[Kabar-indonesia] 2: RI Trade and Investment News, 21 August 2006

[JoyoNews at aol.com]

The Coordinating Ministry for Economic Affairs
Republic of Indonesia
Jakarta
Monday, August 21, 2006

Trade and Investment News, 21 August 2006

Part 2 of 2

STATE CONCERNS

No Tax on Rubber Exports - Official

The government is unlikely to impose an export tax on natural rubber, Deputy 
Coordinating Minister for Economic Affairs Bayu Krishnamurti said on Tuesday 
(15/8/06).

"I don't think there will be a policy to put a tax on the export of rubber," 
Krishnamurti said, according to Dow Jones Newswires.

Bisnis Indonesia reported Monday (14/8/06) that the government might impose a 
rubber tax after having decided to lift a value-added tax (VAT) on primary 
commodities, given the high rubber prices at present.

Krishnamurti confirmed the government has submitted a proposal to parliament 
to end the imposition of a VAT on primary commodities.  He added that a rubber 
tax would contradict the intent of the proposed new VAT law.  

"The purpose of the VAT law is to promote primary products and make raw 
materials for the industry more competitive, and to promote our industry, (as well 
as) to give incentives to farmers, who could increase their incomes," he said.

PRIVATE SECTOR

Manufacturing Expanded by 3.07% in H1

The country's manufacturing industry grew by 3.07% year-on-year in the first 
half 
of the year, the Central Bureau of Statistics (BPS) said.

BPS said the industry expanded by 3.09% in the first quarter of the year and 
3.05% in the second quarter, compared to the same periods last year, Antara 
reported on Tuesday (15/8/06).

Exports instead of domestic sales have boosted the manufacturing industry, 
chairman of the business association Apindo, Sofyan Wanandi, said.

Quotas set by the United States and the European Union on certain Chinese 
products had helped Indonesia increase its exports.

The Industry Department has set the target for the country's manufacturing 
industry this year at 7.7%.

Indonesia Gets 3G; Telkomsel Leads 

The country's largest cellular operator, PT Telkomsel, launched its 
third-generation (3G) service on Tuesday (15/8/06), marking the first commercial 
introduction of 3G to Indonesia, reported The Jakarta Post.

Telkomsel signed contracts for network deployment with vendors Nokia and 
Ericsson, and will do so later with Siemens, to support the rollout of Telkomsel's 
3G network. 

Telkomsel also signed collaboration agreements with four initial content 
providers -- SCM, Metro TV, Bizcom and Elasitas -- to provide a large selection of 
content through live mobile TV services, video-on-demand streaming and video 
downloading. 

Telkomsel president director Kiskenda Suriahardja said that Telkomsel had 
also entered into collaborative arrangements with another 162 local and foreign 
content providers.  

He noted that the rollout of 3G around the country over the next three years 
would cost Rp3 trillion.  "We are optimistic that by 2009, we will have 
arrived at break-even point for the overall investment," he said. 

Also on Tuesday, Telkomsel launched a customer pre-registration program 
through which Telkomsel customers who already have a 3G-equipped phone can sign up 
by simply sending a text message for the chance to become part of the initial 
group of 10,000 early adopters to experience Telkomsel's 3G services 
firsthand. 

As of the second week in August, the number of Telkomsel customers stood at 
31.5 million and this figure is expected to reach 35 million by the end of the 
year, accounting for about 55% of the country's total cellular users. 

Govt. Unlikely to Force TV Stations to Merge 

The government is unlikely to force TV stations with national coverage to 
merge, as there are signs that some of them are already on the verge of merging 
to boost efficiency. 

While hoping to see the number of national networks fall to five or six, the 
government would not issue any directive requiring TV firms to merge in the 
foreseeable future, Information and Communications Minister Sofyan Djalil said. 

"At the moment, the government can only persuade and appeal to the stations 
to merge.  We have to leave it up to the market to decide as there is already 
extreme competition in the industry that leaves each station with less 
advertisements," Djalil was quoted as saying by The Jakarta Post on Monday (14/8/06). 

During the previous week, Trans Corp, owner of TransTV, purchased a 49% stake 
in TV7 from Kelompok Kompas Gramedia to form a strategic partnership between 
the two firms.  The two companies have said the move aims to improve their 
competitiveness. 

It has also been reported that Lativi is seeking to enter into a relationship 
with another station, with ANTV currently seen as the prime suitor.  After 
seeing several downturns, ANTV is one of the richest TV stations after Rupert 
Murdoch's News Corp bought a 20% stake last year in PT Cakrawala Andalas 
Televisi, which runs the station. 

Djalil said Indosiar is also in the process of seeking to build a 
relationship with another station.  "I think we will see more tie-ups, which will lead to 
mergers in the near future.  This is a good start," he said, adding that 
three TV groups running six stations would likely emerge in the future. 

BANKS

China's ICBC Eyes Indonesian Bank - Report

The Industrial and Commercial Bank of China (ICBC), which is aiming to list 
on both the Shanghai and Hong Kong bourses, plans to buy an Indonesian bank 
after its dual listing, the Hong Kong-based Oriental Daily reported, citing an 
unidentified source.

Chinese media reported earlier that ICBC, the country's largest bank by 
assets, is planning to raise as much as $19 billion in a cross-border initial 
public offering, and may set identical prices for its A and H shares.  The source 
refused to give the name of the Indonesian bank, but said it has quality assets.

The report noted that the Indonesian government has previously signaled its 
intention to sell the country's seven commercial banks, including Bank Danamon 
Indonesia and Lippo Bank Indonesia.

BTN Prices Rp1t Bond Yield, Plans IPO 

Bank Tabungan Negara (BTN), a state bank specializing in housing loans, has 
set the indicative yield of its 10-year Rp1 trillion bond issue at 25-125 basis 
points above the FR30 treasury bond yield.  The FR30 yield stood at 11.8% on 
Tuesday (15/8/06).

"The wide spread is in anticipation of further interest rate cuts," BTN 
president Kodradi told reporters at a briefing on the firm's bond plans, according 
to XFN-Asia.

Kodradi said final price will be determined after the book building process, 
set to run from August 15-29.  The bond offer period is scheduled for 
September 19-21, with listing on the Surabaya Stock Exchange slated for September 27.

BTN will use the bond proceeds to support expansion of its loans, targeted to 
reach Rp5.7 trillion this year, Kodradi said.  In the first half to June, the 
bank extended Rp1.3 trillion in new loans.

PT Mandiri Securities and PT Standard Chartered Securities Indonesia are the 
underwriters for the issue.

Meanwhile, Kodradi also said the firm is planning to launch an initial public 
offering (IPO) in the first half of next year to raise Rp1.5 trillion to Rp2 
trillion, which will also be used to boost its loans portfolio.

He said the management sent a letter to the state minister for state 
enterprises on August 8, outlining the bank's IPO plan but has yet to get a response.

Bank Ekspor to Offer Bonds

State bank, Bank Ekspor Indonesia, unveiled plans on Tuesday (15/8/06) to 
offer Rp500 billion ($55.1 million) worth of bonds to help expand its lending, 
reported Reuters.

The bank, with total assets of Rp8 trillion, will offer the bonds on 
September 25-27 and list the paper on the country's main bond exchange, the Surabaya 
Stock Exchange, on October 3.  It made the announcement in a prospectus carried 
in newspapers.

The lender, which specializes in providing trade financing, had not set the 
coupon rate for the paper, which will consist of three maturities of between 
three to five years.

PT Trimegah Securities and state-owned Danareksa Sekuritas will underwrite 
the issue.

The bank booked a net profit of Rp200.5 billion last year, up 10% compared to 
a year ago.  However, the figure was lower than the lender's net profit in 
2003 of Rp293.7 billion.

Bank Jabar to Issue Bonds in H2

Bank Jabar, owned by West Java's provincial administration, plans to issue 
bonds valued at Rp750 billion ($83.3 million) in the second half of the year.

Ten securities companies, among them PT Trimegah Securities, PT Mandiri 
Sekuritas and PT Indopremier Sekuritas, have been invited to take part in a 
selection of underwriters for the five-year bonds, Antara reported on Monday 
(14/8/06).

Earlier, PT Andalan Artha Advisiindo and PT Dhanawibawa Arthacemerlang were 
named financial advisors to prepare options to raise funds to increase the 
bank's capital.

The two financial advisors have helped the bank prepare the launch of an 
initial public offering, which has been put off until next year.

OIL AND GAS

New Oil, Gas Rights Opened for Bidding

The government said it has invited bids for 41 oil and gas areas to bolster 
Indonesia's dwindling petroleum reserves and production.  

The country wants companies to bid for exploration rights in 20 areas and 
plans to award 21 areas through direct offerings, the Mines and Energy 
Department's Director General of Oil and Gas, Luluk Sumiarso said during a forum for oil 
and gas investors on Tuesday (15/8/06).

The blocks being put out to tender are located in the Natuna area, South 
Sumatra, East Kalimantan, West Sulawesi, Lampung and West Java, Sumiarso said.  

"In Natuna, the government is putting three new offshore blocks -- Tuna, 
Cucut and Dolphin -- out to tender, as well as three available offshore blocks -- 
Cakalang, Baronang and Kerapu," he added.  

He said the government is also tendering the new onshore West Air Komering 
block in South Sumatra, and the Southeast Mahakam, Tigau and Menatana blocks, 
offshore East Kalimantan.  

Also on the table are new blocks in Madang, South Mandar, Sageri and South 
Sageri off the coast of South Sulawesi, and the Enrekang block in onshore South 
Sulawesi, as well as three offshore blocks in West Sulawesi -- Karama, Malunda 
and Mandar.  

In Lampung, the offshore Lampung I block and, in West Java, the offshore and 
onshore blocks in Ujung Kulon would also be put out to tender. 
Under the direct offering system, companies identify the blocks they wish to 
develop, and the government advertises to see whether there are rival bids.  
The government will announce the winners of exploration rights for such areas 
in 45 days, Sumiarso said.  The government may take as long as four months to 
decide on the winners of areas offered through regular tenders. 

About 80% of the companies offering to take blocks in the direct offer are 
Indonesian, he said. However, ConocoPhillips, Chevron, Total, and ExxonMobil are 
also among the foreign companies interested in bidding through direct offer, 
said R Priyono of the upstream oil and gas regulatory body BP Migas. 

Speaking at the forum, Mines and Energy Minister Purnomo Yusgiantoro said 
about 30% of the state budget comes from oil and gas.  "We'd like to continue 
having this contribution," he said. "I invite you to participate in this tender 
and hope that we can increase oil and gas production in the country."

MINING

Govt. Sees Lengthy Freeport Contract Review 

The government has indicated that the process of reviewing the mining 
contract of PT Freeport Indonesia may not be completed until next year. "We are still 
waiting for the outcome of a (report being made by a) special team formed by 
the House (of Representatives) to review Freeport's contract and operations, 
and from the Finance Department on royalty issues," Mines and Energy Minister 
Purnomo Yusgiantoro said, according to The Jakarta Post. 

"The department wants to speed up the process and wrap it up as soon as 
possible.  But we cannot do that since other institutions are also involved in the 
process.  We hope to be able to complete it by this year, but that is unlikely 
to happen," he said.  

Yusgiantoro refused to say what percentage of revenue the government is 
seeking.  "In the mining sector, there is no ideal figure for revenue sharing.  A 
zero-sum game is always in play, meaning that one party should have a higher 
share of the revenue than the other. For sure, the revenue share we will ask for 
will not deter investment in the sector," he said. 

The government is also working to improve Freeport's community development 
programs, to allow people living near the mining concession to receive more 
benefits. 

Essel Mulls Buying Coal Mine

Essel Mining & Industries Ltd, a subsidiary of the $6.5 billion Aditya Birla 
Group, is looking to acquire wholly or partially a coal mine in Indonesia and 
has short-listed about a dozen mines in the country, for which it is willing 
to spend $80 million to $150 million.

"The Aditya Birla group is actively seeking to acquire a coal mine in 
Indonesia and will appoint an investment bank to advise us in the acquisition in the 
next couple of weeks.  We have identified about a dozen mines and the mandate 
to the bank would be to complete the acquisition process in the next six 
months," Aditya Birla group executive president and business head, Ravi Kastia, 
told Business Standard.

"We are looking to service export markets like India, South Korea and Japan 
from this acquisition but a lot depends on what kind of mine we get.  If it is 
a coking coal mine, then the opportunities are broader but if it is merely a 
thermal coal mine then our options may narrow down."

The Aditya Birla Group already has five entities in Indonesia, which are 
primarily involved in the production of yarns, viscose staple fibers and carbon 
disulphide.

-End 2 of 2-

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Joyo Indonesia News Service
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