[Kabar-indonesia] 19 RI Biz/Econ Reports: BI Sees Room for Key Rate Cut to 11%; US$326m Debt Swap

[JoyoNews at aol.com]

19 Reports:

- Indonesia swaps 3 trillion rupiah in debt
- Bank Indonesia sees room for key rate
   cut to 11 pct by yr-end - report
- Indonesia govt seeks 500 bln rupiah div
   from unit Telkom, 3G proceeds for budget
- JP: Motorcycle production seen down to 
  4.8m units in 2006 
- RI names new chairman of statistics office 
- JP: Netherlands to grant RI US$28m 
  for education project 
- Indonesian govt predicts dividend income to
   fall to 13.86 trln rupiah in 2007
- JP: Digital security provider Gemalto eyes 
  vast market for chip-based smart card 
- Indonesia's Gudang Garam says to pay
    500 rupiah/share div on Aug 7
- Indonesia's Sampoerna minority shareholders
    approve product licensing proposals
- Singapore Airlines, Indonesia to spend
    400,000 usd in joint tourism campaign
- Indonesia's manufacturing sector tipped
    to grow 8.1% in 2007
- Indonesia May car tire sales up 6.4 pct
    from April - report
- Malaysia's Perodua to enter Indonesia car
   market next yr - report
- Indonesia's Davomas 'B2' rating affirmed -
   Moody's
- Indonesia's fish production forecast to hit
    8.3 mln tons in 2008
- Indonesia palm oil prices flat,
   demand thin
- Interview-Malaysia 2006 palm oil output
   seen rising 2.6 pct
- Australian to send business delegation to
   Indonesia

Indonesia swaps 3 trillion rupiah in debt (US$326.5 million) 

JAKARTA, June 27 (Reuters) - The Indonesian government swapped more
than 3 trillion rupiah in short-term debt for longer-term debt on
Tuesday, which dealers said suggested a return of foreign investors
after volatility in emerging markets.

Indonesian assets, including the rupiah, were hit hard in a sell-off
in May of emerging markets on investor jitters over the prospect for
further rises in U.S. interest rates.

Indonesia has stepped up its efforts to ease the cost of refinancing
its large debt. This has included holding auctions in recent months to
swap short-term debt for longer-term debt.

It didn't hold its last scheduled auction on June 1 due to the
emerging-markets sell-off.

At an auction on Tuesday, the government swapped 3.05 trillion rupiah
(US$326.5 million) of shorter-term bonds into FR0017 bonds maturing in 
January 2012, Rahmat Waluyanto, the finance ministry's director for 
debt management, told Reuters.

That was more than the previous bond swap on May 9, when 2.2 trillion
rupiah in shorter-term bonds were swapped for longer-term debt.

"This is positive news. It shows that demand from offshore has
returned. The rupiah is also largely stable now," said a bond trader
at a foreign bank.

The auction offered bond holders the option to swap out of bonds
maturing between 2007 and 2009 into the longer-dated paper.

Ratings agencies rate Indonesian bonds below investment grade, or as junk 
bonds.

Standard & Poor's Ratings Services, for example, rates Indonesian
local currency government bonds "BB" -- two notches below investment
grade.

One attraction of Indonesian bonds for foreign investors is that they
offer among Asia's highest yields.

Six-year bonds, for example, were priced to offer yields around 12.5
percent in the secondary market on Tuesday.

The rupiah fell more than 9 percent between mid May and mid
June as investors moved out of riskier assets.

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Bank Indonesia sees room for key rate cut to 11 pct by yr-end - report

JAKARTA, June 27 (XFN-ASIA) - Bank Indonesia governor Burhanuddin
Abdullah said the central bank could still lower its key policy rate,
called the BI rate, to 11 pct by year-end from the current 12.50 pct,
if inflation runs lower than 8.0 pct, the Investor Daily reported.

Abdullah made the comment on the sidelines of the Bank for
International Settlements (BIS) annual meeting in Basel.

The governor's statement was even more optimistic than his previous
estimate made just a week ago, that the rate could be lowered by 50
basis points if the year-end inflation rate hits 7.3 pct.

The central bank just made a 25-basis point rate cut in May after
holding the rate at 12.75 pct during the previous four months. A
further cut for this month has been suspended due to the rupiah's
weakness.

Abdullah said any further rate cut is not only positive for boosting
economic growth but will also benefit the central bank itself as such
move will discourage more placement of idle funds in Bank Indonesia
Certificates (SBI).

He said banks have preferred to place their excess liquidity in the
risk-free SBI instrument rather than try to expand lending. The SBI
now amounts to roughly 170 trln rupiah, which means BI will have to
pay interests of around 20 trln.

"The excess liquidity situation is not good for the economy. If it is
not immediately resolved, it could create an economic bubble,"
Abdullah was quoted as saying.

Separately, Kompas quoted BIS general manager Malcolm Knight as saying
that despite the risk of a global tightening policy, Indonesia can
lower its key interest rate given that it had made huge rate hikes
before.

Last year, Bank Indonesia raised the BI rate by a cumulative 425 basis
point to 12.75 pct to control spiralling inflation and to defend the
rupiah.

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Indonesia govt seeks 500 bln rupiah div 
from unit Telkom, 3G proceeds for budget

JAKARTA, June 27 (XFN-ASIA) - Finance Minister Sri Mulyani Indrawati
said the government as majority stockholder will request PT
Telekomunikasi Indonesia (Telkom) to pay an interim dividend of 500
bln rupiah to support this year's state budget.

Telkom is Indonesia's fixed-line telecommunications service provider,
owned 51 pct by the government.

The minister said her office is also chasing the proceeds of a tender
for third-generation (3G) cellular service frequencies held by the
Communication and Information Ministry. In February, the Communication
and Information Ministry awarded 3G licenses to Telkom unit PT
Telekomunikasi Seluler (Telkomsel), PT Indosat, and PT Excelcomindo.

The government is requiring the winners and the existing players -- PT
Hutchison CP Telecommunication and PT Natrindo Telepon Seluler -- to
pay the up-front fees, plus commissions for using the frequencies.

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The Jakarta Post
June 27, 2006

Motorcycle production seen down to 4.8m units in 2006 

The Jakarta Post, Jakarta

The Industry Ministry estimates that Indonesian motorcycle production this 
year will decline to 4.8 million units from over 5 million last year due to 
slowing demand.

The ministry's director general of transportation, Budi Darmadi, was quoted 
by Antara as saying that higher fuel prices and continuing high interest rates 
had significantly reduced demand for motorcycles as consumer purchasing power 
weakened. 

"If fuel prices had not increased, this year's production level would have at 
least been the same as last year's," he told reporters Sunday. 

He said that slowing demand and production came as motorcycle manufacturers 
expanded their production capacities to 6.5 million motorbikes per year, making 
Indonesia the world's third largest motorcycle producer after China and 
India. 

"But the current weak market situation will not last for long. Once the 
economy improves, the motorcycle market will revive again," Budi said. 

Motorcycle sales rose by 21 percent to 5.5 million last year from 4.2 million 
in 2004. 

Demand this year is expected to drop by 20 percent from last year, according 
to the Indonesian Motorcycle Industry Association (AISI). 

Sales during the first five months of the year only amounted to 1.4 million 
units. 

Elsewhere, Budi urged motorcycle manufacturers to develop local brands by 
investing more in research and development. 

He said that the government was preparing fiscal incentives to encourage 
companies to spend more on R&D. 

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RI names new chairman of statistics office 

JAKARTA, June 27 (Bloomberg): Indonesia named Rusman Heriawan as the new 
chairman of the Central Statistics Agency (BPS) replacing Choiril Maksum who will 
retire, an official at the agency said.

National Planning Minister Paskah Suzetta will install Rustam Wednesday in 
Jakarta, Agus Subeno, a communications official at the Statistics Office, said 
in a telephone interview.

Rustam is currently deputy chairman of the Statistics Office in charge of 
social and demographic affairs, Agus said.

Rusman, born in 1951, was in charge of a survey last year to identify 15.5 
million Indonesian poor families who received funds in compensation for a fuel 
price increase. 

Indonesia almost tripled kerosene prices and more than doubled diesel tariffs 
in October last year to cap energy subsidies that had eroded confidence in 
the nation's finances. 

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The Jakarta Post (web site)
June 27, 2006

Netherlands to grant RI US$28m for education project 

JAKARTA (JP): The Netherlands government will finance an expansion of a 
project to improve participation ofunderprivileged children in education and 
to supportdecentralization of education management in eastern Indonesia.

The agreement on the US$28 million grant was launched in a ceremony attended 
by representatives from the Indonesian government, the Netherlands embassy in 
Jakarta and the Asian Development Bank (ADB).

"The grant will expand the Decentralization Basic Education Project (DBEP), 
for which a US$100 million loan was approved in 2001 by the ADB," said a joint 
press release issued by the three relevant parties.

Representing each party during the ceremony was Dutch Ambassador to Indonesia 
Nikilaos van Dam, ADB Country Director Edgar A. Cua, and Indonesia's National 
Education Minister Bambang Sudibjo.

The DBEP project has been implemented since 2003 by local governments, 
communities and schools in all regencies of Nusa Tenggara Barat and Bali provinces, 
and two regencies in Nusa Tenggara Timur. The grant from the Netherlands will 
finance the expansion of the project into six additional regencies in 
NusaTenggara Timur.

"We agree with the Indonesian government to intensify our support for 
education. Today (Tuesday), we translate (our) intentions into concrete actions. We 
will continue increasing our support to education," Van Dam said. 

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

Indonesian govt predicts dividend income 
to fall to 13.86 trln rupiah in 2007

JAKARTA, June 27 (XFN-ASIA) - The government's income from dividends
paid by companies in which the state owns stakes is predicted to fall
to 13.86 trln rupiah next year from the 21.69 trln rupiah expected
this year, the Ministry of Finance said.

The 10 biggest contributors next year are expected to pay the
government a combined 11.45 trln rupiah, or 82.6 pct of the
government's income from dividends, the ministry said in a written
statement.

The ministry said oil and gas firm PT Pertamina is forecast to be the
largest contributor next year, paying the government dividends of 6.0
trln rupiah.

PT Telekomunikasi Indonesia is expected to pay dividends of 2.0 trln
rupiah, PT Bank Negara Indonesia dividends of 1.25 trln rupiah and PT
Bank Rakyat Indonesia 1.21 trln rupiah.

Other big contributors to the government's coffers are expected to be
PT Antam, PT Jamsostek, PT Perusahaan Gas Negara, PT Krakatau Steel,
PT Semen Gresik and PT Jasa Marga.

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

The Jakarta Post
June 27, 2006

Digital security provider Gemalto eyes vast 
market for chip-based smart card 

The Jakarta Post, Jakarta

Newly established digital security provider Gemalto is eyeing a vast new 
market for chip-based smart cards in the Indonesian banking sector after the 
central bank recommended that domestic banks adopt EMV (Europay, MasterCard, Visa) 
standards.

Gemalto's South Asia vice president, Adi Harsono, said Monday that Bank 
Indonesia had set a September deadline for domestic banks to start the changeover 
from magnetic strip-based cards to chip-based smart cards to prevent fraud. 

"We see great market potential ahead with this changeover," Adi said. 

According to central bank figures, Indonesia has 71 privately owned and five 
state-owned commercial banks. 

Currently Gemalto, the result of a merger between digital security giants 
Gemplus of Luxembourg and Axalto of the Netherlands, has supplied smart cards to 
publicly listed Bank Buana and Bank Central Asia (BCA), one of the largest 
banks in Indonesia, with 7.9 million customers. 

Adi said that the worldwide move to smart cards was unstoppable given rising 
demand for digital security in the cashless economy. 

He said that Malaysia, which required its banks to start using smart cards a 
year ago, now had virtually no banking fraud. 

Gemalto South Asia president Martin McCourt said that for security purposes, 
countries would have to adopt smart cards or else be left behind. 

McCourt said that besides the banking sector, Gemalto's other key markets 
included telecommunications, network and corporate security, and the personal 
identity and government sectors. 

In the telecommunications field, Gemalto, which supplied one-billion cards 
worldwide last year, provided smart cards for pre-paid and post-paid customers 
of telecom firms PT Telkomsel and PT Indosat. 

Adi said that the market for smart cards in the telecommunications sector was 
also expanding, with the coming onstream of 3G technology. 

In the personal identity and government sectors, Gemalto was very excited 
about the demand for electronic passports. 

McCourt said that with over 220 million people in Indonesia, the untapped 
market here was enormous. 

In 2005, the company earned US$2.2 billion in combined revenue and had a 
market capitalization of $2.7 billion. 

For Asia, McCourt said, "we are expecting double digit revenue growth in a 
few years." 

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

Indonesia's Gudang Garam says to pay 500 rupiah/share div on Aug 7

JAKARTA, June 27 (XFN-ASIA) - Cigarette maker PT Gudang Garam said it
will pay a cash dividend of 500 rupiah a share on Aug 7, or a total of
962.044 bln rupiah, from its net profit in 2005.

The ex-dividend date has been set for July 26, Gudang Garam said in a
statement following its shareholders meeting last Saturday.

Gudang Garam posted net profit of 1.89 trln rupiah last year, up from
1. 79 trln a year earlier.

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Indonesia's Sampoerna minority shareholders 
approve product licensing proposals

JAKARTA (XFN-ASIA) - PT HM Sampoerna, a unit of Marlboro producer
Philip Morris International Inc, has finally secured minority
shareholders' approval for proposed product licensing deals, according
to an announcement.

The company obtained the approval in its third attempt. Two previous
attempts failed as minority shareholder turnout in the meetings did
not meet the quorum.

The company has proposed that it will license production and sale of
Sampoerna's cigarette brands overseas, while another proposal is for
enabling Sampoerna to produce and sell Philip Morris brands in the
domestic market.

Sampoerna's main offerings include the hand-rolled "Dji Sam Soe" and
machine-rolled "Sampoerna A Mild" brands.

Sampoerna's corporate communications head Niken Rachmad told reporters
that 70 pct of minority shareholders, representing 62.9 mln shares,
attended a meeting today and that 88 pct of them approved the
proposals.

The quorum for today's meeting has been lowered to just 5 pct compared
to 50 pct plus one of the company's minority shareholders at the
previous two meetings.

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Singapore Airlines, Indonesia to spend 
400,000 usd in joint tourism campaign

SINGAPORE, June 27 (XFN-ASIA) - Singapore Airlines (SIA) and the
Indonesian government will spearhead a 400,000 usd marketing campaign
to attract more tourists to Indonesia, the airline said.

"The primary focus of the joint activities is to promote the image,
awareness of and familiarity with Indonesia," SIA said in a statement.

SIA and the Indonesian Ministry of Culture and Tourism have inked a
one-year agreement to promote the country as a destination for
holidaymakers.

They will each contribute 200,000 usd to fund the promotional activities.

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Indonesia's manufacturing sector tipped to grow 8.1% in 2007

JAKARTA, June 27 (Asia Pulse/Antara) - Indonesia's industry ministry
said the manufacturing sector is expected to grow by 8.1 per cent in
2007 from 2006.

The machine and tool industry is predicted to post the highest growth
of 12.3 per cent, followed by fertilizer, chemical and rubber goods
industries and cement and non metal mining product, which will grow by
9 per cent.

The food and tobacco industry is projected to grow by 5.1 per cent,
and the textile, leather goods and foot wear industry by 5 per cent.

In order to reach the target the ministry needs a budget of Rp2.79
trillion (US$310 million) or 50 per cent more than proposed by the
government for 2007.

In the first quarter of 2006, the manufacturing industry grew by 2.83 per 
cent.

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Indonesia May car tire sales up 6.4 pct from April - report

JAKARTA, June 27 (XFN-ASIA) - Car tire sales rose 6.4 pct to 3.439 mln
units in May from 3.232 mln in the previous month, Bisnis Indonesia
reported, citing data from the Indonesia Tire Producers Association.

The association said 2.677 mln tire units were exported last month
compared to 2.561 mln units in April, with the rest sold locally.

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Malaysia's Perodua to enter Indonesia car market next yr - report

KUALA LUMPUR, June 27 (XFN-ASIA) - Perusahaan Otomobil Kedua Sdn Bhd
(Perodua) plans to enter the Indonesian car market aggresively from
the middle of next year, company managing director Syed Hafiz Syed Abu
Bakar was quoted by Bernama News Agency as saying.

"We want to help create a compact car market in Indonesia. We see a
potential market of 500 Myvi (cars) per month as the motorization rate
(ownership of motor vehicles) there is (relatively) low," Hafiz said.

In 2005, about 360,000 motor vehicles were sold in Indonesia, while
about 520,000 were sold in Malaysia. Hafiz said the lower total
industry volume in Indonesia was mainly due to the high cost of fuel
prices.

Perodua, currently holding a 32 pct share of the total vehicle market
in Malaysia, exports its cars in small quantities to 13 countries,
including the United Kingdom.

Hafiz said the company's initial plan was to export Myvi to other
ASEAN countries by the second half of this year.

However, domestic orders for Myvi keep piling up, with the last three
months averaging 7,000 a month, hence the company decided to postpone
its export program until the middle of next year, he said.

Prior to entering the ASEAN, Myvi -- developed jointly with Perodua's
technology partners Daihatsu and Toyota -- will be exported to the UK
this year. About 500 units will be sent there between September and
December, Hafiz added.

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Indonesia's Davomas 'B2' rating affirmed - Moody's

JAKARTA, June 27 (XFN-ASIA) - Moody's Investors Service said it has
affirmed its "B2" foreign currency rating on Davomas International
Finance Co's 125 mln usd senior secured notes due 2011, while removing
the provisional status of the rating.

At the same time, Moody's affirmed its "B2" corporate family rating
for PT Davomas Abadi Tbk (Davomas).

This rating action follows the completion of issuances of the notes
and the subsequent repayment of all outstanding secured debts.

The outlook for the ratings is stable.

Established in 1990, Davomas is one of the dominant producers and
exporters of cocoa butter and cocoa powder in Indonesia.

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Indonesia's fish production forecast to hit 8.3 mln tons in 2008

JAKARTA, June 27 (Asia Pulse/Antara) - The country's fish production
is forecast to rise by 5 per cent to 8.3 million tons next year, from
an estimated 7.88 million tons this year, Maritime and Fisheries
Minister Freddy Numberi said.

Numberi said exports are predicted to reach US$2.4 billion in 2007.

He said the sea fish catch will account for 5.2 million tons, while
fish breeding will contribute 3.1 million tons to the total
production.

Numberi said the ministry needs additional budget of Rp1.28 trillion
(US$136.33 million) to Rp4.3 trillion to be able to reach the
production target.

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Indonesia palm oil prices flat, demand thin

JAKARTA, June 27 (Reuters) - Indonesian palm oil prices were mostly
unchanged on Tuesday because of thin local and overseas demand as
buyers still have ample stocks, traders said.

In Jakarta, the state marketing centre did not sell any of the 3,500
tonnes of crude palm oil offered at an auction due to low bids.

The centre, which sells palm oil from state plantations, offered CPO
at 3,931 rupiah ($0.421) a kg on Tuesday. It sold CPO at the same
price at Monday's auction.

At a local auction in North Sumatra's Medan, Indonesia's key port for
palm oil exports, crude palm oil was quoted at between 3,931 and 3,936
rupiah, up slightly from 3,925 last week.

"There's no fresh news in the market that can push prices much higher.
An increase of less than 25 rupiah in prices does not make any
difference," said a trader in Medan.

RBD palm olein in Jakarta was unchanged from Monday at 4,275 rupiah,
with some 100 tonnes changing hands at a local auction, said a trader
in Jakarta.

On the exports front, sellers offered July shipment at $392.5 a tonne,
free on board Belawan. Buyers bid $390, with no deals reported.

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Interview-Malaysia 2006 palm oil output seen rising 2.6 pct

By Naveen Thukral

PUTRAJAYA, Malaysia, June 27 (Reuters) - Output of palm oil in
Malaysia, the world's largest producer, is likely to rise 2.6 percent
to around 15.8 million tonnes this year with more plantations
maturing, a senior industry official said on Tuesday.

"We thought there would be a slowdown this year and the output will
remain at the same level of last year," M.R. Chandran, former head of
the Malaysian Palm Oil Association, told Reuters in an interview.

"But the trend in the first five months of the year so far has been of
higher-than-expected production."

Malaysian Commodities Minister Peter Chin on Monday estimated palm
output at 15.5 million tonnes in 2007, compared with 15.4 million
tonnes in 2005.

Malaysian palm oil output stood at 1,391,347 tonnes in May, up 6.14
percent from April, according to the official crop agency Malaysian
Palm Oil Board. Production for May 2005 stood at 1,299,467 tonnes.

The output has been rising since February because of widespread rains
across the growing regions.

Chandran said palm oil production in Indonesia is likely to match
Malaysia's output and could even exceed that to reach 16 million
tonnes in 2006.

"Indonesian production is very difficult to estimate but we are all
looking at anything between 15.8 to 16 million tonnes," he said. "This
could be the first year when Indonesia will overtake Malaysia. And if
it does not happen this year, 2007 is definite."

The official, who now works as an independent commodity consultant,
said palm plantings in Indonesia were annually expanding by 350,000 to
450,000 hectares. Malaysia, which faces shortage of land, was adding
70,000 to 80,000 hectares a year.

He said Indonesia has 10 million hectares of additional land which is
suitable for palm cultivation. But Malaysia is estimated to have only
600,000 hectares of additional land for palm.

The area under oil palm in Malaysia is around four million hectares
and in Indonesia palm trees have been planted over 5.4 million
hectares, he said.

A slowdown is Malaysia's palm oil exports in the last few months is
likely to change when the production of biodiesel goes on stream.


"Producers are holding back stocks because they are expecting a higher
price level once biodiesel takes off," Chandran said on the sidelines
of a plantation conference.

He said the prices of crude palm oil are likely to rise to 1,470 to
1,500 ringgit ($399 to $407) a tonne in the second half of this year
on the back of bio-diesel demand.

"I see an upward trend in the second half of the year and by June next
year I see a price level of 1,600 ringgit a tonne."

Malaysia's physical crude palm oil is trading around 1,400 ringgit a tonne.

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Australian to send business delegation to Indonesia

BATAM, June 26 (Asia Pulse/Antara) - Australian Prime Minister John
Howard said here on Monday his country would send a large business
delegation to Indonesia next August in an effort to realize
Australia's investment commitment in various sectors in Indonesia and
to increase the trade volume between the two countries.

After attending a private meeting with President Susilo Bambang
Yudhoyono at Nongsa Point Marina Resort here, Howard told the press
that the trade and investment delegation was expected to take home a
number of cooperation lists between the two nations.

Indonesia and Australia's direct trade only stood at 105.5 million,
and boosting this small volume is the main reason for the Australian
delegation to visit Indonesia.

This constitutes two per cent of Australia's total external trade.

In the meantime, President Yudhoyono's special staff for political
communications affairs, Yenny Zannuba Wahid told ANTARA that Batam and
its surroundings constituted an investment zone the Indonesian
government was developing.

"The meetings between Yudhoyono and Howard as well as between
Singaporean Prime Minister Lee Hsien Loong are held here as part of
the government's efforts to promote Batam," she said.

On Sunday, Yudhoyono also met with Lee Hsien Loong to discuss
cooperation in the Special Economic Zone which covered the islands of
Batam, Bintan and Karimun.

Earlier on Monday President Susilo Bambang Yudhoyono and Australian
Prime Minister John Howard held talks on Batam Island.

Prime Minister John Howard and his spouse Jeanette Howard also paid a
courtesy call to Yudhoyono and Mme. Ani Yudhoyono prior to the the
meeting.

They were expected to discuss the status of ties between the two
countries, following a rift caused by Canberra's decision to grant
temporary visas to 42 Papuans seeking asylum in Australia.

On Sunday Foreign Affairs Minister Hassan Wirajuda said Howard was
expected to reaffirm Australia's recognition of Indonesia's
sovereignty over Papua.

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Joyo Indonesia News Service
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