Business briefs

Macroeconomy
·    Inflation in July may be down
·    The government aims to raise Rp3 trillion of rupiah-denominated bonds
SOEs
·    IPO for three state firms expected to take place this year
·    PT Telkom and a subsidiary expect a disbursement of a total loan of $1 billion
Private Sector
·    Qatar may face rival bidders over Indosat share
·    Motorcycle sales rose 44% in the first half of 2008
Banks
·    Higher costs may affect banks this year
Power
·    A 130 MW plant is planned for South Kalimantan
·    PLN aims to offer up to Rp2 trillion of bonds
Oil & Gas
·    Pertamina wants at least 10% in Makassar Strait Block
·    A gas field off East Kalimantan will supply 11.5 million tons of gas to Java
Mining
·    Bappepam-LK not concerned by threats of lawsuit over Adaro Energy IPO
·    Timah 1H revenue over Rp4T

Indonesia warns on food, oil crises
The leader of Indonesia on Tuesday called for boosting world food production and finding a permanent solution to skyrocketing oil prices, saying the twin problems have become "grave threats" to the world economy, The Associated Press reported.

President Susilo Bambang Yudhoyono told a summit of Islamic countries in Kuala Lumpur that the challenge of food and energy security has surpassed the challenge of globalization, which he said has led to the marginalization of many poor countries.

The Developing Eight summit brought together eight developing Islamic nations - Malaysia, Indonesia, Pakistan, Iran, Bangladesh, Egypt, Nigeria and Turkey. It coincides with the Group of Eight summit under way in northern Japan.

"There is no quick fix that will sweep aside this challenge, but we must act on it at once and in concert. To delay concerted action on this great challenge of our time is to court disaster," Yudhoyono said.

The "rising price of crude oil, the scramble for alternative sources of energy, and the threat of global warming" has exacerbated the food crisis, he said.

Pirate attacks down in Malacca Strait
Pirate attacks worldwide surged 19% in the past three months compared to the January-March period, largely due to increased incidents in Somalia and Nigeria, but attacks in the Malacca Strait have decreased, an international maritime agency said Friday, The Associated Press reported.

There were 62 attacks on ships between April and June, up from 52 in the previous quarter, the International Maritime Bureau said in a report released by its piracy reporting center in Kuala Lumpur, Malaysia.

Attacks continued to be suppressed in the Straits of Malacca, thanks to anti-piracy cooperation between Indonesia, Malaysia and Singapore which shared the key shipping route, it said. Just two attacks have been reported this year in the waterway, the same as in 2007, it said.

Constitutional Court election ruling will not affect poll
The Constitutional Court verdict on the law on legislative elections will not change the number of parties participating in the upcoming election, the head of General Election Committee (KPU) Abdul Hafiz Anshary said after meeting with the head of the Constitutional Court, Jimly Asshiddiqie, Republika reported on Saturday.

The Constitutional Court on Thursday threw out an article of the newly-passed election law after it was challenged by seven political parties that failed to reach the electoral threshold in the 2004 general election.

The ruling allows parties which currently hold a minimum of at least one seat at the House of Representatives to contest the 2009 election, even if they did not achieve the electoral threshold at the national level in 2004.

Asshiddiqie said it was regrettable that the court had only been able to make its decision after the General Election Committee announcement on the parties eligible to contest the elections.

He said the court has been working closely with the KPU, but “just had a chance to announce the decision on July 10. This is a prospective and valid decision,” adding that he realized the decision had social and political impacts.

In the future, Asshiddiqie said, it was hoped that no other articles in the law represented unfair treatment to political parties.



REGIONS

Bali: Pastika triumph predictable, say experts
I Made Mangku Pastika’s lead in early vote counting from Wednesday's gubernatorial election is predictable as he was supported by the largest political party on the island, experts said, reported The Jakarta Post.

Dasi Astawa of the Bali Development Empowerment Institution said Pastika and his running mate, AA Ngurah Puspayoga, backed by the Indonesian Democratic Party of Struggle (PDI-P), were leading in early results thanks to the party's solid support and the local patron-client culture.

"Balinese are known to honor their leaders and are willing to give their unquestionable loyalty to them," Astawa said.

"Therefore it is not difficult for the PDI-P to influence most people since party members currently hold important positions either as regents or local legislators," he said.

Besides, he said, Pastika and his running mate are generally viewed in a favorable light by Balinese.

He said that Pastika, for example, was well known for his important role in investigating the 2002 Bali bombing.

"People consider him to have done a great service in restoring security. This is the emotional factor that other candidates don't have," Astawa said, adding that this was a more important factor than the candidates' promises and policies.

As of Friday, Pastika and Puspayoga led the vote count with more than 55% of counted votes, or over one million votes.

Govt. forms national board on climate change
The government on Friday announced the formation of a National Board on Climate Change (DNPI) chaired by President Susilo Bambang Yudhoyono and involving 17 government ministries as well as the Meteorology and Geophysics Agency (BMG), Antara reported.

"The DNPI’s formation was formalized through a presidential regulation signed last July 4, after about one year of preparation," Environment Minister Rachmat Witoelar told a press conference.

The DNPI will work in the spirit of implementing the National Action Plan on Climate Change adopted in November 2007 and serve as the vehicle to achieve the plan’s objectives in dealing with and mitigating the impact of climate change, he said.

The board is led by the president as chairman and the coordinating ministers of the people’s welfare and of economic affairs as vice-chairmen with the environment minister serving as chief executive officer.

Also in the board’s membership are the state secretary, the cabinet secretary, and the ministers of finance, home affairs, foreign affairs, energy and mineral resources, forestry, agriculture, industry, public works, national development planning, marine and fisheries, trade, research and technology, transportation, health, and the BMG head.

In more specific terms, the DNPI’s tasks comprised the formulation of national policies, strategies, programs and activities to control climate change, coordination of activities to implement the board’s mission to deal with climate change in terms of adaptation, mitigation, transfer of technology and funding.

Also part of the board’s brief was the formulation of policies to regulate the carbon trade system and mechanism, as well as the monitoring and evaluation of the climate-change control policies implemented.

Internationally, the board was expected to reinforce Indonesia’s position in persuading developed countries to show greater responsibility for efforts to control climate change.

Witoelar also said, in the future, the board would tightly oversee development plans in both the public and private sectors so as to prevent the country from becoming a major producer of greenhouse gas emissions.

S. Sulawesi launches house renovation program for the poor
The South Sulawesi administration has launched a ‘bedah rumah’ house renovation program for low-income families in the province, The Jakarta Post reported on Wednesday

As many as 120 houses in the regencies of Gowa, Takalar, Sinjai, Selayar, Luwu, Wajo and Bone will be renovated as a pilot project for the program.

"It's a small number but we hope it will help produce more proper houses for poor people," the head of South Sulawesi's village community empowerment body (BPMD), Massalangka Tjullang, said earlier this week.

According to the provincial statistic bureau, 1.1 million people in South Sulawesi were living below the poverty line in 2007, including some 400,000 people categorized as "extremely poor".

South Sulawesi's population is 7.4 million, spread over 23 regencies/cities.

Officials forecast the number of poor in the province will increase by 1.0 to 1.7% annually. Nationally, the number of poor is expected to go up by about 2.5% per year.

The BPMD introduced the house renovation program as part of a national community empowerment program aimed at helping economically poor families renovate their houses to make them more suitable for human habitation.

"We don't build new houses for them but renovate damaged parts of their houses," Tjullang said.

He said eligible recipients of the program would be given cash, according to an approved proposal, to renovate their houses under the BPMD's supervision.



ECONOMY

Growth solid in first half: Minister
Minister of Finance Sri Indrawati Mulyani said Wednesday that while growth was beginning to dip as a result of global factors, she understood that growth in the first half of the year was above expectations, a statement echoed by a number of analysts.

Yudhi Sadewa of the Danareksa Research Institute said growth appeared to have come in above 6.2% for the first semester, a view shared by Bank Danamon chief economist Anton Gunawan, Investor Daily reported.

Bank Mega director Kostaman Thayib said the 33% in credit disbursements was evidence of strong growth, with the plantation, toll road and power sectors receiving major investment inputs.

Bank Indonesia Governor Boediono, at a lunch with foreign journalists, also stressed that the economy was in good condition, with the rice surplus an important factor in creating positive economic conditions.

“Economic growth in Indonesia has been quite steady and is gradually accelerating. This is a pre-condition for us to grow further in the coming years. Hopefully within five years we will be able to go back to the pre-crisis growth path of 7%-plus,” he said.

Boediono refused to be drawn on whether the central bank will continue to push interest rates higher, but provided room for optimism that they won't move higher. “Our experience has shown that when we have a domestic fuel price rise there is a spike for two months and after that there is a reduction,” he said.  

There was no sign of recession in the automotive market. Johnny Dharmawan, vice chairman of the Indonesian Automotive Industry Association (Gaikindo), said sales this year were expected to top 500,000 units, despite the rise in fuel prices at the end of May.

"If the fuel prices had not gone up, sales may have been significantly higher than 500,000 units," he added, according to Reuters.  

Local business daily Kontan said there was strong interest in vehicles from the top to bottom of the range at the Jakarta Motor Show, officially opened by the industry minister on Friday.

Organizers said they expected sales of around Rp1.6 trillion (around $170 million) during the show, which ends on July 20, up from last year's Rp1.5 trillion. PT Mercedes Benz Indonesia said it was expecting 700 sales out of the show, while BMW Indonesia said it was not taking part in the show because sales figures were already very strong.

Last year, domestic car sales reached 434,449 units, industry data shows, recovering from a slump in 2006 when sales dropped to 318,904 units after the government more than doubled the fuel price in 2005.

Bambang Trisulo, chairman of Gaikindo, said Indonesia was expected to produce 1 million cars for domestic and export markets by 2011. He forecast 750,000 units would be for the domestic market and 250,000 units for exports.

Motorcycle sales in the first half grew 44% to 3,060,400 units from a year earlier, industry officials said, according to Asia Pulse, finance sector analysts said 70% of purchases were replacement bikes, not first-time owners.

Sales of electronic products were estimated to have risen 22% to Rp8.6 trillion ($937 million) in the first half of this year compared to the same period last year, Asia Pulse reported.

Strong growth was recorded especially outside Java, secretary general of the Electronic Marketer Club (EMC) Handojo said, adding sales in the outer regions grew 30% month-on-month.

Domestic cement sales were also strong, rising 25% in June to 3.47 million tons compared to the same month a year earlier, according to major producer PT Semen Gresik.

In the six months to June 30, cement makers sold 18.9 million tons of cement in Indonesia, 21% more than a year before, Gresik said, citing data from the Indonesian Cement Association, Bloomberg reported.

The path for the government to issue Islamic bonds, or sukuk, was cleared by the House of Representatives, with the approval of a bill by a working committee on Thursday. A plenary session of the House is expected to approve the bill this week.

The House also approved the use the finance ministry's property valued at Rp18.371 trillion, or about $2 billion, as the underlying assets for the Islamic bonds, which sets the maximum amount of sukuk the government can issue.

The government has said it expected to raise the equivalent of about $1 billion from the sale of rupiah-denominated Islamic bonds in August, and to sell a dollar sukuk in October, raising as much as $1 billion.



BUSINESS BRIEFS

Inflation to trim growth: Sri Mulyani
The economy may grow below an initial target of 6.2% this year because of high inflation, Finance Minister Sri Mulyani Indrawati said, Dow Jones reported. She said the government is striving to achieve economic growth of at least 6%, the pace recorded last year.

Inflation in Indonesia remained at a near two-year high in June. The consumer price index rose 2.46% on month and 11.03% on year last month, accelerating from May's 1.41% on-month gain and 10.38% on-year rise.

Next year, the government may have to spend as much as Rp300 trillion ($33 billion) to cap fuel prices next year as oil surges, Sri Mulyani said.

The government may set its subsidy costs and budget revenue by assuming oil prices will average $140 a barrel in 2009. She forecast economic growth next year at 6.2%.

President Susilo Bambang Yudhoyono, facing an election in 2009, said Monday he won't raise fuel prices again this year, after increasing pump tariff for the first time since 2005 in May.

Inflation may have peaked: BI Governor
Inflation may have peaked and the number for July may be "down" based on the central bank's preliminary readings, Bank Indonesia's governor said, but he declined to say whether further rate hikes would be necessary, Reuters reported.

Annual inflation in June was 11.03%, its highest pace in nearly two years, after the government raised subsidized fuel prices by an average of 29% in late May.

Boediono's comments, coupled with a steady rupiah -- up 2% against the dollar this year -- are likely to boost bond market sentiment.

Boediono also said Bank Indonesia (BI) will continue to use all of its instruments available in a "measured manner" to contain inflation, repeating earlier remarks which analysts said signalled the bank's reluctance to sharply hike interest rates.

Speaking at a press lunch in Jakarta, Boediono said the impact of a recent fuel price hike was likely to be temporary and inflation was likely to ease to 6.5-7.5% at the end of next year. He has said previously that inflation is likely to hit 11.5-12.5% this year.

"Our focus is on guiding down inflation from around 11% in June to 6.5-7.5% in 2009," he said.

Govt. aims to raise Rp3T from bond sale
The government aims to raise Rp3 trillion ($325.9 million) of rupiah-denominated government bonds from an auction on Tuesday next week to help plug the budget deficit, the Finance Ministry said, quoted by Reuters.

Analysts see healthy demand for the bonds, despite a slight rise in the benchmark BI rate, given lower-than-expected inflation in June and a largely stable rupiah currency.

"It's time to buy because the yield is very good for rupiah bonds," said Budi Susanto, a debt analyst at brokerage Danareksa Sekuritas.

Govt. proposes reserve fund to protect state budget
The government has proposed to the House of Representatives a reserve fund for the 2009 draft state budget to cope with the possible surge in the crude oil price to $150 - $160 per barrel, Asia Pulse reported.

Finance Minister Sri Mulyani Indrawati said the government has decided to revise up the oil price assumption used to calculate the bill to $140 a barrel from previously set at $95.

However, to be safer the government needs to set aside a fiscal reserve in case the oil price rises beyond the assumption, reports quoted Indrawati as saying.

She also said that the government may spend Rp300 trillion ($32.55 billion) on energy subsidy next year or close to a 50% rise from this year if the oil prices would average $140 a barrel.

For this year the government has set aside Rp200.6 trillion for energy including fuel and electricity subsidies.

Meanwhile, Reuters said that the Finance Minister estimates budget surplus of Rp61.5 trillion in the first half year due to lower-than-targeted spending.



INVESTMENT

MTD to build sea port, toll road in Java
MTD Capital Bhd, a Malaysian builder, plans to build a sea port and a toll road in West Java to help reduce traffic congestion and facilitate coal shipments, Bloomberg reported.

"These projects are important to ease traffic congestion, which has caused some late shipments," President Susilo Bambang Yudhoyono told reporters in Kuala Lumpur. They can also help bring costs down for industry, he said.

Furthermore, this company also has planned to spend $100 million in the next five years to build and operate a coal-receiving terminal in Banten province, Bloomberg reported.

The company will spend $40 million immediately to construct the terminal in Cigading port and the rest over the next five years, Yusof Merican, head of MTD's Indonesian operation said. The terminal, with a capacity to handle 10 million metric tons of coal a year, will be built in the next 24 months, he said.

MTD wants to tap rising demand for coal in Indonesia and overseas as new power plants are constructed.

The coal-receiving terminal being built in the port owned by a unit of PT Krakatau Steel will initially handle coal mined by PT Bintang Sinomas, MTD's partner, Merican said.

Investment banks vie to lend to Samudera Indonesia
Five investment banks are competing in offering Rp7 trillion ($776 million) in loans to finance the acquisition of a foreign shipping company by PT Samudera Indonesia.

Samudera president Randy Effendi refused to name the banks but said they include investment banks from France, Singapore, the Netherlands and a state bank.

Earlier the company said it planned to raise funds through a rights issue, bonds and bank loans to finance its strategic program until 2011, but it later decided to use only bank loans, Effendi told the newspaper Bisnis Indonesia.

Around Rp1.98 trillion of the fund will be used to buy 10 ships including four container ships, cement transport vessels and four 2,500 DWT tankers, he said.

He said the company also planned to build a container terminal in Palaran, Samarinda, East Kalimantan.

Construction of the 220,000 TEUs capacity terminal is to start in later this year in cooperation with state-owned port operator Pelindo II at the international port of Palaran.

Aceh Hopes growth triangle can bring investment
A business forum of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) will be meaningful for the people of Nanggroe Aceh Darussalam (NAD) if the initiators of the forum can persuade businessmen to invest in the province, Asia Pulse reported.

"I hope the Joint Business Council (JBC) will not remain as a ceremonial function, but should be used as good as possible to draw investment into NAD," Almanar, member of the National Mandate Party (PAN) faction in the Aceh legislative assembly said here on Wednesday.

He made the remarks regarding the JBC of the IMT-GT forum which would be attended by about 300 Malaysian and Thai businessmen in Banda Aceh. The Acehnese people hoped the investment could be realized," he cited.

Almanar said the IMT-GT forum of JBC, which was conducted by the Regional Chamber of Commerce and Industry, also absorbed this year's state budget.

The IMG-GT forum should be able to seek a solution to overcome unemployment and lower the poverty rate through investment in the western-most Indonesian province.

Almanar added that Aceh is one of Indonesian provinces which helped establish the IMT-GT on July 16, 1993. The initiator of the sub-regional economic cooperation was Malaysian Prime Minister Mahathir Mohammad in 1991.



STATE CONCERNS

House approves Islamic bond issuance
A parliamentary working committee approved the government's plan to issue Islamic bonds, also known as sukuk, late on Thursday, clearing the way for issuance in the domestic and global market this year, Reuters reported.

The approval means that the government can proceed with the sale of Islamic bonds abroad, tapping a wider range of investors to fund a widening state budget deficit. Soaring oil prices have pushed up the cost of fuel and electricity subsidies.

The parliament approved the issuance of Islamic bonds, with the sale of domestic bonds due in August and of international bonds in October.

It also approved the use the finance ministry's property valued at Rp18.371 trillion, or about $2 billion, as the underlying assets for the Islamic bonds, which sets the maximum amount of Sukuk the government can issue.

"This is the final process they had to follow in the parliament," said Drajad Wibowo, a member of the parliamentary working commission which handles finance and banking, adding that certain technical issues would still be settled by the government.

Sukuk comply with shariah, or Islamic, law which bans payment of interest and allows money to be earned only from physical assets. It also bars investment in alcohol, tobacco or gambling.

The government had said it expected to raise the equivalent of about $1 billion from the sale of rupiah-denominated Islamic bonds in August, and to sell a dollar sukuk in October, raising as much as $1 billion.

Govt. hails US ban on goods made from illegal logs
The government welcomes the US decision to ban import of timber products from illegal logs, an official of the forestry ministry said, quoted by Asia Pulse.

The ban is a result of an amendment to the US Lacey Act, and will require US importers to announce information about imported timber products including the country of origin and tree species.

Secretary of the Directorate General of Forestry Production Development Hadi Daryanto said the US decision would have a positive effect on the country's forestry sector.

Indonesia has repeatedly accused Malaysia and China of being the markets of smuggled logs from Indonesia.

Daryanto said Malaysia and China were believed to have produced timber products for exports using illegal logs from Indonesia as the feedstock.

The two countries have become major competitors for Indonesia in the market for timber products, he said.

Govt. refuses to sign VPA with EU
The government refuses to sign and describes as discriminatory the Voluntary Partnership Agreement (VPA) with the European Union on illegal logging, Asia Pulse reported.

The refusal is in protest against EU failure to punish Malaysia for alleged use of smuggled logs from Indonesia, an official of the Forestry Ministry said.

Malaysia, which is one of the signatories of VPA has continued to use illegal logs smuggled from Indonesia, Hadi Pasaribu, Forestry Product Development Director General, said.

Malaysia needs to clarify the smuggling of timbers via Ketapang in Indonesia's West Kalimantan to neighboring Malaysia's Serawak state, Pasaribu said after a meeting with an EU Commission.

The government has repeatedly accused Malaysia and China of using smuggled logs from Indonesia.



SOEs

IPOs for state steel, plantations firms this year
Initial public offerings for state-owned steel firm PT Krakatau Steel and for three state plantation groups are expected to take place this year, State Enterprises Minister Sofyan Djalil said, Reuters reported.

Djalil, who had just returned from a road show in Hong Kong and Singapore to promote the government's privatization program, said that investor interest in the steel and plantations companies was high.

The government plans to privatize a number of state firms this year, either through IPOs or sales to strategic investors, in an attempt to raise funds for the budget deficit and improve the firms' performance.

Krakatau Steel and the three state plantation firms are among those expected to be sold via IPO, although the plan requires parliamentary approval.

"This is a non-deal road show. We were not in the process of selling. We want to hear investors, getting input from them. We want to know how much they are interested in our privatization program," Djalil said.

He said the IPOs would take place this year as "the internal preparation for this has been very good...we are just awaiting approval from the parliament."

The government has expects to have around Rp3 trillion ($326 million) from the IPO. Most of the proceeds will be used to expand the company's business and strengthen working capital.

Meanwhile, the government also plans to sell 20% to 40% of state-owned steelmaker PT Krakatau Steel in the third quarter of 2008, State Enterprises Minister Sofyan Djalil said,

He added that the government expected to sell the stake at premium.

Telkom expects disbursement of $1B loan in August
State-owned telecommunication company PT Telkom and its cellular subsidiary expect a disbursement of a total loan of $1 billion (Rp9.2 trillion) in August or September this year, Asia Pulse reported.

Agreements are expected to be signed later this month on the loans to be used to finance investment this year, Telkom finance director Sudiro Asno told the newspaper Investor Daily.
 
Sudiro said Rp3 billion of the loan will be provided by Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank Jabar.

Telkom's cellular phone subsidiary PT Telkomsel will receive around Rp6.2 trillion from BNI, BRI and Bank Mandiri, he added.

The country's largest telecommunication company plans to spend $2.5 billion in capital expenditure this year, including $1.5 billion for Telkomsel.



PRIVATE SECTOR

Qatar may face rival in buying Indosat shares
Qatar Telecom QSC, which plans to buy as much as 8.2% of the shares of PT Indosat in a general offer, may face rival bidders, Bloomberg reported.

Qatar Telecom, known as Q-Tel, agreed to pay $1.76 billion to buy a 40.8% stake in Indosat on June 7, and offered on June 26 to purchase further shares for Rp7,388 a piece, the newspaper Investor Daily said.

The government then said Q-Tel's ownership in Indosat would be limited to 49%.

Other investors are allowed to make rival offers as long as they are willing to buy at a price higher than Q-Tel's offer, the daily cited M. Noor Rahman, head of financial assessment of service companies at the capital market regulator.

Motorcycle sales up 44% despite higher fuel prices
Despite rises in fuel prices and interest rates, motorcycle sales rose 44% in the first half of this year compared to the same period last year, the industry association said, The Jakarta Post reported.

"The industry sold more than 3 million motorcycles in the first six months, compared to 2.1 million last year," Gunadi Sindhu Winata, head of the Indonesian Motorcycle Industry Association (AISI) said. "That is a 44% increase."

"New motorcycle models are always a drive to push the market. The competition between brands is very tight and new models have the competitive edge," Winata remarked.

In the first half of the year, the market continued to be dominated by Japanese makers Honda, Yamaha and Suzuki, which together accounted for 98% of market share.

Meanwhile, automobile sales reported rose 36% last month. Sales in June rose to 53,700 units from 39,424 units, the Indonesian Automotive Industries Association, Gaikindo reported.

Hexindo posts 120% jump in H1 heavy equipment sales
Sales by heavy equipment sales agent PT Hexindo Adiperkasa shot up 120% to 1,100 units in the first half of 2008 from the same period last year, Asia Pulse reported.

Excavators of 10-30 tons contributed 90% of sales with big machines of 120-800 tons accounting for the rest; Investor Daily quoted a company official as saying.

The strong sales were attributable to booming mining and agro sectors, said Heri Akhyar, secretary of the agent for the products of PT Hitachi Machinery Construction Indonesia (HCMI).

Akhyar said Hexindo has succeeded in expanding its share of the excavator market in Indonesia to 30% from 27% last year. Its main rival is PT United Tractors, the agent for Komatsu heavy equipment products which leads with a market share of 46%.

Kawan Lama sells 10% stake in Ace Hardware
PT Kawan Lama Sejahtera, the majority shareholder of PT Ace Hardware, said it has sold a 10% stake in the company to the investing public, Asia Pulse reported.

Kawan Lama Director Hartanto Djasman said his company retains 59.97% in Ace Hardware. This year Ace Hardware is set to chalk up Rp1.2 trillion ($131 million) in sales, an increase of 35% from last year, Djasman said.

Ace Hardware, which holds a franchise license from USHardware Corporation, plans to open more outlets in the regions including in Sidoarjo, Solo, Semarang, Medan, Palembang and Batam, the newspaper Investor Daily said.

Bakrie Group takes control of more toll road projects
The Bakrie Group has taken over the Pasuruan-Probolinggo toll road project after the original contractor failed to carry out the project due to financial difficulties, Antara reported.

There is no revocation of concession as Bakrie took over the project by injecting funds to the holder of the contract, PT Transjawa Pasro, Public Works Minister Djoko Kirmanto said.

Earlier, the toll road regulatory body BPJT gave PT Transjawa a week to July 7 to meet the financial requirements or face revocation of its contract.

Bakrie has also taken over a number of other toll road projects as implementation by the original contractors failed over financial problems.

Wahanaartha to pick underwriter for IPO launch
PT Wahanaartha Harsaka said it is selecting lead underwriter to help it handle initial public offering (IPO) it plans to launch in September, Asia Pulse reported.

The Honda motorcycle dealer will select among three bidders -- PT Danatama Makmur, PT Indo Premier Securities and PT Trimegah Securities, its chief commissioner Boy Thohir said.

The company plans to sell 597 million shares valued at Rp156.35 billion ($17 million), representing 29.5% of its shares to the public in the IPO, the newspaper Investor Daily said.

The fund will be used to finance business expansion through a number of subsidiaries operating in related business including PT Wahana Makmur Sejati, PT Wahanaartha Motorental and PT Tristart Transindo.

Destinasi Tirta to acquire Thai, Malaysian tourism cos
PT Destinasi Tirta Nusantara said it hopes to complete acquisition of two tourism companies in Thailand and Malaysia in September, Asia Pulse reported.

The tourism service company will focus on the acquisition plan after the completion of an initial public offering, now in process, its managing director Rocky W. Praputranto said after the share listing on the Indonesian Stock Exchange.

Praputranto said Rp40 billion ($4.4 million) in fund have been available to finance the Rp60 billion acquisition and the balance of Rp20 billion will be covered with fund from IPO.

Destinasi Tirta wants the majority 51% stake in the Thai company and 30%-40% stake in the Malaysian company to be acquired, media reports quoted him as saying.

Arpeni's 2Q profit rises 25%
PT Arpeni Pratama Ocean Line's second-quarter profit rose 25% from the 28.79 billion rupiah ($3.1 million) earned in the same period a year earlier, Investor Daily cited president director Oentoro Surya, quoted by Bloomberg

For the three months ending September 30, the company expects net income to grow 30%, the newspaper said. The report didn't give a profit figure for the three months ended June 30.

Jakarta-based Arpeni is Indonesia's third-biggest shipping company.


BANKS

Banks face more difficult period: Fitch
Indonesian banks face higher costs and weaker purchasing power this year which may increase bad debts, affecting the health of banks, Fitch Ratings said Monday, Bloomberg reported.

“The smaller banks will be more vulnerable due to their weaker loss absorption capacity,” Fitch Ratings said in the report. “Rising inflationary pressures and interest rates are expected to negatively affect spending power and debt servicing ability.”

Bank Indonesia raised its benchmark interest rate for the third month in a row at the beginning of July. The key rate was raised to 8.75% from 8.5%. The rate may be raised by 1 percentage point in the second half, Fitch analysts including Tan Lai Peng and Yanto Umar said in the report.

Indonesia's banks may be able to “buffer” the tougher conditions after improving their balance sheets and as they diversify their loans to smaller lenders. The banking sector’s non-performing loans fell to 4.4% of total credits of banks at end-April this year, compared with 8.3% at the end of 2005, according to Bank Indonesia data.

There's “quite a good buffer against a deterioration in credit quality,” the Fitch report added. The average capital adequacy ratio of Indonesian banks, a measure of the strength of capital, was at 18.3% at the end of last year, compared with the required 8%.