THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
Main Building, Ministry of Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta 10710
Tel: (021) 351-1178 Fax: (021) 351-1186 Website: http://www.ekon.go.id
Trade and Investment News[1], 28 April 2008
Highlights
Politics
· Indonesia calls for action by UN on high food prices
· The Philippines says Indonesia troops could assist in peacekeeping in Mindanao
Regions
· Security boosted on borders to stop smuggling of rice
Economy
· ArcelorMittal proposes $8 billion package focused on iron ore
· Business chamber supports fuel price rise
Business briefs
Macroeconomy
· Statistics agency says inflation likely steady in April
Investment
· New cellular operator Natrindo plans $1 billion investment this year
· T.Rad to make radiators in Indonesia
State concerns
· Agriculture minister rules out rice exports this year
· Palm oil export tax to be lowered to 15%
SOEs
· Four holding companies to be formed next month, minister says
· Rajawali Group looks at exit from PT Semen Gresik investment
Private sector
· PT Indofood plans Rp1.5 trillion bond issue
· Telkomsel subscribers rise by 32% on year in first quarter
Banks
· Kuwait’s International Leasing to buy a bank in Aceh and invest in infrastructure
· Bank Internasional Indonesia reports a 72% jump in first quarter net profit
Power
· Power utility PLN lets contracts for two power plants
· PLN signs loan agreements with Bank of China
Oil & gas
· Business backs fuel price rise, infrastructure spending
· 2008 LNG exports likely to rise 6.3%
Mining
· PT Antam and PT Krakatau to build $60 million iron ore processing plant
· Indian cement producer in talks on PT Berau Coal share
POLITICS
Call for UN action on high food prices
Indonesia said Wednesday that the UN should adopt measures against rising prices for food commodities to prevent a full-scale crisis worldwide, Deutsche Presse-Agentur reported.
Jakarta's UN Ambassador Marty Natalegawa said there had been piecemeal reaction to world food prices but no concerted short-term and long-term plans to deal with the issue.
"We need a holistic approach involving the UN, and we as governments have to come up with solutions," Natalegawa said.
He said he has suggested a high-level summit on the food issue to UN Secretary General Ban Ki-moon and received an assurance that the matter will be brought up to UN members.
Natalegawa said there was difficulty in scheduling such a meeting in the already heavy UN General Assembly agenda. He suggested holding a food summit following the scheduled meeting of the 192-nation General Assembly in early September on the Millennium Development Goals, one of which deals with reduction of poverty and hunger.
If a food summit cannot be held at UN headquarters in New York, Jakarta would step in to organize and host an event because of the urgency of the issue, Natalegawa said.
"There is now an excess of attention on the issue, but there should be a clear road map to deal with it," he said.
Foreign Affairs Minister Hasan Wirayuda earlier said Indonesia was ‘likely’ to host a world summit on the issue if the UN took no action.
The foreign minister was in New York for a meeting with the UN Secretary General.
Wirayuda said Indonesia was ready to host such a summit even if it had to be held before September. He said he had discussed with the UN chief a suggestion from President Susilo Bambang Yudhoyono that the world body should hold a summit during the UN General Assembly in September.
"According to President Yudhoyono, it is urgent that the UN overcome the skyrocketing prices of food and energy because they were causing a negative impact on developing countries. As everybody can observe, demonstrations to protest the food and energy crisis are happening in many countries, including in Indonesia," he said.
"The UN chief will discuss the matter with related institutions within the world body and then coordinate with the World Bank," the minister added.
Manila says TNI could help in Mindanao
The Philippines has suggested that predominantly Muslim Indonesia would be an ideal replacement for Malaysia to lead international monitoring of the Muslim separatist group, the Moro Islamic Liberation Front.
Manila, through its chief negotiator Rodolfo Garcia on Friday said that Indonesia would be able to find common ground with Mindanao with respect to religion and culture.
"Logically, it helps if the [monitoring team's] head comes from a country that is predominantly Muslim, because they will be able to understand the practice, religion and culture in Mindanao better," he said in a report from The Manila Standard..
Malaysia has announced that it would begin withdrawing its peacekeepers from Mindanao in the south of the country next month, as prospects for a final peace agreement remain dim.
Britain seeks closer military ties
The Indonesian and British militaries will soon formulate an agreement in the framework of a strategic partnership both countries agreed in March 2006, the Indonesian Armed Forces (TNI) commander said Thursday, Antara reported.
"We agreed to increase and expand fields of cooperation that have been established between the Indonesian and the British armed forces," TNI commander Gen. Djoko Santoso said at a joint press conference with British Armed Forces Commander Marshal Jock Stirrup after a meeting with Defense Minister Juwono Sudarsono.
Santoso said that the strategic partnership included maritime defense and security cooperation.
Stirrup said relations between the two countries had been running well and would be further expanded in the future. He said cooperation was important for the two countries to face global security challenges.
He said the Asia Pacific region was a strategic area which played an important role in global security stability.
On weaponry, Stirrup said that he understood Indonesia's military need for sufficient reliable armaments to equip its defense system. "We are happy that we can exchange experience on equipment and armaments such as reconnaissance weapons," he said.
VP says House must accept KPK search
The House of Representatives must allow the Corruption Eradication Commission (KPK) to search its premises, Vice President Jusuf Kalla said in Makassar on Friday, overturning objections to a search by House Speaker Agung Laksono and other members, Kompas reported.
“The KPK is an independent institution formed by law. There is nothing in this country that is above the law,” said Kalla, adding that the KPK had already searched the Supreme Court and Bank Indonesia and could search the presidential offices if it wanted to.
The KPK provoked a storm at the House when it tried to search the office of Al Amin Nur Nasution, a United Development Party politician accused of taking a bribe to change the status of forest land on Bintan island.
Laksono initially said the KPK could not search his office, especially since the House was in recess. He questioned the KPK’s search authorization. “The question is, does the KPK have the authority to conduct a search?”
By Friday Laksono had climbed down and merely called on the anti-corruption agency to act in a polite manner.
KPK head Antasari Azhar called for calm, asking the media not to try to start a war between the agency and the House.
New manhunt for terror fugitive
Police said Friday that a massive manhunt is underway for terror fugitive Noordin Moh Top following the arrest of an alleged accomplice, Yasir Abdul Bar, in the Central Java town of Purworejo, Xinhua reported.
"We are currently searching for other suspects but we cannot tell you the names," Central Java police chief FX Sunarno was quoted as saying by the national Antara news agency.
Yasir, 30, is believed to be a close aide of Malaysian-born Top, who is blamed for a series of major bombings in Indonesia.
He was arrested by the elite anti-terror squad on Tuesday without resistance, Sunarno said.
Separately in Jakarta, National Police spokesman Abubakar Nataprawira said Top remained a priority target in the country 's fight against terrorism.
"Hopefully we can capture him alive because that would be useful in helping us uncover other (terror) networks," he said.
Meanwhile the Supreme Court is to decide the execution site for convicted 2002 Bali bombers Iman Samudra, Ali Gufron and Amrozi, a police official said Wednesday.
“We are still waiting for the Supreme Court to deliver the letter naming the execution site,” said Central Java Police chief, Ir. Gen. FX Sunarno, adding that there are two possible locations, Bali or Central Java.
The execution will be performed either under the authority of Central Java or Bali Police, said Sunarno, adding the execution date will also be decided by the Supreme Court.
Diplomatic notes for China, Vietnam and Taiwan
The Foreign Ministry has sent diplomatic notes to China, Vietnam and Taiwan following the arrest of 17 foreign vessels and 151 crew members on April 11 in Natuna waters, an official said on Thursday.
“We are sending the letters to the countries to conduct verification and arrange deportation of the crew members,” said the Consular Affairs Director at the Foreign Ministry, Indra Kesuma Oesman.
Oesman said that the deportation of the detainees will occur within at least two months from now to prevent more problems.
The crew members have been interrogated by the Pontianak Immigration Office, while the ships are still anchored at the Jeruju Port, said Pontianak Naval Base Commander Lt. Col. Taufik Harun.
REGIONS
Borders tightened to prevent rice smuggling
With global rice prices at record highs, Indonesia is scaling up border patrols and taking other measures to deter rice smuggling to other countries, Trade Minister Mari Pangestu said in an interview with The Wall Street Journal on Friday.
The trade ministry fears smuggling to beat strict controls on exports and is cooperating with the police and navy to control the Indonesia’s porous borders. “We have to be more vigilant about the possibility of smuggling," Pangestu said.
President Susilo Bambang Yudhoyono said during a visit to Central Kalimantan on Thursday that the government would remain vigilant to stamp out rice smuggling. "Don't let our rice flow to other countries," he urged farmers.
In the past, Indonesia hasn't needed to regulate exports of rice because the domestic price was higher than global rice prices, due to import tariffs and subsidies for farmers but as global prices have spiked, Indonesia's rice price has fallen below the global average.
To reduce incentives to smuggle rice, the government is also trying to close the price gap. Earlier last week, Indonesia raised the price it pays farmers for unhusked rice by 10% and for finished rice by 7.5%.
The state food agency, which buys about 10% of the annual harvest, was finding it hard to procure rice because traders were offering higher prices, Pangestu said.
Bird flu pandemic readiness tested
Indonesia began a major bird flu simulation Friday that was to end on Sunday to test the county’s preparedness for a potentially catastrophic pandemic.
According to a report from The Associated Press, about 1,000 government, health and law enforcement officials were at the three-day event in Bali to consider how to contain a possible widespread outbreak of the often-lethal disease.
The drill began with the isolation of a village where a field hospital was set up to treat people with flu-like symptoms. At the closing on Sunday, officials will try to prevent "infected" travelers from leaving the international airport and spreading the virus to other countries.
"This is the only exercise in the world (of its kind) that has ever taken place," said Subhash Salunke, the World Health Organization's top official in Indonesia. "This will certainly help prepare Indonesia in the event of a pandemic."
It will be an example to other countries struggling to contain outbreaks of the disease, he said.
Jakarta, W. Java push ahead on ‘mega-city’ plans
The Jakarta administration said last week it is pushing ahead on a number of strategic plans to generate income and solve some of the city’s long-standing problems.
One of the ventures the Jakarta administration is pinning high hopes on is a proposed ‘mega-city’, The Jakarta Post reported.
Jakarta Governor Fauzi Bowo, after a meeting with newly-elected West Java governor Ahmad Heryawan, said he was confident of a joint venture with the West Java administration to realize the mega-city concept for Greater Jakarta.
"The newly elected West Java governor is someone who understands Jakarta's problems. I believe together we can find common ground to solve these problems," Bowo said Monday.
Ahmad Heryawan, former deputy speaker of the Jakarta council from 2004 - 2009, was declared the winner of the West Java gubernatorial election on Tuesday.
The ‘mega city’ development concept would see Jakarta, several regencies in West Java (including Bogor, Depok, Bekasi and Cianjur) and Banten's Tangerang regency incorporated into a single area, to be called "Jabodetabekjur".
The concept was proposed by former Jakarta Governor Sutiyoso in 2006, as a solution to resolve long-standing problems in the capital region, including floods, waste management, transportation and urbanization.
Govt. to restrict shopping mall hours to save energy
The government plans to reduce the operating hours of malls and supermarkets in the country to save energy, Development Planning Minister Paskah Suzetta said on Thursday, Xinhua reported.
The minister said soaring prices of oil and electricity had led the government to provide more subsidies for the energy consumed by the shopping centers.
"We are discussing the proposed regulation and it will be issued in the near future," said Suzetta. He did not elaborate on how many hours the cut would be.
Suzetta said that the opening hours of the malls and shopping centers in Indonesia from morning to evening was not effective, adding that malls and supermarkets in developed countries, such as in Japan, only opened from 10:00 AM to 6 PM.
ECONOMY
Iron ore plan to boost investment
The world’s largest steelmaker, ArcelorMittal, is planning to invest around $8 billion – some reports said $10 billion – to build a new steel plant, take a stake in state-owned PT Krakatau Steel and prospect for iron ore, nickel and manganese.
ArcelorMittal has made a formal offer in a letter to President Susilo Bambang Yudhoyono, according to officials of the Indonesian Chamber of Commerce (Kadin), which has been involved in the negotiations.
Kadin was also involved in a meeting with Finance Minister Sri Mulyani Indrawati to discuss ways of trimming the government’s ballooning fuel subsidy bill, with chamber officials saying they would support an immediate 10% rise in the price of fuel as long as public transport was not affected.