[Kabar-indonesia] 19 RI Biz/Econ Reports: IMF Debt; New Bank Rules; Debt Ratio/GDP; BNI

[JoyoNews at aol.com]

19 Reports:

- IMF welcomes Indonesian
  early debt repayment
- Bank Indonesia Narrows Definition 
  Of Parties Related To Banks
- Bank Indonesia To Provide Incentives
  To Bank Mergers
- Indonesia sees 40 percent debt
  ratio to GDP year end
- Indonesian Jan-Sept state budget
  deficit 13.24 trln rupiah
- Indonesia to get new 25 mln eur grant
  from Germany for tsunami reconstruction
- Indonesia '06 Natural Rubber Output To 
  Rise 3.5% - Analyst
- Indonesia needs to work to make most
  of EU anti-dumping measures
  [previously sent]
- China, Indonesia sign economic,
  trade agreements
- JP: PT Buana Finance loaned US$28m 
- Indonesia's Bank Niaga sees FY
  net profit up 20-25 pct - report
- Global ICT firms back development of
  infrastructure in Indonesia
- Indonesia Ciputra Devt to grow earnings
  via acquisitions, affiliate mergers
- Stock Alert - Indonesia's Bimantara up
  on speculative play ahead of unit's IPO
- Semen Holcim, BTN to jointly fund
  low-cost housing project
- Indonesia's Aneka Kimia to acquire 5
  ports in China for 170 mln yuan - report
- Taiwan companies to invest up to
  10.25 bln usd in Indonesia - report
- China import duty on Indonesia
  cocoa products to end
- Interview-Indonesia palm oil to trade
  on Singapore's JADE

IMF welcomes Indonesian early debt repayment

WASHINGTON, October 5 (AFP) -- The International Monetary Fund on
Thursday welcomed Indonesia's announcement that it would repay all its
debts to the organization early.

"We welcome this announcement," IMF spokesman Masood Ahmed told
reporters after the announcement in Jakarta.

"We think this repayment reflects the strength of the recovery in
Indonesia, reflects the strong balance of payments position and we
continue to look forward to a close relationship and a dialogue with
authorities, not only on the economic issues in Indonesia but also on
economic issues in the region and the world."

Officials said earlier in Jakarta that the remaining 3.2 billion
dollars in IMF debts would be repaid as early as next week after a
recovery in its foreign exchange reserves

Earlier, Bank Indonesia reported that its foreign exchange reserves
rose to 42.35 billion dollars at the end of September from 42 billion
at the end of August.

Indonesia exited the IMF program in 2003 with total loans of 9.8
billion dollars.

The country is currently in its second year of an IMF post-monitoring
program, which means that the world's fourth most populous country
would have to repay its debt within the normal schedule of seven years
as agreed.

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

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Bank Indonesia Narrows Definition 
Of Parties Related To Banks

JAKARTA, October 6 (Dow Jones)--In a bid to increase bank lending,
Indonesia's central bank has narrowed the definition of parties
related to banks so that lending limits will no longer apply for some
of these entities, a central bank official said Friday

Shareholders with more than 10% equity in banks' subsidiaries are no
longer regarded as related parties, Bank Indonesia's director for bank
regulation and research Muliaman Hadad told reporters.

In addition, companies controlled by banks' pension funds are no
longer regarded as related to banks, Hadad said.

"The purpose (of the new policy) is to give room for banks...in
channeling credit," he noted.

For lending to related parties, Bank Indonesia is maintaining its cap
at 30% of banks' equity capital, he added.

The regulation is one of many issued by Bank Indonesia Thursday aimed
at boosting bank lending and pushing bank consolidation.

Bank Indonesia will also encourage commercial banks to lend to
export-related businesses and those involved in alternative energy,
Hadad added.

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Bank Indonesia To Provide Incentives To Bank Mergers

JAKARTA, October 6 (Dow Jones)--Indonesia's central bank will provide
incentives to banks formed by mergers as part of the efforts to
expedite bank consolidation, an official said Friday.

Banks formed from the merger of several banks will be required to put
aside only 4% of the rupiah deposit they receive as a reserve at the
central bank, compared with a 5% requirement currently.

But after 12 months, the merged banks must increase the reserve to 5%,
Bank Indonesia's spokesman told Dow Jones Newswires.

The incentives are part of a raft of regulations Bank Indonesia
announced Thursday aimed at boosting bank lending, and push bank
consolidation.

Among other merger incentives, the central bank will also make it
easier for those banks to become foreign exchange banks as well as
extending the deadline to resolve overlending if the merger results in
the new banks violating legal lending limit, he said.

Those banks will also get quicker approval from the central bank for
the opening of new branches, and the partial reimbursement of costs
banks pay to consultants for the mergers.

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Indonesia sees 40 percent debt ratio to GDP year end

JAKARTA, October 6 (Xinhua) -- Indonesia targets to decrease its debt
to the ratio of 40 percent to the gross domestic product (GDP) by year
end, Indonesian President Susilo Bambang Yudhoyono said here Friday.

Indonseia's GDP stood at 803.42 trillion rupiah (some 80.34 billion
U.S. dollars) in June, according to the Indonesian Central Bank.

"Our hope in 2006, it can decrease to 40 percent and keep declining
then, until Indonesia's debt to GDP ratio is healthier than the other
countries in Southeast Asia," President Susilo said.

The president said that the country had to decrease debt in an attempt
to decline the burdens in the state budget.

He cited the Asian financial crisis in 1997 which caused the country's
debt to mount to 80 percent of GDP in 2000.

Since then Indonesia has reduced debt to 54 percent to the GDP in 2004
and 48 percent in 2005, said Susilo.

"Therefore we insist on continuously decreasing debt ratio to the
gross domestic product so that our debts can drastically lessen in the
mid and long terms," he said.

Governor of Indonesian Central Bank Burhanuddin Abdullah said that the
decrease of the country's debt was faster than it was in the
neighboring countries.

"The decrease of debt ratio to the GDP is very fast, compared to other
countries like Malaysia which stands about 45 percent now, " he said.

On Thursday, Indonesia decided to pay off the country's entire debts
next week to the International Monetary Fund (IMF).

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Indonesian Jan-Sept state budget deficit 13.24 trln rupiah

JAKARTA, October 6 (XFN-ASIA) - The state budget deficit for the first
nine months of the year was 13.24 trln rupiah, with spending amounting
to 403.48 trln rupiah, the Ministry of Finance said.

Tax receipts in the first nine months were 278.56 trln rupiah, non-tax
revenue was 110.71 trln rupiah and grants received were worth 979.205
bln rupiah, the ministry said.

Last month, the government and Parliament agreed to raise the forecast
for this year's budget deficit to 40 trln rupiah from 22.43 trln
rupiah, to reflect higher spending. The estimate of expenditure was
raised to 699.1 trln rupiah from 647.67 trln rupiah.

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Indonesia to get new 25 mln eur grant from 
Germany for tsunami reconstruction

JAKARTA, October 6 (XFN-ASIA) - The government said it has 
signed a deal for a fresh grant of 25 mln usd from Germany for the
reconstruction and rehabilitation of Aceh and Nias, two areas that
were badly damaged by the tsunami that struck many parts of Asia in
December 2004.

In a statement, the ministry of finance said the government will use
the money to rebuild schools and a hospital in Banda Aceh.

The latest funds will bring Germany's total grants for reconstruction
in Aceh and Nias to 90 mln eur.

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Indonesia '06 Natural Rubber Output To Rise 3.5% - Analyst

SINGAPORE, October 6 (Dow Jones)--Indonesia's natural rubber output
will likely rise by 3.5% in 2006, and may potentially jump almost 30%
in 10 years with the help of a government program set to begin in
2007, a senior rubber analyst said at a conference in Singapore
Friday.

However, most of the production gains can only begin after 2010
because of the long lead times in rubber production, said AFS Budiman,
an advisor to the Indonesian Rubber Research Institute and a former
secretary general of the International Rubber Study Group, or IRSG.

"Additional production (is) only to be anticipated after 2010,"
Budiman said in his presentation.

Rubber trees begin producing latex at the age of four to seven years.

Budiman estimates Indonesia's production will hit 2.35 million tons in
2006 and 2.5 million tons in 2010, before jumping to 3 million tons in
2015 if the government program is successful.

Budiman said that if prices remain high, as they have in recent years,
the enormous jump in production targeted by the Indonesian government
may be possible.

"High prices, like what occurred in the past three years, will lead to
additional spontaneous replanting/new planting, and a higher level of
exploitation of existing rubber trees."

Since 2000, rubber production in Indonesia has risen by a yearly
average of more than 8%, according to IRSG statistics. In that same
period, Indonesian rubber prices have more than doubled to IDR10,000 a
kilogram, from IDR5,073/kg in 2000, Budiman said.

Many within the rubber industry expect rubber prices to remain high
over the next decade, as supply is expected to fall short of demand,
which is growing rapidly due to increasing vehicle usage in emerging
markets. Tiremakers consume about 75% of the world's natural rubber.

The Indonesian government's 'Acceleration' program, announced by
Vice-president Jusuf Kalla in June, targets planting 500,000 hectares
with new, high-yielding rubber trees by 2010.

This would potentially raise Indonesia's output to 3 million tons by
2015 and 4 million tons by 2025, or 75% in less than 20 years, Budiman
said.

If realized, Indonesia would likely become the world's biggest rubber
producer. IRSG estimates world natural rubber production in 2005
totaled 8.821 million tons.

The acceleration project is likely to start in 2007. The government
will provide soft loans to farmers at a 10% interest rate to purchase
seedlings, Budiman said.

However, Budiman said the Indonesian government may find itself
challenged to provide the amount of funds and planting needed, while
the industry lacks an efficient administrative system, unlike other
producing countries.

"The crucial factor for success will be the necessary provision and
distribution of high yielding clonal plant materials as there is still
a lot be desired in the supervision and development management for
smallholder rubber in the country, and improvement of basic
infrastructure in producing provinces," Budiman said.

Indonesia has by far the largest rubber acreage in the world, with
3.279 million hectares planted, but has one of the lowest yield per
hectare among major rubber producing countries.

About 85% of the country's trees are cultivated by 1.4 million rubber
smallholders. The program envisages income per rubber smallholder
rising to US$2,000 a year, from US$1,200 in 2005.

Other rubber organizations have substantially lowered production
forecasts for Indonesia. LMC International, a London-based research
consultancy, predicts Indonesia's output will rise to 2.25 million
tons by 2010, or 11% below Budiman's forecast.

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

Indonesia needs to work to make most of EU anti-dumping measures

JAKARTA, October 6 (AFP) -- Indonesia needs to boost its supplies of
finished leather so it can attract producers expected to exit China
and Vietnam after the European Union slapped anti-dumping measures on
them, an official said Friday.

The EU on Wednesday adopted new anti-dumping measures on leather shoe
imports from China and Vietnam, meaning foreign producers are likely
to seek out new sources.

Some 20 foreign producers have already reportedly shifted here since
provisional EU anti-dumping measures put in place in April. The latest
measures will be effective for two years.

"We need to attract more investment to increase the supply of finished
leather. Only then we can take this huge opportunity," said Diah
Maulida, director-general of foreign trade at the trade ministry.

"Our strength is in producing sports shoes. We still have problems
with the supply of finished leather," she told AFP.

"This is a great opportunity to increase investment in the leather
shoe industry but this depends on the investment climate in general."

Tutang Mochtar, chairman of the Indonesian footwear association, said
however that Indonesian producers "are ready ... now we can compete
with China and Vietnam."

Separately, an official at the industry ministry said shoe exports
were expected to jump some 43 percent this year to two billion
dollars.

Anshari Bukhari, director-general of machinery and textiles, said:
"After 20 new companies invested in Indonesia, foreign buyers' new
orders will boost our footwear exports this year."

Exports clocked in at 678 million dollars for January to May this
year, up 15.4 percent compared with the same period last year.

Exporters have complained in the past about bureaucratic costs in
Indonesia, which are among the highest in the region.

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China, Indonesia sign economic, trade agreements

BALI, Indonesia, Oct. 6 (Xinhua) -- Visiting Chinese Minister of
Commerce Bo Xilai and his Indonesian counterpart Mari Pangestu here
Friday signed several economic and trade cooperation agreements, in a
bid to boost bilateral economic relations between the two countries.

The agreements, which were signed by the two ministers during the 8th
meeting of the Sino-Indonesian Joint Economic and Trade Commission,
include the Memorandum of Understanding (MoU) concerning Projects
Assistant to Prevent and Cure Bird Flu; MoU concerning the Arrangement
of Specific Comprehensive Economic Cooperation; MoU on the
Establishment of a Joint Investment Promotion committee; and MoU on
the China-Indonesia Economic and Trade Cooperation Website.

After the Signing ceremony, the two ministers also presided over the
launching ceremony of the China-Indonesia Economic and Trade
Cooperation Website.

The meeting will be concluded on Friday evening.

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

The Jakarta Post
October 6, 2006

PT Buana Finance loaned US$28m 

Local financing company PT Buana Finance Tbk secured on Thursday a loan worth 
US$28 million from a syndicate of local and overseas banks led by Chinatrust 
Commercial Bank of Taiwan.

With a three year-maturity, the loan will be used by Buana Finance to provide 
credit to the country's export-oriented companies. 

"The US$28 million loan was approved during a shareholders meeting in June, 
and the funds would be distributed as loans for our export-oriented 
custromers," Buana president director Eko Santoso said (pictured right talking to 
Chinatrust Indonesia president director Peter Liu). 

The syndicated loan is an achievement for Chinatrust as Buana initially 
requested a $25 million facility. 

"The oversubscription shows that there is growing interest from international 
financial institutions to invest in Indonesia, especially in Buana Finance," 
Eko said. 

During the 1997 monetary crisis, Buana was able to restructure all its 
non-performing loans that turned sour unlike many other companies here. 

Chinatrust is acting as the arranger and undwriter for the loan. The 
syndication consists of Chinatrust Commercial Bnk Ltd., Bank of China Ltd., Bank 
SinoPac, PT Bank Negara Indonesia, Tbk. (Tokyo Branch), Chailease Finance Company, 
Ltd., State Bank of India, Bowa Bank Ltd., and IFS Capital Limited. 

"We (Chinatrust) are the market leader in Taiwan's financial sector and we 
are now trying to expand to other countries including Indonesia. Our strategy is 
to have the best local team to give services to local customers," Liu said. 

"Many of our customers in Taiwan also come from Indonesia. There are around 
90,000 Indonesian workers in Taiwan. We also give financing to them," Liu said. 

Chinatrust is the largest bank in Taiwan in terms of profit. In 2005, the 
bank booked total revenues of NT$76.7 billion, with pre-tax profit reaching 
NT$16.6 billion. 

Since 2005, the bank has been expanding into the international market in 
countries like India, Indonesia, Japan and China. 

"We hope to grow as a prudent corporate financing company together with 
Buana. We are certain that Buana has what it takes to be the most-preferred finance 
company in the country," Hendrianto said. JP 

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Indonesia's Bank Niaga sees FY net profit up 20-25 pct - report

JAKARTA, October 6 (XFN-ASIA) - PT Bank Niaga expects growth of 20-25
pct in net profit this year, supported by recent cuts in interest
rates by the central bank, Bisnis Indonesia reported.

Last year, Bank Niaga made a net profit of 547 bln rupiah, down from
660 bln rupiah in 2004.

Yesterday, the central bank cut its key policy rate, called the BI
rate, by 50 basis points for the third straight month. The BI rate is
now 10.75 pct.

The newspaper quoted Bank Niaga president Peter Stok as saying: "The
declining BI rate gives room for banks to expand credit. So, we hope
that in the second half of this year, our loans can grow at a faster
pace."

At end of June, Bank Niaga's outstanding loans amounted to 30.65 trln
rupiah, compared to 29 trln rupiah at the end of last year.

Bumiputra-Commerce Holdings Bhd owns 66 pct of Bank Niaga.

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Global ICT firms back development of infrastructure in Indonesia

JAKARTA, October 5 (Asia Pulse/Antara) - The world's largest
information, telecommunications and media companies like Microsoft,
Oracle Corporation, Hewlet Packard (HP), IBM, Time Warner, and Star TV
have expressed support for the development of information
communication technology (ICT) infrastructure in Indonesia, a foreign
businessman said.

President Susilo Bambang Yudhoyono's meeting with Microsoft boss Bill
Gates in the United States last May was very meaningful and encouraged
Microsoft Corporation to help develop ICT infrastructure in Indonesia,
Southeast Asia Microsoft Corporation president Chris Atkinson told a
special forum with the House of Representatives' Commission I here
Thursday.

Commission I chairman Theo Sambuaga said Indonesia began ICT
development in 1976.

"Indonesia is the third country in the world to own a communications
satellite. We are open to technology owners but they should help
improve indigenous capabilities," he said.

What was very important to Indonesia in the application of ICT, he
said, was the prices of software and database and could therefore be
used by people from all walks of life including students, small- and
medium-scale enterprises and cooperatives.

"These factors are important to avoid piracy which is violation of
intellectual property rights," he said.

Theo also hoped that the world's largest ICT firms would set up
hardware factories in Indonesia soon.

Meanwhile in the one-hour special meeting, Asia Pacific Time Warner's
international relations and public policy director Alvin Lee expressed
his company's keen interest on forging a partnership with Indonesian
businessmen in making products for Indonesian television programs.

Star TV government affairs news corporation/senior vice president Joe
Welch said his corporation existed in Indonesia by acquiring ANTV's
stake.

Star TV planned to produce TV programs in Indonesian language like
those in India, he said.

Therefore, Commission I deputy chairman Tosari Widjaja asked for
seriousness in building a cyber park like Microsoft had built in
India.

Meanwhile, Joeslin Nasution of Golkar Party faction, suggested that
international ICT investors select local credible business partners if
they wished to develop media business in Indonesia.

"I think ANTARA news agency is one of the widely experienced media
institutions in Indonesia which can be relied on in a cooperation," he
said commenting on Time Warner's plan to establish a business
cooperation with Indonesian institutions.

US-ASEAN Business Council president Matthew Daley led the
international ICT businessmen's delegation in during the several-day
visit to Indonesia.

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Indonesia Ciputra Devt to grow earnings via acquisitions, affiliate mergers

JAKARTA, October 6 (XFN-ASIA) - Property developer PT Ciputra
Development said it plans to expand earnings by merging with
profitable affiliates, as well as through offshore acquisitions,
company corporate secretary Tulus Santoso said in a letter to the
Jakarta Stock Exchange.

"Looking ahead, the company will continue to expand via both internal
and external acquisitions," Santoso said.

At the moment the company is "in the process of reviewing all options," he 
said.

At 9.50 am, Ciputra Development was up 20 rupiah at 650, while its
affiliate Ciputra Surya was up 60 at 890. The composite index was up
10.087 points at 1,555.065, an intra-day all time high.

Dealers said interest in the Ciputra stocks was partly due to market
speculation that the group may merge its profitable property units.

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Stock Alert - Indonesia's Bimantara up on speculative play ahead of unit's IPO

JAKARTA, October 6 (XFN-ASIA) - PT Bimantara Citra was higher on
speculative trade ahead of the planned initial public offering (IPO)
of the firm's 75.87 pct-owned unit PT Mobile-8, dealers said.

Bimantara was up 175 rupiah or 6.87 pct at 2,725.

"Valuation wise, Bimantara is still attractive as some of its units
especially MNC are performing well," an institutional dealer with a
local brokerage, referring to Bimantara's 100 pct-owned unit PT Media
Nusantara Citra (MNC).

Media Nusantara is a media company with operations in television,
radio and print media

"But I also suspect that the rally has something to do with the unit's
(Mobile-8's) IPO plan," he added.

Last month another Bimantara unit PT Indonesian Air Transport sold 20
pct of its shares via an IPO Over the past two months, Bimantara's
stock price has gained 150 pct.

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Semen Holcim, BTN to jointly fund low-cost housing project

JAKARTA (Antara): Cement maker PT Semen Holcim Indonesia and
state-owned Bank Tabungan Negara have agreed to cooperate in funding
the construction of low-cost houses, Semen Holcim director Patrick
Walser said Friday.

Semen Holcim and BTN signed a cooperation agreement to that effect on
Wednesday, Walser told the Jakarta Stock Exchange (JSX).

Hopefully, the cooperation would improve the company's performance and
innovation capabilities in the future and raise its cement sales in
the near future, he said.

The cooperation, he added, covered the financing of low cost houses to
be sold at affordable prices as well as the development of industries
producing cement-related products.

Semen Holcim Indonesia, formerly PT Semen Cibinong, planned early this
year to raise its cement output to 7.9 million tons from 7.7 million
tons last year.

Holcim aimed to get 16 percent of the domestic cement market, selling
up to 6 million tons of its annual output in Indonesia.

Semen Cibinong changed its name to Holcim Indonesia on Jan 1 last year.

Holcim AG of Switzerland, through Holcim Participations (Mauritius)
Ltd, took a 77.33 percent stake in Semen Cibinong in 2001 after the
restructuring of Cibinong's US$1.2 billion debt.

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Indonesia's Aneka Kimia to acquire 5 ports in China for 170 mln yuan - report

JAKARTA, October 6 (XFN-ASIA) - Chemical distributor PT Aneka Kimia
Raya is planning to complete the acquisition of five ports in China
this year at a combined cost of 170 mln yuan, Bisnis Indonesia
reported.

The report quoted Aneka president Haryanto Adikoesoemo as saying that
since April, the company has acquired three ports so far. These are
the Guangxi Guigang AKR Container Port, the AKR Guigan Ports and the
AKR Guigang Transhipment Port, in which Aneka now holds 80 pct, 100
pct and 65 pct stakes, respectively. "The acquisition of two other
ports will be realized in October and December," Adikoesoemo said.

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Taiwan companies to invest up to 10.25 bln usd in Indonesia - report

JAKARTA, October 6 (XFN-ASIA) - A number of Taiwan companies have
expressed their commitment to invest up to 10.25 bln usd here over the
next few years, Bisnis Indonesia reported.

The newspaper quoted the chairman of the National Investment
Coordinating Board (BKPM), Muhammad Lutfi, as saying on his return
from a visit to Taiwan that these companies were interested in
investing in various sectors.

They include China Petroleum Co, which is interested in investing in
two oil and gas refineries together worth around 3.5 bln usd. Formosa
International Group is interested in investing 500 mln usd in a power
plant. Taiwan Sugar Corp plans to build a 250 mln-usd sugar refinery.

BKPM data show that in the first half of this year Taiwan's investment
in Indonesia reached 203.7 mln usd.

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China import duty on Indonesia cocoa products to end

JAKARTA, October 6 (Reuters) - Exports of Indonesian cocoa-based
products to China will have import duties removed starting Jan. 1,
2007, Jakarta's trade minister said on Thursday.

Indonesia, Asia's second-largest cocoa grinder after Malaysia, has
been trying to bolster exports of cocoa-based products in a bid to
boost the country's cocoa industry that has suffered from low demand
in the past year.

"As part of China-ASEAN free trade agreement, China has agreed to
scrap the import duty on cocoa-based products from Indonesia," Mari
Pangestu told reporters, refering to the Association of Southeast
Asian Nations.

Pangestu said she and her Chinese counterpart would sign the tax
relief agreement in the resort island of Bali on Oct. 6.

China currently imposes 15 percent import duty on cocoa-based products
from Indonesia.

Pangestu said she hoped the move would improve the competitiveness of
Indonesia's cocoa-based products compared with other rivals in the
region.

"As compensation, we will scrap the import duty on China's dry chili
products that enter Indonesia," Pangestu said, adding Chinese chili
exporters currently had to pay 5 percent import duty.

Indonesia has 12 grinders with a capacity of 283,000 tonnes a year but
a lack of raw material and sagging demand for cocoa products has
forced them to cut back output.

The industry is expected to process 141,500 tonnes of beans in 2006.

During the processing of beans, grinders get butter and cake, which is
later pressed into powder.

Butter is a key ingredient for chocolate and also used to make
spreads, as well as being a component in soaps and cosmetics.

China imported 400 tonnes of cocoa beans in the first seven months of
the year from Indonesia's main producing area of Sulawesi island.

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Interview-Indonesia palm oil to trade on Singapore's JADE

SINGAPORE, October 6 (Reuters) - Singapore is set to launch crude palm
oil futures contracts by the end of 2006, trading palm oil of
Indonesian origin on the Joint Asian Derivatives Exchange, an industry
official told Reuters on Friday.

The electronic JADE is a joint venture between the Chicago Board of
Trade and the Singapore Exchange .

It launched its first rubber contract on Sept. 25 in what organisers
said was only the beginning in a drive to capture the Asian hedging
market.

"We see that Indonesia is a very important producer of palm oil and
will become even more important in the years to come," said Nelson
Low, JADE's vice-president for product and business development.

"We are basing our contract on Indonesian origin. At the current
moment, we are still keeping our options open, but one of our current
thoughts is that we are looking into Indonesia," he said.

Low gave no details on the point of loading but trade sources said the
palm oil contracts would be on a free on board basis at the ports of
Belawan and Dumai in Sumatra.

JADE's palm oil futures, which will be denominated in dollars, will
compete with the ringgit-denominated palm oil contracts in Malaysia
<0#KPO:> -- seen as the benchmark for the commodity, said dealers.

After years in the doldrums, palm oil futures are now generating
increasing interest as governments pursue plans to use palm oil for
fuel.

Malaysia and Indonesia agreed earlier this year to each set aside 6
million tonnes per year of palm oil for biodiesel production.

"Production from Indonesia is forecast to grow dramatically in the
coming years. From my understanding, Malaysian acreage is more or less
stable," said Low.

"There's not too much room left to plant more plantations, whereas
Indonesia still has huge tracts of land in Kalimantan, Irian Jaya
(Papua) and Sulawesi to continue planting," he said.

Hamburg-based analysts Oil World has said Indonesia and Malaysia are
likely to raise palm oil output sharply in 2007 but high domestic
consumption for biofuels will limit export growth.

Indonesia's calendar year 2007 palm oil production is forecast to rise
to 17.60 million tonnes from an estimated 15.90 million in 2006,
overtaking Malaysia as the world's largest producer.

Malaysia's 2007 output is seen rising to 16.45 million tonnes from
15.93 million, Oil World said.

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Joyo Indonesia News Service
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