The Jakarta Globe RSS: Business http://www.thejakartaglobe.com 2013 The Jakarta Globe Your City, Your World Wed, 27 Aug 2014 07:46:29 +0000 en-US hourly 1 http://www.thejakartaglobe.com/images/jakarta-globe.gif http://www.thejakartaglobe.com China Says to Let Foreign Investors Set Up Hospitals http://www.thejakartaglobe.com/?p=317876 Wed, 27 Aug 2014 09:48:33 +0700 Beijing. China will allow foreign investors for the first time ever to set up hospitals wholly owned by them in seven cities or provinces, the Chinese trade ministry said on Wednesday. One of the hospitals has already been established in the Shanghai free trade zone, the Ministry of Commerce said in an online statement. Reuters]]> Beijing. China will allow foreign investors for the first time ever to set up hospitals wholly owned by them in seven cities or provinces, the Chinese trade ministry said on Wednesday. One of the hospitals has already been established in the Shanghai free trade zone, the Ministry of Commerce said in an online statement. Reuters]]> http://www.thejakartaglobe.com/?p=317876 Indonesian Coal Firms, Fearing Mass Failures, Want Trade Rules Reviewed http://www.thejakartaglobe.com/?p=317820 Tue, 26 Aug 2014 22:17:48 +0700 This file photo taken on November 10, 2013, shows a barge on the river of Mahakam to load coal from the mining area in Samarinda, East Kalimantan. (AFP Photo/Bay Ismoyo) This file photo taken on November 10, 2013, shows a barge on the river of Mahakam to load coal from the mining area in Samarinda, East Kalimantan. (AFP Photo/Bay Ismoyo)[/caption] Jakarta. Indonesia’s coal industry is pushing the government to roll back new trade rules that it says will drive firms into the ground and rule out any chance of higher shipments next year from the world’s top exporter of thermal coal. The rules, intended to rein in illegal operations, force coal miners to register with the central government and make royalty payments upfront before they are allowed to export. But the change — coming as the Southeast Asian country pushes to limit coal output to safeguard future energy needs — is piling pressure on a sector that faces at least another year of depressed prices because of a global oversupply, the Indonesian Coal Mining Association said. “A lot of companies will die because of cash flow problems ... The full impact will be seen in 2015. Usually the [export] number is always increasing significantly, but this will stop that,” Bob Kamandanu, chairman of the association, told Reuters. He expected coal exports of around 350 million metric tons in 2015, broadly the same as this year. “They are trying to kill the rats but they are killing the chicken that laid the golden egg,” Kamandanu said. “I’m trying to convince the government that this will kill everyone.” However, according to Sukhyar, Indonesia’s director-general of coal and minerals, the new export rules would have a minimal impact on shipments. “Perhaps a little, but not major,” he said. The price of Asian benchmark Newcastle coal has dropped around 20 percent this year, hitting $69.27 a ton in the week to Aug. 22, its lowest level since late 2009, due to worries about growth in demand from China. Disputes with miners According to the coal association, the new export rules would contravene contracts signed with the government by miners that account for about two-thirds of national output. The government already faces international arbitration over a separate rule restricting mineral exports introduced in January that US-based Newmont Mining has said is in breach of its contract. Fellow US miner Freeport-McMoRan had also challenged the rule but reached a deal with the government last month. The association hopes the administration of president-elect Joko Widodo, due to take office on Oct. 21, will review coal policy, said Pandu Sjahrir, who chairs its commercial committee. “We are talking with the current trade minister to suggest they wait until the next government because obviously this is very contentious,” he said. “Once you get a very strong team, people who truly understand the industry, that should be helpful because they know the pain we go through,” Sjahrir said, adding he saw no reason for the new government not to roll back the rule. Last week the government announced it would delay implementation of the regulation by one month from Sept. 1 after only a handful of firms registered. “The backlog is quite significant,” Sjahrir said, noting that smaller firms would find it more difficult to get government approval. “Getting those signatures is not very easy, even if you’ve complied with everything.” Data on Friday from the Financial Services Authority (OJK) showed that non-performing loans to the mining sector had more than doubled to 2.49 percent in June from 0.99 percent a year before, showing the impact of the downturn in prices. Banks have been cutting exposure to the sector, with loans to the mining sector growing by 6.97 percent over the same period, whereas overall credit grew 17.2 percent. The coal association says it was taken by surprise by the changes to the royalty payment structure, which would add to members’ cash flow problems. “Effectively you are financing the government a month ahead, and that will affect cash flows for all businesses,” Sjahrir said. Previously firms only had to pay royalties to the government after their coal had been handed over to a customer and some could pay up to three months after transactions, he said. Reuters]]> This file photo taken on November 10, 2013, shows a barge on the river of Mahakam to load coal from the mining area in Samarinda, East Kalimantan. (AFP Photo/Bay Ismoyo) This file photo taken on November 10, 2013, shows a barge on the river of Mahakam to load coal from the mining area in Samarinda, East Kalimantan. (AFP Photo/Bay Ismoyo)[/caption] Jakarta. Indonesia’s coal industry is pushing the government to roll back new trade rules that it says will drive firms into the ground and rule out any chance of higher shipments next year from the world’s top exporter of thermal coal. The rules, intended to rein in illegal operations, force coal miners to register with the central government and make royalty payments upfront before they are allowed to export. But the change — coming as the Southeast Asian country pushes to limit coal output to safeguard future energy needs — is piling pressure on a sector that faces at least another year of depressed prices because of a global oversupply, the Indonesian Coal Mining Association said. “A lot of companies will die because of cash flow problems ... The full impact will be seen in 2015. Usually the [export] number is always increasing significantly, but this will stop that,” Bob Kamandanu, chairman of the association, told Reuters. He expected coal exports of around 350 million metric tons in 2015, broadly the same as this year. “They are trying to kill the rats but they are killing the chicken that laid the golden egg,” Kamandanu said. “I’m trying to convince the government that this will kill everyone.” However, according to Sukhyar, Indonesia’s director-general of coal and minerals, the new export rules would have a minimal impact on shipments. “Perhaps a little, but not major,” he said. The price of Asian benchmark Newcastle coal has dropped around 20 percent this year, hitting $69.27 a ton in the week to Aug. 22, its lowest level since late 2009, due to worries about growth in demand from China. Disputes with miners According to the coal association, the new export rules would contravene contracts signed with the government by miners that account for about two-thirds of national output. The government already faces international arbitration over a separate rule restricting mineral exports introduced in January that US-based Newmont Mining has said is in breach of its contract. Fellow US miner Freeport-McMoRan had also challenged the rule but reached a deal with the government last month. The association hopes the administration of president-elect Joko Widodo, due to take office on Oct. 21, will review coal policy, said Pandu Sjahrir, who chairs its commercial committee. “We are talking with the current trade minister to suggest they wait until the next government because obviously this is very contentious,” he said. “Once you get a very strong team, people who truly understand the industry, that should be helpful because they know the pain we go through,” Sjahrir said, adding he saw no reason for the new government not to roll back the rule. Last week the government announced it would delay implementation of the regulation by one month from Sept. 1 after only a handful of firms registered. “The backlog is quite significant,” Sjahrir said, noting that smaller firms would find it more difficult to get government approval. “Getting those signatures is not very easy, even if you’ve complied with everything.” Data on Friday from the Financial Services Authority (OJK) showed that non-performing loans to the mining sector had more than doubled to 2.49 percent in June from 0.99 percent a year before, showing the impact of the downturn in prices. Banks have been cutting exposure to the sector, with loans to the mining sector growing by 6.97 percent over the same period, whereas overall credit grew 17.2 percent. The coal association says it was taken by surprise by the changes to the royalty payment structure, which would add to members’ cash flow problems. “Effectively you are financing the government a month ahead, and that will affect cash flows for all businesses,” Sjahrir said. Previously firms only had to pay royalties to the government after their coal had been handed over to a customer and some could pay up to three months after transactions, he said. Reuters]]> http://www.thejakartaglobe.com/?p=317820 Indonesia’s President-Elect Said to Consider Overhaul of Tax System http://www.thejakartaglobe.com/?p=317816 Tue, 26 Aug 2014 22:10:58 +0700 Piles of rupiah notes are stacked at Bank Mandiri in this July 23, 2014 photo. (Antara Photo/Yudhi Mahatma) Piles of rupiah notes are stacked at Bank Mandiri in this July 23, 2014 photo. (Antara Photo/Yudhi Mahatma)[/caption] Jakarta. Indonesia’s president-elect, Joko Widodo, and his transition team are considering setting up an autonomous tax office in a drive to boost state income in Southeast Asia’s largest economy, a senior advisor to Joko told Reuters. The plan would separate the taxation and customs department from the Finance Ministry and place it under the control of the president’s office, similar to the US Internal Revenue Service, said Luhut Panjaitan, a key advisor to Joko’s transition team and contender to be chief economics minister. Since mid-2012, tax revenue in the Group of 20 economy has been weak, mostly due to declining export performance. With economic growth at its slowest since 2009, the government projects tax revenue this year to miss its target of Rp 1,246 trillion ($106 billion). Government spending is capped for several sectors, including more than $20 billion for a fuel subsidy that economists argue benefited the rich more than the poor, leaving Joko with limited fiscal space to change things. “How can you do something if you don’t have much money in your pocket?” asked Panjaitan. Joko has said he wants to phase out the subsidy and reallocate the funds to better spending. His first move will be to ask outgoing President Susilo Bambang Yudhoyono to raise the price of fuel before he takes office on Oct. 20. By establishing the new tax office and improving efficiency, the new government hopes to collect an extra Rp 400 trillion for government coffers, Panjaitan said. Over his five-year term, Joko’s administration wants to double the tax revenue from current levels, by encouraging more people to pay up. Just 25 million Indonesians are registered as taxpayers, from among a population of more than 240 million. To fight tax avoidance, Panjaitan said, tax rates will be cut to make Indonesia’s rate level with that of neighboring Singapore. But in a country where bureaucracy often holds back policy changes for years, the new tax office plan may not be easy to execute. Changes to tax administration require a revision in tax laws, state income laws and money laundering laws, said Wahju Tumakaka, a spokesman for the existing tax office. “The issue is not whether or not to separate the tax office, but what kind of tax administration you want to have,” Tumakaka said. “If we’re going to mold a new office, ideally we need three years to shape the structure and configure the information technology system.” Reuters]]> Piles of rupiah notes are stacked at Bank Mandiri in this July 23, 2014 photo. (Antara Photo/Yudhi Mahatma) Piles of rupiah notes are stacked at Bank Mandiri in this July 23, 2014 photo. (Antara Photo/Yudhi Mahatma)[/caption] Jakarta. Indonesia’s president-elect, Joko Widodo, and his transition team are considering setting up an autonomous tax office in a drive to boost state income in Southeast Asia’s largest economy, a senior advisor to Joko told Reuters. The plan would separate the taxation and customs department from the Finance Ministry and place it under the control of the president’s office, similar to the US Internal Revenue Service, said Luhut Panjaitan, a key advisor to Joko’s transition team and contender to be chief economics minister. Since mid-2012, tax revenue in the Group of 20 economy has been weak, mostly due to declining export performance. With economic growth at its slowest since 2009, the government projects tax revenue this year to miss its target of Rp 1,246 trillion ($106 billion). Government spending is capped for several sectors, including more than $20 billion for a fuel subsidy that economists argue benefited the rich more than the poor, leaving Joko with limited fiscal space to change things. “How can you do something if you don’t have much money in your pocket?” asked Panjaitan. Joko has said he wants to phase out the subsidy and reallocate the funds to better spending. His first move will be to ask outgoing President Susilo Bambang Yudhoyono to raise the price of fuel before he takes office on Oct. 20. By establishing the new tax office and improving efficiency, the new government hopes to collect an extra Rp 400 trillion for government coffers, Panjaitan said. Over his five-year term, Joko’s administration wants to double the tax revenue from current levels, by encouraging more people to pay up. Just 25 million Indonesians are registered as taxpayers, from among a population of more than 240 million. To fight tax avoidance, Panjaitan said, tax rates will be cut to make Indonesia’s rate level with that of neighboring Singapore. But in a country where bureaucracy often holds back policy changes for years, the new tax office plan may not be easy to execute. Changes to tax administration require a revision in tax laws, state income laws and money laundering laws, said Wahju Tumakaka, a spokesman for the existing tax office. “The issue is not whether or not to separate the tax office, but what kind of tax administration you want to have,” Tumakaka said. “If we’re going to mold a new office, ideally we need three years to shape the structure and configure the information technology system.” Reuters]]> http://www.thejakartaglobe.com/?p=317816 Newmont Withdraws Mining Arbitration Case Against Indonesia http://www.thejakartaglobe.com/?p=317802 Tue, 26 Aug 2014 22:58:48 +0700 Trucks carry ore from stockpiles at Newmont Mining's copper and gold mine on Indonesia's Sumbawa island in this Sept. 21, 2012 file photo. (Reuters Photo/Neil Chatterjee/File) Trucks carry ore from stockpiles at Newmont Mining's copper and gold mine on Indonesia's Sumbawa island in this Sept. 21, 2012 file photo. (Reuters Photo/Neil Chatterjee/File)[/caption] [Updated at 11 p.m. on Tuesday, Aug. 26, 2014] Jakarta. Newmont Mining has withdrawn an international arbitration filing against the Indonesian government, government and company officials said on Tuesday, indicating a possible breakthrough in a seven-month dispute that halted exports. Newmont’s Indonesian chief executive Martiono Hadianto said the mining giant had reached a “constructive solution” over new mining rules and expected to resume production at its copper mine soon. “The decision to discontinue and withdraw arbitration comes after commitments from senior government officials to open formal negotiations to conclude a Memorandum of Understanding (MoU) with PTNNT [PT Newmont Nusa Tenggara] upon cessation of the arbitration claim,” the company said in a statement late on Tuesday. “Signing of a MoU with the government would be followed by the safe ramp-up of copper concentrate production and exports from Batu Hijau.” US-based Newmont, which declared force majeure at its Batu Hijau copper mine in June and then filed for arbitration in July, has been in a dispute with the Indonesian government over an export tax imposed in January that the US-based miner says conflicts with its mining contract. The controversial export tax was part of government moves to force all miners to develop local mineral-processing facilities, which would bring bigger returns for Indonesia from its mineral resources. The government has yet to receive an official letter from Newmont, said Sukhyar, director-general of coal and minerals at the mining ministry, adding that Newmont still needed to negotiate a MoU before exports could be resumed. Sukhyar said Newmont had agreed to pay an export tax but that further negotiations were needed over royalties. Chief Economics Minister Chairul Tanjung is expected to make an announcement on Newmont’s arbitration on Wednesday, said Susyanto, the director of the law bureau for the mines ministry. Mining industry executives in Indonesia have balked at the idea of developing downstream industries and building smelters, citing a lack of power and infrastructure in remote areas where mines are often located. Relations tested The relationship between Newmont and the Indonesian government has been severely tested during the dispute, with outgoing president Susilo Bambang Yudhoyono criticizing the company’s methods. In contrast, President-elect Joko Widodo, who will replace Yudhoyono in October, said he wanted to sit down with mining companies in a bid to resolve the row over policies. It is not known whether Joko was involved in the talks that led to Newmont’s withdrawal of its arbitration case. Before the new export rules, Newmont forecast total output of copper in concentrate would amount to 110,000 to 125,000 metric tons from its Indonesian mine this year. Shares of the Denver, Colorado-based gold and copper miner were up just over 1 percent at 1540 GMT. Freeport-McMoRan’s Indonesian unit resumed exports earlier this month after clinching a deal and signing an MoU with the government in July. Both Freeport and Newmont, which account for 97 percent of Indonesia’s copper output, had previously argued they should be exempt from the tax, which kicks in at 25 percent and rises to 60 percent in the second half of 2016, before a total concentrate export ban in 2017. Freeport agreed to a much reduced export tax rate of 7.5 percent, which will fall further depending on its progress in the construction of a domestic copper smelter. Reuters  ]]> Trucks carry ore from stockpiles at Newmont Mining's copper and gold mine on Indonesia's Sumbawa island in this Sept. 21, 2012 file photo. (Reuters Photo/Neil Chatterjee/File) Trucks carry ore from stockpiles at Newmont Mining's copper and gold mine on Indonesia's Sumbawa island in this Sept. 21, 2012 file photo. (Reuters Photo/Neil Chatterjee/File)[/caption] [Updated at 11 p.m. on Tuesday, Aug. 26, 2014] Jakarta. Newmont Mining has withdrawn an international arbitration filing against the Indonesian government, government and company officials said on Tuesday, indicating a possible breakthrough in a seven-month dispute that halted exports. Newmont’s Indonesian chief executive Martiono Hadianto said the mining giant had reached a “constructive solution” over new mining rules and expected to resume production at its copper mine soon. “The decision to discontinue and withdraw arbitration comes after commitments from senior government officials to open formal negotiations to conclude a Memorandum of Understanding (MoU) with PTNNT [PT Newmont Nusa Tenggara] upon cessation of the arbitration claim,” the company said in a statement late on Tuesday. “Signing of a MoU with the government would be followed by the safe ramp-up of copper concentrate production and exports from Batu Hijau.” US-based Newmont, which declared force majeure at its Batu Hijau copper mine in June and then filed for arbitration in July, has been in a dispute with the Indonesian government over an export tax imposed in January that the US-based miner says conflicts with its mining contract. The controversial export tax was part of government moves to force all miners to develop local mineral-processing facilities, which would bring bigger returns for Indonesia from its mineral resources. The government has yet to receive an official letter from Newmont, said Sukhyar, director-general of coal and minerals at the mining ministry, adding that Newmont still needed to negotiate a MoU before exports could be resumed. Sukhyar said Newmont had agreed to pay an export tax but that further negotiations were needed over royalties. Chief Economics Minister Chairul Tanjung is expected to make an announcement on Newmont’s arbitration on Wednesday, said Susyanto, the director of the law bureau for the mines ministry. Mining industry executives in Indonesia have balked at the idea of developing downstream industries and building smelters, citing a lack of power and infrastructure in remote areas where mines are often located. Relations tested The relationship between Newmont and the Indonesian government has been severely tested during the dispute, with outgoing president Susilo Bambang Yudhoyono criticizing the company’s methods. In contrast, President-elect Joko Widodo, who will replace Yudhoyono in October, said he wanted to sit down with mining companies in a bid to resolve the row over policies. It is not known whether Joko was involved in the talks that led to Newmont’s withdrawal of its arbitration case. Before the new export rules, Newmont forecast total output of copper in concentrate would amount to 110,000 to 125,000 metric tons from its Indonesian mine this year. Shares of the Denver, Colorado-based gold and copper miner were up just over 1 percent at 1540 GMT. Freeport-McMoRan’s Indonesian unit resumed exports earlier this month after clinching a deal and signing an MoU with the government in July. Both Freeport and Newmont, which account for 97 percent of Indonesia’s copper output, had previously argued they should be exempt from the tax, which kicks in at 25 percent and rises to 60 percent in the second half of 2016, before a total concentrate export ban in 2017. Freeport agreed to a much reduced export tax rate of 7.5 percent, which will fall further depending on its progress in the construction of a domestic copper smelter. Reuters  ]]> http://www.thejakartaglobe.com/?p=317802 Market Falls Further Over Fuel Supply http://www.thejakartaglobe.com/business/market-falls-fuel-supply/ Tue, 26 Aug 2014 21:35:30 +0700 Jakarta. Indonesia’s main stock index slid further on Tuesday, posting a 1.4 percent loss since last Thursday’s rally, reflecting growing concern among investors over the supply of subsidized fuel. The Jakarta Composite Index (JCI) slipped 0.74 percent, or 38.4 points, to 5,146.552. About 5.6 billion shares, or Rp 5.4 trillion ($461 million), changed hands on the Indonesia Stock Exchange (IDX). Decliners beat gainers by 211 by 91. Foreign investors made up 43 percent of the trading activity. They sold Rp 202.2 billion more in shares than they bought. Queues appeared in several cities after Pertamina reduced supplies to gas stations, in an effort maintain subsidized fuel stocks until the end of the year. Consumers paying for costlier non-subsidized fuel could stoke inflation, which in turn reduces the value of rupiah denominated assets such as stocks and bonds. All sectors closed lower on Tuesday, as property sector shares fell 1.99 percent. Property developer Summarecon Agung lost 5.45 percent to Rp 1,300. Lippo Karawaci, the property arm of the Lippo Group, fell 4.02 percent to Rp 1,075. State-owned Semen Indonesia, the country’s biggest cement manufacturer, fell 1.94 percent to Rp 16,450, while cement maker Holcim Indonesia lost 1.52 percent to Rp 2,952. Yield on the government’s 10-year bonds rose to 8.3423 percent on Tuesday from 8.3330 percent on Monday, according to the Indonesia Bond Pricing Agency.]]> Jakarta. Indonesia’s main stock index slid further on Tuesday, posting a 1.4 percent loss since last Thursday’s rally, reflecting growing concern among investors over the supply of subsidized fuel. The Jakarta Composite Index (JCI) slipped 0.74 percent, or 38.4 points, to 5,146.552. About 5.6 billion shares, or Rp 5.4 trillion ($461 million), changed hands on the Indonesia Stock Exchange (IDX). Decliners beat gainers by 211 by 91. Foreign investors made up 43 percent of the trading activity. They sold Rp 202.2 billion more in shares than they bought. Queues appeared in several cities after Pertamina reduced supplies to gas stations, in an effort maintain subsidized fuel stocks until the end of the year. Consumers paying for costlier non-subsidized fuel could stoke inflation, which in turn reduces the value of rupiah denominated assets such as stocks and bonds. All sectors closed lower on Tuesday, as property sector shares fell 1.99 percent. Property developer Summarecon Agung lost 5.45 percent to Rp 1,300. Lippo Karawaci, the property arm of the Lippo Group, fell 4.02 percent to Rp 1,075. State-owned Semen Indonesia, the country’s biggest cement manufacturer, fell 1.94 percent to Rp 16,450, while cement maker Holcim Indonesia lost 1.52 percent to Rp 2,952. Yield on the government’s 10-year bonds rose to 8.3423 percent on Tuesday from 8.3330 percent on Monday, according to the Indonesia Bond Pricing Agency.]]> http://www.thejakartaglobe.com/business/market-falls-fuel-supply/ Tanri: Indonesian SOEs Need to Go Global, Break Free of Corrupt Officials http://www.thejakartaglobe.com/business/tanri-indonesian-soes-need-go-global-break-free-corrupt-officials/ Tue, 26 Aug 2014 21:45:16 +0700 Jakarta. Indonesia’s next government needs to put more effort into enabling the country’s state-owned enterprises to have a greater role in the global market, former state-owned enterprise minister Tanri Abeng said in Jakarta on Tuesday. Tanri, whose career encompasses a wealth of experience in top executive positions in government, multinationals and major national corporations for more than three decades, said some state enterprises could be called “global players,” and at least five chief executives at SOEs could be described as “global CEOs.” Indonesia is home to 141 state enterprises with total assets of Rp 2,500 trillion ($213 billion). “But please, don’t let SOEs be politicized or interfered with by bureaucrats. They must be free from their attachment to the state finance law. Only then can SOEs spread their wings,” said Tanri, Indonesia’s first SOE minister installed in the last year of former strongman Suharto’s administration in 1998. Tanri was speaking in a seminar held by Investor Daily, a sister publication of the Jakarta Globe, based on the theme “Pushing SOEs to Go International.” Some of the country’s SOEs that have expanded their global reach include Semen Indonesia, which bought control of Thang Long Cement of Vietnam at the end of 2012. Semen Indonesia, the bigger cement producer in Indonesia, has a total market capitalization of $8.3 billion. It is still seeking more acquisitions, reportedly in Myanmar. Non-listed energy company Pertamina has made it into the Fortune Global 500 after booking up to $70.9 billion in revenue and $2.8 billion in net income in 2012. Pertamina has acquired oil and gas fields overseas, as part of its effort to become a global energy company. In Indonesia, SOEs contribute to state coffers through their dividends; on occasion, when the government is in need for funds, it can sell shares in the SOEs to strategic investors. But the SOEs have long been a cash cow for corrupt officials and parties, which hurts their efforts to expand abroad. “Efforts at good corporate governance have been quite good so far. But what hasn’t been run is creating sectoral holding companies,” said Tanri, who since 2004 has served as chairman at Telekomunikasi Indonesia, or Telkom. Telkom has expanded into Southeast Asia and as far as the Middle East.]]> Jakarta. Indonesia’s next government needs to put more effort into enabling the country’s state-owned enterprises to have a greater role in the global market, former state-owned enterprise minister Tanri Abeng said in Jakarta on Tuesday. Tanri, whose career encompasses a wealth of experience in top executive positions in government, multinationals and major national corporations for more than three decades, said some state enterprises could be called “global players,” and at least five chief executives at SOEs could be described as “global CEOs.” Indonesia is home to 141 state enterprises with total assets of Rp 2,500 trillion ($213 billion). “But please, don’t let SOEs be politicized or interfered with by bureaucrats. They must be free from their attachment to the state finance law. Only then can SOEs spread their wings,” said Tanri, Indonesia’s first SOE minister installed in the last year of former strongman Suharto’s administration in 1998. Tanri was speaking in a seminar held by Investor Daily, a sister publication of the Jakarta Globe, based on the theme “Pushing SOEs to Go International.” Some of the country’s SOEs that have expanded their global reach include Semen Indonesia, which bought control of Thang Long Cement of Vietnam at the end of 2012. Semen Indonesia, the bigger cement producer in Indonesia, has a total market capitalization of $8.3 billion. It is still seeking more acquisitions, reportedly in Myanmar. Non-listed energy company Pertamina has made it into the Fortune Global 500 after booking up to $70.9 billion in revenue and $2.8 billion in net income in 2012. Pertamina has acquired oil and gas fields overseas, as part of its effort to become a global energy company. In Indonesia, SOEs contribute to state coffers through their dividends; on occasion, when the government is in need for funds, it can sell shares in the SOEs to strategic investors. But the SOEs have long been a cash cow for corrupt officials and parties, which hurts their efforts to expand abroad. “Efforts at good corporate governance have been quite good so far. But what hasn’t been run is creating sectoral holding companies,” said Tanri, who since 2004 has served as chairman at Telekomunikasi Indonesia, or Telkom. Telkom has expanded into Southeast Asia and as far as the Middle East.]]> http://www.thejakartaglobe.com/business/tanri-indonesian-soes-need-go-global-break-free-corrupt-officials/ Lawmakers Approve Revised Geothermal Law http://www.thejakartaglobe.com/business/lawmakers-approve-revised-geothermal-law/ Tue, 26 Aug 2014 21:52:23 +0700 Jakarta. Members of the House of Representatives finally approved a revised geothermal law in a plenary meeting on Tuesday, with the long-awaited decision expected to encourage the exploitation of geothermal energy in Indonesia. Once the president signs the revised law, it will replace the one issued in 2003. Indonesia only harnesses 5 percent of its estimated 28,617 megawatts of geothermal power as the previous law did not allow for the exploitation of geothermal sources in the country’s conservation forests. Other issues that hampered the optimal use of this energy source include pricing considered unfavorable by investors, and opposition from indigenous peoples. According to Ridha Mulyana, director general for renewable energy and energy conservation at the Ministry of Energy and Mineral Resources, there are several key changes in the revised geothermal law. In terms of the revised law, geothermal exploitation will no longer be considered part of mining activities, Ridha said, adding “With this we can accelerate geothermal energy development.” The old law classified the exploitation of geothermal energy as a mining activity, thus making conservation areas, where much of the country’s geothermal sources are concentrated, off-limits. Another important change is that the power to issue permits or conduct tenders related to geothermal energy exploitation is returned to the central government, Ridha added. Previously, regional governments had the authority to issue such permits or hold tenders, which resulted in bureaucratic complications and often overlap with the central government regulations. Regional governments, however, will get production bonuses taken directly from the electricity output and they will also have the authority to obtain other financial benefits from geothermal energy, he said. Ridha said the Ministry of Energy and Mineral Resources will have to formulate new regulations now for implementing the revised law. “We expect to complete a government regulation on production bonuses this year,” he said. Nur Pamudji, president director of state utility firm Perusahaan Listrik Negara, welcomed the revised geothermal law. “It would encourage the development of energy sources as previously off-limits areas can now be exploited,” he said. Lawmaker Nazarudin Kiemas, who heads the committee on the geothermal bill, added that the passage of the revised law would lead to an increase in investment in geothermal energy as investors will now have better legal certainty. The Ministry of Energy and Mineral Resources estimates that 42 percent of the nation’s geothermal resources are located in protected forest areas.]]> Jakarta. Members of the House of Representatives finally approved a revised geothermal law in a plenary meeting on Tuesday, with the long-awaited decision expected to encourage the exploitation of geothermal energy in Indonesia. Once the president signs the revised law, it will replace the one issued in 2003. Indonesia only harnesses 5 percent of its estimated 28,617 megawatts of geothermal power as the previous law did not allow for the exploitation of geothermal sources in the country’s conservation forests. Other issues that hampered the optimal use of this energy source include pricing considered unfavorable by investors, and opposition from indigenous peoples. According to Ridha Mulyana, director general for renewable energy and energy conservation at the Ministry of Energy and Mineral Resources, there are several key changes in the revised geothermal law. In terms of the revised law, geothermal exploitation will no longer be considered part of mining activities, Ridha said, adding “With this we can accelerate geothermal energy development.” The old law classified the exploitation of geothermal energy as a mining activity, thus making conservation areas, where much of the country’s geothermal sources are concentrated, off-limits. Another important change is that the power to issue permits or conduct tenders related to geothermal energy exploitation is returned to the central government, Ridha added. Previously, regional governments had the authority to issue such permits or hold tenders, which resulted in bureaucratic complications and often overlap with the central government regulations. Regional governments, however, will get production bonuses taken directly from the electricity output and they will also have the authority to obtain other financial benefits from geothermal energy, he said. Ridha said the Ministry of Energy and Mineral Resources will have to formulate new regulations now for implementing the revised law. “We expect to complete a government regulation on production bonuses this year,” he said. Nur Pamudji, president director of state utility firm Perusahaan Listrik Negara, welcomed the revised geothermal law. “It would encourage the development of energy sources as previously off-limits areas can now be exploited,” he said. Lawmaker Nazarudin Kiemas, who heads the committee on the geothermal bill, added that the passage of the revised law would lead to an increase in investment in geothermal energy as investors will now have better legal certainty. The Ministry of Energy and Mineral Resources estimates that 42 percent of the nation’s geothermal resources are located in protected forest areas.]]> http://www.thejakartaglobe.com/business/lawmakers-approve-revised-geothermal-law/ Jakarta Office Space to Increase, But Not Upscale Homes: Report http://www.thejakartaglobe.com/business/jakarta-office-space-increase-upscale-homes-report/ Tue, 26 Aug 2014 21:17:49 +0700 Jakarta. Foreign investors seeking to expand their presence in Indonesia over the next four years will find ample office options to chose from in Jakarta, but housing for their executives will be harder to come by, according to a report from global real estate services firm Colliers International. While total office space in Jakarta increased by just 1 percent in the first half this year, the capital will see a cumulative 10.7 million square meters of new office space built by 2018, up 51 percent from 7.1 million square meters today, Colliers said in its report on Wednesday. That projection assumes 74 buildings that are now under construction or being planned will be completed on time, Colliers said. The increase will result in drop in office occupancy to under 90 percent from 96 percent at the end of the first half. “A substantial supply projection in the CBD will inevitably have a big impact on the weakening figure of asking base rental and occupancy rates,” the report said. Average asking base rental rates rose to Rp 252,114 ($21.54) per square meter a month in the first half, up 2 percent year-on-year. The asking base is dollars rose 4.5 percent to $36.30 a square meter a month. Demand for new office space is usually boosted by a surge in foreign direct investment. Foreign investors pumped Rp 78 trillion, or $7.4 billion, into the country between April and June. FDI in the second quarter climbed 16.9 percent from last year and 8.3 percent from the previous quarter, the Investment Coordinating Board says. Multinational corporations’ expansion in Indonesia has also driven up demand for homes for their upper-management expatriate staff. But supply of such houses, “particularly in preferred areas such as Kebayoran Baru, Pondok Indah, Kemang, Cipete, Kuningan and Menteng, is limited due to the continuing demand and slow supply,” Colliers said. “Meager land availability in preferred expatriate locations has also restricted the number of new houses,” it added. Colliers also noted that retail space supply in Jakarta and the capital’s satellite cities remained steady at 6.56 million square meters in the first half of this year, driving up asking base rental rates by 11 percent in those areas.]]> Jakarta. Foreign investors seeking to expand their presence in Indonesia over the next four years will find ample office options to chose from in Jakarta, but housing for their executives will be harder to come by, according to a report from global real estate services firm Colliers International. While total office space in Jakarta increased by just 1 percent in the first half this year, the capital will see a cumulative 10.7 million square meters of new office space built by 2018, up 51 percent from 7.1 million square meters today, Colliers said in its report on Wednesday. That projection assumes 74 buildings that are now under construction or being planned will be completed on time, Colliers said. The increase will result in drop in office occupancy to under 90 percent from 96 percent at the end of the first half. “A substantial supply projection in the CBD will inevitably have a big impact on the weakening figure of asking base rental and occupancy rates,” the report said. Average asking base rental rates rose to Rp 252,114 ($21.54) per square meter a month in the first half, up 2 percent year-on-year. The asking base is dollars rose 4.5 percent to $36.30 a square meter a month. Demand for new office space is usually boosted by a surge in foreign direct investment. Foreign investors pumped Rp 78 trillion, or $7.4 billion, into the country between April and June. FDI in the second quarter climbed 16.9 percent from last year and 8.3 percent from the previous quarter, the Investment Coordinating Board says. Multinational corporations’ expansion in Indonesia has also driven up demand for homes for their upper-management expatriate staff. But supply of such houses, “particularly in preferred areas such as Kebayoran Baru, Pondok Indah, Kemang, Cipete, Kuningan and Menteng, is limited due to the continuing demand and slow supply,” Colliers said. “Meager land availability in preferred expatriate locations has also restricted the number of new houses,” it added. Colliers also noted that retail space supply in Jakarta and the capital’s satellite cities remained steady at 6.56 million square meters in the first half of this year, driving up asking base rental rates by 11 percent in those areas.]]> http://www.thejakartaglobe.com/business/jakarta-office-space-increase-upscale-homes-report/ Thai Green Tea Maker Ichitan to Build New Plant in Indonesia http://www.thejakartaglobe.com/?p=317529 Tue, 26 Aug 2014 13:41:40 +0700 Bangkok. Thai green tea maker Ichitan Group said on Tuesday it would set up a joint venture with Indonesia’s Atri Pasifix to build a new plant in Indonesia with an authorized capital of 1.18 billion baht ($37 million). The move is part of the group’s drive to tap strong demand in the Southeast Asian country where demand for green tea is expected to grow at an average 15 percent a year, the company said in a statement. Ichitan will invest 592 million baht for a 50 percent stake in the joint venture expected to be set up in the fourth quarter, it said. Reuters]]> Bangkok. Thai green tea maker Ichitan Group said on Tuesday it would set up a joint venture with Indonesia’s Atri Pasifix to build a new plant in Indonesia with an authorized capital of 1.18 billion baht ($37 million). The move is part of the group’s drive to tap strong demand in the Southeast Asian country where demand for green tea is expected to grow at an average 15 percent a year, the company said in a statement. Ichitan will invest 592 million baht for a 50 percent stake in the joint venture expected to be set up in the fourth quarter, it said. Reuters]]> http://www.thejakartaglobe.com/?p=317529