Marubeni vs Sugar Group continues

Legal dispute between Marubeni Corporation and PT Sweet Indolampung, a subsidiary of Sugar Group of Companies, continues at Central Jakarta district court. 

In the court proceeding yesterday, Indolampung rejected Marubeni's claim of defaulted payment of 3.52 billion yen and US$7.92 million.

Hotman Paris Hutapea, lawyer for Indolampung, insisted Marubeni is not one of their creditors. Hotman said Lampung court had rejected similar claims from Marubeni. Marubeni will have two weeks to respond Indolampung's defense statement. 

In a related development, Judicial Commission will examine Supreme Court justice Djoko Sarwoko for his role in the ruling on legal dispute between Marubeni and Indolampung in Jakarta court. 

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Tax incentive & efficacy

In a bid to boost investment, government launched a new tax incentive where certain projects and/or in certain areas will enjoy tax income break. But based on various surveys by different organizations, income tax is not an issue. Investors are willing to pay tax, but all they need is certainty and eradication of under the table payments.

This is not the first time government offers tax incentive. Back in 90s, Soeharto administration once offered tax holiday to certain projects. Kiani Kertas (that time controlled by Soeharto's golf buddy Bob Hasan), Tuban Petrochemical (controlled by Hashim Djoyohadikoesoemo, younger brother of Soeharto's son-in-law Prabowo Subianto), and Texmaco Perkasa Engineering (owned by Marimutu Sinivasan, one of Soeharto's favourite businessman) were among the receipients of tax holiday. But all of these projects almost bankrupt and even until now are struggling after almost 10 years. And most important, the facilicy failed to attract significant FDI.
Antara reported that nine types of investment would be eligible for tax income incentive. Investment in palm oil/cooking oil in Sulawesi, corn mills in Sulawesi, fish processing in Sulawesi, Maluku, and Papua, sugar plants outside Java, and cement in Papua are among them.
I'm not saying this is a kind of wrong medicine. I just sense the reemerging of cronyism in selecting companies which eligible to get.

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Gunawan Jusuf & The Sugar Trap

We're not talking about Gunawan Jusuf's sugar addiction. We're talking about how the investment banker is trapped in the business he's not familiar with and can't get out of it!

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Indonesia's bitter-sweet sugar business & politics

Indonesia is one of the largest sugar consumers in the world with 2.6 million tones per year. As domestic production increased only slightly from 2.24 million tones in 2005 to 2.3 million tones this year, more than 10% of demand should be filled with import. Sugar is a sweet business with around USD1.7 billion revenue per year. But old political games survived & nastier, with new players. Who are they?

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Laksamana to be summoned on a corruption case

Prosecutors had sent a letter to have former state-owned enterprises minister Laksamana Sukardi as the witness in the corruption allegations on former Indonesia Bank Restructuring Agency (IBRA) Syafruddin A. Temenggung. Laksamana is scheduled to be summoned on Wednesday.
Syafruddin was declared a suspect early last month in the illegal sale of state assets estimated to have caused losses of 500 billion rupiah (S$88 million).
Attorney-General Abdulrahman Saleh told reporters that Syafruddin had been charged with selling assets of sugar company PT Rajawali III in Gorontalo province in 2003 for 84 billion rupiah, far below the company's book value of 600 billion rupiah. Laksamana, as the minister for SOEs, was the supervisor for IBRA during the asset sale.
Laksamana was once a key ally of Mrs Megawati Soekarnoputri and former treasury of PDI-P. But he made a political maneuver against Megawati and establish a new party with some former PDI-P fellow members.

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News Roundup: Electricity & Corruption Cases

Electricity tariff hiked 200%

State-owned monopolist PT Perusahaan Listrik Negara (PLN) had raised electricity tariffs for certain groups of customers almost 200 percent amid rejection from industries and suggestion from president Susilo Bambang Yudhoyono to postpone the tariff hike.
Tempointeraktif.com reported that electricity tariff for industries and big customers had been raised, temporarily, from Rp439 per kWh to Rp1.380 per kWh, for their daily usages from 11 PM to 4 PM.
The new tariff applied to new customers and additional power. "The tariff hike would be temporary until there is certainty over basic electricity tariff hike," said Murtaqi Syamsuddin, general manager distribution for West Java and Banten at PLN.

Handoko dismissed, PDI-P put pressure on Firman Ganie
Following the intelligence on legislator scandal, National Police dismissed Sr Com Handoko from his post as chief of intelligence at the Jakarta Police. But PDI-P, the second largest party in the House of Representatives and the main target of the intelligence operation, isn't satisfied. The party intensify pressures on National Police to investigate Jakarta Police Chief Firman Ganie. The party belives it's almost impossible that Handoko carried out the operation without order and simply as his own initiative.

Syafruddin Temenggung case, new suspects

Prosecutors had summoned several witnesses in the corruption case of Syafruddin Temenggung, former chairman of Indonesia Bank Restructuring Agency (IBRA). They're among others Maman Soemantri, former deputy chairman of IBRA, Rinaldy Firmansyah (former director of Bahana Securities, currently finance director of PT Telkom Tbk) and Wazhary Wardaya (director of Danareksa, the state-owned investment bank). Sources told that Wazhary and Rinaldy might be named suspects along with Syafruddin.

Both Bahana and Danareksa were financial advisors for IBRA in the divestment of the sugar cane producer PT PG Rajawali III which is at the center of corruption charges on Syafruddin.

Atang Latief case, Husni Mochtar detained

Police detained Husni Mochtar, a close aide to the state debtor Atang Latief, for an aledged embezzlement of Latief's Rp40 billion (almost US$4.5 million) supposedly to pay Latief's Rp170 billion debt to Indonesia Bank Restructuring Agency (IBRA).

Investor Daily quoted police spokes person Anton Bachrul Alam that in 2004 Latief asked Husni to payout the former's debt to IBRA through divestment of PT Bina Multi Finance owned by Latief. The proceeds from the divestment, at the amount of Rp40bn, were embezzled by Husni, the police said.

Once Latief also transferred Rp10 billion to Husni for payment to IBRA, but Husni didn't transfer on the money to IBRA.

Hilton Hotel case, Golkar stand by the suspect side

Golkar Chairman Jusuf Kalla, who also Indonesia's Vice President, said the party is stand by Ali Mazi, Sulawesi Governor's side. Mazi, a former lawyer for Indobuild Co (owner of Hotel Hilton Jakarta), has been named suspect in the Hilton Hotel land scandal along with Pontjo N. Sutowo (the owner of Indobuild Co), Robert J. Lumampauw (chief of Jakarta land office), and Ronny Kusuma Yudistiro (former chief of Central Jakarta Land Office.

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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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