PLUS Expressway's major inroads

Malaysia's PLUS Expressway Berhad has made major inroads into Indonesian toll road projects with the acquisition of 55% share in PT Lintas Marga Sedaya, the holder of the biggest concession in the Trans Java Expressway that may cost USD600 million. The subsidiary of Khazanah is also competing in bids for another three toll road projects. Now I realized what a Khazanah executive told me last month. "We have a dream to operate an integrated expressway system here like what we have in Malaysia," he said. Will the dream come true? Who are the key local partners?

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This is the perfect time, Mr President!

President SBY indirectly admitted his weaknesses when he stated that in 2007 onwards he would be more decisive & direct. Recent issues, the humiliating Haj catering chaotic and transportation accidents, might be the best tests of how SBY would implement his New Year resolutions.

It's difficult indeed. Imagine how officers at religious affairs ministry pointed their fingers to legislator KH Aziddin from SBY's Democrat Party who recommended the catering service. Imagine also how difficult to punish Mandala Airlines (previously controlled by army) or Adam Air (partly owned by House Speaker Agung Laksono).
OK, he might needs little bit time, awaiting the conclusion of respective investigations. The president could start with softer issues like the disbursement of land acquisition fund to accelerate the construction of trans-Java toll roads. The state budget had allocated Rp2 trillion for that purpose (to be reimbursed by toll road investors later on) and Tuesday (Jan 2nd) should be the first disbursement. None! Why? Because the ministry of finance and public works are yet to settle the mechanism. Mr President, call in these ministers and ask them to settle immediately. We have too many people unemployed and that's not good for your image (if you really cares about this)!
Another tough issue that needs tough decision is mudflow disaster caused by Lapindo Brantas Inc in Sidoarjo, East Java. We're confused of conflicting statements over the cost of handling the disaster or compensation to people's assets. You've signed a decree last September that gives Lapindo six months time to cover all the costs, which means until March. The problem, we have no idea of what will happen after March which is two months away. Should all of us bear the costs Lapindo failed to cover? What do you really mean with Rp3.8 trillion that Lapindo should bear? What if Lapindo said "sorry, we have no money, we're filing for bankruptcy protection."?
You've assigned energy minister Purnomo Yusgiantoro to lead the Lapindo Settlement team. But I never read of any decision made by the team. The team looks bussy, but I'm afraid nothing is actually being done.
Purnomo told us today that he can't move (to separate what's government share or Lapindo share of the burden) because you made no decision yet. Should you the one who make all the technical decisions?
We understand how deep your relationship with Mr Purnomo. But this is just the perfect time to convince public that you want to walk the talks!

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Jasa Marga divests CMNP, Tutut's comeback ?

State-owned toll road operator PT Jasa Marga is leaving another toll road operator once controlled by Soeharto family, PT Citra Marga Nusaphala (CMNP) Tbk. The company is divesting its 17.79% shares (355 million units). Who is the buyer?

Jasa Marga is the single largest shareholder at CMNP followed by UBS AG (7.2%), Remington Gold Ltd (5.23%), and Mr Ievan Daniar Sumampouw (5.15%).
Early this month, Jasa Marga also divested 10% its shares in PT Citra Margatama Surabaya (CMS) to CMNP. CMS is building Surabaya Eastern Ring Road (SERR), a 12.7 km toll road with 35-year concession and investment of Rp1.39 trillion. CMNP controls 95% shares in the toll road to be commercially operated mid-2007.
The question, who is behind the buyer of Jasa Marga shares at CMNP?
Early this year, some newspapers disclosed a plan of Mrs Siti Hardiyanti Rukmana, eldest daughter of former president Soeharto, to regain control up to 55% shares of CMNP through a company named Crown Capital Global (CCG) with UBS' full support.
Under the scenario, CCG would collect up to 38% shares of various investors and then Jasa Marga's 17.79%.
In a letter to UBS AG dated December 19, 2005, Almington Assets Ltd (owned by Tutut's family) had pledged 11% shares of PT Bimantara Citra. And according to the latest list of Bimantara shareholders, UBS/Almington owns 10.85% shares but is not listed as controlling shareholder of Bimantara anymore.
Total value of Jasa Marga shares in CMNP is around Rp518.3 billion, while total value of UBS/Almington shares at Bimantara is around Rp1 trillion.
BTW, who is Ievan Daniar Sumampouw?

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Khazanah vying for more toll projects

After acquiring majority (55%) shares of Cikampek-Palimanan toll road project from a consortium led by Saratoga Investama, Malaysia's Khazanah through its subsidiary PLUS, is likely to acquire other toll projects in Java.

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Counting the losses

As thousands of displaced people (due to hot mudflow from gas field operated by Lapindo Brantas Inc) went on protest yesterday for months of gross neglience over the promised compensation and 12 people killed in a gas pipeline burst in the area covered by Lapindo mud, we're increasingly bussy in counting the losses and yet we have no idea who will pay. Why don't establish an escrow account, funded by Bakrie (if that's the commitment) with tight independent supervision to underwrite the costs?

Some was cynical when Greenomics claimed the cost incurred of hot mudflow could be billions of US dollars calling the NGO of exagerating. Government then put the estimated cost of US$150 million till March 2007. This magic number is being used by Lapindo-related parties as the total liabilities in their hands over the disaster.
But look at the claims so far. PT Jasa Marga, the state-owned turnpike operator, stated today that the cost to build a new toll road in the area would be Rp1.5 trillion and no way the company would finance that. "Lapindo should bear the cost," said Frans Sutikno, CEO of Jasa Marga.
I'm afraid the state-owned railway operator PT Kereta Api Indonesia would spend billions of rupiah to re-route the track. And the residents who lost their land claimed compensation of Rp1 million/square meter. Millions of toll road users have been suffered huge mental problems and economic losses due to the closure of the turnpike.
Millions of cubic metres of hot mud has spewed from the site, flooding over 400 hectares, swallowing eight entire villages, hectares of rice paddy fields and numerous factories in East Java, and displacing more than 10,000 people.
The gas pipeline burst is apparently the worst so far, killing 12 innocent people and injured 16 others.
As reported by Tempointeraktif.com, state-owned gas distribution company PT PGN Tbk recorded billions of rupiah of losses in the last few days. At least 244 companies, 74 hotels, and 1,090 households got no gas supply due to the explosion.
Paper manufacturer PT Kertas Leces, a state-owned company, reported Rp500 million losses in two days only. Industrial gases producer PT Samator had to stop its hydrogen, hydrogen peroxide, and carbondioxide facilities with billions of rupiah of losses. Who will pay all of these? Can we just separate the pipeline burst from the mudflow? When would all of these going to end or an endless mess? Is it possible that the worst is yet to come?
On the other end, PT Energi Mega Persada (the parent company of Lapindo Brantas Inc) filed bad and good news late last week. The first, bad one, due to the pipeline burst, Energi had shutdown gas production in Kangean Block. The second, the same day of the explosion, EMP Kangean which operates the block, had successfully started oil production in Sepanjang Islands at the volume of 9,000 barrel per day (generating cash of USD450,000/day). These evenly announcements have resulted in stable price of Energi shares at Rp500. What an odd world we livin! When many people could only count losses, small number of people still manage to calculate the benefits!

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Lapindo mudflow protesters run amok

Desperate with unstoppable mudflow from Lapindo Brantas Inc's drilling well, residents of Besuki, Sidoarjo, East Java waged protest. These protesters run amok at Gempol-Surabaya turnpike, crushing cars & the toll road facilities, Detik.com reported.

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Lapindo disaster: Check out the weather report!

The Jakarta Post published a photo in its Today's front page of State Minister for the Environment Rachmat Witoelar pours processed mud into the frame of a building under construction at Porong market, Sidoarjo, East Java. The minister said the mud from Lapindo Brantas Inc's oil and gas operation was safe and ready for use as building material after undergoing treatment to remove toxins.

So, the mud is an alternative for property developers and considering its huge volume it pose a threat to cement makers, especially to PT Semen Gresik Tbk, the market leader in the area. He3.
Other business venture is SPA-like hot mud treatment to be campaigned very soon as the largest SPA in the world. No Kidding!
Kompas reported today PT Jasa Marga's plan to relocate the Surabaya-Gempol turnpike after series of mudflow attack on the major transportation infrastructure. It means the state-owned toll operator would have to build new road as thousands of companies complained of heavy traffic that cost them additional expenses for transporting export goods to seaport.
The largest business opportunity might be the wastewater treatment. President SBY and Mr Rachmat have agreed to dispose the wastewater to river or sea only after being treated at wastewater treatment facilities to make sure the liquid would be free of any toxic substances. I have no idea how many such facilities needed to process millions of cubic meter of mud in the area. But I'm sure it's huge.
Housing rent business might flourishing as more than 10,000 residents have been forced to leave their houses. They get Rp300,000 per month of meal compensation.
But all of these calculations would collapse if rain comes earlier than predicted. Mr Rachmat said the disposal (of mudflow to the sea) might begin in six months' time after the construction of wastewater treatment and dams around the gas drilling site were completed. Check out the weather channel. I'm afraid the rainy season is coming and that would cause more environmental damage. The cost of the damage would well above US$1 billion as estimated by environmentalist. Who will bear the costs?

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Lapindo disaster updates: 90 Days later!

May 29 was the first gas blast at Lapindo Brantas Inc's Banjar Panji-1 drilling well. Ninety days have passed, no clear signs of when the mudflow would gonna stop. Thousands of people have been forced to leave their homes, hundreds lost their jobs as some factories have been mud-covered, millions of USD tangible and intangible losses have been incurred. Yet, we have no idea what to do. Turnpike operator Jasa Marga had raised the level of toll road with Rp30 billion investment, but the mudflow keeps threathening the transportation infrastructure.

Lapindo's parent company PT Energi Mega Persada Tbk is very much bussy to answer capital market authority and investors on its planned merger with PT Bumi Resources Tbk. In a press release last week, Energi affirm the merger plan without a single word on the mudflow disaster.
But The Jakarta Post quoted Yuniwati Teryana, vice president and head of public relations at Lapindo claiming the company had spent US$70 million since May to deal with the disaster.
The Post wrote as follows:
The company did not provide a breakdown of expenditure, only saying the money was used to cover operational costs, including bringing in a well snubbing unit, a rig and other equipment used to try to stem the mud.

The result so far is big zero. Energi's investors deserved explanation on the costs aspect of the disaster.
Meanwhile, some geologists are trying to spin the issue. Take a look at the article published by Kompas today. The largest newspaper quoted geologists with conclusion that the increasing mudflow tend to proof that the disaster has something to do with mud volcano, a natural flow of mud. If that's true, Kompas wrote, no technology would able to stop the mudflow.
Geologist Andang Bachtiar is quoted as saying the mudflow has no more relationship with Banjar Panji-1 drilling well. But he quickly admitted that the mud volcano has been triggered by technical faults at Banjar Panji-1 drilling well. "Without the technical drilling fault, the mud volcano would not happen," Andang said.
But officials at energy minister declined to accept the theory pending on the full implementation of relief well technique, sometimes late October.

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A tribute to the victims of Lapindo disaster

So, finally, the president is about to visit the area burried with hot mudflow in Sidoarjo tomorrow, Detik.com reported. The online publication calls the visit an official visit to The Truly KL (Kuala Lumpur), or The Truly Mud River. And for me, it's a tribute to the victims of Lapindo disaster. Oops, the president bring with him Rp1 billion (US$110,000), cash! (???????)

In a separate development, a meeting chaired by VP Jusuf Kalla had decided four policies to handle the mudflow. As reported by Kompas.com, Detik.com, and Tempointeraktif.com, those policies are:
First, all remedy actions should take into account people's safety and give them decent compensation.
Second, make sure all infrastructures such as toll road and railway operates normally.
Third, all remedy actions should only create minimum impact to the environment.
Fourth, Lapindo Brantas Inc should bear all the costs.
There are two major issues to tackle. First, to stop the mudflow from Banjar Panji-1 drilling well. Second, the handling of million of cubic meters of mud overflown the surrounding area of drilling well.
On the first, so far the snubbing unit technique has been failed to stop the mudflow. The next will be relief well technique.
On the second, the mud would be processed first before diverted the liquid parts through pipelines to the river & sea to make sure it meet environmental standards.
The question, what if rain comes earlier than predicted to create a massive floods in the area? Help us God!

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India's ITNL in two Indonesia toll road projects, US$550 million

IL&FS Transportation Networks (India) Limited (ITNL) (previously Consolidated Transportation Networks Limited/CTNL), India's infrastructure giant, has secured investment approval from Indonesia's Investment Coordinating Board to invest in two toll road projects worth US$552 million.

CTNL is the partner in two companies, PT Pejagan Pemalang Toll Road Corporation and PT Pemalang Batang Toll Road Corporation. Partners in these companies are Indonesian PT Sumber Mitra Jaya and PT Punj Lloyd Indonesia (a subsidiary of Punj Lloyd Ltd (India).

PT Pejagan Pemalang Toll Road Corporation would build the 57 KM toll road connecting Pejagan and Pemalang with US$322 million investment, while PT Pemalang Batang would build the toll road connecting Pemalang and Batang with US$230 million investment, all in Central Java province. No information on who own PT Sumber Mitra Jaya.

But a blogger wrote to me that Sumber Mitra Jaya is owned by Pak (Mr) Gon (established player in Contracting business). They are in coal mining (Kideco), coal contract mining (Kideco, Berau, etc) and many other large projects. Pak Gon is an Indonesian businessman with Indian background. No wonder its office at Graha Irama owned by Indorama Group (another Indonesian group with Indian background).

Whatever. But ITNL's involvement could be considered the biggest investment from Indian companies in years.

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Indonesia Corporations 2005 results

Indonesia's beer and cigarette producers make good money in 2005, positive growth from 2004. Manufacturers had bad year. Food and consumer goods recorded reduction of profit, except the milk producers. Energy companies and related services companies, shipping, and plantations were doing well. But the banks, while still profitable, feel the heat of increasing interest rate last year. TV made good money, but not my favourite newspaper and magazine Tempo.

Below are 2005 financial result of some Indonesian companies listed at Jakarta Stock Exchange (against 2004 in the brackets):
- PT Indofood Sukses Makmur Tbk, food: Profit Rp124bn (negative)
- PT Unilever Indonesia Tbk, consumer goods: Rp1.44 trillion (-)
- PT Energi Mega Persada Tbk, oil and gas: Profit Rp195bn (positive)
- PT Tambang Batubara Bukit Asam Tbk, coal produer: Profit Rp467 billion (positive growth)
- PT Bank Panin Tbk, bank: Profit Rp505 billion (negative)
- PT Bank Permata Tbk, bank: Profit Rp295bn (negative)

- PT Bank Negara Indonesia Tbk, bank: Profit Rp1.4 trillion (negative)

- PT Bank Artha Graha Tbk, bank: Profit Rp22bn (-)
- PT Sari Husada Tbk, milk producer: Profit Rp289 billion (positive growth)
- PT Humpuss Intermoda, shipping: Profit Rp 143 billion (negative growth)
- PT Malindo Feedmill Tbk, feed mill: Profit Rp47 billion (positive)
- PT Bakrie Sumatra Plantation Tbk, plantation: Profit Rp115 billion (positive)
- PT Bakrie & Brothers Tbk, holding company: Profit Rp292bn (positive)
- PT Asahimas Flat Glass Tbk, glass producer: Profit Rp212 billion (positive)
- PT Bhakti Capital Indonesia Tbk, brokerage firm: Profit Rp22 billion (positive)
- PT Indofarma Tbk, pharmaceutical: Profit Rp9bn (positive)
- PT Andhi Chandra Tbk, automotive: Profit Rp16bn (negative)
- PT Charoen Pokphand Indonesia Tbk, agriculture: Profit Rp41bn (positive)
- PT Pelayaran Tempura Mas Tbk, shipping: Profit Rp126bn (positive)
- PT Jembo Cable Company Tbk, cable manufacturer: Loss Rp2bn (negative)
- PT Sepatu Bata Tbk, shoes manufacturer: Profit Rp25bn (negative)
- PT Gudang Garam Tbk, cigarette: Profit Rp1.89 trillion (positive)
- PT Bentoel International Tbk, cigarette: Profit Rp108 billion (positive)
- PT Lion Metal Works Tbk, metal: Profit Rp19bn (negative)
- PT Surya Citra Media Tbk, media: Profit Rp65bn (positive)

- PT Tempo Inti Media Tbk, media: Loss Rp8bn (negative)
- PT Pan Brothers Tbk, textile: Profit Rp10bn (positive)
- PT Selamat Sempurna Tbk, component: Profit Rp60bn (positive)
- PT Siantar Top Tbk, food: Profit Rp10bn (negative)
- PT Toba Pulp Lestari Tbk, pulp: Loss Rp24bn (positive)
- PT Bank ANK Tbk, bank: Profit Rp11bn (positive)
- PT Voksel Electric Tbk, cable manufacturer: Profit Rp27bn (positive)
- PT Metrodata Electronics Tbk, electronic: Profit Rp16bn (positive)
- PT Bank Swadesi Tbk, bank: Profit Rp11bn (positive)
- PT Tigaraksa Satria Tbk, distribution: Profit Rp19.5bn (positive)
- PT Panin Sekuritas Tbk, brokerage firm: Profit Rp31bn (positive)
- PT Petrosea Tbk, oil & gas: Profit Rp83bn (+)
- PT Sucaco Tbk, cable manufacturer: Profit Rp56bn (+)
- PT Ultrajaya Milk Industry Tbk, milk: Profit Rp4bn (+)
- PT Pembangunan Perumahan Tbk, construction: Profit Rp66bn (+)
- PT Citra Marga Nusaphala Persada Tbk, toll road operator: Profit Rp81bn (-)
- PT Multi Bintang Indonesia Tbk, beer producer: Profit Rp87bn (-)
- PT Delta Djakarta Tbk, beer producer: Profit Rp56bn (+)
- PT Duta Pertiwi Nusantara Tbk, chemical: Profit Rp4bn (-)
- PT Ekadharma Tape Industries Tbk, plastic: Profit Rp5bn (+)
- PT Cipendawa Agroindustri Tbk, animal husbandry: Profit Rp0.9bn (-)
- PT Wahana Phonix Mandiri Tbk, textile: Profit Rp2bn (+)
- PT Siwani Trimitra Tbk: Loss Rp7bn (+)
- PT Pudjiadi and Sons Tbk, property: Profit Rp2bn (-)
- PT Asiaplast Industries Tbk, plastic: Loss Rp4bn (+)
- PT Kresna Graha Sekurindo Tbk, brokerage firm: Profit Rp6bn (-)
- PT Gema Grahasarana Tbk, interior & manufacturing: Profit Rp4bn (+)
- PT Intraco Penta Tbk, heavy equipments: Profit Rp18bn (+)

- PT Duta Anggada Realty Tbk, property: Profit Rp197bn (+)

- PT Fatrapolindo Nusa Industri Tbk, plastic: Profit Rp57bn (+)

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Bimantara takeover, how serious?

UBS is seeking to help finance the takeover of two Indonesian companies, PT Bimantara Citra Tbk, the conglomerate which owns four major television channels in Indonesia, and toll-road operator PT Citra Marga Nusaphala (CMNP) Tbk, according to individuals in Indonesia familiar with the transaction.

Global Crown Capital, a special purpose vehicle, owned by the Salim family, Peter Gontha (former shareholder and executive at Bimantara), and Indra Rukumana (former President Suharto’s son-in-law) is seeking to acquire controlling stakes in Bimantara and CMNP. In order to obtain the funding, the three parties have pledged shares they have in Bimantara and CMNP to UBS in order to obtain a loan of up to US$350m, said individuals in Indonesia.

Few details were available about the goings on, but Bimantara last week issued a denial stating that the conglomerate had not been approached by GCC to acquire the assets. Salim also denied the plan to acquire Bimantara and CMNP.

But Bimantara wrote to Jakarta Stock Exchange (JSX) authority on Friday that recently it recieved a proposal from one of its shareholders (Almington Assets Limited) which represents 5% shares of the company that it want to pledge the held shares to UBS AG Singapore Branch.

JSX suspended the trading of both Bimantara and CMNP shares on Friday. No information so far on when JSX will lift the suspension.

Individuals in Jakarta said there were definite signs that the consortium had already obtained funding from UBS in their attempt to take over the assets. Investor Daily on claimed on Friday that it got a document showing the financial support from UBS Bank to GCG to acquire Bimantara and CMNP. In exchange GCC will pledge to UBS some marketable securities, cash, and shares of Bimantara and CMNP. Under the loan proposal to UBS, GCC needs funding of US$250 million to US$350 million.

According to the document, before it acquires Bimantara and CMNP, GCC would takeover shares of PT Televisi Pendidikan Indonesia (TPI, a TV station under Bimantara) and CMNP Manila (toll road operator in Manila).Under the loan proposal to UBS, GCC needs funding of US$250 million to US$350 million.

Meanwhile, IFR Asia reported an official who acts as custodian of shares traded on the Jakarta Stock Exchange said UBS has recently requested that a large shareholding of Bimantara shares be blocked under the Swiss bank’s name.

“If that’s so, then that’s a sign that the GCC conglomerate has already pledged shares to UBS,” said one banker in Indonesia.

Investor Daily reported today that Almington Assets had pledged its 11% shares through GCC to UBS AG with the address at Temasek Boulevard 18-00 Suntec Tower Five, Singapore. GCC also planned to acquire 14% shares of CMNP owned by Heffernan International Limited, Delta Equity Assets Ltd, and Commonshare Investment Ltd, all are special purpose vehicle companies registered in British Virgin Island.

Another banker said to AFR Asia: “UBS private banking has been shopping the local market to finance the rupiah-denominated portion of the deal. One of the parties approached was Sinar Mas Securities, so we know something big is going on.”

The battle for the Bimantara assets will be a lively one, said investment bankers in Indonesia, given that Bhakti Investama, another Indonesia company, now holds a stake of around 40% in Bimantara and 10% indirectly.

“It therefore will be very difficult for GCC to gain a controlling stake in Bimantara,” said an investment banker to AFR Asia.

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Press Day: Who'll pay decent journalism?

I believe press celebrities and media barons are listening President Susilo Bambang Yudhoyono's speech in Bandung, West Java while I'm writing this piece of 'speech'. I have nothing to congratulate except a question: Who'll pay decent journalism in Indonesia?
Let me take this Press Day opportunity to share little bit of my experience working for Indonesian media.
Well, I survived different press regimes in my only 14 years carreer in journalism. Under Soeharto, I got several legal notices from crony capitalists. "If you play hard, we could be harder. Be nice," one of those cronies once threatened.
I got no such notices during Abdurrahman Wahid. In 2002, I got one legal notice from a respected lawyer of one of the biggest debtors of Indonesia Bank Restructuring Agency (IBRA). The next year, I also got one legal notice from a tycoon who has a lot of investment in China and one of biggest debtors at IBRA as well.
My one-year sabatical leave in UC Berkeley was peaceful, no such notices. But few months ago, one of readers of this humble blog sent a complaint letter to my company (which is nothing to do with this blog) and the Press Council. So far, none of those legal notices ended up in court, surprisingly, even though most of them threatened to do so.
Still, I'm not sure of whether I had done something good for the readers or not. I believe, however, press freedom has given Indonesian journalists the chance to deliver good journalism. Competition is stiff and it is good. Indonesian journalism, as elsewhere, has to deal with reality, both as a business and an essential element in the democratic mozaic.
The much-ballyhooed citizens' or community journalism movement also flourished in Indonesia despite its limited potential in delivering good and serious journalism. From my experience, serious journalism such as investigative reporting is labor-intensive and time-consuming and therefore requires large amounts of money and health benefits and pensions.
With 180 newspapers published (jumped from 80 during Soeharto years) with hundreds of thousands copies the most, 60% of them even less than 10 thousands copies with well below average salary (mostly less than US$200 per month, still above the average per capita income though), only few are really economically viable. Even big names such as Tempo, Republika, or Jawa Pos are struggling financially.
Look at the contents. Almost 80% of their contents are all the same stories based on press releases, press statements, sports result, public hearings, court hearings, verdicts, etc. Why they publish different newspapers if the stories are all the same? If money is the problem for good journalism, why don't they merge?
Some publishers are die-hard to defend their ownerships even though they can't pay journalists well or silently approved the stories-for-money practices or simply use their media network for political or business deals.

Counter-Paid-Opinion

In recent months, more and more government institutions, including state-owned enterprises which deployed third party to counter public criticism through their paid-up articles under the title of advertorial (guess an abbreviation of advertising and editorial).
State-owned enterprises minister applied that for criticism on poor efficiency of SOEs, PLN on mark-up of power plant projects, and education minister of tuition subsidy. More and more ministers also published ads on their performances as well.
Sometimes, even in the respected publication such as Tempo, we could find a report from journalists (investigative ones) published side-by-side with such advetorials (off course in contrast to the journalist report) on the same issue. So be aware of the reminders at the end of such articles to differentiate which one is a journalism product.
Op-eds have become a huge business involving deals between analysts, experts or observers with businessmen, lawyers, or politicians or government officers in collaboration with media barons or editors. That's why we have to be careful in reading statements appeared in the media.

Tycoons into media
So far, like in other countries, media industry in Indonesia is owned by different types of investors. Kompas daily, for example, is controlled by Jakob Oetama, a highly respected journalist, through Kompas Gramedia Group. Tempo, listed at Jakarta Stock Exchange, is controlled by respected journalists like Goenawan Mohammad, Fikri Jufri, and Bambang Harymurti.
Jawa Pos Network is controlled by Dahlan Iskan, a former Tempo journalist. Media Group (Media Indonesia and MetroTV, among others) is owned by Surya Paloh, the chairman of patron board of Golkar Party. Golkar also owns Suara Karya. Former assembly speaker and minister during Soeharto years, Harmoko, controls Pos Kota Group.
Alwi Hamu, VP Jusuf Kalla's special staff, co-owns Fajar Media Group, the largest media network in eastern part of Indonesia, with Jawa Pos and Kalla family as partners.
My newspaper, Bisnis Indonesia, is owned by several businessmen (Sukamdani Sahid who owns Sahid Hotel chain, Ciputra the property tycoon, the late Eric Samola who also co-found Jawa Pos Group and Tempo, Subronto Laras who is executive at car manufacturer Suzuki, and the staffs who holds the majority shares).
Bakrie Family once owned some newspapers but have been closed down. The family, meanwhile, still controls ANTV. In the last few years, Sjamsul Nursalim acquired several newspapers including Sinar Harapan & Indonesia Shang Bao, while Lippo Group acquired Investor Indonesia (Daily and Magazine) and Suara Pembaruan.
Bimantara under Harry Tanoesoedibjo (an investment banker) also publish Seputar Indonesia and acquired Trust magazine on top of three TV stations (RCTI, TPI, and Global TV). Mahaka Group controls Republika.
We have also retail tycoon Abdul Latief with LaTV and Para Group (property and banking business) at TransTV.

Internationalization
We knew already that Mr Rupert Murdoch acquired 20% shares of ANTV, a network owned by Bakrie Family. Murdoch might also acquire 20% shares in TV7, a network owned by Kompas Gramedia Group. Malaysia's TV3 might soon become the new owner of the ailing LaTV.
We heard also the possible cooperation between Kompas and Murdoch in transforming economic tabloid Kontan into an economic daily that hit the newsstands next month. Lippo Group is reportedly had invited South China Morning Post as partner in Investor Daily and Suara Pembaruan. Mahaka Group, the majority owner of Republika, had also signed alliances with The New York Times and The Strait Times (Singapore).
Beyond The Media
Other critical issue is the influx of media barons into non-media business and use their media network to maneuver. Surya Paloh, the owner of Media Group (Media Indonesia and MetroTV), for example, is venturing in Cepu oil business with Bojonegoro Admnistration. Dahlan Iskan from Jawa Pos Group is also involved in Cepu dispute with his venture with East Java Administration.
Kompas Gramedia Group has been invited by Jakarta Governor to invest in toll road projects.

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Army foundation keeps control over Mandala Airlines

Government-sanctioned team to restructure Indonesia's military business decided to let Yayasan Dharma Putra Kostrad, a foundation established by army's strategic reserve command (Kostrad), to own and manage the ailing Mandala Airlines.
Kostrad owns 90 percent shares in Mandala, a regional carrier with 15 Boeing 737/400 and 737/200 in its fleet. In 1994, Soeharto regime bought 10 Boeing 737 from German carrier Lufthansa for US$90 million.
It is not clear though whether Kostrad would move on with its plan to sell the airline.
Last year Kostrad Commander Lieutnant General Hadi Waluyo announced the plan to sell all Kostrad shares in Mandala. Newspapers reported that six businessmen, including Kim Johannes, Hilmi Kalla (younger brother of VP Jusuf Kalla), and Azwar Anas (former minister under Soeharto regime) were interested in acquiring Mandala.
Mandala is one of 213 business units linked to Indonesian military. Last year, the House of Representatives passed a law ordering the military to divest of all its businesses by 2009. While some of the businesses would be transferred to government, private business groups are also competing to control them.
The divestment of Bank Arta Graha (a joint venture between Army's foundation and property tycoon Tommy Winata) to undisclosed group last year, for example, raised people's eyebrows due to lack of transparency about the process.
Kostrad recently admitted that it only has three business units left. Others, like the logging concession in Kalimantan and toll road operator in East Java, have been divested to undisclosed parties.

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Honeymoon is over for Boediono

It's almost two months as the coordinating minister for the economy, Dr Boediono has been warmly responded with a stronger rupiah against the greenback, higher stock market index, a lower inflation rate, and new hopes of economic stability and progress.
But being in the post is not just dealing with monetary and fiscal policies, things that earned him so much respects. Boediono, a conservative economist, is confronting some non-monetary and fiscal issues that needs tough decisions and highly sensitive politically.
Huge unemployment due to relatively limited new investment and high-cost economy is the most critical of all especially when so many industries announced mass lay-offs for various reasons, including the planned electricity tariff hike.
From the fiscal perspective, Boediono might choose to raise the tariff as it would ease the burden on subsidies given to state-owned monopolist PT Perusahaan Listrik Negara (PLN). But rasing tariff this time around would risk higher unemployment as most industries and consumers have not absorbed completely the step fuel price hike in October 2005.
State-owned telecommunication company PT Telkom has submitted a plan to raise the telephone tariff up to 30%. (FYI, Telkom booked almost US$1 billion profit last year)
Budget pressure might be higher this year as the country should resume payments of its sovereign loan after one year of break following the Paris Club decision to give the room for Indonesia to cope with the major burden aftermath of the tsunami.
And, while the significant decrease in fuel consumption managed to loosen pressure on budget from high oil price in the last two months, people starts to worry the global oil supply might push the price to the sky amid political development in Nigeria, Iran, and Palestine.
But it's just unfair to raise electricity and telephone tariffs just months after the fuel price hike for the sake of budget balance.
Despite the macroeconomy stability in the last few months, net inflow of capital for fresh investment is still bare minimum. Why? Investors are waiting Boediono's firm decision on several pending issues confronted by major players that normally seen as benchmark.
Indonesia Mining Association (IMA) recently warned government to improve the investment climate in the sector with providing business and legal certainties under the system of contract of work.
PricewaterhouseCoopers cited in its recently published report that even though there has been a significant increase in global exploration spending, exploration spending in Indonesian mining industry remains at low levels, accounted for less than 1.5% of the global spending of US$3.8 billion in 2004.
The recent downtrend in exploration activity can be attributed to the country's lack of legal certainty, security concerns in some remote parts with good mining prospects, and rampant illegal mining.
Few weeks ago I met an executive of Merril Lynch. He believes Boediono could improve the macroeconomy stability. But that's not enough. "We have concerns on some issues like ExxonMobil's project in Cepu. The settlement on Cepu would be a benchmark whether investors want to invest more or pull out and invest in other countries," he said.
The giant oilfield project that needs US$2 billion is yet to start pending the endless dispute between Exxon and Pertamina over who should be the operator of the block.
Little progress has been made in infrastructure projects despite major campaign to lure in foreign investment. Most of toll road projects went to some powerful local business groups. China investors had committed to build some huge powerplants with limited progress.
Textile industry is in a critical situation due to stiff competition with other countries in export market while more and more cheap import garments enter the local market.
An evaluation by the ministry of industry found that half of the machinery at textile companies was more than 15 years old, causing inefficiency and lowering the price competitiveness. A major revitalization program is badly needed and awaits immediate help from government to make use the already committed cheap Japanese loans.
Timber-based industry would continue its downward trend. Last year, 64 furniture firms were closed down due to increasing costs and lack of timber following the government's decision to lower the logging quota for natural forests and the failure in timber plantation program. As export will unlikely to grow, domestic market has been increasingly flooded by imported furnitures. Last year, total furniture imports jumped 78%.
Meanwhile plywood producers in South Kalimantan predicted mass layoffs on 11,800 workers by first semester 2006 due to various problems.
The synthetic fiber manufacturers had announced late last year their plan to layoff 9,000 workers until this year. Some 2,000 workers had been out of the job last year due to fuel price hike, the industry association said.
Bomer Pasaribu, former minister for manpower, predicted up to 1 million workers would join the already 12 million people categorized as open unemployment. That would be a nightmare.
According to Central Bank's statistic, in third quarter 2005, net inflow of foreign direct investment (FDI) was only US$53 million, dropped from US$2.17 billion in second quarter. The numbers were well below the data announced by Investment Coordinating Board (BKPM) that FDI jumped 190% to US$8.9 billion last year. Central Bank's data is more reliable as it recorded the true inflow of capital. BKPM's data should have make more jobs than layoffs.
So, Dr Boediono, it's nice to have you back on board to stabilize the macroeconomy, but that's just not enough. People needs job. We need to invite more investors to create jobs.

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