Update News December 28, 2017

In The News

Train manufacturer PT INKA signs Rp 4t loan to build LRT cars
The Jakarta Post, 28 December 2017

State-owned train manufacturer PT Industri Kereta Api (INKA) signed on Wednesday a syndicated loan agreement totaling Rp 4.05 trillion (US$298.8 million) to build 186 train cars to be operated along the Greater Jakarta light rapid transit (LRT Jabodetabek) network.

The company, the only train car manufacturer in Southeast Asia, obtained the loan, which  has a 30-month tenure, from Bank Negara Indonesia (BNI), Bank Sumitomo Indonesia and state-owned infrastructure financing company PT Sarana Multi Infrastruktur (SMI).

INKA finance director and acting president director Mohamad Nur Sodiq said during the loan-signing ceremony that the loan was part of Rp 5.2 trillion that was needed by the company to construct train cars as well as for their maintenance and service over the next five years.

“This is our second LRT project after the first one, which is the LRT project in Palembang, South Sumatra,” Sodiq told reporters.

Sodiq voiced hope that the loan would be disbursed in January so that his company could meet the April 2019 deadline for its LRT contract.

The Greater Jakarta LRT will run from Bogor through Bekasi, Cawang and Kuningan to Sudirman Station.  (bbn)

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Government to complete access road to Bengkulu Port in 2018
The Jakarta Post, 28 December 2017

The Public Works and Public Housing Ministry aims to complete works on a 5.4- kilometer access road to Baai Island Port in Bengkulu next year.

"The road heading to the port has four lanes. We have completed 1.7-km. Hopefully we can finish the road in 2018, Public Works and Public Housing Minister Basuki Hadimuljono said in a statement over the weekend.

The port was constructed by the British colonial administration in the 18th century. The old city was then known as Bencoolen.

Unlike the other part of Sumatra that was colonized by the Dutch, Bengkulu was colonized by Britain for around 140 years before it was ceded to the Dutch under the 1892 Anglo-British treaty in exchange for Singapore.

The port is managed by state-owned port management company PT Pelindo II (Persero). The company is building the terminal for crude palm oil (CPO) export with a capacity of 57,000 liters. (bbn)

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Government wants other regions to construct LRT
The Jakarta Post, 28 December 2017

The government has invited other regions to develop light rapid transit (LRT) projects. Currently, the transportation infrastructure is being developed in Jakarta and Palembang, both of which will host the 2018 Asian Games.   

“We have to start to change our state of mind about the current state of transportation infrastructure. We have to shift to mass public transportation,” said Transportation Minister Budi Karya Sumadi during the “LRT untuk siapa?” (LRT for who?) discussion on Saturday.

He said the LRT projects in Jakarta and Palembang had to inspire other regions to do the same because such projects would not just be used for the Asian Games, but also help the two cities transform their transportation systems.

“Palembang is lucky in that it has become a pilot city with its LRT. This could help the city progress to become a metropolitan city," he said as reported by kontan.co.id, adding that the LRT would also support tourism.

The construction of the 23.4 kilometer Palembang LRT has reached 78 percent of completion. It is equipped with 13 stations.

The LRT project is being developed in two phases in Jakarta. The Greater Jakarta LRT will depart from Bogor, Bekasi, Cawang, Kuningan and terminate at Sudirman Station, while the Jakarta LRT will depart from Kelapa Gading, Rawamangun, Manggarai and also terminate at Sudirman Station. (srs/bbn)

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Minister Sri Mulyani Challenges Jakarta Budget Expense
TEMPO.CO, 28 December 2017

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati challenged Jakarta Governor Anies Baswedan and Deputy Governor Sandiaga Uno to improve Jakarta financial auditory report to the Supreme Audit Agency`s (BPK) highest score, which is to obtain an unqualified opinion (WTP).

“Jakarta’s grade should be an investment grade, which should really outperform nationally,” she said. “So, please Pak Sandi and Pak Anies, if it’s possible, beat me in financial reports,” the minister said on Wednesday, December 27.

Sri Mulyani stated her challenge during the opening of the Regional Medium Term Development Plan Forum (RPJMD), which was also attended by several regional and State Officials such as Anies Baswedan and Sandiaga Uno, and Jakarta Legislative Council (DPRD) Chairman Mohamad Taufik.

The Jakarta governor responded to Sri Mulyani’s challenge several hours later. “Inshallah, at least for the upcoming years, we will organize it from now on so that it would not cause problems. I can even say that our tax realization currently has surpassed our initial target,” said Anies Baswedan.

Sri Mulyani also criticized Jakarta’s travel expenses in the regional budget which she advised to be scrutinized. “Regional levels always have a higher cost standard. I would understand it if it were outside of Jakarta Greater Region. But the official travel expenses set by Jakarta Administration are nearly three times more expensive than the central government,” she said.

Minister Sri Mulyani continued to compare both the central government and Jakarta’s travel expense budgets, ”Jakarta is Rp1.5 million for each person per day, meanwhile, the central government standard is just Rp480,000 daily for each person. Besides, we are also in Jakarta.”

She continued by suggesting that she is not questioning how the budget is used, but rather, “is it really the good way to spend your money?” said Sri Mulyani.

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REI optimistic house sales would increase in 2018
ANTARA News, 28 December 2017

Solo, Central Java (ANTARA News) - The Central Java branch of the Real Estate Indonesia (REI) said it is optimistic that house sales would increase in 2018 as a result of marketing drive by developers. 

"This year sales totaled around 8,500 units and next year the sales are expected to rise to around 10,000 units," chairman of the Central Java branch of REI MR Prijanto said here on Wednesday. 

Prijantono said he hoped there would be change in economic condition next year that would improve the purchasing power of the people. 

Next year, the economic condition is expected to remain favorable despite the political tension with the regional elections, he said. Indonesia would hold simultaneous regional elections for regional leaders next year. 

"At least we hope there would be no security problem, during the political year that the people would feel safe to invest in property," he said.

He said REI has succeeded in developing cooperation with a number of organizations in the procurement of houses for civil servants. 

"We have cooperated with the Corps of Civil Servant (Korpri) for the provision of houses for civil servants. Here we have cooperation with the chairman of Korpri nationally and regionally," he cited. 

In addition, REI has also built residential houses for the military and police , he said. 

"We also cooperate with the Employee Social Security (BPJS Ketenagakerjaan) in providing house financing facility for workers in formal and informal sectors. Here there is financing facility for advanced payment or credit for house ownership (KPR)," he said. 

Meanwhile, REI has also signed cooperation agreement with Bank Pembangunan Daerah (BPD) of Central Java administration on low cost house financing, he said.

"With the various forms of cooperation agreements, we are confident house sales would increase in 2018," he said.

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Japanese investor takes over control of Bank Danamon
ANTARA News, 28 December 2017

Jakarta (ANTARA News) - Japan`s lender The Bank of Tokyo-Mitsubishi UFJ Ltd (BTMU) has reached an agreement on its takeover of 73.8 percent of Bank Danamon with Asia Financial (Indonesia) Pte Ltd and other shareholders of the Indonesia-based bank. 

According to an official information from BTMU available here on Wednesday, the strategic investment would be held in three phases.

In the first phase, BTMU would acquire 19.9 percent of the shares of Bank Danamon at a price of Rp8,323 per share or totaling Rp15.875 trillion.

In the second phase, BTMU hopes to acquire 20.1 percent more of the shares making BTMU a 40 percent shareholder of the bank. The second phase is expected to wrapped up in the second or third quarter of 2018 in line with the approval of the Financial Service Authority (OJK).

In the third phase, BTMU hopes to secure again approval to acquire more shares of Bank Danamon. In this phase, BTMU would offer opportunity for other shareholders to retain their shares or accept cash from BTMU.

In the third phase, MUFG hopes to control more than 73.8 percent of Bank Danamon shares.

"As a leading bank in Asia and Oceania, we are aware of the role of Indonesia as a driver of development in the region," Chief Executive Officer (CEO) of Mitshubishi UFJ Financial Group Inc. (MUFG) for Asia and Oceania, Takayoshi Futae said.

"We are confident the inclusion of MUFG as a shareholder of Bank Danamon would benefit the stakeholders including the workers , clients and business partners," Futae said.

Earlier, head of the Banking Supervision Department of OJK Aristiadi said that first MUFG would acquire the would be non majority portion.

Asia Financial (Indonesia) Pte is a subsidiary of Singapore`s Temasek, as the majority shareholder of Bank Danamon.

Currently Bank Danamon is 67.37 percent owned by Asia Financial (Indonesia) Pte, LTd, 6.5 percent by JPMCB-Frankiln Templeton Investment Funds and 25.7 percent by the public.

MUFG is not a new business player in Indonesia. MUFG already owns the majority stake in two banks - Bank of Tokyo Mitsubishi UFJ Ltd (BTMU) and PT Bank Nusantara Parahyangan Tbk.

BTMU has operated for almost 60 years in Indonesia with the status of Foreign Bank Branhc Officer.

Therefore, if BTMU became the holder of the majority shares in Danamon, it has to deal with the regulation of the Central Bank on "single presence policy" prohibiting investors to be majority shareholder in more than one bank.  

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Miners Invest $5b in Indonesia Nickel Smelters in First 10 Months
Jakarta Globe, 28 December 2017

Jakarta. Thirteen mining companies have invested a combined $5.03 billion in the construction of nickel smelters during the first 10 months of this year to comply with Indonesian government requirements, an official at the Ministry of Energy and Mineral Resources said.

President Joko "Jokowi" Widodo issued a government regulation earlier this year to amend several articles in a 2010 mining regulation, which now requires miners to process raw materials within Indonesia before exporting them.

To do this, miners must build smelters to produce value-added products.

"Our new regulation, issued [by the president] this year, contributes to the value-added nickel products and it has had a positive impact on smelter investment this year," Bambang Gatot Aryono, the ministry's director general of coal and minerals, told reporters on Wednesday (27/12).

However, Bambang did not elaborate on the number of smelters that have been built so far.

Processing and Smelting Companies Association (AP3I) data shows that 32 smelters were built between 2012 and 2016 for a total investment of around $20 billion. These smelters process iron, nickel and copper.

Meanwhile, 13 companies have started smelter operations between January and October this year, including state-controlled miner Aneka Tambang and nickel producer Vale Indonesia, the local unit of the Brazilian mining giant.

Bambang said these companies produced about 598,000 tons of ferronickel and nickel pig iron, in addition to 64,000 tons of nickel matte. They produced a combined total of around 34 million tons of nickel ore in the first 10 months of this year.

He added that two nickel smelters operated by local miners Cahaya Modern Metal Industri and Indoferro have ceased operations over the past two years, due to lower nickel prices and the high cost of coke since the end of last year.

Coke contributes around 40 percent of the industry's total production cost.

Indoferro ceased its smelter operations in on July 19, while Cahaya Modern Metal Industri ceased smelter operations in January last year.

Both companies initially produced iron ore, but shifted to nickel in January 2014.

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Garuda Indonesia Opens Wakatobi-Kendari Route
Jakarta Globe, 28 December 2017

Jakarta. Flag carrier Garuda Indonesia now operates direct flights to Wakatobi Island, Southeast Sulawesi, from the province's capital of Kendari, the company announced on Tuesday (26/12).

"The new route could be opened thanks to the Ministry of Transportation and the Ministry of Tourism, which continue to support Garuda Indonesia's effort to strengthen the country's tourism sector," Garuda Indonesia marketing and information technology director Nina Sulistyowati said.

Wakatobi is popular among tourists as one of the best diving destinations in the world. It has the largest barrier reef in Indonesia, with 942 species of fish and 750 of corals.

Garuda Indonesia launched the new route on an ATR 72-600 aircraft that can carry 70 passengers.

Garuda flies from Kendari to Wakatobi on Tuesdays, Thursdays, Saturdays and Sundays at 12:05 p.m., arriving in Wakatobi at 12:55 p.m, while return flights leave at 1:25 p.m. and arrive at 2:25 p.m.

The Wakatobi airport has been developed to promote Wakatobi Island as one of the 10 prioritized tourism destinations.

According to the Wakatobi Tourism Agency, 22,000 tourists visited the district last year, 29 percent more than a year earlier. The government wants to attract 500,000 visitors to the destination by 2019.

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Gov't to Maintain Fuel, Electricity Prices in Q1 2018
Jakarta Globe, 28 December 2017

Jakarta. The government has decided to maintain stable subsidized fuel and electricity prices throughout the first three months next year, the Energy and Mineral Resources Minister Ignasius Jonan said on Wednesday (27/12).

The administered prices are major drivers towards the economy's inflation rate and can significantly affect the country's poor purchasing power, which has failed to rise significantly over the past twelve months.

"Our decision was taken in consideration of people's purchasing power," Jonan said in a press briefing.

State-run energy company Pertamina has said it will sell subsidized RON 88 gasoline at Rp 6,450 ($0.47) per liter, while the selling price for subsidized diesel fuel will remain at Rp 5,150 per liter.

Electricity costs will also remain the same for all classes of customers.

Customers who subscribe for 450 volt ampere (VA) power will continue to pay Rp 415 per kilowatt hour (kWh), while 900 VA power subscribers will continue to pay Rp 605 per kWh.

Non-subsidized subscribers will see no changes to their current invoices.

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