BNI provides Chandra Asri US$15 M

State-owned Bank Negara Indonesia (BNI) has signed L/C facility of US$15 million with PT Chandra Asri Petrochemical Center (CAPC), a subsidiary of PT Barito Pacific (BRPT) Tbk controlled by Prajogo Pangestu.

Barito Pacific agreed to provide corporate guarantee for the facility which covers a maximum 70% of the facility's requirement. BRPT stock surged from its low at Rp450 in January 2009 to Rp1710 in August 26, 2009, but then retreated to Rp1260 recently. Still, that would give a 180% gain this year.

At Rp1260, BRPT has market capitalization of US$930 million. BRPT has total asset of Rp17.58 trillion or about US$1.85 billion as of June 30, 2009. BRPT reported net profit of Rp383.7 billion in H1 2009 against net loss of Rp372 billion in the same period last year on improved operating margin. 

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Banten gubernatorial race

Hold your breath for the Jakarta gubernatorial race which is a year away. Let's talk about the breathtaking race in the newly established Banten province at the western tip of Java island only weeks away. Who are the candidates?

Three pairs to contest:
First, Rt Atut Chosiyah (Golkar) endorsed by PDI-P as governor candidate. She won the PDI-P Banten chapter convention, beating PDI-P's own cadre and popular artist Mrs Marissa Haque (PDI-P legislator). Mrs Atut also won Golkar Party's convention in Banten to make her the front runner in the election.
Second, Dr Zulkieflimansyah (legislator from PKS). His running mate is Mrs Marissa Haque (PDI-P).
Third, Tubagus Iman Aryadi (Golkar executive), endorsed by president SBY's Partai Demokrat.
The election is worth attention as Banten is the stronghold of Golkar party which won the 2004 election with 16 seats at the local legislative (DPRD), followed by PDI-P (12), PKS (11), Partai Demokrat (8), and PPP (8).
Banten is the home of many multinational investments. Cilegon regency is the largest center of chemical industry in Indonesia. Mitsubishi Chemical, for example, operates the largest purified therepthalic acid (PTA) plants of South East Asia in Cilegon regency. Chandra Asri (olefin center), Titan's PENI (polyethylene), Tri Polyta (polypropylene), Asahi Chemical's EDC to PVC plants, Cabot's carbon black, Amoco Mitsui's PTA plant, Polyprima's PTA plant, Polychem's glycol, Bayer MaterialScience, etc. Cilegon is also the steel-related industry center with the largest steel manufacturer PT Krakatau Steel and Australia's BHP Steel facilities there.
The much-talked-about Bojonegara port is also there with efforts to make it a special economic zone (SEZ). The Merak port is main access linking Java and Sumatra islands.
Banten raised public's attention on social issues when Tangerang, Banten's most populous municipality, under the spotlight after the issuance of a controversial bylaw to eradicate prostitution in 2005. Bylaw No. 8/2005 bans people in public places, places visible from the street or in red-light districts, from persuading or coercing, either through words or gestures, others into acts of prostitution.
The municipality's council also promulgated bylaw No. 7/2005 which bans the distribution and the sale of alcoholic drinks, except in three to five-star hotels and licensed restaurants for on-the-spot consumption.
There's so much at stakes, but I have no clues in which directions these governor candidates would take the province to. Anybody?

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Syafruddin Temenggung named a suspect in a corruption case

As predicted, prosecutors finally named Syafruddin Temenggung, former chairman of Indonesia Bank Restructuring Agency (IBRA) on an aledged corruption for the divestment of a sugar plant in 2003, newspapers reported today.

Syafruddin, popularly known as Pak Syaf, dissapeared from public eyes for almost two years since the closure of IBRA in early 2004, was the last chairman of IBRA, once one of the most powerful position in the country. IBRA managed tens of billions of US dollar assets transferred from the country's banks following the collapse of financial market in 1998.

The prosecutors accused the transaction in 2003 had cost the state a huge loss as the assets were sold at heavily discounted price. The sugar plant (PG Rajawali III, located in Gorontalo, Sulawesi Island), according the attorney, had the value of 600 billion rupiah (almost US$67 million) but IBRA sold it at 84 billion rupiah. The attorney said even though IBRA had applied decent procedure in the bidding, the price difference is considered unfair to the state. That's the attorney's logic and that leads to corruption charges.

Well, from my records, most of IBRA's assets were divested at heavy discounts, sometimes up to 95% like in the case of petrochemical company PT Chandra Asri. IBRA, supported by government, argued that was the market mechanism and the price reflects investor's appetite.
Investor Daily was right to raise the question on prosecutor's move to focus on Syaf and urged them to investigate other former chairmen of IBRA such as Glenn M. Yusuf (1998-2000), Edwin Gerungan (2000-2001), and I Putu Gde Ary Suta (2001-2002).

Why Syaf first?

Syafruddin, a former commissioner at state-owned oil and gas company Pertamina, was considered key ally for former president Megawati Soekarnoputri's husband Mr Taufik Kiemas.

A PhD from Cornell University (USA), Syafruddin, was appointed chairman of IBRA in April 2002 replacing I Putu Gde Ary Suta. During his period, IBRA divested most of its assets, including the non-restructured debts, at what some says at fire sale price. (Fire sale could be considered a crime to the state nowadays, depends on who did that and who got what?)

On June 2004, Corruption Eradication Commission (KPK) also summoned Syafruddin for almost nine hours but no information available that time on what issue he was 'interviewed'. But it seems that Syafruddin, along with former State-Owned Enterprises Minister Laksamana Sukardi, was reported to KPK for an aledged corruption at Pertamina.

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Titan acquired Indonesian petrochemical company

Malaysia's Titan Chemicals signed the agreement to acquire 100% shares of Indonesian polyethylene producer PT Petrokimia Nusantara Interindo (Peni) from Indika Group on Thursday (December 22) at undisclosed price.
Indika bought 100% shares of Peni three years ago from Beyond Petroleum, Sumitomo Corporation, and Mitsui Inc at US$50 million.
Peni is the largest polyethylene (plastic raw material) in Indonesia with combined capacity of 450,000 tones per year. But the company always in raw material problem as the country has only one ethylene cracker PT Chandra Asri Petrochemical Center which also its main competitor with 300,000 tones per yer polyethylene plant.
With the divestment, Indika would focus on coal mining and energy business. Indika is a diversified business group owned by tycoon Sudwikatmono family.

Donald M. Condon, managing director of Titan Chemicals Corp. Bhd told me after the signing ceremony that the company is conducting a feasibility study to build olefin cracker in Indonesia to feed Peni. But he didn't disclose the timetable for the plan.

Ethylene supply is the main problem for Peni. Titan is planning to supply ethylene feedstocks to Peni from its Pasir Gudang, Malaysia facility.

Dedi H. Sudarijanto, president director of Peni, admitted out of 450,000 t/y capacity, utilization rate is well below 50%. "We're running at 200,000 t/y," he said.
Both Indika and Titan declined to comment on the price of the acquisition pending on the completion of transaction which is expected by first quarter 2006.
Arsjad Rasyid, managing director of Indika Group also denied rumors of Peni's bad debts as the main reason behind the decision to exit petrochemical business.
"We're not exiting the petrochemical business as we still hold investment in other chemical plants. Peni is also in good shape," he said.
Agus Lasmono, chairman of Indika Group, admitted the group would focus on energy business. Agus and Arsjad reluctant to disclose Indika's next move. But one investment banker disclosed the group's plan to acquire another coal mining company to strengthen its energy ventures.
Indika is involved in a huge power plant project in South Sumatra and new project in West Java.
As for Titan, the acquisition would boost its polymer production capacities to 1.4 million tones per year and make it the largest in South East Asia.

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