Two Years of Blogging

Dear readers, today, two years ago, was the first time when my colleague Steven Bodzin (he is a reporter at Bloomberg New York office) introduced me to the blogging world. In fact, he was the one who pushed me to start blogging right after I enrolled the blogging class (actually China blogging project) at University of Californiat at Berkeley. Thank You Steven (especially for letting me stay at your appartment for three weeks) and be your friend. I just got Steven's email that he's in Venezuela at the moment. Anyway, two years of blogging, I know more people than my 13 years of newsprint journalism. Now, I'm addicted to blogging, and can't help to have more years of blogging to come! For those who have stopped by in this blog, thanks a lot and hope you'll visit more often! Keep blogging.

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Tata Power pays USD1.3 billion for 30% KPC-Arutmin

India's Tata Power agreed to pay USD1.3 billion for 30% shares of two coal mining subsidiaries of PT Bumi Resources Tbk---PT Kaltim Prima Coal & PT Arutmin Indonesia. Senior Vice President Investor Relations of Bumi Resources Mr. Dileep Srivastava confirmed the divestment last night. "The USD1.3 billion is inclusive the working capital. It shows Indonesia's attractiveness to the world's investors," he said.

The price is clearly lower than the previous claims that Tata would pay at USD1.6 billion, but for sure it's higher than analysts prediction at USD1 billion. What we need to know is the terms and conditions of Tata's offer.
"The price could be misleading. That's why we have to look deeper into the terms and conditions of the deal," an investment banker said.

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Panin Life turns into a paper company?

An analyst told me about Reuters news today that Malaysia's Maybank and PT Panin Life Tbk entered into a JV agreement to build a life insurance company where Maybank controls 60% share and Panin Life with 40%. "Looks like Lippo Life's transaction with AIG where Lippo actually offloaded its life insurance operation to AIG and turns into a paper company," the famous analyst said.

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Gudang Garam profit dropped 47%

PT Gudang Garam Tbk recorded net profit of Rp1.007 trillion in 2006, droppd 47% from Rp1.889 trillion in 2005 on lower operating margin.

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BRI's profit +11.8%, loss category loans +104%

PT Bank Rakyat Indonesia booked net profit of Rp4.257 trillion in 2006 (+11.8%), with provision for possible losses on earning assets skyrocketted to Rp1.84 trillion from Rp431 billion in 2005. The bank also reported significant increase of 104% in loss category loans to Rp2.598 trillion.

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Bumi profit +80%, Gajah Tunggal dropped 66%

PT Bumi Resources reported net profit of USD222 million in 2006, jumped 80% from USD123 million in 2005. Meanwhile tire manufacturer PT Gajah Tunggal Tbk recorded 66% drop in net profit to Rp118bn (against Rp346bn).

According to its financial statement published today, Bumi recorded USD1.85 billion of sales, slightly increased from USD1.75 billion in 2005. Bumi booked gross profit of USD484.4 million, less than 10% growth from USD441 million in 2005. With lower operating expenses, Bumi then recorded net operating income of USD323 million (against USD263 million in 2005). Actually Bumi targetted EBITDA of USD480 million for 2006 from two coal mining subsidiaries (KPC and Arutmin).
The coal mining giant's net profit mainly contributed by lower tax expenses at USD2.52 million against USD56 million in 2005 plus gain from sale of service agreement at USD32 million. Hm...and today the company is expected to announce the winner of 30% shares divestment at KPC and Arutmin.

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Cleaning up The President's backyard

Despite criticism of selective target of anti-graft movement, people praise President SBY's efforts so far. Several high-level officers close to the previous administration have been prosecuted, some of them were President SBY's colleagues. The most recent is the corruption investigation over former Bulog CEO Puspoyo Widjanarko. People would respect more the president's effort if he could start to clean-up his own backyard as promised in his early days in power. He could start with two ministers: Hamid Awaluddin and Yusril Ihza Mahendra, both involved in the disbursement of Tommy Soeharto's disputed USD10 million deposit. Or to be fair, all cabinet members, including the president should submit their latest financial reports to update their wealths.

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Unilever profit +19.5%, Branta dropped 93%

PT Unilever Indonesia Tbk recorded strong 19.5% growth in net profit last year at Rp1.72 trillion on 13.3% growth of revenue. The consumer goods giant recorded gross profit of Rp5.63 trillion and almost 20% growth in operating profit at Rp2.43 trillion. Meanwhile, tire cord producer PT Branta Mulia Tbk, just acquired by Turskish company Kordsa, recorded net profit of Rp18bn only, significantly dropped 93% from Rp119bn in 2005.

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Tempo still in red

Despite significant increase of revenue, PT Tempo Inti Media Tbk, holding company for Koran Tempo and Tempo magazine, recorded net loss of Rp6.7bn in 2006 (lower than Rp7.95bn in 2005).

According to the company's financial report published today, Tempo reported revenue of Rp165bn in 2006 or 13.8% growth from Rp145bn in 2005. The company's improvement could be seen in its operating profit of Rp15.56m against operating losses of Rp4.5bn in 2005. Tempo's total asset as of Dec 2006 was Rp117bn, slightly reduced from Rp124bn in 2005. Keep on writing great stories & investigative stuffs, my friends!

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JB Kendarto moved to Bank Mega

Johanes Bambang Kendarto, former director of treasury at Bank Mandiri, has been appointed new director of Bank Mega controlled by Chairul Tanjung's Para Group.

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TSH & Thohir acquired SPMN

Jatoba International Pte Ltd, a wholly owned subsidiary of TSH Resources Bhd, and Mr Garibaldi Thohir acquired 100% shares of PT Sarana Prima Multi Niaga (SPMN) for USD28 million. Jatoba and Mr Thohir will own 3,600 shares (90%) and 400 shares (10%)respectively in SPMN.

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K(ch)eating on Indonesian banks

No doubt that Paul Keating is one of prominent political figures in the region. He was Australian prime minister for many years. But I never heard of Mr Keating as a banker. So, it's quite a suprise for me to read the long-form interview with Mr Keating published by Bisnis Indonesia today about the state of Indonesian banking industry. I'm not saying he is an overnight Indonesian banking industry analyst. Anyway, what he said?
Banks should be careful about capital adequacy ratio (CAR) and that the state should stay out of the business. That's normative. But expecting him to answer the following questions?
1) What do you think of Bank Indonesia's initiative to encourage the merger of small banks?
2) What do you think of bank's reluctance to finance real and micro sectors?
Mr Keating is not cheating on his answers for sure. But we really need to find the answers from the bankers, especially those who control small banks, on why they're reluctant to merge or to small medium entrepreneurs/investors on why they're reluctant to get the loans out of the banks even though they had signed loan agreements.

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Lippo Karawaci's op profit declined 16.6%

PT Lippo Karawaci Tbk recorded operating profit of Rp447bn in 2006, declined 16.6% from Rp536bn in 2005 on lower revenue (down 5%) and increasing operating expenses (+13.3%). The property giant reported significant increase in total asset to Rp8.48 trillion in 2006 (+36%) but lower (-9.5%) net profit at Rp324bn.

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New Investment Law

Parliament has finally deliberated the new investment law in a bid to lure in more investors. But it's not a panacea. Why?

Mini-plenary session of parliament deliberated the bill yesterday and will be brought to plenary session on Thursday for approval. After that, government would have to issue details of rules and regulations based on the new law.
The existing laws (for foreign and domestic investments) have been in place for almost four decades (both laws deliberated by Soeharto regime in 1967 and 1968). The new law will cover both foreign and domestic investments. Despite criticism that the new law is considered too liberal and give more rooms to foreign investors, no quick fix to the country's tarnished image in the investment community.
No doubt about Indonesia's attractiveness for investors in terms of vast natural resources, abundant workforce, and huge domestic market potentials. But to turn these potentials into real economic forces is a delicate issue. Rampant corruptions, hefty bureaucrazy, poor infrastructure, lack of leadership and qualified human resources, and legal uncertainties & law enforcements, are pending issues that need to be solved no matter how soon the new law will be enacted.
Anyway, what's new in the investment law besides the merger of laws on foreign and domestic investment?

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Swedish Match expands cigars

PT Swedish Match Cigars Indonesia, a subsidiary of Swedish Match Cigars BV (Netherland), expands its production facility in Pasuruan, East Java with additional investment of USD19 million. The new plant has installed capacity to produce 450 million cigars/year.

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Essar expands Indonesian plant

PT Essar Indonesia, a subsidiary of Essar International, is expanding its manufacturing facilities in Bekasi, West Java with additional investment of US$60 million. The new facility would produce galvanizing coils/sheets (50,000 t/y) and colour coated sheets (60,000 t/y). It expects to absorb 215 new workers.

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Tata, Marubeni, & Mitsubishi submitted bids on KPC-Arutmin

Three giants---Tata (India), Marubeni & Mitsubishi (Japan)---have submitted their respective final offers to acquire 30% shares of PT Bumi Resources Tbk in two coal mining subsidiaries---PT KPC & PT Arutmin Indonesia, for undisclosed price. Bumi is expected to announce the winner next week. "You're right. They have submitted their final offers," an investment banker involved in the deal said few minutes ago.

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Intelligence Agency's new role: Handling the mudflow

News of the day: President SBY has just expanded The State Intelligence Body's scope of work with the new task to handle the negotiation of mudflow victims in Sidoarjo, East Java with Lapindo Brantas Inc. Why? Guess yourself!

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Poor margin, Asahimas records losses

Flat glass and automotive glass manufacturer PT Asahimas Flat Glass Tbk recorded net loss of Rp17.2bn in 2006 (against net profit of Rp212bn in 2005) on poor margin. According to its financial report published today, Asahimas booked significant drop of operating profit from Rp309bn to Rp7.7bn last year caused by the decline in domestic sales that derives from the low demand in the automotive glass segment. On the other hand, the rise in the company’s production and operational cost caused by the 2005 industry fuel hike cannot be balanced by the rise in sales worth, due to a tight competition and the weakening of purchasing power (also due to 2005 fuel hike).

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My doctor said Blogging isn't allowed: Sorry guys!

A lot of interesting stuffs out there I wanna write. BCA's net profit of Rp4.2 trillion but it sits over Rp45 trillion government bonds (with interest payment from the State budget still) like Mandiri, BNI, BRI, and other recapitalized (bailed-out) banks; the Yusril-Hamid saga on Tommy's money; Lapindo updates; some exclusives; but the doctor said blogging is not good for my health. Sorry guys!

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Lapindo disaster updates

Arifin Panigoro's PT Medco Energi Internasional Tbk sells 32% interest in Brantas PSC for USD200 to Prakarsa Group (Bakrie-linked Minarak Labuan back up the group's financial liabilities). Lapindo Brantas Inc (controlled by Bakrie's Energi Mega Persada) owns 50% interest in the troubled oil & gas concession area. Energi once planned to exit from the disaster (remember the USD2 transaction with Freehold?) but stock market authorities blocked that. Why stock market authorities let Panigoro get out from the disaster?

I guess Bapepam sees like this...Medco sells 32% stake for USD100, while Energi tried to sell 50% stake to Freehold for USD2. Just kidding!
Why Medco decided to exit? Cut loss. Why Prakarsa (or Bakrie) decided to buyout Medco? Potential upside?
Why Medco & Santos (owns 18% in Brantas PSC) booked huge loss provisions from Brantas PSC while Energi didn't? Because Energi believes the cost of handling the mudflow disaster could be recovered by the State under cost recovery scheme?

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Mustafa, new Bulog CEO: Where's the fit & proper test?

Only days after the former CEO Puspoyo Widjanarko named a suspect and hours after detained, government appoint Mustafa Abubakar as the new CEO of Bulog. This is very much in contrast with PLN CEO Eddie Widiono Suwondo who is maintained in his position even though he was detained several months as a suspect in corruption case.

Can we say this is government's response to criticism about pathetic slow decision making in the selection of state-owned companies executives?
Well, there are SOEs that need few months of fit & proper tests. One listed company, Bukit Asam, once even left without executives for several weeks.
But appointment of Mustafa, former acting governor of Aceh, is so fast if we use the normal process of fit & proper. I just got SMS this morning that VP Jusuf Kalla tipped Mustafa as candidate for Bulog CEO. So, I'm quite surprised to read Detik.com that Mustafa had been sworn in this afternoon. It deserved an explanation still.

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Can we learn something from Karaha Bodas case?

Pertamina CEO Ari Soemarno confirmed today that the company should pay USD319 million fines to Karaha Bodas Company (KBC), more than enough to build thousands of new schools for our kids. At the end of the day, state budget should pay to Pertamina. The question, can we really learn something out of it?

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Farallon acquired BTPN loans from Credit Suisse

Farallon Capital has aquired loans of PT Bank Tabungan Pensiunan Nasional (BTPN) from Credit Suisse, people close to the deal said. The loans are reportedly secured with significant shares at the bank currently controlled by Recapital Advisors.

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Bahana-Credit Suisse underwrite Jasa Marga IPO

It's almost certain that PT Bahana Securities and Credit Suisse will underwrite what could be the largest privatization for SBY's adminitration, initial public offering of up to 30% shares of turnpike operator & developer PT Jasa Marga. I got an early clue of Bahana-Jasa Marga last night.

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An interview with Al Hilal Hamdi, chairman of National Biofuel Development Team

This morning I got a chance to make a phone interview with Al Hilal Hamdi, chairman of the National Team for Biofuel Development on the latest issues surrounding the biofuel issue.


Q: What's the latest on biofuel development?
A: Today, Indonesia and Brazil will sign biofuel development cooperation in plantation and research and development. Brazil has been considered a success in biofuel development. Can you imagine the country has 17 million KL capacity at the moment and they're planning to establish 86 news plants. We need to learn from them.
Q: I believe the main focus will be on sugar cane?
A: You're right. It's funny that Brazil told us actually they got the seed from Papua sometime 500 years ago. I didn't know that before.
Q: Market is there, the land also available, but land acquisition is the main problem for massive plantation projects to support our biofuel drive. How to tackle the issue?
A: Last week, all governors from Kalimantan asked for additional forest concession for plantation, but minister of forestry rejected that because there are so many forest concession have been awarded for conversion to plantation, but only few that have been planted. Imagine that in East Kalimantan and Central Kalimantan alone, almost 6 million hectares of forest area has been released for commercial plantation but only 250,000 hectares that have been planted. We need to be careful.
Q: So, why not use the existing neglected area?
A; Well, that's our priority at the moment. Next Monday, officials from related ministries would discuss the issue. Government is preparing legal audit and legal compliance on the license given. We're thinking of revoking their licenses and give it to new investors who seriously want to develop plantation.
Q: How about local administrations? Are they supportive enough?
A: Papua is the most supportive. Merauke regency administration, for example, have awarded area license to Sinar Mas, Genting Group, and others for around 1 million hectares. But it's pending approval of forest concession from Minister of Forestry.
Q: But there is risk of investors only want to harvesting the trees and leaving the area emptied. Environmentalists have huge concern on this issue, especially when dealing with big groups?
A: That's why we're focusing on areas that have no more trees. It's more productive to have palm oil plantation than timber plantation at the moment. Income from one hectare of timber plantation would only USD2,500 in five years, while palm plantation could make the same amount in one year only.
Q: How about investors?
A: I just got information that Sinopec and Genting Biofuel will join forces for a biofuel project here. Genting already own 80,000 hectares through its subsidiary Asiatic Group. Overall, investors are upbeat.

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Holcim op profit drops 95%

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SBY & Megawati endorsed Fauzi Bowo

President SBY's Partai Demokrat and former president Megawati Soekarnoputri's PDI-P finally endorsed Fauzi Bowo as their candidate for Jakarta governor election. Demokrat and PDI-P will join VP Jusuf Kalla's Golkar Party which already endorsed the ticket to Fauzi Bowo.

LSI's recent survey claimed PDI-P's popularity is the highest among political parties due to its consistency as opposition party. But if we see how the party joined forces with Golkar in regional elections, we can't say PDI-P is consistent enough. That's also why some groups inside the party rejected the nomination of Fauzi as PDI-P's candidate. "Look at what happens in Banten election. We endorsed the same candidate proposed by Golkar. After winning the election, it's Golkar which claim the victory," one party member said.

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Farallon also want to acquire BTPN

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Citra Group & BP Berau legal dispute

PT Citra Pembina Pengangkutan Industries (CPPI), a subsidiary of Kris Wiluan's Citra Group is fighting back with counter statements published in Kompas daily today regarding BP Berau Ltd's earlier statements commenting court decision that awarded Citra a win. I wonder why lawyers increasingly use media as the court room?

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Energi op profit declined 29%

PT Energi Mega Persada Tbk booked operating income of Rp237 billion in 2006, declined 29% from Rp336 billion in 2005 due to increasing costs. But the company managed to book net profit of Rp203 billion, inched up from Rp201 billion in 2005. How much is the provision for mudflow in Sidoarjo?

According to its audited financial report 2006 published today, Energi's net sales slightly reduced to Rp1.64 trillion from Rp1.68 trillion in 2005 while its asset grew significantly by 55% to Rp9.88 trillion. Energi, parent company of Lapindo Brantas Inc---owner of 50% participating interest in the Brantas PSC, recorded significant increase in non-current liabilities to Rp6.7 trillion, mainly due to higher long-term loans.
It's not clear yet on how much the company's net provision for mudflow losses due to drilling activities in Banjar Panji-1 (Brantas PSC). But in the non-current liabilities, Energi posted estimated obligation on probable losses of Rp286 billion. (I need to read the full report filed to JSX later this afternoon)
As reported earlier, Santos---Energi's partner with 15% interest in Brantas PSC, had posted net provision of A$67 million or around Rp450 billion in its 2006 report.

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Mudflow Provisions for Energi Mega & Medco Energi

In the next few hours PT Energi Mega Persada Tbk might announce its 2006 audited financial report and soon to be followed by PT Medco Energi International Tbk. It's interesting to see how much the company's provision for mudflow in Sidoarjo.

Santos put Aus$67 million net provision in its 2006 report. Santos owns 15% participating interest in Banjar Panji-1 drilling well, the primary source of the mudflow erupted since May 29. Energi Mega's Lapindo Brantas Inc is the largest shareholder in Brantas PSC with 50% participating interest (as an operator as well), while Medco owns 35%. If Santos is the benchmark, Energi may have to set provision of Aus$200 million?

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Mulialand booked operating loss

Property company PT Mulialand Tbk booked operating loss of Rp2.59 billion last year against operating profit of Rp8.58 billion in 2005 due to increasing costs. The company's gross profit declined almost 14% despite 12% revenue growth.

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Jakarta governor election updates

Fauzi Bowo, deputy governor of Jakarta, has secured endorsement ticket from VP Jusuf Kalla's Golkar Party to run in the election under its banner. SBY's Partai Demokrat is reportedly endorsing Mr Bowo as well. But Megawati Soekarnoputri's PDI-P is split. Detik.com report last night that PDI-P will give the ticket to Bowo has sparked internal conflict in the party. PDI-P's lower branches are reportedly rejecting Bowo and prefer its own candidate (no coalition with Golkar). Sarwono Kusumaatmadja has been tipped as the alternative candidate for PDI-P.

In the meantime, former VP candidate Agum Gumelar has been tipped by Amien Rais' PAN as the party's strongest candidate for Jakarta governor election. Agum is paired with Jeffry Geovanie (lost the battle in West Sumatra governor election last year). Agum is said to lobby SBY's Partai Demokrat for the ticket.
PKS has Mr Andang Daradjatun as its main candidate for the election.

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Salim vs Gunawan Yusuf: Anthony was quized 7 hrs

The war between Salim Group and Gunawan Yusuf on the disputed sugar cane plantation asset entered a new phase yesterday when police quized Anthony Salim (Salim CEO) for seven hours yesterday. Anthony was tight-lipped when asked by journalists after the long session, Detik.com reported. What's next?

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Cabinet Reshuffle, a mystery

Make sure to ask the following people after reading this article: 1) President SBY himself, 2) Mr Kurdi Mustofa (president's secretary), or maybe 3) Ibu Ani (in case she overheards, but I'm not sure if reshuffle is a dinner time discussion). "If you got the information from other than these guys, just consider that a rumor," one investment banker said. Don't ask VP Jusuf Kalla because he is already bored with the issue. But be careful if you send SMS to SBY himself because he already warned 'not to make fuss' the cabinet reshuffle thing.

The minute after SBY made the statement, various parties have even spoken louder on the reshuffle. They simply ignored SBY's demand for a 'silentium magnum'.
This morning, for example, Prosperous Justice Party (PKS) Chairman Tifatul Sembiring urged president to replace three ministers (Coordinating Minister for the Economy Dr Boediono, Coordinating Minister for People's Welfare Aburizal Bakrie, and Minister of Finance Dr Sri Mulyani Indrawati). Mr Sembiring didn't mention about ministers from his party (three of them) or MSOE Sugiharto who is considered increasingly a PKS supporter (initially endorsed by United Development Party or PPP).
Yesterday, former president Abdurrahman Wahid's National Awakening Party (PKB) said 18 ministers should be replaced. "We need three posts," the party said. Meanwhile, Golkar Party had reportedly proposed several names to be ministers in the reshuffled cabinet.
Golkar politicians have also demanded SBY to talk eye-to-eye with VP JK on reshuffle issue (a sign that JK has been left behind in many decision making process because of stronger suspicious between the two camps regarding 2009?).
Whether SBY will reshuffle the cabinet or not, it's not clear. But I'm stunned with the statement published in Tempointeraktif.com few minutes ago from Mr M Iqbal Wibisono, chairman of Central Java chapter of Golkar Party. Mr Wibisono urged SBY to learn about leadership from Soeharto especially two issues that Yudhoyono don't have, decisive & wisdom. Well, I'm sure Soeharto had taught SBY for almost two decades about that. But I'm not sure if this time around Soeharto willing to do that unless he got assurance from court that he wouldn't have to stand trials. Teaching means he's healthy, and that's not good for Soeharto's image as an ill person that unable to stand trial anymore.

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Mr I Know

Last week I interviewed former member of Team Lembang 9 (think tank behind VP Jusuf Kalla in 2004 election). "He was a good listener back then. But things have changed. Everytime I raised one particular issue in my recent discussions, he cut my sentences with 'I know' statements. He is Mr I Know now. But I could understand his frustration on slow pace of decision making here," he said.

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Charoen's move on Dipasena

PT Charoen Phokpand Tbk has reportedly expressed its interest to finance PT Dipasena Citra after Recapital Advisors defaulted in providing additional funding for the ailing shrimp farm. The move would potentially make Charoen control its competitor Dipasena. It might too early to conclude this is an anti-competition, but it's a good exercise for Fair Business Competition Committee (KPPU) to analyze the possibility.

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State banks finance Bakrie's toll road project

Two state-owned banks, BNI and BRI, provide Rp1.38 trillion loans to PT Semesta Marga Raya (SMR) which builds Kanci (Cirebon) - Pejagan (Brebes) toll road. SMR is a JV between Bakrie Investindo (35%), PT Satria Citra Perkasa (25%), Transglobal Finance Ltd (25%), and Pan Galactic Investment Ltd (15%).

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Sugiharto believes he'll stay in the cabinet

Kontan published an interview with Sugiharto, minister for state-owned enterprises, in its latest weekly edition. Besides all the claims of success he made (like SBY did), Sugiharto believes he would survive the reshuffle, if any. "It's all up to those up there. But if you measure it realistically, look at the facts. There are 20 SOEs that booked losses, but it has dropped from 39 SOEs," he said. Other ministers would follow with similar claims, some might publish ads.

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Wandi Sofian walked away with US$14 million

Wandi Sofian, owner of an investment company PT Interbanking Bisnis Terpadu (Ibist) Consult, had walked away with US$14 million of funds from 2,025 investors and so far policed has yet to detain the man. The company promised to pay 4%/month interest. Mr Sofian, according to some reports, used military officers in marketing and most of the investors (victims) are also lower-higher ranking military officers. Well, be careful if someone offer something that is too good to be true!

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No decision on Lapindo

Cabinet meeting on Lapindo hot mudflow failed to make important decision about the status of the disaster last night. Cabinet made only technical decisions on extension of the team to handle the disaster by one month.

According to Detik.com report, the meeting chaired by President SBY decided to give three new tasks to the team led by energy minister Purnomo Yusgiantoro. First, identify all measures taken by government since May 2006. The team should work with Attorney General in anticipating class actions. Second, preparing the establishment a new team. Third, identify all the losses caused including costs to rebuild public infrastructures.
Before the cabinet meeting, SBY met with East Java Governor Imam Utomo, Sidoarjo Regent Wien Hendarso, and Bakrie Group leader Nirwan Bakrie. Attendees of the cabinet meeting were VP Jusuf Kalla, Coordinating Minister for the Economy Boediono, MoF Sri Mulyani, Minister for Fishery Freddy Numberi, Minister for National Development Planning Paskah Suzetta, Minister for Environmental Affairs Rachmat Witoelar, and Public Works Minister Djoko Kirmanto.
No statement made about the status of mudflow disaster as geologists are disputing it. Senior geologists and former chairmen of Indonesian Geologists Association (IAGI) Professor Kusuma and Andang Bachtiar both criticized a workshop conducted by the current IAGI board with some experts and its conclusion (mudflow as a natural disaster, triggered by earthquake in Yogyakarta).
Other geologists also criticized the quality of the workshop especially because the competene of participants are in doubts.

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Lapindo updates

President SBY is expected to make an important decision today, to declare the status of hot mudflow in Sidoarjo, whether it's a natural disaster (so the reconstruction cost would be the state's responsibility) or a disaster caused/triggered by drilling activities of Lapindo Brantas Inc. Watchout!

State Minister for Environment Affairs Rachmat Witoelar told the press yesterday that the mudflow could be considered a natural disaster. While Energy Minister Purnomo Yusgiantoro said it's the president himself who has the authority to declare the status of the disaster.

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Garuda crash, Sabotage & Politic

Australian PM John Howard dismissed speculation of terrorist attack or sabotage behind the burst of Garuda Indonesia into flames Wednesday as it landed in Yogyakarta on Java island that killing 21 people, Tempointeraktif.com reported. Professor Kusnadi, former rector of Gajah Mada University, is among the nine dead bodies identified so far.

Earlier today, President SBY ordered Coordinating Minister for Politic & Security Widodo AS to onduct a thorough investigation into the crash, including the possible 'non-technical' causes, Associated Press quoted spokesman Andi Malarangeng, in an apparent reference to sabotage.
"Including sabotage," cabinet secretary Sudi Silalahi said.
Police officers from National Headquarter have been deployed to investigate the possible sabotage.
Garuda said in a statement that 21 people had died and that the other 119 passengers and crew survived, most with severe burns, and were being treated in local hospital.
Garuda claimed the aircraft was fit to fly, has followed all technical requirements, including routine maintenance. But aeronautical expert Bambang Hadi Kismono told Detik.com that the aircraft was crashed because of the malfunction of landing gears that pushed a hard landing.
Well, looks like we have to wait the result of Black Box investigation. It takes time because Indonesia has no facilities for that. We have to send the black box to Hong Kong, Taiwan, or US.
In Jakarta, politicians asked Transportation Minister Hatta Radjasa to resign, blamed the politician from National Mandate Party (PAN) for his incompetence in handling the transportation affairs following series of tragedies in the sector. Other than that, rumors are quickly spreaded that the crash was caused by terrorist attack or sabotage to ruin SBY's international image. At least 10 Australian were on board of the airplane, including several journalists.
Din Syamsuddin, chairman of PP Muhammadiyah (the second largest Moslem organization in Indonesia) was on board but survived after he escaped the fire.

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Purnama resigned from Indofood

Philip S. Purnama has resigned as director of listed food industry giant PT Indofood Sukses Makmur Tbk for undisclosed reasons, Detik.com reported. Purnama, 42, declined to explain the move. Indofood notified JSX on Monday about Purnama's resignation without explanation.

Purnama, one of Anthony Salim's trusted professionals, was also the Chief Commercial Officer of Bogasari Flour Mill, Indofood's subsidiary. He was responsible for the flour sales, marketing, corporate strategy and business development post deregulation of Indonesian flour industry. Ever since deregulation, he led Bogasari to increase sales to US$800 millions in six years, with market share of 66%.
According to the bio available at his personal website (http://ppurnama.com), Mr Purnama was also active in the Salim Group in business development, merger and acquisition of food and agribusiness. He serves as Director of Salim & CBH Joint Ventures in Australia, Malaysia and Vietnam.
Prior to joining Bogasari in 1998, Philip Purnama was the Chief Operating Officer & General Manager of Pacific Flour & Food (China & Hong Kong) in 1992-1995.
He had worked before in The Chase Manhattan Bank Corporate Finance Department, structuring commercial loan to the Government of Indonesia and several prominent Indonesian conglomerates.
Father of Chloe (6), Philip is active in social works and education. He is an active global pioneer of food fortification to alleviate malnutrition among children and women. He teaches competition and strategy at University of Indonesia.
Mr Purnama holds an MBA from Harvard Business School, Boston, USA. He is fluent in Mandarin and several Chinese dialects.

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Endless natural disasters: Eco-Politic

Landslide in my hometown in Manggarai, Flores killed 34 people few days ago. Today, an earthquake killed 82 people in Solok, West Sumatra. Endless natural disasters. Coordinating Minister for the Economy Dr Boediono said natural disasters have prevented the economy to grow higher. So, I guess our earlier discussion about those people who believe that natural disasters have something to do with President SBY's bad aura could get better justification (for making future rational political decision)...SBY missed his campaign promise of 7%/year growth. But SBY could also defend himself and justify the lower growth..."I could have reached 7% growth without series of natural disasters."

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Conflict over Jasa Marga

Privatization Committee led by Coordinating Minister for the Economy Boediono had decided to privatize toll road operator PT Jasa Marga this year through initial public offering (IPO). But VP Jusuf Kalla and other cabinet members asked Jasa Marga to drop the IPO plan and sell off its productive assets instead. How about that.

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HS Dillon: SBY could be like Carter

Political observer HS Dillon wrote in The Jakarta Post today that President SBY could have similar fate with US President Jimmy Carter. "He is a fine man, but an ineffective leader."

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US$900m for 30% of KPC & Arutmin

Investors are reportedly offering maximum USD900 million for 30% shares in PT Kaltim Prima Coal & PT Arutmin Indonesia, both are coal mining subsidiaries of PT Bumi Resources Tbk. The offers are well below earlier claim that Tata (India) offered USD1.6 billion.

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Lapindo disaster politic updates

House Speaker Agung Laksono (also Deputy Chairman of Golkar Party) declared 'according the meeting of infrastructure committee of the house of representative (DPR)', the cost to repair & relocate public infrastructures destroyed by mudflow in Lapindo Brantas inc's drilling area (predicted at Rp7.6 trillion) will be the state's responsibility.

Minister of Finance Sri Mulyani Indrawati quickly responded the statement saying no more money available to finance the restoration projects.
"Even if the money is there, it should go through legitimate political process and clear on the burden sharing between Lapindo Brantas Inc and government. There should be a president decree or agreement between government and The House about the status (of those who should be held responsible) then I could put into the mid-term budget revision mechanism," she said.
Meanwhile, coordinating minister for the economy Boediono said government has yet to decide the status of the mudflow in Sidoarjo, pending on inputs from experts from Japan and UK. "Even the experts have yet to make clear conclusion," Boediono said.
State minister for National Development Planning Paskah Suzetta (also executive of Golkar Party) said government is working on rehabilitation and reconstruction programs. "Even though, we need the burden sharing mechanism between government and Lapindo," he said.
Will the experts come up with conclusion that might not correct politically? Will government make decision that politically correct even though Lapindo might argue that there is no firm scientific conclusion to justify that the mudflow is a result of drilling misconduct?
Former chairman of Indonesian Geologist Association (IAGI) Koesoemadinata as quoted by Koran Tempo expressed his concern about the conclusion of a workshop (IAGI scientists participated) two weeks ago that the mudflow was caused by earthquake in Yogyakarta.
"It is a mud volcano. But it's not clear yet of whether it was triggered by earthquake or drilling misconduct," he said.
Senior geologist Koesoemadinata criticized IAGI saying "I'm worried IAGI is being used by certain interests."

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It's too early to claim a success

Almost all newspapers published President SBY's claims of success today. The President made the claims before the parliament members of Partai Demokrat where he is the chairman of patron board. Isn't it too early to claim his administration a success?

SBY claimed success on the following pending issues left unsettled by the previous admnistrations:
1) Aceh conflict (Peace Accord & peaceful local election)
2) Papua conflict (?, not sure what has been settled)
3) Human rights violation in East Timor (?)
4) Lifting US military embargo
5) Healthier Budget (?)
6) Accelerating payment of IMF loans & dismiss CGI
7) Dipasena shrimp farm (?)
8) Cemex dispute
9) Karaha Bodas (?)
10) Cepu conflict between ExxonMobil & Pertamina
11) Texmaco settlement(?)
He told party members to tell people what the president had done. "According to World Bank, we're on the right track," Yudhoyono said.
Well, World Bank!
I don't remember his campaign promises, but one thing: 7% economic growth/year. What's the latest statistic?
Other promise: create more jobs (but why unemployment on the rise?)
The answer lies in the famous lyric of singer Ebiet G Ade (he performed before Partai Demokrat gathering, duet with President SBY)...the dancing bushes (I'm not sure the translation).

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Funeral corruption

I know for sure that funeral is a big business. In UK, funeral is a USD1.5 billion/year business. I don't know how big is the business here. But I'm sure it's lucrative. In 2002, the value of funeral business had been above Rp1.2 trillion/year.
That's also why Lippo Group develop the San Diego Hills cemetery park (up to USD3,000/unit). This time, it's Detik.com report that attracted my attention. It's about Mr Susanto or Lie Sheng Cing, chairman of Pluit Funeral Foundation in Jakarta. He is reportedly corrupted the foundation's money and walked away with at least Rp40 billion (USD4.5 million) to USD15 million. Police put him on 'wanted list'.

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Bakrie's revenue +57%

PT Bakrie & Brothers Tbk recorded unaudited revenue of Rp4.28 trillion or 57% growth from three divisions (infrastructure, telecommunication, and plantation) from 2005. Infrastructure is the largest contributor with Rp2.27 trillion (+55%), followed by plantation at Rp1.18 trillion (+33%), and telecommunication at Rp829 billion (+125%).

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Mitsubishi acquires 50% Kangean Block, confirmed

PT Energi Mega Persada Tbk confirmed the signing of head of agreement (HOA) with Mitsubishi Corp & Japex Petroleum for the divestment of 50% shares in Kangean Block for USD360 million. Mitsubishi & Japex will own 25% working interests respectively in the block. The company didn't disclose terms and conditions of the HOA, except that it expect the definitive agreement to be signed this month.

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Corporate Performance (3)

Almost all Astra Group-related companies have issued 2006 financial performance, pretty much as predicted, except that Astra Agro Lestari which failed to book higher profit from increasing CPO price.

Below is the 2006 financial performance of several companies (profit, in Rp billion):
Company 2006 2005
Adira 463 476
Astra Agro 787 790
Serasi Autoraya 20 46
Astra Graphia 55 36
Astra Otoparts 282 279
Astra Interntl 3,712 5,457
United Tractors 930 1,050
Davomas 196 90

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Cabinet Meeting with Mud Therapy

Two years ago, president SBY led a cabinet meeting from Washington through video conference. Catchy! Yesterday, VP Jusuf Kalla led a cabinet meeting on the Jakarta-Yogyakarta train. Catchy as well! Very soon, we're hoping to have the next cabinet meeting with full service of hot mud therapy provided by Lapindo Brantas Inc in Sidoarjo, East Java. That would be a big show!

The next cabinet meeting deserved huge attention as by March 8, 7 days from now, president should issue new decree on how to settle the mudflow disaster especially the cost aspect. The existing decree, expired Marh 8, obliged Lapindo to provide Rp3.8 trillion to finance the settlement. There is immediate need of another Rp4 trillion to fix public infrastructures destroyed by the Sidoarjo mudflow which now popular as Lusi (abbr of Lumpur Sidoarjo). Fancy name right? Oh, Detik.com has another fancy name related to Lusi called Bolton (Bola Beton) or Concrete Balls used to stop the mudflow! (I laughed when read the story...Bolton failed to stop the mudflow!, after the soothsayers failed to show their magic powers few months ago)
I wonder whether the recent workshop of scientists sponsored by (?) would end up with cabinet decision like, "OK, this is a natural disaster, the state should take care the burdens, Bakrie family could walk away free, we'll reimburse the already disbursed funds," or "No, this is 50:50, natural disaster + man-made disaster caused by poor drilling, so we should share 50% of the financial burdens."
Should the cabinet meeting on schedule, the next day, media would run stories like...Relaxed with Lusi's therapy, Cabinet decided to...

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