published their 2006 financial statement today. Bank Permata (controlled by Standard Chartered), Bank Niaga (Khazanah Berhad), and Bank Kesejahteraan Ekonomi (Recapital Advisors has 21% shares) recorded profit growth of 5.6%, 18%, and -13% respectively.

Bank Permata's total asset as of Dec 2006 was Rp37.7 trillion (against Rp34.59 trillion in Dec 05), while Niaga at Rp46.45 trillion (against Rp41.36 trillion). Both banks recorded significant increase in net interest margin but like other banks, they also booked higher provisions on asset write-offs. Both banks reported significant increase in expenses for human resources with Niaga at 42%.

READ MORE!!!

Mitsubishi acquires 50% Kangean Block from Energi Mega

Japan's Mitsubishi Corp is scheduled to sign sales & purchase agreement (SPA) to acquire 50% participating interest in Kangean Block from EMP Kangean, a subsidiary of listed energy company PT Energi Mega Persada Tbk at around USD360 million Tuesday, Feb 27. EMP will use the proceeds to reduce its debts.

"The initial schedule for the signing of SPA was Monday night. But there are some issues to settle," an investment banker close to the deal said.
Few weeks ago, KUPFEC from Kuwait was predicted to win the divestment. "KUFPEC was aggresive but Mitsubishi submits better offer," he said.
Mitsubishi is one of the most aggresive energy investors in recent years. The company is also in the short list of investors to acquire 30% shares in KPC and Arutmin Indonesia, both are subsidiaries of Bakrie-controlled PT Bumi Resources Tbk.
Mitsubishi is also the largest shareholder (60%) in a mini LNG plant project in partnership with Pertamina and Medco called Senoro LNG.

READ MORE!!!

Kontan, another newspaper

Some of you might have used to Kontan as an economic & business tabloid, it's pretty much like The Edge in Singapore or Malaysia. But today the publisher (subsidiary of Kompas Gramedia Group, the largest print media empire in Indonesia) starts publishing Kontan as a business & economy newspaper as well, to add the currently existed (Bisnis Indonesia, Investor Daily, and Neraca). First of all, congratulations.

In the last few years, several groups have entered the already crowded media business, but big way and could lead to the closure of others. In general newspaper category, Bimantara has published Seputar Indonesia (Sindo) and Sampoerna Family-linked people with Jurnal Nasional. In the English media category, Lippo and Tanri Abeng publish The Globe, while Medco Group with The Point.
According to the latest report from Newspaper Publishers Association, 70% of newspapers are not viable financially and 30% of them are healthy. Even of the 30%, only few publishers that realy make money out of the business. Statistics shown us there are 829 newspapers published in the country with total readership of 7.2 million or 8,685 readers/newspaper. Total revenue (advertisements + paid copies) in 2006 was around Rp13 trillion or Rp15.7 billion average/year/newspaper.
Newspaper penetration rate is 1 to 35, far below Malaysia (1:8). Why? Some blame on purchasing power, but others on quality (that 80% of the contents of national newspapers are about the same).
So, to all my colleagues at Kontan, welcome to the jungle. Readers love competition and it's good for our hearts. Hopefully you guys could give out the best for your readers & the society at large, and improve business journalism in particular! Anyway, it must be tough to keep the weekly tabloid as well.

READ MORE!!!

Life vest

I hereby send my condolences to the family of Lativi cameraman who died on duty when he tried to get the best picture of sinking ship Levina I to his viewers. I pray also for the survival of SCTV cameraman and two police officers who are believed missing along with the sinking ship. As a reporter myself, I think the journalism community and the society as a whole need to learn something out of the tragedy.

I'm talking about addherence of rules of the game. Everytime I went to the field reporting, especially on places like steel or chemical factories, both domestic & overseas, the factories obliged me to use safety helmets or jackets and gloves.
Sometimes we're annoyed, but since the factories officials insist with 'take or leave it' stance, we have no choices. From my experiences, some of the time, especially at home, we, the journalists simply ignore and the hosts also permissive because they're afraid of being rude toward us.
Such permissiveness, ignorance, and 'try to be nice' situation cost lives, as we're now experienced with Levina I reporting tragedy. (PS: Most of us do not pay attention when cabin crews display air safety procedures, busy to read fancy magazines or novels; and very few probably remember where exactly are the life vests located!)
Minister of transportation Hatta Radjasa, without intentions to blame the casualties, said there were briefings to the journalists, policemen, and officers from National Committee for Transportation Safety (KNKT) before they went on board of Levina I, the ship that blown out and killed 42 people, that they should wear life vests. But they didn't and the officers let them go without life vests. When they're on board of Levina I and the ship started to sink then it's all been too late to realize the importance of life vests. So, it needs two sides of the isle to impose discipline and both should learn the importance of rules of the game for their own good. No matter who you are or what kind of job that you're in, we gotta live by the rules.

READ MORE!!!

Megawati will not run in 2009?

It's interesting to read PDI-P executive Tjahjo Kumolo's statement published by Tempointeraktif.com today. Tjahjo quoted former president Megawati Soekarnoputri saying, "I once had been the president, vice president, and president candidate. Should I run for 2009 election, I don't want to be ashamed again."

Tjahjo said Megawati don't want to be pushed as president candidate unless her party (PDI-P) could secure at least 50 million votes in 2009. It's interesting because so far Megawati is the only viable candidate tipped by the party and that several polls shown Megawati has still been considered as the strongest candidate to challenge the incumbent president Susilo Bambang Yudhoyono in 2009 election.
Tjahjo believes SBY will run again and is in talks for a possible new coalision with Prosperous Justice Party (PKS) figure like Nur Wahid Hidayat. He also believes VP Jusuf Kalla will challenge SBY with Sri Sultan Hamengkubuwono as his possible VP candidate.
Tjahjo admitted 2009 election would be tougher for PDI-P to win both legislative and president elections. The party's registered members are predicted at slightly below 12 million. In 2004 election, as reported by Tempointeraktif.com, Megawati won 18 million votes. It's not easy for the party & Megawati to win 50 million votes considering both internal & external factors.
Despite the humiliating defeat, PDI-P managed to win some local elections outside Java in recent years such as North Sumatra, West Sumatra, Lampung, South Sumatra, two provinces in Papua, one in Maluku, one in Sulawesi, and one in Kalimantan. Local elections in Java are of the most important to watch. PDI-P's coalition with Golkar had won Banten governor election. The party has yet to announce its candidate for Jakarta governor election this year. PDI-P had picked two candidates, one is Megawati's long time friend Sutjipto, for East Java gubernatorial election.

READ MORE!!!

Yusril, The President, & Ruki

Last week, deputy house speaker Muhaimin Iskandar (PKB) urged President SBY to settle the conflict between minister of state secretary Yusril Ihza Mahendra and chairman of Corruption Eradication Commission (KPK) Taufiequrrahman Ruki. Noviantika Nasution from Partai Demokrasi Pembaruan (PDP) also joined the call like others.
President SBY then summoned both Yusril and Ruki in a limited cabinet meeting on Friday. After the meeting, SBY said both Yusril & Ruki were right in their disputed decisions. This statement was considered a peace settlement brokered by the president. Analysts criticize SBY and calling it as an intervention of president to judicial system.
But I think the president clearly stated that he would not intervene the legal process when he said, by law, direct appointment of suppliers are allowed, "but if there is proof of irregularities over the direct appointment, that's the area of judicial system that I will not enter into."
So, from this point, I prefer to have both KPK and Yusril move forward with their claims. KPK should proof that Yusril's decision was wrong and that someone had taken benefit out of it; while Yusril should also proof that KPK's decision was also wrong and that someone had also taken benefit out of it. That would be fair! Because what matters is not the direct appointment policy. But whether someone had illegally taken benefit out of the policy no matter who made the decision.

READ MORE!!!

Omay is free

Court set Omay Wiraatmadja, former CEO of state-owned fertilizer company PT Pupuk Kaltim, free from corruption charges. Shortly after the verdict, Omay left the detention center. Omay is among the SOEs executives charged with corruption. Last year, court also released ECW Neloe (former CEO of Bank Mandiri) and his colleagues from corruption charges. PLN CEO Eddie Widiono was even released before the court proceedings.

READ MORE!!!

Corporations performance so far

Some listed companies have published their financial performances in 2006. Four banks scored a tie, two reported increasing profit (BCA & NISP) and two recorded lower profit (Danamon & BII). BCA recorded net profit (unaudited) of Rp4 trillion (increased from Rp3.6 trillion in 2005), while Bank International Indonesia (BII) booked net profit of Rp633 billion (down 13% from Rp725 billion) on significant jump in provision of productive asset write-offs (from Rp90 billion to Rp527 billion).

Meanwhile, Excelcomindo, the third largest telecommunication provider reported net profit of Rp651 billion against net loss of Rp224 billion in 2005. Excelcomindo recorded more than 50% growth in revenue and managed to double its operating profit to Rp1.027 trillion.

READ MORE!!!

Misleading mudflow conclusion would cost the state sky high

Some of you might have read The Jakarta Post this morning. The paper quoted British volcanologist Richard Davies, a mud volcano specialist and professor at Durham University saying "the chance that the mud erupted because of the drilling activities is 90 percent. The chance of the mud volcano being triggered by earthquake in Yogyakarta was 1 to 2 percent, while the chance of both drilling & earthquake was 8 percent."

Davies is disputing government-sponsored conference's conclusion that the Sidoarjo mud disaster was caused by tectonic forces which would set Lapindo Brantas Inc & Bakrie Family free from responsibility on costs to handle the impacts.
The sky is the limit when it comes to costs for handling the disaster. President SBY deducted Lapindo's responsibility to Rp3.8 trillion through a decree issued in September. Now, these government scientists could even transfer the Rp3.8 trillion altogether with the additional Rp4 trillion cost that yet to be decided its source of fund and further costs/claims to our shoulder.
I think, the dispute on scientific explanation over the mudflow disaster should be settled first before the state scientists give any recommendation especially if it would cost the state & the people.

READ MORE!!!

State scientists set Bakrie free from disaster costs

The Jakarta Post run as its headline today a conclusion of a workshop of scientists from state agencies (LIPI & BPPT), geologist association (IAGI), and some scientists from overseas universities that the mudflow in Sidoarjo is a mud volcano, a natural disaster. They recommend government to immediately consider the mudflow as a natural disaster so the state should take the responsibility.

The workshop was organized just weeks before government should make new decision on the future of the mudflow handling as the existing team established by president SBY last September would end its tenure early next month. While minister of public works and other scientists rejected the conclusion, cause it will make the state should finance all the reconstruction of public infrastructures, the timing of the workshop and its conclusion raised the question: why now? why not next month? what's happened with the money Lapindo had disbursed? what will happen with the president decree that all costs (set at Rp3.8 trillion) are Lapindo's responsibility?
Should the cabinet accept the recommendation, for sure the additional cost predicted at Rp4 trillion to rebuild the public infrastructures would be transfered to state's shoulders (al of us).
"Who said so?" Djoko Kirmanto, minister of public works reacted when journalists told him that 'experts' recommended the mudflow disaster as a natural disaster caused, partly, by the earthquake that jolted Yogyakarta.
What about the reports that the mud started to flow weeks before the earthquake? What about the warning of Medco that Lapindo ignored to install casing in the drilling well that caused the mudflow? What about VP Jusuf Kalla's statement that "Bakrie Family would bear all the costs"?

READ MORE!!!

Hard landing for Adam Air

It's a blessing in disguise for Texas Pacific Group that the family who owns Adam Air rejected the US-based investment firm's offer to purchase some shares late last year. I heard the family rejected the offer after a US investment bank advised the family to sell the shares through initial public offering (IPO) instead.

After the tragic Adam Air flight 574 that killed about 100 people, today the airline's flight KI 172 slipped at Juanda Airport, Surabaya. On board were 148 passengers. Lucky that the hard landing didn't cause serious physical injuries, even though we can't discount the mental stress.
While there is no definitive explanation on the incident, Adam Air lightly explain that the aircraft isn't broken apart, only shrinked.
Government responded the incident with immediate call to suspend the operation of all Adam Air's Boeing 737-300 (seven units). Some even urge governmen to permanently revoke Adam Air's license.
I'm not sure whether the family would move ahead with the planned IPO this year. Shortly after the 574 accident, Adam Air firmly stated its intention to proceed with the IPO in Jakarta and Singapore stock exchanges to float up to 20% shares to finance 10 new aircrafts.

READ MORE!!!

Lion overtakes Garuda in domestic market

As government is yet to make up its mind on what to do with the ailing flag carrier Garuda Indonesia that put the company on the verge of another default on debts payment, Lion Air has, for the first time, overtaken Garuda's dominance in domestic market. Poor eagle!

Four years ago, Lion Air announced its plan to be the number one in domestic market by 2004. It failed in 2004. But the latest figures shown Lion has overtaken Garuda as the largest carrier in domestic market.

READ MORE!!!

Who'll bear Lapindo's additional cost of Rp4 trillion?

The National Team set up to solve the hot mudflow disaster caused by Lapindo Brantas Inc's drilling in Banjar Panji-1 well, Sidoarjo, East Java predicted additional cost up to Rp4 trillion to rehabilitate some public infrastructures, but it's not clear yet on who will bear this cost.

Media quoted Basuki Hadimoeljo, chairman of the team, saying the additional cost is needed to finance the construction of new turnpike (Rp700 billion), general alternate roads (Rp300 billion), new railway (Rp450 billion), gas pipeline (Rp300 billion), land acquisition (Rp600 billion), and others.
The Rp4 trillion additional cost is on top of the Rp3.8 trillion compensation cost pursuant to President Decree issued last September. Lapindo has disbursed Rp1 trillion, the team claimed, and another Rp1.3 trillion should be disbursed till next month, to be followed by the remaining Rp1.5 trillion after March.
So far, the team has yet to come up with financing plan. But if government keeps its promise that Bakrie family would be responsible for all the costs, then we know what might be the next.
The family is in the process to sell significant shares in Kangean Block, one of the crown jewels of PT Energi Mega Persada. But the proceeds would not be used to finance the Lapindo disaster, I guess. The proceeds would go to creditor's coffers.

READ MORE!!!

Privatization of three SOEs

Market has been skeptical when it comes to privatization in the last few years. The only significant 'privatization' was the placement of 5% shares of PT Perusahaan Gas Negara (PGN) Tbk late last year after years of discourse. So, when MSOE Sugiharto claimed that three SOEs (Jasa Marga, BNI, and Wijaya Karya) will be privatized this first half, just reserve that for...

"OK, but we have four months left, pretty much time," said one of Sugiharto's staff at MSOE.
"How long will the approval process, especially to get the clearance from Privatization Committee and then the House of Representative?"
"Depends on how convincing is the government. But it could be weeks or months," he said.
"Given the fast-track approval, is it possible to privatize three SOEs in three months?"
"Why not? The market is there to absorb. Why are you so skeptical on privatization?"
"Because last week, among others, your ministry announced to postpone the privatization of nine companies scheduled this year. I understand you have 13 SOEs remain in the list of privatization this year. But with what's going on out there, I'm skeptical still."
"For the three SOEs mentioned, we're quite optimistic."
Well, let's see whether this time government could deliver.

READ MORE!!!

Medco-IPR settles lawsuit on Bawean Block

PT Medco Energi International Tbk announced today the out of court settlement with Indo-Pacific Resources (IPR) and Fortune Oil & Gas Inc (IPR's parent) to drop the arbitration law suit. Under the agreement dated February 8, IPR and Fortune also agreed to transfer IPR's 30% working interest in Bawean PSC to Camar Resources Company (Medco) and upon approval from BPMigas, Medco would control 100% of the block. IPR & Fortune, according to Medco, had sent an apology letter to both Medco & BPMigas, and their regret of their misbehaviour (for filing the lawsuit). What's up IPR & Fortune? Where all the allegations of corruptions toward Medco & BPMigas? What kind of settlement? What price?

READ MORE!!!

Sand diplomatic war

Singapore government was iritated with the statement of Primo Alui Joelianto (director general for East Asia at the ministry of foreign affairs) that Indonesia's recent ban on the export of concreting sand was a "key way of placing more pressure” on Singapore“(to resolve differences) in extradition and some border negotiations”, as reported in The Jakarta Post of 16 February 2007.

Singapore MFA's spokesman responded the statement as follows (it's provided to this blog as well):
"If this is indeed DEPLU's approach, it is a disappointment to us. The
official reason for the ban announced last month was environmental
protection. Director-General Primo's remarks lead us to wonder whether
that was the main reason for the ban. Singapore had earlier expressed
willingness to work with Indonesia on environmental protection, but
Indonesia ignored this offer and proceeded with the ban.
The ban is now purportedly tied to ongoing negotiations between the two
countries. Singapore has embarked on negotiations with Indonesia on the
Extradition Treaty and border delineation in good faith on the basis of
mutual benefit. On the Extradition Treaty, both Indonesian President
Susilo Bambang Yudhoyono and Prime Minister Lee Hsien Loong had agreed
in Bali on 3 October 2005 that it would be in parallel and linked to the
negotiation on a Defence Cooperation Agreement. Indeed, on this basis,
we have made good progress on both agreements even though some
difficulties remain. What is needed is political goodwill on both sides
to finalise the agreements which, from Singapore's perspective, is
within reach. Unilaterally making sand an additional issue with the
objective of delinking the Defence Cooperation Agreement from the
Extradition Treaty contravenes the earlier agreement by the two Leaders.
As for the linkage to border delineation, Minister for Foreign Affairs
George Yeo said in Parliament recently (12 February 2007) that the talks
are complicated enough without this additional complication."
Some politicians urged government to cut diplomatic ties with Singapore instead. "The ban on exporting sands is not enough to push Singapore to discuss critical issues of importance to us," Permadi, legislator from PDI-P said yesterday.
And indeed there are lots of Indonesians fugitives hiding in Singapore in recent years that cost the neighbor an allegation as 'protector of Indonesian corruptors'.
Morgan Stanley's economist Andy Xie had to tender his resignation last year for his comments over the issue.

READ MORE!!!

69: Walk the Talk

I'm not sure how many times the government officials stated this: Number of state-owned companies would be reduced significantly through merger, privatization, etc. The difference, this time VP Jusuf Kalla put 69 SOEs as the ultimate target by 2009, meaning we have to cut 70 SOEs out of the existing 139 companies. Is it a joke or what?

MSOE Sugiharto has the details: Reducing 37 companies in 2007, 15 next year, and another 18 in 2009. I'm not saying that's not good. In fact we love to have one or two SOEs but they could provide more profits & jobs to the state. What's the benefit of having 139 SOEs except to provide posts of 139 CEOs, thousands of commissioners, board of directors, to colleagues or as part of political bargaining?
But my very humble concern is delivery or execution of the 69 model. Look at what we've experienced with the plan to merge state-owned banks BNI and BTN, or the plantations, fertilizers, construction, consultings, etc. After months of discussion, debate, waste of money, the merger plans went nowhere.
I could imagine the whole plan would be difficult if not impossible, especially if we look at process. First of all, the plan should be approved by related ministries such as finance, coordinating minister for the economy, and then the House of Representatives (DPR).
But MSOE Sugiharto might take short-cut like establishing holding companies for banks, plantations, mining, fertilizers, insurance, construction, etc...and you can easily have 69 group of companies...with more CEOs to share...

READ MORE!!!

2-Wheels recovered, cars dropped

Surprisingly, motorcycle sales in January increased 28.5% compared to the same month last year, but cars dropped almost 14% compared to December 2006 or almost the same with Jan 2006. But I'm not sure the figures would be better off in February especially heavy floods in the last few weeks.

READ MORE!!!

Bumi divestment, far away

As the share price increased sharply in the last few trading days, investors should be careful in digesting all kinds of information from Bumi Resources or their proxies. Today, Bumi replied JSX question on why the company's asset changed significantly by more than 20%, but you will not get the 'right' answer nor we know how much the changes?

Meanwhile, the company told JSX that six investors are currently in the final stages of due diligence to acquire 30% shares in KPC & Arutmin with expectation of binding offer next week (Feb 28) the latest. After that, Bumi will announce the result in late March.
FYI, Bumi shares price increased almost 100% since the collapse of divestment deal with Renaissance Capital in August 2006, partly because of massive buyback (more than USD200 million) and expectation of the new 30% divestment deal. The failure to close the deal would be a disaster for Bumi and related Bakrie shares, especially if the offered price would be lower than the claims (USD1.6 billion).

READ MORE!!!

Texmaco, what price?

Feb 20, investors should submit final bid for Texmaco assets (Rp29 trillion or around USD3.3 billion) currently controlled by PT Perusahaan Pengelola Aset (PPA)---successor of IBRA. Three investors are reportedly expressed their interests to acquire the assets. The problem, how much of these assets could be recovered by the state?

Detik.com reported VP Jusuf Kalla visited Texmaco's main site in Purwakarta today. There, he met Texmaco management. Texmaco's facilities are running at a very low rate at 20% of installed capacity. Kalla, unusually, said only few words during the visit. Kalla's visit was no coincidence as he knew for sure the bidding will be conducted next week.
"But before we let someone takeover the company, we have to see first what's the company all about. We clearly need investor who could revive Texmaco," Kalla said as quoted by Detik.com.
Kalla is not the first high level officer to visit the plant site. President Soeharto was there to officially inaugurate some facilities, BJ Habibie promised to revive the company, Wahid even asked everybody not to 'touch' Texmaco for the sake of exports, and Megawati's husband Taufik Kiemas visited the factory many times with the same promises.
As for Marimutu Sinivasan, the former controlling owner, he is currently on the police wanted list. Rumors said last week that the businessman had been caught in India and on his way back home to stand the trial on corruption allegation, but no follow up of the story.
Sinivasan's relatives urged government to restructure Texmaco, and that's probably why Kalla visited the plant site today.
Should PPA proceed with the bidding next week, whoever wins would have access to control 70% of PT Bina Prima Perdana (BPP), a holding company established by IBRA pursuant to debt restructuring of Texmaco. BPP has controlling stakes in some of Texmaco's key assets such as PT Polysindo Eka Perkasa (PTA, chips & staple fiber), PT Texmaco Jaya (garment), etc.
At what price?
Well, the previous bids were range between Rp90 billion to Rp290 billion or less than 1% of recovery or 99% haircut. I imagine the next administration might launch an investigation toward this administration if haircut is still considered a 'corruption' like what this administration has done to some haircuts given by the previous administrations.

READ MORE!!!

Yusril's childish act, a curse of the nation

Ministry of state secretary Yusril Ihza Mahendra is a real survivor. He was Soeharto's speech writer, and minister in various posts since Wahid to SBY administration. He once promoted himself as presidential candidate to challenge Wahid and Megawati in 1999 election.

But his latest move, asking Corruption Eradication Commission (KPK) to investigate the commission's Chairman after KPK questioned his policy, i.e. appointed directly the vendor for fingerprint automated system, is considered by many as a childish revenge even though he might be right to ask the clarity of Presidential Decree on procurement of goods & services for government.
The decree (No. 80/2003) indeed has been employed by prosecutors to justify accusations on corruption especially when it comes to direct appointment of suppliers. Meanwhile government officers use the same decree to justify the appointment of certain supplier without open bidding in the name of limited time available etc.
Yusril is right to raise the question on when a procurement could be done without open bidding and when it should. It's true the Decree has some exceptions on open bidding, but still leaves room for multi-interpretation.
The problem, Yusril only raised the question after he was summoned to testify in a corruption scandal committed by the office where Yusril was the minister during the procurement process.
Revenge, revenge and revenge! Politics of revenge is a curse of a nation ever since Ken Arok days.

READ MORE!!!

Iwan Pontjo resigns, replaced by Hotbonar

Knowing that he has slim chance to be reappointed, Iwan Pontjowinoto said he'll tender his resignation as the CEO of PT Jamsostek at the shareholder meeting on Friday night as Hotbonar Sinaga, the chairman of Indonesian Insurance Council (DAI), was about to be the appointed as the new CEO.

In an interview with Detik.com minutes before the meeting, Mr Pontjo said even if shareholder reappoint him, he prefers to go. Meanwhile, Bisnis.com reported today that Hotbonar is the strongest candidate to replace Mr Pontjo.
The shareholder meeting, as reported by Detik.com few minutes ago, had finally appointed Hotbonar as the new Jamsostek CEO.

READ MORE!!!

Kangean Block, how worthy, how risky?

Bakrie acquired Kangean Block from BP Plc at only USD160 million in 2004. BP tried hard to extend the working contract for Kangean Block which matured 2010, but failed. Shortly after Bakrie acquired the block, President Susilo Bambang Yudhoyono's administration awarded 20-year extension in late 2004 when Aburizal Bakrie was still the coordinating minister for the economy. So far, no allegation of corruption, collusion, or nepotism (KKN) behind the contract extension, but we never know what will happen if Indonesia has new administration in 2009?

Last night I asked a former Caltex (Chevron) geologist on his views about stories that Marubeni and Middle East investors are competing to buy Kangean Block from Energi Mega Persada (controlled by Bakrie family).
"Once an investor asked me to review the block. The gas reserves were far below the claims. I don't know if there are new discoveries in the last two years. But without new discovery, the block's valutation is around USD400 million only," the senior geologist said.
But some say it worth USD700 million?
"Looks like USD700 million, but when you dig out the data more carefully, you'll end up with at least 40% discount," he argued.
Part of the claims is Kangean Block's reserves at 2.3 TCF of which 1.3 TCF is certified (proven). With simple math, Kangean gas worth USD2 billion minimum. So, what is the rationale behind your number (USD400 million) or other's (USD700 million)?
"Let me ask you, why BP only got USD160 million if you have USD2 billion asset?"
"Because BP failed to get the contract extension?"
"Exactly. But that's not necessarily translated to USD2 billion once you secured the contract extension. Let me ask you, how come that ConocoPhilips secured a contract to sell gas to 2.3 TCF to Perusahaan Gas Negara (PGN) in August 2004 at USD4.3 billion while similar gas amount in Kangean now only worth USD700 million the most as they said?"
"I don't know. I need to ask someone else."

READ MORE!!!

2009 President should be college graduate?

The race to 2009 presidential election has been heated up with the proposal to amend the law on presidential candidates that should be university graduates with minimum bachelor degree. You know who's being targeted and you know who will oppose or support this.

READ MORE!!!

1.6billion for 30% KPC-Arutmin???????

Bloomberg reported today that Tata Group from India offers USD1.6 billion for 30% shares in Kaltim Prima Coal and Arutmin Indonesia. In December 2006, media reported far lower figure offered by Tata at USD1 billion. Is it possible that in less than three months Tata raised the value of KPC-Arutmin by 60%? Or this is just the game played to pump up the price of Bumi Resources shares?

"Can you believe it? Tata offers USD1.6 billion for 30% of KPC & Arutmin. Isn't that great?" a US-based investment banker sent a short message this morning.
"Are they lost their mind?" other US-based investment banker answered my question.
"You'd better be careful with the currency. Will they pay 1.6 billion US dollar or Singapore dollar or Rupee?" a European-based investment banker responded.
Well, Samin Tan's Renaissance Capital initial offer was USD3.25 billion for 100% or slightly less than USD1 billion for 30% of KPC-Arutmin. Renaissance then changed its mind and offered lower price (some say around USD2.5 billion) which led to the collapse of the deal in August 2006.
"Well, during Samin's process, Bumi share was Rp750 but now it's going up to Rp1,110 (up 3.66% today)," the supporter of Bumi said.
But Bumi have to spend more than USD100 million to pump up the price through shares buyback in the last few months.
"I don't believe that Tata would bid that much for KPC-Arutmin. Let's see whether the deal really closes at that price or Bumi would completely collapse after the humiliation last year," one analyst at local brokerage firm said.
So why only few people believe KPC-Arutmin really worth that much?
"Because the valuation is off. When Tata or anyone else really goes deep on due diligence, they will uncover a lot of problems that have destroyed the value," a banker at state-owned bank said.
"Credit Suisse is in the game and I could understand if they're trying to boost Bumi shares with this information," another equity strategist at European-based investment bank said.
Well, it's all speculative. Besides, the final bid for KPC-Arutmin divestment is still two weeks away (Feb 28) and adjustment would be made significantly like what Samin did. Tata, Mitsubishi, and others would quickly discount KPC & Arutmin once they realized the real figures. So, better be careful!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

READ MORE!!!

Telkom reshuffle confirmed,

PT Telkom Tbk finally announced today that the Feb 28 extraordinary shareholders meeting should make decision on management reshuffle; keep Arwin Rasyid as the CEO with other directors replaced (plus new board of commissioners) or kick Arwin out and keep others in place (with new CEO).

The 'me or they' and 'he or us' attitude could be seen in the statements of Arwin Rasyid and Tanri Abeng (President Commissioner) published by Investor magazine this week.
ARWIN INTERVIEW:
Q: What will you do if shareholders reject the board reshuffle?
A: As a pro, I have some options. I can't disclose what options. I just hope that government is consistent and committed.
Q: You had failed to replace the board in the previous shareholders meeting?
A: I got no explanation; you better ask related minister.

TANRI ABENG INTERVIEW:
Q: Arwin once asked for board reshuffle but rejected?
A: It's true, since April he sent the letter to board of commissioner so we ask the shareholders meeting in June. I supported Arwin for the reshuffle, but shareholders didn't approve that.
Q: There is conflict between commissioner & Arwin?
A: Well, we can't have same views all the time, I respect professionalism, but if we can't get along, what can you do? If we can't maintain, you gotta make decision. When the board member felt they can't work together, we might need Arwin in other place.
Q: That's why board of commissioners demanded the replacement?
A: When the board of directors feel that they can't work together anymore. The best for Arwin and the company is to have him in another place.
Q; So, what will happen on Feb 28?
A: One of the issues will be the board of directors replacement. If Arwin could be trusted for the job again, then he could only work if there will be changes according to Arwin's demand. We heard that Arwin also want to have board of commissioners replaced.

READ MORE!!!

An Expanded Bureaucrazy

The downfall of Soeharto's centralistic regime has been followed by an expanded bureaucracy all over the country. In the last 10 years, the reform movement has created more provinces and regencies. What we have is actually an expanded bureaucrazy, not less bureaucracy.

While the regional autonomy spirit is focused on regencies and put provincial level administrations almost no significant power in hands except as 'liason' between central government & regencies, we create more and more provinces instead. So, we have 7 new provinces (one in Papua, one in Maluku, two in Sulawesi, two in Sumatra, and one in Java) and lot more new regencies.
This year alone, we will have 35 new regencies with Rp95 billion cost of deliberating the laws on every single regency. In 2005, government established 65 new regencies/city administrations with Rp250 billion cost. In four years of 2001-2004, almost 100 new regencies established. So in less than one decade after Soeharto's downfall, we have expanded the administration by nearly 100%.
Few more new provinces are under preparation such as Flores in East Nusa Tenggara and Cirebon in West Java. Three regencies in West Java (Bogor, Depok, and Karawang) agreed to establish a new province separated from West Java. Others may arise from North Sumatra (Tapanuli), Aceh, and Central Kalimantan.
One may argue that these new regional/local administrations help to create new jobs, but this is not in line with the reform idea to have a more efficient bureaucracy and give more rooms for the society. Besides, more state money should be allocated to pay the civil servants' salary at the time we need more development funds.
Worse, this expanded bureaucracy has prevented the whole nation's effort to streamline procedures in business activities. So, what's actually the point of having more provinces and regencies?

READ MORE!!!

Nursalim's apartment auction

I read Sunday paper with an ad from Tuan Sing, Singapore-listed company controlled by Sjamsul Nursalim family, inviting Indonesian buyers to an auction of Botanika, a 34-unit boutique apartment next to Singapore's Botanic Gardens. According to the ad, only 12 units left to be auctioned off. TODAY reported last week that the other 22 units have already been sold at a private preview consisting of the developer's friends and business associates (Wanna know the buyers?). A transaction last month saw a unit fetching close to S$2,000/square feet. Wow! With floors range from 1,500 - 3,300 sq feet, the auction could take the price to the sky!

READ MORE!!!

Garuda on the verge of default (again)

In Dec 2005, Garuda Indonesia defaulted USD55 million payment to creditors. In the next few days, the company should make payments, but the promised Rp500 billion state funds injected has not disbursed yet. With mounts of debts to suppliers (including Pertamina), the flag carrier is on the verge of default again.

Last year, government promised to inject fresh capital of Rp1 trillion (around USD110 million) to Garuda in two tranches Rp500 billion each. The first tranch should have been disbursed November 2006. "But ministry of finance postponed the disbursement upon completion of a new business plan," an internal source at Garuda said.
Garuda has outstanding loan of around USD800 million. Garuda has reportedly not paid fuel purchased from state-owned Pertamina for almost six months.
"Without state funds of Rp500 billion, Garuda is inevitably in trouble from cash flow point of view. I just can't imagine if Garuda defaulted on payments to creditors again and that will push Airbus to pull the leased aircrafts. While the aircrafts are not in operational due to high cost of operations, other leasing agencies would pull out their aircrafts as well," the executive said.
"This administration has a very poor capacity to execute," he described the situation at Garuda and Merpati Nusantara(another ailing state-owned airline).
On the other hand, Peter Sondakh from Rajawali Corporation is aggresively lobbying government officers including Privatization Committee led by Sahala Lumban Gaol to buy Garuda shares.
"We've sent the letter to Privatization Committee on Tuesday, but no answer yet," Rajawali managing director Darjoto Setiawan said to me over the weekend.
Rajawali's competitor is, among others, Texas Pacific Group. None of these investment companies disclosed their partners for the acquisition.

READ MORE!!!

Indosiar & SCTV merger

A local conglomerate dismissed the rumor that Trans TV would acquire Indosiar. "Some confused with the relationship between Anthony Salim & Chaerul Tandjung and then came to conclusion that TransTV will acquire Indosiar," the man close to Anthony said.

"It would be too obvious for Anthony to do that and he's not that kind of person. After acquiring 50% of TV7 from Kompas, TransTV is already big enough," he further said.
"What I heard is the possible merger of Indosiar and SCTV because Salim has good relationship with SCTV majority owner as well. With this scenario, Salim would have two strong footholds in the TV industry," the businessman said.
SCMA, parent company of SCTV, also owns O Channel.
Is it something to do with Salim's plan to mount pressure toward Harry Tanoe's TV empire (RCTI, TPI & GlobalTV)?
"Only Anthony knows," he said.
I remember five years ago when I met Anthony accidentally at Soekarno-Hatta airport after a meeting with IBRA to settle Salim's Rp56 trillion debts in Le Meridien, Bali. He was accompanied by Harry Tanoe. But I have no idea of their relationship recently even though some say 'never be the same'.
On the other hand, ANTV is the strongest candidate to acquire the ailing TV station LaTV from Bank Mandiri upon approval on debt restructuring. What about other TV stations like JakTV?

READ MORE!!!

PGN under pressure to reroute pipeline

Banten Province legislative (DPRD) asked PT Perusahaan Gas Negara (PGN) Tbk to re-route the gas pipeline, Tempointeraktif.com reported. What a mess if PGN should accommodate that especially because the company is already three months behind schedule which pushed the share price down significantly last month. The company is constructing the pipeline along the side of the Jakarta-Merak turnpike. DPRD asked PGN to use new route, along the side of Jakarta-Merak railway instead.

READ MORE!!!

SOEs management reshuffle

Wiwin P. Soedjito has been appointed the new CEO for PT Permodalan Nasional Madani (PNM), replacing BS Kusmuljono (Aburizal Bakrie's brother-in-law), while CEOs of PT Pelayaran Bahtera Adiguna, PT Pelayaran Nasional Indonesia (Pelni), and PT Berdikari have been maintained in their respective posts, media reported over the weekend.

Wiwin P. Soedjito was director for business development at PNM and member of Masyarakat Ekonomi Syariah (MES) or Sharia Economy Society. PNM directors Fathorrahman and Wahyu T. T. Kuncahyo are also members of MES.
Former chairman of MES Iwan Pontjowinoto is currently the president of another SOE, Jamsostek. Other MES figures at SOE are SOE minister Sugiharto, Aries Mufti (commissioner of Garuda Indonesia), Tatat Rahmita Utami (finance director of PT Kimia Farma's subsidiary), Nana M. Somantri (director PT Bank Syariah Mandiri, subsdiary of Bank Mandiri),....

READ MORE!!!

Kideco to issue USD200 million bonds

Third largest coal producer PT Kideco Jaya Agung will issue USD200 million bonds to expand its capital expenditure. But executive at Indika (majority owner of Kideco) denied that. "Bankers did propose to us," the executive said.

READ MORE!!!

Telkom reshuffle: New BOC & BOD

I got mixed signals from The Inner Circle regarding management reshuffle at PT Telekomunikasi Indonesia (Telkom) Tbk. In contrast to Telkom BOC's claim that BOCs would get extension of their service and brand new BODs (majority new guys), those close to power said it would be fair to have new BOCs & BODs altogether.

Some say Arwin Rasjid will retain his post as CEO with new BOD members, others say Arwin will be replaced not by those who already in the board. "There is discourse to promote Kiskenda, CEO of Telkomsel. We have to replace the BOCs as well, including Tanri Abeng," the source at The State Palace said.
So far, we only knew that government is conducting fit/proper test for BODs, no BOCs? Is it a sign that BOCs would stay?

READ MORE!!!

Danamon profit drop, loss category loans double, etc

Bank Danamon is the first bank to publish full year 2006 audited financial performance (because the bank will issue bond Rp1.5 trillion in April) with profit dropped a third while assets in loss category more than doubled and high investment in marketable securities & government bonds.

Looking at the bank's balance sheet, asset grew from Rp66.76 trillion to Rp79.59 trillion of which around Rp40.8 trillion as loans to third parties and Rp23.91 trillion as marketable securities/government bonds or grew 15% and 43% respectively.
While the bank's net NPL is well below 5%, loans on loss category have jumped from Rp367 billion to Rp871 billion (137%), resulting in significant cut of net profit (as allowance for possible losses in assets in 2006 was Rp976 billion).
On the other hand, operating expenses increased significantly by around 20% mainly due to increases in salaries/employee benefits and administrative costs. As a result, Danamon booked net profit of Rp1.32 trillion, dropped 33.8% from 2005.
Temasek is the largest shareholder of Danamon.

READ MORE!!!

Spokespersons

Two days ago, I, like others, got short messages..."Dino Patti Djalal has been fired as presidential spokesperson for international affairs." So I rushed to ask Dino's friends. "No. It's a rumor. I've checked myself," one of his friends said. Today, we got mix information from the State Palace.

Detik.com quoted Andi Malarangeng, presidential spokesperson for domestic affairs indirectly 'confirmed' the rumor saying Dino got another special assignment (from the president) without further elaboration. But this evening, Tempointeraktif.com quoted Dino saying "I'm still the spokesperson."
Others say Dino has been asked to temporarily off-duty. "President SBY is looking for a new spokesperson," one officer at The State Palace said.
It's not clear why. Is it just a competition in the Inner Circle?

READ MORE!!!

Sinivasan captured in India?

Marimutu Sinivasan, one of the largest debtor with around Rp27 trillion unpaid loans to the state, has reportedly been captured in India and now on his way home.

Sinivasan fled the country in March 15 last year, two days before Police asked immigration office to impose overseas travel ban on him. That time, his lawyer claimed Sinivasan fled the country for medical treatment. Police put Sinivasan in the wanted list to stand trial in a banking loan scam. In June, police claimed a cooperation with Interpol and Indian police to hunt down Sinivasan.
Prosecutors then promised to proceed the in absentia trial but no information since then.
(I remember back in Dec 2001 when AGO issued red notice to 184 countries and asked Interpol to have tycoon Sjamsul Nursalim stand trial back home. He fled the country, reportedly for medical treatment. Some reports said Nursalim, the owner of Gajah Tunggal group & Giti Tire (the largest tire manufacturer in China), lives in Singapore.)
In July, Rakyat Merdeka reported Sinivasan gave the power of attorney to lawyer Hery Suryadi to settle the debts, again no follow ups.
VP Jusuf Kalla was in India last week and met some businessmen, but no reports if he ever met Sinivasan there. Sinivasan's late brother Marimutu Manimaren was Golkar Party's treasurer.
I just can't imagine how difficult for the police to catch someone hiding in India. Is is possible that Sinivasan met the Vice President in private but failed to convince Mr Kalla to pay the debts as promised and then asked the police to lock the businessman in?
In the last two days, media run the conflicting statements from government officers regarding Sinivasan's Texmaco Group. While Secretary to the Minister of SOEs Said Didu said that government would takeover the company and make it a new SOE, Minister of Industry Fahmi Idris strongly rejected the idea arguing 'that's not in line with government's overall privatization strategy."

READ MORE!!!

Mitsubishi & KPC-Arutmin

One investment banker close to PT Bumi Resources Tbk told me this morning that Japan's Mitsubishi Corp is almost close the deal to buy 30% shares of two coal mining subsidiaries PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia for USD1 billion. But one of the shareholders denied that. "We're working on the proposals," he said. Mitsubishi is KPC's marketing agent for coal export to Japan while Glencore International handles non-Japan market. Meanwhile BHP Billiton is Arutmin's agent for export market. BHP and India's Tata are competing with Mitsubishi in the divestment of KPC and Arutmin shares.

READ MORE!!!

One Child Policy

VP Jusuf Kalla throws another ball game: One Child Policy in Java; Many Childs Policy outside Java! As reported by Tempointeraktif.com, Kalla said Java has been too crowded and susceptible to floods. "So, if necessary, it's better to have only one child per family in Java. But people in Papua need to have five kids to prosper."

He didn't say Javanese, Sundanese, Chinese, or Papuanese. He mentioned people live in Java, Papua, Sulawesi, Kalimantan, and other areas. Should such policy implemented, I can't help to think of its impact on the country's political landscape in 20 years time, which is good.
I thought when we implement regional autonomy, giving more money & authority to local/regional administrations, we could move people away from Jakarta. But I'm dead wrong. Regional Autonomy gives more money to officers only to come more often to Jakarta!
"No we have 6-1 officers all over the country, those who spend six days in a week in Jakarta/other cities/countries for leisure, lobbying, shopping, and one day in their administrative area," one political analyst said.
"We have more local/regional officers as the buyer. They buy for investment or leisures," one apartment salesman said.

READ MORE!!!

The Tale of Mr Ikan Porno

Mr Ikan Porno's position as CEO of PT Jamu Sok Teu, a state-owned enterprise collecting people's money, is apparently on a hot seat. BOD, BOC, and workers union have voted of no confidence in him and asked Suka Basah Ya? Administration to replace Mr Porno. But Mr Porno's friend in high place is trying hard to defend arguing Mr Porno's good performance. What's up?

"Looks like the VP Ucup Kelik is upset with Mr Porno's undelivered promises," one executive at Mr Kelik's office said.
Why?
"Remember when the PPD drivers went on massive strike, the nastiest in the company's history? It was a big shame for the cabinet. So Mr Kelik summoned related officers asking them to come up with good solution. Mr Porno offered to lend Jamu Sok Teu's hand, pay the PPD drivers' salaries. He was considered a hero in the meeting," the officer said.
That's good, right?
"It's good for Mr Porno. He knew that Mr Kelik didn't like him in the first place because the minister who appointed Mr Porno didn't ask Mr Kelik's permission beforehand. Mr Porno managed to have Mr Kelik impressed!"
I mean, that should be good for the drivers?
"The problem, PPD never paid installments to Jamu Sok Teu, so by law it's not eligible for help. As a result, Mr Porno failed to deliver his promises."
Well, he followed the rules then?
"But it means he didn't understand the mechanism of Jamu Sok Teu."
That's not enough.
"Then once the cabinet hold a meeting to bail out The Eagle, our ailing airline. Mr Kelik asked how we could help. Mr Porno raised his hand and pledged the plan to inject fresh capital into The Eagle. He was a hero in the meeting. But again he failed to deliver because by law Jamu Sok Teu is not allowed to do such kind of investment."
But Mr Kelik also want to put his own guy because he's suspicious on Mr Porno & his friend for heavy weight political support to Partai Kurang Senyum which may pose major threat to Mr Kelik's party?
"Probably!"
And it makes Mr Kelik's partner suspicious on Mr Kelik's motives and then summon Mr Porno's friend and two other ministers to State Palace?
"Probably! But he wouldn't say so!"
Then, what Mr Kelik's partner will do about?
"It's tricky. He is, as usual, confused because Mr Porno and his friend have strong political back up from Partai Kurang Senyum which helped him to be The First Gentleman."
I'm sorry, you said First Gentleman? Isn't that applied to the previous one when we have the lady as the president and his husband as the First Gentleman?
"No. The President was actually The First Gentleman and The President was actually The First Lady."
Are you drunk?
"No, I got FL............D"
Ok, what about Mr Porno?
"I'm confused too!"

READ MORE!!!

Counting the losses of heavy floods

State-owned bank PT BNI Tbk reported to JSX today the damages caused by heavy floods over the weekend as follows: 45 outlets and 117 ATMs in greater Jakarta were malfunctioned for various reasons including the collapsed of telecommunication/electricity service.

Meanwhile BCA reported 151 ATMs, two main branches, and 36 sub-branches were either damaged or closed down. The bank's call center HALO BCA is also out of operation.
Online communication between banks and Central Bank was also in trouble as PT Telkom Tbk's Automatic Telephone Center (STO) in Semanggi, Jakarta is heavily disrupted. This is the heart of the problem. Heavy flood, 1.2 meter high burried Telkom's vital equipments that called off almost 75,000 lines. So far Telkom has managed to repair 25,000 lines.
The question is why such an important infrastructure could easily hit by flood? Is there enough protection?

READ MORE!!!

If you're Sutiyoso or governor candidate

If you're Sutiyoso, governor of Jakarta, what will you do to prevent worse floods in the city next year onwards? Well, Sutiyoso's term will be ended this year. With limited time available, what's the best he should do to inherit a legacy of true leader?

Sutiyoso proposes transmigration of Jakartans. But people are cynical about the idea, "except he'll remove us to Pondok Indah (the upper class neighborhood!)," a resident of Cililitan told Detik.com.
Transmigration is not a bad idea at all. But it should be done naturally in the longer run, not repeating Soeharto era's model. If we start to build huge malls at Jakarta's outskirts, we could move some people. If we build new 'capital city' outside Jakarta, we could move people more significantly. But all of these will be long-run strategies.
What will you do if you're in Sutiyoso's position with few months left in office to change the course of these deadly floods?
The question is good for governor candidates to anwer or could be part of their campaign. I wanna see one of these candidates (Sarwono, Faisal Basri, Fauzi Bowo, Rano Karno, Andang Daradjatun, Agum Gumelar, who else?) come up with bold ideas & feasible to implement, not just shouting "Free of Floods in 2008" or "Anti-Floods Guaranteed!"

READ MORE!!!

KPC-Arutmin divestment is on, but...

People close to Bumi Resources said the divestment of up to 30% shares of coal mining subsidiaries (KPC and Arutmin) is on, but they're not sure if buyers could sign the purchase agreement in the next few days.

READ MORE!!!

Tempo goes blog

Tempo claimed itself the first 'traditional media' to do blogging at http://blog.tempointeraktif.com. Koran Tempo wrote today that the blog will have all journalists & editors of Tempo magazine, Koran Tempo, & Tempo News Room as the bloggers. I've read first few posts and one post about 'drama on flood news directed by TV reporter/presenter' attracted lots of comments!

Four Tempo journalists have posted and I bet if all the reporters/editors write one article/day, this new blog would easily leapfrog tempointeraktif.com. Or may be, just may be, they'll follow Washington Post's blog with sub-blogs like Achenblog for Joel Achenbach or Liz Kelly's Celebritology. So blog.tempointeraktif.com may have respective blogs for each journalist like Mettalog for Metta Dharmasaputra or Metenglog for Mohammad Teguh.
They could also follow New York Times blogs like The Caucus (politic), Bits (technology), pogue (technology), Screens (film), The Lede (breaking news) etc.
Wall Street Journal do the same. Now, Tempo is the first mainstream media in Indonesia going blog.
As Peggy Noonan, contributing editor for The WSJ said, blogging changes how business is done in American journalism. The MSM isn't over. It just can no longer pose as if it is The Guardian of Established Truth. The MSM is just another player now. A big one, but a player. That's in America. Could this happen here? I don't know.
Anyway, for Tempo, Welcome To Blogist (Blogger-Journalist) or Blo-Jo (be careful when read this!) Society or Blogosphere, whichever you like the most!
Once again, I pick up Ms Noonan's article: The blogosphere isn't some mindless eruption of wild opinion. That isn't their power. This is one of them:
They use the tools of journalists (computer, keyboard, a spirit of inquiry, a willingness to ask the question) and of the Internet (Google, LexisNexis) to look for and find facts that have been overlooked, ignored or hidden. They look for the telling quote, the ignored statistic, the data that have been submerged.
Bloggers have an institutional advantage in terms of technology and form. They can post immediately. The items they post can be as long or short as they judge to be necessary. Breaking news can be one sentence long.

READ MORE!!!

Microsoft soap opera

A young journalist told me this week that Information & Communication Minister Sofyan Djalil once shown reporters the short message sent by Research Minister Kusmayanto Kardiman over the controversy surrounding a MoU between Indonesia government & Microsoft Corp regarding the use of legal software in government offices. "Let's continue this soap opera on Microsoft. You play the antagonist, and I'm playing the hero!" I have no chance to double check this to both ministers. If it's true, I could only regret, how come these ministers playing like that?

The soap opera or popular as sinetron in Indonesia is directed by President SBY. I'm not sure where he got the inspiration. But the opera started when SBY visited Redmond, WA, Microsoft's headquarter, two years ago (May 2005 to be exact). Bill Gates gave a lecture on what a country needs to do if it want to develop IT business. Impressed, SBY then offered Gates to be his advisor for IT development.
Early February 2005, Sofyan told a meeting that Gates would be the first man to enter Heaven's gates. It cost Sofyan lots of criticism and accused him of being an asslicker.
In early July, Kardiman met SBY in his private residence in Cikeas with Microsoft Indonesia's president Tony Chen & Darmono (president of Jababeka---I don't know in what capacity he was there except that he is close to SBY).
After the meeting Kardiman told press that Indonesia government would invite Bill Gates to visit Indonesia. One year later, Gates visited Vietnam and was greeted like a pop star with 7,000 students waited for hours, some clinging to trees and balconies, to get a glimpse of Mr Gates during his visit to the Hanoi university.
At home, things changed quickly in the last quarter of 2006. All of a sudden, Gates becomes common enemy for open source community when SBY administration signed a MoU with Microsoft to use legal softwares in government offices. Open source community accused government of taking sides with Microsoft and contrasting it with government's other plan to promote Indonesia Goes Open Source (IGOS). Since then, Kardiman claimed himself the champion of open source community while Sofyan who signed the MoU as Microsoft guy. Legislators jumped in the stage and rallied behind Kardiman.
I'm not the supporter of either Microsoft & open source. In fact, I love both. Since 2004 while in the State until now I use Mozilla Firefox at home (because too many spams) though I hate readers of this blog using Mozilla because they could easily copy the materials/contents (users with Explorer can't copy paste the informations published). At office I use Microsoft. Very much in contrast with Kardiman who admits that at home he uses Windows and at office with IGOS.
Back to the soap opera, I prefer to have both systems compete, co-exists. And I really can't understand why these ministers can't settle their differences inside the cabinet. But I do understand that the ending of a story is very much depend on the director, whether to provide a Hollywood happy ending or open ended.

READ MORE!!!

Job cuts at major corporations

This week, we read PT Telkom Tbk's plan to cut its workforce by 2,000 and the same amount offered by Bank Permata, just when President SBY pledges to create more jobs this year onwards. Other major corporations to follow. Federation of Workers Union predicted 1.4 million workers will be kicked out of textile, clothing, plantation, and forestry businesses this year following 800,000 people that were forced to leave their jobs last year in those sectors.

Remember two weeks ago when 65,000 applicants flocked Bung Karno Sport Stadion to compete for jobs at Trans Corp (Trans TV and Trans 7 TV stations)? Well, the company owned by Chairul Tanjung accepted job applications from 100,000 people. I don't think the company could even absorb 2% of them.

READ MORE!!!

Mittal’s USD1.5 billion investments

Started out his steel business by setting up PT Ispat Indo in Surabaya, East Java 23 years ago, ML Mittal’s Arcelor Mittal (an amalgamation of Arcelor & Mittal) is currently the No.1 steel producer in the world with combined production capacity of 130 million tones, represent 10% of world's capacity. Now, he is planning significant investment in Indonesia up to USD1.5 billion in the next five years.


Mittal executive told the press about the investment after a meeting with VP Jusuf Kalla, who is in a state visit to India. Mittal is not alone. Tata Group and Essar also pledged similar interests to invest in the country’s ailing steel industry. While Mittal knows well the country, there is no guarantee that he would definitely invest USD1.5 billion here. In the next two months they’ll collect data to be followed by feasibility study (few months), and by June the giant will make the final decision.
Nine years ago, Mittal rocked Indonesian politic when Tanri Abeng (that time minister for state-owned enterprises under Soeharto & BJ Habibie administration) quietly signed a MoU to sell 51% shares of PT Krakatau Steel, Indonesia’s largest steel producer to Ispat. But Tanri faced strong opposition from the state-owned steel company’s board of commissioners, directors, and workers union.
As reported by Financial Times in June 1998, Soeharto administration had already agreed to sell 51% of Krakatau Steel to Ispat as early as May 7, two weeks before Soeharto’s downfall for around USD400 million without seeking additional bids.
Pressures mounted toward Tanri to cancel the deal. Tanri, a long-time friend of Mr Mittal, defended his decision saying, “As the shareholder’s representative, I have every rights to do that.”
But with the downfall of Soeharto, the deal was cancelled accordingly. Tanri is survived. He is the president commissioner of PT Telkom Tbk, lot healthier than Krakatau, and one of key supporters of Kalla.
There is huge difference between Ispat & Krakatau Steel in nine years time. Ispat/Mittal has become No.1 in the world, while Krakatau only No.1 in Indonesia with stagnant 2 million tones/year of capacity.
Now, both companies are on expansion mood. I don’t need to put a note on Mittal’s worldwide expansion. But Krakatau has several major projects to come. The largest is an iron ore plant to be built in Kalimantan with USD450 million investments. The company has signed a MOU with Al Tuwairqi, Saudi Arabia for the project last year during MSOE Sugiharto’s road show to Middle Eastern countries.
Are these guys, Al Tuwairqi & Mittal, looking from the same project with Krakatau Steel with different entry gates?
No idea. But the most important thing, they could really invest such big amount to create more jobs and strengthen our industrial structure.

READ MORE!!!

Will Bumi cut the deal?

I asked several analysts in town regarding the possibility of PT Bumi Resources Tbk could ink a deal to sell up to 30% shares of PT KPC and PT Arutmin Indonesia.

"I'm skeptical any deal can be closed on Bumi, now or ever," one analyst at local brokerage firm said.
Few weeks ago, I asked the owner of Bumi. "We're quite optimistic that before February 9, we could seal the deal," the famous businessman told me convincingly. Tata (India), BHP (Australia), Mitsubishi were mentioned as potential buyers. Tata had just accomplished major acquisition (Chorus for USD12 billion), while BHP was the controlling shareholder of Arutmin before Bakrie family acquired the company with loans from Bank Mandiri.
But, "I don't believe they could make it. They announced too many actions but delivers none," another senior analyst said.
"They could still cut the deal if the terms are favorable, especially the marketing side & cashflow management. But I don't think that's gonna happen next week," an investment banker familiar with such deals.

READ MORE!!!