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  No. 52/IV/August 31 - Sept 06, 2004


Business Weekly

Pertamina to Expropriate Cepu?

THE drama between state oil & gas company PT Pertamina and ExxonMobil Oil over the Cepu Block has entered a new chapter. Pertamina, which originally intended to extend ExxonMobil’s contract at the Cepu field in East Java, has changed its mind. Under its new board of directors, the state-owned enterprise has just decided not to extend ExxonMobil’s contract at the Cepu field.

Pertamina Managing Director Widya Purnama acknowledged that he was currently formulating a letter regarding this. “We are going to issue a letter stating that Pertamina will not extend ExxonMobil’s contract,” said Widya during a working meeting with the Energy Commission at the House of Representatives (DPR) on Wednesday last week. ExxonMobil’s contract at Cepu comes to an end in 2010.

Pertamina, said Widya, has decided to operate the Cepo oil & gas field by itself because the oil reserves could reach as much as 2 billion barrels. It is estimated that the field can produce between 200,000 and 300,000 barrels per day. Based on Pertamina’s estimates, development of the field can commence in 2007, while new production can only be enjoyed starting from 2012. “Pertamina will receive large profits, if Cepu can be taken over immediately,” said Widya.

However, Widya’s statement was promptly contradicted by Pertamina Commissioner Syafruddin Temenggung. According to him, Pertamina will send a letter to ExxonMobil offering three options: Pertamina will manage the field itself; ExxonMobil’s contract will be extended; or, the profitable term will be put out to tender to a third party. “These are the options that we are going to offer to ExxonMobil,” said Syafruddin.

Textiles Require Large Funding

THE textile and textile products (TPT) sector is still one of Indonesia’s most advantageous non-oil & gas export sectors. However, TPT businesspeople will have to renovate their machinery if they want to compete on the international market. According to calculations made by the Department of Trade & Industry, these renovations will require a large amount of funds, in the region of US$505 million or around Rp4.6 trillion. This funding is required by about 4,000 factories.

The problem, according to TPT Industry Director Luky Hartini, national banks are still unwilling to disburse loans to the textile sector because there are still a large amount of non-performing loans in this sector. This is in spite of the fact that the government still has high hopes for this industry. Currently, every year TPT exports bring in annual total revenues of between US$6 trillion and US$7 trillion.

In addition, the TPT industry also provides a great deal of employment, all in all for more than 1.2 million people. Because of this, the government has already set up an integrated team to come up with solutions for this funding problem. The Office of the Coordinating Minister for the Economy will coordinate several involved parties such as the Department of Trade & Industry, Bank Indonesia and banks.

IFC Provides Injection for NISP

THE International Finance Corporation (IFC) is to provide a long-term loan of US$35 million to Bank NISP. This World Bank-connected financial institution, which is now a shareholder in Bank NISP, is also planning to provide a partial guarantee of up to Rp210 billion.

Bank NISP President Director Pramukti Surjaudaja has stated that the IFC loan will be used to increase the quality of the bank’s risk management and manufacturing companies orientated towards export. “These funds will improve the quality of our risk management, particularly as regards the management of our liquidity,” said Pramukti, on Wednesday last week. With a 15.05 percent share, IFC is the third largest shareholder in Bank NISP.

German Vegarra, IFC Country Manager for Indonesia, added that it was hoped the loan would also help develop Bank NISP’s base assets. “We always support banks to practice good transparency levels in terms of operations, as well as to strengthen risk management,” said German.

New Kijang

AUTOMOTIVE consumers in Indonesia will soon be able to enjoy a new look Toyota Kijang. The latest model Kijang is called the Innova and will be launched this September. The price will almost certainly be higher than that of the previous Kijang, apparently in the region of Rp160 million.

Although this latest model won’t be available until next month, it seems that the general public is too impatient. The proof of this is that to date, as many as 14,000 new Kijang Innova have already been ordered. According to Astra Internasional spokesperson Aminuddin, it is hoped that this new model will increase Astra’s share of the vehicle sales market to 47 percent. Last year, Astra enjoyed a 43 percent share of the national motor vehicle market, which amounts to almost 400,000 vehicles.

It is planned that production of the new Kijang will be centered in Indonesia and Thailand. Three types will be produced in Thailand: the single cabin pickup, the extra cabin pickup and the double cabin pickup. The multipurpose vehicle version of the Kijang Innovo will be produced in Indonesia, with targeted production of 150,000 vehicles per year.

Coalitions to Purchase Permata?

MALAYAN Banking Bhd. (MayBank) of Malaysia is joining up with Malaysia’s state financing agency Permodalan Nasional Berhard Malaysia (PNB) and Indonesia’s state-run social security service PT Jamsostek in order to purchase a 51 percent share in Permata Bank. Bank Mandiri is setting up a consortium with Mandiri Sekuritas, while Bank Buana is joining up with majority shareholder PT Sari Dasa Karsa.

According to Jamsostek Managing Director Ahmad Djunaidi, MayBank is the largest bank in Malaysia with assets worth US$42 billion (around Rp378 trillion). MayBank will lead the consortium and control 31 percent of the Permata Bank shares, with the remainder being divided between its two partners. “However, this is still open to negotiation,” said Ahmad, on Tuesday last week. This consortium has already returned its qualification request (FRQ) to the state asset disposal company PT Perusahaan Pengelola Aset (PPA).

Bank Mandiri has also already returned its FRQ to PPA. Bank Mandiri Managing Director E.C.W Neloe stated that the bank was taking part in the tender because Permata Bank’s consumer customer base was good, especially those formerly with Bank Universal. The purchase would also mean that Bank Mandiri would be able to expand its network because respective branch locations differ. Bank Mandiri has more in commercial areas, while Permata Bank has more in office blocks and housing estates.

Eyeing a Freeport Dividend

THE government is in the middle of a review to look at the opportunity of obtaining a larger dividend from PT Freeport Indonesia for the reporting years of 2002 and 2003. One reason for this, according to Roes Aryawijaya, Assistant to the State Minister for State-Owned Enterprises (SOEs) in the Strategic Industry and Mining Division, is that the price of gold has continued to increase recently and the company’s performance has also improved. However, Roes declined to reveal just how large a dividend the government was hoping to obtain.

The review is being carried out as the amount of the government’s dividend decreased during the 2000-2001 period. Although in 2000, the government received a dividend amounting to US$5 million, the next year the government’s share was only US$4.49 million. With the possibility that Freeport Indonesia’s net profits will increase, the government is hoping for a higher dividend for the reporting years of 2002 and 2003.

Rupiah Weakens

THE rupiah has started to weaken again. On Friday last week, the rupiah exchange rate closed at Rp9,295 against the US dollar. Compared to the closing rate on Friday two weeks previously, this was a drop of 70 points. Several analysts have said that this weakening of the rupiah has been mainly caused by many companies buying US dollars for the end-of-month costs. In addition, oil prices in excess of US$43 per barrel have caused the exchange rate of the US dollar to fluctuate.

However, unlike the previous week, during last week the rupiah was unable to recover after the weakening at the start of the week. Analysts’ predictions that the rupiah would in fact strengthen seem to hold no water. In reality, companies are continuing to buy US dollars. It is expected that the exchange rate of the rupiah will be between Rp9,250 and Rp9,300 against the US dollar.




 



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