Monday, December 18, 2006

How Japan outsmart China in Indonesia's electricity business

"You may think that China swept most of new power generating projects in Indonesia. But don't ever underestimate the Japanese. They managed to block China with the postponement of IPP projects and at the same time ask Mitsui and Sumitomo to expand their existing facilities in Paiton and Tanjung Jati B respectively so there will be no more rooms for new IPPs in Java," one China-backed investor said over the weekend. But how they did it?

"Well, first of all, Japan use ADB to lobby government to conduct a study on IPPs first before proceeding with the bidding. The study would take one year at least. Government agreed to postpone the IPPs and only proceed the 10,000 MW crash program. In the meantime, Japan asked Mitsui & Sumitomo to expand their existing power plants," he explained.

Labels: , ,


READ MORE!!!

Wednesday, September 06, 2006

Inco & Phelps Dodge cancel the merger

Nickel giant Inco Ltd and Phelps Dodge agree to terminate the
Combination Agreement the parties entered into on June 25, 2006. Inco also
announced that it has cancelled the special meeting of Inco shareholders
called for September 7, 2006.


PT Inco Tbk, a subsidiary of Inco Ltd, with shares floating at Jakarta Stock Exchange (JSX). Inco shares price closed higher 4% on Wednesday trading at Rp23,050 or market capitalization of US$2.5 billion. Inco Ltd is the largest shareholder with 60.8%, followed by Sumitomo Metal Mining 20.09%.
According to Inco's statement to Toronto Stock Exchange on Wednesday, Sept 5, Inco will pay Phelps Dodge a termination fee of US$125 million today and a further US$350 million if Inco consummates an alternative take-over bid or similar transaction on or prior to September 7, 2007. Inco would have paid
these same amounts had the agreement been terminated after Inco shareholders
failed to approve the Phelps Dodge transaction at the special meeting.
Scott Hand, Chairman and Chief Executive Officer of Inco, stated: “It was
very clear from the proxies we received that Inco shareholders were not
going to support the Phelps Dodge transaction, so the two companies agreed
that it was in our respective best interests to move on.”
Following the termination of the Combination Agreement, Inco is no longer
restricted in its ability to solicit acquisition proposals from, provide
confidential information to or enter into negotiations or agreements with
interested parties concerning potential value enhancing alternatives. The
Board has authorized Inco’s senior management and its advisors to explore
these alternatives consistent with the company’s commitment to maximize
value to Inco shareholders. Inco also continues to be open to entering into
discussions or negotiations with Companhia do Vale Rio Doce (CVRD) with
regard to its offer of August 14, 2006.
Brazil's CVRD US$17.5 billion in cash for Inco while the merger value was predicted at US$17.7 billion.

Labels: ,


READ MORE!!!

Tuesday, May 23, 2006

Japan automotive investments keep coming

Japan could be considered the most consistent investor in Indonesia so far, at least with the incoming new automotive component investment commitments.


Data from Investment Coordinating Board shown the following new investments from Japanese companies in the automotive sector:
1) TSC Manufacturing: A joint venture between PT Takagi Sari Multi Utama, Sumitomo Shoji Chemicals Co Ltd, and Takagi Seiko Corporation to build a US$6.6 million automotive plastic component (800,000 pcs/year) in Delta Silicon Industrial Park, Bekasi, West Java.
2) Mikuni Indonesia: A JV between Mikuni (Thailand) Co Ltd and Mikuni Corporation to invest US$4 million in a secondary air valve and carburator plant in EJIP Industrial Estate, West Java.
3) Sankei Indonesia: A JV between Mr Hiroshi Tokoro and Sankei Co Ltd to build a US$6 million plant to produce plastic painted autoparts (1.2 million pcs/year) in KIIC Industrial Estate, Karawang, West Java.
4) Indonesia Nippon Steel Pipe: A JV between Siam Nippon Steel Pipe Co Ltd (Thailand) and Toshiba Industry Co. Ltd (Japan) to produce automotive component in Indotasei Industrial Estate, Karawang, West Java with US$18.75 million investment.

Labels: ,


READ MORE!!!

Tuesday, March 21, 2006

Jakarta subway, another 30 years of discussion

It's just ten days away for Indonesia government to decide, whether to accept Japan's offer to finance the long-awaited mass rapid transportation system (MRT) to be built in super-crowded Jakarta. March 31 is the deadline as Japan will start the new fiscal year.
Japan Bank for International Cooperation (JIBC) has repeatedly offer low-interest rate loans, this time 0.4% over 40 years of payment and 10 years of grace period. I would say the offer is lot better than the recently issued US$1 billion global bonds which bears 7.75% interest per annum.
Jakarta Governor Sutiyoso seems want to close his 10-year tenure (next year) with something spectaculer to remember. So he wrote president Susilo Bambang Yudhoyono recently asking government's decision on the MRT project. (This one is probably more important than Sutiyoso's proposal to create a Megapolitan Administration)
He doubted the plan of some state-owned enterprises to takeover the project. "Even we can't build good schools building," he said with cynism.
That's not the first statement of Sutiyoso. I remember back in 2001, Sutiyoso once claimed the construction of MRT project to be started that year at the cost of US$1.75 billion and would absorb 60,000 workers. He should make this happen now.
Three years ago, JBIC agreed to provide US$767.66 million funding for the MRT system at higher interest rate of 0.95%. So, if Sutiyoso was right with the latest offer of 0.4%, this one could significantly cut almost half the interest payments over 30 years time.
I wonder if government could make decision this time. But to my surprise, government rejected Japan's offer on disagreement over terms of the loans (tied loans) and Indonesia's demand to have 75% local content in the project.
Fourteen years ago, when I was a reporter for technology beat, then minister for research and technology BJ Habibie (former president) was the one who heavily supported the country's long-awaited mass rapid transport system. I wrote many articles about the subway system many times only to be upset over and over. Even some of them with exact timetable that the MRT would be in operation by 2000.
I agree 100% with the MRT system, probably due to personal experience with Underground in London, UK or Bay Area Rapid Transport (BART) in Bay Area, San Francisco, USA. That's why I never fed up imagining Jakarta would have such system some day.
But, my goodness, 30 years have passed, we're keep talking about it. That's why Jakartans love to call MRT as a Masih Rapat Terus (Still Under Discussion) project.
Imagine that, the idea was first floated in the 1970s and later during the administration of governor Surjadi Soedirdja, was last postponed after the financial crisis in 1997.
Transportation experts have repeatedly said that the MRT was one of the most effective solutions to tackling chronic traffic congestion in the capital, although they also said it would be extremely expensive.
Other observers say the city's messy underground sewer, power and telecommunications networks, its unstable soil structure and its recurrent flooding problems could turn any underground project into an engineering nightmare. The engineering fears are real given that Jakarta is basically a flood plain but Bangkok has been able to do it.
Imagine the congestion in the capital when the construction starts. But I think people would not mind at all, say for three years, as long as they know exactly MRT could make their life better off.
So what's the problem then?
Well, back in 1994, Habibie signed a memorandum of understanding with two Japanese companies, Sumitomo and Itochu, to build the MRT.
In 1995, when Surjadi was the governor, he signed the MoU with Japan European Group which consisted of PT Citra Lamtorogung (controlled by Siti Hardiyanti Rukmana, former president Soeharto's eldest daughter), PT Bakrie Investindo (controlled by Aburizal Bakrie, currently the coordinating minister for people's welfare),Itochu, and Ferrostaal (Germany).
Other investors worth mentioned are Ciputra Group, Lippo Group, Bukaka Group (partly owned by VP Jusuf Kalla's family) and Suthamtabie (a company owned by the family of Habibie).
I guess, as long as government can't settle the issue of who would be the investors in this project, we should wait few more decades, or even it will never come.
This time, government turned down Japan's offer for funding on local content issue, in which Indonesia government demanded 75% of the value of the project should be provided by local companies. It means that we have to wait 30 more years to really have MRT in place.
Others said intensive lobby from automotive producers may also block the MRT project. But if they book lower car sales in Jakarta, like in the last three months, blame the traffic!

Labels: , , , , , ,


READ MORE!!!

Wednesday, December 21, 2005

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.

Labels: , , , , ,


READ MORE!!!

Friday, November 11, 2005

Sumitomo acquired 71.73% Summitplast

Sumitomo Shoji Chemical acquired 71.73% shares of listed plastic producer PT Summitplast Tbk from various shareholders.

Invesment Team Manager Kohei Takemoto in a letter to Jakarta Stock Exchange wrote that Sumitomo acquired shares owned by PT Dynaplast Tbk (the founder of Summitplast), PT Panca Teladan Interbenua and other shareholders.

Sumitomo has 12.12% shares of Summitplast prior to the acquisition. Other shareholders are PT Panca Teladan 28.52%, Dynaplast 21.38%, Sumitomo Corporation (Singapore) Pte Ltd 9.27%, Tensho Electric Industries 3.56%, PT Ciptadana Sekuritas 7.81%, and public 17.34%.

The acquisition is part of Sumitomo's effort to boost its presence in Indonesian plastic industry. Sumitomo would follow up the acquisition with tender offer of public-listed shares.


Labels: ,


READ MORE!!!