[Kabar-indonesia] 21 RI Biz/Econ Reports: Budget Surplus; Sampoerna; War Impacts Exports; Bonds

[JoyoNews at aol.com]

21 RI Biz/Econ Reports:

- Indonesian govt Jan-July budget
  surplus 5.78 trln rupiah
- Indonesia's exports to Mideast 
  down by 10 pct due to war
- Indonesia motorbike loans firm 
  sees 07 lending up
- Indonesia's Sampoerna family buys 
  parent firm of Sumalindo: report
- Indonesia's rate cut too small 
  to revive real estate: Assoc
- JP: Govt swaps Rp 4.38t of bonds 
  in debt portfolio restructuring 
- Markups suspected in Indonesian
  procurement costs
- BI awards 31.4 trln rupiah 1-mth 
  SBIs at fixed rate 11.75 pct
- Table-Indonesia's SBI auction
  results
- JP: Components sector set 
  for boost 
- Singapore ups 2006 GDP 
  forecast to between 6.5-7.5% 
- Stock Alert: Indonesia's Bank 
  Niaga up sharply on earnings 
  hopes after rate cut
- Stock Alert: Indonesia's Indocement 
  higher on hopes rate cut to revive 
  demand
- Indonesia bourse delists Bukaka
  Teknik
- Indonesia's Asuransi Jiwa targets 
  20 pct rise in net profit
- Indonesia's Asuransi Bintang 
  to increase capital
- Mideast investors keen to invest 
  in Indonesia's infrastructure
- Thai fishing firms forced to comply 
  with new rules in Indonesia
- Indonesia's Austindo hopes to 
  raise US$80 mln from IPO
- Malaysian investors to build oil 
  palm plantations in Indonesia
- Indonesian palm oil up on Malaysia 
  gains, sellers return

Indonesian govt Jan-July budget surplus 5.78 trln rupiah

JAKARTA, August 9 (XFN-ASIA) - The government had a budget 
surplus of 5.78 trln rupiah in the first seven months of this year, 
having spent 282.73 trln rupiah or 43.65 pct of its budget for the 
year, the Ministry of Finance said.

In a statement, the ministry said revenue in the first seven months
was 288.51 trln rupiah or 46.14 pct of the revenue target for the
whole year.

The government has proposed to raise its deficit for the year to 
37.63 trln rupiah or 1.2 pct of GDP from 22 trln rupiah or 0.7 pct 
of GDP, envisioning an increase in expenditure to 689.54 trln 
rupiah and an increase in revenue to 651.91 trln rupiah.

Tax receipts in the first seven months totaled 216.98 trln rupiah or
52. 12 pct of the target for the whole year, and non-tax revenue was
70.84 trln rupiah or 34.51 pct of the full-year target.

Central government expenditure in the first seven months was 165.51
trln rupiah or 38.7 pct of the amount budgeted for the year.

The central government spent 15.73 trln rupiah on capital goods (25
pct of the budgeted amount), 17.08 trln rupiah on goods (31 pct),
45.59 trln rupiah on interest payments (60 pct) and 13.74 trln rupiah
on subsidies (17 pct).

Finance Minister Sri Mulyani Indrawati said three ministries -- trade,
energy and forestry -- were the slowest spenders, with none of them
spending more than 10 pct of the full-year target during the first
seven months.

"Of course, the relevant ministers will have to take many more
efforts," she told reporters.

Analysts have said acceleration of the budget spending is crucial to
stimulating economic growth given that private consumption, the key
growth driver, has been slowing down following last October's 126 pct
fuel price hike.

Indrawati said the pace of government spending has been partly slowed
down by a revised presidential decree issued in 2003 stipulating that
government procurement should follow a tender process, which is very
time-consuming.

-------------------------------------

Indonesia's exports to Mideast down by 10 pct due to war

JAKARTA, August 9 (Asia Pulse/Antara) - Indonesia's exports to the
Middle East had been predicted to drop by 10 per cent from US$1.5
billion to US$1.35 billion, as the result of Israel's military
aggression to Lebanon for almost one month now.

"It's true that Indonesia's exports to the Middle East has been
declining slightly, only by 10 per cent," Chairman of the Indonesian
Chamber of Industry and Commerce (Kadin)'s Middle East and
Organization of the Islamic Conference (OIC) Committee, Sudrajat DP
said here on Tuesday.

According to him, Indonesian businessmen were worried about the war
between Israel and Lebanon, making them reluctant to do business with
their Middle Eastern counterparts.

"They are doubtful about the smooth payment of the transactions," he said.

He said, actually there was no serious problem in doing trade with
Arab countries.

Up to now, Indonesia is still exporting some commodities, such as
electronic goods, building materials , garments and others to Saudi
Arabia and the United Arab Emirates (UAE).

Meanwhile, Indonesia's exports to Lebanon had been completely halted
due to the Israeli military aggression.

"But our exports to Lebanon are still small, so the impact is not
significant," he said.

Sudrajat explained that most of Indonesia's commodities had been
exported to Saudi Arabia and only later re-exported to Lebanon.

"Basically, Lebanon is not Indonesia's direct export destination," he
said. "Indonesia's exports to Lebanon take place via Saudi Arabia," he
added.

---------------------------------------

Indonesia motorbike loans firm sees 07 lending up

JAKARTA, August 9 (Reuters) - Indonesia's third-largest motorcycle
financing company, PT Wahana Ottomitra Multiartha Tbk (WOM Finance),
aims to raise lending by more than 10 percent next year as demand
grows.

President Director Benny Wennas told a news conference on Wednesday
that he expected the firm to extend 4.5 trillion rupiah ($495.2
million) worth of motorcycle loans in 2007.

In the first half, he said the firm achieved around 40 percent of its
full year target to extend 4 trillion rupiah worth of financing this
year. Last year, its motorcycle financing was 3.6 trillion.

"Next year maybe we can increase our lending to around 4.5 trillion
rupiah ... In the first half alone we have extended 1.7 trillion
rupiah worth of loans," Wennas said.

He made the remarks at a new conference for the signing of $25 million
of loans between the company and DEG of Germany.

The country's sixth largest lender, PT Bank Internasional Indonesia
Tbk , controls WOM Finance.

The expected increase this year comes as Indonesia's motorcycle
industry faces a tough time after the government cranked up domestic
fuel prices to scale back costly fuel subsidies.

Domestic motorcycle sales volume fell about 26 percent in the first
six months of this year, compared to a year ago. Sales topped five
million units last year when interest rates were at a record low.

Interest rate hit their highest level in more than three years after
the fuel price hikes, hurting automotive sales, which are mostly
funded by loans.

But the central bank cut rates by 50 basis points on Tuesday, raising
hopes for further cuts that could stimulate the auto industry.

----------------------------------------

Indonesia's Sampoerna family buys parent firm of Sumalindo - report

JAKARTA, August 9 (AFX) - Three Six Nine Ltd, a company owned by the
Sampoerna family, has bought out Sumalindo Lestari's parent firm, PT
Sumber Graha Sejahtera (SGS), Bisnis Indonesia reported.

SGS holds 30.11 pct of Sumalindo.

The newspaper quoted an unidentified executive described as close to
the deal as saying Three Six Nine has bought another 15.17 pct of
Sumalindo from Recapital Asset Management.

The executive was quoted as saying that the Sampoerna family has thus
become the indirect controlling shareholder of Sumalindo.

One member of the family, Michael Sampoerna, is now chief commissioner
of SGS, the newspaper said.

Bisnis Indonesia quoted another source, also unidentified, as saying
Michael Sampoerna will buy more shares in Sumalindo through the
company's planned rights issue.

----------------------------------------

Indonesia's rate cut too small to revive real estate: Assoc

JAKARTA, August 8 (Asia Pulse/Antara) - A business leader said the
decline in the key interest rate by 50 basis points to 11.75 per cent
on Tuesday was not significant enough to spur growth in the real
estate sector as rates are still too high.

"The real estate sector especially industries will remain depressed
unless Bank Indonesia has the courage to cut the rate to less than a
double digit," the chief of the Association of Indonesian Tyre
Producers, Azis Pane, said.

He expressed regret that the government and the central bank had
decided to cut the rate in stages, arguing that such a strategy would
minimise the impact of the fall on business activities.

Azis who is also chairman of the Committee of Standardization for
Industry, Technology and Marine Resources of the Indonesian Chamber of
Commerce and Industry said that the government and monetary
authorities still had no courage to take the risk of reviving economic
activities.

"If the lowering was done little by little it would only provoke trade
transactions and would not create wider economic activities," he said.

Azis said a drop in rates to around 9 per cent was needed to spur
business activities.

He said there was no need for the government to be afraid that a
significant cut would cause a capital outflow because the country had
sufficient raw materials and other business resources to secure
businesses kept investing locally.

Azis said the government is still thinking of its own safety, and
abandoning the business sector to its problems -- an approach which he
blamed for the increase in unemployment levels.

He further suggested that the government and Bank Indonesia should not
dedicate too much national and regional budget funds to regional banks
as they would only return to Jakarta in the form of SBIs (Bank
Indonesia promissory notes)

"The condition has caused idleness in economic activities especially
trade in the regions," he said.

He said many project officers in the regions have been hesitant in
dealing with budget funds for fear of being accused of corruption by
the Corruption Eradication Commission.

He said the situation had to be dealt with, so that regional budget
funds could be used immediately.

The chairman of the Matsushita Foundation, Jusman SD, representing the
president of the board of commissioners of PT Panasonic Gobel
Indonesia, meanwhile said in a discussion on competitiveness that the
situation in the real estate sector was contrary to macro-economic
conditions which were actually improving as shown by the increase in
exports and controlled inflation.

In relation to the real estate sector Jusman said: "Right now business
opportunities are getting smaller and smaller while business profit is
also declining and investment opportunities are also difficult to
get," he said.

--------------------------------------

The Jakarta Post
August 9, 2006

Government swaps Rp 4.38t of bonds in debt portfolio restructuring 

The Jakarta Post, Jakarta

The government swapped Rp 4.38 trillion (US$481 million) of treasury bonds 
maturing between 2007 and 2009 for new ones due in 2021 to help restructure its 
bond-debt portfolio.

A total of Rp 5.86 trillion in bids were received from bondholders during 
Tuesday's public auction, said the Finance Ministry's director general of the 
treasury, Mulia P. Nasution. 

Investors traded in nine series of fixed-rate and variable-rate bonds, 
carrying average weighted yields of between 9.5 and 14 percent, for the new 15-year, 
fixed-rate FR0034 bonds, with an average weighted yield of 12.02 percent. 

The central bank's cutting of its key rate by half a percentage point to 
11.75 percent earlier in the day helped lower the yields, which reflect the 
government's interest payment costs to investors. 

The government has been refinancing its maturing bonds both by extending 
their terms through such bond swaps, and buying them back so as to better manage 
redemption. It would face the risk of having to pay out as much as Rp 40 
trillion in due bonds between 2007 and 2009 if they were not refinanced. 

The government is tending to rely more on bonds to finance the budget, 
instead of resorting to the more politically-sensitive overseas borrowing or 
privatization. 

It hopes to raise Rp 35.8 trillion in net proceeds from bond sales this year 
to help plug the budget deficit, which is expected to come in at Rp 37.6 
trillion, or 1.2 percent of gross domestic product. 

The government raised Rp 3.28 trillion from its first-ever retail bond sale 
to individual investors Monday, adding to the Rp 29.6 trillion in proceeds it 
managed to rake in from monthly local-currency bond sales to institutional 
investors up until the end of July. It also raised US$2 billion in March from this 
year's global bond sale. 

The government will hold its next local-currency bond sale on Aug. 22. 

Global credit rating agencies Standard and Poor's, Moody's Investment 
Services and Fitch Ratings all rate Indonesian bonds as junk, or still below 
investment grade. 

Investors are, however, attracted by the high yields on the bonds of at least 
12 percent, one of the highest levels among the world's emerging markets. 

----------------------------------------

Markups suspected in Indonesian procurement costs

JAKARTA, August 9 (Asia Pulse/Antara) - Markups have been suspected in
the procurement costs by government agencies for projects financed
with foreign loans, the Anti Debt Coalition (KAU) said.

The costs of procuring goods for government projects were inflated
much higher than the market prices resulting in a swelling of budget
by 30 per cent-50 per cent, KAU coordinator Kusfialdi said Tuesday.

The idea of mark up came first from good suppliers affiliated to
financial agencies or the government of the creditor countries, which
offer loans for Indonesia on condition that the goods used in the
projects are to be supplied from the creditor countries.

The creditors approached the finance ministry or the National
Development Planning Board, which name the projects in the regions to
be financed with the loans.

Kusfialdi said often the regions are not involved in the project and
sometimes they do not even need foreign loans to build the projects
such as garbage cans and gutters.

------------------------------------------------------------------

Bank Indonesia awards 31.4 trln rupiah 1-mth SBIs at fixed rate 11.75 pct

JAKARTA, August 9 (XFN-ASIA) - Bank Indonesia has awarded 31.4 trln
rupiah worth of Bank Indonesia Certificates (SBIs) at a fixed rate of
11.75 pct.

The one-month SBI rate is pegged to the benchmark rate, called the BI
rate, which was lowered by 50 basis points to 11.75 pct yesterday.

The central bank also auctioned three-month SBIs worth 1 trln rupiah,
or just 10.8 pct of total bids, at a weighted average interest rate of
11.36 pct against 12.16 pct previously.

---------------------------------------------------------------

Table-Indonesia's SBI auction results

JAKARTA, August 9 (Reuters) - Following is the result 
of Bank Indonesia's auction of central bank paper, or 
SBIs, on Wednesday.

                                                           Latest     Previous
One month:
 Amount absorbed (trillions of rupiah)         31.40       59.33
 -- as a percentage of total bids                100.00     100.00

 Three-month:
 Weighted average interest rate (pct)         11.36       12.16
 Amount absorbed (trillions of rupiah)         1.00         2.45
 -- as a percentage of total bids                 10.80       26.53

NOTE: Indonesia's central bank fixed the interest rate on its
one-month debt before the auction at 11.75 percent, the same 
as the benchmark BI rate.

---------------------------------------

The Jakarta Post
August 9, 2006

Components sector set for boost 

The Jakarta Post, Jakarta

The government is hoping to remove all import duties currently imposed on raw 
materials used in the production of components and spare parts by the end of 
the year, Industry Minister Fahmi Idris says.

Speaking to reporters on the sidelines of a ceremony marking the acceptance 
by small and medium enterprises of donations presented by Japanese firm 
Mitsubishi, Fahmi said the move was needed to promote the development of the 
components industry in Indonesia. 

"This is in line with the policy of the Association of Southeast Asian 
Nations (ASEAN), which is on track to eventually eliminate all import duties between 
members," he said. 

The government currently imposes import duties of up to 20 percent on the raw 
materials used in the production of components. 

Indonesian industry has long been urging the government to reduce these 
duties so as to avoid Indonesian manufacturing firms being reduced to mere 
packagers. 

Fahmi said he was optimistic that the plan would be put into effect this 
year, although the Finance Ministry would still have the final say on the issue. 

"Our colleagues in the Finance Ministry have given the green light so that 
this can be done this year. But we don't know the exact time yet," he said 
without elaborating. 

Besides raw materials used in the production of components, the government 
also imposes import duties on the raw materials used to produce certain 
agricultural, fishing, pharmaceutical and metal products that are considered 
economically, socially or politically sensitive. 

However, manufacturing firms have complained that this has resulted in the 
import duties on some raw materials being higher than those imposed on processed 
and assembled goods. 

------------------------

Singapore ups 2006 GDP forecast to between 6.5-7.5% 

SINGAPORE, Aug. 9 (AP): Singapore's economy grew 9.4 percent in the first 
half 
of 2006 from a year ago, and is expected to exceed previous forecasts to 
expand 
by 6.5 percent-7.5 percent for the full year, Prime Minister Lee Hsien Loong 
said.

In a televised National Day address Tuesday night, Lee also said the global 
economic outlook remains positive, with moderation in the U.S. economy balanced 
by stronger growth in Japan, gradual improvements in several European 
economies, andthe continued strong momentum in China and India.

"After the past few years upgrading and restructuring our economy, Singapore 
is in a much stronger position than before.Our strategies are working, and our 
economy is growing and creating jobs," Lee said in his speech.

Singapore celebrates its 41st year of independence Wednesday, and the 
government will release detailed second-quarter GDP data Thursday.

Based on first-quarter growth of 10.6 percent on year, Singapore's gross 
domestic product likely expanded around 8.2 percent in the second quarter, faster 
than the government's estimate of 7.5 percent.

According to a poll of seven economists by Dow Jones Newswires, Singapore's 
economy likely grew 8 percent on year during the April-June quarter, as the 
manufacturing sector showed surprising strength through June.

The government had earlier forecast economic growth for 2006 to be between 5 
percent and 7 percent.

Lee didn't discuss the factors fueling the city-state's economic growth. 
However, he warned Singaporeans of dark clouds on the horizon, such as the 
upheaval in the Middle East, the stalled Doha round of trade talks, bird flu - a 
serious problemin neighboring Indonesia - and the threat from terrorism.

"To deal with these and other challenges, we need able and dedicated leaders 
in every sector. We need a good and effective government to lead the country," 
he said. "And we need Singaporeans to work together to take our nation 
forward." 

---------------------------------------

Stock Alert: Indonesia's Bank Niaga up sharply 
on earnings hopes after rate cut

JAKARTA, August 9 (XFN-ASIA) - PT Bank Niaga was sharply higher in
heavy trade on hopes that it would benefit the most from yesterday's
aggressive interest rate cut by the central bank, dealers said.

They said the rate cut should significantly reduce Bank Niaga's cost
of funds and improve its profitability.

Yesterday, Bank Indonesia cut its key rate, called the BI rate, by 50
basis points to 11.75 pct.

Bank Niaga was up 50 rupiah or 7.58 pct at 710, off a high of 720, on
volume of 177.73 mln shares.

The stock is also considered as having lagged behind other bigger
banks in the recent rally.

"The rate cut is good news for all banks but Bank Niaga will benefit
the most because its third party funds are dominated by time
deposits," said an institutional dealer with a state brokerage.

The dealer added that the rate cut would therefore make a significant
impact on Bank Niaga's cost of funds, thereby improving its earnings.

The high interest rate environment in the first half pushed up Bank
Niaga's interest expense during the period by 115.45 pct to 1.52 trln
rupiah compared to just 709.10 bln the year before.

Banks normally pay a higher interest rate on time deposits than on
savings deposits.

The dealer said at the current level, the stock is almost fairly valued.

----------------------------------------------------------------

Stock Alert: Indonesia's Indocement higher on hopes rate cut to revive demand

JAKARTA, August 9 (AFX) - PT Indocement Tunggal Perkasa, a 65.14-pct
owned unit of Germany's HeidelbergCement AG, was higher in afternoon
trade on hopes that yesterday's interest rate cut would spark a
recovery in cement demand, dealers said.

Indocement was up 175 rupiah or 4.07 pct at 4,475.

'Cement sales for the second half now looks more promising after the
rate cut,' said a dealer with Mandiri Securities.

Domestic cement consumption during the first half to June fell 3.3 pct
to 14.55 mln tons from 15.05 mln a year ago.

Indocement is the country's second largest cement maker with a market
share of around 30 pct.

----------------------------------------------------------------

Indonesia bourse delists Bukaka Teknik

JAKARTA, August 9 (AFX) - The Jakarta Stock Exchange (JSX) said it has
decided to delist PT Bukaka Teknik Utama from today for failure to
submit its latest financial report with an unqualified opinion from
its auditor.

'The delisting of PT Bukaka Teknik Utama from the Jakarta Stock
Exchange becomes effective as of August 9, 2006,' the bourse said in a
statement.

Bukaka is chaired by Vice President Jusuf Kalla's brother Achmad Kalla
as president director and Suhaeli Kalla as chief commissioner.

----------------------------------------------------------------

Indonesia's Asuransi Jiwa targets 20 pct rise in net profit

JAKARTA, August 9 (Asia Pulse/Antara) - Life insurance company PT
Asuransi Jiwa Central Asia Raya (CAR) targets to chalk up a 20 per
cent increase in its net profit to Rp58.8 billion (US$6.63 million)
this year compared with last year.

Company President Muljadi Kusuma said in the first six months of this
year the company posted Rp20 billion in un-audited net profit.

Muljadi said the company has succeeded in expanding its market to
almost to all parts of the country, including remote frontier areas
and islands.

By June the company had 850,000 individual policy holders with a
premium income of Rp850 billion, he said, adding by the end of this
year premium income is expected to hit Rp1 trillion.

------------------------------------------------------------------

Indonesia's Asuransi Bintang to increase capital

JAKARTA, August 9 (Asia Pulse/Antara) - The shareholders of publicly
listed insurance company PT Asuransi Bintang (JSX:ASBI) have agrees to
increase the capital of the company with an additional fund of Rp34.08
billion (US$3.77 million) bringing its total capital to Rp70.8
billion.

The shareholders also sanctioned plan to launch right issue to raise
more fnd to strengthen he capital of the company, its President
Muhaimin Iqbal said.

The step is in preparation for an expected government regulation
setting a minimum limit for the capital of an insurance company, Iqbal
said.

He said the government's policy has been clear toward increasing the
capital of insurance company, adding, announcement is impending.

The fund for the additional capital is derived from retained profit
the appropriation of which is not yet determined, Iqbal said.

----------------------------------------------------------------

Mideast investors keen to invest in Indonesia's infrastructure

JAKARTA, August 9 (Asia Pulse/Antara) - Four months after President
Susilo Bambang Yudhoyono visited the Middle East, investors in the
region became interested in investing in Indonesia, especially in the
infrastructure sector.

"They have expressed interest in investment in Indonesia, especially
in infrastructure projects," Chairman of the Indonesian Chamber of
Commerce and Industry (Kadin)'s Committee for the Middle East and the
Organization of Islamic Conference (OIC), Sudrajat DP said in Jakarta,
Tuesday.

According to him, businessmen of the Middle East were keen to invest
their money in the oil and gas, education and banking sectors in
Indonesia.

He also said that with regard to the infrastructure sector,
businessmen from Iran, Egypt, Kuwait and Saudi Arabia will come to
Jakarta to attend the "Visit Indonesia Infrastructure" event to be
held in the Jakarta Convention Centre from November 1 to 3, 2006.

"For the time being, they will be observing and studying the economic
situation in Indonesia which they hope will be conducive to their
planned investment," he said.

The businessmen have also expressed interest in marketing Indonesian
products in their respective countries.

Sudradjat also said Indonesia's exports currently reaching USD1.35
billion could be boosted if the producers improved the quality of
their commodities.

The main factors which most of the Mideastern businessmen were
interested in include good quality, competitive prices and matters
related to shipment.

"At present, our main competitor is China. While Chinese products are
cheaper, Indonesian products are qualitatively better. This situation
should be improved, especially with regard to prices," he said.

Indonesian commodities exported to the Middle East include timber,
electronic products, building materials, and garment.

President Yudhoyono from April 24 to May 4, 2006, visited a number of
countries in the Middle East namely Saudi Arabia, Kuwait, Qatar,
United Arab Emirates and Jordan.

The main purpose of his tour was to improve Indonesia's trade with
these countries, and luring potential investors to do business in
Indonesia's many sectors.

----------------------------------------------------------------

Thai fishing firms forced to comply with new rules in Indonesia

JAKARTA, August 9 (Asia Pulse/Antara) - The maritime and Fishery
Ministry said it will not renew the fishing license of Thai fishing
ships operating in Indonesian waters when they expires in next month.

Under a new regulation, licenses will be available only to foreign
fishing companies which have fish processing plants in the country, an
official of the ministry said.

"If every fish caught by foreign fishing ships were taken away from
Indonesia, the country will stand to lose," Catch Fishery Director
General Husni Manggabarani said on the sideline of a meeting with a
Thai delegation here Tuesday.

Thai Fishery Director General Jaranthada Karnasuta, who was included
in the delegation, said Thailand will comply with the new regulation
and is ready to cooperate with Indonesia.

-----------------------------------------------------------------

Indonesia's Austindo hopes to raise US$80 mln from IPO

JAKARTA, August 9 (Asia Pulse/Antara) - PT Austindo Nusantara Jaya
Agri of the Austindo Group plans to go public late this year or early
next year hoping to raise US$80 million from share sales.

Austindo has named two underwriters - a foreign firm and a local
company - to help in selling the shares of the oil palm plantation
company abroad and in the country.

PT Austindo Nusantara Jaya Agri was formerly named PT Eka Pendawa
Sakti established in 1986 operating oil palm plantations and a crude
palm oil processing plant.

Now Austindo has 67,488 hectares of land for oil palm plantations but
only 25,500 hectares of the land has been cultivated.

-----------------------------------------------------------------

Malaysian investors to build oil palm plantations in Indonesia

JAKARTA, August 9 (Asia Pulse/Antara) - Six Malaysian investors are
seeking lands to build oil palm plantations in Indonesia.

The Malaysian investors will also build crude palm oil (CPO)
processing plants, head of the regional office of the investment board
(BKPMD) in Bengkulu Azriati Aziz said.

Azriati said one of the investors has been ready to sign a memorandum
of agreement to build a CPO processing plant in the regency of
Bengkulu Selatan with a processing capacity of 60 tons of oil palm
fresh fruit bunches an hour.

"I refuse to sign memorandum of understanding. If they are serious
they have to sign an agreement," he said.

Malaysian companies have built 14 CPO processing plants in South Sumatra.

-----------------------------------------------------------------

Indonesian palm oil up on Malaysia gains, sellers return

JAKARTA, August 9 (Reuters) - A rally in Malaysia crude palm oil
futures boosted Indonesian palm oil prices on Wednesday, with sellers
pouring into the market, traders said.

Crude palm oil at the state marketing centre's auction in Jakarta rose
to 4,461 rupiah ($0.491) a kg on Wednesday, from 4,375 rupiah on
Tuesday.

At a local auction in North Sumatra's Medan, high-grade crude palm oil
traded at 4,470 rupiah, up from 4,390.

"Malaysia is pushing the prices up. That prompted sellers to sell
their stocks while prices are high. Some have even sold them for next
week delivery," said a trader in Medan, the provincial capital of
North Sumatra and a key port for palm oil exports.

But the rise in prices deterred buyers as they were concerned the
uptrend might not continue in the coming days, the Medan trader added.

Malaysian crude palm oil futures rallied for the third straight day on
Wednesday, fuelled by robust exports and firm crude oil prices.

In Jakarta, cooking oil was quoted at 5,060 rupiah a kg, up from 4,985
rupiah on Tuesday.

"Crude palm oil supply to Jakarta is still a bit tight and that helped
boost the prices," a Jakarta-based trader said.

Traders have said drought in recent weeks has lowered river water
levels, hampering shipments of crude palm oil from key producing areas
to ports in Sumatra and Java island.

In the export market, sellers offered Aug/Sept shipment at $450 a
tonne, free on board Belawan. Buyers bid at $445 without any deals
reported.

------------------------------------------
Joyo Indonesia News Service
------------------------------------------