[Kabar-indonesia] 20 RI Biz/Econ Reports: Bonds; JSX Down Slightly; Indofood; Rice; Matahari

[JoyoNews at aol.com]

20 RI Biz/Econ Reports:

- Indonesia bonds get good 
  demand, strong rupiah seen
- Indonesia Govt Issues IDR1.95 
  Trillion (US$214.5m) In 12-Year 
  Bonds
- Indonesia shares fall slightly on 
  price corrections in PGN, Inco 
- Indonesia sells 6.12 trln rupiah 
  T-bonds at avg yields 11.82/
  11.95 pct
- Indonesia's rice stock to fall to
  532,000 tons by the end of 2006
- Indonesia's Indofood unit proposes to
  buy plantations in 125 bln rupiah deal
- Goldman Sachs raises stake in Indonesia's
  Matahari to 8.1 pct from 3.9 - report
- update: Salim-owned company to buy 
  21.6 pct stake in Singapore's Food Empire
- Stock Alert - Singapore's Food Empire
  higher on Salim plan to buy stake
- Indonesia's Air Paradise sells 49 pct 
  stake to Australian operator - report
- Indonesia's Great River caretaker 
  management team to resign Sept 1
- Stock Alert - Singapore's Gallant higher 
  as talk of Bintan casino plan persists
- Singapore's Gallant Venture says has 
  not been approached by casino investors
- Indonesia's car exports imports predicted 
  to increase 19.6% this yr
- Indonesia's Bank Jatim set to double profit
- Indonesia's Polychem H1 net loss 
  109.46 bln rupiah vs profit 148.13 bln
- Indonesia's forestry ministry sets deadline 
  for loan repayments
- Indonesia's exports more shrimps to
  the United States in H1
- Indonesia's tea priced at US$1.35 per kg
  in world market
- Indonesia palm oil down on thin demand,
  Malaysia
- Malaysia approves 52 biodiesel plant
  licenses to date - MPOB

Indonesia bonds get good demand, strong rupiah seen

By Adriana Nina Kusuma

JAKARTA, August 22 (Reuters) - Indonesian bond auctions on Tuesday
attracted strong demand amid hopes for further interest rate cuts,
prompting expectations of a stronger rupiah from bond-related capital
inflows and a pick up in the economy.

The finance ministry said it sold a total of 6.125 trillion rupiah
($675.6 million) worth of 12-year and 17-year bonds in the auctions,
triple its original target. There was a total of 15.5 trillion rupiah
worth of bids at the auctions.

A ministry official said domestic banks, traditionally a key buyer of
government bonds, played a reduced role in Tuesday's auctions,
possibly indicating a preference to use excess funds for loans rather
than buying bonds.

"We are seeing that the percentage of funds coming in from banks
compared to total incoming funds is lower than in the previous
auctions. This means banks are likely to make more lending," Rahmat
Waluyanto, the finance ministry's head of debt management unit, told
reporters.

"Banks have tended to be net sellers in the past two months, while
foreign investors tended to be net buyers. This means the economy is
going to be better," Waluyanto said, without giving specific figures.

The economy was hit earlier this year by high domestic interest rates
and inflation, but price pressures have started easing in recent
months, allowing the central bank to cut rates.

The central bank has said it may cut the benchmark one-month interest
rate to around 11.0 percent by year end from 11.75 percent now.

Foreign investors, attracted by one of Asia's highest bond yields and
the prospect of lower domestic interest rates, have played a growing
role in the Indonesian government bond market.

Rating agencies, however, still rate Indonesian bonds below investment
grade, or junk status. Standard and Poor's ratings Services, for
example, rates long-term Indonesian local currency government bonds
"BB+" - one notch below investment grade.

The strong fund inflows resulting from bond purchases by foreign
investors has been seen as a key factor behind the rupiah's 8.5
percent gains against the dollar this year. The currency was quoted at
around 9,070 per dollar late on Tuesday.

"Foreign investors need to convert their dollars into rupiah to buy
the domestic-currency bonds. This should be good for the rupiah," one
fixed income dealer said.

The government sold 1.95 trillion rupiah worth of 12-year bonds FR0038
with an average yield of 11.82 percent. This is below the yield in an
auction of similar maturity bonds in April when 13-year bonds FR0036
were priced to yield 12.00 percent.

It also sold 4.175 trillion rupiah worth of 17-year bonds FR0039 with
an average yield of 11.95 percent. This compared to 12.42 percent
yield for 15-year bonds in an auction last month.

The government holds regular bond auctions every month, but the
maturities of the bonds may vary.

Tuesday's bond auction brought the total amount of government bonds
sold to around 57 trillion rupiah so far this year, with the proceeds
used to help plug the state budget deficit. The bond market estimates
the government will sell around 60 trillion rupiah of bonds this year.
(Additional reporting by Muhamad Ari and Johannes Mantiri)

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Indonesia Govt Issues IDR1.95 Trillion
(US$214.5m) In 12-Year Bonds

JAKARTA, August 22 (Dow Jones)--The Indonesian government issued
12-year and 17-year bonds Tuesday worth IDR1.95 trillion and IDR4.18
trillion respectively in the local market Tuesday via auction, a
finance ministry official said.

The 12-year and 17-year bonds had weighted yield averages of 11.82%
and 11.95% respectively, Mulia Nasution, director-general of the state
treasury at the Ministry of Finance, told reporters.

Nasution said the bonds attracted total bids of IDR15.45 trillion.

The bond sale is part of the government's efforts to raise IDR35.8
trillion to finance the budget deficit in 2006.

The government aims to raise a net IDR34.2 trillion through bonds next
year, according to a government document on the 2007 budget. [
22-08-06 0820GMT ]

Market response to the auction indicated strong investor sentiment for
Indonesian government debt, said Rahmat Waluyanto, head of the finance
ministry's Debt Management Unit.

"The market remains bullish...this indicates that the market is
anticipating that the (official benchmark) interest rate will continue
to fall," Waluyanto said.

However, official data indicate a faltering appetite among domestic
commercial banks for government debt, Waluyanto said.

"There have been indications that banks bought less in percentage
terms (and) in the latest two auctions, banks (bought) only 50 to 60%
of the total bonds, compared with 75% early this year," he said.

That data suggest banks are diverting their funds from government
bonds into "intermediary services", Waluyanto said, without
elaborating.

Indonesia last issued 12-year treasury bonds in March 2005.

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

Indonesia shares fall slightly on price corrections in PGN, Inco 

JAKARTA, Aug. 22 (AP): Indonesian shares fell Tuesday, as gas distributor 
PT Perusahaan Gas Negara fell after a recent surge and nickel miner Inco 
tumbled on worries of lower sales.

The Jakarta Stock Exchange Composite index ended down 2.739 points, 
or 0.2 percent at 1,435.029.

PGN fell 5.5 percent to Rp 12,850 after rising 11 percent in the wake of 
a government plan to sell a 5.31 percent stake in the company later this 
year.

Dealers said there is speculation that the stake will be sold at a premium.

Nickel miner Inco lost 3.4 percent to Rp 22,900 on fears that the company 
will book lower nickel sales volume this year.

Also lower were shares in Bank Danamon, which ended down 2.1 percent 
at Rp 4,700 on fears that the bank may still record lower net profit by the 
end of September due to the high interest rate environment.

Indosat, which is expected to report first-half earnings next week, rose 
4.2 percent to Rp 4,925. 

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

Indonesia's rice stock to fall to 532,000 tons by the end of 2006

WONOGIRI, August 22 (Asia Pulse/Antara) - The president director of
the National Logistics Agency (Bulog), Widjanarko Puspoyo, said here
on Saturday that the rice stock would reach only around 532,000 tons
by the end of this year or drop from a normal standard of around one
million tons.

"The amount includes around 222,750 tons of reserve rice belonging to
the government but it will drop if there are more natural disasters or
requests for market operations," he said on the sidelines of "Bulog
Care 2006" held to mark the Independence Day.

He said if there were requests for market operations it would be the
government reserve rice that would be used for it.

He said the amount of the rice stock was the lowest Bulog had ever had
in its history.

He said he had reported the situation to the government. "It is up to
the government to deal with it because it is the government that makes
a policy while Bulog is a mere executor," he said.

He said there had been no request for a market operation so far
although the price of rice had gone up by up to 12 percent for the
past three months," he said.

He said Bulog had so far conducted rice procurement domestically to
meet the stock target which had been lowered for 2006.

The target of rice stock for this year was reduced from around 2.1
million tons to around 1.35 million tons.

"Several weeks ahead of entering the fasting month usually there will
be indications of price rise," he said.

He said from August to December Bulog expects to procure around 80,000
tons of rice for several provinces.

"The peak of harvest will only take place in South Sulawesi and it is
expected to reach around 60,000 tons," he said.

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

Indonesia's Indofood unit proposes to buy plantations in 125 bln rupiah deal

JAKARTA, August 22 (XFN-ASIA) - Noodle maker PT Indofood Sukses Makmur
said its subsidiary PT Salim Ivomas Pratama is proposing to acquire
85,500 hectares of plantations in South Sumatra and Central and East
Kalimantan in a deal valued at 125 bln rupiah.

In a statement, Indofood said Ivomas will carry out the deal by
acquiring the 60 pct stake held by Rascal Holdings Ltd in three firms
that operate the plantations. The three firms are PT Mentari Subur
Abadi, PT Swadaya Bhakti Negaramas and PT Mega Citra Perdana.

Indofood said Ivomas has entered into a conditional sale and purchase
agreement with Rascal Holdings.

Under the terms of the agreement, completion of the deal will be
subject to certain conditions, including approval by Indofood's
minority shareholders as the proposed acquisition is affiliated with
Ivomas' majority shareholder and constitutes a connected party
transaction.

Completion of the agreement is expected to be finalized no later than
Dec 31, 2006.

Indofood also said the proposed acquisition will be funded with internal cash.

'In line with Indofood's long term strategy to expand its oil palm
plantation to strengthen its edible oils and fats strategic business
group, the proposed acquisition will enable the company to enhance its
competitive advantage in the industry and increase its revenue
growth,' the statement said.

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Goldman Sachs raises stake in Indonesia's 
Matahari to 8.1 pct from 3.9 - report

JAKARTA, August 22 (XFN-ASIA) - Goldman Sachs International has raised
its stake in Indonesia's leading retailer PT Matahari Putra Prima to
8.19 pct as of Aug 12, from 3.99 pct in May, Bisnis Indonesia
reported.

The report said Goldman acquired the additional shares in a number
tansactions, though it did not name the sellers.

As of end July, the Lippo Group through Multipolar Corporation and
Lippo E-Net, still controlled a combined 50.08 pct stake in Matahari,
the report said.

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

Salim-owned company to buy 21.6 pct stake in Singapore's Food Empire

SINGAPORE, August 22 (XFN-ASIA) - Food Empire Holdings Ltd, a maker of
coffee and other instant beverages, said Universal Integrated Corp
Consumer Products Pte Ltd (UICCP), a company owned by Indonesian
businessman Anthoni Salim is buying around 21.6 pct stake in the
Singapore company.

UICCP said it has agreed to buy 39.2 mln new shares, equivalent to 10
pct of Food Empire, for 0.57 sgd per share. Food Empire said the
estimated proceeds of 22.34 mln sgd from the share sale will be used
to fund new projects and for working capital requirements.

After that is completed, UICCP will buy an additional 54 mln shares at
the same price from existing Food Empire shareholders, giving UICCP a
total stake of about 21.6 pct in the Singapore firm.

UICCP is a manufacturer and distributor of instant noodles, ice cream
and dairy products in Indonesia, the Middle East, Thailand and
Malaysia.

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

Stock Alert - Singapore's Food Empire higher on Salim plan to buy stake

SINGAPORE, August 22 (XFN-ASIA) - Shares in Food Empire Holdings, a
maker of instant beverages, were higher after it announced that
Universal Integrated Corp Consumer Products Pte Ltd (UICCP), a company
owned by Indonesian businessman Anthoni Salim, was buying about 21.6
pct of Food Empire, dealers said.

In late morning trading, Food Empire was up 0.01 sgd or 1.85 pct at
0.55, with 885,000 shares having changed hands.

UICCP said it had agreed to buy 39.2 mln new shares, equivalent to 10
pct of Food Empire, for 0.57 sgd per share. Food Empire said the
estimated proceeds of 22.34 mln sgd would be used to fund new projects
and for working capital requirements.

Subsequently, UICCP will buy 54 mln more shares at the same price from
current shareholders in Food Empire, giving it a total stake of about
21.6 pct.

Food Empire group chairman and managing director Tan Wang Cheow said
his company would benefit from the extensive experience, network and
international reputation of the Salim group.

'There are strong synergies between Food Empire and the Salim group.
Food Empire has extensive experience in the consumer markets of
Russia. The Salim group has a wide and expanding network across
various food industries in Indonesia, the Middle East, Thailand and
Malaysia. This should give rise to exciting business opportunities,'
Tan said.

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

Indonesia's Air Paradise sells 49 pct stake to Australian operator - report

JAKARTA, August 22 (XFN-ASIA) - Bali-based airline PT Air Paradise
International has sold 49 pct of its shares to an Australian airline,
Bisnis Indonesia reported, citing an official at the Transportation
Ministry.

"The change of ownership composition is being processed for approval
by the Justice and Human Rights Ministry," Edi Wibowo, director for
air transportation at the ministry, said.

Wibowo did not disclose the name of the buyer.

Air Paradise had been servicing destinations in select cities in
Australia, South Korea and Taiwan before it ceased operations on Nov
24, 2005 due to a downturn in traffic following the October 2005 Bali
bombings.

Wibowo said the stake sale was in accordance with government
regulations which requires that the stake ownership of a foreign party
in a domestic airline is limited to 49 pct.

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

Indonesia's Great River caretaker management team to resign Sept 1

JAKARTA, August 11 (XFN-ASIA) - Ailing apparel firm PT Great River's
independent management team said it has decided to resign with effect
from Sept 1, and has asked the company's creditors and trustees to
take over the management of the firm.

The caretaker team comprises of Kristanto Setyadi, Doddy Soepardi, D
Swantopo, Albert Maria Setyawan and Hasanuddin Rachman.

Indonesia's largest lender PT Bank Mandiri and PT Nikko Securities are
Great River's creditors, while PT Bank Mega is the trustee.

The team said in a statement that Great River and its unit PT Inti
Fashindo Indonesia desperately need the injection of fresh funds from
new investors to survive.

The team's efforts to attract new investors, however, have been
hampered a prolonged delay in revising Great River's financial reports
for the financial years 2003 and 2004 as recommended by accounting
firm Aryanto Amir Yusuf and Mawar.

The adjustments to the 2003 and 2004 reports must be completed before
an audit can be carried out on the firm's 2005 financial results.

Meanwhile, potential investors will need those reports to value the
firm properly before they agree to provide any financial support.

The statement said 'the related competent people' have however
rejected the adjustments to the reports for 'their own reasons.'

The statement said the caretaker management team is also unhappy with
the unwillingness of employees to share the burden by not staging any
strikes or by accepting lower salaries as production activities are
slowing down.

The situation was further complicated by a member of the caretaker
team being named as a suspect by police as a result of a report by the
firm's labor union, for allegedly paying salaries below the minimum
amount set by local government.

Great River has defaulted on the coupon payment of its 300 bln worth
of rupiah bonds. It also owes some 250 bln rupiah to Bank Mandiri.

The company manufactures and distributes high-end fashion items
including brands such as Triumph, Van Laack, Nino Cerruti, Kenzo,
Arrow and Elle.

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

Stock Alert - Singapore's Gallant higher as talk of Bintan casino plan 
persists

SINGAPORE, August 22 (XFN-ASIA) - Gallant Venture extended its gains
amid persistent conjecture that it will team up with investors to
develop a gaming resort on the Indonesian island of Bintan, where
Gallant owns undeveloped property, dealers said.

In early trading, Gallant was up 0.015 sgd or 2.08 pct at 0.735, with
2.48 mln shares having changed hands.

Despite denials by the company, and the fact that gambling is illegal
in Indonesia, reports in the news media continue to point to the
possibility of a gaming resort being put up on Bintan, one of three
Indonesian islands that Singapore and Indonesia want to develop as
special economic zones.

According to the Business Times, Gallant could partner Malaysian
businessman Mark Wee and Landmarks Bhd, of which Genting Bhd holds 17
pct.

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

Singapore's Gallant Venture says has not been approached by casino investors

SINGAPORE, August 22 (XFN-ASIA) - Gallant Venture Ltd, which owns and
operates resorts, industrial parks and utility assets on the
Indonesian islands of Batam and Bintan, said it has not been
approached by potential investors who are interested to set up casinos
there.

'We are not aware of any investors who want to buy (our) land to set
up casinos,' Gallant Venture chief financial officer Alvin Choo said.

The Business Times had reported that Gallant Venture may team up with
Genting Bhd and

Landmarks Bhd and Malaysian businessman Mark Wee to help build a
casino in Bintan.

But speaking to XFN-Asia, Choo was surprised at the report, saying
that these names are unfamiliar to Gallant Venture as the group has
not spoken to any potential investor related to Landmarks or Wee.

'At the moment, we don't understand why there is such a speculation,'
Choo added. 'So far, we are in negotiations with potential investors
to build resorts; hotels; villas for rent or sale; retail centers
(and) homes. None has come to us saying that they want to build gaming
facilities.'

Choo said that Gallant Venture will continue to focus on selling land
to investors to build resorts and hotels, and until casinos are
legalized in Indonesia, it will not be targeting any casino projects.

Gambling is illegal under Islamic law and in the predominantly Muslim 
Indonesia.

But Singapore's move to lift its ban on casinos last year and its two
planned casino resorts has brought pressure to conservative countries
in the region like Japan to review their strict gambling laws.

Speculation that a casino may be developed on land owned by Gallant in
Bintan has sent Gallant's share price soaring by as much as 35 pct
since the Edge newspaper in Malaysia reported last week that Wee is
looking to set up a casino in Bintan.

Gallant ended the morning session up 0.015 sgd or 2.08 pct at 0.735
with 5.04 mln shares traded.

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

Indonesia's car exports imports predicted to increase 19.6% this yr

JAKARTA, August 22 (Asia Pulse/Antara) - The country's exports and
imports of cars in completely built-up (CBU) form this year are
forecast to rise 19.6 per cent year-on-year to 72,000 units.

Exports will make up 35,000 units and imports 37,000 units of the
total trade volume representing a significant increase despite the
slump on the domestic market.

Last year, exports and imports totaled 60,218 units including exports
totaling 27,018 units and imports totaling 33,200 units, President of
car distributor Indomobil Sukses International (JSX:IMAS) Gunadi
Sindhuwinata said.

Gunadi said the slump that still hits the domestic market will force
car makers to continue to rely more on exports.

He said the increase in car trade will necessitate immediate
construction of the car ports.

The government plans to build a car port in Jakarta's Tanjung Priok
port to facilitate exports and imports.

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

Indonesia's Bank Jatim set to double profit

JAKARTA, August 22 (Asia Pulse/Antara) - Bank Jatim, which is owned by
the East Java regional administration, expressed optimism that it
would chalk up Rp400 billion (US$44.4 million) in net profit this
year, up from Rp235.1 billion last year.

In the first half of this year the bank reported Rp221.45 billion in
un-audited net profit, up from Rp159.56 billion in the same period
last year.

Earlier the bank targeted to chalk up only Rp300 billion in net profit
for this year.

Its outstanding credits by June, 2006, totaled Rp4,347 billion as
against third party fund it held at Rp12.2 trillion.

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

Indonesia's Polychem H1 net loss 109.46 bln rupiah vs profit 148.13 bln

JAKARTA, August 22 (XFN-ASIA) - PT Polychem Indonesia's six months to
June results:

Sales - 1.73 trln rupiah vs 2.07 trln
Operating loss - 154.27 bln rupiah vs profit 133.25 bln
Net loss - 109.46 bln rupiah vs profit 148.13 bln
Loss per share - 28 rupiah vs EPS 38

Formerly PT GT Petrochem Industries, the company changed its name last
December after it spun off its tire cord business to focus on the
production of polyester and polyester-related chemicals.

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

Indonesia's forestry ministry sets deadline for loan repayments

JAKARTA, August 22 (Asia Pulse/Antara) - Indonesia's forestry ministry
has set a Sept. 27, 2006 deadline for 40 forestry companies to fully
repay their long overdue debt in reforestation funds and resource
royalty provisions.

The government will revoke the licenses of the 40 companies if they
fail to meet the deadline, forestry production director general Hadi
S. Pasaribu said.

Hadi said at least 40 companies still have arrears totaling Rp200
billion (US$22 million) and the government has served them warnings on
three separate occasions.

The Suharto government offered loans in reforestation funds without
interest to build plantation forests, but many of the recipients have
misused the funds.

The monetary crisis in 1997/1998 caused difficulties for the companies
to repay the debts.

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

Indonesia's exports more shrimps to the United States in H1

JAKARTA, August 22 (Asia Pulse/Antara) - Indonesia exported 33,726
tons of shrimp to the United States in the first half of this year
giving it a 12 per cent share of the U.S, market which imports that
commodity from at least 10 countries.

The exports rose 19 per cent from the exports of 28,315 tons to that
country in the same period last year, the newspaper Bisnis Indonesia
reported quoting data from the U.S. National Marine Fisheries
Services.

Deputy chairman of the Indonesian fishery companies (Gapindo) Yohannes
Kitono said demand for Indonesian shrimp is high in the U.S. market
despite alleged transshipment.

The United States has threatened to impose sanction on Indonesian
shrimp for allegedly transshipping shrimp from China, which is one of
a number of major shrimp suppliers slapped with anti-dumping sanctions
by the United States.

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

Indonesia's tea priced at US$1.35 per kg in world market

BANDUNG, W JAVA, Aug 21 Asia Pulse - The price of Indonesian tea on
the world market in the first semester of 2006 is still stable at
US$1.35 per kilogram, General Chairman of the Indonesian Tea
Association (ATI), Isyaf Malik, said here recently.

Malik said the price of Indonesian tea in the world however dropped by
about eight per cent in the first semester of 2006 due to bad weather
but did not affect world tea price.

He pointed out that tea production in the first semester of this year
only reached 46 per cent of the total production target for 2006 set
at 160,000 tons.

Malik said he was optimistic that the target will be met as the price
of Indonesian tea in the world is in a favorable position.

According to him, Indonesia exported a total of 45,000 tons of tea to
Iraq, Iran, Japan and Britain each year.

Malik complained that the government has yet to materialize its plan
to abolish the 10 per cent value added tax on the export of tea in
bulk form.

The 10 per cent value added tax has burdened tea traders as it
indirectly affects production cost, Malik said.

He said Sri Lanka, for instance, is better than Indonesia because it
did not practice such a policy, and therefore benefit their tea
growers and traders.

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

Indonesia palm oil down on thin demand, Malaysia

JAKARTA, August 22 (Reuters) - Indonesian palm oil prices fell on
Tuesday, tracking weaknesses in Malaysian crude palm oil and on thin
demand as buyers still had enough stocks, traders said.

In local auctions in North Sumatra's Medan, crude palm oil traded at
4,322 rupiah ($0.477), 4,328 and 4,333 rupiah a kg, down from 4,466
last week.

At the state marketing centre's auction in Jakarta, crude palm oil
traded at 4,320 rupiah, down from 4,455 last week.

The Indonesia market was closed for public holidays from last Thursday
to Monday.

"Most buyers had already bought enough stocks when the market was
rallying. It will take some time to return to the market," said a
trader in Medan, the provincial capital of North Sumatra and a key
port for palm oil exports.

"Sellers are also watching the market. They will come out when the
market is showing sign of rebounding," he added.

Cooking oil followed the downtrend, trading at 5,025 rupiah in
Jakarta, from 5,100 last week.

"It's a bit quiet today. Most buyers still have enough stocks for
about two weeks," said a trader in Jakarta.

Dealers said the export market was tracking the bearish trend, with
sellers offering September shipments at $443 a tonne, free on board
Belawan, down from $453 last week.

Buyers bid at $437.5 a tonne without any deals reported.

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

Malaysia approves 52 biodiesel plant licenses to date - MPOB

KUALA LUMPUR, August 22 (XFN-ASIA) - The government has so far
approved 52 licenses for biodiesel plants involving total annual
production capacity of 5 mln tons, said Mohd Basri Wahid,
director-general of Malaysian Palm Oil Board (MPOB).

The government had received some 90 applications before a temporary
freeze on new licenses was made and there are still some 40
applications pending with the Malaysian Industrial Development
Authority (MIDA) currently, he added.

Basri said the government has not set a timeframe as to when the 5 mln
tons of production capacity will be achieved, but it has projected an
annual growth rate of 5 pct for biodiesel production.

Speaking at a conference for renewable energy and biodiesel, he said
South East Asia has the potential to become a production center as
well as a technology provider for palm biodiesel.

He noted that Malaysia and Indonesia produce 80 pct of the world's
palm oil, capturing a share of 24 pct in the oils and fats market.

Malaysia is set to make a switch from petrol-based diesel to biodiesel
blends mandatory in 2008. A biofuel bill is to be tabled in the
parliament this year.

Meanwhile, Indonesia is also planning to increase its palm oil
production for biodiesel industry with a target to replace at least 10
pct of oil consumption with biodiesel by 2010.

Earlier, the two countries have agreed to set aside 12 mln tons of
palm oil production, or 6 mln tons each, for biodiesel production.

Basri said he does not expect the government's commitment to set aside
6 mln tons of palm oil a year for the production of palm biodiesel to
cause a disruption in the downstream palm oil industry.

'We don't see a danger of shortage of supply, as we expect the
production of palm oil to increase going forward,' he said, adding
that the government has been working on replanting new areas.

MPOB is looking at 15.2 mln tons of palm oil production next year, he added.

Meanwhile, Basri said the government has recently appointed an
European consultant to study the issue of the sustainability of palm
oil production.

'There is a negative perception from the EU that the way we produce
palm oil is not sustainable, as we burn before we plant,' he said.

He said the government will collect statistics and investigate the
issue in a bid to change some negative perceptions on Malaysia's palm
oil.

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Joyo Indonesia News Service
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