THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS REPUBLIC OF INDONESIA

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Trade and Investment News1, 25 February 2008

Highlights

Politics The terrorist movement in Indonesia remains crippled, experts conclude The Malacca Strait is safe from terrorist attack for the time being, an expert says Regions Thousands camp outside after huge Aceh quake Illegal logging crackdown to continueEconomy Government trims budgets at government departments, institutions Fitch Ratings says Indonesia in sound position Business briefs Macroeconomy Budget “safe” with $100 oil price, says senior economics minister Export growth target to be revised, to stay above 10%Investment Realized investment at new high in 2007 at $14.7 billion UAE interests in $1 billion investment deal with South Sumatra State concerns Industry output slowed in 2007, but some areas grew Foreign air cargo operators asked to join with local firms SOEs Garuda Indonesia, eyeing European routes, orders new Boeings Private sector Budget carrier Lion Air hits headlines with order for 56 Boeings Cellular operator Excelcom expands subscribers, but profit lower Banks Government expects to raise $86 million from bank sale Bank Permata records 62% growth in pre-tax profit Power Bangka Belitung province in deal for new generators Mining Australian firms ready to invest $4 billion, trade official says PT United Tractors wins $150 million loan for coal mine acquisition Oil & gas Government asks Pertamina to take over Natuna gas block Exxon, Pertamina in 10% equity deal with Cepu local governments

POLITICS Terrorist movement still crippled: Experts

1 ? This Trade and Investment News is a publication of the Coordinating Ministry for Economic Affairs of the Republic of Indonesia. Readers are welcomed to forward it in its original form but no reproduction is allowed without permission

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Two experts on terrorism told a discussion on Wednesday (20/2/08) that the Jemaah Islamiyah (JI) terrorist movement remains badly hurt by a wave of arrests, although many of its senior figures remain at large.

International Crisis Group (ICG) regional advisor Sidney Jones, and Nasir Abbas, a former JI leader who is now assisting the police, said despite the continuing presence of figures including Malaysian Noordin M. Top, JI itself had come to the conclusion that it was currently incapable of mounting attacks.

Improved security in areas such as Maluku and Poso in Central Sulawesi had also reduced the room for movement, they said. Jones said it was not possible to rule out the possibility of more terrorist attacks, but capacities are limited. She said JI members wanted to retaliate against the police after the campaign to root out radicalism in Poso but found they were not strong enough to do so.

Nevertheless, the speakers agreed that it would be virtually impossible to stamp out terrorism altogether. "The ideology of Saudi jihadism is rooted in Indonesia and it wil not be possible to remove it just like that, but it will take local issues to spark it into action," she said.

Meanwhile the first hearing in what is believed to be the final legal challenge by the three 2002 Bali bombers fighting to escape death sentences will begin in Bali on Monday.

The cases of Amrozi Nurhasyim, his brother Ali Ghufron (alias Mukhlas) and Imam Samudra will be heard by three separate groups of judges at the Denpasar District Court, following a Supreme Court decision to accept a request for a review of the procedures used in overthrowing an earlier judicial review.

Court officials said they expected the hearings to take two to three weeks. In Jakarta, ICG’s Sidney Jones said she expected demonstrations when the three were executed, but no terrorist action was expected.

"I think there's a question of what impact the executions will have — and I think probably not that much. I certainly don't think they're going to prompt some sort of terrorist retaliation,'' said Jones.

"I think they'll be declared martyrs by their colleagues and I think there will be an effort to get lots of people at their burial, but I don't think there will be major outbreak of activity,'' she said.

Detachment 88 gets new head National Police Chief Gen. Sutanto has issued an executive order for the rotation of command for 38 officers, including the head of the Special Detachment 88 counter-terrorism unit, Tempo reported.

The executive order affects a total of 11 inspector generals, 15 brigadier generals (eight of whom were newly promoted) and 12 senior commissioners.

At Detachment 88, Brig. Gen. Bekto Suprapto has been replaced by Brig. Gen. Surya Dharma, previously director of transnational security.

Suprapto becomes chief of police in North Sulawesi, replacing Brig. Gen. Yakhobus Jacki Uly, who has been appointed a lecturer at the Police Command and Staff College.

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"The position of deputy head of Special Detachment 88 is now vacant as Senior Commissioner Budi Utama was appointed as the head of the Administrative and Planning Bureau," head of public relations Senior Commissioner Bambang Kuncoko said Thursday (21/2/08).

Malacca Strait ‘safe for now’: Analyst Terrorist groups in Southeast Asia lack the capability to launch an attack on shipping in the Malacca Strait, terrorism expert Rohan Gunaratna told the Lloyd's 360 Live Debate in Singapore on Thursday (21/2/08).

The fear that terrorists could launch an attack on shipping in the Malacca Strait, potentially blocking one of the world's busiest shipping lanes, has been a driving force behind security measures in the waterway in recent years.

Gunaratna, head of the International Centre for Political Violence and Terrorism Research at Nanyang Technological University, does not believe there is an immediate threat, Lloyd's List reported.

"There are no groups in this region that can mount an attack of this nature," he said.

But despite the lack of a specific local threat, Gunaratna warned that there were groups from outside the region that could potentially provide terrorists within Southeast Asia with such a capability.

The debate marked the launch of a new report on terrorism in Asia published by Lloyd's which warns that traditional forms of terrorism in Asia are being superseded by area-specific threats which businesses need to better understand.

FM dismisses Dulmatin claim Indonesian Foreign Minister Hassan Wirayuda has dismissed claims by the Philippines military that it has found the remains of Dulmatin, a terrorist figure linked to Jemaah Islamiyah (JI) with a $10 million bounty on his head from the United States for his role in the 2002 Bali bombing.

Wirayuda said a report received by the foreign affairs ministry confirmed that the dead body is not Dulmatin's, Radio Elshinta reported.

He added that over the past two years, the Philippines government has many times claimed that Dulmatin has been killed. In fact, at the end of 2007, Dulmatin was still alive.

Jakarta may adopt IATA safety standard The International Air Transport Association (IATA) said Friday (22/2/08) that the Indonesian government is considering adopting its operational safety audit for all its airline operators in a bid to improve standards, Reuters reported.

Giovanni Bisignani, Director General and CEO of IATA, told a media briefing that Indonesia's transportation minister had told him the government intends to adopt the IATA Operational Safety Audit (IOSA).

"I am very pleased after the conversation with the minister yesterday. He told me that he was considering to implement all Indonesian carriers to go through IOSA," Bisignani said.

IATA has suggested the government make IOSA mandatory, he said, adding the international community would welcome such commitment by the government.

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"My suggestion is to speed this up, the international community is still waiting for clear actions and this is a very good signal that the government is moving in the right direction," Bisignani said.

REGIONS Thousands camp out after Aceh quakeTens of thousands of people still remain camped outside their homes on Simeulue Island, Aceh after a 7.5-magnitude quake that killed three, an official said Friday (22/2/08).

The quake hit just off the remote island located near Sumatra on Wednesday, triggering panic across the region lashed by the 2004 Indian Ocean tsunami, which killed 168,000 people in Indonesia alone.

"The majority of residents have not returned to their homes. Many are still in the hills while others are in makeshift shelters built near their houses," Abdul Karim, Simeulue's local government spokesman, said.

Karim said authorities were still collecting information about quake damage across the island, which is part of Aceh province. So far, 34 buildings have been reported as damaged and officials said four people were known to have died. .

The Armed Forcers is using three Cassa planes to help provide relief aid to victims, Antara reported. Larger planes were unable to use the Lasikin airstrip on the island.

In 2005, entire villages on Simeulue were destroyed by a quake which killed at least 17 people.

Wednesday's quake sparked a local tsunami alert, but it was cancelled shortly after the quake.

Indonesia resumes sending bird flu samples Indonesia sent 12 bird flu samples to a World Health Organization laboratory last week for the firsttime since August 2007, and will try to continue doing so, the health ministry said Friday (22/2/08), Agence France-Presse reported.

Indonesia halted sharing samples in December 2006, saying it feared multinational drug companies could use them to develop vaccines that were not affordable for poor countries.

Health Minister Siti Fadilah Supari said 12 samples from recent bird flu patients were sent on Tuesday to the WHO-affiliated Centers for Disease Control and Prevention in the US.

"This is just for risk assessment," Supari said. "If they want to develop them into a seed virus they must notify us. If they make them into a vaccine our rights over (the vaccine) will be recognized." She did not elaborate.

Supari has been calling for WHO to change its 50-year-old influenza virus sharing system so that developing countries that hand over samples retain the rights to any vaccines produced from them.

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Rights workshop for military prosecutors A workshop to familiarize Indonesian military prosecutors in Papua about the need to respect human rights and the existence of the International Criminal Court was opened on Wednesday at the headquarters of the Praja Wirayakthi Military Distict Command in Jayapura, Antara reported.

Attended by at least 20 prosecutors working for the Army, Navy and Air Force in Papua, the workshop was organized by the Canadian Embassy in Indonesia in cooperation with the Defense Ministry and National Defense Forces Headquarters.

Separately in Jakarta, President Susilo Bambang Yudhoyono said the government was set to launch the "Save Papua" program in early April in response to the prevalence of HIV/AIDS in the province.

"The central government, together with the Papua administration, has formulated comprehensive measures for the program. We have also issued a presidential instruction on this matter," said the President.

He said one of the major goals of the Rp765 billion program is to improve the effectiveness of fighting against diseases, including HIV/AIDS, malaria and tuberculosis.

President: illegal logging crackdown to continue President Susilo Bambang Yudhoyono says the crackdown on illegal logging will continue to protect Indonesia’s forests, Kompas reported.

In comments on Wednesday (20/2/08), he said that while the crackdown had achieved results it needed to continue.

In the latest action on illegal logging, five timber companies in South Kalimantan have been closed because of suspicions over the source of supplies.

In West Kalimantan, the military detained five trucks suspected of carrying illegally logged ironwood, or ulin, an extremely hard and rare local timber.

ECONOMY Department funds to be trimmed Funding for all major government departments is to be cut to reduce budget expenditures as the government strives to keep its budget deficit down in expectation of a difficult year due to high oil prices and a depressed US economy.

The government will set a lower growth parameter of 6.4% for the year, down from 6.8% in its original budget, in a revision to be proposed to the House of Representatives.

Coordinating Minister for the Economy Boediono said Wednesday (20/2/08) that the state budget remains secure despite oil prices at much higher levels than the government had budgeted for previously, Dow Jones reported. Oil touched $102 a barrel last week.

Trade Minister Mari Elka Pangestu also said the government would lower its 14.5% target for export growth. She said the figure had not been decided on, but it would be above 10%

Officials have said they want to maintain spending on infrastructure and poverty reduction to maintain growth at optimal levels.

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While Indonesian analysts, the investment community and government officials continued to be downbeat about the prospects for the year, Ai Ling Ngiam, a director in Fitch's Sovereign Ratings team, which a week earlier raised Indonesia’s rating to BB, said action by the government had put the country in a good position.

"Positive economic growth and balance of payments implications had already become evident in 2007, enabling Indonesia to enter the current period of tightened global credit conditions and weaker external demand on a firmer footing," she said in a written statement.

“Pragmatic macroeconomic policies have returned the economy to a stronger and broader-based GDP growth path of above 6% since Q4 2006.

“The recovery in household demand, which constitutes over 60% of nominal GDP, should partially offset a slowdown in external demand, while the uptick in local and foreign private sector investment supports medium-term growth,” the statement from Fitch said.

The Indonesian Stock Exchange was also in two minds about prospects, influenced strongly by directions in US markets, but was generally buoyant on hopes of strong full-year reports from blue-chip companies.

The Jakarta composite index finished the week at 2,741.18, a full 2.0% up on the week. The rupiah was trading at 9,175/9,180 to the dollar.

BUSINESS BRIEFS MACROECONOMY Budget ‘safe’ with $100 oil The state budget for this year remains secure despite oil prices at much higher levels than the government had budgeted for previously, Coordinating Minister for the Economy Boediono said Wednesday (20/2/08), Dow Jones reported.

"Even with oil prices at $100 a barrel at this moment, our budget is still safe, as the oil price (assumption) in the budget is $83 a barrel, while (oil prices) by nature fluctuate, and thus should average out over the year," Boediono said. He didn't elaborate further.

Analysts have said that were oil prices to sustain at around $100 a barrel, the government may have to run a higher deficit or cut spending in other areas such as infrastructure development.

Meanwhile The Jakarta Post reported that the government plans to acquire more foreign loans to help cover the state budget deficit, set to well this year amid a slowing global economy and high world crude oil price.

To cover the deficit, the government is seeking Rp4.7 trillion ($513.1 million) in new loans, the deputy chief for development budget at the National Development Planning Agency (Bappenas), Lukita Dinarsyah Tuwo, said Friday (22/2/08).

The government has already borrowed Rp19.1 trillion from the World Bank, the Asian Development Bank (ADB) and Japan-based bank JBIG, meaning this year's foreign loans could reach Rp23.8 trillion, Lukita said.

The money will be lent through a Development Policy Loan (DPL), an Infrastructure

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Development Policy Loan (IDPL) and local government financial regulations (LGFR) loan.

Lukita said the DPL would be financed by the World Bank and co-financed by the ADB and JBIC, the IDPL financed by the ADB and co-financed by the World Bank and JBIC and the LGFR financed by the ADB.

Lukita also said Bappenas was optimistic the country's poverty rate would not increase, although consumption -- the nation's main economic engine -- might decrease.

"The government is prepared to continue measures to keep the poverty rate at between 14% and 15% this year, such as providing cheap rice for poor people," said Lukita.

The government has also eliminated the import duty on soybeans and the value-added tax on flour, wheat and cooking oil. The four are among the country's key basic commodities.

Govt. to revise down export target Trade Minister Mari Elka Pangestu said the government will revise down its target for export growth of 14.5% set earlier for this year, Asia Pulse reported Wednesday (20/2/08).

The decision to set a new target followed the revision of the country's economic growth target from 6.8% to 6.4% to be proposed by the government to the House of Representatives.

Pangestu said she has yet to determine the size of the cut as it will depend on the revision of other macro-economic indicators, but the new target would not be less than 10%.

She said demand is still strong for many commodities, giving optimism that export growth would not fall to single digits.

Govt. to offer 9.5% for retail bonds The government will offer a 9.5% coupon for its fourth retail bonds offer in March and expects strong demand for the bonds, after raising nearly $1 billion in the last issuance, a government official said on Wednesday (20/2/08), Reuters reported.

Rahmat Waluyanto, the Finance Ministry's Director General of Treasury, also said he expects the country's first shariah-compliant bonds to be issued in September or October.

"The government is optimistic that this issue can raise a higher figure than the last one."

The finance ministry plans to sell its fourth issue of retail bonds on March 10, following by a fifth retail bond issue on September 1.

Indonesia raised Rp9.367 trillion in its third retail bonds in September last year. The bonds offered a 9.4% coupon rate.

Meanwhile the government sold two series of zero-coupon treasury bonds worth a combined Rp5.85 trillion Tuesday to help cover the budget deficit and repay maturing debts, the Finance Ministry said in a statement.

The ministry sold Rp3.65 trillion worth of bonds under the ZC-0004 series at an average yield of 8.87%, and another Rp2.2 trillion worth of bonds under the ZC-0005 series at an average yield of 9.56%.

The first series, which attracted incoming bids of Rp3.83 trillion, will mature on February 20,

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2010.

The second series, which will mature on February 20, 2013, attracted bids of Rp2.71 trillion.

INVESTMENT Realized investment in 2007 reached $14.7BRealized domestic and foreign investments in 2007 amounted to Rp135 trillion ($14.715 billion), exceeding the previous projection of Rp114 trillion, a finance ministry official said, Asia Pulse reported Monday (18/2/08).

"The realization of investments in 2007 was higher than those in the four previous years. The figure was the highest since 2000," Anggito Abimanyu, head of fiscal policy affairs at the finance ministry said.

Anggito said the ratio between investments approved and investments realized continued to increase with 70% realization in 2007.

Most of the realized investments in 2007 were investment schemes approved in 2005. "The investments were approved in 2005 and their realization was accelerated and carried out in 2007," he said.

On investment realization in 2008, Anggito said in 2006, investment realization was Rp150 trillion so that in 2008 it was expected to increase.

He said investment by the government and state enterprises (BUMN) had not yet shown an encouraging development. Many investment schemes were late and not fully implemented. UAE, S. Sumatra Govt. to invest over $1B UAE-based Ras Al Khaimah Investment Authority (RAKIA) and RAK Minerals and Metals Investments (RMMI) said a memorandum of understanding has been signed with the government of South Sumatra Province, Thomson Financial reported Tuesday (19/2/08).

They plan to invest more than $1 billion in 2008 in the development of an integrated industrial and logistics infrastructure, including a rail transport corridor, and deep water sea port to handle bulk and container cargoes.

Ras Al Khaimah is one of the seven emirates of the UAE. The grouping also plans investments in Africa and Asia.

Jakarta plans $393M rail link to airport Jakarta plans to build a Rp3.6 trillion ($393 million) railway system linking Soekarno-Hatta Airport in Banten province with the capital to cope with growing passenger traffic, the Straits Times reported Monday (18/2/08).

Targeted to be ready next year, the railway will stretch along 33.7 km, with two-thirds of it running on an elevated track, giving passengers an alternative to the road route.

The remaining 11.7 km of the track will use an existing railroad, according to PT Railink, a subsidiary of state-owned railway company PT Kereta Api (KA) and airport operator PT Angkasa Pura II.

"Once we finish with financial arrangements, the project can start by next month," said PT Railink president Masjraul Hidayat.

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Hidayat said the new railway track - which will start in Manggarai, central Jakarta - will pass several train stations and will be an alternative means of public transportation to and from the airport besides buses and taxis.

PT KA president-director Ronny Wahyudi said that 70% of the project's cost would be covered by national syndicated bank loans and 15% by the implementing consortium's equity. The remaining 15% would be offered to other interested parties.

The consortium's participants include PT Railink, PT Jasa Marga and PT Wika.

Kajima to step up urban development businessKajima Corp. plans to expand its urban development project in Jakarta, starting with the construction of a large office building, Nikkei reported Tuesday (19/2/08).

The general contractor completed a large office building on Monday, and already plans to begin constructing a similar-sized office building late this year.

The 4 billion yen ($37.08 million) building, which is expected to be completed in 2010, is to have 28 above-ground floors and a total floor space of 62,000 sq. meters.

As soon as it receives government approval, Kajima also plans to build a hotel and a shopping mall in Jakarta.

"We aim to bolster our urban development business in Indonesia further by planning construction of new office buildings and hotels," Kajima president Mitsuyoshi Nakamura said.

STATE CONCERNS Industry output slowed in 2007 The growth of the country's overall industry output slowed last year to 5.15% from 5.27% in 2006, below the government's target of 6.31%, the government said, The Jakarta Post reported Tuesday (19/2/08).

Industry Minister Fahmi Idris blamed the slowdown on pressures triggered by higher crude oil prices.

"In 2007, our national industry was facing many difficulties, such as the increase of oil and energy prices, which eventually led to the increase in prices of agricultural commodities like soybeans, wheat, corn and crude palm oil," he said.

Contributing the most to the drop, he said, were two industry sectors: textiles, leather and footwear products, and timber and wood products.

Among expanding sectors were food, beverage and tobacco, and metals, although the growth was not enough to offset falls in other sectors.

In 2008 the ministry targets a total output growth of 7.43% by year-end, foreseeing a significant contribution from the transportation, machinery and equipment sector, expected to expand by 9.6%.

Foreign cargo operators asked to work with local partners The transport ministry suggests foreign air cargo carriers should cooperate with Indonesian counterparts if they want to provide cargo transport to Indonesian cities, Asia Pulse reported

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Monday (18/2/08).

Local cargo carriers should have a share of at least 30%, Air Transport Director Tri S. Sunoko said.

"We want business-to-business cooperation before we issue the license to serve flights to Indonesian cities," Sunoko said.

He said the government has received an application from Singapore's Jett Airlines to provide cargo transport between Jakarta and Singapore using Boeing 747-200 aircraft.

Govt. allocates $64.7M for coastal area development The ministry of marine and fisheries has allocated funds amounting to Rp594 billion ($64.7 million) for development programs in small islands and coastal areas in 2008, a spokesman said, Asia Pulse reported Monday (18/2/08).

A director general at the ministry, Syamsul Maarif, said Rp184 billion of the funds were derived from foreign loans and grants.

The funds would be used among other things for the empowerment of residents of the country's outer-most small islands and coastal areas and for the naming of small islands.

In 2007, the ministry registered 4,981 newly named islands with the United Nations (UN).

The ministry was planning to rehabilitate the small islands' ecosystems and construct a number of infrastructures in them and in coastal areas.

It would also carry out the second-phase coral reef management program (Coremap II).

SOEsGaruda to order 10 Boeings to resume Europe flights PT Garuda Indonesia, the country's biggest carrier, will buy 10 Boeing Co. 777-300ER planes valued at as much as $2.8 billion at list prices to resume services to Europe, Bloomberg reported Monday (18/2/08).

The company expects the first plane to arrive in 2010, president director Emirsyah Satar said, adding that Garuda's first destination in Europe will be Amsterdam.

A 777-300ER plane has a price of between $250 million and $279 million, according to Boeing's Web site. It can seat as many as 365 passengers.

Garuda's new planes are to replace ageing aircraft in its fleet of 49 aircraft, Satar said. The carrier has nine wide-body aircraft.

State-owned Garuda plans to borrow to finance the plane purchases. It will also raise some funds through the sale and lease back of aircraft, Satar said.

PRIVATE SECTOR Lion Air orders 56 Boeings Budget carrier Lion Air has ordered 56 Boeing 737-900ERs valued at more than $4.4 billion, announced Tuesday at the Singapore Air Show, Agence France-Presse reported.

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The Indonesian carrier also acquired the right to purchase an additional 50 aircraft, Boeing said in a statement. With the new order for 56 planes, Lion Air will have 178 737-900ERs in its fleet.

The single-aisle 737-900ER has a maximum capacity of 220 passengers in a single-class layout. The fuel-efficient planes have a range of 5,900 km, Boeing said.

"The next generation 737 is the right airplane for our airline, our customers and our growing route structure," said Lion Air founder and president director Rusdi Kirana.

"Lion Air is committed to growing its fleet with fuel-efficient, reliable and technologically advanced aircraft, while offering its passengers the best service and lowest fares in the market."

Boeing vice president for commercial planes Dinesh Keskar said Lion Air is the world's largest operator of the 737-900ER.

Meanwhile Kirana said Lion Air will soon open an operation base in Langkawi, Kedah, Malaysia in a bid to become a major regional airline, Asia Pulse reported.

Lion Air will establish Lion Langkawi in cooperation with a local partner, Kirana said.

Rusdi said Lion Langkawi will use Boeing 737-900ER aircraft to serve domestic routes in Malaysia or international services.

Lion Air has also reached an agreement with Australia's Sky Airworld to establish a joint venture airline to be named Lion Air Australia to operate in that country. It also plans to buy an airline in Thailand.

Excelcom says 2007 net profit falls on tax Third-largest mobile phone operator PT Excelcomindo Pratama said on Wednesday (20/2/08) its 2007 net profit dropped 61.5% due to withholding tax and foreign exchange losses, Reuters reported.

The fall came despite Excelcom's subscriber base jumping 62% to 15.5 million, representing around 17% market share.

Excelcom, controlled by Telekom Malaysia Bhd, booked a 2007 net profit of Rp250.8 billion ($27.30 million), down from Rp651.9 billion a year earlier. Revenue climbed 38% to around Rp8 trillion.

Without the extraordinary items, Excelcom's net profit would have more than doubled to Rp721 billion compared with an adjusted 2006 result of Rp336 billion.

Manulife insurance premiums grow by 88% Life insurance company PT Manulife Indonesia announced Wednesday (20/2/08) its total insurance premiums grew by 88% last year to Rp767 billion from Rp 419 billion in 2006, The Jakarta Post reported.

The growth was remarkable, president director David Beynon said, considering the industry as a whole was growing at a rate of 25 to 30%.

"We have reinforced the sales distribution channel through our 10 bank partners in 2007, which contributed to about 60% of the total premium income last year," Beynon said.

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Indosat plans Rp1.5T bonds in H1 Second-ranked mobile phone operator PT Indosat said Wednesday (20/2/08) it plans to raise as much as Rp1.5 trillion ($163.8 million) in bonds in the first half to finance expansion, Reuters reported.

Indosat, around 40% owned by Asia Mobile Holdings, said a maximum of Rp1 trillion will be through conventional debt while the rest will be in shariah-compliant bonds.

Singapore's state investor, Temasek Holdings, controls 75% of Asia Mobile Holdings, while Qatar Telecom holds the rest.

The company plans to offer the bonds between April 3-7. Two state-owned brokerage companies, Danareksa Sekuritas and Mandiri Sekuritas, have been appointed as lead underwriters for the issue.

Indosat is estimated to have booked a net profit of Rp1.99 trillion last year, Reuters Estimates data show, up from Rp1.4 trillion made a year earlier.

Metropolitan Land to launch IPOProperty company PT Metropolitan Land hopes to earn Rp400 billion ($44.4 million) from an initial public offering (IPO) it plans to launch in May or June, a company official said, Asia Pulse reported Monday (18/2/08).

Company public relations manager Wahyu Sulistio said the funds to be raised from the IPO will be used to build a shopping mall, hotel and housing projects.

Management is selecting a number of candidates for lead underwriters including PT Danareksa Sekuritas, PT BNI Securities and PT DBS Vickers Securities, Sulistio said.

He said the company, 50% owned by Reco Newtown Pte Ltd from Singapore, wants to sell 40% of its shares to the public to be entitled to tax incentives offered by the government.

Samko to raise $72M in Singapore IPO Timber producer Samko Timber Ltd said on Monday (18/2/08) it will raise S$101 million ($71.63 million) in its Singapore listing, Reuters reported.

The firm is offering 183 million shares at S$0.55 per share, its prospectus said.

The company was earlier looking to raise as much as S$113 million before it delayed its IPO, a banking source said. Credit Suisse is handling the IPO.

Bakrie shareholders approve reverse stock splitDiversified conglomerate PT Bakrie Brothers said Wednesday (20/2/08) its shareholders approved a proposed reverse stock split, which will consolidate every two existing shares into one, Thomson Financial reported.

After the reverse stock split, the company will seek approval for a rights issue in March, Bakrie president Bobby Gafur Umar said.

Bakrie is planning to raise about Rp40 trillion from the rights issue.

It will use the proceeds to finance in part its planned acquisition of a 35% stake in coal giant PT Bumi Resources, a 40% stake in oil and gas company PT Energi Mega and a 40% stake in property company PT Bakrieland Development. The acquisitions will turn Bakrie Brothers

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into a strategic investment company.

PT Visi Media set to launch IPOPT Visi Media Asia, the operator of TV One, plans to launch an initial public offering (IPO) and is hoping to raise Rp400 billion ($43,589) in the next few months, a company official said, Asia Pulse reported Monday (18/2/08).

The company hoped to name the underwriter for the IPO in the next one or two month, TV One finance director Charlie Kasim said.

The company, formerly known as PT Lativi Media Karya, would offer 30% of its shares to the public in the IPO, Kasim said, adding that the fund would be used to strengthen its working capital.

Smart Telecom to build 1,500 new base stations PT Smart Telecom said it will spend around $115 million to build around 1,500 base transceiver stations (BTS) to bring the number of its BTS to 3,000 this year, Asia Pulse reported Tuesday (19/2/08).

Its deputy chief executive officer Djoko Tata Ibrahim said the subsidiary of the Sinar Mas Group has set aside $350 million for capital spending this year including for the new BTS.

He said construction program has been delayed because of the slow process of land use licensing, especially in the regions.

BANKSGovt. aims to raise $86M from BTPN sale State asset management firm PT Perusahaan Pengelola Aset (PPA) hopes to raise as much as Rp790.5 billion ($86 million) from the sale of a stake in PT Bank Tabungan Pensiunan Negara (BTPN) through an IPO in March, the bank said, Reuters reported Monday (18/2/08).

US Texas Pacific Group will acquire a 71.61% stake in the bank from a number of shareholders after the initial public offering is completed, an executive at one of BTPN's financial advisers said.

BTPN's president director Paulus Wiranata said PPA will offer nearly 268 million of its shares in BTPN between March 3-5 at between Rp2,700-2,950 each. The IPO will value the bank at $304 million. Wiranata said the proceeds from the IPO will be given to the government, which holds a 28.39% stake in the bank through PPA.

CIMB-GK Securities Indonesia and PT BNI Securities have been appointed as joint lead underwriter for the offering.

Texas Pacific will acquire shares currently held by Bakrie Capital, Recapital, PT Danatama Makmur and Fuad Hasan Masyur.

Permata pre-tax profit up 62% Publicly listed lender Permata Bank booked a 62% gain in its pre-tax profit thanks to strong growth in loans and non-interest-based incomes, The Jakarta Post reported Thursday (21/2/08).

The pre-tax profit increased from Rp455.2 billion (around $49.5 million) in 2006 to Rp736.8

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billion last year, according to a media statement.

The profit increase was attributed mainly to 11% growth in loans, bringing the bank's loan-to-deposit ratio (LDR) to 88%, far higher than the national average LDR of 69%.

Outstanding loans as of December 31 last year reached Rp26.5 trillion, with the focus still on SME and consumer lending services.

With the profit increase, Permata generated a net interest income of Rp2.3 trillion in 2007, 15% higher than in 2006. Its fee-based income grew 87% from Rp554.3 billion in 2006 to Rp1 trillion.

Bank Jabar Banten set to IPO The management of PT Bank Jabar Banten, a bank owned by the Banten provincial administration, said it hopes to launch an initial public offering (IPO) before April, Asia Pulse reported Monday (18/2/08).

The IPO should be launched before April, so it could use the October 2007 financial report already prepared by the bank in seeking approval from the capital market watchdog Bapepam-LK, its president Agus Ruswendi said.

He said that shareholders had sanctioned the plan to launch an IPO, selling 20% of its shares, and hoping to raise up to Rp800 billion, depending on the market condition.

POWER New generators for Bangka-Belitung The regional administration in Bangka-Belitung has reached an initial agreement with power investors for the provision of two 50-MW coal-fired power plants, The Jakarta Post reported Monday (18/2/08).

The power plant projects will be developed by PT Adhi Karya and PT Matahari Megah Energy.

Bangka-Belitung Governor Eko Maulana Ali that by 2010 Bangka-Belitung would need combined power capacity of at least 150 MW, while current supply was only 40 MW.

MINING Australia ready to invest $4B in mining Australia's Senior Trade Commissioner Rod Morehouse said Monday (18/2/08) that Australian firms were prepared to invest more than $4 billion in Indonesia's mining industry, The Jakarta Post reported.

"Australia has more than $4 billion waiting to be invested," Morehouse said in Jakarta.

Craig Senger, first secretary to the trade commissioner, said the investment would come from both "existing players" here and also from new ones. He refused to give more details.

United Tractors secures $150M loan for acquisition PT United Tractors, the largest heavy equipment distributor in the country, said Monday (18/2/08) it has secured a loan facility worth $150 million to finance a planned acquisition and the capital expenditure of the acquired company, Thomson Financial reported.

Last month, United Tractors signed a sales and purchase agreement to acquire 93.3% of PT Tuah Turangga Agung for $115.57 million.

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Currently, Tuah Turangga holds a 30-year work contract from the government to exploit coal in Kalimantan. It has an estimated 40 million tons of coal reserves.

The arrangers for the loan are Mizuho Corporate Bank Ltd, Oversea-Chinese Banking Corp Ltd, and Sumitomo Mitsui Banking Corp, while Sumitomo Mitsui Banking Corp Singapore Branch served as the facility agent, the company said.

United Tractors is also the largest mining contractor in Indonesia. It is majority owned by diversified conglomerate PT Astra International, which in turn is majority owned by Jardine Cycle & Carriage Ltd, an integral member of the Asian-based conglomerate, the Jardine Matheson Group.

Inco net profit expected to double PT International Nickel Indonesia (Inco) is expected to report this week that its 2007 net profit doubled from the year before on a surge in nickel prices and a slight increase in nickel output, Thomson Financial reported.

Analysts are projecting Inco's 2007 net profit to come in a range of $1.06-1.26 billion against $513 million the year before. Sales are expected to have risen to $2.12-2.49 billion from $1.34 billion.

In the first nine months of 2007, Inco booked a net profit of $972.6 million, up 292.3% from the previous year. Sales rose 149.6% to $1.87 billion.

Antam eyes gold resources The management of PT Aneka Tambang (Antam) is considering the acquisition of stakes in three gold mining companies, Bisnis Indonesia reported Tuesday (19/2/08).

The gold mines, operated by Oxiana Ltd, Avocet Mining Plc, and Indo Muro Kencana, are in Martabe, North Sumatra, Lanut Utara and Bakan, North Sulawesi, and Mount Muro, Central Kalimantan.

Antam president director D. Aditya Sumanagara declined to comment. "We will do the best for the shareholders," he said.

Oxiana, a Melbourne-based company, controls a 100% interest in the gold and silver mine at Martabe. The project has started construction and will start production in 2010.

Avocet, listed on the London Stock Exchange, has an 80% interest in the North Lanut gold mine and the Bakan project in North Sulawesi, while Indo Muro, a wholly owned subsidiary of Straits Resources Ltd., controls 100% of the Mount Muro gold mine in Central Kalimantan.

Bumi Resources to acquire four mining companiesThe country's largest coal producer, PT Bumi Resources, is studying possible acquisition of three or four potential mining companies, Asia Pulse reported.

The company has the capacity to raise up to $4 billion to finance the acquisition, its senior vice president for investor relations Dileep Srivastava said after a shareholders' meeting on Thursday (21/2/08) of PT Bakrie & Brothers, which owns Bumi Resources.

Srivastava said Bumi will look for funds when the acquisition program is ready, adding that the company will also consider a rights issue or issuing bonds.

New tin export license approved The government approved an export license for a new tin smelter, bringing the total number

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of smelters allowed to export the metal to 17, a trade ministry official said on Tuesday (19/2/08), Reuters reported.

The export license was granted to PT Bangka Timah Utama Sejahtera. Officials said no other requests for licenses were pending.

Freeport to use tailings for cement plant Copper and gold mining company PT Freeport Indonesia said it plans to build a cement factory in Papua using mining tailings as the basic material, Asia Pulse reported Thursday (21/2/08).

A memorandum of understanding has been signed on the plan with the provincial government of Papua.

The project will make use of mining sand to produce cement that can be used for infrastructure development in Papua or other areas, Freeport spokesman Mindo Pangaribuan said.

The project will be handled by the provincial administration with financial support and expertise from Freeport, he said.

OIL & GAS Govt. asks Pertamina to manage Natuna D-Alpha The government Tuesday (19/2/08) decided to grant state-owned PT Pertamina the right to take over the offshore Natuna D-Alpha gas block after failing to reach an agreement with US-based ExxonMobil Corp. on a revenue split, Minister of Energy and Mineral Resources said, Dow Jones reported.

The government will ask Pertamina to submit its detailed action plan on the block in three weeks, including any plan to partner with other investors, Purnomo Yusgiantoro said.

The block, which accounts for about a quarter of the country's recoverable gas reserves, is estimated to need investment of about $30 billion, the Financial Times reported.

Some 70% of the gas is carbon dioxide, which has no commercial value and makes recovery difficult.

Ari Soemarno, Pertamina's president, said the company would submit a feasibility study within three weeks of receiving official notification of the government's decision.

Pertamina has indicated that it may invite Exxon to work with it on the project, while other possible contenders are thought to include BP, Royal Dutch Shell, Statoil of Norway and Petronas of Malaysia.

Exxon, Pertamina sell 10% stake of Cepu PT Pertamina and energy giant ExxonMobil Corp. agreed to sell a 10% participating stake in Cepu gas and oil field to four regional state-owned companies, Dow Jones reported Friday (22/2/08).

Abdul Muin, deputy chairman at upstream oil and gas regulator BP Migas, said Pertamina, through its unit PT Pertamina EP, and Exxon through units Mobile Cepu Ltd. and Ampolex Pty. Ltd., will own 45% each in the Cepu gas field.

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The four local companies, which represent local governments in the area, are PT Sarana Patra Hulu Cepu, PT Asri Dharma Sejahtera, PT Blora Gas Hulu and PT Petro Gas Jatim Utama Cendana.

Muin said he expects Cepu field will start producing 20,000 barrels of oil per day in December and may peak at 165,000 barrels a day by 2011.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the total cost of developing the field is estimated at around Rp35 trillion ($3.8 billion).

Exxon, Pertamina and the four local companies will bear the cost of developing Cepu field, he added.

Govt. seeks to revise contracts with oil companies The government will seek to renegotiate contracts with oil and gas operators, who enjoyed much higher revenues because of soaring oil prices, Asia Pulse reported Tuesday (19/2/08).

Energy and Mineral Resources Minister Purnomo Yusgiantoro said the government wants to change the terms and conditions set in the existing production sharing contracts.

The minister said any change would be subject to renegotiations with the oil and gas companies concerned.

Pertamina orders two vessels State oil and gas firm PT Pertamina has ordered the construction of two vessels from state ship builder PT Dok dan Perkapalan Surabaya (DPS) for $29.2 million, The Jakarta Post reported Wednesday (20/2/08).

"The order of these two vessels is an effort to rejuvenate and expand our network," Pertamina president director Ari H. Sumarno said. Pertamina currently owns 26 ships and leases 104 others.

M. Firmansyah Arifin, director of DPS, said the two vessels were the fifth and the sixth Pertamina had ordered from DPS.

The two 6,500 Long Ton Dead Weight (LTDW) vessels, which will be delivered in 2011, will be used to distribute fuel throughout the country.

EMP doubles gas output in Sumatra Energi Mega Persada (EMP), the country's second largest oil and gas producer, said Wednesday (21/2/08) it had more than doubled output at its gas block in Sumatra, The Jakarta Post reported.

EMP investor relations head Herwin Wahyu Hidayat said the Kerinci block in Riau had increased production to 21 million cubic feet from 10 million cubic feet.

The additional output will be supplied to PT Riau Andalan Pulp and Paper, which has been receiving gas from EMP since December 2007, Hidayat said. The remaining gas will go to a power plant in Riau.

Herwin said the increase in output had raised the company's total gas production to 90 million cubic feet.

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According to data provided by EMP, the company produced 80 million cubic of gas per day and 10,000 barrels of oil per day, or equal to 24,200 barrels of oil equivalent per day, in 2007.

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