Update News October 10, 2017

In The News

Jonan: $4 billion needed for 51 percent stake in Freeport Indonesia
ANTARA News , 10 October 2017

Jakarta (ANTARA News) - Energy and Mineral Resources (ESDM) Minister Ignasius Jonan said the 51 percent stake to be divested by Freeport Indonesia, is worth around US$4 billion.

Freeport Indonesia, a subsidiary of US mining giant Freeport-McMoRan Inc, has agreed to divest up to 51 percent of its shares to Indonesia in exchange of extension of its contract, which will expire in 2021, until 2041.

Jonan said Freeport McMoran (FCX) is valued at US$20.74 billion in New York Stock Exchange and Freeport Indonesia is about 40 percent of the total value.

The Minister told lawmakers at a meeting with Commission VII of the House of Representatives here on Monday 40 percent of the US$20.74 billion is about US$8 billion.

The government, therefore, has to be ready with around US$4 billion to pay for the majority 51 percent share of Freeport Indonesia, which has large copper and gold mines in Grasberg, Papua, the worlds second largest copper mine, he said.

As for who is in control, Jonan said, it is still in the process of discussion, but from the beginning it has been a commitment that the mining work is to be handled by Freeport McMoRan, but the management or regulations is under the government.

He said the decision to extend the operating license of Freeport is to be granted only if the conditions set by Indonesia has been accepted including the divestment of up to 51 percent of the Freeport shares and the commitment to building a smelter and that the state revenues must be larger. 

The strategy concerning technical matters would be discussed behind closed door by the government, he said. 

Earlier Jonan said the government has reached an agreement with Freeport-McMoRan Inc to allow the US miner to apply for a permit to keep operating its giant Grasberg copper and gold mine in the country, but the method of divestment is still unresolved. (*)

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Transport Minister: Trunojoyo Airport to be Completed by 2019
TEMPO.CO  10 October 2017 

TEMPO.CO, Jakarta - Transport Minister Budi Karya Sumadi said that Trunojoyo Airport in Sumenep Regency, East Java, will be completed by 2019. President Joko Widodo has instructed the minister to develop the airport’s runway and passenger terminal.

With a population of 5.8 million people, Budi said that Sumenep Regency has a huge economic potential and high mobility.

Budi will coordinate with the local government to acquire land for runway improvement.

The runway will be developed from 1600 meters in length and 30 meters in width to 2250 meters long and 45 meters wide to accommodate wide-body aircraft. The Transport Minister will also develop the terminal in three phases.

“As for passenger terminal development, the first phase will be 800 square meters, the second phase will be 1160 square meters and the third phase will be 2139 square meters.”

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Loans for LRT to be channeled in November
The Jakarta Post 10 October 2017

State-owned railway operator PT Kereta Api Indonesia (KAI) plans to disburse loans to state-owned construction firm PT Adhi Karya in November, as part of the Light Rapid Transit (LRT) project financing.

“It [the disbursement of the loan] depends on an invoice from Adhi Karya,” KAI finance director Didiek Hartantyo Didiek said in Jakarta on Monday.

Deputy Finance Minister Mardiasmo added that the Transportation Ministry, KAI and Adhi Karya were still negotiating for the interest rates of the loans, adding that he hoped negotiations would be concluded by the end of the year.

Mardiasmo also said that the government would issue Government Regulation (PP) for the disbursement of the state-capital injection (PMN) for the LRT project this month. PT KAI has so far raised Rp 4 trillion in equity, which was sourced from the revised state budget (APBN-P) and re-allocation of funds from the railway operator’s trans-Sumatra project, said Didiek.

A number of banks -- namely Bank Mandiri, Bank Negara Indonesia (BNI), Bank Central Asia, Malaysian-controlled Bank CIMB Niaga and state-owned financing company PT Sarana Multi Infrastruktur -- have committed themselves to provide syndicated loans for the project.

To earn Rp 18.5 trillion syndicated loans from the banks to fund the Rp 27.5 trillion-project, KAI is required to have equity worth Rp 9 trillion. Aside from that, the government would inject Rp 3.6 trillion in capital (PMN) next year and another Rp 1.4 trillion through Adhi Karya. (ags)

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Bekasi-Jakarta toll road to undergo test
The Jakarta Post 09 October 2017

The stalled "Becakayu" toll road, which will connect Bekasi in West Java and Cawang and Kampung Melayu in East Jakarta, will soon undergo a road test, an official said. 

“I hope in October we can undergo the test,” Toll Road Regulatory Agency (BPJT) head Herry Trisaputra Zuna said on Monday as quoted by kompas.com. Becakayu is an acronym of Bekasi, Cawang and Kampung Melayu.

The two road sections nearly ready for inauguration was the 1B section connecting Cipang Melayu and Pangkalan Jati and the 1C section, which would connect Pangkalan Jati and Jaka Sampurna, Herry said, adding that President Joko “Jokowi” Widodo was scheduled to inaugurate them. 

The construction of the 21.04-kilometer toll road had been idle for about 20 years before a consortium of construction companies took over and restarted the project in late 2014.

The toll road is expected to be fully operational next year. (fac)

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Rupiah Strengthens over Positive Domestic News
TEMPO.CO  09 October 2017 

TEMPO.CO, Jakarta - Analysts project the rupiah exchange rate to strengthen again this week, supported by positive domestic news.

"It is estimated that the rupiah will be in the support range of Rp13,595 and a resistance level of Rp13,448 per US dollar," Binaartha Securitas analyst Reza Priyambada said in Jakarta, Sunday, 8 October.

The rupiah appreciation is followed by the US dollar's strengthening; hence there is a possibility for reversal. Reza projected the dollar gain will not be not too significant—allowing the rupiah to keep its uptrend next week.

In the Bank Indonesia website, the rupiah middle exchange rate at the end of last week was Rp13.485 per US dollar.

Reza said investors should be on the lookout for various sentiments that may hinder the rupiah from gaining further. The main risk to watch for this week is the release of economic reports.

Last week, the rupiah weakened to Rp13,585 per US dollar. The rupiah last week moved between the support level of Rp13.625 and the resistance level of Rp13,300 per US dollar.

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OJK Sets-up10 Main Policies
TEMPO.CO  10 October 2017 

TEMPO.CO, Jakarta - The Financial Services Authority (OJK) has set up 10 key policies for the period of 2017-2022. One of them is to by optimize the use of information technology in overseeing industry players, in a bid to reform the non-bank financial sector and the capital market.

The OJK will strengthen integrated arrangements, licensing and supervision for financial conglomerates, and apply prudential international standards that fits the national interest. The regulator will also reform the non-bank financial industry to be more competitive and help achieve efficiency in the financial services industry.

Moreover, the OJK will revitalize capital markets to support development financing, optimize the role of fintechs with adequate oversight, reduce economic inequality by providing more financial accesses, improve education and consumer protection, and encourage sharia finance to fund development projects.

OJK chief Wimboh Santoso said the purpose of these 10 policies is to make his agency an independent and credible one in overseeing and monitoring the financial services sector.

"And able to protect consumers and achieve prosperity through policies in the financial services sector," he said through a statement on his website on Monday, October 9.

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Tax Revenues at 60 Percent as of September 30
TEMPO.CO  10 October 2017 

TEMPO.CO, Jakarta - Director General of Tax said that, as of September 30, total tax revenues reached Rp770.7 trillion or 60 percent of the target set in the revised 2017 state budget (APBN-P) or Rp1,283.6 trillion.

As such, the Tax DG needs to collect Rp513 trillion more to meet the target. “The realization dropped 2.79 percent [year-on-year]…,” Director for Potential, Compliance and Tax Revenue Yon Arsal said yesterday.

The tax revenues consisted of oil and gas tax (PPh migas) of Rp732.1 trillion or 59 percent of the revised 2017 state budget or registering negative growth of 4.7 percent (year-on-year). Tax revenue from the non-oil and gas sector (PPh nonmigas) registered negative growth of 12.32 percent (year-on-year) at Rp418 trillion or 56.3 percent of the target.

Value-added tax (PPN) and luxury tax (PPnBM) were 64.6 percent of the target or grew 13.70 percent (year-on-year) or Rp307.3 trillion.

Yon said that the decrease was caused by unrepeated revenues that from last year’s redemption fees in the tax amnesty program and income tax for purposes of revaluation of assets. There are also differences in the payments of land and building tax (PBB) and government-borne income tax in a significant amount. “The growth of non-oil and gas income tax outside of redemption fees and overall unrepeated revenue and the difference in payment period was 12.6 percent,” Yon said.

Bank Permata economist Josua Pardede said that as the national and global economy slows down, it would be difficult for the Tax DG to meet the full-year tax revenue target. Nevertheless, Pardede is optimistic that the total revenue would reach 85 percent at the end of the year. He has called on the government to be realistic in determining the target considering current situation.

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VP Kalla to Attend Opening of Europalia Arts Indonesia
TEMPO.CO  10 October 2017 

TEMPO.CO, Jakarta - Vice President Jusuf Kalla is slated to attend the opening of Europalia Arts Festival Indonesia 2017 at Center for Fine Arts in Brussels, Belgium.

A press release issued by Tourism Ministry stated that the event will be opened today by the King of Belgium Philippe Léopold Louis Marie at 5 pm local time.

Before attending the opening, Vice President Jusuf Kalla will see Indonesian artworks and antiquity showcased in the biennial event.

Indonesia this year becomes an honorary guest in the 26th Europalia Arts Festival 2017 that will be held from October 10 to January 21.

Some 486 Indonesian artists will be participating in 226 programs held in Belgium and six other European countries: the UK, the Netherlands, Germany, Austria, France and Poland.

Europalia Arts Festival Indonesia adopts three major themes ‘Ancestors and Rituals, Biodiversity and Exchange” that will be represented in performance art, literature, exhibitions, music and film.

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BKMP Calls for Foreign Investment in New Tourist Destination
TEMPO.CO  09 October 2017 

TEMPO.CO, Jakarta - Investment Coordinating Board (BKPM) chief Thomas Lembong has called for foreign direct investment in new tourist destinations that are currently being developed by the government. He said that investment in the sector would be profitable.

Thomas said that investors who have invested in Bali in the past ten years in hotels, resorts and villas are currently enjoying the yields from tourism sector development in Indonesia. “It is high time to invest in ‘New Balis’,” he said in a press release received today by Tempo.

Read: Foreign Investors Eyeing Indonesian Bonds, SOE Minister Says

Thomas has called on investors to see the profile of the new destinations in the Regional Investment Forum (RIF) that will be held in Padang, West Sumatra, on October 15-17. The forum is organized by the BKPM and supported by Tourism Ministry, Bank Indonesia and local administration. The event will showcase 10 ‘New Balis’, the government’s flagship policy.

The new destinations are Lake Toba (North Sumatra), Tanjung Kelayang (Bangka Belitung), Tanjung Lesung (Banten), Seribu Islands & KotaTua (Jakarta), Borobudur (Central Java) and Bromo-Tengger-Semeru (East Java), as well as two integrated tourism areas in West Sumatra: Mandeh and Gunung Padang.

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