[Kabar-indonesia] 21 RI Biz/Econ Reports: Land Reform to Cut Poverty; US$1B Infrastructure Fund

[JoyoNews at aol.com]

21 Reports:

- Interview - Jakarta Plans Land 
  Reform to Cut Poverty - Minister
- Indonesia, Qatar To Set Up 
  US$1B Infrastructure Fund - Min
- Indonesia Shares Close Flat;
  Awaiting Likely Rate Cut
- Indonesia Rupiah Ends Up On
  Profit-Taking In The Dollar
- Qatar Islamic bank may open or
  buy Indonesian bank
- Indonesia Barito Pacific lays off
  1,000 employees in unit Mangole Timber
- Indofood sets 1 mln ton yearly CPO 
  production target
- Indonesia's Berlian files preliminary
  prospectus for Singapore listing
- Jakarta bourse suspends Bank Negara
  Indonesia from trading
- Corporate bonds issued in Indonesia to
  hit US$1.67 bln in 2007
- Indonesia's Bank Niaga president tenders
  resignation - report
- Bank Danamon targets 10-pct share in
  bancassurance program
- Bank Ekspor Indonesia to list bonds in
  Surabaya bourse
- Indonesia's Bakrieland Considering
  Tapping Debt Market
- Plaza Indonesia to borrow US$150 mln
  from Sumitomo Singapore
- Stock alert - Indonesia's Jaya Ancol sharply
  higher after H1 net profit surge
- Indonesia's Alfa Retailindo H1 net profit
  4.69 bln rupiah vs 4.74 bln
- Indonesian textile makers push for
  FTA with the United States
- Indonesian palm oil market sluggish,
  eyes prices
- Bloomberg: Abe Says Japan Must 
  Tackle its `Severe' Debt Burden 
- Dow Jones: Japan's Consumer 
  Price Index, Industrial Production Rise

Interview - Jakarta Plans Land 
Reform to Cut Poverty - Minister

By Gde Anugrah Arka and Muhamad Ari

JAKARTA, Sept 29 (Reuters) - Indonesia is planning to launch a big
land reform programme aimed at giving land to its poor farmers in a
bid to cut poverty in the world's fourth most populous country, the
agriculture minister said on Friday.

Anton Apriyantono told Reuters in an interview he had discussed the
politically sensitive issue with the president and planned to present
it in a cabinet meeting next week, a move which he said was "very
critical" for the country.

A previous attempt at land reform in the 1960s failed to materialise
and exacerbated tensions between the left and right wings, eventually
ending in a bloody political transition that saw hundreds of thousands
of suspected communists killed.

"We are planning big programmes. They involve land reform, the use of
forest and food security. It was discussed with the president
yesterday. The core issue is that small farmers can get land so as
they can get out of poverty," Apriyantono said.

He declined to elaborate when asked whether the move would meet less
resistance since he is a senior member of the Muslim-based Justice and
Prosperous Party. Orthodox Muslims were among those who strongly
opposed such a move in the 1960s.

"This will indeed get strong support. This demand has been there for a
long time. It especially comes from the poor. Conglomerates may not be
happy hearing this. Which one should we support?"

EIGHT MILLION HECTARES

He said the government has identified some 8.15 million hectares of
land that could potentially be distributed to poor farmers, but he
declined to give details.

"If we want to get people out of poverty, considering that most of
them are poor are farmers, the size of land owned by farmers must be
adequate. Therefore land reform is very critical," Apriyantono said.

Government data shows about 15 million farmers have less than 0.5
hectares of land each, which officials say is too small to help them
increase productivity.

Indonesia's poverty rate is among Asia's worst. Latest poverty data,
ending in March this year, showed the number of people below
Indonesia's poverty line of about 60 U.S. cents-per-day hit around 40
million in March, almost one fifth of the population.

Apriyantono said he did not know yet how the land reform programme
would take place on the densely populated Java island where most of
Indonesia's 220 million people live and where the land issue has been
a historically sensitive political issue.

"The details are not yet available, but the essence is that poor
farmers will be given land so as they could get out of poverty. Let's
say 2-5 hectares of land outside of Java. Regarding Java, I do not yet
know."

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Indonesia, Qatar To Set Up $1B Infrastructure Fund - Min

JAKARTA, September 29 (Dow Jones)--The governments of Indonesia and
Qatar have agreed to set up a $1 billion trust fund to finance
infrastructure projects in Indonesia, a government minister said
Friday.

"If it (the fund) is successful, it will become a business model for
cooperation with other Middle Eastern countries," Indonesia's Minister
of State Enterprises' Affairs Sugiharto told reporters.

He didn't provide further details on the fund.

The government is trying to attract investors to help upgrade the
country's infrastructure. Vice President Jusuf Kalla said recently the
government will seek both foreign and domestic investment for IDR500
trillion ($54 billion) worth of infrastructure projects at a
conference in November.

Sugiharto recently led an Indonesian delegation to the Middle East to
solicit foreign investment.

He said several Indonesian companies signed business deals with their
Middle Eastern counterparts, including state-owned PT Krakatau Steel,
which plans to join hands with Al-Tuwairqi to build a $326 million
steel plant in Indonesia.

Dubai's EMAAR Properties (EMAAR.AI) also plans to join state-owned
airport operator PT Angkasa Pura I in building an airport in Lombok,
an Indonesian island east of Bali, Sugiharto said.

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Indonesia Shares Close Flat; Awaiting Likely Rate Cut

JAKARTA, September 29 (Dow Jones)--Indonesia shares closed 
flat Friday and are likely to hold the current level next week before 
Thursday's Bank of Indonesia meeting, where it is expected to 
cut rates, dealers said.

"In the short-term, the main index will not run away from the 
1500 level," a dealer with a foreign securities company said. 
"Overall sentiment is good as Bank Indonesia is expected 
to cut rates again next week, but stocks are mostly already 
overbought."

The Jakarta Stock Exchange Composite index ended up 
0.815 points,or 0.05%, at 1534.615.

Gainers led decliners 79 to 44, with 44 shares unchanged.

Volume was 3.32 billion shares valued at IDR1.52 trillion, compared
with 1.35 billion shares valued at IDR1.50 trillion Thursday.

The dollar ended at IDR9,225 Friday, compared with Thursday's close at 
IDR9,240.

Bank Indonesia is widely expected to cut its one-month benchmark rate
Thursday by between 25 and 50 basis points to give the economy a much
needed kick.

Rate cut expectations boosted Bank Mandiri by 1% to IDR2,325, and Bank
Danamon by 1.9% to IDR5,300.

Cigarette maker Gudang Garam rose 1.5% to IDR10,350, but Indonesian
Satellite Corp fell 0.9% to IDR5,150 on profit taking. Its rival,
Telekomunikasi Indonesia, ended flat at IDR8,450

Dealers expect the main index to move between 1515 and 1540 Monday.

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Indonesia Rupiah Ends Up On Profit-Taking In The Dollar

JAKARTA, September 29 (Dow Jones)--The Indonesian rupiah ended
slightly higher Friday as market participants took profits on the
dollar amid easing dollar demand from local companies, dealers said.

"Most companies likely have already secured dollars for payment of
offshore obligations," a dealer said.

The dollar also lost ground against many other regional currencies,
dealers added.

The dollar closed at IDR9,225, versus its close Thursday at IDR9,240.

Trading volume was thin as most market participants chose to stay on
the sidelines awaiting the release of September inflation data Monday
to better gauge Bank Indonesia's move on interest rates on Oct. 5.

Analysts expect the central bank to cut its one-month benchmark rate
by 25-50 basis points next week, despite an expected uptick in
on-month inflation.

Dealers expect the dollar to trade between IDR9,200 and IDR9,250 Monday.

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

Qatar Islamic bank may open or buy Indonesian bank

JAKARTA, September 29 (Reuters) - Qatar Islamic Bank (QIB) may invest
$100 million to buy or set up a new bank in Indonesia, an Indonesian
minister said on Friday.

QIB, which provides services based on Islamic financial principles,
had the choice of converting a conventional Indonesian bank into a
sharia bank, acquiring an already established Indonesian sharia bank,
or setting up a new bank in Indonesia.

"They may prefer to open a new bank. This has already been discussed
betwen them and the Indonesian central bank who advised them to open a
new bank," said Sugiharto, Indonesia's minister of state enterprises.
He did not elaborate further.

Islamic finance accounts for just a small percentage of business in
Indonesia, the world's most populous Muslim country.

Under Islamic or sharia law, interest is banned and income must
instead be derived from a fundamental economic transaction such as
trade in goods and services, direct investment in a business or
renting out a property.

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Indonesia Barito Pacific lays off 1,000 employees in unit Mangole Timber

JAKARTA, September 29 (XFN-ASIA) - PT Barito Pacific Timber said it
laid off 1,000 employees of its unit PT Mangole Timber Producers at
the end of last month.

"We wish to inform you that we have begun rationalising the number of
employees in PT Mangole Timber Producers, one of the company's units,"
Barito corporate secretary Salwati Agustina said in a statement to the
stock exchange.

She said the lay-offs were the result of "a reduction in activities"
by the unit, but did not give any other details, though she noted that
the decision would have "no impact on the overall production capacity
of Barito Pacific."

In midmorning trade, Barito Pacific was up 10 rupiah at 440.

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Indofood sets 1 mln ton yearly CPO production target

JAKARTA, September 29 (Asia Pulse/Antara) - Publicly-listed food
industrial company PT Indofood Sukses Makmur (JSX:INDF) has set itself
a target of producing 1 million tons of crude palm oil (CPO) per year,
a company spokesperson said.

The CPO would initially be allocated to the company's refinery
division and the rest would be used for a long-term biodiesel
production project, Indofood corporate secretary Verianty Setiawan
told the Jakarta Stock Exchange (JSX) here Friday.

INDF has also planned to have 250,000 heactares of biofuel plantations
by 2015 and to expand its plantation area, Verianty said.

The company's oil palm plantation development program will be funded
with internally generated cash funds, rights issues and credits, she
said.

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Indonesia's Berlian files preliminary prospectus for Singapore listing

JAKARTA, September 29 (XFN-ASIA) - Shipping firm PT Berlian Laju
Tanker said it has filed a preliminary prospectus with the Monetary
Authority of Singapore (MAS) for a share offering and listing on the
Singapore Exchange (SGX-ST).

The company expects to conduct the float in October.

In a statement to the Jakarta Stock Exchange, Berlian said the shares
to be offered are those currently held by the founder of the business,
PT Tunggaladhi Baskara.

The global coordinators - Deutsche Bank and UBS Investment Bank,
however, have an option to sell additional treasury shares, the
statement said.

Berlian had previously indicated it would float 20 pct of its total
shares, including a 14.5 pct stake held by Tunggaladhi, which owned
60.76 pct of the shipper as of Sept 22.

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Jakarta bourse suspends Bank Negara Indonesia from trading

JAKARTA, September 29 (XFN-ASIA) - The Jakarta Stock Exchange (JSX)
said it is suspending trading in the shares of PT Bank Negara
Indonesia (BNI) today to give investors time to reassess their views
about the stock after its 77 pct gain over the past two weeks.

The government holds a 99.11 pct stake in the bank.

Analysts have said BNI's sharp increase was driven by market
speculation that the government may divest some of its shares in the
bank.

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Corporate bonds issued in Indonesia to hit US$1.67 bln in 2007

JAKARTA, Sept 29 Asia Pulse - Corporate bonds issued in 2007 are
forecast to reach Rp15 trillion (US$1.67 billion) with the lowering of
interest rates.

Chief researcher of PT Mandiri Sekuritas Paulus Nurwandono said the
central bank's benchmark interest rate is expected to be lowered
further to around 10 per cent in 2007 from 11.25 per cent at present,
encouraging the issuance of new bonds.

New bonds issued to refinance debts will amount to at least Rp10
trillion and Rp5 trillion and will be issued to finance business
expansion, Nurwandono predicted.

He said a 10 per cent reference interest is considered safe for
companies to issue new bonds although the market players still hope to
see the interest rate to go down further.

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Indonesia's Bank Niaga president tenders resignation - report

JAKARTA, September 29 (XFN-ASIA) - PT Bank Niaga president Peter Stok
has submitted his letter of resignation to Bank Indonesia, Kompas
reported, citing a central bank official.

The resignation is to take effect early next year, the report said.

"We have been informed about the resignation of Peter Stok. The bank's
controlling shareholder has also been informed about his plan to
resign," Bank Indonesia director for bank licensing and information
Yang Ahmad Rizal was quoted as saying.

Bank Niaga is a 66 pct-owned subsidiary of Bumiputra-Commerce Holdings
Bhd of Malaysia.

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Bank Danamon targets 10-pct share in bancassurance program

JAKARTA, September 29 (Asia Pulse/Antara) - Publicly-listed Bank
Danamon Indonesia (JSX:BDNM) targets a market share of 10 per cent in
a bancassurance project, Bank Danamon Vice Pesident Director Jerry Ng
said here Thursday.

"We expect to gain a 10-percent market share in the years to come," Ng
said during the launch of Danamon's `"Kadoku" program which was
organized jointly with PT Asuransi Allianz Life insurance company.

The program offers bancassurance partnership products consisting of
investment and comprehensive protection for the future of families.

"Bancassurance is a strategic business and not a short-term venture so
it must be done precisely from the beginning," Ng said.

In the short-term , he said, bancassurance's contribution would not be
big but Bank Danamon targeted a 10-percent market share in the near
future.

Another bank, NISP (JSX:NISP), had launched a bancassurance program
earlier in cooperation with three insurance companies, namely PT
Asuransi AIU, Allianze and PT Great Eastern Life Indonesia.

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Bank Ekspor Indonesia to list bonds in Surabaya bourse

JAKARTA, September 29 (Asia Pulse/Antara) - Publicly-listed Bank
Ekspor Indonesia will list its third bond valued at Rp500 billion
(US$50 million) on the Surabaya Stock Exchange (BES) on September 29,
a BES official said here Thursday.

The bonds will bear serial A numbers with nominal value of Rp150
billion and carry a fixed interest rate of 12.50 percent per year
which would be paid once every three months and due on Sept 28, 2009,
BES listing section head Umi Kulsum said.

The second bonds bear serial B numbers with a nominal value of Rp200
billion and carry a fixed interest rate of 12.70 percent annually
which would be paid once every three months and due on Sept 28, 2010.

The remaining bonds bear serial C numbers with a nominal value of
Rp150 billion and carry a fixed interest rate of 12.80 percent per
year which would be paid once every three months and due on Sept 28,
2011.

Indonesian stock rating agency PT Pefindo gave idA- (single A minus or
stable outlook) rate to the bonds.

Umi said the issuers could buy back half or all the bonds as a
repayment one year after the issuance.

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Indonesia's Bakrieland Considering Tapping Debt Market

MANILA, September 29 (Dow Jones)--Indonesian property firm PT
Bakrieland Development (ELTY.JK) plans to tap the international debt
market to finance its various projects, a company official said
Friday.

"We are exploring all types of debt financing, such as loans and
bonds," Nuzirman Nurdin, corporate secretary at Bakrieland, told Dow
Jones Newswires. He declined to specify a timetable.

Nuzirman, who is based in Jakarta, said the planned borrowing aims to
accelerate the completion of the firm's property projects, including
the 12.6-hectare Rasuna Epicentrum project in south Jakarta.

"We haven't come to a firm decision on whether we are going to use a
loan or bond, including the size of it, since we are still in the
process of considering several important things such as the cost of
funds, flexibility, fund availability, market conditions, etc," he
said.

Local newspaper Bisnis Indonesia reported earlier this week that
Bakrieland will sell US$150 million worth of bonds next month with the
help of Deutsche Bank. The company also plans to sell IDR300 billion
of bonds in the local market, it said.

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Plaza Indonesia to borrow US$150 mln from Sumitomo Singapore

JAKARTA, September 29 (Asia Pulse/Antara) - Publicly listed property
company PT Plaza Indonesia Realty (JSX:PLIN) has secured a new loan
worth US$150 million from Sumitomo Mitsui Corp, Singapore.

The loan agreement was signed on September 22 and disbursement started
on Thursday, Plaza finance director Hendra Hartono said.

Disbursement of the loan to be repaid in five years will be made in
three years with an annual interest of 3.85 per cent above the London
Interbank Offered Rate (LIBOR).

Plaza Indonesia plans to finance a property project in Jakarta with
the borrowed funds.

The One month LIBOR is around 5.32 per cent while the three-six month
LIBOR is 5.36 per cent this week.

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Stock alert - Indonesia's Jaya Ancol sharply higher after H1 net profit surge

JAKARTA, September 29 (XFN-ASIA) - Property firm and recreation park
operator, PT Pembangunan Jaya Ancol, rose sharply in early trade after
reporting a 68 pct year-on-year rise in first half to June net profit.

The company said its net earnings reached 58.88 bln rupiah from 34.99
bln the year earlier, while sales increased to 285.11 bln from 206.08
bln.

At 9.41 am, Jaya Ancol was up 50 rupiah, or 5.05 pct, at 1,040.

The composite index was down 2.798 points at 1,531.002.

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Indonesia's Alfa Retailindo H1 net profit 4.69 bln rupiah vs 4.74 bln

JAKARTA, September 29 (XFN-ASIA) - PT Alfa Retailindo's first half to
June results:

Sales - 1.68 trln rupiah vs 1.57 trln
Cost of goods sold - 1.56 trln rupiah vs 1.46 trln
Operating profit - 1.20 bln rupiah vs 1.21 bln
Tax benefit - 2.83 bln rupiah vs 1.14 bln
Net profit - 4.69 bln rupiah vs 4.74 bln
Earnings per share - 10 rupiah vs 10

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Indonesian textile makers push fro FTA with the United States

JAKARTA, September 29 (Asia Pulse/Antara) - The association of textile
makers (API) has urged the government to immediately sign a textile
free trade agreement (FTA) with the United States.

The call came after the two countries recently signed a memorandum of
understanding to jointly fight illegal exports disguised in textiles
shipments.

"We hope the signing of the agreement will lead to the signing of
FTA," API secretary Ernovian G. Ismy said.

"An FTA with the United States is important as international
cooperation now tends to lead to bilateral agreement.

"In addition, Indonesia should not be lagging behind as Thailand and
Vietnam have already signed an FTA with the United States," the API
secretary added.

He said Indonesia will gain from an FTA with the United States, the
largest buyer of Indonesian textiles and textile products.

Indonesian exports of textiles and garments to the United States have
continued to increase - up 26.7 per cent to US$2.17 billion in the
first 7 months of this year from the same period last year.

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

Indonesian palm oil market sluggish, eyes prices

JAKARTA, September 29 (Reuters) - The Indonesian palm oil market was
quiet on Friday with players staying on the sidelines as they watched
the price trend in Malaysian crude palm oil futures, traders said.

Lacklustre trading interest put pressure on the crude palm oil market
both in Jakarta and North Sumatra's Medan which did not hold any
auction on Friday.

"Players retreated from the market to watch how prices will be next
week," a Jakarta-based trader said.

Malaysian crude palm oil futures were marginally up in thin trade by
midday, with the benchmark third-month December <KPOZ6> <0#KPO:>
contract on the Bursa Malaysia Derivatives exchange up three ringgit
to 1,553 ringgit ($422) a tonne.

In Jakarta, olein traded at between 4,650 and 4,675 rupiah
($0.504-$0.507) per kg compared with 4,635-4,650 on Thursday.

On the exports front, crude palm oil was offered at $427.5 a tonne for
October shipments, free on board Belawan, while bids were seen at
$420-422.5.

November and December shipments were offered at $427.5 a tonne, 
and bids stood at $422.5-425.

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Abe Says Japan Must Tackle its `Severe' Debt Burden 

By John Brinsley

Sept. 29 (Bloomberg) -- Shinzo Abe, Japan's new prime minister, said he will 
balance the country's budget in five years, cut spending to reduce the world's 
largest national debt and improve relations with China and South Korea. 

``The condition of our country's finances is extremely severe,'' Abe said 
today in his inaugural policy speech in parliament. ``As the population falls and 
ages with fewer children, it is clear this burden will become heavier in the 
future.'' 

Japan's percentage of elderly is the highest in the world, the ratio of young 
people is the lowest, and its government debt is forecast to rise to 151 
percent of gross domestic product by March. The government last month set targets 
to cut spending and boost revenue to find the 16.5 trillion yen ($140 billion) 
needed to balance the budget by 2011. 

Abe on Sept. 26 became the youngest prime minister since World War II, 
succeeding Junichiro Koizumi. He inherits an economy headed for its longest 
expansion in 60 years. He also has to improve relations with China and South Korea, 
which have both criticized Koizumi's visits to a Tokyo war memorial. Abe said 
better relations will require mutual effort. 

Abe two days ago phoned South Korean President Roh Moo-Hyun and the two 
leaders agreed to meet soon. Kyodo News reported today Abe may visit Seoul around 
Oct. 7. China refuses to hold a summit with Japan until Abe pledges not to go 
to Yasukuni shrine, where 14 Japanese leaders convicted of World War II war 
crimes are memorialized. Koizumi visited Yasukuni every year in his five years as 
prime minister. 

Trade 

Economic links with China and South Korea ``have never been stronger,'' Abe 
said. ``It is important for both sides to work hard to be able to talk frankly 
with each other.'' 

Abe served as Chief Cabinet Secretary, the government's top spokesman, in the 
last administration. When Koizumi took office in April 2001, Japan was in its 
third recession in a decade, and faced a dysfunctional banking system and 
huge fiscal deficits. 

Koizumi cut spending in his first year by 11 percent and then forced banks to 
write off 19 trillion yen in bad loans. He pushed through a bill last year to 
privatize the postal system, which would take 260,000 employees off the 
government payroll. 

Improving government finances, deregulating the economy, and bettering 
relations with China and South Korea are the top issues Abe should tackle, according 
to a Nihon Keizai newspaper survey of 135 corporate leaders published today. 

Higher Taxes? 

Abe said he will continue Koizumi's fiscal restructuring, without saying 
whether he will raise the consumption tax to boost revenue. 

``To ensure financial stability, we must pursue overall tax reform,'' he 
said. ``As for the consumption tax, we must address the issue from a position of 
neither evading, nor taking shelter in'' the prospect of an increase. 

He reiterated his pledge to keep government bond sales in the fiscal year 
beginning April 1 below this year's 30-trillion- yen target. 

The nation's security alliance with the U.S. should be deepened, Abe said. 
That relationship helped Japan deal with North Korea's nuclear weapon 
development program and missile tests in July, which he called ``a threat to 
international security.'' He urged North Korea to return to six-nation talks aimed at 
getting it to abandon its nuclear program. 

North Korea 

North Korea condemned Japan for applying financial sanctions against the 
communist state and warned that such a policy will strain their relationship. 

North Korea drew international condemnation after testing seven missiles on 
July 5, including a Taepodong-2 that U.S. officials say may be able to reach 
North America. 

The sanctions ``are no more than reckless and provocative acts of leading the 
DPRK-Japan relations to a more serious phase of confrontation,'' North 
Korea's official Korea Central News Agency said last week. 

Relations with Russia should also be strengthened to find a way to solve a 
dispute over claims to four islands of the coast of Japan's northern island of 
Hokkaido. 

Abe also called for changing Japan's educational system to foster a sense of 
patriotism. 

School teachers in Tokyo on Sept. 22 won a court battle against a city 
government ruling forcing them to stand for the country's flag and sing the national 
anthem at school ceremonies, the plaintiffs said. 

A group of more than 400 teachers filed the lawsuit after the Tokyo 
government in October 2003 introduced the rule. 

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Dow Jones Newswires
September 29, 2006

Japan's Consumer Price Index,
Industrial Production Rise

By TAKASHI NAKAMICHI

TOKYO -- Japan's consumer prices rose at their fastest rate in 
eight-and-a-half years and industrial output increased in August, government data showed 
Friday, in another sign of the firmness of the nation's economic recovery.

But economy minister Hiroko Ota indicated that Tokyo isn't yet convinced that 
deflation is gone for good in Japan, suggesting that the government may 
pressure the nation's central bank to keep interest rates low to support growth. 
"Members of [new Prime Minister Shinzo] Abe's cabinet initially seemed neutral 
toward the Bank of Japan," said Hideo Kumano, chief economist at Daiichi Life 
Research Institute. But Ms. Ota's remarks suggest that "the BOJ can't be 
optimistic" that Tokyo will give it a free hand in monetary policy.

Friday's data also showed that consumer spending fell for an eighth straight 
month, while a measure of corporate demand for workers also declined for the 
first time in five months. The results indicate that Japan's nearly five-year 
economic recovery led by domestic demand is increasingly dependent on business 
spending for growth.

The Ministry of Internal Affairs and Communications said Japan's nationwide 
core consumer price index, which excludes volatile fresh food prices, rose 0.3% 
in August from a year earlier on gains in energy costs. The figure, 
calculated under a new computation formula adopted last month, was the highest since 
the 1.8% increase in March 1998.

The reading also marked the third straight month of rises and matched the 
average forecast by economists polled by Dow Jones Newswires. The index rose 0.2% 
on year in both July and June, after being unchanged in May.

"Inflation continued to strengthen in August, confirming that last month's 
[calculation revisions] merely changed the 'level' of the CPI, not its 
'direction,'" said Takuji Aida, chief economist at Barclays Capital. "As long as wages 
continue to trend upward, we expect this direction to remain intact."

But given the government's seemingly cautious assessment on price trends, 
Daiichi Life Research Institute's Mr. Kumano said the BOJ's closely watched 
tankan survey of business sentiment due Monday will be more important in 
determining whether the bank could raise short-term interest rates from the current 
0.25% by the year-end.

The tankan survey's headline diffusion index measuring large manufacturers' 
business conditions in September is expected to slip to 20, down one point from 
June, according a Dow Jones Newswires survey of economists. But if the figure 
falls three points or more, Mr. Kumano said the central bank would have 
difficulties making a rate increase that he expects to come in December. Meanwhile, 
data released by the Ministry of Economy, Trade and Industry showed that 
Japan's mining and factory output rose a seasonally adjusted 1.9% on month after 
falling 0.9% in July. Companies surveyed also told the ministry that they 
expect to see their output slip 0.1% in September but then increase 1.8% in the 
following month, the data showed.

The Internal Affairs ministry released data showing that spending by Japanese 
households headed by salaried workers fell 4.4% on year in August, the eighth 
straight month of decreases.

A separate survey released by the Ministry of Health, Labor and Welfare 
showed that the ratio of job offers to job seekers, an indicator of demand for 
labor, fell to 1.08 in August from July's 1.09, the first drop in five months. The 
ratio shows that 108 jobs were being offered for every 100 workers seeking 
employment. But other government data showed that the nation's unemployment rate 
was unchanged at 4.1% in August from the previous month.

"The underlying recovery in employment continues, although at a modest pace," 
said Naoki Murakami, senior economist at Goldman Sachs.

-- Takashi Mochizuki, Tomoyuki Tachikawa contributed to this article.

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Joyo Indonesia News Service
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