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BCA TO ESTABLISH NEW MULTIFINANCE SUBSIDIARY. PT Bank Central Asia Tbk has established a new financing firm specially to finance the purchases of motorcycles. The country's third largest lender has apparently been interested in the leapfrogging increase in motorcycle sales in the country. BCA's Vice President Jahja Setiatmadja  said in the first phase share participation will be 25%  by its financing subsidiary  BCA Finance  in line with the regulation. The move to establish a multifinance company will strengthen the bank's business in consumer banking. So far, BCA joins with BCA Finance in offering credit for the purchases of cars with a ratio of 95%:5%. The multifinance subsidiary to be stablished by BCA will further diversify its business lines.  BCA Finance has served as the vehicle of BCA in expanding its consumer credits in housing credits in addition to car credits. The consumer credit of BCA has increased by almost 40% in the past several years.

MERUKH TO TEAM UP WITH MAYFIELD TO ACQUIRE AVOCET. PT Lebong Tandai, the subsidiary of Merukh Enterprises will team up with Singapore's Mayfield Investment Pte Ltd to acquire the assets of Avocet Mining Plc in Indonesia and Malaysia. Mayfield has agreed to jointly provide US$ 250 million for the payment of the assets, Lebong's President Lucky Merukh said. Payments will be in two phase - US$50 million to be put in escrow account  and the rest to be paid after due diligence study is conducted, Lucky said. Avocet is Lebong Tandai's partner in a joint venture PT Avocet Bolaang Mngonodouw, a gold mining company in North Sulawesi. Merukh chief commissioner Jusuf Merukh said based on its contract, Avocet may not sell its assets other than to his company. Avocet's assets in Indonesia and Malaysia include a number of gold mining companies such as PT Avocet Bolaang Mongondouw.

TWO TAIWANESE CERAMIC PRODUCERS TO BUILD FACTORIES IN INDONESIA. Sunpower International Ceramics and Kylos Resources, both from Taiwan plan to build a ceramic factory each in Indonesia with a total investment of US$ 57.5 million in 2011. Sunpower wants to build a factory with a production capacity of 30,000 sq.m.  per day. Kylos plans to build one with a production capacity of 85,000 sq.m. per day. Based on an assumption that a production line (with a capacity of 10,000 sq.m a year) to cost around US$5 million Sunpower will need to invest US$ 15 million and Kylos US$ 42.5 million.  Earlier, Nobel Ceramics also from Taiwan built a ceramic plant with a capacity of 40,000 sq.m. of ceramic per day. If the two projects are to be implemented as scheduled, the country's total production capacity will rise from 243 million m2 to 277 million m2 per year.

HANKOOK TO BUILD TIRE FACTORY WORTH US$ 1.2 BILLION.  South Korea's largest tire producer Hankook Tire Co.  Ltd plans to build a tire factory in Indonesia by the end of 2010. The Seoul-based company will invest US$1.2 billion in the project which will have a production capacity of 15 million units of car tires a year, an official said. Hankook chose Indonesia over Thailand and Vietnam because of the huge domestic marker, Gita Wirjawan, head of the investment board (BKPM) said. With such capacity Indonesia will serve as the production base for other Asian countries, Europe and America, he said. Other than China and Hungary, the factory to be built in Indonesia will also serve to supply tire in global market. Hankook has already surveyed locations in a number of areas for the project such as Cibitung, Jababeka and Bekasi. He said the government has promised to facilitate the project by simplifying the licensing procedure. Indonesia already has a number of car tire producers with a total capacity of 43 million units  a year. Meanwhile, the association of tire producing companies said tire sales from factories to dealers in the country totaled 1.96 million units in the first half of the year, up 1.17 million units in the same period last year.

NEWMONT SECURES A LOAN PLEDGE OF US$ 200 MILLION. PT Newmont Nusa Tenggara, which operates a big copper and gold mine in Nusatenggara has secured a loan pledge of US$ 200 million from European banks. It already secured a loan commitment from banks in the country BNP Paribas, Sumitomo Mitsui Banking Corporation and Bank Mandiri - to strengthen its working capital to finance further development of the mine. Earlier, Bank Mandiri vice director Riswinandi said the state bank  and Sumitomo Mitsui Banking Corporation,  and  BNP Paribas had been named by Newmont  as the lead arranger  for a loan of US$ 600 million. The loan would be for 5-7 years. 

INDOFOOD REPORTS HEALTHIER PERFORMANCE. The net profit of Indonesia's publicly traded food giant PT Indofoof Sukses Makmur shot up 42.6% to Rp 2.25 trillion in the first nine months of this year from Rp 1.58 trillion in the same period last year. The  largest instant noodle producer in Southeast Asia  posted Rp 9.15 trillion in gross profit , up  from Rp 7.78 trillion  year-on-year. Its operating profit climbed 30.5% to Rp4.86 trillion with core profit surging 83% to Rp 2.22 trillion Its president Anthoni Salim said the performances of all of its business units improved in the nine months period. Salim said the management is optimistic the trend will continue through the rest of the year and the following years.  The company posted Rp 28.31 trillion in consolidated net sales in the January-Sept. period up slightly 0.4% year-on-year. Sales of its wheat flour unit Bogasari and agribusiness subsidiaries fell but sales of branded consumer products made up the decline. He said the prices of wheat flour and crude palm oil by its subsidiaries fell In the first half of the year, its net profit rose 76.37% to Rp 1.41 trillion largely due to smaller lower cost of goods sold.

PETROGRES TO SOON BUILD PHOSPHORIC ACID FERTILIZER FACTORY. State-owned fertilizer producer PT Petrokimia Gresik said it would soon implement plan to build a US$ 200 million phosphoric acid factory. The factory is to be built in Gresik, East Java in cooperation with Jordan Phosphate Mines Co. Plc (JPMC) with production capacity of 200,000 tons a year. Petrokimia Gresik and its Jordan partner have agreed to establish a joint venture PT Petro Jordan Abadi with share split of 50% each to run the new factory. The phosphoric acid will be used to feed Petrokimia's factory producing Natrium, Phosphate Kalium (NPK) fertilizer, demand for which is growing, its president Nugroho Purwanto said. With the new factory the company could expand its NPK capacity to 3.48 million tons a year from 2.4 million tons at present, Nugroho said. Tender for the construction of the factory is to be held in October-November and it is to be operational in 2013, the company said. Meanwhile, in order to improve its efficiency, the company has operated a new power plant. The coal-fired power plant has a capacity of 25 megawatts built with an investment of Rp 598 billion. The power plant coming on line in September will save US$ 11 million a year in diesel need to fuel the power plant 

PKT TO SPEND US$ 400 MILLION ON EXPANSION PROJECTS.  Indonesia's largest fertilizer company PT Pupuk Kalimantan Timur (PKT) will set aside US$400 million to finance a number of projects including expansion and diversification of business next year. Among the project is the fifth unit of its urea production facility called Kaltim V and coal boiler. Company's President Hidayat Nyakman most of the fund will be used to build Kaltim V  next year.  The coal boiler project to cost around US$110 million  is designed to produce coal steam  around 27 million British thermal unit (BTU) to be prepared for possible shortage in natural gas supply  in the coming years.  The boiler will produce 440 tons of hot steam per hour to propel the turbine of its ammonia production facility. Meanwhile, Pupuk Kaltim has agreed with  state plantation companies PT Perkebunan Nusantara (PTPN)  IV  and   PT Perkebunan Nusantara(TPN) V  to build a nitrogen, phosphor kalium (NPK) fertilizer factory  in Medan, North Sumatra. The project will cost around US$ 50 million. Hidayat Nyakman said  the NPK factory  will have a production capacity of 200,000 tons of NPK a year. The joint venture named PT Pupuk Agro Nusantara  is expected to be able to supply NPK for plantations  in North Sumatra, Hidayat  said. North Sumatra is selected  to be  close to many plantations such as oil palm, rubber, cacao and tea plantations in that province.


CORPORATE NEWS IN BRIEF
August 2010
 
INDONESIAN COMMERCIAL NEWSLETTER (ICN)
MONTHLY REPORT
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