2008-2009 DATA CONSULT. All rights reserved.
PERTAMINA LUBRICANTS TO START OPERATION IN 2012. State oil and gas company PT Pertamina will establish a subsidiary to start lubricant business in January 2012. Foreign lubricant marketing manager of Pertamina Lubricants Redesmon Munir said the new subsidiary is expected to expand the lubricant business of Pertamina. Currently Pertamina Lubricants is still awaiting the process of spin off from its parent company. Pertamina Lubricants already has assets worth more than Rp2 trillion including lands  and four lube oil blending plants  (LOBP)  in Jakarta, Cilacap, Gresik,  and  Surabaya. The one in Surabaya is used only to produce lube oil for exports and for domestic market ahead of Idul Fitri. Redesmon said in 2010, total sales of lube oils reached 550,000 kiloliters with 90% for domestic market.  Exports were small as last year, the Cilacap plant caught fire. In 2011, Pertamina hopes to exports 150,000 kiloliters of lube oil pelumas and dispose of 600,000 kiloliters on domestic market.

ASTRA AGRO TO BUILD NEW PALM OIL FACTORIES VALUED AT RP 516 BILLION. Palm oil Company PT Astra Agro Lestari Tbk will use up to Rp 516 billion from capital expenditure to finance the construction of four new palm oil processing factories. Construction of the project is expected to be completed next year. The company has set aside Rp 1.5 trillion for capital expenditures including for the four palm oil factories, Corporate Planning and Investor Relations Astra Agro Yarmanto said. Yarmanto said the company already has 22 units of palm oil plants with a total processing capacity of 1,050 tons of fresh fruits per hour. The four new factories include two to be completed this year in South Kalimantan and East Kalimantan Timur, and two other in Central Sulawesi and East Kalimantan Timur to be completed next year. The project is estimated to cost up to US$ 15 million each with a processing capacity of 45 tons of FFB per hour.

MITSUI ACQUIRES STAKE IN ASURANSI SINARMAS. Mitsui Sumitomo Insurance Co, Ltd  the second largest  insurance company in Japan has injected Rp 7 trillion into Sinarmas Life, after  acquiring 50% of  the local insurance company  from  PT Sinarmas Multi Artha of the Sinarmas Group Mitsui acquired 50% of Sinarmas Life with a deal signed in May and it was given a new name PT Sinarmas  MSIG. The assets of Sinarmas MSIG rose to Rp 20.18 trillion by June from Rp 11.45 trillion a year earlier. With the acquisition, Sinarmas MSIG is jointly owned by Mitsui Sumitomo and Sinarmas Multi Artha each as a 50% shareholder. Mitsui joined as strategy investors after both sides agreed hat Asuransi Jiwa Sinarmas issued new shares worth RP 7 trillion to be acquired by Mitsui Sumitomo. The acquisition of the shares made the Japanese partner a 50% shareholder. The share sales increased the capital of Asuransi Jiwa Sinarmas to Rp 8.5 trillion making it the largest life insurance company in the country in term of capital. Asuransi Jiwa Sinarmas director I.J. Soegeng Wibowo said with the capital addition Asuransi Jiwa Sinarmas plans to expand business through its all of its business lines including being bancasurance agent, telemarketing and electronic distribution. In addition, Mitsui Sumitomo is a general indurance company established through a merger between Sumitomo Marine & Fire and Mitsui Marine & Fire in 2001. Before investing in Asuransi Jiwa Sinarmas, Mitsui Sumitomo already controls PT Asuransi MSIG Indonesia, a general insurance company with 8 offices in various cities including Jakarta, Surabaya, Batam and Semarang.

GE INVESTED US$ 1 BILLION IN INDONESIA. General Electric (GE) has agreed to team up with state construction company PT Wijaya Karya to develop business in energy infrastructure in his country. The cooperation with GE is expected to help Wika in bringing to reality its vision to become a leading and integrated engineering, procurement and Construction Company in Southeast Asia, its president Bintang Perbowo said. For GE, which operates in infrastructure, manufacturing and service industries, the cooperation will help open the way for its business expansion in the country, Bintang said. He said currently Wika is more interested in expanding business in energy infrastructure construction.  He said Wika is handling EPC work for a number of power generating projects such as for coal-fired power generating projects in Amurang, North Sulawesi and Asam Asam, South Kalimantan. GE has invested more than US$ 1 billion in Indonesia, including in aircraft finance, procurement of locomotives and development of environmental projects. The US technology, telecommunications media and financial service   company has been involved in turnkey projects such as in supplying locomotives and power generating equipment.  Stuart L. Dean, CEO GE Global Growth & Operation Asean, said most of the fund invested Indonesia is for aircraft procurement of PT Garuda Indonesai Tbk and PT Mentari Lion Airlines.

MANDALA SET TO RESUME OPERATION. Following five months of due diligence, Mandala Airlines has finalized its commercial agreement with Saratoga Capital and Tiger Airways, the debt-stricken carrier has announced. Mandala is in the midst of financial restructuring after it halted operations in January under the weight of Rp 2.4 trillion ($274 million) in debt. In a restructuring deal reached in April, it converted its debt into 6.89 million shares, or 15 percent of Mandala's total equity. "We are encouraged by the finalization of the transaction and we look forward to Mandala resuming its service," Sandiaga Uno, co-founder of Saratoga Capital, said in a statement. Based on the agreement, Saratoga Capital will become the controlling stakeholder with a 51 percent share in Mandala.        Singapore's Tiger Airways Holdings enters as a strategic partner and will control 33 percent of the Indonesian airline's shares.  "We are pleased to have reached agreement for this transaction and are excited at the prospect of Mandala resuming operations. We will continue to work closely with our business partner in this venture in order to achieve this," said Chin Yau Seng, acting chief executive of Tiger Airways Holdings. The remaining stakes in the company will be held by creditors and the existing shareholders.

NISSAN MOTOR INDONESIA SET TO PRODUCE GREEN CARS IN INDONESIA. PT Nissan Motor Indonesia has moved a step closer to implementing its plan to produce low cost green cars (LCGC) in the country. The sole agent for Nissan cars in the country held a supplier meeting here recently as a first step toward implementing the project, NMI president Takayuki Kimura said.  Around 500 suppliers including from abroad took part in the two-day meeting ending Sept 16 to study cooperation among Nissan's suppliers. NMI also discussed better business process with vendors and studies increase in localization, Kimura said NMI plans to invest 25 billion yens (US$ 312.5 million) in the next two years to increase its capacity and build new assembling plant and increase localization, he said.     NMI plans to produce cars with a local content of more than 80% in 2012. In 2010, NMI produced more than 50,000 units of cars with sales reaching 40,000 units. In the first half of the current fiscal year ending in March 2012, the company already sold 35,000 units of Nissan cars or more than 50% of its sales target of 60,000 units in the fiscal year. The company plans to expand the capacity of its factory in Cikampek to 100,000 units in 2012 and to 180,000 units in 2013.

KRAKATAU TO BUILD STEEL FACTORY AT A COST OF RP 5.92 TRILLION.  State-owned steel maker PT Krakatau Steel Tbk (Persero) will build a steel factory with the technology of blast furnace at a cost of Rp 5.92 trillion (US$ 697 million). The factory to be built in Cilegon, Banten, will have a production capacity of 1.2 million tons. It is planned to reduce the production cost of slabs and imports of basic material, and to utilize local basic material such as iron ores and coal.  Construction of the factory is expected to start in before the end of this year to be completed in the second quarter of 2014. Krakatau Steel planned to team up with Metallurgical Corporation of China Ltd (MCC) CERI to build the project, said Andi Soko Setiabudi, a deputy director of the country's largest steel maker. Krakatau Steel and the Chinese construction company have signed the contract to build the project, Andi said. The company will seek a loan of around Rp5 trillion from Chinese banks to finance the project, he said, adding the remaining fund for the cost will be put up by the company. Meanwhile, the US$ 6 billion project between KS and South Korea's Pasco is still in the phase of preparing the land for the integrated steel plant in Cilegon, Banten. The land preparation alone has cost Rp 600 billion, Krakatau President Fazwar Bujang said, adding civil work will start early next year. The first phase of construction of the factory will begin only in 2013.

MERGER NOVARTIS-ALCON STRENGTHENS DOMESTIC PHARMACEUTICAL MARKET. The merger between global pharmaceutical company Novartis and Alcon Inc is expected to strengthen the position of Novartis in the Indonesian market. PT Novartis president Luthfi Mardiansyah said merger between the two companies will create strong eye treatment business with wide commercial coverage and improve the capacity of producing products for eye treatment. The new Alcon division in Indonesia will involve its business under CIBA Vision and medicines for eye treatment. Novartis is a leading global and domestic player in the pharmaceutical business. Among its products include innovative medicines, eye health, generic medicines, vaccine and diagnostic equipment. Novartis had the 18th largest share of the Indonesian market based on a survey in 2010 with sales valued at Rp 521 billion of the total market value of Rp 34.5 trillion.

PIKKO GROUP ACQUIRES ROYAL OAK AT US$234 MILLION. Leading Indonesian property developer the Pikko Group has acquired 68.01% of PT Royal Oak Development Asia, which is listed on the Indonesian Stock Exchange   at a price of Rp 2.06 trillion (US$ 234 million). Pikko Group's unit Pikko Land Corp. based in the British Virginia Islands, acquired 9.16 billion shares of Royal Oak, a major property company, from Forever Prosperous Pte Ltd (Singapore) with PT Sinarmas Sekuritas as Pikko's adviser. Sinarmas Sekuritas' president Kokaryadi Chandra said after the transaction earlier this week, the Pikko Group will hold tender offer to buy the shares held by the investing public. An Indonesian regulation requires buyer of a majority stake in a listed company to hold tender offer before offering shares again to the public.  The Pikko Group has established cooperation with leading property developers in the country such as Lippo, Podomoro, Sahid, Metropolish, Istana and Spring Hills. Royal Oak president Subianto Satmaka said the divestment was part of the company's plan to expand its property business. Royal Oak plans to acquire seven property companies in the country worth Rp 512 billion.

GEELY AUTOMOBILE TO MAKE INDONESIA PRODUCTION BASE.  Geely Automobile Holding Ltd plans to make Indonesia its car production base for the regional market Asean, Australia and New Zealand. Investment will  start in 2014 to coincide with the implementation of  the Asean China Free Trade Agreement  in the automotive sector of  the  "very high sensitive list ,  its local  unit  PT Geely Mobil Indonesia  (GMI) said.  Geely Indonesia President Budi Pramono said the plan is being processed, adding the Chinese principal sees Indonesia the most potential market in Southeast Asia. Geely plans to concentrate expansion to Australia and New Zealand only later in the next 5-10 years, Budi said. The leapfrogging increase in car sales in the country has attracted foreign automotive principals. GMI said it hopes to sell up to 700 units of its new product of LC Cross 500-700 a month in the country this year. Geely cars compete well facing Japanese and European products in Indonesian market prompting GMI to launch the new variant Budi Pramono said. The new model, offered at Rp 112 million per unit, is fuel efficient needing only; a liter of gasoline per 14 kilometers, Budi said. Last year, GMI launched a city car, Panda LC 1.3 of which it recorded sales at 300 units in the first half of this year. GMI also has other Geely models including MK1 and MK2 sedan cars. According to data at the industry ministry there are five other principals including Daihatsu, Toyota, Suzuki, Nissan and BMW planning billions of US dollar investment in the country this year.       Daihatsu is already in the process of implementing its project building a new production facility with a total investment of Rp 2.1 trillion (US$ 235 million).  Meanwhile US General Motors plans to revive its long abandoned assembling plant in Pondok Ungu, Bekasi.


INPEX TO START DEVELOPMENT OF MASELA BLOCK NEXT YEAR. Japan's Inpex Corp.  said it will start work next year to develop the Masela gas block including a US$ 8 billion floating liquefied natural gas (LNG) plant Toshiaki Kitamura, the CEO of Inpex Corp. Confirmed the plan in a recent meeting with Vice President Boediono. Inpex is ready to produce gas from the Abadi field in 2016, Yopie Hidayat, the spokesman of the vice president said. Inpex already secured the license to  build  the LNG plant in the Abadi field in the Masela block, in the Arafuru sea, Maluku,  late last year in the first years, the plant is expected to produce  2.5 million tons of LNG a year and 8,400 barrels of condensate a day.   Chief spokesman of the upstream oil and gas regulator (BP Migas) Gde Pradnyana said the entire cost of development of the Abadi field including drilling is estimated to reach US$ 25 billion. Masela is believed to have one of the largest gas deposits in the country.   Last July, Inpex signed an agreement to sell a 30% stake in the floating LNG plant project to Shell Upstream Overseas Services, a subsidiary of Royal Dutch Shell plc.   Earlier it sold a 10% stake to PT EMP Energi Indonesia, a subsidiary of the Bakrie Group reducing Inpex's share in the block to 60%. 


CORPORATE NEWS IN BRIEF
May 2011
MONTHLY REPORT
INDONESIAN COMMERCIAL NEWSLETTER (ICN)
 
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