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					                 THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
                             REPUBLIC OF INDONESIA
             Main Building, Ministry of Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta 10710
                 Tel: (021) 351-1178 Fax: (021) 351-1186 Website: http://www.ekon.go.id


                    Trade and Investment News1, 23 March 2009

Highlights

National
 A new terminal at Jakarta‘s main airport first to get city rail link
Politics
 Indonesia‘s ‗party of democracy‘ gets underway
 Popularity of Islamic parties continues to fall, new survey finds
Terrorism
 President turns down appeal for pardon from 2002 Bali bomber
Security
 Treaties on defense, extradition with Singapore frozen, says minister
Law & order
 Supreme Court says rehabilitation, not prison, best for drug offenders
 Campaign against illegal software showing results
Economy
 Central bank says deeper economic crisis may cut growth
 Rupiah strengthens in line with regional currencies
Business briefs
Macroeconomy
 Government to sell another Rp2 trillion in bonds
 Banks start to cut interest rates in line with lower benchmark figure
Investment
 Mercedes to spend $18 million to upgrade West Java facility
 Local, foreign firms to outlay $3 billion on industrial forests
State concerns
 Government to propose aid with private debt roll-overs at G-20
SOEs
 Cement maker PT Semen Gresik looks to regional acquisitions
Private sector
 Car, motorcycle sales lift in February, industry association says
 CPO sales may rise 7% this year on continuing strong demand
Banks
 Bank Mandiri reports rising trend in loans to micro, small and medium firms
Power
 Thailand's Ratchaburi looks to invest in North Sumatra power plant
Oil & gas
 Government happy with OPEC decision on production, minister says
Mining
 PT Aneka Tambang considers building copper smelter
 PT INCO gets $250 million loan from affiliated company


1
 This Trade and Investment News is a publication of the Coordinating Ministry for Economic Affairs of the
Republic of Indonesia. Readers are welcomed to forward it in its original form but no reproduction is allowed
without permission.


                                                                                                            1
NATIONAL
Railway to link new Soekarno-Hatta terminal to Jakarta
A new terminal at Jakarta‘s main airport will be the first to be linked to the city by a railway system,
Transport Minister Jusman Syafei Djamal said on Friday, The Jakarta Globe reported.

The new terminal 3 at Soekarno-Hatta International Airport will be the first of the airport‘s three terminals
to be linked directly to the center of Jakarta, Djamal said, adding terminals one and two will be connected
to the rail line in the future.

The train‘s route will pass though Pantai Indah Kapuk to Tanah Abang and return to the airport from the
Manggarai Station in South Jakarta.

Djamal said that the railway directorate general at the Ministry of Transportation is currently conducting a
tender to choose which consortium would be awarded the construction project.

Sugiadi Waluyo, director of railway transportation at the ministry, said construction of the airport train will
likely commence during the third quarter of this year.



POLITICS
Campaign fever takes hold as parties rally
Campaign fever is sweeping Indonesia, with last Friday and Saturday seeing the most activity yet with
colorful mass rallies, dancing and rock concerts in Jakarta and many other regions, reported Agence
France-Presse.

President Susilo Bambang Yudhoyono set the pace with an appearance before up to 30,000 cheering
supporters of his Democratic Party at the main Bung Karno Stadium in Central Jakarta.

Wearing the party's blue and carrying banners with slogans like "SBY YES," supporters danced and sang
along with boisterous ‗dangdut‘ folk tunes and rock songs peppered with lyrics praising Yudhoyono's
liberal leadership.

The president is fond of a song himself and has released several albums of syrupy love ballads, but he
took the microphone Friday only to recount his successes as president and urge party loyalists to get out
and vote.

Campaigning for Indonesia's third general elections since the fall of the Suharto dictatorship in 1998 got
underway on March 16 with fears of a global recession dominating voters' concerns in Southeast Asia's
biggest economy.

Thirty-eight parties are competing for places in the 560-seat national parliament in polls that will have a
huge bearing on presidential elections in July.

Parties need 25% of the popular vote or 20% of seats in the House of Representatives to be able to
nominate their own candidates for president.

As Yudhoyono marshaled his supporters in Jakarta, rival presidential candidate Prabowo Subianto
delighted his at a rally in Medan, North Sumatra, by dancing on stage with three pop stars, according to
Detikcom.

Prabowo, a former Special Forces general, descended from the stage and was carried through the
raucous crowd by supporters of his Gerindra Party despite frantic efforts by police to bring him back.

The Islam-based Prosperous Justice Party (PKS) struck a more sober note at a rally in East Java.

                                                                                                             2
"Don't choose politicians that are rotten, corrupt, cheat with their secretaries and commit adultery," PKS
president Tifatul Sembiring told the crowd.

Party faithful on motorbikes took over streets in cities across the country, including thousands who turned
up to rally for the Golkar Party in Pekanbaru, Riau.

Islamist parties poised to lose support: Poll
Support for Islamic parties is set to drop in the legislative election next month and secular parties will
maintain their hold on Indonesia, according to a new poll, Agence France-Presse reported.

Only 24% of voters said they plan to vote for an Islamist party in the April 9 election, a stiff drop from
38.1% who voted for Islamic parties in the 2004 general election, the Indonesian Survey Institute (LSI)
found.

The survey, conducted among a sample of 2,455 voters, found 67% backed secular and non-Islamic
parties, despite roughly 90% of the population being Muslim. Nine percent were undecided.

The poll also found support surging for the secular Democratic Party of President Susilo Bambang
Yudhoyono, and that it was likely to secure 24.3% of the vote compared to 7.45% in 2004.

According to the survey, Golkar will win only 15.9% of the legislative vote while the Democratic Party of
Struggle of former President Megawati Sukarnoputri would win 17.3%.

The poll backs findings in a joint survey by four other institutes last week that found support for
Yudhoyono's Democratic Party rising while Islamist parties struggled.



TERRORISM
Bali bomber denied presidential pardon
President Susilo Bambang Yudhoyono denied a pardon request from Ali Imron, who recently began
serving a life sentence for his role in the 2002 Bali bombing, The Jakarta Post reported.

"Imron‘s request has been denied and we have already received the president‘s official decision letter,"
head of the Denpasar Prosecutor's Office, Ida Bagus Siwananda, said.

Imron was convicted of terrorism over his role in the Kuta nightclub blasts on October 12, 2002 that killed
202 people, including many foreign tourists.

Imron fared better than his brothers - Amrozi and Ali Gufron - who were executed along with Imam
Samudra on November 9 last year, after two years of drawn-out appeals over their death sentences.

Imron, currently held at the Kerobokan penitentiary in Denpasar, Bali, has been cooperative with
authorities and is seen as the highest-profile success so far in the government‘s jihadi rehabilitation
program.




SECURITY
Defense, extradition pacts with Singapore frozen: Minister
Defense Minister Juwono Sudarsono accused Singapore of not signing an extradition pact with Indonesia
out of fear it would be obliged to return money stashed away by corrupt fugitives who fled to the city state
in the wake of the 1998 Asian financial crisis, The Jakarta Post reported.

                                                                                                          3
The Defense Cooperation Agreement (DCA) being negotiated along with the extradition treaty seems to
have fallen apart as well, Sudarsono said.

―Singapore doesn‘t want the extradition treaty because it would be legally required to return billion of
dollars of money belonging to the Indonesian government that disappeared along with a number of
corruption fugitives,‖ he said.

Sudarsono said 80 Indonesian fugitives enjoy sanctuary in Singapore, a situation beneficial for the
Singaporean government, which enjoys increased investment from their wealth.

―Singapore‘s senior minister Lee Kuan Yew told me in Jakarta last year that Singapore returning the
questionable funds to Indonesia did not make sense,‖ Sudarsono said.

Government representatives from Indonesia and Singapore signed the intertwined DCA and the
extradition treaty in 2007. However, the House of Representatives slammed the DCA, saying it was
lopsided in Singapore‘s favor and compromised Indonesia‘s national security. Both agreements have yet
to be ratified and are therefore ineffective.

In response, Indonesia requested that several changes be made to the DCA, but Singapore promptly
rejected the requests.

Singapore‘s Foreign Minister George Yeo said last week that Singapore and Indonesia have set aside
discussions on the DCA because the Indonesian government sought to revise the terms after the DCA
had been signed.

Yeo was in Jakarta last week to sign the western maritime boundary agreement with Indonesia after five
years of tense negotiations.



LAW & ORDER
Prison no option for drug abusers: Supreme Court
The Supreme Court has told provincial courts to stop sentencing convicted drug users to lengthy jail
terms and ordered medical treatment and rehabilitation instead, Tempo Interactive reported.

The directive was made in the form of an official letter signed by Chief Justice Bagir Manan on Tuesday
and distributed to the heads of all provincial courts in the country, court spokesperson Djoko Sarwoko
said.

Sarwoko said imprisoning drug users is not deemed effective in tackling drug abuse.

―Drug addiction is a medical condition and drug abusers require treatment to overcome the affliction,‖
Sarwoko said.

The Supreme Court feels that imprisoning drug addicts only has a negative impact, often making the
addictions worse than before, he said.

―First-time drug abuse offenders and minors who are sent to prison become exposed to a larger criminal
element, such as inmates serving time for violent crimes or robberies,‖ Sarwoko said.

Sarwoko said the Supreme Court‘s decision is in line with a law on psychotropic substances that states
addicts can be ordered to attend rehabilitation instead of incarceration.




                                                                                                      4
Software piracy eradication showing results: Study
The strategy of targeting end users of pirated software for arrest and criminal prosecution seems to be
curbing the country‘s rampant pirated software industry, a new study released last week indicated, The
Jakarta Globe reported.

The Business Software Alliance, which conducted the study, represents international software giants
such as Microsoft, Adobe and Cisco.

The alliance has been working closely with Indonesian police in providing technical assistance during
raids and investigations and first devised the strategy of pursuing end users and threatening them with
criminal and civil lawsuits.

―We switched our strategy from targeting retailers to end users in 2005,‖ Donny Sheyoputra, an alliance
representative, said.

―Retailers will always find a way to stay open as long as the demand is there. We shut down one store in
the morning and a new one springs up that very afternoon,‖ he said.

By focusing on the end user, the use of unlicensed software in big companies dropped from 84% in 2007
to 70% in 2008, the study showed.

Maritime, fishery agreement signed with Australia
Indonesia and Australia signed a Memorandum of Understanding MoU in Jakarta on Friday, covering
maritime and fishery issues, which have often created tension between the two neighbors, reported
Antara.

According to both governments, the MoU mainly covers illegal fishing, fishery management, partnership
and bilateral cooperation and the ―Box‖ – a term both countries use to refer to area of ocean located
south of Dana and Rote islands in East Nusa Tenggara where it borders Australia‘s maritime territory.

The MoU was signed by Suseno Sukoyono, a senior official from Indonesia‘s Ministry of Fisheries and
Marine Resources and Craig Burns, a senior official from Australia‘s Department of Agriculture, Fishery
and Forestry.

"The MoU is another leap forward in Indonesia‘s maritime relations with Australia. It appears that both
countries are now on the same maritime frequency," Sukoyono said.

Sukoyono said the MoU comes amid a number of positive developments between Indonesia and
Australia.

―As a result of this increasing cooperation and understanding, the number of illegal fishing incidents
continues to drop every year,‖ he said.

Sukoyono said Australia has expressed a willingness to view alleged illegal fishing in Australian waters
south of the ―Box‘ as part of the social and cultural traditions of the coastal communities in eastern
Indonesia.

This area of ocean is where the majority of Indonesians are nabbed by Australia over illegal fishing, but
they say they are only fishing areas considered traditional fishing grounds for many eastern Indonesian
communities for centuries.

Burns said "progress over supply management and an extension of assistance with regards to
implementing the agreement has also been made.‖




                                                                                                       5
ECONOMY
Economic growth may slow: BI
The central bank says it is likely that Indonesia‘s economic growth prospects will slow further this year,
possibly dipping below 4%, down from 6.1% last year, as exports continue to tumble, The Associated
Press reported.

Bank Indonesia (BI) deputy governor Hartadi Sarwono said exports could contract by up to 28% annually
in 2009, after falling more than 30% in January.

"We have to see the risk of a (GDP) fall to below 4%, but BI's growth projection remains 4% because it's
too early to make a revision," Sarwono said.

University of Indonesia economist and adviser to the finance minister Chatib Basri also pointed to lower
growth. He said Tuesday that global growth of only -0.5% to -1.5% in developed country economies,
down from an earlier estimate of 2.2%, was likely to further impact Indonesia‘s performance.

Late on Monday, Finance Minister Sri Mulyani Indrawati said the government would likely add to its
stimulus package, in line with the G-20‘s suggestion that country‘s stimulus packages should be at least
2% of gross domestic product (GDP) for at least two years, 2009 and 2010, The Jakarta Globe reported.

The government had set March 18 as the date for the first disbursement of some Rp12.2 trillion ($1.02
billion) in infrastructure funds as part of the Rp73.3 trillion fiscal stimulus package endorsed by the House
of Representatives on February 24.

The government hopes the stimulus package will support household spending — the main driver of
national growth — as a slowdown in exports due to faltering global demand is expected to seriously hurt
the economy.

Indonesia‘s total fiscal stimulus package currently stands at 1.4% of GDP.

―If the initial stimulus package is not enough, we will add to it in the revised state budget,‖ Indrawati said.

The final decision about whether to add funds to the package, the minister added, would also depend on
political considerations. Indonesia will hold legislative elections on April 9 and presidential elections in
July.

Indonesia's exports via its key port fell a quarter in February, Indrawati said late on Tuesday, adding the
government's 4.5% economic growth forecast may be cut if full-year exports drop as much as 10%,
Reuters reported.

The Tanjung Priok port in Jakarta handles two thirds of the country's exports and imports including
commodities and manufactured goods.

"For February there is a decrease in (export) volume of around 25% year on year. This is for Tanjung
Priok," Indrawati said.

There was positive news on the rupiah, which strengthened during the week in line with other regional
currencies.

BI Governor Boediono said on Friday the currency is expected to further strengthen against the dollar,
Reuters reported.

"The dollar is depreciating against other currencies as its supplies have been quite adequate," Boediono
told reporters.



                                                                                                                  6
BI said that in the intermediate terms the trend for the dollar was to weaken against other currencies.

The currency ended the week 1.9% higher, its biggest weekly gain of the year, at 11,775 per dollar
compared to the week-earlier level of 11,980.

On the stock exchange, the Jakarta composite index increased by 3.7% last week, from 1,312.092 on
March 17 to 1,360.889 on Friday.

Foreign investor net buys were increasing the gains, Agence France-Presse reported. "Positive sentiment
could come from a strengthening rupiah against the US dollar," Suherman Santikno of Batavia
Prosperindo said.

―The Fed has kept printing massive amounts of dollars over the past year, so it's been only a matter of
time until the dollar starts to fall in value against the rupiah.‖



BUSINESS BRIEFS
MACROECONOMY
Govt. to sell more bonds
The Finance Ministry said Thursday it aims to raise Rp2 trillion ($168.2 million) at its March 24 debt
auction, part of efforts to finance its budget deficit this year, Reuters reported.

The ministry said in a statement that it plans to sell one-year treasury bills and seven-year fixed rate
bonds.

It raised a lower-than-targeted Rp1.85 trillion in the last debt auction on March 10, which analysts say
signaled that it is less willing to pay high yields. The government has already raised well over 50% of its
budgeted target to meet the deficit of 2.5% of GDP.

Banks begin to cut rates
Banks have finally begun to cut rates in the wake of the central bank‘s March 4 reduction of its
benchmark rate by 50 basis points, Bank Indonesia (BI) said on Wednesday, The Jakarta Globe reported.

Wimboh Santoso, BI‘s bureau chief of financial system stabilization, said average one-month time
deposits rate fell by 0.51% to 8.24% between December and the third week of March.

During the same period, banks‘ base lending rates have slipped from 14.20% to 13.29%. BI has
progressively reduced the BI rate to 7.75% from 9.5% since September last year.

―The situation is changing, but it will be very slow,‖ Santoso said. ―Based on historical experience, it takes
six months to a year for banks to fully adjust their rates in response to the BI.‖

Banks disbursed only Rp2 trillion ($168 million) in credit until the third week of March this year as against
collection of Rp58 trillion in third party funds, Santoso said, Asia Pulse reported.

"The banks have no problem in liquidity, therefore, they should start cutting their credit interest to boost
credit expansion," Santoso said.

By the end of 2008, third party funds held by Indonesian banks totaled Rp1,710 trillion, while the amount
had risen to Rp1,768 trillion in the third week of March, Santoso said.

Banks say the high cost of funds is keeping them from lowering their rates.



                                                                                                            7
Tax office for millionaires starts operation
The government on Wednesday officially commenced operation of the nation‘s first tax office designed to
serve only the country‘s millionaires, The Jakarta Post reported.

President Susilo Bambang Yudhoyono, who inaugurated the new office by submitting his tax return
before the March 31 deadline, was accompanied by several noted businessmen who are likely to be
among the 1,200 wealthy taxpayers managed by the office.

Director General for Taxation Darmin Nasution said the 1,200 rich taxpayers list pooled by the office
included some government officials from business backgrounds.

―High-ranking state officials who happen to also be businessmen are also included,‖ he said, refusing to
name the officials due to regulations that kept any information on taxpayers confidential.

Finance Minister Sri Mulyani Indrawati said the new office would provide the richest clients with better
services as well as monitoring.

―Unlike in many developed countries, the contribution of corporate income tax in Indonesia is far higher
than individual income tax. We‘ll try to increase that of individual taxpayers with this office,‖ she said.

Indrawati has said the main aim of the office is to better track the wealth of the rich and prevent them from
evading taxes.



INVESTMENT
Mercedes to spend $18M on W. Java facility
PT Mercedes Benz Indonesia (MBI) said it will spend Rp200 billion ($18 million) this year on its
Indonesian assembling facility, Asia Pulse reported.

The sole agent for Mercedes cars will repair its assembly facility for multipurpose vehicles (MPV) in
Gunung Putri, Bogor, West Java, an official said.

Head of the Investment Coordinating Board (BKPM) Muhammad Lutfi said the German principal Daimler
AG plans to make Indonesia a production base for new models of luxury MPV products for the region.

Daimler wants to win the luxury MPV market in Indonesia, so far dominated by the Toyota Alphard and
Nissan Elgrande, Lutfi said.

Local, foreign firms to spend $3B on HTI projects
Around 24 Indonesian and foreign companies will invest Rp35.6 trillion ($3 billion) this year to build 1.3
million hectares of industrial timber estates (HTI) in the country, Asia Pulse reported on Thursday.

PT Taiyoung Engreen and PT Inni Joa, both from South Korea and PT Selaras Inti Semesta already
secured the license.

Taiyoung has a concession of 59,981 hectares in Central Kalimantan, PT Inni Joa 28,721 hectares in
South Kalimantan and PT Selaras 259,475 hectares in Papua.

Other 21 companies have so far been given only the principle approval, Investor Daily reported.

Director of plantation forests Bejo Santoso said the HTI projects will open 1,769 jobs not including 14,176
for daily paid workers.



                                                                                                           8
This year the government targets to build 5 million hectares of HTI by the end of this year.



STATE CONCERNS
Govt. to propose private debt rollover talks at G20
The government will propose talks on rollover risk of private debt at the G20 summit, which will begin on
April 2, Finance Minister Sri Mulyani Indrawati said on Monday, Xinhua reported.

Indrawati said risk faced by the private sector in emerging markets, including Indonesia, was due to the
inability of European and American banks to disburse new loans as the debt of private sector companies
came due.

Anggito Abimanyu, the head of fiscal policy at the finance ministry, said many countries are concerned
about how much foreign exchange is needed to repay private overseas debt this year. The concern was
due to predictions that foreign creditors would force debtors to pay their overdue debt in this current crisis
environment.

Bank Indonesia (BI) noted that the foreign debt of Indonesia's private sector due for payment in 2009 is
$17.4 billion.

Indonesia, Japan FTA affected by crisis
Part implementation of the Indonesia-Japan Economic Partnership Agreement (IJ-EPA), a free trade
agreement to help develop human resources in 13 industries is delayed by the economic crisis, The
Jakarta Post reported.

An expert assistant to Industry Minister Fahmi Idris, Achdiat Atmawinata, said Thursday that out of the 13
sectors programmed under the Manufacturing Industrial Development Center (Midec), part of the
Indonesia-Japan EPA economic cooperation agreement, three of the components mentioned have not
yet started to be implemented.

―The ongoing economic crisis has hurt Japan‘s economy and consequently affected the implementation of
the Midec,‖ Atmawinata said.

The Midec training program is a supporting part of IJ-EPA which came into force last July.

The 13 sectors include metal work, welding, industrial molds and dies, export promotion and investment,
micro business, automotive, steel, textile, oleo chemicals and non-iron metals.

Indonesia could earn up to $68 billion by 2012 from expanding businesses in the 13 areas, if they are
well-developed under the Midec program, Atmawinata said.

The IJ-EPA requires Japan to actively help develop the 13 sectors under the Midec program because this
would also help determine ―the level of Japan‘s products absorbed in the Indonesian market‖, he said.

Under the IJ-EPA, Indonesia agrees to reduce to zero 92.5% of 11,163 tariff lines covering import duties
on a wide range of items incrementally over a period of 15 years from the start of the agreement.

Indonesia has further scrapped 328 tariff lines imposed on steel products under the user specific duty free
scheme (USDFS), which also comes under the IJ-EPA. This covers steel products used in automotive
and auto parts, electronics, energy and construction.

Indonesia reciprocally accesses duty reductions for exports of fruit and fishery products to Japan.



                                                                                                            9
The Economic Partnership Agreement is designed to strengthen bilateral economic relations between the
two Asian nations, covering not only issues related to trade and tariffs but also investment and movement
of labor.

Exports of agricultural product to rise: official
Exports of agricultural products are expected to increase by 16% this year, an official said Monday, The
Jakarta Post reported.

"We believe we can raise our income from exports to $21.68 billion from last year's $18.85 billion. This is
based on the fact there are new markets available and we believe main commodities prices will rise," said
an official from the Agriculture Ministry, Herdrajat.

He mentioned China, the Middle East and India as some of the new export markets.

"Last year's achievement, which surpassed the original target of $11.55 billion income set in early 2008,
was also a big factor in our confidence to increase this year's exports," he said.

Herdrajat expected demand would pick up from the new markets, while commodity prices would also
recover, providing an eventual boost for the industry.

Still, he said it was vital for the government to immediately disburse the stimulus package, in particular the
parts designated for the development of agriculture and plantation infrastructure.

Canada optimistic trade balance with Indonesia will grow
The Canada government is optimistic that the country‘s trade balance with Indonesia still could grow or at
least remain solid amid the ongoing global crisis, Canadian Ambassador to Indonesia Y.M. John Holmes
said on Thursday, Asia Pulse reported.

The trade value of the two countries reached over Rp23.1 trillion ($1.9 billion) and it was the highest
record.

"Indonesia and Canada are also G-20 member countries, so that both will be trying hard to increase their
cooperation, especially in trade," Holmes said.

Holmes also said that fertilizer, pulp, mining products and electronic were still dominant in the two
countries' trade relations.

Holmes admitted that however the bilateral trade was still facing a deficit in which Canadian export was
bigger to Indonesia.



SOEs
Semen Gresik may acquire regional rival
PT Semen Gresik, the country‘s largest cement maker, may acquire a 40% stake in a regional rival as
domestic demand slows and the global economic recession makes assets cheaper, The Jakarta Post
reported.

―At the moment, prices are cheap. We don‘t want to lose momentum,‖ president director Dwi Soetjipto
said on Tuesday, adding the company has appointed Credit Suisse Group as acquisition plan adviser.

The targets for this expansion plans are cement companies located in the Philippines, Vietnam and
Malaysia now producing cement at a cost of between $80 and $90 per metric ton, Soetjipto added.



                                                                                                           10
The acquisition plan, according to Soetjipto, has forced the company to again revise its capital
expenditure plan to be spent between 2009 and 2012, which had been previously revised down to $1.3
billion, from $1.6 billion earlier.

Semen Gresik vice president Heru Adiningrat said the company planned to hold a shareholders' meeting
in May to seek approval for the plan.

So far, Adiningrat added, the company has selected six firms as possible acquisition targets. Semen
Gresik‘s acquisition plan aims to help it retain its revenue growth amid an expected decline in local
demand this year.

Semen Gresik may produce 19 million tons of cement this year, around 4% higher than last year. It
currently is the leader in the country‘s cement market with a 44% market share.

Soetjipto said that the company targeted to export 1.5 million tons of cement this year, up from 1 million
tons in 2008. Semen Gresik exports its products to South Asia, Africa and Middle Eastern countries.

―There‘s room for an increase in domestic sales due to the stimulus package,‖ Soetjipto said. ―If domestic
demand weakens, we‘ll boost exports, but if that fails, we‘ll reduce capacity.‖

Cement producers expect domestic sales to increase by 3% this year, lower than about 12% growth last
year, with some growth continuing thanks in part, according to Soetjipto, to the government‘s Rp71.3
trillion (around $6.1 billion) economic stimulus plan.

Semen Gresik recorded a rise in net profit of 44% in the fourth quarter of 2008 to Rp723 billion ($60
million) in October-December, from Rp503.5 billion in the previous year, according to Reuters calculations
based on published full-year and nine-month results.

Full-year net profit rose about 40% to Rp2.52 trillion on revenue of Rp12.21 trillion.

Kimia Farma chalks up 10.5% rise in net profit
Publicly-listed state pharmaceutical company PT Kimia Farma posted Rp57.89 billion ($4.8 million) in net
profit last year, up 10.52% from the previous year, Asia Pulse reported.

Kimia Farma recorded Rp2.68 trillion in sales, with operating profit at Rp106.58 billion last year.

This year, the company is set to chalk up a 14.55% increase in income to Rp3.07 trillion, with net profit at
Rp65.74 billion.

The government plans to start the process of a merger between Kimia Farma and another state
pharmaceutical company Indofarma this year.

Kimia Farma president director M Sjamsul Arifin said Tuesday the feasibility studies and legal processes
for the merger would take around six to nine months from this March, The Jakarta Post reported.

―By the first quarter next year, the new single company will be fully operational,‖ said Arifin during a press
conference on the plan.

―In 2011, the pharmaceutical market in the ASEAN countries will be integrated (in one market). The
merger [Kimia Farma and Indofarma] is a strategy to prepare us for the upcoming competition,‖ he said.

Pelindo IV to spend $40M on container terminal
State port operator PT Pelabuhan Indonesia (Pelindo) IV will spend Rp485 billion ($40 million) on a
container terminal project in Kariangau , Balikpapan, East Kalimantan, Asia Pulse reported.


                                                                                                           11
Pelindo finance director Mulyono said Rp175 billion of the fund will be used for the procurement of
equipment including two container cranes.

The container terminal project to be operational in 2011, will be built in cooperation with the East
Kalimantan administration, Bisnis Indonesia reported. Last year, the flows of container cargoes via the
Balikpapan port totaled 86,792 TEUs or an increase of 10% from the previous year.

Wika to build asphalt plant in S. Sulawesi
State-owned construction company PT Wijaya Karya (Wika) said it plans to build an asphalt extraction
plant with an investment of Rp300 billion ($25.2 million) by the end of this year, Asia Pulse reported.

Wika will team up with PT Sarana Karya, which holds an asphalt mining concession, to build the factory
on Buton island off Southeast Sulawesi, Wika corporate secretary Imam Sudiyono said.

Wika and Sarana Karya have agreed to cooperate although no agreement has been signed, Sudiyono
said, adding Sarana Karya will provide its mining rights and Wika will handle the marketing .

Wika operation director Budi Harto said the company will establish a joint venture with Sarana Karya with
a share split of 50% each.

Wika will also provide an initial budget of Rp50 billion for the asphalt business, Sudiyono said, Investor
Daily reported.




PRIVATE SECTOR
February car sales up 9% on month
New car sales in Indonesia rose 9% on month to 34,499 units in February, the Indonesian Automotive
Association (Gaikindo), said Wednesday. Analysts attributed the uptick to lower interest rates, Dow Jones
reported.

On year, however, sales dropped 27% from 47,510 units.

The association said PT Astra International, Indonesia's largest automotive company by assets and sales,
saw its car sales rise 9.6% on month to 19,886 units. On year, its sales were down 16% from 23,597
units.

New motorcycle sales in the country rose 13% on month to 414,587 units, of which Astra had a 48%
share.

Nikkei reported on Monday that Yamaha Motor is expanding Indonesian production of motorcycles in
response to continued brisk sales locally.

Annual output will be increased by 75,000 units to 2.46 million units by April, on a par with 2008 and 3%
more than initially planned for this year.

At the start of the year, Yamaha Motor was forecasting a slight drop in local sales volumes to just under
2.4 million units.

Meanwhile, the sale of car and motorcycle parts and equipment has dropped by 23% in January, Antara
reported.

"Car and motorcycle equipment sales are hindered by illegally imported products in the country," the
general chairman of the Association of Motorcycle and Car Equipment Industries (GIAMM), Hadi
Surjadipraja, said on Tuesday.

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Indocement 2008 net profit Rp1.75T
Cement maker PT Indocement Tunggal Prakarsa said Friday its 2008 net profit rose 79% to Rp1.75
trillion from Rp980.10 billion a year earlier, helped by higher revenues Dow Jones reported.

Net revenues for the January to December period of 2008 rose 34% on year to Rp9.78 trillion from
Rp7.32 trillion a year earlier.

Assets at the end of December rose 12% to Rp.29 trillion.

CPO exports may rise 7% this year: Industry group
Indonesia's exports of crude palm oil (CPO) and derivatives are forecast to rise by up to 7% to 15.5
million tons this year from 14.1 million tons last year, Asia Pulse reported.

A chairman of the association of palm oil companies (Gapki) Susanto said demand for palm oil remains
strong despite the global recession.

Susanto said increases are still expected in demand from India, China and Europe, but demand from the
United States is predicted to decline.

A number of factors including soybean production, the price of crude oil and industrial growth in
destination countries will determine palm oil demand in the world market, he said.

He said the world's production of soybean is on the decline resulting in an increase in the price of that
commodity.

The price of CPO has been picking up since early this year to reach $550 per ton at present, he said.

A decline has also been recorded in the production of CPO by Indonesia and Malaysia, which are the
world's largest CPO producers, according to Bisnis Indonesia.



BANKS
Bank Danamon to issue 3.33B shares
Indonesia‘s fifth-largest lender, PT Bank Danamon, said on Thursday that it would issue 3.33 billion new
shares to raise Rp3.99 trillion ($335.16 million) to support loan growth and strengthen its capital
adequacy ratio to 20.8%, The Jakarta Globe reported.

Bank Danamon said each shareholder who holds at least 102 shares as of April 3 is entitled to purchase
new shares at an offer price of Rp1,200 per share. Trading is scheduled from April 7 to April 15.

The shareholders are each entitled to 67 pre-emptive rights for every 100 shares held. Each right entitles
the shareholder to subscribe for one share at a price of Rp1,200 per share. Asia Financial [Indonesia],
which holds 67.9% of the shares, said it intended to fully exercise its rights.

―The proceeds will be put in liquid assets and will be progressively used for supporting growth in loans
distributed to high margin sectors, mainly micro and middle-low business and automotive financing once
the economy recovers,‖ the bank said.

Standby buyers are Citigroup Global Markets Singapore Pte Ltd. and Morgan Stanley Asia Pte.
Shareholders who do not exercise their rights will face a potential 39.6% dilution of their stakes in the
bank.




                                                                                                        13
Meanwhile PT Bank Permata is to get a capital injection of $200 million from its shareholders PT Astra
International and Standard Chartered (Stanchart) bank, Asia Pulse reported.

The publicly listed lender needs fresh funds to strengthen its funding capacity, a bank source said.

Astra and Stanchart are finalizing the plan for the additional capital to be available before July, sources
said.

Bank Permata corporate secretary Sandy T Muliana said additional capital is needed to anticipate the
worsening impact of the global financial crisis.

Bank Mandiri outlays Rp23.19T for small businesses
PT Bank Mandiri extended Rp23.19 trillion credits to micro, small and medium-sized businesses (MSME)
in 2008, an increase of an average of 26% per annum since 2005, the bank said in a media release on
Wednesday, Antara reported.

Bank Mandiri director Bambang Setiawan said the number of MSME businesses continued to increase
and represented 98% of total businesses in Indonesia.

Based on the criteria set by Bank Indonesia (BI), Bank Mandiri was able to provide credits to three groups
of businesses.

The first group consists of micro businesses with a credit ceiling of Rp50 million. The second consists of
businesses with a credit ceiling between Rp50 and Rp500 million and the third companies receiving
credits of between Rp500 million and Rp5 billion.

Bank Mandiri said that in 2008 credits provided for the lowest group amounted to Rp2.65 trillion, sharply
up from Rp808.67 billion in 2005.

Bank Mandiri provided Rp4.7 trillion for businesses grouped in the Rp50 million-Rp500 million range, with
the amount of credits up from Rp2.64 trillion in 2005.

Credits provided for companies in the Rp500 million - Rp5 billion group have increased by an average of
24.8% per annum since 2005.

Bank BRI posts over $420M in 2008 net profit
PT Bank Rakyat Indonesia (BRI) reported net profit at more than Rp5 trillion ($420 million) last year up
from Rp4.8 trillion in the previous year, Asia Pulse reported.

BRI president Sofyan Basir attributed the increase in net profit to credit expansion that has pushed up its
outstanding credit to Rp160 trillion or a 40% increase in a year.

Basir said he was optimistic the bank, which leads in outstanding credits, would chalk up further increase
in net profit by 15% this year as the bank still has room for credit expansion.

BRI bank director Abdul Salam said the bank would maintain its capital adequacy ratio at around 13%,
Bisnis Indonesia reported.

Commonwealth Bank eyes small deals in Indonesia
Commonwealth Bank of Australia sees further opportunity for growth in its operations in Indonesia and
may consider further small acquisitions in the country, CEO Ralph Norris said Tuesday, Dow Jones
reported.




                                                                                                        14
Speaking to a business lunch, Norris singled out Indonesia as a key area of future growth although the
nation makes up only a small percentage of earnings.

Norris is targeting organic growth in Indonesia, but said he will also look at acquisition opportunities as
they arise.

He said the group is looking at other areas of growth that fit with the lender's strategy, with recent market
turmoil throwing up unprecedented opportunities.




POWER
Thai Ratchaburi may take N. Sumatra power stake
Thailand's Ratchaburi Electricity Generating Holding said on Thursday it was in discussions with PT
Truba Alam Manunggal Engineering about investing in a power plant in North Sumatra, Reuters reported.

Ratchaburi, Thailand's largest private power producer, expected to take about 40% in the coal-fired power
plant, which had an estimated cost of $274.3 million, the Thai firm said in a statement.

The 270-MW power plant is located in Kuala Tanjung and commercial operations are expected to begin in
2010.

Ratchaburi is 45% owned by state-run Electricity Generating Authority of Thailand and 15% owned by
Banpu.



OIL & GAS
Govt. 'happy' with oil prices: Minister
The government is ‗happy‘ with current oil prices and expects them to continue falling, Minister of Energy
and Mineral Resources Purnomo Yusgiantoro said Monday, Dow Jones reported.

"We are happy with lower oil prices after OPEC left the oil output quota unchanged," Yusgiantoro told
reporters.

The minister did not elaborate but analysts noted that lower oil prices will help the country reduce its fuel
subsidy burden.

Members of the Organization of Petroleum Exporting Countries (OPEC) decided to keep output steady at
a meeting in Vienna, Sunday, after agreeing to cut a total of more than four million barrels a day since last
summer.

Indonesia withdrew as Asia's only member of OPEC in January amid declining output from its aging
fields. Indonesia produced 978,000 barrels a day of crude oil a day in 2008, down from a peak of 1.6
million barrels a day in 1995.


Govt. may divert Bontang gas to Tangguh buyers
The government is seeking to divert 12 liquefied natural gas (LNG) cargoes produced by the Bontang
field in East Kalimantan to buyers of BP‘s Tangguh field in Papua, after customers in East Asia canceled
contracts, a minister said on Wednesday, The Jakarta Globe reported.

South Korean, Taiwanese and Japanese buyers were seeking to cancel the Bontang shipments, leaving
Indonesia with three alternatives — to find new customers, divert the LNG to the domestic market or sell


                                                                                                          15
the gas to Tangguh‘s buyers to avoid shipment delays, Energy and Mineral Resources Minister Purnomo
Yusgiantoro said.

―We‘re still looking at the Tangguh option, but it‘s the most likely choice,‖ Yusgiantoro said.

The Tangguh project is scheduled to send its first commercial shipment to South Korea‘s K-Power and
China National Offshore Oil Corp., (CNOOC) in the second quarter of 2009, BP said.

Raden Priyono, chairman of upstream oil and gas regulator BP Migas, said that diverting gas to
Tangguh‘s buyers could help prevent delays to May shipments to CNOOC.

―The first shipment of two cargoes to Fujian will likely include gas from Bontang,‖ he said.

Production at the BP-led Tangguh project — with proven reserves of 14.4 trillion cubic feet in Bintuni Bay
in Papua —is expected to start in April, two months behind schedule.



MINING
INCO secures $250M loan
PT International Nickel Indonesia (INCO) has secured short-term funding from its affiliate Vale
International amounting to $250 million, a report on the company's website said on Wednesday, Antara
reported.

The credit given under a short-term revolving credit facility will be used to meet a commitment to capital
and operational expenditures.

INCO said it still needs the approval of an extraordinary general shareholders meeting on April 17.

Vale International is an affiliate of Vale Inco Limited and was established on the basis of Swiss law.

Vale Inco Limited was established based on Canadian Law and controls about 60.80% of the shares
issued by the company.

Australia's Finders ships first Indonesian copper
Australian miner Finders Resources Ltd has shipped its first copper from its Wetar project in Maluku to
Australia, saying the material was of a very good quality, Reuters reported

The company said on Tuesday 61 tons of copper cathode was shipped to a refinery in the Australian
state of Queensland, and assay reports showed that the cathodes had exceeded London Metal Exchange
A-grade copper cathode specifications.

"The key for any project is to produce a saleable product and assays confirm that our cathode quality is
very good," said Finders chief executive Chris Farmer in a statement.

Finders is targeting 20,000-25,000 tons of copper production a year, but as a first step built a semi-
commercial scale demonstration plant which is ramping up to 150 tons of copper cathode output per
month.

It owns 85% of the project, with the remainder held by Indonesia's PT Batutua Kharisma Permai.

Finders plans to complete a feasibility study for a full-sized plant next month and expects to have the
plant in production a year later.

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