Highlights
Politics
·         House accepts bill for military personnel to face civil courts
·         More Defense Funds Sought
Regions
·         Jakarta enacts by-law in new bird flu control move
·         Police Bust ‘Biggest Ecstasy Syndicate’
Economy
·         Coordinating minister tells US audience more reforms on way
·         Stock market hits new highs
Business briefs
Macroeconomy
·         Growth is approaching 6% in first quarter and full year target still in sight
·         Consumer Confidence Rises in March
Investment
·         Foreign investment rises, approvals also higher
·         Toll road tariffs may be lifted
·         Seven Chinese companies in $55.2 million steelmaking investments
State concerns
·         Footwear industry puts on 7% growth in first quarter exports
SOEs
·         President Yudhoyono says no more fund injections for poor performers
·         PT Telkom net profit seen as rising 36% last year
Private sector
·         Automobile sales jump in March
·         Cellular provider Excelcomindo adds 1 million subscribers
Banks
·         Bank Mandiri records strong fall in non-performing loans
Power
·         State utility PLN calls tenders for $2 billion in transmission works
·         PLN looks at listing for subsidiary Indonesia Power
Oil & gas
·         Production deals expected on methane coal bed gas extraction
Mining
·         PT Timah looks to 61% sales boost in first quarter on strong prices
·         Indonesia has potential to take 26% of world coal trade this year
 

POLITICS
House Approves Civilian Trials
The House of Representatives says it will endorse a bill requiring soldiers who commit crimes to stand trial in civilian courts, The Jakarta Post reported on Monday (9/4/07).

Andreas Pareira, chairman of the House special committee preparing the bill, said military courts should only try soldiers accused of violating military regulations and leave the civilian courts to hear criminal cases.

"In the reform era, there must be a clear separation between violations of military codes and criminal codes, no matter who the violators are," Pareira told reporters. Deliberation of the bill will resume when the House returns from recess next month, with its endorsement expected in August at the latest.

A three-month deadlock between the House and the administration was broken in March when President Susilo Bambang Yudhoyono agreed to a House proposal that stressed the
authority of civilian courts in trying soldiers accused of criminal acts.

More Defense Funds Sought
The Ministry of Defense will try to persuade the government to maintain the policy of an annual 15% increase in the defense budget, Defense Minister Juwono Sudarsono said on Tuesday (10/4/07).

"We will try to keep that policy, but we may have to make a sacrifice because the government wants to allocate more funds for education and infrastructure," Sudarsono told reporters after a limited cabinet meeting.

The minister said the 2007 budget allocation for defense was Rp18 trillion ($1.9 billion), with Rp9 trillion ($989 million) going to the Army and Rp4.5 trillion each to the Navy and Air Force.

He said 20% of the budget allocated to each of the services could be saved through the sharing of military equipment.

SBY Urges Caution on Graft
President Susilo Bambang Yudhoyono has called on law enforcers to exercise caution when investigating officials from state-owned enterprises for corruption, The Jakarta Post reported on Friday (13/4/07).

Yudhoyono said that in their fight against corruption, investigators should act prudently to avoid building erroneous cases and wrongly prosecuting individuals.

"If a company suffers business-related losses, then this cannot be considered corruption. Corruption occurs when personal enrichment is made at a loss to the company," Yudhoyono said in an address to top executives from more than 100 state-owned enterprises.

The president lamented the fact that a number of state-owned enterprise executives had been subject to trial by the press, and said he would stand in defense of those who had been wrongly-accused.

"Please report to me, because it is my obligation and the government's to correct it all. I have to uphold justice and law correctly," Dr. Yudhoyono said.

He then called on executives to remain independent when making decisions by not being heedful to outside political interference.

REGIONS
Jakarta Tightens Poultry Regulation
 The City Council endorsed Friday (13/4/07) a bylaw to control poultry farming and distribution in response to avian influenza outbreaks in the city.   Speaking to reporters after the endorsement of the bylaw, deputy governor Fauzi Bowo said the issuance of the regulation was timely and that he hoped people would comply with it.   "The most important thing is people's consciousness in the implementation of the regulation," The Jakarta Post quoted him as saying.   Of the country's 74 human bird flu fatalities, 21 were Jakarta residents. Nearly all of the victims had had contact with dead birds.   On January 19, a regulation issued by Governor Sutiyoso banning backyard poultry came in to effect, mainly affecting individuals raising chickens or keeping pet birds.   The new bylaw covers a wider part of the poultry industry as it stipulates that poultry farmers must have a license from the Jakarta Animal Husbandry and Fisheries Agency.   Applicants must have a Jakarta identity card, permission from the neighborhood and documents detailing the number of birds and the size and shape of the poultry stall, which must be located at least 25 meters away from any residential area.   Poultry farmers and slaughterhouse owners with pre-existing businesses have six months to fulfill the requirements or their businesses will be shut down and their birds seized.   Police Bust ‘Biggest Ecstasy Syndicate’
Jakarta police said Thursday (12/4/07) that they had caught four drug dealers and confiscated 80,678 ecstasy pills and 700 grams of crystal methamphetamine, with an estimated street value of Rp13 billion, The Jakarta Post reported.
Drug squad head Sr. Comm. Arman Depari identified the four suspects as Surya Wijaya, alias Eunderu Hartawan; Henry Ali, alias Ong Seng; Jefri, alias Asiong; and Hartono, alias Atong.
Police seized a Baretta handgun, 135 live bullets and a bank transfer report at a house in Sunter Agung in North Jakarta that belonged to one of the suspects.
Surya Wijaya told the police that the gun was his and that he had received the ecstasy, which was wrapped in aluminum foil packets containing 5,000 pills each, from a man identified only as DRT, who is still at large.
The four suspects are believed to part of a nationwide drug syndicate based in Jakarta, Arman said, adding that his detectives had been watching the men for more than a month before arresting them on Monday.

Tsunami Detector Installed off Java
Indonesia deployed a new tsunami detection buoy off the western coast of Java on Wednesday (12/4/07), an official said, as part of efforts to revive its early warning system that has been hit by technical problems, The Jakarta Post reported.
Jakarta first began setting up a tsunami warning system after the devastating December 2004 Indian Ocean tsunami that left 230,000 dead or missing, including 170,000 in Indonesia. Authorities deployed two buoys off Sumatra in 2005, but they have been dogged by technical problems and are out of service.
The head of the project, Ridwan Djamaluddin, said the new device will address the problems faced by the first two buoys and will be the nearest tsunami detector to the capital Jakarta and quake-prone areas on the western and southern coasts of Java.
"We are planning to make five more -- four Indonesian-made and one working together with the US," Djamaluddin said.
He said his agency aimed to have 11 tsunami detecting buoys operational by the end of this year.

More Phone Services for Remote Areas
The government is forging ahead with its policy of developing telephone and information technology services in all rural areas in Indonesia by 2015, despite many regions still lacking basic infrastructure such as electricity and water services, The Jakarta Post.
State Minister for the Development of Disadvantaged Regions Saifullah Yusuf said the program was part of the government's mission to provide low-income consumers with better access to telecommunication services.
"In addition to improving quality of life, wider access can have a significant positive impact on health, productivity, education and entrepreneurship," Yusuf said during a round table discussion on Monday (9/4/07).
The policy is based on an international program known as Universal Service Obligation (USO) concerning the provision of telecommunication networks by operators so that the telecommunication needs of remote communities can be fulfilled.

ECONOMY
More Reforms to Come: Boediono
Indonesia’s improving political stability and growing economy provide opportunity for Indonesia to push through more economic reforms, Coordinating Minister for Economic Affairs Boediono told an audience in Washington on Thursday, Agence France-Presse reported.
In an address to a joint forum of the US-ASEAN Business Council and the US-Indonesia Society, Boediono said Indonesia was on the threshold of a new period of growth in the 7% range.
"The improving macro picture, increased political and institutional stability allow us to turn with more focus and energy to the reform agenda," he said.
Boediono acknowledged impatience in the international community on the pace of reforms in Indonesia, but said the changes required lengthy consultation with the House of Representatives and other stakeholders because of the new democratic landscape.
"Expectations were high that significant reforms would be forthcoming faster than has proven to be the case, but we have to accept that we are operating in a new reality," he said.
Boediono said he still expected to see economic growth at 6.3%, a figure which Finance Minister Sri Mulyani Indrawati has admitted is still only a ’50:50’ chance.
But, Boediono said, next year an expected turnaround in investment sentiment amid increasing reform momentum could see even higher investment driving growth to "6.8% with the possibility that it could go higher and return to the 7% range."
The authorities are formulating a variety of regulations to support the new investment law, including investment approval procedures and tax reforms, he said.
The minister also acknowledged the infrastructure position was “critical” in many areas, and said the government is accelerating tendering of power plants. And, he added, “fundamental” civil service reform was on the way.
"It is no secret that one of the reasons we have had difficulty moving quickly on reforms has been an inability to deliver quickly on regulations needed to cut transactions costs," he said.
"An even greater problem is in our inability to make sure that policies once enacted are carried out as desired," he said.
Back home, the Jakarta Stock Exchange composite index was hitting new highs again, closing the week 0.56% up on the day at 1,941.520.
Foreign interest drove the market forward, according to Reuters, with strong interest in Bank Mandiri, which put on 4.3% following a report that it had slashed its non-performing loan levels.
Shares in Telkom Indonesia rose 1.5%, while Indofood gained 5% on predictions of strong first quarter earnings.
The resources sector also continued to provoke interest, with coal exports set to rise by up to 35 million tons to as much as 198 million tons this year, according to a survey of producers at McCloskey’s Fifth Asian Coal Conference.

BUSINESS BRIEFS

MACROECONOMY
Economic Growth Slows in Q1
Economic growth probably slowed slightly in the first quarter but the country is still likely to meet its full-year budget target, the Finance Department said on Wednesday (11/4/07).
The department’s estimated annual economic growth in the January-March period was between 5.7% and 5.9% compared with 6.1% in the previous quarter, which was the fastest in two years, Reuters reported. "Private consumption rose 3.6%-4.1%, while government consumption increased 4.5%-5%, and investment was up 6%-6.5%," the department said in a statement, referring to annual growth.
Growth in the first quarter is normally slower than the rest of the year, since government departments require time to start implementing programs.
Finance Minister Sri Mulyani Indrawati said on Tuesday (10/4/07) the government may raise net bond issues to Rp57 trillion to Rp65 trillion this year from Rp40.6 trillion approved in the budget to finance the budget deficit, forecast to rise to 1.5%-1.8% of GDP from a budget target of 1.1%.
To help finance the deficit, Jakarta expects to issue treasury bills every month and a higher amount of treasury bonds for both institutional and retail investors as well as Islamic bonds.  But new global bonds are not in prospect this year.  Indonesia last tapped the global debt market in February, selling $1.5 billion of 30-year bonds.
The Finance Department said earlier on Tuesday it aimed to raise Rp3 trillion from its first issue of treasury bills planned for April 24.  The target is at the lower end of its previously announced range of Rp3 trillion to Rp4 trillion.

Consumer Confidence Rises in March
Consumer confidence rose slightly in March, its first rise after three monthly falls in a row, a central bank survey showed on Monday (9/4/07).
The consumer confidence index, based on a survey of 4,650 households from 18 cities, rose to 93.3 in March from 92.4 in February, Reuters reported.  A reading below 100 still means more consumers were pessimistic about the future than optimistic.
The index last showed a brief burst of optimism when it rose to 101.6 in November, the highest in more than a year.  The February index was the lowest in eight months.

BI Awards Rp63.78t Worth of 1-Month SBIs
Bank Indonesia (BI) said it has awarded Rp63.78 trillion worth of one-month BI Certificates (SBIs) at a fixed rate of 9%, XFN-Asia reported on Wednesday (11/4/07). The auction absorbed all incoming bids.

INVESTMENT
Q1 Foreign Investment Rises
Foreign direct investment rose to $2.99 billion in the first quarter of 2007 from $2.6 billion in the same period last year, National Investment Coordinating Board (BKPM) chairman Muhammad Lutfi said on Tuesday (10/4/07).
Foreign direct investment approvals rose to $14.13 billion in the January-March period from $2.36 billion in the same period last year, he said, according to Reuters.
Meanwhile, realized domestic investment rose 60.56% to Rp13.68 trillion from Rp8.52 trillion a year ago while domestic investment approvals jumped to Rp77.15 trillion from Rp16.1 trillion in the same quarter last year.
Lutfi claimed that the pick up in both actual and proposed investments was due to the passage of a new investment law in the quarter, which includes the condition that both domestic and foreign direct investment "will be treated equally" in terms of rights, obligations and facilities, XFN-Asia reported.
Data from the investment board showed that for actual FDI projects, the biggest investment in the first quarter by PT Trans-Pacific Petrochemical in an aromatic project was worth $1.31 billion.
Major realized domestic investments included Rp3.78 trillion in a pulp industry project by PT Lontar Papyrus Pulp & Paper; and a ferronickel project worth Rp2.77 trillion by PT Antam.
Among the major FDI projects approved in the quarter was a new oil and gas refinery worth $4.44 billion to be built in Batam by PT Kilang Minyak Intan Nusantara Tanjung Sau.  A power project worth Rp1.745 trillion owned by PT Bosowa Energi was among the major domestic projects approved.
Last year, actual foreign direct investment fell to $5.98 billion from $8.91 billion in 2005, although FDI approvals were up to $15.62 billion from $13.58 billion.

Toll Road Tariffs to Increase by 20%
Tariffs for 13 toll roads will be increased by an average of 20% in August, a government official said Thursday (12/4/07).
Toll tariffs have been kept low in the country in recent years, making it harder to attract new investment.  The government administers toll fees in consultation with parliament.
"The government plans to raise the toll tariffs around 20% for 13 toll roads.  The government plans the new toll tariffs in August 2007," Hisnu Pawenang, the head of the toll road regulatory body, was quoted as saying by Reuters. Eleven of the 13 toll roads are in Java.
In an effort to boost investment in toll roads, Indonesia passed a law in 2004 which requires the government to review toll tariffs every two years.  Toll tariffs range from Rp1,000 ($0.110) to about Rp30,000.

Chinese Firms to Invest $55m in Steel Industry
Seven Chinese companies have been licensed to invest a combined $55.2 million in Indonesia's steelmaking industry in the country this year, Antara reported on Monday (9/4/07).
Based on data from the National Investment Coordinating Board (BKPM), the seven Chinese companies plan to produce various steel materials such as concrete reinforcing iron, rolled steel bars, angle iron and square bars.
One of the seven companies, PT Jakarta Central Asia Steel, plans to invest $36.6 million in the construction of a steel plant with a total capacity of 500,000 tons in East Jakarta. 
Other companies plan to build their projects in Serang and Tangerang, Banten; Mojokerto, East Java; and Bekasi, West Java.
The Chinese companies decided to go ahead with the project after witnessing growing demand for steel materials in the country this year, an Industry Department official said.

ASEAN to Set up Infrastructure Fund
The 10 member countries of the ASEAN have agreed to set up a special body to raise and manage an infrastructure fund to finance infrastructure projects in the region.
The agency is expected to help speed up procurement of funds and mobilize idle funds for infrastructure projects in the ASEAN, head of the Fiscal Policy Board, Anggito Abimanyu said, according to an Antara report on Wednesday (11/4/07).
Abimanyu said the initiative to set up the ASEAN Infrastructure Fund has been prompted by difficulty in securing funds from banks or other financing agencies for infrastructure development in this region, notably in Indonesia.
A meeting of ASEAN finance ministers in Chiang Mai, Thailand on April 5 formed a task force to prepare the setting up of a body to manage fund for infrastructure projects and each country will contribute to the fund.

STATE CONCERNS
Shoe Exports Up 7% in Q1
Exports and production of footwear rose 7% in the first quarter of the year over the same period last year, Antara reported.
Indonesia exported 177.1 million pairs of shoe valued at $1.43 billion in 2005, up from $1.32 billion in the previous year.

Coffee Prices Rising on Harvest Delay
With the coffee harvest falling some two months behind schedule in Sumatra, supplies are dwindling and prices are on the rise.
Robusta beans for immediate shipments are being offered at a premium of $200 to $300 a ton over London's May contract as exporters and local roasters scramble for cargoes, traders said on Monday (9/4/07), according to Reuters.
Local prices of robusta -- used in the making of instant coffee -- are hovering between Rp16,000 and Rp16,500 ($1.76-$1.81) a kg, up from between Rp14,250 and Rp14,750 a kg in March.
"Coffee beans are scarce while demand is still strong from exporters who have to meet shipment contracts.  Also, roasters are buying beans," said a dealer in Bandar Lampung, the main port for coffee exports.
Traders are expecting the main harvest in the leading growing area of Lampung to be delayed until April to May from the normal schedule of March as dry weather wilts the flowers.  There has been concern the harvest would dwindle with dry erratic weather affecting the harvest in Lampung as well as South Sumatra and Bengkulu.

SOEs
President: Stop Fund Injections
President Susilo Bambang Yudhoyono said the government will no longer be willing to inject new capital into state enterprises, Bisnis Indonesia reported.
"In 2006, the government had to increase its capital injections to several state enterprises. I hope this will not happen again in the future," he said on Thursday (12/4/07).
Yudhoyono added that the government would liquidate money-losing state enterprises to reduce the burden on the government’s budget.
The President said performance of SOEs was improving, with an average boost in earnings in 2006 of 20%.
At the end of 2006 the government was forced to pump money into state enterprises including PT Kertas Aceh (Rp100 billion), Merpati Nusantara (Rp450 billion) and Garuda Indonesia (Rp500 billion).
"I target that there will be no more money-losing state enterprises in 2008-2009," he said.

Telkom’s 2006 Net Profit Seen Up 36%
The Finance Department on Wednesday (11/4/07) estimated that PT Telkom’s unaudited net profit last year rose 36%.
The department's head of financial analysis, Anggito Abimanyu said Telkom’s unaudited net profit is expected to be about Rp10.9 trillion ($1.2 billion) in 2006, compared to the Rp7.99 trillion it made in 2005, Reuters reported.
The company is due to announce its audited results this month and no other details of its 2006 financial performance were immediately available.
Telkom, which controls 65% of PT Telkomsel, saw the subscriber base of its mobile unit expand to 35 million last year from just more than 24 million in 2005.  Telkomsel has already signed on about 3 million new users in the first quarter of the year, on track to meet its full-year target of 9.5 million, a company official said on Tuesday (10/4/07).
"Our customers reached 38 million by the end of the first quarter, 95% of them are prepaid customers," Telkomsel vice president of marketing Henry Mulya Syam told Reuters.  "I am optimistic our full-year target can be met.  The penetration of the industry is about 30%."
Meanwhile, Telkomsel will sell Rp2 trillion ($220 million) worth of bonds this year to help it expand its network coverage, two people with knowledge of the plan said.
Telkomsel will sell bonds maturing in three and five years in its first offering denominated in the local currency, said the two who declined to be identified before a formal announcement, Bloomberg News reported on Thursday (12/4/07).
Telkomsel is turning to the local currency bond market to take advantage of lower borrowing costs.  Companies raised Rp11.4 trillion selling bonds in Indonesia last year, compared with Rp6.3 trillion in 2002, when Telkomsel sold $150 million of debt overseas, according to data compiled by Bloomberg.
The company plans to spend $1.5 billion to expand its network as competition intensifies.  Telkomsel will build 5,000 mobile phone towers this year and buy equipment, commercial director Yuen Kuan Moon said on January 5.

Jasa Marga Names Underwriter for Bonds
State-owned toll road operator PT Jasa Marga has named PT Bahana Securities as the underwriter for the Rp1 trillion ($111 million) bond it plans to issue in the second quarter of this year.
Jasa Marga finance director Reynaldi Hermansyah said that toward the end of May, the company and the underwriter will start to process the issuance of the bond, Antara reported on Monday (9/4/07).
Hermansyah said he did not rule out the management raising the amount of the bond as the market is good.
He said the company has also named PT CIMB Securities as financial consultant for its plan to launch an initial public offering (IPO), which still needs approval from State Minister for State Enterprises Sugiharto.
Earlier, it was reported that Jasa Marga offered to sell part of its toll roads to raise funds to finance its toll road projects.  A number of investors have submitted bids to buy toll road concessions, such as Deutsche Bank, which wants to buy the Cipularang toll road in West Java, Sugiharto said.

PRIVATE SECTOR
Auto Market Revives In March
The country’s car market revived strongly in March with sales rising to more than 33,000 units after a decline to 23,810 units in the previous month from 26,788 in January, Antara reported on Monday (9/4/07).
This is a provisional figure, the association of car manufacturers Gaikindo said, noting that the actual data would be available middle of this month and most likely, sales in March would reach 34,000 units.
March sales brought the number of cars sold in the first quarter of the year to at least 83,589 units, as against only 79,300 units in the same period last year, the association said.
March saw a reversal in performance from February when sales dropped as a result of big floods that hit 60% of Jakarta.
Gaikindo chairman Bambang Trisulo predicted the rising trend will continue this month if present conditions prevail.

Excelcom Users Up 10.5%
Indonesia's third largest mobile phone operator, PT Excelcomindo Pratama, signed on some 1 million new users in the first quarter, a senior company official said on Wednesday (11/4/07).
The company, owned by Telekom Malaysia Bhd, is aiming for 4.5 million news users this year to add to its 9.5 million customers at the end of 2006.
"Our customers as of the end of the first quarter are 10.5 million.  It was not much but it is realistic and in line with our expectation for a full-year target of 4.5 million new users," Rudy Hermanto, general manager of marketing at Excelcom, was quoted as saying by Reuters.
Excelcom is the third largest operator after PT Telkomsel and PT Indosat.

BANKS
Bank Mandiri’s Net NPL Down to 4.7%
Bank Mandiri’s net non-performing loans (NPL) ratio fell to 4.7% in March from 5.9% at the end of last year, the bank said on Thursday (12/4/07).
"The decline was due to successful debt restructuring progress and repayment from some big debtors," the state bank said in a statement, according to Reuters.
"In line with the Indonesian Banking Architecture, Bank Mandiri has met all criteria as a bank with good performance and ready to become an anchor bank," Mandiri president director Agus Martowardojo said.
Martowardojo added that Bank Mandiri is planning to acquire a bank or a multi-finance company in an effort to improve its performance.
"We are considering buying a 51% stake in a company," he was quoted as saying by Dow Jones Newswires, without identifying any possible acquisition targets or a timeframe for the move.
"We will use our own internal cash to finance the acquisition," he added.  Last year, Bank Mandiri posted a net profit of Rp2.42 trillion, up from Rp603 billion in the previous year.
The Indonesian Banking Architecture is a roadmap produced by the central bank to consolidate the country's banking sector by encouraging takeovers and mergers in the $187 billion industry.  The central bank plans to appoint a few “anchor banks” which can acquire or merge with other lenders to speed up the consolidation process.
Meanwhile Merrill Lynch said Thursday it has upgraded its rating on Bank Mandiri to "buy" from "neutral", with a 12-month price target of Rp3,800 per share.
Merrill said in a research note that it now has "greater confidence" in Bank Mandiri's ability to resolve its outstanding asset quality problems.

Govt. May Raise $880m from BNI Stake Sale
Indonesia may raise up to Rp8 trillion ($880.2 million) by selling a stake in the country's third largest lender, Bank Negara Indonesia (BNI), its chief said Wednesday (11/4/07), according to Reuters.
The government plans to sell up to 35% in BNI through a secondary public offering and a rights issue as part of its privatization program.
BNI chief Sigit Pramono said the funds raised from the secondary public offering will be used to help narrow the state budget deficit, while funds from the rights issue will be used to boost the bank's capital base and help expansion.
Pramono said BNI expects to raise Rp3 trillion to Rp4 trillion from the rights issue and a similar amount from the secondary public offering.
The stake sale of BNI, earlier planned for June, may be postponed to July or August because it has not yet received parliamentary approval.

BCA to Extend Up to $1.1b in Loans
Bank Central Asia (BCA) is planning to extend up to Rp10 trillion ($1.1 billion) worth of loans this year, some Rp4 trillion of which would be allocated to corporations, vice president Jahja Setiaatmadja said.
The loans would be provided through the withdrawal of funds in Bank Indonesia short-term promissory notes (SBI), Antara reported on Thursday (12/4/07).
The bank's loans in 2006 grew 13.5% to Rp61.4 trillion, with corporate loans growing 19% to Rp23.9 trillion.
Commercial loans and loans for small and medium businesses meanwhile rose 16.1% to Rp29.2 trillion but consumer loans dropped 4.9% to Rp8.5 trillion, caused by a decline of 40.9% in motor vehicle loans to Rp2.5 trillion.
The bank's housing loans grew 23.9% to Rp4.4 trillion while the value of the bank's credit cards grew 34.3% to Rp1.6 trillion.
On December 31, 2006, commercial loans and loans for small and medium businesses reached 47.4% of the bank's total loans, while corporate credits contributed 38.8% and consumer credits 13.8%.
BCA and Bank Mandiri are currently forming a syndicate to distribute credits for the Jagorawi-Cinere toll road development.  They plan to extend Rp1.461 trillion for the project, with BCA’s contribution totalling Rp584 billion.

Shariah Banking Industry Improves
The shariah banking industry reported a net profit of Rp113.23 billion ($12.5 million) in February, up from Rp73.51 billion the previous month.
The improved performance followed a surge in operating income that doubled to Rp601.6 billion over the period, central bank data showed, according to Antara.
By February, the assets of shariah banks in the country were valued at Rp27.69 trillion, up from Rp26.95 trillion in January.
However, an increase was recorded by the shariah banks in their non-performing financing (NPF), from 5.17% to 5.54%, the association of shariah banks said.

Rupiah Deposit Rate Set at 9%
The state-owned Deposit Insurance Corp (LPS) has set its maximum rupiah guaranteed deposit rate at 9% for the April 15 to May 14 period, down from 9.25% in the previous month, the agency said on Thursday (12/4/07), according to Reuters.
It kept the maximum dollar guaranteed deposit rate unchanged at 4.75% for the same period.

POWER
PLN Calls for $2bn Power Project Tenders
State-owned electricity company PLN has called for tenders for a $2 billion power transmission project in the Java Bali interconnection, Asia Pulse reported on Wednesday (11/4/07).
The project will be financed from the state budget, export credit and foreign loans, PLN Transmission and Distribution Director Herman Darnel Ibrahim said.
The transmission system will include extra high voltage airborne cables, high voltage airborne cables and electrical relay stations, Ibrahim said.
In the Java-Bali interconnections, PLN plans to build 543 km of new transmission systems and relay stations in 40 locations and upgrade 793 km of old transmission networks.
It also plans to build 1,546 km of new transmissions and upgrade 133 km of old transmission system outside Java and Bali.

PLN Plans to List Unit
State electricity company PLN plans to list one of its power units to raise funds for business expansion, its chief said on Thursday (12/4/07).
PLN has a monopoly over power supply in Indonesia and operates 24,000 MW of capacity, although due to its ageing plants daily output is below capacity. It has been trying to boost its capacity to avoid shortages due to rising demand in the world's fourth most populous nation. It aims to increase its power capacity by 10,000 MW by 2010.
"The unit that we plan for IPO is PT Indonesia Power. We are looking for the right time to do this so we can get the best possible result. We need the funds for our business expansion," Reuters quoted Eddie Widiono, president director of the company, as saying. He declined to give details.
PT Indonesia Power, a subsidiary of PLN, was formed in 1995. It operates 8,800 MW of capacity and supplies 46% of the power needs of Java and Bali.

Bumi to Build Power Plants in S. Sumatra
PT Bumi Resources Indonesia, the country's biggest coal exporter, will build two "mine-mouth" power plants at a cost of $1.2 billion in Muara Enim, South Sumatra, a company executive says.
Bumi vice president director Kaz Tanaka told The Jakarta Post Tuesday (10/4/07) that the construction of the coal-fired plants was expected to begin in 2010. The two plants will have a combined capacity of 1,200 MW.
He said that the plants would be built in a coal-mining concession held by a company subsidiary in Muara Enim. The concession is believed to contain coal deposits of up to 1 billion tons.
"We plan to supply the electricity to South Sumatra and also West Java," he said, adding that the project would benefit from the government's plan to build a Java-Sumatra electricity interconnector.
Under the plan, a submarine cable will be laid in the Sunda Strait to link the power grids of Sumatra and Java so that excess power supply in Sumatra can be supplied to Java.
Tanaka said that his company had already entered into negotiations with state-owned electricity utility PLN. However, he refused to be drawn on the substance of the discussions as the interconnector project was still only at the planning stage.
He added that Bumi had set up a consortium called DH Power to handle the sale of the output from the two power plants. He did not give the names of the consortium members.
Bumi, Asia's third largest coal producer, plans to boost production to 90 million tons by 2010 from an estimated 60 million tons this year to tap rising demand from India and China, the world's two-fastest growing major economies. The company produced 53.5 million tons of coal in 2006.
The Indonesian government wants private power producers to add 10,000 MW of capacity by 2010 using coal and gas to cut the country's dependence on more expensive oil-based fuels.

Oil & GAS
Coal Seam Methane to Source Gas 
Indonesia plans to sign production deals in the next two months with firms including Royal Dutch Shell to extract gas from coal seams that could double the nation's output, Energy Minister Purnomo Yusgiantoro said on Sunday (8/4/07).
He also told Reuters that the country would start up a $6.5 billion liquefied natural gas (LNG) terminal around six months early in 2008 as it strives to stem a decline in its LNG exports.
Indonesia was the world's largest exporter of the gas cooled to liquid form for years until last year, but as output from its ageing oil and gas fields declined, fast-developing Qatar snatched the top spot.
Production of coal seam methane could help Indonesia to boost its LNG exports and gas available for power generation. “In the next couple of months, we will sign production-sharing agreements with several companies,” he said, adding Shell was one of them.
“We would use CBM (coal bed methane) for domestic consumption, then we can export more natural gas. We hope CBM can double our domestic production.”
The gas, typically trapped in the cracks of coal seams, is relatively easy to produce as it is at shallow depths, and output could be ramped up quickly once the deals were signed. It emits less greenhouse gas when burned than coal and has gained increased prominence as an alternative energy source.
Indonesia's total gas production stood at around 8.5 billion cubic feet per day, and could be doubled, Yusgiantoro said. He did not give a time frame for that increase, but said that the country's total gas output could rise by 25% by 2010.
The Tangguh LNG project, developed and operated by BP, will boost Indonesia's LNG output capacity by more than 30% to 31.5 million tons per year, from around 24 million tons now, Yusgiantoro said.
“We have accelerated the Tangguh project with the cooperation of the companies involved,” he said. “Instead of coming online by the end of the year in late 2008, it will come online in the second quarter.”
Indonesia will export the gas to Japan, China and Korea.

Pipeline Begins Commercial Delivery
State-owned gas transmission and distribution company Perusahaan Gas Negara (PGN) began delivering gas commercially through its 450 km pipeline linking South Sumatra and West Java at the end of March, a company official told Platts Commodity News Tuesday (10/4/07).
"The pipeline started delivering 30 million cubic feet/day (Mcf/d) of gas by the end of March and has ramped it up to 50,000 Mcf/d. It will increase the throughput volume gradually to meet PGN customers' demand for gas," PGN's corporate communications officer Agus Dihardjo said.
PGN made its first gas delivery on March 11. By July 2007, the volume of gas delivered via the pipeline is expected to rise to 170,000-232,000 Mcf/day and to 272,000 Mcf/day within the next year. In March 2008, gas delivery through the pipeline will be no less than 480,000 Mcf/day, according to PGN.
The gas delivered through the pipeline is supplied from Pertamina's Pagardewa field and ConocoPhilips' Grisik field in South Sumatra.
The pipeline was initially scheduled to be completed by December 2006, but was delayed to March because of reasons including land acquisition, heavy rainfall that led to difficulties in mobilizing heavy equipment and personnel and other technical problems.

 Pertamina to Exceed 2007 Production Target State-owned oil and gas company Pertamina said that its upstream subsidiary will exceed its production target of of 118,000 barrel per day (b/d) this year.   "Pertamina EP is producing 117,000 b/d currently. The output from Pondok Tengah is expected to reach 12,000 b/d within this year from 4,000 b/d currently. We have a 'breakthrough' project in Pondok Tengah," Pertamina upstream director Sukusen Soemarinda told Platts Commodity News on Thursday (12/4/07).   Pondok Tengah, in Bekasi, West Java, is expected to reach its peak production at 16,000 b/d by 2008. Pertamina EP plans to increase its oil output by 10.3% this year to 118,000 b/d, while gas output is expected to rise by as much as 59% to between 1.3-1.5 billion cu ft/d.   The increase in oil production is expected to come from Pondok Tengah while the additional gas will come from Pagardewa, South Sumatra, Soemarinda said.   The country fell short of its target for oil and condensate output for the 2006 state budget of 1.05 million b/d, pumping an average of only 1.007 million b/d.  

Crude Output Rises in March
Indonesia's crude production rose to 851,700 b/d in March, up 1.7% from 837,456 b/d a month earlier, an official at upstream regulator BPMigas said Tuesday (10/4/07).   The country's condensate output rose 1.3% to 114,700 b/d from 113,199 b/d in February, the official told Platts Commodity News.   Total liquids production was 966,400 b/d in March, up 1.7% from 950,655 b/d in February. "Several fields had been producing normally, therefore the oil and condensate production increased," he said.  

Medco Eyes Cassava in New Ethanol Plant
Indonesia's largest listed energy firm PT Medco Energi Internasional Tbk will start a 180,000 liter per day ethanol plant later this year, using cassava as a feedstock, a senior official said on Wednesday (11/4/07).   Bio-ethanol production from the plant in Lampung in southern Sumatra will be exported to Japan and the European Union, said president director Djatnika Puradinata from PT Medco Methanol Bunyu, a unit of Medco Energi.   "We will run at full capacity once the plant becomes operational. It will be the biggest ethanol facility in Indonesia and we are now negotiating with potential buyers for the product," Puradinata told Reuters on the sidelines of an energy forum in Singapore.   Besides this $45 million plant, there are currently four to five ethanol facilities in Indonesia, each with capacity of 120,000 liters per day or lower, he said. "We plan to build another five biofuel plants within four years from now and we are studying the feedstock," Puradinata added.   Medco preferred cassava to sugarcane although the latter offers the highest yield, as Indonesia already relies heavily on sugar imports. "We will use cassava in the new plant and it's important for the plant to be near the feedstock. Time is limited for processing. The starch content in cassava will change beyond 24 hours," he said.   Indonesia has nine refineries with 1.057 million barrels per day capacity but is forced to import fuels to feed growing transport and power sector demand. "Biofuel is seen as a substitute product and it will strengthen the country's energy security. We have plenty of arable land, also good for palm oil. There is no need for deforestation," Puradinata said.  

SPC's Oyong Field to Start Production
Singapore Petroleum Company (SPC)expects oil from its Indonesian Oyong field to start flowing this quarter, with its share amounting to about 6,000 barrels per day (bpd), Singapore’s Business Times reported on Thursday (12/4/07).   This will add to its current output of 2,540 bpd of oil equivalent from its only producing field so far at Kakap. More significantly, SPC is gearing up to be a bigger gas player, its just-released 2006 annual report shows.   “An interim analysis from the operator of the Oyong field suggests that the mid-range recoverable oil and gas volumes for the field are six million barrels and 97 billion standard cubic feet respectively,” the report says.   This means that for oil alone, SPC's 36% stake in the Oyong production sharing contract will give it 5,917 bpd - at the higher end of its earlier expectation of 3,600-7,200 bpd.   Phase 2 gas development at Oyong, which sources say should start next year, will include construction of a 60 km pipeline from the field to a power plant at Grati, East Java, owned by PT Indonesia Power.   The Oyong partners expect to sell between 40 and 60 billion British thermal units per day under this deal.   At the Kakap oil/gas field, SPC says production has increased 10% after additional work last year and is expected to be boosted further by a gas discovery at the Lukah-1X well.   'Lukah-1X well successfully tested natural gas and condensate over two sand intervals. The intervals flowed at a rate of approximately 19.7 million standard cu ft per day of natural gas and 2.8 barrels of condensate per day,' SPC's report said.   Following this, pipeline construction is expected to start in the second half to tie the recent gas discovery at Lukah to the production platform.  

Pertamina to Invest Rp14T to Boost Output
State oil firm Pertamina aims to invest Rp14 trillion in the upstream and downstream sectors this year to boost sagging output, up about 40% from its initial projection, an official said Monday (9/4/07).
Its plans include exploring many untapped oil and gas areas in Indonesia, OPEC's second-smallest producer that has struggled to maintain output and became a net crude oil importer last year, as it has failed to tap new oilfields fast enough.
Company spokesman Toharso told Reuters the firm will invest Rp10 trillion in upstream activities and Rp4 trillion in the downstream sector this year, compared with Rp8 trillion for upstream activities in 2006.
Pertamina said in January it planned to drill 30 exploration wells this year, compared with six wells in 2006, and planned to spend around Rp10 trillion.
Pertamina has said it will raise crude oil output to 118,000 barrels per day (bpd) in 2007 from its own operations, compared with 107,000 bpd last year.
Another Pertamina official said the company had secured around $500 million in loans from foreign banks this year. It will also use internal funds for this year's investments, he added.
The official said the company needed funding for a new 50,000-bpd gasoline cracking unit it plans to build in the Cilacap refinery with Japan's Mitsui & Co. The Cilacap refinery in central Java has a capacity of 348,000 bpd.
  Pertamina also has said it will move to expand its business in Qatar and Egypt by buying stakes in oil and gas companies in the two countries, Upstream reported on Thursday (12/4/07).   Currently Pertamina is aggressively expanding oil explorations in overseas locations including Sudan, Libya, Ecuador and Vietnam.   Pertamina’s upstream director Sukusen Soemarinda said the company is set to increase its annual crude oil production and for that purpose it will send a team to Qatar and Egypt to study offers it has received from oil and gas companies in the two countries, Asia Pulse reported.   Pertamina already has two oil blocks in Libya and drilling is to start next years on two or three wells, he said. In Ecuador, Pertamina has carried out seismic surveys over two blocks.

MINING
Timah 1Q Sales to Rise 61%
Tin producer PT Timah expects sales to have risen 61% on year in the first quarter of 2007 due to an increase in sales volume and higher commodity prices. "Sales are expected to increase to Rp1.3 trillion from Rp809.8 billion a year earlier," Timah finance director Wachid Usman told Dow Jones Newswires on Thursday (12/4/07).
In the first quarter of 2006, Timah sold 12,000 metric tons of tin, up 20% from around 10,000 tons a year earlier. The company sold the commodity at an average of $12,000 per ton.
Usman didn't give any comparison price for the corresponding period last year, but expects tin prices to stay at $13,000 per ton for the rest of 2007.

Share of World Coal Market May Reach 26%
Indonesia has the potential to control 26% of the world's coal trade, which is forecast to total 730 million tons this year, the Indonesian Coal Society (ICS) said.
ICS Director Singgih Widagdo told Asia Pulse on Thursday (12/4/07) that Indonesia was forecast to export up to 140 million tons of its total coal production, estimated at 190 million tons this year.
Coal requirements in the country are not yet as high as expected this year, despite an ambitious program to replace oil fuel with coal, Widagdo said. The government had launched a program to build many new coal-fired power plants and to reduce the use of oil fuel in other industries such as cement and steel factories.
He said the opportunity was wide open for Indonesia to increase its market share, with an expected decline in coal supply from Australia and China.

Bakrie Now Largest Coal Producer
The Bakrie Group, through PT Bumi Resources with subsidiaries PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, took over as the largest coal producer in the country in 2006, relegating PT Adaro Indonesia, which is owned by Sandiago Uno and Edwin Soeryadjaya, to second place, Antara reported on Friday (13/4/07).
KPC and Arutmin produced 51.65 million tons of coal last year worth around $2.06 billion putting Adaro behind with production of 34.37 million tons worth around $1.37 billion.
Based on data at the Association of Coal Mining Companies (APBI) KPC reported a sharp increase in output to 35.3 million tons in 2006 from 28.18 million tons in 2005. This year it is set to push up production to around 36 million tons.
Adaro, which was the largest coal producer in the country until 2005, also hopes to increase its coal output to 36 million tons this year. The Bakrie Group, however, will lead with production from Arutmin.
The Bakrie Group has stakes in publicly listed Bumi Resources through Willow Finance Limited and Long Haul Holdings Ltd with other shareholders Credit Suisse of Singapore branch and Jimba Finance Limited and investing public.
In addition to KPC and Arutmin, Bumi Resources are holding companies for PT Indocoal Kalsel Resources, PT Indocoal Kaltim Resources and Indocoal Resources (Cayman) Limited.

East Asia Minerals Acquires Sangihe Project
East Asia Minerals Corporation announced it has signed a joint venture agreement (JVA) with PT Sangihe Mineral and PT Amsya Lyna to explore and develop the Sangihe gold-copper project, Canada Newswire reported on Thursday (12/4/07).
Under the terms of the JVA, EAS has a 70% starting equity in the 42,000 hectare property which encompasses numerous drill-ready epithermal gold and porphyry copper-gold prospects. Field teams have been mobilized to the Sangihe project, located on Sangihe Island, North Sulawesi.
The Company has now received all necessary approvals in principle from the government, and has been granted a preliminary exploration permit (SIPP) whilst it continues its negotiations for the grant of a Contract of Work (CoW). Under the SIPP the company is authorized to conduct all proposed exploration activities, including drilling.

Gem Diamonds to Buy BDI Mining
Diamond miner Gem Diamonds Limited said on Wednesday (11/4/07) it had agreed to buy Indonesia-focused BDI Mining Corp in a cash offer worth $82.61 million.
The company said in a statement it would pay 37 pence a share for BDI, an 8.8% premium to Tuesday's closing price, Reuters reported.

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