Plantation industry aims big despite economic crisis

Betting on higher prices for top commodities and the emergence of new markets, the country’s plantation industry is seeking to buck the trend and expects export values this year to increase by 16 percent. Agriculture Ministry’s plantation protection director, Herdrajat, said the income from exports can be raised to US$ 21.68 billion from last year’s $18.85 billion. Meanwhile, the government also plans to revitalize up to 290,000 hectares of CPO, cacao and rubber plantations in 27 provinces this year.
Source: PA Asia - Public Affairs and CSR from The Jakarta Post, 16 March, p.13

Economic growth is still set at 4.5%

During a press conference yesterday, President Susilo Bambang Yudhoyono said although a number of countries have revised their growth target, the government and the House of Representatives (DPR) so far will not revise its target growth that has been set previously at 4.5%. One of the efforts to sustain economic growth, he added, is by maintaining the domestic consumption.
Source: Media Indonesia, PA Asia - Public Affairs and CSR from 16 March, p.13

Industries only grow 2.5%

The growth of the manufacturing industries in the first quarter of 2009 is predicted to plunge to only 2.5% compared with last year’s first quarter, namely 5.5%. This means that the total added value in the national production has dropped and if such situation continues, many manufacturing industries may collapse. According to the analysis by the Ministry of Industry, the sharp decline is caused by the weakening of several basic industries (such as wood, metal and chemical) and the decline of export of several labor-intensive industrial sectors.
Source: PA Asia - Public Affairs and CSR from Bisnis Indonesia, 17 March, p.1

The licenses of 18 malls could be revoked

The South Jakarta municipality government will summon 18 building and supermarket managers to discuss about the Regional Regulation No.2 Year 2002 on Private Market that obliges buildings and malls to provide spaces for SMEs and small vendors. The building and supermarket managers include PT Lion Superindo, PT Alfa Retailindo, PT Carrefour Indonesia, PT Matahari Putra Prima, PT Pacific Place, etc. Irawan D. Kadarman, General Affairs PT Carrefour Indonesia, said his company is trying to comply with the regulation. He admitted that Carrefour’s hypermarket in Lebak Bulus has not provided spaces for SMEs and small vendors.
Source: PA Asia - Public Affairs and CSR from Koran Tempo, 18 March, p.B1

Shell is seeking for ownership in Natuna up to 60%

Royal Dutch Shell is seeking for a 30%-60% ownership as a senior partner in the Natuna D-Alpha block as a compensation for the technology it would apply and transfer to Pertamina. President Director of PT Shell Indonesia, Darwin Silalahi said Shell does not want to become a junior partner in Natuna with only a maximum 15% ownership. Meanwhile, the Director General of Oil and Gas Evita Legowo said the final decision on the size of the block’s ownership (who gets how much) will be determined by the government later.

Master list

PT PMA may obtain favorable import duty reductions on imported production equipment, spare parts and raw materials that are not locally available. PT PMA shall submit Master List application to BKPM or the Customs and Excise Office (in certain circumstances). After the Master List is approved, then PT PMA receives an import duty reduction on the item listed in the letter to a maximum 5% duty rate.

Government establishes infrastructure financing company

The government has established financing company PT Sarana Multi Infrastruktur (SMI) which will finance infrastructure projects, Asia Pulse reported on Friday.
SMI, which is expected to start operation in April, will provide financial support for projects especially ones failing to attract investors but considered having good prospects. SMI will start with an initial capital of Rp1 trillion ($90 million) to be provided by the government, Bisnis Indonesia reported.
Farid Arif Wibowo, an official of the Fiscal Policy Agency of the Finance Ministry, said the government will issue bonds to increase the capital of SMI.
In the first phase the bond will be valued at Rp3 trillion, Wibowo said, adding up to Rp20 trillion more funds will be raised later from the market.
He said SMI will serve as a holding company, adding that the financing agent will be the Indonesia Infrastructure Financing Facility (IIFF), to be established by the government and donor consortiums.The World Bank and Asian Development Bank have pledged a loan of Rp2 trillion for IIFF and Rp1 trillion in equity from other donor agencies, he said.

CDM will be included in the electricity buying price structure

The government will include the results of the sale of CDM certificates from power plants using renewable energy in the structure of the buying price of the State Electricity Company (PLN). This plan is expected to reduce the company’s buying price US$ 0.005 per kWh so it could lower the investment allocated for environment-friendly power projects. Based on the government’s data, it could save around US$ 280 million per year only from geothermal power plants.

NSW is hampered by port of entry

The implementation of the national single window (NSW) electronic system is still hampered by the problematic process of port of entry, starting from the spatial planning, infrastructures, working mechanism inside the port that require time and money, illegal levies, and so on. The Directorate General of Customs and Excise, as the leader in NSW implementation, has planned to provide a quick solution by developing a model of customs advance trade system (CATS), to be used to reduce the disorder in Tanjung Priok port and to boost export.

Denpasar establishes CSR community

The Denpasar city administration established a corporate social responsibility (CSR) community Thursday to commemorate the 17th anniversary of it signing an MoU between the administration and corporate representatives. The Denpasar Corporate Social Responsibility Community (DCSRC) is not being launched for fund raising or philanthropic reasons but more as a coordination effort for CSR activities in the city, Denpasar Mayor IB Rai Darmawijaya Mantra said. Rai said around Rp 200 million in CSR funding would be allocated for the city and the funding would not necessary involve cash aids but could be in the form of programs such as health services.

Permanent business license

The Initial Investment Approval serves as a temporary operating license until PT PMA reaches the stage of commercial production. At that time, PT PMA shall apply for an IUT (“Permanent Business License”) to BKPM. Upon issuance of the IUT, PT PMA is authorized to conduct its activities for 30 years period.

Government to offer 15 geothermal fields for tender

The government will soon call for bids for exploration and development of 15 geothermal fields which could generate around 1,500 MW of electricity and require a total investment of $4.5 billion, Dow Jones reported. Director General of Mineral, Coal and Geothermal Resources at the Ministry of Energy and Mineral Resources, Bambang Setiawan, said the tenders will be organized by the regional governments where the fields are located.
The fields are Seulawah Agam in Aceh, Telaga Ngebel in East Java, Gunung Ungaran in Central Java, Jaboi in Aceh, Gunung Talang in West Sumatra, Blawan Ijen in East Java, Hu'u Daha in West Nusa Tenggara, Sipoholon Ria-Ria in North Sumatra, Bukit Kili in West Sumatra, Sorik Marapi-Roburan-Sampuraga in North Sumatra, Marana in Central Sulawesi, SongaWayaua in South Halmahera, Atadei in East Nusa Tenggara, Suwawa in Gorontalo, and Kaldera Danau in Banten.

Waste electricity to be sold at Rp 800 per kWh

The electricity produced from the burning of methane gas from waste in Bantar Gebang waste disposal site is offered at Rp 800 per kWh to PLN. According to the manager of the site, PT Navigat Organic Energy Ltd, such price will benefit both sides since it is less expensive than if PLN produces its own electricity with an operational cost of Rp 1,100-1,200 per kWh. The company is currently negotiating the price with PLN.

Tangerang considers regional waste management

Tangerang Regency, Tangerang City and South Tangerang City are considering to cooperate in managing waste to be processed into brickets. The brickets will be supplied for PLN in order to fulfill the requirements of its gas power plants. Meanwhile, the Tangerang Regency will also continue its waste gas sale cooperation with PT Gikoko Kogyo Indonesia, who will process the CO2 and methane gas from the waste collected by the regency.

The government invites waste processing investors

The government through the Ministry of Public Works invites the private sector to be involved in waste processing business as part of the clean development mechanism (CDM) efforts. Modern waste processing will focus on controlled landfill or sanitary landfill to be used for energy production including power plants. According to the Public Works Minister, Djoko Kirmanto, there are already five CDM development joint projects between local governments and investors, i.e. TPA (waste disposal site) Suwung Denpasar, TPA Batulayang Pontianak, TPA Sumur Batu Bekasi, TPA Sukowinatan Palembang and TPA Tamangapa Makasar. He said cooperation between local governments and the private sector is important to maximize the certified emission reduction (CER) fund received by the local government to help cover the operational cost of the disposal sites.

Highlights of the knowledge report on the property market - Colliers International Indonesia

Office: Despite the global financial storm, the office market remained resilient, showing steady occupancy of 90% and stable asking rental rates in Jakarta’s CBD. The postponement of some projects under construction as a result of financing difficulties will help regulate projected supply over the next two years. This will help ensure stability in the office market, although concerns remain about space downsizing or the postponement of expansions plans by tenants.

Apartment: Development of strata - title apartment projects has been halted due to financ­ing difficulties, so the new supply in 2009 will not be as high as predicted before the crisis. Nevertheless, concerns over substantial existing amounts of supply and the likelihood of dampened demand will cause take-up rates to fall in 2009. Nonetheless, apartment prices are expected to be relatively stable, due particularly to the unwillingness of developers to sell below their construction cost.

Retail: The market continued to see new shopping centers completed in the last quarter of 2008 against the backdrop of weakening purchasing power. Several foreign retailers are still eyeing Indonesia, which is perceived as a lucrative market, particularly given its huge popu­lation. Despite the steady occupancy of 88% in the shopping centers in the Jakarta CBD, retail developers should be cautious about the years ahead and emphasize cost efficiency for the sake of themselves and their tenants, mainly because of the financial pressure caused by negative consumer sentiment.

Industrial: Despite the significant amount of existing unsold supply of industrial land avail­able in the Greater Jakarta area, 55 hectares of industrial land was launched in the quarter under review. Overall industrial land sales in the last quarter of 2008 were the slowest of the year, although they were significantly higher than in 2007. Prices for industrial land remained stable.