1. Oil ( 2 x 22)
1. Oil ( 2 x 22)
Govt offers alternatives for oil, gas concessions Fitri Wulandari The Jakarta Post Jakarta
The government has offered a more flexible system for investors to be granted oil and gas concessions in the country as part of its bid to revive the investment climate in the sector.
Iin Arifin Takhyan, director general of oil and gas at the Ministry of Energy and Mineral Resources said the government had provided two alternative ways for investors to get oil and gas blocks apart from the normal bidding rounds.
"We want to make easier procedures for investors interested in oil and gas concessions," Iin said over the weekend.
Aside from the usual bidding round, the government will make oil and gas blocks that failed to attract bidders in past bidding, available to any interested investor.
"If there is a company interested in a certain block, it can submit proposal. The government will award the block if they meet certain requirements," Iin said.
To maintain transparency, the government will also offer the block eyed by the company in question to other companies through the media.
"We will give one month to invite other interested firms. If no companies submit their proposal, the award goes directly to the first company that submitted the proposal," he added.
The block will be open for bidding if there are other firms voicing an interest, Iin said.
Currently, a total of 16 oil and gas blocks remain in the government's hands becaue they did not attract bidders during a regularly scheduled auction. The government will still make the blocks available for interested investors.
Three companies have voiced their interest in three oil and gas blocks, he said.
Companies now can also propose to get oil and gas blocks of their interest after they conduct a study of their own, Iin added.
Iin said the company must submit proposals of their working commitment program as well as the result of their studies.
According to Iin, there are five companies that have submitted proposals on five oil and gas blocks apart from the ones offered in the bidding round.
Iin brushed aside speculation that the steps meant that the government was selling off the country's resources all too easily.
"We will choose companies that meet the requirements both financially and technologically to run the oil and gas blocks," he stressed.
Iin said the steps are expected to boost development of new hydrocarbon resources to maintain production sustainability amid an ongoing decrease in the country's oil and gas output.
Oil and gas production in Indonesia continues to drop as the investment climate becomes unfavorable.
2. SMEs (1 x 34)
Resilient SMEs still facing problems Evi Mariani The Jakarta Post Jakarta
Small and medium scale enterprises (SMEs) -- which have proved more resilient than many corporate giants in coping with the economic crisis -- still struggle with persistent problems in tapping overseas markets, according to a government paper.
The problems include the lack of access to banking credits and lack of skills in packaging products, according to the paper written by the directorate general for SMEs at the Ministry of Industry and Trade.
"SMEs' ability in acquiring banking credits is limited, because, among others, they do not own collateral.
"Also, their products do not have good package designs," the paper said.
Concerning the problems relating to banking credits, the government and the Asian Development Bank (ADB) are seeking to solve them by channeling US$85 million in loans to small and medium scale exporters by the end of this year, with lending rates of between 1 to 2 percent below the average commercial rate.
In order to address problems relating to packaging design, the government has developed a design center at the ministry, with the cooperation of art and design students, from the Bandung Institute of Technology in West Java's capital of Bandung and the Indonesian Art Institute in Yogyakarta.
"SMEs can choose and use for free from the ministry the designs for packaging their products," Agus Tjahajana, the director general for SMEs, told reporters last week. "It is difficult for them to tap larger markets if they continue using photocopied logos and packaging."
The design center has produced dozens of computer-designed logos and brands for products such as snacks, coffee, and various traditional foods.
Both programs -- the design center and loan assistance -- aim to boost SMEs' exports. In 2002, SMEs contributed a total of $2.51 billion to the country's exports, according to government data.
The ministry is also organizing an exhibition in Sharjah, United Arab Emirates, to help SMEs boost their export to Africa and the Middle East. The expo will take place in mid-September.
However, the paper conceded that, thus far, the government was still focusing on large companies, despite the fact that SMEs make up most of the country's businesses. In 2002, SMEs reached 3.03 million, or more than 95 percent of the country's total business units, and absorbed 11.89 million workers.
The government has often committed to help improve SMEs' performance but, the paper said, in reality, it has yet to instigate regulations favorable to SMEs.
"The government has yet to formulate an incentive system, special tariffs, subsidies or technical assistance for SMEs or protect them against (large) corporation's tricks," the paper said.
Agus said small companies producing machine or auto parts were often exploited by wholesalers from Jakarta or Surabaya.
"For example, an auto-parts merchant from Sawah Besar (auto-parts center in Jakarta), ordered cheap auto-parts from an SME in a small town in West Java," he explained. "The merchant packaged the parts, stating that they were made in China or Thailand, only to sell them for much more."
In order to protect small and medium producers from being manipulated by traders, the ministry is studying the possibility of developing special markets where they can meet with buyers face to face, he said.
For instance, he said, the ministry is developing machine and auto-parts markets, one in Semarang, Central Java and another one in Cirebon, West Java.
3. Dollar (1 x 32) Dollar surge against euro peaking JP/13/Belum
Dollar's 10-percent surge against euro seen peaking
Agence France-Presse New York
A near 10-percent surge in the dollar's value against the euro since May, driven by a brightening U.S. economy and spreading recessions across Europe, has likely peaked, analysts said Friday.
The euro had sunk to US$1.08 on U.S. trading floors Friday morning, marking a near 10-percent decline from the euro's rate of $1.19 seen in late May.
However, the dollar's rapid rise has tapered off in the last few days since it hit a four-month against the euro on Tuesday.
"We have got a 10 percent move in the last two months," in terms of the dollar's rise against the euro, explained Greg Anderson, a senior foreign exchange strategist at ABN AMRO in Chicago.
A flurry of bullish reports on the U.S. economy, which grew at a 2.4 percent annual pace in the second quarter, has sparked the stampede for dollars.
Bullish July numbers included a surprise 1.4 percent gain in retail sales, a 17-year record in groundbreaking on new housing projects and a steeper-than-expected 0.5 percent increase in industrial production.
"The growth numbers coming out of the U.S. in the past two weeks have caught the market by surprise," said Simon Fowles, a senior foreign exchange dealer at Wells Fargo Bank in Minneapolis.
At the same time, euros have lost their allure as concerns mount about the state of Europe's major economies.
Germany, Europe's largest economy, Italy and the Netherlands have all slipped into recession, while France reported this week a 0.3-percent contraction in second quarter gross domestic product (GDP).
Investors deserted the dollar in late May and early June over concerns about the bulging U.S. current account deficit, war jitters and a perception that President George W. Bush's administration had abandoned a long-held "strong dollar" policy.
Demand for dollars also was sapped by near rock-bottom interest rates, which lowers the return on U.S. investments.
But the flood of upbeat data has turned the tide.
"We had this bubble of dollar weakness that has just popped, and as is typical of any financial market bubble it pops much more quickly than it builds," Anderson said.
As the U.S. economy has picked up, so has the stock market.
The Dow industrials hit a 14-month high Monday closing at 9,412.45 while the Nasdaq struck a 16-month high this week as rising confidence in the economy raised the hunger for U.S. equities.
However, the dollar appears to be running out of puff.
"Is it sustainable? Yes. Will it continue at the same pace? I personally don't believe so," Anderson said.
The euro would likely settle into a range of between $1.06 and $1.14 for the remainder of 2003, he forecast.
Fowles agreed.
"I think we are going to range-trade for the second half of the year, but you never say 'never'. The market has seen some dramatic volatility this year," he said.
"All it would take is one event to see this thing flip around," Fowles added.
4. Leader (1 x 48)
Pertamina needs world-class CEO to beat competition
Pertamina needs a professional leader JP/ /
Fitri Wulandari The Jakarta Post Jakarta
State oil and gas firm PT Pertamina needs a professional leader who does not only have extensive experience in the oil and gas business, but also possesses world-class leadership skills so as to be see the company safely through the cut-throat competition that exists in the energy business, legislators said.
Irwan Prayitno of the House of Representatives' Commission VIII said Pertamina needed a world-class chief executive officer (CEO) to run the company instead of a bureaucrat.
Pertamina needed a CEO who was progressive in his thinking, decisive and able to find markets for the company's oil and gas products, Irwan told The Jakarta Post over the weekend.
Sharing Irwan's view, Emir Moeis, another Commission member, added that Pertamina's future leader should have a strong entrepreneurial spirit.
Bureaucrats did not possess this as they were accustomed to working in an ordered working environment.
"Pertamina needs a leader who is highly creative and dares to make innovations," he said, adding that such a leader needed to be able to make decisions quickly in view of the highly competitive environment in the oil and gas business.
Irwan stressed that Pertamina's future leader should have a background in the oil and gas business.
Both were commenting on the need to replace top Pertamina managers as a consequence of the government's decision to turn it into a limited liability company. A presidential decree on this was issued in June 2003.
It came after the government decided to liberalize the country's oil and gas industry, and stripped Pertamina off its decades-long monopoly with the implementation of Law No. 22/2001 on oil and gas.
Names tipped to replace current Pertamina president director Baihaki Hakim include deputy minister of state enterprises Roes Aryawijaya, president of liquefied natural gas firm PT Badak NGL Harry Poernomo, former Pertamina upstream director Gatot Karyoso Wiroyudo, director general of oil and gas Iin Arifin Takhyan, and the current chairman of the Indonesian Bank Restructuring Agency (IBRA) Syarifuddin Temenggung.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro is reluctant to say much about the issue. He only said that the power to appoint Pertamina's future leaders now rested solely with Minister of State-owned Enterprises Laksamana Sukardi. He hinted that the reshuffle would take place in November.
Whoever the new leader of Pertamina is, he or she will face the challenging task of turning what was once labeled "the most corrupt business in the country" into an efficient company.
The Development Finance Comptroller (BPKP) and PricewaterhouseCoopers found hundreds of irregularities worth trillions of rupiah in the company in the past. A number of Pertamina's directors were also brought to trial for corruption in the past.
The corruption was perpetrated by politically well-connected individuals.
Since 1994, the company has been undergoing restructuring to improve efficiency, including the institution of an early retirement program that has reduced the number of the firm's workers from 46,000 in 1994 to just 27,000 now. It is also been attempting to develop a new corporate culture.
But more importantly, over the past several years Pertamina has been trying to resist efforts by the government and political parties to turn it into their cash cow to be milked for all it was worth.
Unfortunately, the issues surrounding the future Pertamina's leader have already shown signs of politicking by the government officials involved.
Tempo magazine reported that Laksamana, Minister of Finance Boediono and Purnomo had proposed Roes Aryawijaya to President Megawati Soekarnoputri. But she had flatly rejected him.
State Secretary Bambang Kesowo was supporting Gatot Karyoso Wiroyudo, the magazine said. A subsequent report in the Kontan business weekly said Laksmana was now promoting Syarifuddin Temenggung for the job.
But the underlying issue is that there are moves afoot to replace Baihaki Hakim as director. Reports said Baihaki was not particularly welcome as he was deemed less than cooperative when it came to collusion.
Baihaki, the former number one in the U.S. oil and gas firm Caltex Indonesia, is known for its professionalism and honesty.
Baihaki's critics point to what they say are shortcomings in Pertamina as a sign of Baihaki's failure to run the company properly. For instance, they blame the steady decline in the country's oil output on Baihaki's "failed" leadership.
Emir, however, maintained that Baihaki should not be replaced as he was familiar with the situation in Pertamina and had notched up some successes in restructuring Pertamina and turning it into a professionally managed business.
At least, he said, Baihaki should be allowed to lead Pertamina "during the transition period" from the change in the company's status until the appointment of a new leader. He did not say how long this transition period would be.