Govt eyes 46 percent growth in oil and gas infrastructure

The government announced Tuesday its long-term oil and gas management road map, revealing its ambitious target to attract US$31.2 billion in investment for oil and gas infrastructure between 2010 and 2014.

Of the figure, 69.49 percent or $21.68 billion is targeted for investment in gas facilities, including liquefied natural gas (LNG) and liquefied petroleum gas, LPG refineries, receiving terminals and residential pipeline networks.

The remaining 30.51 percent or $9.52 billion is for oil facilities, including refineries and rigs.
In 2010, the government is targeting $2.94 billion of oil and gas infrastructure investment while in 2011 it is expected to increase this by 7.99 percent to $3.18 billion.

The government is looking at  2013 as the peak year for investment in oil and gas infrastructure during the period. With a target of $ 10.57 billion, this would represent more than double the level of investment in the previous year, at $ 4.32 billion.

The investment target is projected to grow at an average annual rate of 46 percent from 2010 to 2014.

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Indonesia to develop horticultural zones to boost exports

The government is set to develop horticultural zones to support agrobusiness and serve the domestic market, an academic said in Denpasar, Bali, on Thursday.

“Efforts have been undertaken within the last five years by way of rehabilitating existing plots and developing new ones,” Dean of Agricultural Technology of Udayana University in Bali Bambang Admadi said, as quoted by Kompas.com.

The efforts, he said, were spearheaded by the Agriculture Ministry’s Horticulture Directorate.

Bambang said there were no less than 1.7 hectares of horticultural land already being developed in 66 regions accross Indonesia.

“The results have so far been positive. We have had a steady 10 percent increase of fruit harvest per year,” he said, adding that such growth had allowed the country to produce 14,313,101 tonnes of fruit per year.

Vegetables followed closely with an average growth rate of 5.4 percent or 9,011,417 tonnes annually.

Despite positive trends, Bambang argued that the level of the country’s production was still not sufficient when compared to the exports of neighboring countries.

“The value of Indonesia’s current horticultural export is merely 0.6 percent with a total output of 345,642 tonnes,” he said. “This pales in comparison to other countries in Asia and Australia.”

Source : The Jakarta Post

RI ups campaigns to boost tourists

Less than four months from the deadline to meet its foreign tourist arrival target under the Visit Indonesia Year program, the tourism industry is upping the stakes by holding a travel fair.

Three tourism and travel associations will be sponsoring the first-ever Indonesia Travel and Tourism Fair 2008 from Sept. 11 to 14: the Indonesian Hotel Association (PHRI), the Indonesian Congress and Convention Association (INCCA) and the Indonesian Tours and Travel Agency Association (ASITA).

National carrier Garuda Nusantara will also be supporting the event.

The fair is an opportunity for travel agents to strike deals with counterparts from countries abroad participating in the event, said Ainul Affifi, head of trade for ASITA.

“Local agencies can cooperate with foreign players to offer tourism packages in their respective countries,” he said.

During the four-day fair, agencies will try to promote at least 10 local major destinations — including Bandung in West Java, Manado in North Sulawesi and Bukittinggi in West Sumatra — in a bid to familiarize travelers with the country’s lesser known but beautiful spots, he added.

“People have known about Bali for a long time, but now we’re working on promoting other attractive places, both in local and foreign tourism exhibitions,” Ainul said.

Indonesia can lure plenty of tourists through intensified promotional campaigns, thereby approaching its goal of 7 million foreign visitors, he added while commenting on this year’s program.

Data from the Central Statistics Agency (BPS) show the tourism industry has its work cut out for it, as it has only managed to attract 2.9 million visitors as of June.

Despite the meager first-half performance, Ainul was upbeat about the prospects of meeting this year’s target, as the number of visitors usually peaks during the second semester.

“Foreign visits will reach their peak in November and December, to mark the Christmas and New Year’s holidays,” he said, adding visitors mostly come from Japan, South Korea and some European countries.

To help attract tourists under the Visit Indonesia Year program, the Culture and Tourism Ministry has allocated Rp 1 trillion, hoping to collect some $6.7 billion in foreign exchange revenue, a 28-percent increase from last year’s $5.2 billion.

The ministry has also scheduled several cultural and sporting events, such as the Asian Beach Games and the Solok Regency Festival.

Source : The Jakarta Post

KPPU turns up the heat on Carrefour amid unfair business allegations

Retail companies, including French retail giant Carrefour, will be required to provide reports on merger and takeover plans to avoid unfair business practices and to help protect small suppliers in the sector.

Business Competition Supervisory Commission (KPPU) member Muhammad Iqbal said Tuesday the commission would issue major retailers next month with a guideline for the “pre-notification” of mergers and acquisitions.

“Such a guideline is part of our authority to supervise business competitions as stipulated in the monopoly and unfair business competition law.”

“The commission will slap hefty financial penalties should the retail companies fail to report, especially if the mergers and acquisitions are proven to create an unfair business (climate),” Iqbal said.

The announcement comes during the KPPU’s ongoing investigation into alleged unfair practices by PT Carrefour Indonesia over its procurement of a 75 percent stake in local retailer PT Alfa Retalindo in January.

With this acquisition, according to the KPPU, Carrefour now has a total of 58 outlets, 34 of which are owned by Alfa. Last year, Carrefour reported total sales of Rp 7.2 trillion (US$7.8 billion), up from Rp 5.7 trillion in 2006.

The figure dwarfed those of local retailers PT Ramayana Lestari and PT Matahari Putra Prima, which recorded Rp 4.8 trillion and Rp 4.3 trillion, respectively, according to research firm Partisipasi Indonesia.

Carrefour’s plans for expansion did not end there. The company is reportedly in talks to purchase a controlling stake in PT Makro Indonesia, a local unit of Dutch retailer Makro.

Should the acquisition be made, Carrefour will dominate the country’s hypermarket, supermarket and grocery sectors.

Carrefour corporate affairs director Irawan Kadarman said the company would fully comply with the KPPU’s policies.

The company has also attracted criticism from local small and medium retailers, including an operator of traditional markets, which accused it of conducting unfair business practices by setting up most of its outlets in the city center.

However, Irawan denied the accusation, saying the company had secured the necessary legal licenses from relevant authorities to operate its outlets.

The KPPU is also investigating allegations that Carrefour has abused its dominance by charging new local suppliers, especially small ones, with high listing fees, according to Iqbal.

A listing fee is a sum paid by suppliers to retailers to get their products on the retailers’ shelves.

The expensive fee has reduce the chances of suppliers in selling their products in the outlets.

“We are collecting some important data to support our investigation slated to be wrapped up this year,” said Iqbal.

Finance director of the Indonesian Food and Beverage Association Yusuf Hadi said the association was urging the KPPU to regulate trading terms for suppliers in the event that Carrefour becomes the dominant player.

“The KPPU can possibly determine the percentage of the allowed listing fee. If not, suppliers will have to pay much for small profits,” he said. [The Jakarta Post]

RI may lose $40m in Brazil dumping claim

Indonesia may lose at least US$40 million in textile and garment product exports if Brazil proves imports it received from 29 Indonesian manufacturers are illegal.

Indonesian Textile Association chairman Benny Soetrisno said businesses in Brazil had become wary of importing rayon yarn from Indonesia since the accusations had arisen.

“Brazil is accusing Indonesia of dumping on rayon yarn,” he said Thursday at the Industry Ministry.

“Importers in Brazil are now afraid of ordering goods from Indonesia as they fear the goods will be slapped with higher import duties,” he said.

Dumping is an international trade term for when a country exports goods priced significantly lower than those produced in the recipient country and in sufficient bulk to jeopardize the recipient’s local industry. Dumping is countered by stamping imported goods with tariffs and quotas.

The dumping accusation emerged after several large textile manufacturers in Brazil reported reduced profits due to imports of similar products from China, Taiwan and India, Benny said.

“I’ve sent an e-mail about this issue to the trade minister (Mari Elka Pangestu) but have not yet received any responses,” he said.

Trade security and monitoring director at the Trade Ministry Martua Sihombing said the ministry had yet to receive an official accusation from the Brazilian government.

“We will send a letter to the Brazilian government tomorrow (Friday), asking them to send us their accusation documents,” Martua told The Jakarta Post.

An official allegation, Benny said, would see Brazil slash more than 10 percent of textile and garment products received from Indonesia, which stand at $400 million per year.

However, Brazil has yet to officially impose an anti-dumping penalty, he added.

Brazil has previously accused Indonesia of dumping, Benny said. The accusations concerned rayon fiber imports.

He said false dumping accusations were common on the global market as country’s sought to protect their local industries from foreign rivals offering better prices.

“We’ll prove that the Brazilian government’s accusation is untrue,” he said.

“It’s impossible for us to export our products to Brazil at prices lower than we charge here because of high delivery costs.”

Indonesian products are more competitively priced than those of Brazil in part because the minimum wage and electricity rates in Indonesia are lower than in Brazil, Benny said.

Indonesia is also facing dumping allegations from Turkey, which has named 14 Indonesian garment manufacturers, including PT Pirata Teks, PT Elagan, PT Camatex and publicly listed PT Apac Inti Corpora.

The case is still currently being investigated by Turkish authorities.

By Mustaqim Adamrah
Source: The Jakarta Post

Govt probes alleged dumping cases

The Indonesian Anti-Dumping Committee (KADI) is investigating two alleged incidents of illegal importing involving Thai chemical substance producers and Chinese detergent manufacturers, an official has said.

KADI head Halida Miljani said Wednesday the committee had begun investigations into alleged imports of detergent ingredient Sodium Tripolyphosphate (STTP) from China after receiving complaints from local STTP producer PT Petrocentral.

STTP is a water softener used to increase detergent purity levels.

“Petrocentral told the committee it has been suffering losses since the Chinese-based products entered the market,” Halida said, refusing to disclose the value of the losses.

The committee is scheduled to wrap up investigations next month, she said.

“We have to ensure that all data is valid so that we are ready to face any complaints by the Chinese producers.”

Dumping is an international trade term for when a country exports goods to a country at a substantially lower price compared to those produced in the recipient country and in sufficient bulk to jeopardize local industry.

Dumping is countered by stamping imported goods with tariffs and quotas.

The committee has also received protests from manufacturers of domestic Bi Axially Oriented Polypropylene (BOPP), which is used to make plastic wrapping materials, including Saran Wrap.

“Three companies’ factories have accused several Thai producers of dumping their BOPP products in Indonesia,” she said.

The three firms are PT Trias Sentosa, PT Arga Karya and PT Titan Kimia Nusantara, KADI data shows.

“We have been examining the case since May and are scheduled to finish it by next year,” Halida said.

In February, the committee finished investigating a dumping case involving hot rolled coils sent from China, Russia, Taiwan and India.

Since 1990, Indonesia has been the victim of 173 dumping cases.

The figure places Indonesia six on a list of countries with the most cases, after China, South Korea, Chinese Taipei, the United States and Japan, according to February 2008 World Trade Organization data.
(Source : The Jakarta Post)

Price war among telcos still healthy: Minister

The government is not concerned over the fierce tariff war in the crowded Indonesian mobile phone industry, as it has yet to lead to a compromise in service standards, officials say.

Information and Communications Minister Muhammad Nuh said over the weekend that the intense competition had been relatively “healthy” and that his ministry would not interfere in such matters.

“We will not impose regulations to try to change things. It’s actually the customers who have benefited the most,” he said.

Over the past several years, operators have aggressively cut their tariffs to lure more customers amid a rapidly growing telecommunications sector.

Critics have argued that the sharp reductions, which mean less revenue for operators, coupled with a massive budget for advertising to promote their discounted rates, have eroded operator’s spending on maintenance and network expansion, thus compromising their services to the public.

An ACNielsen survey shows that phone operators spent big on advertising to promote their reduced tariffs and new products.

In the first semester for instance, the survey found that PT Exelcomino Pratama (XL), the third largest operator, led the pack after spending Rp 139 billion on ads — approximately 219 percent higher than in the same period in 2007.

Bakrie Telecom, with its Esia brand, came in second with Rp 131 billion — a 57 percent increase from a year earlier. Then in third came IM3 owned by PT Indosat (the nation’s second largest telecom firm) spending Rp 119 billion, representing a 209 percent increase from the January-June period last year.

Nuh, however, insisted the tariffs were outside the government’s domain and that it was unlikely to interfere.

Gatot S. Dewa Broto, a spokesman for the post and telecommunications ministries, said the ministry could only monitor the situation and intervene if the tariff war showed signs of hurting the industry or customers.

Several operators have vowed that the low tariffs they were offering would not lead to a reduction in the quality of customer service.

Eddy Kurnia, public communications vice president of PT Telekomunikasi Indonesia (Telkom), the nation’s biggest telecommunications firm, said the tariff war was to be expected as the country’s mobile sector had now become highly competitive, with 10 operators in the same industry.

“Unfortunately, companies sometimes forget how to improve the quality of the services they offer.

“It is a real challenge to improve services without imposing extra costs on customers,” he said.

Telkom owns a 65 percent stake in PT Telekomunikasi Selular (Telkom), which controls around a 50 percent market share of the mobile telecommunication industry.

XL president director Hasnul Suhaimi said the tariff competition had not led his company to compromise its services.

In fact, he said, the company was rapidly expanding its network, having spent up to US$1.25 billion on network infrastructure this year alone.

A good network was needed, Hasnul said, for the company to manage the already hectic state of subscriber’ cellular traffic.

“As of the first half of this year, we have 23 million subscribers, more than double the 10.2 million subscribers we had in the same period last year,” he said.

Hasnul attributed the growth not only to the low tariffs but also to the network the company had built.

Mobile-8 corporate communication manager Yolanda Nainggolan said cellular companies would have brighter prospects if they spent less time trying to lure customers based on cheaper rates alone.

“Our company has been working to expand its network capacity to allow our 3.5 million subscribers to communicate seamlessly throughout the nation,” she said. [The Jakarta Post]

Coal Producers Agree to Pay Royalty

By Nieke Indrietta

Coal mining companies have agreed to pay the Indonesian government Rp 3,9 trillion in royalties, which they had failed to pay since for the past seven years.

The Indonesian Coal Mining Association chairman, Jeffrey Mulyono, said they will produce a document indicating their intent, as regulated in the First Generation Coal Mining Business Agreement. “It is an agreement
between KADIN (Indonesian Chamber of Commerce and Industry) and the government,” said Jeffrey, former Berau Coal president-director, who is also banned from traveling overseas, following a meeting at KADIN yesterday.

KADIN has been moderating between the coal producers and the Finance Department on the royalty issue, which intensified last week when the Immigration Office banned several coal businessmen from traveling overseas, under the Finance Minister’s order.

The businessmen banned from traveling are from four companies: PT Kaltim Prima Coal and PT Arutmin Indonesia, both owned by the Bakri Family, Edwin Soeryadjaya’s PT Adaro Indonesia, and PT Berau Coal. Two other companies which received similar treatment were PT Kideco Jaya Agung and PT Kendilo Indonesia.

The coal companies did not pay their royalties because they felt Government Decree No.144/2000, stating the Value-added tax would no longer be applied to coal, was causing them significant financial loss. With this new regulation, coal producers could not impose tax to their buyers, while they must pay the taxes of their suppliers and vendors. Conversely, the first generation contract releases them from new taxi regulations or they will receive compensation from the government, which so far has not happened.

The Investment Coordination Agency chairman, Muhammad Lutfi, said the ban was aimed at reinforcing the law. However, “the coal producer’s request for a tax restitution also made sense because of their lex specialis status” he said.

According to Lutfi, when the contract was signed in 1982 – 1983, special status was offered by the government to the coal producers because at that time all the coal companies were owned by foreign parties. With the new status, they are protected from all regulations.

“The Finance Minister stressed that the government will always respect contracts,” said Lutfi. Nevertheless he asked for a written commitment from the coal companies, that they would pay their dues.

KADIN chairman, M.S Hidayat, said they also discussed the compensation mechanism. KADIN will try to ensure the case does not go to international arbitration “Foreign investors may now be asking: If the government can have disputes even with national companies, what about them,” he said. [Tempo Interaktif]

RI’s wood exports to EU to enjoy lower duties

Indonesia’s wood products entering EU countries will get a tax cut from Jan. 1, 2009, until the end of 2011, the European Commission (EC) says.

Tax on wood products, such as sheets, will no longer be subject to the current tax of between 3 percent and 6 percent, while tax on plywood and boards will be reduced by 3.5 percent from the current tax of between 7 percent and 10 percent, the EC said in a statement Tuesday.

The decision was made after the EU member states adopted on July 22 a new regulation proposed by the EC, amending the preferential import tariff scheme to the EU called the Generalized System of Preferences (GSP).

“GSP is a vital tool for our pro-development EU trade policy. The continuation of GSP will ensure stability and predictability for beneficiaries and traders in the EU and developing countries,” EU trade commissioner Peter Mandelson said in the statement.

Preferential tariffs are either suspended or re-established whenever an individual country’s performance on the EU market over a three-year period exceeds or falls below a set level, the commission said.

According to the commission, the decision will allow continued preferential access for 176 developing countries to the EU market.

Indonesia will be granted increased preferential access for wood and wood byproducts under the new GSP scheme. Last year, more than US$4.9 billion worth of EU imports of Indonesian products were eligible for preferential tariffs from the EU.

In 2007, developing countries exported 57 billion euro worth of goods under the GSP, with a nominal duty loss for the EU of 2.5 billion euro. [The Jakarta Post]

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Yahoo seeks local partners to boost internet users

The regional unit of top internet portal Yahoo! is looking for new Indonesian partners to help expand its market in the country.

Pontus Sonnerstedt, senior director of business development at Yahoo! Southeast Asia, said in Jakarta on Friday the company needed new partners to lure more internet users to boost revenue from advertisement.

“Indonesia is a promising market thanks to its large population,” he told a media briefing.

The Singapore-based unit of the Internet giant has been working on improving its content in conjunction with several local players, including news, mobile phone and advertisement companies, Sonnerstedt said.

“We are cooperating with news providers ‘Kompas’ and ‘Detik’ to provide local news for users of Yahoo! in Indonesia,” he said.

He said his company had also been collaborating with local mobile phone partners Telkomsel, Indosat, Excelcomindo and Hutch 3 to provide news and messaging services on cellular phones.

“Any companies interested in posting their advertisements on the Yahoo! website can contact our partners Admax and Yellow Brick Road,” he said.

Senior manager of communications for Southeast Asia Jason Coates said the search-engine division of the company had recently been focusing on improving its home page display.

“This year we have launched new products, including Yahoo! Messenger for mobile phone users, Yahoo! GO 3G for mobiles and Yahoo! toolbar,” he said.

The company offers a number of products at its local domain www.yahoo.co.id.

In 2005, the regional unit launched Indonesian versions of Yahoo! Mail and Yahoo! Search.

In 2006, the company revamped its local home page and made improvements to its Indonesian-language variants of Yahoo! Messenger and Web Messenger.

“We will create more innovative products to attract new users in line with the increasing number of local internet users,” he said.

Indonesia has seen a rapid growth in the number of its internet users.

According to data from the Indonesian Association of Internet Service Providers, at the end of last year there were 25 million users in the country, up from 20 million in 2006 and 16 million in 2005.

Sonnerstedt, citing a study, expects internet users in Indonesia to reach 43 million by the end of 2009. [The Jakarta Post]