Thursday, July 26, 2007

Govt hopes tax breaks will boost research

Wednesday, July 25, 2007
The Jakarta Post, Jakarta

The government will appoint an independent committee to formulate guidelines for the implementation of a new regulation offering tax and customs incentives, as well as technical assistance, to businesses that invest in research and development (R&D).

The move is necessary so as to boost R&D spending, by the private sector particularly, State Minister for Research and Technology Kusmayanto Kadiman said Tuesday.

Indonesia's annual spending on research averages some US$300 million, most of which comes from the government. This is way behind China's $76 billion, or even Malaysia's $1.2 billion and Singapore's $2 billion.

Kusmayanto said the establishment of the committee -- comprising representatives of universities, business organizations and government institutions -- was the first step toward improving Indonesia's R&D performance.

With the formulation of the guidelines, the recent government regulation on the allocation of corporate revenues for the strengthening of technology, engineering and innovation would soon be able to implemented.

"We are encouraging the participation of the business sector in this research and development effort. Our long-term goal is to see 3 percent of GDP being spend on research," Kusmayanto said.

Citing as an example Norway, which allocates more than 4 percent of its GDP on research and development, which is one of the highest levels in the world, Kusmayanto said that it would be good progress if research spending could reach 1 percent of GDP within 10 years.

The current allocation on research and development is 0.04 percent of GDP, while neighboring countries Malaysia and Singapore allocate almost 2 percent of their GDP on R&D, said Kusmayanto.

In his opening speech, Kusmayanto explained that the issuing of the regulation was part of a national strategy to strengthen links between universities, research and development institutions, businesses and networks in the science and technology fields.

"The results of research and development, as well as the application of science and technology, which mostly take place in the universities and research institutions, need to be made known to the public.

"This would lead to the making of products that would support national development, strengthen competition and give rise to national pride," said Kusmayanto.

The regulation, which was issued June 22, stipulates that businesses -- be they private companies, state-owned companies, or cooperatives -- that allocate a portion of their profits to research will be able to avail of incentives.

The incentives can take the form of tax incentives, customs incentives, or technical assistance.

M. Said Didu, secretary to the State Ministry for State Enterprises, said the government regulation offered a good opportunity for increasing state-sector spending on R&D.

"With the total capital and operational spending of state enterprises amounting to between Rp 700 trillion and Rp 800 trillion per year, the country's spending on research would increase sharply if their total spending on R&D amounted to 1 percent," Didu told the meeting. (02)

Lorena Air chooses Malaysia for maintenance services

Tuesday, July 24, 2007
The Jakarta, Jakarta

Malaysia Airlines Engineering & Maintenance will provide maintenance, repair and overhaul (MRO) services to PT Eka Sari Lorena Airlines' (Lorena Air) new fleet of six Boeing 737 aircraft under a three year agreement worth US$48 million.

The agreement was signed last week in Malaysia by Lorena Air's CEO, Eka Sari Lorena Surbakti, and the senior general manager of Malaysia Airlines (MAS) Mohd. Roslan Ismail, a statement says.

The full-service airline, a subsidiary of Lorena Transport Group, will commence scheduled services in August with routes from its base in Jakarta to Surabaya (East Java), Denpasar (Bali), Balikpapan (East Kalimantan), Manado (North Sulawesi), Palembang (South Sumatra) and Kuala Lumpur.

Lorena Group -- best known as a luxury bus operator on the islands of Java, Madura, Bali and Sumatra -- plans to increase its fleet to 15 Boeing passenger jets over the coming years.

"MAS's worldwide experience and MRO capabilities, together with our engineering team, will definitely help us sustain our goal of ensuring the best global companies support our operations," said Eka Sari.

Roslan said the six B737s were expected to be ready for service by September this year.

"Our entire staff is firmly focused on providing Lorena Air and all of our other customers the best services possible as we continue to build upon our existing business relationships and remain a preferred MRO provider," said Roslan.

With years of experience in the transportation business, Lorena says the airline has what it takes to be successful, even at a time when the country's airline industry is reeling.

Indonesia's aviation industry has taken a hit from a series of deadly accidents, raising serious questions about the industry's safety standards and forcing the European Union to ban all Indonesian airlines from its jurisdiction.

Saudi Arabia is also considering a similar ban.

"The agreement shows that we are serious about our services and safety standards," Eka Sari said.

MAS Engineering and Maintenance commenced operations in 1972 and has over 30 years of experience in the MRO business. It has obtained approval to carry out maintenance work from international bodies such as the European Aviation Safety Agency (EASA), and the U.S. Federal Aviation Administration (FAA).

To date, it has obtained approval from airlines in 14 countries for certification of component work and aircraft maintenance, including Air France, KLM and Qantas Airways. (02)

Power firm PLN gets green light to pledge assets to secure loans

Saturday, July 21, 2007
The Jakarta Post, Jakarta

State-owned electricity firm PT Perusahaan Listrik Negara (PLN) has been given the green light by the State Ministry for State Enterprises to pledge its assets to secure loans for the construction of new power plants.

State Minister for State Enterprises Sofyan Djalil said Thursday evening after a coordinating meeting with Vice President Jusuf Kalla that PLN could use it assets to secure loans.

PLN had hoped to raise loans from various overseas creditors, mainly from China, to finance 85 percent of the cost of power projects worth Rp 79 trillion (US$8.7 billion), but the negotiations bogged down due to the lack of a government guarantee.

As a result, PLN cannot start the construction of the projects even though the contracts for some of them have already been signed.

PLN then sought the government's approval to allow it to pledge its assets as collateral for the loans

In March, PLN signed contracts for five coal-fired power plants, all in Java, with a total capacity of 3,300 MW.

They comprise the 600-MW Suralaya Baru plant in Banten, to be constructed by China National Technical Import & Export Corp. (CNTIC), the 600-MW Labuan plant in Banten, to be constructed by Chenda Engineering Corporation and its partner PT Truba Jurong Engineering, the 900-MW Indramayu plant in West Java, to be constructed by a consortium of China National Machinery Industry Corporation (Sinomach), China National Electronics Equipment Company (CNEEC) and PT Penta Adi Samudera, the 600-MW Rembang plant in Central Java, to be constructed by Zelan Malaysia, and the 600-MW Paiton Baru plant in East Java, to be constructed by China's Harbin Power.

In April, PLN also signed contracts for the construction of five coal-fired power plants with a total capacity of about 3,600 MW. They consist of 900-MW plants in Teluk Naga, Banten, and in Pelabuhan Ratu, West Java, and 600-MW plants in Jepara, Central Java, and in Pacitan and Awar-Awar, East Java.

These project form part of PLN's fast-track program to provide additional power supply of about 10,000 megawatts by the end of 2009 to cope with the country's acute power shortage.(02)

Bakrie Telecom ups customer target to 3.6 million this year

Friday, July 20, 2007
The Jakarta Post, Jakarta

Bakrie Telecom (BTEL), the telecommunications unit of Bakrie and Brothers, reported Wednesday a 63 percent rise in gross revenues to Rp 580 billion (US$63.7 million) in the first semester, from Rp 355 billion in the same period of 2006.

The company, which operates a CDMA-based mobile phone service using the Esia brand, attributed the sharp increase to a 112-percent jump in the number of its subscribers to 2.2 million as of the end of June from 1.1 million at the end of the same month in 2006.

Besides its Esia brand, BTEL also operates a Wifone wireless fixed service, Wimode wireless internet service and the Esia-tel chain of telephone kiosks.

President director Anindya Novyan Bakrie said that BTEL expected to increase the number of its subscribers to 3.6 million as of the end of the year.

Anindya said that with the sharp increase in the number of its subscribers, starting next month BTEL would expand its national coverage to 34 cities from the existing 17 cities in Greater Jakarta, and West Java and Banten provinces.

To support the expansion project, the company would double the number of its telecommunications towers to 800. The expansion is expected to account for 500,000 subscribers out of the total target of 3.6 million.

"We expect that we will have coverage in 34 cities by the end of the year. Our target is to become a national player offering high quality services and products at affordable prices."

The company said earlier that it would set aside about $220 million for capital expenditure to finance its expansion this year, $70 million of which would be raised from vendor financing, $95 million from bank borrowing and $55 million from bonds.

The company would also issue bonds worth Rp 500 million in the third quarter to help finance the expansion. The bonds would be sold to the public from Aug. 31 to Sept. 4, and be listed on the Surabaya Stock Exchange on Sept 10.

To manage the bond issue, the company has appointed two underwriters -- PT Danatama Makmur Investment Bank and PT Mandiri Sekuritas. (02)

Govt to standardize risk management procedures

Friday, July 20, 2007
The Jakarta Post, Jakarta

The State Ministry for State Enterprises is finalizing detailed guidelines for standardizing risk management practices in the country's 138 state enterprises.

"We are preparing detailed guidelines for the state enterprises and will announces the result as soon as possible," Loso Judijanto, a special advisor to the state minister, told reporters Thursday.

While a 2002 decree of the state minister for state enterprises on good corporate governance sets out general guidelines on risk management, "we now need more detailed guidelines," Loso explained.

Loso said that some state enterprises had already adopted risk management approaches, but these ranged from the relatively sophisticated to very primitive.

"Companies in the banking and telecommunications sector have mostly adopted risk management approaches because the nature of these sectors requires them to do so, especially the banking sector, where every financial institution is required to comply with the Basel Accord if they want to enter the international market," said Loso.

The Basel Accord is a set of agreements sponsored by the Basel Committee on Bank Supervision, which sets out recommendations on capital risk, market risk and operational risk.

Speaking during a seminar on corporate risk management organized by the Perbanas Business School, Loso said that to date only about five percent of state enterprises outside the banking sector applied risk management in the running of their businesses.

Roy Sembel, a financial and risk management consultant, said that in order to survive in a rapidly changing business environment, state enterprises needed to adopt risk management practices in their day-to-day activities.

Over the last two years, many Indonesian companies had started to lay the foundations for enterprise risk management, but it would take three to five years before this became a culture among corporations, said Roy.

"It is not only about infrastructure or standard operating procedures. It's about people's mind-sets," said Roy, adding that many state enterprises were reluctant to apply risk management as middle managers usually saw it as generating "unnecessary" additional paperwork.

Roy added that state enterprises outside the banking sector needed to learn from that sector about the application of risk management.

"The banking sector already has some tools, such as risk assessment tools, risk management information technology and risk monitoring capability that could also be employed by other sectors. No need to reinvent the wheel," said Roy.(02)

Nike reaffirms commitment to Indonesia

Tuesday, July 17, 2007
The Jakarta Post, Jakarta

Nike Inc. restated its commitment Monday to doing business in Indonesia despite its recent decision to cease placing orders with two of its suppliers here, which has prompted massive protests from the companies' workers.

Erin Dobson, Nike's director for corporate responsibility and communications, said that Nike had been sourcing in Indonesia since 1989 and remained fully committed to growing its sourcing base over time.

"Since 2004, Nike has increased its footwear sourcing by 16 percent.

"Despite this decision, Nike will continue to source 20 percent of its footwear manufacturing in Indonesia and will continue to work with more than 30 footwear and apparel contract factories here," said Dobson in a statement.

The statement was made in response to continuing protests from unionized workers and the owners of PT Hardaya Aneka Shoes (Hasi) and PT Nagasakti Paramashoes Industry (Nasa), both of which have their factories in Tangerang.

On Monday, thousands of workers from the two companies, owned by Central Citra Murdaya (CCM), staged a rally at the Jakarta Stock Exchange building in Jl. Sudirman, South Jakarta, to protest Nike's decision to cease placing orders with the two companies as of the end of 2007.

The workers demanded that Nike keep placing orders at the present level, or provide severance pay for all the workers. This is despite the fact that they are not employed by Nike and severance pay, by law, is the responsibility of their employers.

Maretha Sambe from Nike Indonesia said that the decision to cease ordering was based on the two companies consistent failures to meet Nike's minimum product quality and delivery standards over the past two years.

"Following repeated failures, we reduced our orders by 50 percent in March to encourage them meet our minimum product quality and delivery standards.

"But because there has been no significant change in quality and delivery, Nike world headquarters served termination notices on July 6," Maretha told The Jakarta Post.

To make up for the supply shortfall, Maretha said that Nike had shifted its orders to the other 37 contract factories in Indonesia that also supplied it with sport footwear, apparel and equipment.

To allow enough time for Hasi and Nasa to fulfill their obligations to their workers, Nike would continue to work with the two firms over the next nine months until the last orders had been completed, said Maretha.

She said she expected CCM to fulfill its legal obligations to the employees of the two companies and their suppliers by March 2008.

Elizabeth Sutarti, a union spokesperson at Nasa, said that the workers had been shocked by Nike's decision as there had been no warnings or indications that the company had been failing to meet the required standards.

"We never heard that Nasa was failing to meet the requirements. We always held a quarterly evaluation and until the last quarter, our performance was still good and was even one of the best in the country," Elizabeth told the Post.

Hasi and Nasa, with more than 14,000 workers, have exclusively produced footwear for Nike since 1989.

Nike has been active in Indonesia since then and currently more than 115,000 Indonesian workers are employed by contract factories manufacturing Nike products.

In 2006, Nike's contract factories in Indonesia produced more than 50 million pairs of shoes and 17 million garments. (02)

Biznet to spend $20m on network expansion

Saturday, July 14, 2007
The Jakarta Post, Jakarta

Internet service and network provider Biznet is spending up to US$20 million on an ongoing project to expand its fiber-optic network to reach more commercial buildings in Jakarta's central business district.

"With our fiber-optic network, we are not only an Internet service provider, but also a network provider in Jakarta," Edward Kusma, Biznet's product manager, told reporters Friday.

The company has so far expanded its network to 110 buildings in the Sudirman, Kuningan, Thamrin, Gatot Subroto, Slipi, Simatupang and Pondok Indah areas, including 94 office buildings, seven apartment complexes, five shopping malls, and four hotels.

With the completion of the fiber-optic network, the company's services will extend to more business districts in Greater Jakarta, including Cikarang in Bekasi, Serpong in Tangerang, Kelapa Gading in East Jakarta and Bintaro in South Jakarta, he said.

Biznet, which recorded 50 percent business growth last year, is focusing on Jakarta as between 70 and 80 percent of demand in Indonesia is concentrated here.

The company is also focusing on corporate customers as it is simpler to connect such customers than individual households, he explained.

"It is easier to set up the infrastructure in a building with a lot of tenants than to set it up for individual households in a residential complex," said Edward, adding that about 80 percent of the company's customers were corporations.

Figures from Internet World Stats, an international Internet organization, reveals that Internet market penetration in Indonesia currently stands at only eight percent, compared to 69.9 percent in the United States, and 17.5 percent in Vietnam.

However, with 18 million Internet users this year, Indonesia is ranked 15th in the world in terms of numbers of users, accounting for 1.6 percent of the world total.(02)

HSBC joins ATM network

Friday, July 13, 2007
JAKARTA: The Indonesian unit of the Hongkong Shanghai Banking Corporation (HSBC) has become the latest bank to join the ATM Bersama network.

HSBC Indonesia, which currently has only 22 ATMs in its 13 branches in Jakarta, Surabaya, Medan, Bandung, Semarang and Batam, has become the 67th member of the country's biggest ATM network, which is operated by PT Artajasa Pembayaran Elektronis.

Rakesh Bhatia, CEO of HSBC Indonesia, said during the launch of the cooperative venture Wednesday that by joining the network, the customers of the bank, which has been in Indonesia since 1884, can now use the network's 11,200 ATM machines around the country. (02)

From crisis to boom: Provider of serviced-offices shows the way ahead

Thursday, July 12, 2007
The Jakarta Post, Jakarta

If you're looking for an office without the need for heavy initial outlay or maintenance costs, a Jakarta based serviced-office provider may have just the solution.

"As an outsourcing business, we offer everything. That includes the office space and the staff. We help clients save time and money so that they can focus on their main business," Mee Kim, the president of CEO SUITE, told The Jakarta Post on Tuesday.

Kim says that most firms want to keep their businesses as light as possible, and do not want to make heavy capital investments as they never know what will happen tomorrow.

CEO established its first serviced-office center in Jakarta amid the Asian financial crisis in 1997. Within a decade, it had extended its network to six Asian countries.

Kim said that when she started the business, things were difficult, but the company managed to survive as it had experienced staff and sufficient resources.

In Jakarta, CEO has around 130 office suites in its two centers, which are located in the Jakarta Stock Exchange Building and the Wisma GKBI building. It currently serves some 300 clients, who enjoy 24-hour access to their rental suites.

Kim said the company would open another center at the new One Pacific Place building in September.

Apart from its Jakarta headquarters, CEO has centers in five other cities in Asia. These are located in the Menara Maxis in Kuala Lumpur, Malaysia; Singapore Land Tower in Singapore; Hong Kong New World Tower in Shanghai, China; Twin Towers in Beijing, China; and the LKG Tower in Makati City, the Philippines.

Each center offers boutique-style, serviced-office suites for individuals and companies, with a variety of sizes on offer, ranging from smaller offices for individual people to large suites for major organizations.

Leasing periods are also flexible, ranging from one hour to an unlimited length of time.

The company charges between $500 and $3,000 a month for its services, which include a "virtual office" service, fully equipped offices, boardrooms, fixed-line communications, wireless internet connection and video conferencing.

It also offers consultancy, recruitment, accounting, legal, concierge, project management, equipment rental and even disaster-recovery services.

CEO serves over 700 clients in the region, 90 percent of whom are transnational corporations, such as ABN Amro, Dell, BMC Software, Coca Cola, and ExxonMobil. (02)