IDX lost 2.2% on bombings

IDX Composite Index lost 2.3% this morning as investors worried about security after nine people killed in the bomb explosions at two 5-star hotels, JW Marriott and Ritz Carlton, both located at Jakarta's business district.

Most blue chip stocks declined led by PGAS with 2.9%, Kalbe Farma -2.9%, Bumi Resources -2.1%, United Tractors -2.3%, BCA -2.6%, BRI -2.2%, and Astra Agro Lestari -2.1%.

Rupiah declined slightly to Rp10180 per USD this morning. 

Government officers announced nine people killed and over 52 people injured in the explosions, reportedly from high explosive materials.

Another explosion in Muara Angke toll road killed two persons. It is not clear whether it is a bomb explosion or not. Jakarta Police said it's not a bomb.   

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Nine killed in Ritz & Marriott explosions

Nine people, including Holcim Indonesia CEO Timothy Mackay, killed in the explosions at two 5-star hotels, Ritz Carlton and JW Marriott, Mega Kuningan business district, Jakarta this morning.

Timothy was in a business meeting at Marriott when the bomb exploded. Our source said the bomb at Marriott is a suicide bomb. Dr Cahyono from Jakarta Hospital confirmed six people died. Chrisnanda Dwilaksana from Jakarta Metropolitan Police also confirmed six people died in the explosions.

Media quoted Alex Asmasubrata, businessman and politician, who was in the scene witnessing the explosions saying he saw four bodies were taken out of the Marriott.

Another witness, Greg Woolstencroft, said he saw a dead body in the hotel. "I guess he might have been a suicide bomber or someone very, very close to the explosion," he told CNN.

Department of Health announced eight people killed and 49 injured in the explosions. About 36 people are treated by MMC Hospital, one at Pertamina, and 11 at Jakarta Hospital.

Coordinating minister for politic, security, and law, Widodo AS, explained nine people killed, of which six died at Marriott Hotel, two at Ritz Carlton, and one at Medistra Hospital. "This is a high explosive type of bomb," he said. But he declined to confirm whether they were terrorism attacks. 

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Holcim CEO died in Ritz & Marriott explosion

Detik.com reported Timothy Mackay, CEO of PT Holcim Indonesia, died at Medistra Hospital, Jakarta. He is one of the victims of two explosions at JW Marriott and Ritz-Carlton Hotel, Jakarta this morning.

Dedy Nugroho, corporate communication at Holcim Indonesia told Detik.com few minutes ago that Mackay just passed away at the hospital. He was at Marriott Hotel for a business meeting.

Noke Kiroyan, former CEO of Newmont in Indonesia, is currently treated at MMC Hospital Jakarta. He is among 29 victims currently handled by the hospital. The other 11 victims are treated at Jakarta Hospital. No information from Medistra Hospital yet.

Sources said both are suicide bombs. But police has yet to clarify. Associated Press quoted dr Cahyono from Jakarta Hospital saying six people died in the explosion.

Tim Mackay is the CEO of Holcim Indonesia since May 2004. Born in New Zealand, Mackay holds an MBA from Massey University in NZ. He was managing director of Holcim (Lanka) Ltd in 2001. 

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Explosion at Ritz Carlton cost lives

Explosion at 5-star Ritz Carlton Hotel, Mega Kuningan area, Jakarta, has reportedly killed four people. But there is no confirmation from police about the source of the explosion. Some said bomb blasts, but witnesses said from hotel's kitchen. 

Kompas.com quoted Firman Bundi, South Jakarta Police Head, confirming four people killed from the explosions.

Foreign press quoted police that it was a bomb attack and quickly pointed their fingers to Jemaah Islamiah. Ritz Carlton sits next to JW Marriott Hotel rocked by bomb attack few years back.

Kompas.com reported the explosion also hit a restaurant in Plaza Mutiara. Eight people, including four foreigners, at the restaurant severely injured. MetroTV reported about four people killed in the explosions, but police has yet to confirm the report.

One security officer of JW Marriott Hotel is reportedly killed in the explosion. Nine victims are currently hospitalized at Jakarta Hospital. They are Sidik Maulana, Aryo, Edward Thielsen (Airlangga Kitchen), David Petter (Airlangga Kitchen), Deni Purwanto (JW Marriott), Adri, Dik Ahmad Taufik, Dewi Lestari (Panin Bank), and Ririn (Panin Bank). Edward has been moved to Pertamina hospital, and reportedly in good condition. Two other foreigners get medical treatment at MMC Hospital, Kuningan, Jakarta.

Ritz Carlton is slated to host the famous football English Premier League club Manchester United team who will play in Jakarta this weekend. Kompas.com quoted witnesses saying there were two explosions. The first at 07.30, and the second about three minutes later.

But others said the first explosion at Syailendra Restaurant, JW Marriott Hotel was at 07.50, followed with the second explosion at Airlangga Restaurant (Ritz Carlton) at 07.55.

Regarding the question about source of the explosion, bomb or gas tanks in the restaurants, some said most likely they were bombs. "The explosions were too strong to be triggered by gas tanks in the kitchen of restaurants," one security expert said.

  

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Garda Tujuh Buana: No gain so far

The newly listed coal player PT Garda Tujuh Buana (GTBO) Tbk succeeded in raising Rp210 billion from the IPO of 73.4% issued shares last week. Unfortunately, the first six days of trading have gone without a single day of gain.

GTBO's IPO price is Rp115. The first day of trading, July 9, the stock lost 8% straight, even though the stock once jumped as high as Rp126. The second day, July 10, the stock gained 5%, but since then continued the downfall to close at Rp101 on Thursday or 12% below its IPO price.

The stock is not a sexy stock with less than US$27,000 trading value in the past two days even though the management has tried to attract investors with "promising" outlook. GTBO claimed its coal production would jump to 900,000 tons this year (from 30,000 tons last year) and double to 1.8 million tons next year.

Well, the bubble on coal stocks have busted. We have experienced a "mini bubble" on coal stocks this year where most of them gained over 100%, faster than recovery in coal prices. Thermal coal prices are hovering around US$70 per ton (normally for 6000 Kcal/Kg coal), only 36% of last year's peak of over US$190 per ton. Interestingly, some coal stocks are currently traded only 20%-30% below their peak last year.

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IDX rally ends, commodities mixed

IDX ends two days of substantial gains and closed lower by 0.3% today while most regional markets continued the rally on Wall Street revival. 

Bakrie-related stocks which led the rally in the past few days ended in negative territory, led by Energi Mega Persada which lost 4.2% and Bakrieland -1.6%. Banking stocks ended mixed with two major banks---BRI and NISP---lost grounds by 5.4% and 8.3% respectively. Smaller banks, Bukopin and Kesawan, were top gainers in the sector with 6% and 12% gain respectively.

Bank Danamon and BNI have announced their first half performance. Danamon reported substantial drop of net profit by 24.8% to Rp870 billion, but second quarter posted significantly better results than Q1. On the other hand, BNI reported strong 176% growth in profit after tax to Rp1.2 trillion on higher net interest income of 21% and non-interest income (fee-based income) by 24%. 

Commodities ended mixed with Indika lost 3.3%, while Indo Tambangraya gained 2.1%. Bumi Resources and Adaro Energy also declined by 2.1% and 1.7% respectively. Their peers in the region mainly closed higher, led by Rio Tinto's 4.6% gain. Plantation stocks closed mainly lower with only PP London Sumatra gained 3.4%.

Palm oil prices in Malaysia Derivative Exchanges retreated and closed lower at RM2020 per ton today, while physical auctions organized by state-plantations and Astra Agro Lestari (AALI) ended higher.

Oil and gas stocks were mainly in red, led by Elnusa which slashed 4.5%, and ENRG -4.2%, and Medco -1.7%, while their peers in the region closed in higher grounds. Metals also returned to negative territory, led by Aneka Tambang which lost 2%. (th/ya)

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Hendra Gunawan, new CEO for DBS Indonesia

PT Bank DBS Indonesia has appointed Hendra Gunawan as its new CEO of the bank and Bernard Tan as commissioner. 

Hendra Gunawan joined DBS in January 2003 and was most recently vice president of DBS Indonesia in charge of corporate and investment banking. DBS told Singapore Stock Exchange (SGX) this morning that in his new capacity, Gunawan will be responsible for leading and growing the DBS franchise in Indonesia. Gunawan, 39, was previously with Deutsche Bank AG, Singapore, and PT Schroeder Investment Management Indonesia.

Meanwhile Bernard Tan joined DBS early last year as managing director in debt capital markets. Prior to joining DBS, Mr Tan had a career in the Singapore military before moving to the banking and financial service sector.

DBS Indonesia, a subsidiary of DBS Bank, the largest bank in Singapore, achieved a record earnings last year. Its total assets increased by 16.3% to Rp24.2 trillion or about US$2.4 billion, while net profit surged 31% to Rp2.2 trillion. As of May 2009, the bank's CAR stands at 23.8%.

DBS has aggressively expanded its network in Indonesia and now has 40 branches and sub-branches across the country. 

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Higher gold-silver zones in Tujuh Bukit

Intrepid Mines Limited (ASX: IAU) claimed that ongoing drilling in Zone B of the Tumpangpitu prospect, Tujuh Bukit, Banyuwangi, East Java has continued to define some higher grade gold-silver zones within a broad lower grade envelope. 

Intrepid secured US$40 million financing from Vale, the world's giant mining company, last week. Brad Gordon, Intrepid Mines CEO said, "Zone B is developing as the largest area of mineralization and has returned some of the highest grade defined to date in the upper oxide zone and separately from Zones A and C where we have already defined a combined resource of 2.57 million ounces of gold-equivalent."

Intrepid said its local partner, PT Indo Multi Niaga, is working with relevant Indonesian authorities to allow for a review of forest land status. Forestry Law restricts non forestry activities within protection forests and prohibits mining using an open pit method in the area.

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Indonesians' take on Tonghai's death sentence

What Indonesians said about death sentence on Cheng Tonghai, former CEO of giant petroleum company Sinopec? 

Go read comments about the report at Kompas.com. Someone said "in China you have to be careful committing corruption, here...take it easy, good prospect instead. Mr President, we support death sentence for corruptors." 

"I disagree with death sentence...better penalty 10 times bigger the embezzled money, give no more access." "China deserved to be a great nation for their strong punishment on corruptors. But here, I'm afraid one-third our people would be buried."

"What can you expect? Even the law officers violate the law...why bother thinking about this country."

"Death sentence? I guess half of our State officers would be hanged. I think we need cemetery as big as the whole Jakarta city area."

"Death sentence? We might see the next plenary session of the House of Representatives (DPR) with mainly empty chairs." Or funny suggestions?

"Just put corruptors in a cage with starving lion...But if he or she survive, put in a septic tank."

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Freeport shootings & "security money"

Responding to shootings in Freeport Indonesia, military quickly pointed their fingers to Free Papua Movement (OPM). Others, meanwhile, pointed to rivalry between Indonesian military and police over "security money". 

Defense minister Juwono Sudarsono was wise enough to say, "we have yet to know the perpetrators of the attacks, whether they are the separatist OPM, military personnel, or others. Therefore we need to have results of an investigation into the case and further information," Juwono is quoted by Antara on Wednesday.

Three persons, including one Australian, had been killed in the shootings (three consecutive days). On Wednesday, five police reportedly wounded when a unit were sent to comb the road near the mining site were ambushed. The unit was sent to clear the area of security threats before the secretary of coordinating minister of politics, law, and security Lt. General Robert Romulo inspect the area.

Human rights activists don't buy military's theory. They even suspected the shootings were related to rivalry between police and military over "security" money from Freeport. 

Freeport McMoRan (FCX) controls 90.64% shares in PT Freeport Indonesia (PTFI), with the remainder controlled by Indonesian government. PTFI sold 369 million pounds of copper (US$664 million) and 521,000 ounces of gold (US$470 million) in the first quarter 2009. It is a 10% higher than Q1 2008 (copper = US$790 million, gold = US$234 million). SO, PTFI contributed to 43% of FCX's total sales revenue in the first quarter 2009. 

FCX expects Indonesia sales of 1.3 billion pounds of copper and 2.2 million ounces of gold for the year 2009, compared with 1.1 billion pounds of copper and 1.2 million ounces of gold for 2008. Assuming average price of US$2 per pound of copper and US$900 per ounce of gold, PTFI's sales revenue this year would reach US$4.58 billion.

Freeport paid Indonesian military US$5.6 million to protect employees at the copper and gold mine in 2002, US$4.7 million in 2001. But every time, military denied that it ever received the money or it was steel receiving payments from Freeport to provide security.

Koran Tempo quoted Usman Hamid from KONTRAS warned officers not to issue allegations easily on OPM. He said there are some motives, including "business competition" between military and police for "security money" from Freeport. "Since 2003, police controls the security money," Usman said.

Poengky Indarti, director of Imparsial, echoed Usman. But police immediately dismissed the "business competition" motive behind the shootings. Well, pecunia non olet (money does not smell until it is touched).

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PQ for Senipah gas-fired power plant

State-owned electricity provider PT Perusahaan Listrik Negara (PLN) kicks off pre-qualification for Senipah gas-fired power plant project in East Kalimantan.

The gas-fired power plant will have 2x40 MW capacity as an independent power producer (IPP) project where investor will develop, finance, construct, and operate it on a build-own-operate (BOO) basis pursuant to a long-term power purchase agreement (PPA) up to 30 years.

Investors is also required to finance and construct the associated 150 kV transmission line, which will be transferred to PLN as a special facility.

Late last month, PT Total E&P Indonesia and Inpex Corporation signed gas sales agreement (GSA) with Perusahaan Kelistrikan dan Sumber Daya Energi (PKSDE), a company owned by Kutai Kartanegara administration to supply 20 MMSCFD of gas for 20 years. PKSDE and PT Toba Sejahtera are partners in the plan to build Senipah gas-fired power plant.

According to the GSA, buyer will pay US$3.5/MMBTU plus 3% raise every year for the period of 2011-2017, while for the period of 2018-2031, gas price will be US$4.5/MMBTU plus 3% raise per year and 30% of any electricity price hike to charged to PLN.

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Merrill lost in Indonesian court

South Jakarta District Court ordered Merrill Lynch Indonesia to pay US$25 million compensation to Harjani Prem, owner of Renaissance Capital. 

According to the verdict, Merrill had illegally sold shares, committed defamation against Prem in filing report to Bapepam (capital market supervisory agency) without strong legal evidences, and illegally hiring private investigators.

Merrill's lawyer, Frans Hendra Winarta, said his client will appeal to High Court to challenge the verdict.

Winarta argued there was no legal relationship between the company that sold shares in Singapore and Indonesian parties. He can't understand why a report to Bapepam is considered as defamation. 

At the center of this case is Merrill's approval to provide loans to Prem to purchase the shares of PT Triwira Insan Lestari (TRIL) Tbk. Merrill called off the loan, and asked Prem to pay in cash US$14.4 million the shares. Merrill then offloaded the shares to other parties.

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Flip-flop on IFES & KPU, Obama's early congrats

The Election Monitoring Body (Bawaslu) grilled officers at International Foundation of Electoral System (IFES) on Wednesday about their role in a live counting of votes published by General Election Commission (KPU) for July 8 presidential election.

According to Bawaslu, IFES admitted they only provided the system and had no idea how the group of voting organization (KPPS) and polling stations (TPS) have been selected in the counting process. "IFES admitted, their role was mainly to prepare the server and IT professionals to install the program," Wahidah Suaib, member of Bawaslu said. 

Suaib further said, "IFES initially budgeted US$200,000 for the process, but after discussions with telco operator, the cost charged was only for transmission of SMS" 

How the system worked? "Data transmitted from KPPS to Telkomsel (telco operator), and then transmitted to the "system" and KPU's server," Suaib said.

This is completely in contrast with KPU's statement before that KPU only published live votes counting from data gathered and processed by IFES (with funds from USAID). Others said, data processing is under the control of BPPT (The Agency for the Assessment and Application of Technology), ministry of research and technology. Can we say, this is an independent process?

Interestingly, Bappenas admitted it already warned KPU not to conduct such live votes counting because TPS used by IFES of 45,000 units is only 10% of the total polling stations. Bappenas also disagree with KPU's interpretation of IFES program with "real count" while it's not real count because it covers only 10% of polling stations. 

In fact, KPU announced in July 9 that there will be 104,000 polling stations to be counted under the SMS program, but then stopped when only data from 45,000 polling stations published. The termination triggered rumors that actually SBY-Boediono only got less than 50% votes if data from the whole 104,000 polling stations published. According to the rumor, SBY-Boediono only got 47.32% votes, followed by Megawati-Prabowo with 32.15%, and Kalla-Wiranto 20.53%. Meanwhile, KPU's published data based on the vote counting with IFES system stopped when SBY-Boediono got 61.66%, Megawati-Prabowo 28.57%, and Kalla-Wiranto 9.77%.

This data is pretty much similar with quick counts from various pollsters shown here!

Unfortunately, no words from IFES. "We just can't comment on that," Anhar Zamal, IFES program manager said.

So, may be Barrack Obama's congratulation to SBY-Boediono is way too early. Unless that US government want to be called "take sides". Why not waiting until the whole election results confirmed and legally sound? Why would US in a rush to congratulate SBY-Boediono?

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IDX jumps 3.2% on commodities

Regional sentiment and rebounds in commodities lifted IDX composite index to 2123 (+3.2%) today. This is the new high this year to represent a 56% gain from Dec 30, 2008.

IDX started the year of 2008 with few days of gain to reach its historic high of 2830 in January 9, 2008. But since then, IDX lost ground to as low as 1111 in October 28, 2008. Since then the index rebounded to its new high of 2108 early last month before retreating to 1914 late last month. 

A peaceful presidential election in July 8 initially considered a boost for the market only to see the composite index dropped three consecutive days after the election due to negative sentiment from global market and the fall of commodities.

Investors started the rally yesterday and recorded its biggest gain today. Bakrie-related stocks dominated the transactions, led by Bumi Resources with almost US$100 million. BUMI gained over 4.4%, while Bakrie Sumatra Plantations surged 9.5%.

Commodities stocks regained grounds, with most coal stocks rebounded by 3-4% to tracking their peers in the region. Straits Asia gained 5.5% in Singapore, while Xstrata opened higher by 5.5% in London. 

Plantation stocks also surged, with London Sumatra jumped 7.3%. Their peers in Singapore and Malaysia also ended significantly higher as CPO futures in Malaysia Derivatives Exchange crossed RM2100 per ton for September delivery.

Metals like Aneka Tambang, INCO, and Timah also regained grounds after few days of corrections. Banks also improved. Overall, blue chip stocks closed substantially higher. (th/ya)

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Max liability for nuclear accident US$400 M

Government has raised maximum liability for nuclear facility operator in the event of accident from Rp900 billion (about US$90 million) to Rp4 trillion (US$400 million). 

According to the newly signed Government Regulation No. 46/2009, maximum liability for nuclear facility operator which initially set at Rp900 billion (Law No. 10/1997 article 34 point 1) in any nuclear accident, be it in nuclear installation or from transportation of nuclear materials, be raised to Rp4 trillion. 

The maximum Rp4 trillion liability could be in the form of compensation to third parties injured or affected.

Indonesia has yet to build nuclear power plant in Indonesia even though some companies have announced their respective plans.

Government said Indonesia will build four nuclear power plant before 2025. Medco Group has also expressed its interest to build nuclear power plant in a cooperation with Korea Hydro and Nuclear Power Co Ltd. PLN is expected to join the 1,000 MW power plant.

Political lobbies to neighbors in the region have been pursued. Looks like the neighbors don't mind to see Asean members build nuclear power plants. 

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CMNP warned over Depok-Antasari toll project

Toll Road Regulatory Body (BPJT) warned PT Citra Waspphutowa, 62.5% controlled by listed toll developer PT Citra Marga Nusaphala Persada (CMNP) Tbk, to immediately build the US$250 million Depok-Antasari project.

Nurdin Manurung, head of BPJT, told Antara this morning that the agency is evaluating the project as no significant progress made while the toll road is slated for commercial operation this month. BPJT said government had actually revised up the tariff from Rp515 per Km to 618 Km late last year, but land acquisition has just been accomplished 0.04% in the past three years.

There is a possibility that government will takeover the project or to be offered to other investors. Depok-Antasari route will be 22.8 Km long with estimated investment cost of US$250 million, of which cost for land acquisition is estimated at Rp700 billion or approximately US$70 million.

CMNP owns 62.5% shares in PT Citra Waspphutowa. Other shareholders are PT Waskita karya (12.5%), PT Hutama Karya (2.5%), and PT Pembangunan Perumahan (12.5%). 

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Kepco invites coal supplier

Kepco SPC Power Corporation (KSPC) invites coal suppliers to participate in an open bidding to supply 320,000 tons per year of coal for its Cebu power plant. 

KSPC is the operator of 2x100 MW coal-fired power plant in Naga, Cepu province, Philippines. Earlier last week, another Philippine electricity provider Napocor awarded 2x65,000 tons of coal at US$80.93 - US$81.03 per ton (CIF) to Trubaindo Mining and 65,000 tons at US$79/ton (CIF) to PT Delta Mineral.

In February 2009, Napocor awarded Trubaindo 260,000 tons for April-July 2009 delivery and Indominco at 585,000 tons for March-September 2009 delivery. 

Napocor plans to import 3.5 million tons of coal this year, significantly below last year's 4.18 million tons per year. 

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Indonesia to buy 20 locomotives from General Electric

Indonesian railway operator PT Kereta Api Indonesia plans to purchase 20 new locomotives from General Electric for US$40 million. 

Ignasius Jonan, CEO of PT Kereta Api, said the company needs up to 200 new locomotives in five years to serve Java and Sumatra railways with total investment of US$400 million.

Kereta Api and General Electric Transportation has signed the cooperation agreement in Bandung, West Java yesterday. General Electric is expected to deliver 20 locomotives within 18 months.

But GE Transportation has a bigger plan. This company reportedly plans to invest in the railways infrastructure as well. US Embassy has invited ministry of transportation to discuss the revitalization program for railways with investment up to US$20 billion in the longer term.

Few years ago, GE CEO Jeffrey R. Immelt actually met president SBY in the State Palace to talk about the company's plan to work with state-owned PT Industri Kereta Api (INKA) to produce 200 locomotives in 10 years. GE has also established Indonesian subsidiary PT GE Lokindo. 

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Bank Century fraud leads to another frauds

Investigation one fraud usually leads to another fraud. Investigation on fraud at PT Antaboga Delta Securities led to other frauds at Bank Century. How about Bank Indonesia? 

When the case broke out last year, police detained Erick Adriansjah, stockbroker at PT Bahana Securities, for "spreading rumors" (through email) about liquidity crisis in five banks, including Bank Century. Bank Indonesia governor (that time) Dr Boediono ("elected" VP) described Bank Century's failure to participate in November 12, 2009 clearing as mere technical problem. But that was not the case, because few days later, Deposit Insurance Agency (LPS) takeover the bank and since then injected over Rp6 trillion to keep the bank alive until now.

Siti Fadjrijah, deputy governor of Bank Indonesia, finally disclosed after LPS action that Century's capital adequacy ratio (CAR) dropped from 14% as of September 30 to negative 2.3% on Nov 21. Century's CAR declined as the bank's largest depositors pulled out after the bank defaulted on a US$56 million loan payment. 

"Century could have paid the debt if our interbank loans ran normally. The problem is that no bank wants to lend the money to Century because of these liquidity jitters," The Jakarta Post quoted Fadjrijah that time.

Where were Bank Indonesia officers?

Century is a merger of three banks, including CIC. CIC was involved in the investigation of loan facility GSM-102, export credit facility provided by US government. The bank secured US$953.92 million from the facility. Investigators found a violation of the facility where CIC purchased credit link note republic of Indonesia (CLN-ROI) for US$225 million, of which around US$50 million was allegedly dubious. Tantular denied that in an interview with Tempo six years ago. Century's officer claimed Bank Indonesia's deputy governor Aulia Pohan was the once who signed the CLN-ROI deal. Pohan, whose daughter is married to President SBY's son, is named a suspect in a bribery scandal.

It's not clear until now, despite the fact that CIC had repaid the USDA facility, why Bank Indonesia picked CIC as the partner bank for USDA's facility.

Boediono said Century was the only problematic bank at the moment and he didn't see other banks could fall into the same problem only to see another scandal later that month in Lampung (Tripanca Bank). Some of the owners (Tantular in Century and Sugiharto in Tripanca) have been detained. But those with funds at both banks have been busy to recover losses and release the "frozen" assets under investigation.

Corruption Eradication Commission (KPK) knew these "businesses" could generate "fees" for those having access to the assets. That's probably why they wiretapped some people, including police officers. The wiretapping led to rumors that police asked for "something" in releasing Budi Sampoerna's US$200 million funds in Bank Century (according to Century CEO Maryono in media reports today, not US$300 million as reported earlier). Police complained about this. But anti-graft movement consider KPK's wiretapping as a standard operation. ICW even fired criticism towards SBY's statement about this when he said "focus on prevention, prevention, and prevention, not "trapping" (someone)".

Zainal Arifin Muchtar, director anti-corruption research center at Gadjah Mada University, said police should be open to be grilled/examined by other institutions, including KPK. Muchtar condemned National Police Chief Bambang Hendarso for his statement as if nothing happened in the Bank Century fraud investigation. 

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Petrochina controls 57% Singapore Petroleum

Petrochina has purchased additional 11.61% shares in Singapore Petroleum Corporation (SPC) from a tender offer of public shares. Combined with 45.51% shares acquired from Keppel Oil and Gas (Temasek), Petrochina currently controls 57% of SPC.

SPC told Singapore Stock Exchange (SGX) on Tuesday that as of July 14, Petrochina received acceptance of 11.61% shares through its tender offer launched after the acquisition of Keppel shares. 

The company could still raise its ownership in SPC from both tender offer and options offer to be expired August 21, 2009. SPC said until July 14, Petrochina has not received any valid acceptances on the options.

Petrochina acquired 45.51% last month for US$1.01 billion. SPC owns interests in three oil and gas blocks in Indonesia. They are Sampang PSC (40%), Mahakam Hilir PSC (100%), and Kakap PSC (15%). 

SPC also holds interests in three regional gas transmission pipelines; the 654-Km West Natuna Transportation System, the 468-km Grissik-Batam-Singapore Pipeline, and the 536-km Grissik-Duri pipeline.

SPC also holds a 50% interest in the Singapore Refining Company (SRC), a refinery with processing capacity of 290,000 barrels per day.

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Govt softens on BlackBerry

The Government of Indonesia has softened its stance on Research in Motion (RIM) where ICT ministry allows import of BlackBerry even though only for types that already certified for distribution in Indonesia. 

Executives of RIM, accompanied by Canadian Ambassador in Jakarta, met director general for post and telecommunication Basuki Yusuf Iskandar on Tuesday to reaffirm RIM's commitment to open service center in Indonesia. 

RIM got "mild result" from the meeting because government resumed import of BlackBerry for types already certified, but rejected to certify new BlackBerry models.

RIM promised to government officers that it will open the service center by August 26, 2009. RIM will start site construction, material delivery, and training by July 31, to be followed with trial run in August 17, and go live by August 21.

ICT ministry requires RIM to develop service center in Indonesia with similar quality the one in Singapore. "We don't want them to keep sending BlackBerrys to Singapore for service," Gatot Dewa Broto, head of information center at the ministry said.

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IDX rebounds 1.8%

After three consecutive days in red, IDX composite index finally closed in green on Tuesday with 1.8% gain to tracking regional and global sentiment. 

IDX is not the best today, especially in the morning session with gain of less than 1%. But investors entered the second session with more optimism. Hang Seng closed higher by 3.7%, but KOSPI inched up by 0.5% only.

Commodities lifted IDX significantly, led by coal stocks. BUMI gained 5.1%, while Adaro surged 5.5%. Others also gained in the 3-4% range, except Bukit Asam which lost 1.4% on profit taking. Their peers in the region also regained grounds with 3-4% gain on average. CNOOC is the top gainer in oil and gas with 6.4% increase, while Energi Mega Persada gained 3.3%. 

Plantation stocks also closed in green, led by Kulim's 7% gain in KL and Indofood Agri Resources' 3.9% gain in Singapore, as CPO futures in Malaysia Derivatives Exchange ended higher at RM2036 per ton. Gozco Plantation closed higher by 4.9% in Jakarta, while others increased by 2-3%. 

Most banking stocks surged, led by BII's 8.64% gain, followed by BRI with 4.6% and Danamon +4%. Telcos also in green with Telkom gained 1.3%. (th/ya) 

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BUMI has 5% Multi Capital

Mining giant PT Bumi Resources (BUMI) Tbk said the company only has minority stake of 5% in PT Multi Capital, a company selected by local administrations in West Nusa Tenggara as partner in the potential multi-billion US dollars acquisition of PT Newmont Nusa Tenggara shares. 

In contrast to media reports in the past few days, PT Multi Capital is not a subsidiary of BUMI in that sense. Senior Investor Relation of BUMI, Dileep Srivastava told Indonesia Stock Exchange (IDX) this morning that it is a member of the Multi Capital consortium through its wholly owned subsidiary PT Bumi Resources Investment (BRI). This company only owns 5% shares in Multi Capital.

So, who owns most of the shares? Multi Capital has reportedly agreed to establish a JV with local administrations of NTB wherein Multi Capital will only get 25% of revenue stream from investments in NNT. Recently, this consortium insisted to acquire up to 31% shares in NNT.

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Ausenco preferred for Martabe US$250 million project

Global diversified engineering services group, Ausenco Limited, announced today that its mineral business had been selected as preferred contractor to provide EPC management services for the US$250 million Martabe gold project in North Sumatra.

"We're extremely pleased to be working with PT Agincourt Resources and Martabe's new parent company owner---G-Resources---on such a significant project," Zimi Meka, CEO of Ausenco said in a statement.

Meka said he was pleased to see the gold and silver project return to Ausenco, following its deferral in late 2008 by the mine's previous owner OZ Minerals.

Both companies are in the final stages of documenting the EPCM contract, which should be formally signed by late this month. The Martabe project is expected to produce approximately 250,000 ounces of gold and 3 million ounces of silver in the early years of the mine life. 

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KL Kepong acquires Bumi Makmur

Malaysian-listed plantation giant Kuala Lumpur Kepong has on July 14, 2009, entered into agreements to acquire 95% shares of PT Bumi Makmur Sejahtera Jaya, a company with concession to develop oil palm plantation in Belitung Island.

KL Kepong told Kuala Lumpur Stock Exchange this morning that it acquired the shares for cash consideration of Rp6.66 billion. KL Kepong acquired the shares through its subsidiary PT Steelindo Wahana Perkasa (SWP) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.

Bumi Makmur Sejahtera holds a certificate of izin lokasi for approximately 2,336 Ha located in Desa Mentawak and Desa Air Kelik, Kepala Kampit sub-regency, Belitung Timur Indonesia, adjacent to SWP's plantations. 

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Baltic Dry Index remains weak

Baltic Dry Index, a leading indicator for commodities market, remains weak and closed lower at 1975 on Monday. The decline is only 10 point from last week's closing of 1985. But that reflects an overall weakness in the commodities market.

BDI has dropped 35% from early June 2009, which somehow reflected the retreat in most commodities. Palm oil, for example, has surged closer to RM3000 per ton in May, but this morning the benchmark September 2009 delivery in Malaysia Derivatives Exchange is traded around RM2039 per ton. It is improved from RM1990 per ton on Monday. But the current price is already 35% below its recent peak.

Metals are mainly weak. Monthly prices of nickel have inched up from the year's low of around US$5 per pound to above US$7 per pound. But the metal retreated in recent weeks to below US$7 per pound as it remains unclear whether the stainless steel industry, which consumes two-thirds of global nickel production, will improve significantly in the coming months. 

Prices of nickel have tumbled from an annual average of US$16.87 in 2007 to an annual average of US$9.57 in 2008 to an annual average of US$5.3 per pound so far this year.

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Mining royalties to be raised

Mining companies might have to pay higher royalties as the State seeks higher income from the sector. 

Simon Felix Sembiring, special staff for energy and mineral resources minister, said government is the process to negotiate the raise of mineral royalties with all existing mining companies, including those under coal contract of work (CCOW) which currently pay 13.5% of output.

Sembiring admitted the currently deliberated Mining and Coal Law No. 4/2009 stipulates that government shall honor the existing contracts. But he said, government as partner in the contracts could ask for negotiation to raise the royalty. 

"In fact the contracts clearly stipulate that if government asks for higher royalty, contractors shall do financial calculation. As long as they will not incur losses, they have no reason to reject a raise," Sembiring is quoted by financial paper Bisnis Indonesia today.

Well, we have repeatedly suggested the raise in mineral royalty. Bumi Resources, which controls KPC and Arutmin, for example, booked combined net profit of almost US$2 billion in the past five years. Even a 20% royalty for coal will cut only few percentage of net profit of coal companies.

Government should have raised the royalty few years ago. But nothing is too late for the something good for the country. The next important issue, of course, not only how to raise revenue for the State, but how the State will spend properly the revenues from natural resources.

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KPK vs Police: Sampoerna's Money

Police called itself crocodile, equalled Corruption Eradication Commission (KPK) with lizard. So, it is crocodile (buaya) versus lizard (cicak in Indonesian). At the heart of the recent "war" between these institutions is Budi Sampoerna's money at Bank Century. 

It all started with massive fraud at Bank Century, allegedly committed by the bank's former shareholders, including Robert Tantular who has been detained in the case. The bank collapsed, but the State is generous enough to bailout the bank in the name of preventing a bigger risk for the system (systemic risk).

How big is the systemic risk? Well, based on recent calculation, Deposit Insurance Institute (LPS) has injected over Rp6 trillion to keep Century in operation. Thousands of depositors will be at risk if government close down the bank, that's true. But the most affected from the closure would be Budi Sampoerna. Some reports pointed to Sampoerna's over US$200 million funds deposited in the bank.

Under the guarantee system, LPS could only cover deposits at the maximum of Rp1 billion per account. So, it's impossible for Sampoerna to recoup the money if government close down the bank. Sampoerna is known for "good relationship" with the ruling elites. Government decided to bailout the bank and had LPS injected significant amount of liquidity, including short-term facilities from central bank under the leadership of Boediono.

The bank survived, at least until now. The bank's management claimed various improvements. Still, it is not "easy" for depositors, including Budi Sampoerna, to get their money out of the bank. The first argument was to prevent liquidity crash, understandable. The second is police investigation on Tantular, Bank Century, and Antaboga Delta Securities. Police reportedly ordered Century not to release "major deposits", including Sampoerna's.

But in April, Sampoerna got "great news". Susno Duadji, National police chief of detectives wrote a letter to Century management in relation to Sampoerna's US$18 million funds. "In relation to US$18 million deposits of PT Lancar Sampoerna Bestari in Century, there is no more issues," Duadji wrote. Copy of the letter is published by Koran Tempo this morning.

Duadji referred to police investigation, examination on Robert Tantular and Boedi Sampoerna, plus discussions with Rudjito (head of commissioner council of LPS) and Maryono (CEO of Bank Century).

It is this letter that triggered rumors that the detective head got "compensation" of US$1 million for "releasing" the deposits. Duadji denied the allegation. He then complained about wiretapping by KPK. In a move seen as "retaliation", KPK investigates KPK deputy chairman Chandra Hamzah in relation to the case of suspended chief of the antigraft body, Antasari Azhar.

SBY as "father" of the "crocodile" invited a meeting with the "lizard" to end the rivalries. But others worry about "the peace deal" yesterday at the State Palace would only weaken anti-graft campaign.

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