Semen Gresik plans Rp 3.5t new plant

State cement producer PT Semen Gresik is planning to invest Rp 3.5 trillion (US$3.5 million) to build a new cement plant in Indarung, West Sumatra, to boost its production capacity.

“Semen Gresik subsidiary PT Semen Padang will manage the new plant,” Semen Gresik president director Dwi Soetjipto said at a memorandum of understanding signing ceremony between state electricity company PT Perusahaan Listrik Negara (PLN) and the Semen Gresik group in Jakarta, on Friday.

Dwi said the new plant’s construction would be financed using internal funds and loans.

“The new plant will be operational by the end of 2011 or at the beginning of 2012,” Dwi said, adding Semen Gresik would start building it in 2010.

According to Dwi, the new plant will be designed to produce 2.5 million metric tons of cement per year and will contribute to 10 percent of Semen Gresik Group’s total production capacity.

Semen Gresik, located in East Java, has two subsidiaries — PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi.

“The new plant’s capacity will almost match the production capacity of our two factories in Gresik and Tuban,” Dwi said.

Dwi acknowledged that Semen Gresik sales fell 3.4 percent to 8 million tons in the first half of this year.

“This drop is not as deep as the fall in national cement consumption. We hope our sales will grow in the second half,” he said.

Although its sales dropped in the first semester, the company saw a 15 percent revenue growth.

“Last year, our revenue grew by 12 percent,” he said, without elaborating on the first semester’s profit.
He said price fluctuations in the world market contributed to the company’s revenue.

Semen Gresik posted a net profit of $66.4 billion in the first quarter this year, up by 17 percent from the same period last year.

It also posted a revenue of Rp 3.22 trillion in first quarter, up by 20 percent on a year-on-year basis.
The volume of domestic sales in the first quarter reached 3.78 million tons, declining by 23 percent on a year-on-year basis.

Semen Gresik is 51 percent owned by the government. Blue Valley Holdings — a subsidiary of business conglomerate Rajawali Group — owns a 24 percent stake and the remaining 25 percent is held by retail investors.

Semen Gresik group is the largest cement producer in Indonesia, with 45 percent market share of Indonesia’s cement industry. It produces 18 million tons per year, 98 percent of its total designed capacity.

Meanwhile, State Minister for State Enterprises Sofyan Djalil suggested state cement producers increase their production capacity to fulfill the country’s growing demand for cement.

“We predict the country will need 140 million metric tons in the next 10 years,” Sofyan said.

“So far, we only produce 46 million metric tons to provide for the country’s annual consumption.”


http://www.thejakartapost.com/news/2009/07/25/semen-gresik-plans-rp-35t-new-plant.html

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Indonesia faces higher subsidy costs

Despite a forecast lower electricity production cost next year, the government proposes a higher budget for the power subsidy than this year's, because of increased national power consumption.

The Energy and Mineral Resources Ministry told a hearing with lawmakers on Thursday that the government proposed to increase the budget allocation for the electricity subsidy next year to between Rp 43.25 trillion (US$4.19 billion) and Rp 48.39 trillion, up from Rp 42.46 trillion allocated for this year.

J. Purwono, the ministry's director general for electricity and energy utilization, said the projected subsidy cost was largely based on two assumptions - Indonesia crude oil price (ICP) of between $50 and $60 per barrel and a rupiah rate of between 10,000 and 10,200 per dollar.

"The proposed subsidy is higher than the Rp 42.46 trillion allocated for this year. The increase is mainly caused by the growth of electricity consumption, which is forecast *to grow* at 6 percent next year," Purwono told lawmakers from Commission VII overseeing the energy and mineral resources ministry.

State utility PT PLN, the sole distributor of electricity, plans to use more coal to generate power next year partly due to the running of newly constructed power plants under PLN's 10,000-megawatt (MW) power program to meet power demand in Java and Bali.

Purwono said that the subsidy proposal would be incorporated into the 2010 state budget bill, along with other allocations. Thursday's hearing was part of the series of meetings to formulate government revenue and expenditure for next year.

PLN forecasts it will sell as much as 144.52 TWh (tera watt hours) of power in 2010, up from 135.99 TWh forecast to be sold this year, president director Fahmi Mochtar said.

He added PLN's average production cost would decline from Rp 962 per kWh (Kilowatt Hour) in 2009 to Rp 931 per kWh next year. "We will reduce our oil-based fuel consumption and this will reduce our costs," Fahmi said.

He said PLN expected to reduce its oil-based fuel consumption from 8.01 million kilo liters in 2009 to 4.56 million kilo liters in 2010. As a consequence, PLN consumption of coal and gas will increase.

Fahmi said that coal consump-tion would increase from 23.77 million tons in 2009 to 31.70 million tons in 2010, while gas consump-tion would increase from 313,716 Billion British Thermal units of gas (BBTU) in 2009 to 323,447 BBTU in 2010.

Although PLN's production cost will be lower next year, Fahmi said the company would still not be able to make a profit.

"Our average selling price is still lower than our average production cost," he said, adding that PLN's average electricity price was at Rp 654 per kWh.

Last year, the company suffered around Rp 13.1 trillion in losses.

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Rupiah strengthens to 10,300 level

The rupiah has strengthened to the level of Rp 10,300 against the US dollar in Jakarta inter-bank market on Monday morning, after weakening to Rp 10,400 level last week.

The rupiah was traded at Rp 10.385 against the greenback on Monday morning, compared to last week's close of Rp 10.445

Money market analyst Edwin Sinaga told Antara news agency that the strengthening of the rupiah was driven by a statement by Finance Minister Sri Mulyani Indrawati that year-on-year inflation in May would not reach 5 percent, below the government's target of 6 percent.

In addition, the market was also buoyed by the news that Indonesia's economy grew by 4.4. percent in the first quarter of this year, making the country one of a few Asian economies that posted positive growth in the first semester.

Such positive news, Edwin said, would continue to boost the rupiah.

"We are optimistic that the rupiah eventually will reach Rp 10,000 level per dollar," Edwin said.

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BI drops key rate to 7.75 percent

The Jakarta Post , Jakarta | Wed, 03/04/2009 4:50 PM | Business

Bank Indonesia (BI) has reduced its key interest rate by 50 basis points to 7.75 percent, as part of efforts to help the banking sector cope with worsening impacts of the global financial downturn, kompas.com reports.

On Wednesday, BI strategic planning and communication bureau head Didy Laksmono R. said that before deciding to reduce the rate, BI had evaluated the performance of the domestic and global economies.

“Inflation pressure was relatively low – at 0.21 percent – during February, thanks to lower fuel prices and availability of food supplies,” Didy said.

The lower prices of international commodities were another factor causing the low inflation pressure, he added.

Bank Indonesia said in a statement the economic slump was "taking a steeper turn" and developing countries were being hit by a fall in exports and negative market sentiment.

Indonesia's exports fell 36 percent in January from a year earlier, the biggest drop since 1986, due to plunging demand for natural resources and manufactured goods, the statistic's agency reported Monday.

It was the fourth straight month the central bank has cut the rate, lowering it a total of one and three quarter points from 9.5 percent since early December.

Indonesia had been struggling to bring down inflation topping 10 percent, but that figure slowed to 8.6 percent on year and 0.2 percent month-on-month in February, the bank said.

The central bank forecast a slowdown in economic growth to 4 percent in 2009, from an estimated 6.1 percent in 2008, "with considerable downside risk if global economic growth worsens even more than expected."

At the same time, Indonesia's banking system - which collapsed just over a decade ago in the Asian financial crisis - was in "stable condition," the bank said.

International reserves stand at $50.56 billion, with an additional $3 billion from government bond issues and a $2 billion World Bank loan also available. (ewd)

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Indonesia Seeks Larger Japan Currency Swap, New Pacts

By Arijit Ghosh and Patricia Lui

Feb. 5 (Bloomberg) -- Indonesia’s central bank is seeking to expand its currency swap agreement with Japan from $6 billion and is seeking new pacts to bolster the rupiah, which slumped the most in eight years in 2008.

Indonesia, which has similar agreements with China and South Korea for $3 billion each, may also initiate talks with a fourth nation, central bank Governor Boediono said, without identifying the country. The rupiah, which fell 16 percent last year, closed at 11,673 per dollar yesterday in Jakarta.

“We think the critical period is six months in which the main problem is tight liquidity and investors pulling out money to return home,” Boediono said at a dinner with local newspapers late yesterday. “In the U.S. itself there’s dollar scarcity, which is ironic.”

Bank Indonesia is boosting supply of foreign exchange as a deepening global recession pummels exports and prompts overseas investors to sell emerging-market assets. The nation’s currency reserves slid to $50.9 billion at the end of January, from $60.6 billion in July, as the central bank intervened to slow the rupiah’s decline.

“The more resources and ammunition that they have in terms of foreign exchange, the more ability the central bank would have in terms of stabilizing the currency,” said Sailesh Jha, a senior regional economist at Barclays Capital Plc in Singapore. “It would be fair to say that one possibility is to look towards the U.S.”

Kazakhstan Devalues

Kazakhstan’s central bank yesterday devalued the tenge by 18 percent, joining Russia, Ukraine and Belarus in abandoning attempts to prop up exchange rates as currency reserves dwindle. Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations plan an unscheduled meeting this month to forge a deal to pool $120 billion of foreign-exchange reserves to help defend their currencies.

A $5.5 billion so-called standby loan from Japan, Australia, the World Bank and the Asian Development Bank and $4 billion of proposed bond sales may help shore up reserves, Boediono said. The country’s foreign-exchange holdings are the 10th biggest in Asia and less than half those of Thailand.

Sales of Indonesian equities by foreign funds have exceeded purchases by $101 million this year. Exports from the $433 billion economy plunged 20 percent in December, the biggest decline since 2001.

The central bank said last week it would lend dollars to banks holding the nation’s foreign-currency denominated government debt to reduce volatility in the rupiah market.

To contact the reporter on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net

Source : www.bloomberg.com

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The worst to come in H1 of 2009: Mulyani

Aditya Suharmoko , The Jakarta Post , Jakarta | Wed, 12/03/2008 6:55 AM | Headlines

The impact of the global economic slowdown will likely peak in the first half of 2009, with exports and investments the hardest hit, Finance Minister Sri Mulyani Indrawati said Tuesday.

“In 2009, the government sees the risk to growth as very real. Exports and investments will be hit hard due to the (poor) performance of the financial sector,” Mulyani said at a hearing with the House of Representatives’ Commission XI, which oversees financial affairs.

“The impact will mainly materialize in the first half (of 2009).”

However, she said that because private consumption growth could be maintained at 5 percent next year, the economy would likely grow between 5 and 5.5 percent.

“The threat of high inflation is not real, so the level of household consumption can be held at 5 percent,” she said.

In the worst case scenario, she warned, Indonesia’s economy could slow to 4.5 percent next year.

The central bank predicts inflation in 2009 will hover between 6.5 and 7.5 percent, down from the 11.5-12.5 percent range it straddled this year. Inflation in November rose 11.68 percent from a year earlier, according to the Central Statistics Agency (BPS).

Private consumption usually makes up about 70 percent of Indonesia’s economy, with exports and investments contributing the rest.

In the third quarter of 2008, the country’s economy grew by 6.1 percent from a year earlier, the BPS reported.

Indonesia began feeling the impact of the global economic slowdown in October, when exports dropped by about 12 percent from the previous month as importing countries slashed demand.

Top global research and advisory firm, the Economist Intelligence Unit, predicted Indonesia’s economy would grow by 3.7 percent in 2009, while Swiss-based financial firm UBS projected 2.5 percent growth.

However, local economists remain upbeat the economy can grow more. Danareksa Research Institute chief researcher Purbaya Yudhi Sadewa said the economy could grow by 5.9 percent in 2009, supported by domestic demand, while renowned economist Faisal Basri forecast 5.8 percent growth.

Mulyani said the government was providing a trade financing facility to help exporters and importers. Imports of unessential consumer goods will be reduced to help local industries compete with cheap imported goods, while support for market diversification for exports will be maintained.

To support the real sector, the government will inject Rp 120 trillion (US$9.68 billion) this month and spend another Rp 90 trillion as early as next year to build infrastructure, including roads, bridges, ports, railways and telecommunications infrastructure, Mulyani said.

Rural areas will be given Rp 10.3 trillion to develop infrastructure. Agriculture subsidies have been raised from Rp 27.9 trillion this year to Rp 33.4 trillion in 2009, including Rp 17.1 trillion for fertilizer.

The government is also offering Rp 12.5 trillion in the form of waived income and value added taxes, as well as import duties, to help industries cope with the economic downturn.

Source : www.thejakartapost.com

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GM Indonesia to start new plant in 2009 despite U.S. problems

The Jakarta Post , Jakarta | Thu, 11/27/2008 11:00 AM | Business

Despite the problems back home in the United States, PT General Motor Indonesia is showing its commitment to Indonesia by laying out big plans for next year -- three new models will be released, new outlets will open and construction will start on a new plant.

While the leaders of the GM parent company are making major efforts to mobilize a bailout from the U.S. government, GM Indonesia is optimistic about its future here, managing director Mukiat Sutikno said on Wednesday.

"We're here to stay. We have no plan to withdraw investments from the country.

"We are even going to release three new models in Indonesia next year, one of which will be released no later than the first quarter of 2009," he said.

A new plant will start to be constructed next year, he said, although no exact timing was given.

At present, GM cars entering Indonesia are completely built up from plants in Thailand and Korea. As of the end of October, GM Indonesia has sold 248 Aveos, 425 Kalos, 70 Optra Magnums, 90 GM Estates and 1,469 Captivas.

Prospects in Indonesia remain very positive, he said, adding that the company had recently opened new distribution outlets in Cirebon in West Java, Jambi in Sumatra, Pontianak in Kalimantan, and Sorong in Papua.

Sales in Indonesia in the first ten months of the year stood at 2,303 units, a significant increase from the total 2007 sales of 1,400 units.

"We hope we will have sold 2,800 units by December," Mukiat said.

Still, next year's sales will likely drop by 30 percent, in line with a decline in the whole automotive industry, he said.

"Eighty percent of Indonesian customers' financing comes from credit loans and the down payments will rise to an average 40 percent of the price. This surely will slow down car purchases."

GM considers Indonesia to be one of its 11 emerging markets, along with Brazil, China, India, Malaysia, Mexico, Poland, Russia, South Africa, Thailand and Turkey.

"This means Indonesia will be one of the company's main production bases," he said.

GM Indonesia is 100 percent owned by GM Corporation. (iwp)

Source : www.thejakartapost.com

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Indo Tambangraya to invest $200m in 2009

PT Indo Tambangraya Megah (ITM), the Indonesian subsidiary of Thailand's biggest coal producer Banpu Pcl., plans to raise its capital expenditure in Indonesia by more than double next year compared to a year earlier, to increase its production capacity.

Somyot Ruchirawat, ITM's president director, said the company would spend US$200 million next year, up from $71.5 million forecast for 2008.

"The funding is from our internal budget. We would not use any loans," Ruchirawat said.

The budget will mainly be used to expand the company's mining capacity in Tandung Mayang, Kutai Kartanegara Regency in East Kalimantan, which is operated by PT Kitadin, one of ITM's subsidiaries.

"We are going to invest in equipment to increase freight capacity. This project alone will cost us about $60 million," Ruchirawat said.

He was quick to add that these figures and the size of the project could still change, if adjustments were needed due to the current financial situation.

"Because of the economic situation, we are reviewing some projects and acquisition plans to see whether what we are going to invest will satisfy our shareholders or not."

The company however will move forward with projects such as the expansion of its coal port facility in Bontang, East Kalimantan to increase handling capacity to 18.5 million tons from the current capacity of 12.5 million tons.

ITM is the fourth largest coal producer in Indonesia.

As of September this year, the company produced 13.2 million tons of coal, up from 12.9 million tons in the same period last year.

It has reduced its 2008 coal sales target to 18.1 million tons from an initial target of 19.5 tons, because of heavy rain in Kalimantan which has made mining more difficult.

The company hopes to produce 20.5 million tons of coal next year. It exports 90 percent of its production.

As the domestic obligation for coal producers will be enforced next year, ITM will increase its sales to domestic buyers, Ruchirawat said. -- Alfian

Source : www.thejakartapost.com

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RI economy grows 6.1 percent in Q3

The Jakarta Post , Jakarta | Mon, 11/17/2008 6:42 PM | Business

The global economic downturn has been blamed for slowing growth in the Indonesian economy which was recorded at 6.1 percent for the third quarter of 2008, according to data from the Central Statistics Agency (BPS).

The Q3 growth was 0.4 percent lower than the 6.5 percent recorded for same period last year, BPS data shows.

The drop in global commodity prices, including crude palm oil and aluminum, decreased Indonesia's export volume which had contributed to the slowing economic performance, Kompas.com reported Monday.

Another contributing factor mentioned was the high prices of fuels, water and electricity.

The economy was moving slower but had still recorded a growing performance thanks to high consumption during the fasting month and Idul Fitri holidays, BPS chairman Rusman Setiawan said on Monday.

During the third quarter, he said, there had been declining growth in some countries, including the United States, Japan and the United Kingdom which had recorded 1.6, 0.7 and 1 percent growth, respectively. (ewd)

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BI regulates bigger forex purchases to steady rupiah

The Jakarta Post , Jakarta | Thu, 11/13/2008 10:39 AM | Business

As the rupiah declines, the central bank will limit the purchase of foreign currencies above US$100,000 to those who can provide information to justify their transactions.

Through a new regulation to be effective starting Thursday, Bank Indonesia expects this policy to help balance demand and supply in the forex market, reduce extreme pressure on the rupiah and minimize forex purchases for speculative purposes, governor Boediono said in a statement Wednesday.

"The regulation is based on the free foreign exchange system that Indonesia now has, in which every citizen is free to own and use foreign currencies, as stipulated on the Law No. 24/1999 on foreign exchange flows and the exchange rate system," Boediono said.

"This is not a foreign exchange control policy or capital control mechanism that limits capital flows between countries,"

Individual customers and registered Indonesian and foreign companies are still allowed to freely purchase foreign currencies through spot, forward, or derivative transactions, BI said.

However, Indonesian citizens or firms wanting to purchase more than $100,000 in foreign currencies need to provide evidence of justifying transactions, such as invoices used to import goods or pay debts.

Meanwhile, foreign parties can only purchase amounts above $100,000 through spot transactions.

The regulation is expected to limit speculative purchases of currencies. With the regulation in place, BI expects that banks should be able to detect when customers purchase dollars for speculative purposes.

Analyst Farial Anwar has said that the fall of the rupiah was caused by the free foreign exchange system adopted by Indonesia.

With capital control, Farial said, the government could more easily manage the flow of short-term funds, or hot money, in and out of Indonesia.

"Hot money is harder to monitor and control and it enters only the financial sector, not the real sector. It makes us black and blue, while only 2 million people out of our 220 million population are engaging in the financial sector.

"If the rupiah stays at the current level for a long time, it will affect state financing and people will suffer," he said.

On Wednesday, the rupiah fell 1.6 percent to 11,485 per dollar as of 4:10 p.m. in Jakarta. At one point the currency reached 11,700 Wednesday, approaching the 11,900 it reached on Oct. 28, which was the lowest since 2001.

"Investors are switching from the capital market to the foreign exchange market to compensate for their losses, thus the dollar strengthens. Investors say it's a safe haven," Farial said.

According to Bloomberg, the rupiah has weakened by 14 percent in the past month, making it the worst performer among Asia's 10 most traded currencies.

-- Aditya Suharmoko

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Rupiah falls, market waits for policies to take effect

Aditya Suharmoko , The Jakarta Post , Jakarta | Thu, 10/30/2008 7:21 AM | Headlines

The rupiah continued its slide Wednesday against the U.S. dollar, with the market unresponsive to the government’s newly launched set of fiscal policies, waiting for them to take effect.

The rupiah fell to Rp 11,025 per dollar at 5:15 p.m. in Jakarta, from Rp 10,900 at 4:19 p.m. on Tuesday, Bloomberg reported.

“The policies will take time (to turn market sentiment around), but they did spark positive sentiment early on,” said Purbaya Yudhi Sadewa, Danareksa Research Institute head of research.

“I think the (government’s) moves are good; we’ll just wait for the implementation.”

During morning trading, the rupiah climbed to Rp 10,400 per dollar, but lost steam later on.
“The rupiah can’t rebound in a day. There’s no one-day cure for (market) sentiment,” Purbaya said.

He added the government should implement its policies, including buying back government bonds and ordering state-run companies to place their foreign reserves — including export proceeds — in local banks, to help boost the rupiah.

“If the implementation works, the sentiment will change,” he said, calling the 10 policies “far more realistic” than the 10 unveiled by President Susilo Bambang Yudhoyono on Oct. 6.

The earlier policies included maintaining economic growth at above 6 percent and doing business as usual, which economists deemed unrealistic and unapplicable.

The new policies were announced Tuesday by the government, in a bid to bolster foreign reserves and prop up the rupiah.

They include the exercising of currency swap agreements with the central banks of China, South Korea and Japan, if needed.

Purbaya said if the government and the central bank started to buy back government bonds, market sentiment would rise.

Currency analyst Farial Anwar, however, said the policies were good but did not address the main problems.

“There are two problems: Free capital flow and free currency traders,” he said. “The government is supposed to limit the flow of hot money entering the country and the sales of dollars.”

By adopting a capital control, Farial went on, the government could manage the flow of investment-oriented money, or hot money, into and out of Indonesia.

Source : www.thejakartapost.com

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