INDONESIA AS NEW EMERGING MARKET

Friday, April 28, 2006

NEW RAILROAD TRACK WILL BE BUILD

The Jakarta Post, Jakarta

The government is planning a major rail and expressway building program to link industrial zones located near Jakarta to ports and airports so as to increase the attractiveness of the zones to investors.

Director of Turnpikes and Urban Affairs at the Public Works Ministry, Nurdin Manurung, said in Jakarta on Wednesday that the government would build a Rp 2.36 trillion (US$253 billion) highway linking industrial areas in Cikarang, West Java, to Tanjung Priok harbor in North Jakarta. It was expected that the new expressway would be completed in 2009.

He said that in addition, the government would also build an expressway connecting Cikampek in West Java with the Jagorawi (Jakarta-Bogor-Ciawi) turnpike at Cileungsi, the Tanjung Priok Access Highway linking the proposed Cikarang-Tanjung Priok highway with the Jakarta inner ring road at Sunter, North Jakarta, and a flyover at Cikarang.

"These projects will cost Rp 7.5 trillion in total and will be completed between 2008 and 2011," he explained.

He said that they were designed to provide the sort of transportation infrastructure that was needed to allow industry to grow.

The latest figures for February show that the vehicle-to-capacity ratio on the Jakarta-Cikarang route stood at 1.36 and Cikarang-Cikampek route at 1.16, compared to the accepted tolerable ratio of 0.6.

Nurdin acknowledged that the congestion was also caused by imbalances in the utilization of transportation modes as 90 percent of freight was transported by motor vehicles, while railway and sea transportation had yet to be used as much as it could.

At the present time, Indonesia has 6,482 kilometers of railway track in place in Java and Sumatra. Of this figure, 2,122 kilometers are disused.

Expert advisor at the Transportation Ministry, Cucuk Suryo Suprojo, said that in order to deal with the congestion problem, the government would also promote the use of railways to support industrial development by building new lines and reopening disused lines linking industrial zones with ports and airports.

"A 30.3-kilometer rail line linking an industrial zone in Tangerang with Soekarno-Hatta Airport will be built between 2007 and 2008 at a cost Rp 490 million," he said.

Meanwhile, a senior official at the Directorate General of Railways, Sugiadi Waluyo, said that a 2.5 kilometer line connecting Pasoso station and Tanjung Priok harbor, which was closed in 1967, would be reopened.

"Because of the closure, traders have to pay additional costs for loading and unloading, as well as transportation by truck, after their freight arrives at Pasoso station," Sugiadi said. "If we reopen the line, their costs will be reduced as their freight will be delivered directly to the port."

"I hope that the project will start next year with the involvement of private sector investors," he said.

He added that the government also planned to build a number of container terminals and freight yards in industrial zones in West Java, such as Gedebage in Bandung, Cibungur in Purwakarta and Cikarang.

Indonesian Industrial Estate Association chairman Johannes Archiadi responded positively to the plan.

"I think that rail is the most efficient and effective way of overcoming the transportation problems faced by industrial zones," he said. "The construction of railway infrastructure costs less than building highways and the operation of trains is cheaper than trucks."

Johannes expressed the hope that private sector investors would participate in the development of the railway infrastructure so badly needed by industry.

ETERINDO BUILD NEW BIO-DIESEL PLANT

TEMPO Interactive, Jakarta:

PT Eterindo Wahanatama will start producing biodiesel for fuel mixing.

“The product will be produced by one of our affiliated companies, PT Anugerahinti Gemanusa in Gresik,” said Yudianto Kosman, an Eterindo Director.

According to Yudianto, the entry of a company into the biodiesel industry is one of the efforts to improve the company's performance.

This step is also in anticipation of Pertamina's plan to sell biodiesel as a mix for environmental friendly automotive diesel oil.

This chemical producer is exploring cooperation with Pertamina to provide biodiesel at the gas stations.

COMPANY DETAIL:

PT. ETERINDO WAHANATAMA
Menara BTN Building, 15th Floor
Jl. Gajah Mada No. 1, Jakarta Pusat 10130, INDONESIA
TEL: +62-21-6332622
FAX: +62-21-6342635
Website: http://www.eterindo.com

Wednesday, April 26, 2006

FINISHED LEATHER MARKET IN INDONESIA

The Indonesian leather industry plays an important role in the country’s economy. The industry is among the ten largest export earning industries within the so-called non-oil and gas sector; it is a labor-intensive undertaking as the majority of the processing and manufacturing industries consists of medium and small-scale industries. The leather processing industry consists of leather tanning industry and the leather manufacturing industry, producing various finished leather articles such as footwear, bags, suitcases, belts, gloves and apparels.

The development of the Indonesian leather industry, however, has shown a downward trend especially during the period of 1996 to 2002. Up until the year 1996, the industry flourished due to a government regulation prohibiting the exports of raw leather. The total export value of processed leather and finished leather articles in 1996 was in excess of US$ 2.2 billion as compared to US$ 1.1 billion in 2002. The export ban was lifted in 1998 as part of an agreement signed with the IMF to deregulate the international trade sector, causing thereby a decline in the exports of semi-finished and finished leather articles as a result of shortage of domestic raw material supply in the subsequent years. Suppliers of raw leather prefer to export their product of raw leather rather than selling to the domestic leather processors or manufacturers. The production situation became even worse due to the fact that the leather raw material needed by the tanning industry of some 70.000 tons can only be supplied domestically at a level of less than 50%, e.g. around 31.000 tons, out of which, approximately 70% of this output is being exported and the balance sold to the domestic manufacturers. This condition has forced many leather manufacturers of finished leather articles to change the raw material from raw leather to plastic or imitation leather.

The current situation with the Indonesian leather processing industry is that there is a shortage in the supply of raw leather due to the raw leather material being exported. The leather manufacturers are faced with the choice of either closing down their factories or using substitute materials such as plastic or imitation leather with the latter being mostly the better choice for the industry. The exports of finished leather articles logically also decline as a result of the raw material supply shortage. On the other hand, a potential domestic market for finished leather articles is not being given enough attention to and demand for such finished leather articles is to a certain extent being fulfilled by imported articles. To be added to this is the fact that Indonesian leather manufacturers are still facing the obstacle of appropriate product design as well as production method, technology and know-how. The majority of the Indonesian finished leather manufacturers are small-scale industries, more of a type of cottage, home industries with limited resources on capital, market and product design. Unless the government re-considers its trade policies and provides assistance to and in favor of the domestic leather industry, the current condition will not be supportive to the future development of this labor-intensive and export-oriented industry.

The future of this particular industrial sector, however, may be looking bright especially when considering the potential raw material availability as well as a vast domestic market. What the industry needs is supportive government regulation to protect domestic supply of raw materials and at the same time provision for improvements in various production aspects. Only by doing so will the industry be capable of competing not only in the international market but also fulfilling the potential domestic market demand.

Tuesday, April 25, 2006

INDONESIA PLAN TO BUILD ANOTHER OIL REFINERY

PT Pertamina, State-owned oil company and Saudi Aramco, a Saudi Arabian oil company, will cooperate in building a refinery in Indonesia.

According to Pertamina's Managing Director, Ari Sumarsono, in addition to Saudi Aramco, several other Middle Eastern countries are interested in investing in Indonesia.

Earlier, Ari explained that the refinery to be built will have a capacity of 250,000 barrels per day. Construction will be prioritized for the Tuban Refinery, East Java.

Pertamina's Vice Managing Director, Iin Arifin, is currently visiting several Middle Eastern countries such as Saudi Arabia, Kuwait, Dubai, and Qatar, to look for cooperation opportunities in building refineries in Indonesia.

Wednesday, April 19, 2006

US$10 MILLION FOR INDONESIA

TEMPO Interactive, Jakarta: The government estimated that Indonesia requires a US$5-10 million (RP90 billion) investment to accelerate the investment growth in Indonesia's outer islands.

According to the Maritime Affairs and Fisheries Minister Freddy Numberi, this investment is for building the facilities and infrastructure in the outer islands which benefit Indonesia's tourism. The investment can be from domestic and foreign investors. “But this number is still a broad outline,” Freddy told the press, Monday (17/4).

He explained that by building the facilities and infrastructure, the respective central and regional governments will benefit, because so far the outer islands have not been reached by the central government. For example, there are islands whose ownership are lost, such as Sipadan Island and Ligitan Island which Malaysia claims are hers.

There are also islands that are not supervised such as Bidadari, West Flores, East Nusa Tenggara Islands, which are managed by foreign parties. “What we are worried about are the islands in Marore and Miangas, North Sulawesi, because there are only 20 thousand residents and many of them have moved to the Philippines.”

Currently Indonesia has 17,499 outer islands. From that number, only 7,349 islands have been named, and 67 islands directly border neighboring countries.

To support the investment, Freddy said, the government will give a tax holiday for 2-3 years. Besides that, during the permit process, the regional government will not be allowed to collect any tax or fees.

INDONESIAN ELECTRICITY PLAN TO USE CBM

Jakarta (ANTARA News) - State electricity company PT PLN is ready to use coal bed methane (CBM) gas as a replacement for fuel oil which is used by diesel-generated power plant, PLN`s Energi Primer deputy director Tonny Agus Marwoto said here Tuesday.

"We are ready to use CDM gas if is developed well," he said on the sidelines of a conference on CDM Development in Indonesia.

Tonny said based on reports tabled during the conference, CBM gas will be produced in the next three years at the fastest.

Accordingly, PLN needs a year to change its equipment to use CBM gas instead of fuel oil, he said adding that the state electricity firm will be capable of saving money if it uses CBM gas to produce power.

Tonny said CBM is found in many areas in Indonesian islands such as in Kalimantan, Sumatra, and West Java so that the country will no longer face the shortage of electricity and fertilizers in the future if PLN is capable of taking advantage to produce power using the coal bed methane.

Some domestic and foreign companies have begun interesting to study the CBM gas, Tonny said.

The CBM gas began to be exploited and mass produced by major companies in Australia and the United States in 1980s.China, which has vast coal deposit has already begun to develop CBM.A research which was jointly conducted by state oil and gas company PT Pertamina and PT Caltex Pacific Indonesia (Chevron) in 2001 found Indonesia deposited about 337 trillion cubic feet of CBM in many areas in the country -- making the country the world?s seven largest CBM depositor. (*)

LKBN ANTARA Copyright © 2005

INDONESIA PLAN TO USE BIODIESEL

Batam (ANTARA News) - Minister of Energy and Mineral Resources Purnomo Yusgiantoro said here on Friday he hoped several regions in Indonesia would be able to start producing biodiesel fuel from castor kernel as an alternative fossil fuel next year.

Hopefully commercial production of biodiesel fuel could begin next year as a long-term profitable business potential, he said.

Castor planting technology has already been developed in the regions which have the potential for castor plantation development.

He said the government and the people already started raising castor plants to produce biodiesel to reduce dependency on conventional fuels.

He said the government planned to build a castor oil industry if castor plantations had been developed in a large scale.

"Not only castor, oilpalm kernel can also be used to produce biodiesel," he said.(*)

LKBN ANTARA Copyright © 2005

Tuesday, April 18, 2006

INCOMING INDONESIAN TRADE SHOW FOR 2006

THE NATIONAL MERCHANDISE AND COMODITY SHOW 2006
Date: October 2006
Place: Jakarta Fairground, Kemayoran
Jakarta, INDONESIA
Organizer: National Agency for Export Development
Ministry of Trade Republic of Indonesia
Address: BPEN Building, Jl. Kramat Raya No. 172
Jakarta Pusat 10430, INDONESIA
Telp: (62 -21) 3100569
Fax: (62 -21) 31904914
Email:nafed@nafed.go.id
Website: http://www.nafed.go.id/


MANUFACTURING INDONESIA SERIES 2005
Date: 7 – 10 December 2005
Place: Jakarta International Expo, Kemayoran
Jakarta, INDONESIA
Organizer: PT. Pamerindo Buana Abadi
Address: Deutsche Bank Building, 13th floor
Jl. Imam Bonjol No. 80
Jakarta Pusat 10310, INDONESIA
Telp: (62 -21) 3162001
Fax: (62 -21) 3161981
Email: promotions@pamerindo.com
Website: http://www.pamerindo.com/

The development of the industrial estate continued till 2007

Benjamin M. Lamberte, the senior Consultant Coldwell Banker Commercial Indonesia suggested that through to quarterly III 2005 occupancy rates (physical occupancy) the industrial region (KI) in Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek) was not yet maximal or around 65,7%, but the KI development will continue till 2007.
According to David Cheadle, Chief Executive Officer PT Procon Beautiful, the shortage of the absorption because of the property investor more was interested developing the office complex, ritel and the dwelling.
Whereas according to Benjamin the condition was caused the infrastructure in an amount of KI did not yet support and must be straightened out became better.
The new region opening and the development of the available region were still being carried out by the developer and the investor, because of being estimated when the infrastructure improved the region will be full and till the next three years was estimated improved around 655 ha., with the data as follows:

Milenium Industrial Estate
Location: Tangerang, Banten
Size: 40 ha.
Realitation: 2006

JABABEKA Phase3
Location: Bekasi, West Java
Size: 100 ha.
Realitation: 2006

Delta Mas Industrial Estate
Location: Bekasi, West Java
Size: 250 ha.
Realitation: 2006

Bukit Indah Extention
Location: Kerawang, West Java
Size: 265 ha.
Realitation: 2006

Moreover after one stagnant semester, to quarterly Ii 2005 happened the increase 30 ha by Millenium IE in Tigaraksa, 65 ha in Bekasi the IE Dawn and 80 ha in Modern Cikande was finished quarterly I in 2006.

(the source: the Indonesian business, on November 18.2005, T4)