1. BRI (2 x 22)<\/p>\n
House urges govt to share
\nIPO proceeds with BRI<\/p>\n
Rendi A. Witular
\nThe Jakarta Post
\nJakarta<\/p>\n
The House of Representatives approved on Tuesday the
\nprivatization of state-owned Bank Rakyat Indonesia through an
\ninitial public offering scheme (IPO), but urged the government to
\nshare the proceeds with the bank.<\/p>\n
\"The commission has approved the plan, but there are several
\nconditions the government and the management of BRI should meet
\nbefore going ahead with the IPO,\" newly appointed chairman of the
\nHouse finance commission, Emir Muis, said on the sidelines of a
\nhearing between the Commission and the bank.<\/p>\n
He explained that one of the main conditions was that part of
\nthe proceeds from the IPO should be given to BRI to help halt the
\nbank's declining capital adequacy ratio (CAR).<\/p>\n
BRI's CAR has been declining over the past several months due
\nto a lack of fresh capital. As of June this year, BRI's CAR stood
\nat 12.36, down from 14.7 percent in March this year.<\/p>\n
Emir said that the House would discuss with the government how
\nthe IPO proceeds could be managed so that BRI's CAR could be
\nincreased but at the same time the state could use the proceeds
\nto plug the widening budget deficit.<\/p>\n
\"The bank wants 50 percent of the proceeds, but I don't think
\nthat is possible as the government will firmly stick to its plan
\n(of taking most of the proceeds). I guess 20 percent is the most
\nfor the bank, and we will ask the government to approve this,\"
\nEmir said.<\/p>\n
2. Tax (3 x 10)<\/p>\n
Scrap soda
\nluxury tax,
\nsays UI<\/p>\n
Scrap
\nluxury tax,
\nsays UI<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
The University of Indonesia (UI) has suggested the government
\nscrap luxury taxes on carbonated drinks, saying the move will
\nincrease rather than decrease the government's tax revenue from
\nthe industry.<\/p>\n
UI's Research Institute for Economy and Society (LPEM-UI) made
\nthe suggestion on Tuesday in conjunction with the results of a
\nsurvey titled \"The impact of luxury tax removal from carbonated
\nsoft drinks\".<\/p>\n
\"If the government scraps luxury tax on carbonated drinks,
\nstate revenue will decrease by Rp 58.4 billion (US$6.8 million),\"
\nthe paper said.<\/p>\n
However, it added that sales of carbonated soft drinks would
\nlikely increase due to lower retail prices resulting in an
\noverall increase in tax revenue.<\/p>\n
If sales of carbonated drinks climb by 15 percent, tax revenue
\nwould be Rp 11 billion higher than the amount collected from the
\nluxury tax, the paper said.<\/p>\n
\"On top of that, there are multiplier effects from the sales
\nincrease,\" LPEM-UI's economist Chatib Basri told reporters on the
\nsidelines of the seminar discussing the paper. \"The investment
\nclimate would revive and it would create more jobs.\"<\/p>\n
Under Law No. 18\/2000 on Luxury and Value-Added Taxes,
\ncarbonated beverages are taxed 10 percent because the products
\nare considered luxury items.<\/p>\n
Chatib said the government's criteria on luxury goods was also
\nconfusing, pointing out that soft drinks were by no means luxury
\nproducts.<\/p>\n
Also in the seminar, businessman Anton Supit supported the
\nresearch's conclusion, saying the recent elimination of such
\ntaxes on electronic goods had had a positive impact on the
\nindustry.<\/p>\n
\"The industries need tax reform to revive,\" he said. \"But the
\nreform should be carried out thoroughly, including a reform in
\nthe investment climate.\"<\/p>\n
4. IFC (2 x 22)<\/p>\n
IFC, govt launch $19m
\ninitiative for SMEs<\/p>\n
I Wayan Juniartha
\nThe Jakarta Post
\nNusa Dua, Bali<\/p>\n
The Indonesian government and the International Finance
\nCorporation (IFC) here on Tuesday officially launched a US$19
\nmillion program to help small and medium enterprises in the
\neastern part of Indonesia.<\/p>\n
The Program for Eastern Indonesia SME Assistance (PENSA), a
\nfive-year technical assistance program, is cofunded by the IFC
\nand the governments of Australia, Japan, Switzerland and
\nNetherlands.<\/p>\n
The program was officially launched by Minister for
\nCooperatives and Small and Medium Enterprises (SMEs) Alimarwan
\nHanan, followed by the signing of the MOU by the general manager
\nof Indonesia Enterprise Development Facility (IEDF), Chris
\nRichards, and representatives of Bank Rakyat Indonesia (BRI) and
\nDharma Bhakti Astra Foundation, which are to assist the IFC in
\nimplementing the program.<\/p>\n
IFC, the private sector development arm of the World Bank,
\nwould manage the US$19 million initial funding to provide
\ntraining and assistance aimed at improving SMEs capacity and
\ncompetitiveness.<\/p>\n
The PENSA will focus on business sectors which have \"regional
\ncomparative advantages\", such as furniture and handicrafts in
\nDenpasar (Bali), mining in Balikpapan (East Kalimantan),
\nagribusiness in Makassar (South Sulawesi).<\/p>\n
It would conduct various training programs for banks and other
\nfinancing institutions in Surabaya, East Java, to create a wider
\nfinancial access for SMEs.<\/p>\n
Praising the launch of the program as a very important event,
\nthe World Bank's country director in Indonesia Andrew Steer
\nhighlighted the fact that out of the 17 million registered
\ncompanies in Indonesia, only 1 percent had more than 20
\nemployees. The rest were SMEs.<\/p>\n
\"The SMEs are absolutely essential for the future of this
\ncountry,\" he stressed.<\/p>\n
\"Throughout Eastern Indonesia today, there are millions of
\npeople who need jobs, there are ten of thousands of good
\nentrepreneurs with good ideas that can change the face of this
\ncountry if they were given a little help. That's what this
\nprogram is all about,\" he added.<\/p>\n
Separately, IEDF general manager Richards pointed out that in
\nIndonesia there were 15 million unregistered businesses, mostly
\nmicro-size firms. Moreover, SMEs employed approximately 60
\npercent of the country's labor force and they were represented
\nacross most economic sectors.<\/p>\n
He also stressed that the PENSA would not provide SMEs with
\ndirect funding or loans since the program would focus on training
\nand technical support.<\/p>\n
However, the program would actively engage and facilitate the
\ninvolvement of various strategic partners, which were interested
\nin providing the SMEs with such funding.<\/p>\n
Separately, the Embassy of Canada's development counselor
\nJulian Murray stated that his government would soon participate
\nin the program.<\/p>\n
4. Bond (1 x 42)<\/p>\n
Govt to undertake second bond issue next week<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
The government is set to issue Rp 5 trillion (around US$625
\nmillion) in bonds on Sept. 9 as part of its efforts to help cover
\nthe deficit in the 2003 state budget.<\/p>\n
The bond, which is the second tranche this year, will mature
\non Dec. 15, 2012 and will carry a fixed coupon to be paid twice a
\nyear, the Ministry of Finance said in a statement on Tuesday,
\nadding that the coupon rate had yet to be determined.<\/p>\n
The bond issuance is part of government plans to issue new
\nbonds to finance maturing government bonds.<\/p>\n
In April, the government issued the first tranche, worth Rp
\n2.7 trillion, which will mature in 2011. The bonds have a fixed
\ncoupon rate of 12 percent and was priced through an auction with
\na weighted average yield of 12.21 percent.<\/p>\n
The government has said the bond issuance was a highly
\nimportant measure to help ease the payments of its huge domestic
\ndebts, as well as to avoid a fiscal disaster and maintain
\ninvestor confidence.<\/p>\n
As of December last year, the government's domestic debt stood
\nat Rp 650.4 trillion -- all in the form of bonds, with a large
\nchunk of them maturing between 2004 and 2009. The huge debt is a
\nresult of the cost to bail out the banking industry during the
\nlate 1990s financial crisis.<\/p>\n
Late last year, the government issued treasury bills also in a
\nbid to finance maturing government bonds. The issuance was
\nconsidered successful given the fact that the bills were
\noversubscribed.<\/p>\n
Previously, the government targeted to issue bonds worth Rp
\n7.7 trillion this year, but it is currently seeking approval from
\nthe House of Representatives for its plan to increase the size of
\nthe bond issuance to Rp 11.7 trillion due to a larger-than-
\nexpected deficit.<\/p>\n
Minister of Finance Boediono said last week the 2003 state
\nbudget deficit was expected to widen to 2 percent of the gross
\ndomestic product (GDP), due to rising expenditures and falling
\nrevenues.<\/p>\n
He said the deficit would hover around Rp 35.1 trillion,
\ninstead of the original target of Rp 34.4 trillion or 1.8 percent
\nof GDP.<\/p>\n
Elsewhere, the statement said that the auction of the new
\nbonds will be held by Bank Indonesia from 10.00 a.m. 12.00 a.m.
\non Sept. 9.<\/p>\n
The government is also expected to sell around $400 million
\nin sovereign bonds in the international market early next year,
\nto help finance next year's state budget.<\/p>\n
5. APEC (1 x 42)<\/p>\n
APEC finance ministers to gather in Thailand<\/p>\n
Michael Mathes
\nAgence France-Presse
\nBangkok<\/p>\n
Asia-Pacific finance ministers meeting this week in Thailand will
\nseek to broaden cooperation in a year when terrorism, SARS and
\neconomic strains have taken center stage, analysts said.<\/p>\n
The financial policy heavyweights from the 21 members of the
\nAsia-Pacific Economic Cooperation (APEC) group, including U.S.
\nTreasury Secretary John Snow, meet on the resort island of Phuket
\non Thursday and Friday to boost global and regional financial
\nlinks crucial to the key APEC goal of lowering trade barriers.<\/p>\n
Topping the agenda will be the promotion of grassroots small-
\nand medium-sized enterprise development, long seen as a crucial
\nengine of growth in the Pacific Rim, the meeting's Thai
\norganizers said.<\/p>\n
\"They will also address the regional bond market and free-
\ntrade areas and regional trading arrangements,\" said Churairat
\nSuteethorn, director of Thailand's bureau of international and
\nmacro-economic policy in the ministry of finance.<\/p>\n
The ministers are also likely to step beyond the pre-set
\nagenda to address global concerns including the fight against
\nterror, an Asian Development Bank (ADB) expert said.<\/p>\n
\"In terms of enhanced geo-political risk in the region,
\nperhaps they will talk about measures like anti-money-laundering
\nand terrorist financing,\" Pradumna Rana, ADB's director of
\nregional economic monitoring, told AFP.<\/p>\n
\"They'll discuss proposals to establish financial intelligence
\nunits in various ministries to track down flows of such types of
\nmoney.\"<\/p>\n
The bid to clampdown on the money trail has gained momentum
\nwith the latest terrorist bombing in Indonesia of a Jakarta
\nhotel, which temporarily spooked financial markets and investors.<\/p>\n
The dialogue will pick up where the finance ministers left off
\none year ago, when they boldly opened a broad new front in the
\nfight against elusive terrorist finance networks at their APEC
\nmeeting in Los Cabos, Mexico.<\/p>\n
Since then, however, the Asia-Pacific has been hammered by the
\noutbreak of Severe Acute Respiratory Syndrome (SARS), which
\nplunged the region into crisis, driving down tourism and
\ninvestment and battering the economic performance in the first
\nsix months of this year.<\/p>\n
\"But with SARS now under control, and positive news and data
\ncoming from U.S. and Japanese economies, the second-half
\nperformance for the East Asian region looks better,\" Rana said,
\nspeaking from the ADB headquarters in Manila.<\/p>\n
Phuket participants are also to hear a pledge of commitment to
\nthe region by the International Monetary Fund, whose managing
\ndirector Horst Kohler will address the meeting in an effort to
\n\"reinforce the IMF's continued engagement with Asia,\" the fund
\nsaid in a statement.<\/p>\n
\"He is particularly interested in the views of Asian countries
\nregarding various regional cooperation initiatives as well as the
\nfund's ongoing work to reinforce global economic and financial
\nstability.\"<\/p>\n
The ADB's Rana said the session is also to touch on global
\ntrade, a pillar of APEC, which has set a goal of free trade and
\ninvestment by 2010 for developed country members and 2020 for
\ndeveloping ones.<\/p>\n
The talks will precede next week's World Trade Organization
\nministerial session in Cancun, Mexico, where negotiators from 146
\nnations will try to lay out a time frame for trade reform.<\/p>\n
Further monetary and financial cooperation among Southeast
\nAsian nations, China, Japan and Korea will also be studied in
\nPhuket, Rana said.<\/p>\n
So will the contentious issue of China's currency, the yuan,
\nwhich Washington and Tokyo have been strenuously arguing is
\nundervalued.<\/p>\n
The Phuket meeting precedes by six weeks the APEC summit,
\nwhich is set to bring 21 world leaders to Bangkok.<\/p>",
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"sponsor": "Okusi Associates",
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