1. market (2 x 22)
1. market (2 x 22)
Stocks tumble, rupiah at
8-month low on election
JP/13/Market
Stocks tumble, rupiah at 8-month low on election concerns
Rendi A. Witular
The Jakarta Post
Jakarta
As the first day of the election campaign began on Thursday,
shares on the Jakarta Stock Exchange (JSX) dropped and the rupiah
plunged to its lowest level in eight months because of jitters
over security during the campaign.
The Jakarta Composite Index dropped by 2.5 percent or 19.129
points to 741.198 from 760.327. Among the stocks traded, 130 were
lower than their previous closing and only 10 were higher.
Most investors were selling blue chips, such as shares of
cigarette giant PT Gudang Garam, state-owned telecommunications
company PT Telkom and food and soap maker PT Unilever Indonesia.
Gudang Garam fell Rp 900 to Rp 13,150, Telkom Rp 200 to Rp
6,950 and Unilever Rp 100 to Rp 3,450.
Stock analyst Ferry Latuhihin of state-owned Danareksa
Securities said there was no doubt the decline was mostly driven
by fears over security during the election campaign.
"Negative sentiment over the election campaign has set the
stock market on fire. However, overall macroeconomic conditions
and corporate performance will remain strong, raising hope that
the decline will be temporary," said Ferry.
He said the drop in the stock index could not be seen as panic
selling by investors, because the total trading value was
relatively low; Rp 737.2 billion (about US$86.7 billion).
"It would be considered panic selling if the value reached Rp
2 trillion," he said.
Jakarta and other cities throughout the archipelago were
colorful and hectic on Thursday, as the 24 political parties
contesting the April 5 legislative election hit the streets on
the first day of the campaign, which will end on April 1.
Ferry said that although the first day of campaigning was
peaceful, investors were expected to remain wary over the next
couple of days, watching security developments.
He said the stock index would likely stay in the range of 750
for the next couple of days.
He said the decline on Thursday was also fueled in part by
further drops in the regional and U.S. markets.
In the United States on Wednesday, the Dow Jones industrial
average ended lower by 160.07 points, or 1.53 percent, at
10,296.89. The S&P 500 Index closed down by 16.69 points, or 1.46
percent, at 1,123.89, while the Nasdaq Composite Index ended down
31.01 points, or 1.55 percent, at 1,964.15.
The declines in the U.S. bourses were caused in part by a
report from the Commerce Department that the U.S. trade deficit
widened to a record $43.1 billion in January.
Bourses in Asia also tracked down on the decline on Wall
Street. Japan's Nikkei ended down by 136.20 points to 11,297.04,
Hong Kong's Hang Seng Index tumbled 190.14 points to 13,024.06,
and Singapore's Straits Times Index shed 27.24 points to
1,847.78.
2. Band (4 x 10)
Telkom
sees rising
broadband
accounts
JP/13/BAND
Telkom forecasts broadband accounts to rise to 50,000
Dewi Santoso
The Jakarta Post
Jakarta
State-owned telecommunications company PT Telekomunikasi
Indonesia (Telkom) projected that the number of its broadband
users this year would surge to 50,000 from last year's 3,000.
Telkom president Kristiono said on Thursday that the company
had long been developing its broadband service, and would
continue to focus on developing the technology.
"I predict that the number of broadband users will reach
50,000 people from the previous 3,000," said Kristiono.
Broadband is a transmission facility with a bandwidth
sufficient to carry multiple voice, video or data channels
simultaneously over a single communications medium, typically
using some form of frequency or wave division multiplexing.
It currently has cable modem and digital subscriber line (DSL)
services, and offers a "24-hour, 7-day-a-week" internet
connections at higher speeds than dial-up connections, allowing
computer users to download manuals, diagrams and videos clips, at
up to 600 kilobytes per second (kbps).
Kristiono said that broadband service was only available in
Jakarta and Surabaya as not all regions were equipped with
appropriate cables.
He added that the cost of investing in broadband was around
US$50 per unit.
Meanwhile, for Telkom Flexi, he expected the number of users
to more than double, reaching up to 1.5 million this year, as
compared to 600,000 last year.
Telkom Flexi is a cellular service that uses fixed wireless
with code division multiple access (CDMA) technology.
The cost of investing in Telkom Flexi, Kristiono said, was
around $200 per unit.
"TelkomFlexi is more expensive than broadband as we have to
build everything from scratch, whereas for the latter, we can use
the already provided cables," he explained.
3. Mandiri (2 x 12)
Govt completes
sale of Mandiri
JP/13/Mandiri
Govt completes sale of 10% stake in Mandiri
Dadan Wijaksana
The Jakarta Post
Jakarta
The government collected on Thursday Rp 2.87 trillion (about
US$330 million) in proceeds from the sale of a 10 percent stake
in Bank Mandiri in the stock market via private placement in
another round of the privatization of the bank.
Mahmuddin Yasin, a deputy to the State Minister for State
Enterprises in charge of privatization, said that the shares were
priced at Rp 1,450 each.
"The offering, which totaled 1.98 billion shares, was 1.5
times oversubscribed," said Mahmuddin.
The share price was lower than Mandiri's Rp 1,500 last quoted
price at the Jakarta Stock Exchange (JSX) on Wednesday, before
the trading was suspended, pending the completion of the
offering.
Earlier, it was reported that the bidding prices had been set
at a range of Rp 1,450 and 1,475 per share. Of the total number
of shares, about half of which were offered to local investors
via Danareksa Sekuritas, while UBS Warburg handled the offering
of the remaining shares to foreign investors.
The sale was in addition to the first one last year, in which
the government successfully sold 20 percent of Mandiri's stake in
what has been dubbed as the most successful share offering ever.
After the Thursday's sale, the government now holds 70 percent
of the bank's stake.
Mandiri is included on the list of state firms to be sold this
year, along with another 14 companies, in order to meet the
government's privatization revenue target of Rp 5 trillion.
The bank was formed in 1998 through a merger of four state
banks; Bank Ekspor Impor Indonesia (Bank Exim), Bank Dagang
Negara (BDN), Bank Bumi Daya (BBD) and Bank Pembangunan Indonesia
(Bapindo).
It now boasts staggering assets of Rp 251 trillion, making it
the largest lender in the country.
Under the privatization program, the government last year
managed to rake in Rp 7.4 trillion in proceeds, surpassing the
initial target of Rp 6.2 trillion.
The proceeds mostly came from the sales of stake in four state
companies: Mandiri (20 percent), Bank Rakyat Indonesia (40.5
percent), cement maker Indocement (16.9 percent) and natural gas
distribution company Perusahaan Gas Negara (39 percent).
The government has been relying on proceeds from the program
to help cover the state budget deficit, which for this year has
been set at Rp 24.4 trillion or 1.2 percent of the country's
gross domestic products (GDP).
The government has said that it planned to sell another 10
percent stake in Mandiri this year, although the House of
Representatives has not yet approved the plan.
4. BI (1 x 32)
BI to hold auction to monthly basis
JP/13/BI
BI plans to hold SBI auctions on monthly basis
The Jakarta Post
Jakarta
The central bank is planning to change its weekly SBI
promissory note auctions to monthly auctions as part of its
effort to push banks to boost lending, according to an official.
"Bank Indonesia wants the banks to know that the SBIs are not
portfolio investments but rather monetary instruments," central
bank spokesman Rusli Simanjuntak was quoted by Dow Jones as
saying on Thursday.
He said that the cut in the frequency of the SBI auctions
could be implemented in the coming months.
During the past two years, the country's commercial banks have
invested much of their depositors' money in the SBI notes instead
of lending it to the corporate sector, taking advantage of the
interest rate spread as banks pay lower interest for deposits
while receiving higher interest from their SBI investments.
Bank Indonesia has been aggressively cutting the interest rate
on its SBI notes over the past two years amid easing inflationary
pressures in the hope that the banks would also lower their
lending rates to make borrowing more affordable to the corporate
sector. The interest rate on one-month SBI notes, for instance,
now stands at a record low of around 7.42 percent, compared to
around 13 percent at the beginning of last year. Interest rates
on bank time deposits currently stand at around 6 percent.
To date, the banks have remained generally reluctant to boost
lending to the corporate sector as investing in local companies
is still deemed too risky due to the slow progress made in the
restructuring of corporate debts.
As of November last year, the loan to deposit ratio of the
banking sector remained at a relatively low level of around 40
percent. Most banks are focusing their lending operations on
consumer loans or credit for small and medium-sized companies.
Analysts have also warned the central bank about the huge
burden placed on the central bank through its issuing of SBI
notes as Bank Indonesia has to pay interest to the investors.
And every time the central bank pays interest on the SBI notes,
additional liquidity is pumped into the market, forcing the
central bank to absorb it again through the issuance of more SBI
notes to help avoid inflationary pressure.
According to one estimate, the country's commercial banks on
average have daily excess liquidity of between Rp 20 trillion and
Rp 25 trillion (US$2.94 billion).
5. Cocoaa (1 x 32)
Cocoa industry urge govt to drop VAT
JP/13/Cocoa
Cocoa industry urges govt to drop VAT
The Jakarta Post
Jakarta
The government target to increase the export value of the
country's cocoa and cocoa products by 25 percent this year can
only be achieved if the existing value-added tax (VAT) on the
commodity is scrapped, says an industry leader.
Zulhefy Sikumbang, chairman of the Indonesian Cocoa
Association (Askindo) said on Thursday the current 10 percent VAT
imposed on cocoa farmers when selling their output to the local
processing industry had prompted the farmers to export the
commodity in the form of unprocessed beans.
He said that this in turn had caused a shortage of raw
materials for the processing industry, forcing some of them out
of business.
The Indonesian Cocoa Industry Association (Apikci) said from
12 factories listed in the association, only three were still
operating.
"The value of cocoa will be higher in the international market
if it is processed first," Zulhefy told The Jakarta Post.
He predicted that with the tax incentive, the local cocoa
industry could enjoy an export revenue of between US$900 million
to $1.2 billion per year.
The government revealed on Wednesday it has selected 15
priority export products to achieve this year's non-oil and gas
export growth target of 7 percent.
Cocoa is among the priority products. The government set cocoa
and cocoa products exports to increase by 25 percent from US$629
million in 2003 to $789 million for this year.
To help achieve the target, the government is planning to
scrap the VAT imposed on certain raw materials like cocoa.
But Zulhefy feared that the plan might not be realized in the
future when a new government is formed.
"New government means new policy, so it might not
materialize," he said.
He also said that processing cocoa beans prior to export was
necessary because Indonesia's cocoa beans were of low quality.
Some 90 percent of Indonesia's cocoa production is low quality
unfermented beans.
Indonesia is the third largest cocoa exporter after the Ivory
Coast and Ghana with total cocoa plantation area of 776,900
hectares. Indonesia's cocoa accounts to around 11 percent of
global demand which stand at 3 million tons per annum.
Last year, Indonesia's cocoa output reached 433,411 tons.
Around 80 percent of cocoa export goes to Southeast Asian
countries.
Previously, Askindo said cocoa production could decline by 7.7
percent this year due to the expected drought in the second
quarter of the year.