POLITICS
Dujana Faces Death Penalty
Alleged former Jemaah Islamiyah (JI) military chief Abu Dujana will face charges of weapons and explosives possession under anti-terror laws that carry a maximum penalty of death, Agence France-Presse reported on Thursday (21/6/07).

National Police spokesman Maj. Gen. Sisno Adiwinoto said Dujana would also face charges of harboring Malaysian fugitive Noordin M. Top, wanted for a series of bomb attacks across Indonesia.

Adiwinoto did not rule out Dujana being charged with some of the bombings over the past five years and his alleged involvement in the beheadings of three school girls in Central Sulawesi in 2005.
Dujana and the head of JI since 2004, Zarkasi, were arrested by anti-terror police on June 9 along with six other suspected militants.

Their capture has been seen as a severe blow to JI, which wants a pan-Islamic state across much of Southeast Asia, but analysts have warned the group has the capacity to eventually bounce back.

India, Indonesia Ponder Action Plan
Indonesian and Indian officials on Monday (18/6/07) discussed a detailed action plan to make
their new strategic partnership agreement a reality, The Jakarta Post reported.

The agreement, which was envisaged by President Susilo Bambang Yudhoyono and Indian Prime Minister Manmohan Singh in 2005, is aimed at enhancing cooperation in various fields and boosting economic ties.

Foreign Minister Hassan Wirayuda and his Indian counterpart, Pranab Mukherjee, who headed their respective delegations at the Third Indonesia-India Joint Commission Meeting, signed a document on agreed minutes to enable a diversification of their trade basket and address the impediments to the expansion of trade and investment.

Apart from addressing economic cooperation, the meeting also discussed future cooperation in the fields of politics, defense, health, education and space exploration.

Pointing to the way bilateral trade between Asia's two largest democracies had increased significantly over the last several years, both ministers expressed optimism that the two countries would soon achieve $10 billion in two-way trade volume.

Minister: Press Freedom Safe
Communications and Information Minister Muhammad Nuh said Monday (18/7/07) that the government remains committed to protecting Indonesian press freedom as well as those working in the media industry, The Jakarta Post reported.

"There have been no such ideas to revise the 1999 Press Law ... We don't know where the issue has come from," he told a hearing with the House of Representatives Commission I for information, defense and foreign affairs.

The minister was responding to questions raised by commission members who warned that the nation's press could be returned to its former state under the authoritarian New Order regime if the government pursued a revision of the Press Law.

The acting Director General for Information Services, Widiatnyana Merati, said the ministry is currently studying ways to empower the media, provide social security programs for media workers and ensure that the legislation is used in legal cases.

"So far, we have held discussions with the University of Indonesia and the Padjadjaran University in Bandung, West Java, to prepare the necessary regulations or decrees to enforce the Press Law," he said.

REGIONS
Three-year-old saved from bird flu after quick intervention
A 3-year-old Indonesian girl has tested positive for bird flu and is recovering in a hospital in Sumatra, a health ministry official said on Saturday Reuters reported on Saturday (23/6).
The girl from the town of Rumbai in Riau Province fell sick on Wednesday and was being treated at the Arifin Achmad hospital in Pakanbaru, said Joko Suyono at the ministry's bird flu centre.
"She tested positively for bird flu in two laboratory tests," Suyono said, adding that she had been in contact with dead chickens. The official said her condition was improving, although did not elaborate.
Indonesian Health Minister Siti Fadillah Supari said on Friday that a vaccine to combat human bird flu could be ready as early as next month and it was prepared to use it immediately despite calls from the WHO to build up a stockpile first.
The minister said clinical trials should wrap up soon for the vaccine, which is being jointly developed with a unit of U.S. firm Baxter International Inc.
The Indonesian government and Baxter agreed in February to develop a vaccine. Under the agreement, Indonesia has been supplying virus specimens, while Baxter is providing the technology to develop the vaccine.

Indonesia ready for forest fires: Minister
Indonesia is prepared to handle more forest fires this year and will receive foreign assistance only on advice, said Forestry Minister Malam Sambat Kaban as reported by The Jakarta Post.
"The government is more prepared because we are coordinating with all related stakeholders," Kaban told Antara news agency in Batam, Riau Islands on Sunday (17/6).
A series of fire prevention workshops have since May been held in Jambi, South Sumatra, South Kalimantan and West Kalimantan.
The workshops involved participants from the ministries of forestry, agriculture, the office of coordinating minister for people's welfare, the state ministry of environment, forestry and agricultural businesspeople as well as local administrations and communities.
Kaban said forest fires had brought air pollution to neighboring countries but Indonesia should not be fully blamed.
"Not just Indonesia experiences forestry fires, the U.S. also experiences (them)," said Kaban.
Forest fires in Indonesia were a natural phenomenon and directly related to the country's lengthy dry season, he said.
But Kaban said about 60 percent of the fires were located in peatlands, which were high-risk fire zones during the dry season.
This year the government would allocate up to Rp 144 billion (US$15.8 million) to deal with forest fires and smog and to alleviate condemnation from neighboring countries.
The government said last week governors and regents would be prepared to deal with the disasters and would aim to reach a target of "zero hot spots".
"We now have less than 100 hot spots across Kalimantan, South Sulawesi, Riau, Jambi and North Sumatra," Kaban said.
"Last year, there were thousands."
The ASEAN Specialized Meteorological Service in Singapore said between June and August last year, 52,599 hot spots affected 8,500 ha of forest land across Indonesia.
And forest-fire haze from Indonesia last year affected millions of people in Malaysia, Singapore, Brunei, parts of Thailand and the Philippines.

ECONOMY
Tax Law Passed by House
The House of Representatives on Tuesday (19/6/07) passed the new Taxation Arrangements and Procedures Law, an important step in a long-awaited process of revision of Indonesia’s three taxation laws.
The law aims at creating a regulatory framework to make it easier for taxpayers to appeal official rulings, and to reduce incidences of arbitrary detention of taxpayers, Dow Jones Newswires reported.
It also contains provisions under which taxpayers will not be obliged to pay disputed taxes until a court ruling has been made.
Finance Minister Sri Mulyani Indrawati said the provisions would serve to give taxpayers greater legal standing.
"I don't think there will be any retrenchment in tax revenues. The government has calculated this objectively and carefully. There won't be a loss in revenue, but there could be delays in collection," she said, according to The Jakarta Post.
Tax Director General Darmin Nasution has said it is hoped the new law will assist in widening the taxpayer base. At the moment, he says, only around 60% of household heads, or 30 million, are eligible to pay tax, but only 3.1 million are registered as taxpayers.
 
“Out of the 3.1 million people, only about 35% so far have submitted their tax forms to the tax office,” he said.
The House is also reviewing the Income Tax Law and the Value-added Tax and Luxury Sales Tax Law, and Nasution says he expects debate on new versions to be speedy.
Bank Indonesia said it expects end-year inflation to be at the lower end of its projected range of 5% to 7% as food prices have stabilized.
“Hopefully, we can have the lower-end of our target” for 2007, said deputy governor Aslim Tadjuddin. Inflation will probably be “below 6%,” he said in an interview with Bloomberg News.
 
Coordinating Economics Minister Boediono said he expected the economy to grow by as much as 6.3% in the second quarter, compared to growth of 5.97% in the first quarter.
Production from several sectors, especially from agriculture, has picked up, and total investment in the country has increased, spurring higher growth, Boediono told reporters, according to Dow Jones Newswires.
Finance Ministry fiscal policy head Anggito Abimanyu said Indonesian imports of capital goods were higher over the second quarter of 2007 than in the first quarter, but did not cite figures.
The government also announced it wanted to trim spending on fuel subsidies by up to Rp22.5 trillion ($2.5 billion) in the 2008 budget by cutting use of heavily subsidized kerosene and reducing subsidy spending on vehicle fuels.
Luluk Sumiarso, Director General of Oil and Gas at the Energy and Mineral Resources Ministry, told the House’s energy commission on Tuesday that a program to replace kerosene for household use with LPG would reduce usage to 8.6 million kiloliters (kl) next year from 9.9 million kl this year, The Jakarta Post reported.
The government would also reduce the quota of subsidized gasoline to 16.9 million kl in 2008 from 17 million kl this year. However, it would maintain the quota for subsidized diesel next year at 11 million kl.
Daihatsu announced that it would increase its production capacity in Indonesia by around a third by October to 150,000 units from 114,000 units.
The additional capacity, which will cost the company Rp1.2 trillion ($134.5 million), is part of its plan to boost its capacity to 270,000 units by 2010.

BUSINESS BRIEFS
MACROECONOMY
Q2 GDP Growth Likely Up on Q1 - Minister
The economy may grow as much as 6.3% on year in the April-June quarter, compared with the 5.97% in the previous quarter, Coordinating Minister for the Economy Boediono said Thursday (21/6/07).
Production from several sectors, especially from agriculture, has picked up, and total investment in the country has increased, spurring the higher growth, Boediono was quoted as saying by Dow Jones Newswires.
Finance Department fiscal policy chief Anggito Abimanyu said the country’s imports of capital goods were higher over the second quarter than in the first quarter.
The Central Bureau of Statistics will release official economic growth data for April-June 2007 early next month.

Central Bank Deputy Sees Firmer Rupiah
The central bank expects the rupiah to become stronger going forward, deputy governor Aslim Tadjuddin said on Tuesday (19/6/07).
Tadjuddin also said that the monetary authority would try to avoid sharp volatility in the currency, which has gained 1.25% against the dollar since the start of the year.
"Going ahead, I think the rupiah will continue to strengthen.  We are trying to keep the volatility low," he was quoted as saying by Reuters.
The rupiah rose as high as 8,865 per dollar, its highest since June 7 and up almost 0.7% from late Asian trade on Monday (18/6/07) but fell to 8,978 per dollar on Thursday (21/6/07).

Govt. Sells Rp4.5t Worth of T-bonds
The government has sold Rp4.5 trillion worth of treasury bonds to help finance its budget deficit this year and to repay maturing bonds, the Finance Department’s debt management director Rachmat Waluyanto said.
The paper came from the reopening of earlier bond series, XFN-Asia reported on Tuesday (19/6/07).
Waluyanto said Rp2 trillion worth of bonds, due 2022 and carrying a weighted average yield of 9.34602% were sold, while Rp2.5 trillion worth of paper, due 2037, carrying a yield of 9.60371% also changed hands.
Bids totaling Rp9.91 trillion were received for the shorter maturity, with Rp6.54 trillion worth lodged for the longer dated debt, the department said.

INVESTMENT
Redland Capital to Acquire More Stakes
Redland Capital Ltd, a private equity fund company from Indiana, the US, said it has set aside $500 million to acquire stakes in Indonesia.
Redland Capital already acquired a stake in Palm Asia Corpora, which has been renamed PT Redland Asia Kapital, Antara reported on Tuesday (19/6/07).
Redland Asia president David Darmawan said the fund is keen on acquiring stakes in other publicly listed companies in the country.

Indofood Agri to Spend $215m on Expansion
PT Indofood Agri-Resources, the plantation arm of conglomerate PT Indofood, will invest up to $215 million to boost its oil palm plantations and crude palm oil (CPO) refining capacity in the next two years.
The company will spend between $50 million and $55 million to increase its CPO refining output to 970,000 tons annually by 2009 by expanding the capacity at two of its refineries in Jakarta and Medan.
On top of that, it is spending $160 million to plant new palm trees on an additional 70,000 hectares of land over the next two years, Mark Wakeford, head of investor relations at Indofood Agri, said in an interview with XFN-Asia.
Indofood Agri has an annual CPO output of 300,000 tons.  That should more than double to 640,015 tons once Indofood Agri completes the acquisition of palm oil producer PT PP London Sumatra by the end of this year. The company is currently conducting due diligence on London Sumatra.
The plan is to buy an initial 64.4% of London Sumatra from various controlling shareholders, including First Durango and the Ashmore Funds, for about S$1 billion.  Indofood Agri will make a tender offer for the rest of London Sumatra for another S$600 million.
"The acquisition will strengthen IndoAgri's integrated plantation business model by expanding our core plantation business," Wakeford said.

Shoemakers to Invest $31.8 M
Twenty-two shoe manufacturers plan to invest $31.8 million in Indonesia this year, an official
said, according to Asia Pulse.

Twenty of the investors are foreign companies from China, South Korea and Taiwan, director of multifarious industries at the industry ministry Nugraha Sukmawijaya said.

The investors have been prompted by the improved macro-economic stability, the stronger value of the rupiah and declining interest rates, he said.

Daihatsu Plans to Raise Capacity
Daihatsu Motor plans to increase its capacity in Indonesia by about a third by October to meet stronger demand for Toyota-badged cars manufactured by Daihatsu, such as the Toyota Avanza and Rush, a senior executive at Daihatsu's distributor said Wednesday (20/6/07).
"Our current (annual) capacity is 114,000 units.  The plan to boost it to at least 150,000 units might come into operation by October," Sudirman, vice president director of PT Astra Daihatsu Motor, told Reuters.
The additional capacity, which will cost the company Rp1.2 trillion ($134.5 million), is part of its plan to boost its capacity to 270,000 units by 2010.
Daihatsu sells a significant number of its car rebadged as Toyotas in Indonesia.  Out of Toyota's total sales of 123,698 units in the country last year, 42% were Daihatsu-made vehicles.
Daihatsu Motor earlier said it will stop operation in Vietnam in favor of doing business in Indonesia.
The taxation system in Vietnam is not attractive, and Daihatsu has decided to concentrate on its operations in Indonesia, company spokesman Hiroshi Maruyama said, according to an Antara report on Tuesday (19/6/07).
Sudirman said Astra Daihatsu will seek to export its products to Vietnam to fill the market left by Daihatsu in that country.

Kalbe Farma Acquires Singaporean Firm
Pharmaceutical company PT Kalbe Farma said it has acquired Singapore-based pharmaceutical firm Kalbe International Pte Ltd (KI).
"PT Kalbe Farma has made an investment in Kalbe International to expand its business operations overseas," Kalbe Farma director Herman Widjaja told the Jakarta Stock Exchange on Monday (18/6/07), according to Antara.
Widjaja however did not disclose the acquisition value when Kalbe Farma bought KI on June 11.
Publicly-listed Kalbe Farma is engaged in the production and distribution of pharmaceutical products for both humans and animals.  It consists of four divisions:  pharmaceuticals, health food, packaging and distribution.
The company has more than 10 subsidiaries, which are engaged in the pharmaceutical, health food, packaging and financial sectors.  It has two production facilities in Bekasi, West Java.

STATE CONCERNS
Japan EPA in August
Japan and Indonesia almost completed work on Friday (22/6/07) on a proposed economic partnership agreement (EPA) aimed at liberalizing bilateral trade, Jiji Press reported.

The two countries aim to sign the agreement in late August, when Japanese Prime Minister Shinzo Abe is expected to visit Indonesia, Japanese officials said.

The agreement is expected to take effect next spring, the officials said.

Indonesia will be required to abolish import duties on Japanese industrial products such as automobiles and steel products in stages to attract automotive investment into the country.

For Japan, the agreement calls for scrapping import duties on Indonesian shrimps while expanding imports of bananas and pineapples from Indonesia. In addition, Japan will accept Indonesian nurses.

Govt. Plans to Cap Cigarette Output by 2010
The government plans to start limiting cigarette production by 2010 in a tentative move to curb smoking in the world's fifth-largest tobacco market.
While the number of smokers in western countries has fallen, a third of Indonesians now smoke, up from a quarter 10 years ago, Reuters reported on Tuesday (19/6/07).
Cigarettes cost as little as $1 a pack in Indonesia, which has a population of about 225 million.
Imam Haryono, director of beverages and tobacco at the Industry Department, said on Tuesday there are plans to cap production at 240 billion cigarettes in 2010.
"In 2010, we will impose a maximum production of 240 billion sticks and in 2015, the limit will be 260 billion and remain at that until 2020," Haryono said.
Indonesians smoked an estimated 220 billion cigarettes last year, the same as in 2005 but below a peak of 239 billion in 2000, according to government data.
According to the World Health Organization, about a quarter of deaths in the country in 2005 were caused by tobacco, and 80% of lung and respiratory cancer cases were due to smoking.

Govt. to Revitalize Sugar Industry
The government plans to revitalize the country's sugar industry to achieve self-sufficiency in sugar production and improve the welfare of sugarcane farmers, Vice President Jusuf Kalla said.
The revitalization will involve renovating 52 aged sugar mills and will cost Rp5 trillion ($555.5 million, Kalla said Tuesday (19/6/07), according to The Jakarta Post.
"The effort can be financed by the banks because this program is profitable," he said.
Industry Minister Fahmi Idris said revitalizing the sugar industry could take three years.  "A number of banks have already expressed interest in financing the program," he said, naming state banks Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI), and private banks Bank Central Asia (BCA) and Bank Mega.
BNI president Sigit Pramono said, "so long as the program is profitable, the banking industry is ready to help."

Palm Oil Exports Seen Up in July on High Output
Indonesia may see exports of palm oil products in July rise by one-third from May, despite an increase in export tax, as producers may be forced to sell their output to avoid a glut, traders said on Wednesday (20/6/07).
"Some producers may have to export because their production is rising while domestic consumption isn't much," said a trader in Medan, one of the leading ports for palm oil exports.
"Exports should be at least 1 million tons, otherwise storage tanks will be full," he was quoted as saying by Reuters.
The country’s palm oil production normally starts to climb in June and reaches its peak in August-September during the rainy season.

SOEs
Govt. Aims to Privatize 15 Firms in 2008
The government aims to sell stakes in 15 state firms through initial public offerings next year, with flag-carrier PT Garuda Indonesia to follow the year after, State Minister for State Enterprises Sofyan Djalil said on Thursday (21/6/07).
"We are in coordination with the privatization committee.  For next year, we will propose 15 state companies to enter the capital market," Djalil was quoted as saying by Reuters.  He did not name the firms.
"For Garuda, we are focusing on restructuring the company to improve its value before selling it.  In 2009, Garuda will go public."
Last year, the government injected Rp500 billion into Garuda to help the company, which like many airlines had been hit by high fuel costs.  The company has been struggling to restructure some $800 million in debt, mostly owed to European creditors.
The government has also announced plans to sell stakes in the country's third largest lender, Bank Negara Indonesia (BNI), and toll-road company PT Jasa Marga through IPOs in 2007.
Djalil also reiterated his office's plan to set up holding companies for mining and plantation firms to improve the efficiency and bargaining power of the state firms in the international market.

Govt. to Audit State Assets
President Susilo Bambang Yudhoyono on Tuesday (19/6/07) ordered a massive reevaluation of all assets controlled wholly or partly by the government to prevent their misuse, as well as a revamp of all agencies tasked with managing state assets.
"The president expects a complete report on state assets in the next month or two...  The report will not be concerned only with the amount of assets but also the managing agencies, some of which are no longer consistent with existing regulations," State Secretary Hatta Radjasa said.
He said that assets under the control of the State Secretariat and the Finance Department would be among those audited.

Garuda, Hainan Airlines in Code-Sharing Agreement
National flag carrier PT Garuda Indonesia and China's fourth largest airline, Hainan Airlines, signed a code-sharing agreement on Tuesday (19/6/07) to strengthen their marketing positions in China and Indonesia, reported The Jakarta Post.
Agus Priyanto, Garuda executive vice president for sales and marketing, said the agreement would allow Hainan Airlines to sell up to 20 seats on each Garuda flight from Jakarta to Beijing, and vice-versa.  The agreement will come into effect in July.
According to Den Jiang, general manager of Hainan Airlines, his company would also serve Garuda passengers with connecting flights to domestic destinations in China, including Harbin, Hangzou and Nanning.
"Through this deal, Garuda and Hainan Airlines hope to secure bigger markets in the Chinese region and in Indonesia," Priyanto said.
Hainan Airlines flies to 53 cities across China, while Garuda flies 16 times a week to four cities in China.
In 2006, Garuda carried more than 275,000 passengers between the two countries and expects the figure to increase to more than 300,000 passengers this year.
Garuda's China routes generate $130 million from passengers and $150 million from cargo, about 25% of the airline's total revenue.

PRIVATE SECTOR
MNC Up 17% on Debut
Shares of media company PT Media Nusantara Citra (MNC) opened at Rp1,050 ($0.117) in their stock market debut on Friday (22/6/07), 17% above the issue price of Rp900, Reuters reported.

MNC, controlled by conglomerate PT Global Mediacom, raised about $419 million in the country's largest initial public offering since 2003.

Shares in the media firm went as high as Rp1,220 before giving up some of their gains, to trade at Rp1,020 at the close. The overall Jakarta index inched 0.22% higher.

At the opening, MNC had a market capitalization of nearly $1.8 billion.

The company plans to use the proceeds from the sale of a 30% stake to repay its debt and finance expansion.

MNC operates television stations including the country's first private TV station, Rajawali Citra Televisi Indonesia (RCTI), Global TV and Televisi Pendidikan Indonesia.

Global Mediacom, previously known as PT Bimantara Citra, used to be controlled by the family of former President Suharto before the Asian financial crisis hit in the late 1990s.

June Vehicle Sales Seen at 38,000 Units
Vehicle sales in June may top 38,000 units due to declining interest rates, the head of the Automotive Industry Association (Gaikindo) said on Wednesday (20/6/07).
June's estimated sales translate to a nearly 55% increase over the same month in 2006, taking this year's total sales so far closer to 200,000 units, half-way to the full-year industry target.
"Car sales in June are expected to reach 38,000 as interest rates might still be able to go down," Gaikindo chairman Bambang Trisulo was quoted as saying by Reuters.
Some analysts and industry experts expect sales in the second half of the year to be better than the first half.
The central bank cut its key interest rate, the BI rate, to 8.5% this month, far lower than 12.75% at the beginning of the year.

Telkomsel Sees 18m 3G Subscribers by 2010
PT Telkomsel expects its third generation (3G) mobile subscribers to be 30% of total subscribers by 2010, chief executive Kiskenda Suriahardja said Thursday (21/6/07).
The company expects to have 18 million 3G subscribers by 2010 and total subscribers of 60 million, he told a telecommunications conference in Singapore, Dow Jones Newswires reported.
He added that the company's average revenue per user is expected to fall 5% to 7% this year compared with 2006.
Telkomsel had 42 million subscribers in May, with 3G subscribers totaling 2.3 million.

Mandala Air Orders 25 Airbus A320s
European airplane-maker Airbus won a firm order for 25 A320 narrow-body aircraft from Mandala Airlines worth $1.9 billion based on list prices.  The domestic carrier said it would make a decision on engines for the aircraft soon.  It also said it was reviewing options for financing of the order, Reuters reported on Thursday (21/6/07).
Mandala president director Diono Nurjadin told a news conference at the Paris air show that it was looking to fund the aircraft either through a capital markets exercise or through bank lending.
Mandala Airlines was bought last year by two investors, Indigo Partners and Indonesian logistics company Cardig International, and it has rebranded itself with new livery.
He added that Mandala plans to phase out its existing Boeing 737 fleet starting from late 2008.

BANKS
BNI to Sell 30% in August Offering
The country's second largest lender, state-owned Bank Negara Indonesia (BNI) will sell 30% of its shares on the Jakarta Stock Exchange in the second week of August, Asia Pulse reported.

In the privatization plan, the government will sell a 15% stake in the bank and another 15% stake will be sold through a rights issue, BNI President Sigit Pramono said.

The publicly listed bank is 99.1% owned by the government and the rest is owned by the investing public.

Pramono said the bank will start a road show program next month to Europe and the United States.

The government has named Bahana Sekuritas and JP Morgan as the underwriters for the share sales, expected to raise Rp4.5 trillion ($504 million) in fresh funds.
 

Mandiri Upbeat on Shariah Mutual Funds
Bank Syariah Mandiri, a subsidiary of Bank Mandiri, is expecting investments in its shariah mutual funds to grow by more than 400%, its president director Abiprayadi Riyanto said Tuesday (19/6/07).
"We expect to see an increase from Rp19 billion (about $2 million) as of May to between Rp100 billion and Rp200 billion by the end of the year as there is still a large, untapped market for shariah fund products," Riyanto was quoted as saying by The Jakarta Post.
The total value of investments in shariah mutual funds currently stand at only Rp800 billion, about 0.8% of the Rp64 trillion mutual fund market in the country, he said.  Shariah mutual funds are currently offered by 12 financial institutions.
"We expect to see an increase of 50% in the total amount of money invested in shariah mutual funds from Rp800 billion at the moment to Rp1.2 trillion by the end of this year," he said.
The government's plan to issue shariah bonds worth Rp3 trillion in September is expected to improve the return on mixed mutual funds, as the bond issue would increase liquidity in the bond market, Priyanto Soedarsono, a fund manager with Mandiri Manajemen Investasi, said.
Bank Central Asia (BCA), the country’s second largest lender, also aims to enter the Islamic finance business, which may involve buying other lenders.
BCA corporate secretary Raymon Yonarto said Tuesday (19/6/07) financial services that comply with the Islamic law have been included in the company's business plan.  "We see a huge business opportunity there, the share of shariah banking is still small compared to the overall banking sector," Yonarto said, according to Reuters.
Investor Daily reported on Tuesday that the bank is planning to buy two small banks and has set aside Rp350 billion ($39.2 million) for the acquisition.
The paper quoted BCA vice president director Jahja Setiaatmadja as saying the bank would transform one of the banks into a shariah-compliant lender and the other would tap the upper end of the business.

Rabobank to Merge Newly Acquired Banks
The Indonesian unit of the Netherland's Rabobank said it is aiming to combine the operations of two local banks it recently acquired, by January next year.
Bank Rabobank International Indonesia purchased Haga Bank and Bank Hagakita in January this year.  "Our target is to complete combining the three banks into one by January next year," its president Antonio da Silva Costa was quoted as saying by XFN-Asia.
He added that Bank Rabobank International Indonesia will be the surviving entity.
Haga Bank and Bank Hagakita are both focused on serving small and medium-sized businesses and had combined assets of Rp5.28 trillion at the end of last year.

BII Buys 15.01% Stake in WOM Finance
Bank Internasional Indonesia (BII), the country's sixth largest bank by assets, has purchased an additional 15.01% stake in motorcycle financing firm PT WOM Finance from World Bank unit International Finance Corp (IFC), Bisnis Indonesia reported, citing BII president Henry Ho.
The purchase will bring BII's ownership in WOM Finance to 62%.  The transaction is still subject to approval from the central bank.
"We hope we can announce the deal in the near future after securing the approval of Bank Indonesia," Ho said, but did not provide any financial details.
However, assuming that the stake was purchased at WOM Finance's closing price of Rp530 per share on Monday (18/6/07), BII would have to spend at least Rp159 billion for the 15.01% stake.

 

OIL & GAS
Govt. Mulls 50% Split for Frontier Blocks
The government is mulling a production split offer of up to 50% to investors who are willing to explore and develop blocks in the country's frontier regions, a senior official at the energy and mines ministry said Wednesday (20/6/07).
"We may offer a split of up to 50:50 in frontier areas. It's better to give a generous split to investors in unexplored fields located in the frontier areas, rather than earmarking a higher split for the government but no investor is interested in," Director General of Oil and Gas Luluk Sumiarso told Platts Commodity News.
The regular splits for investors in the Indonesian upstream sector are 30-35% for gas blocks and 15-20% for oil blocks.

Itochu, Pertamina in LPG Study
Japan’s Itochu Corp. said Friday (22/6/07) it would sign later in the day an agreement with PT Pertamina to jointly conduct a feasibility study on the marketing of liquefied petroleum gas in Indonesia, Dow Jones Newswires reported.
The two companies aim to start selling LPG in Indonesia in 2010, said an Itochu spokesman.
Itochu and Pertamina are considering building Indonesia's first LPG import terminal in western Java, said a person close to the deal.
The terminal, estimated to cost $3 billion, will be equipped with a refrigeration tank that can store between 160,000 tons and 200,000 tons of LPG, along with a port and a facility to pump the fuel into tanker trucks, said the person.
The two firms plan to sell 1.5 million tons of LPG a year to retailers, mainly for household use.

4Gas, Petrogas to Develop LNG Terminal
Dutch liquefied natural gas (LNG) terminal developer and operator 4Gas and local energy company PT Petrogas plan to build an LNG terminal in East Java following the signing of an agreement by the two firms on a feasibility study for the project, The Jakarta Post reported on Thursday (21/6/07).
PT Petrogas is wholly owned by the East Java provincial administration.
According to a release, the memorandum of understanding (MOU), signed on Tuesday, allows the two firms to conduct the joint feasibility study, which will also determine whether they should build a terrestrial (fixed-based) or floating LNG terminal in the gas-starved province.
"Following our LNG terminal projects in the UK, the Netherlands, France, Canada and the US, we are now concentrating on projects in Asia and Indonesia is one of the largest economies in Asia, and has a lot of promise," 4Gas executive director and general counsel Harry Van Rietschoten said in the statement.

Indonesia Eyes 36% Drop in 2008 Fuel Subsidy
The government will see a 36% drop in its fuel subsidy spending next year as the country replaces use of heavily subsidized kerosene with liquefied petroleum gas, a senior official said late Tuesday (19/6/07).
Spending on fuel subsidy next year could be Rp39.5-49.8 trillion, much lower than this year's Rp61.8 trillion, Luluk Sumiarso, Oil and Gas Director General at the Mines and Energy Ministry told Platts Commodity News.
The government hopes to reduce fuel quotas by 3.5% to 36.57 million kiloliters next year from the current 37.9 million kl in the 2007 budget. The reduction is expected to come from replacing kerosene used by households with LPG. It will reduce the volume of kerosene consumed from 9.9 million kl this year to 8.6 million kl next year.
Meanwhile, consumption of diesel oil is expected to stay unchanged at 11 million kl next year, while gasoline quotas will be cut slightly to 16.95 million kl from this year's 17 million kl, Sumiarso said.

AWE Joins Bulu PSC
Oil and gas junior Australian Worldwide Exploration (AWE) has made its first foray into Indonesia by farming into the Bulu production sharing contract area in the offshore East Java Basin, where it will spend up to $12 million to drill two wildcat wells, the company said in a statement Monday (18/6/07).
AWE will earn a 42.5% interest in the Bulu PSC from Pearl Oil (Satria) Limited, a wholly owned subsidiary of Abu Dhabi-listed Aabar Petroleum Investments, subject to approval by the Indonesian government and its oil and gas industry regulator BP Migas, Platts Commodity News reported.
AWE has investigated a number of opportunities in Indonesia over the last 18 months but Bulu was "the first which has met our technical and commercial risk criteria," said the company's managing director Bruce Phillips.