Paris. French President Francois Hollande on Saturday called on French retailers to give higher prices to livestock producers to help support them.

The French cattle, pork and milk sector is in crisis due to stagnating prices and falling exports, with about 10 percent of the country’s producers on the brink of bankruptcy, Agriculture Minister Stephane Le Foll said on Friday.

Farmers say a deteriorating international market, marked by a Russian food embargo, slowing Chinese demand and cheaper supply from other EU countries, has exposed longstanding pressures from business costs and retail consolidation in France.

“There is a very important agricultural crisis,” Hollande told France 2 TV, attending the Tour de France bicycle race in Mende, in the south of the country.

“I wanted to come for this part of the tour to speak about agriculture and tell distributors and big commercial centres … make an effort on prices even if, for consumers, it is a sacrifice,” Hollande was quoted as saying on France Info radio.

Hollande said distributors were planning to launch as of Monday a “Meats of France” label to help the sector and urged French consumers to support it.

France’s Socialist government has tried to address farmers’ complaints of unfair prices in the retail sector by getting food processors and supermarkets to agree last month to raise prices paid to farms.

Some beef breeders blocked access to a number of abattoirs last month in protest because low prices were squeezing their margins.

Le Foll said on Friday that pork producers were getting around 1.38 euros a kilogram, which was still below the target of 1.40 euros. Meanwhile, he said beef prices had only risen by 7 cents, below the target of 20 cents a kilogram.

Pledges were made mid-June of a price increase of 5 cents a week with cattle breeders saying at the time they hoped to get a raise of 60 cents a kilogram in total to cover their costs.

Le Foll is planning to meet farmers’ unions on Wednesday to discuss the issue.

Reuters

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Jakarta. Indonesia’s consumer confidence dropped in June due to concerns over a shrinking job market and fears of a drop in income and business activity in the future, according to a central bank survey published on Thursday.

Bank Indonesia’s Consumer Confidence Index, which samples 4,600 households in 18 major cities in Indonesia, fell by 1.5 points to 111.3 in June from a month earlier. A reading above 100 indicates optimism.

Consumer confidence declined in the first four months of this year before rising in May.

“Consumer perception regarding the current economy condition has declined compared to the previous month,” Bank Indonesia said in the report.

“The slowing economic growth [...] also affects consumers’ perception of job availability.”

Indonesia clocked in its slowest pace of economic expansion in five years at 4.7 percent in the first quarter of this year. The central bank expects growth to pick up slightly in the second quarter.

Consumers are also refraining from buying durable goods such as electronics, household appliances and vehicles, the central bank said.

This goes against past trends in which sales of durable goods peak during the Islamic holy month of Ramadan, when workers are typically paid their 13th monthly salary, known locally as THR.

Consumers have also become more concerned about job security over the next six months and less optimistic about future income, Bank Indonesia said.

On a positive note, consumers expected price pressure to dissipate in the next six months, in line with declines in food and clothing prices, the survey showed.

Indonesia’s inflation accelerated to 7.5 percent last month, from 7.2 percent a month earlier, on the back of rising raw food prices, the Central Statistics Agency (BPS) said on Wednesday.

Bank Indonesia still maintains its view that inflation will settle between 4.5 percent and 5.5 percent by the end of this year.

GlobeAsia

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Jakarta. International Monetary Funds confirmed on Wednesday that Indonesia has no outstanding debt with the fund, putting an end to a public debate between former president Susilo Bambang Yudhoyono and government officials.

“There have been a number of recent statements about Indonesia’s obligations to the IMF. Indonesia currently has no outstanding loans from the IMF,” Benedict Bingham, an IMF adviser, said in a statement made available by Bank Indonesia, the country’s central bank.

“The debt reported in Bank Indonesia’s external debt statistics relates to Indonesia’s SDR allocation,” Bingham said, referring to special drawing rights that are allocated to all members to boost their foreign reserves.

Indonesia’s current SDR allocation is SDR 1.98 billion, which is equivalent to $2.8 billion. It was allocated in 2009 to help strengthen the county’s reserves amid the global financial crisis.

“Under standard accounting rules, this SDR allocation is treated as a foreign liability of Bank Indonesia, while the corresponding holdings of SDRs are treated as a foreign asset of Bank Indonesia. So, when the SDRs are allocated there is no change in a member’s net debt to the IMF,” Bingham said.

On Tuesday Yudhoyono criticized President Joko Widodo for implying that Indonesia still has debt outstanding to the Fund in his speech at the Asian-African Conference last week. Yudhoyono said Indonesia has paid off in 2006 all of its $9.1 billion obligation that the country took during the 1998 Asian financial crisis.

Cabinet Secretary Andi Widjajanto said the Yudhoyono administration borrowed in 2009 from the Fund SDR 1.98 billion — which was valued at $3.09 billion at the time — and it was recorded as a liability in the central bank’s balance sheet. Andi didn’t make the distinction that that was an allocation, instead of a borrowing, which automatically is subject to carrying interest rates.

GlobeAsia

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Jakarta. MatahariMall.com, Lippo Group’s e-commerce arm, has appointed Credit Suisse and Bank of America Merrill Lynch to lead its first round of financing worth $200 million, a move that could help the conglomerate dominate the growing domestic online retail industry.

Rothschild was also appointed to serve as financial advisor to the Lippo Group in the deal, which could crown MatahariMall.com the most valuable e-commerce company in the country.

“We have received active interest from investors. Over the past few months we have made good progress and now is the right time to explore this,” John Riady of the Lippo Group said on Monday.

“We are excited to be working with Credit Suisse and Bank of America to find partners who share our vision.”

Lippo, with which GlobeAsia is affiliated, announced earlier this year its $500 million investment plan for an e-commerce unit, building on the group’s strong retail penetration across the country to tap into the online retail market.

The conglomerate targets to earn $1 billion in sales through the web-based business — set to be the largest in Indonesia — and become “the country’s Alibaba,” it said in a statement, referring to the Chinese e-commerce giant.

“E-commerce has the power to transform the retail industry, and Indonesia represents a huge market opportunity,” said Jan Metzger, managing director and head of technology, media and telecommunications for Asia Pacific at Credit Suisse.

“Given Lippo’s track record in building leading companies in various sectors, such as property, retail, healthcare and pay TV, the group has the scale and expertise to position itself as a leading player in the e-commerce space.”

Proceeds from the funding round will be used to execute MatahariMall.com’s business strategy.

“This is the single largest opportunity in the region. Having this capital will allow us to execute our business model without distraction to achieve the output we believe it will: to dominate e-commerce in Indonesia,” said MatahariMall.com president director Hadi Wenas.

Chris Gammons, head of Southeast Asia investment banking at Bank of America Merrill Lynch, saw burgeoning potential in the archipelago’s web capabilities, saying: “Southeast Asia’s most populous country is increasingly active online and there is significant momentum across Indonesia’s e-commerce landscape.

“This is being driven by the three powerful trends of strong economic growth, growing urbanization and rapid technology adoption.”

This year Internet penetration is expected to exceed 30 percent of the country’s 250 million population, MatahariMall.com said in the statement.

Online retail contributes to only 1 percent of total retail sales, but the figure is projected to grow at least 10 times over the next five years, it added.

And “with the key elements for an e-commerce platform already in place, Lippo Group is well positioned to be at the forefront of this compelling sectoral dynamic,” Gammons said.

GlobeAsia

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Jakarta. Achilles Advanced System, the company behind web-based tax reporting application OnlinePajak, aims to attract 100,000 corporate tax payers over the next two years in a move that could help improve tax compliance in Indonesia.

Since its launch in September 2014, OnlinePajak has aided some 6,000 taxpayers in calculating, paying and reporting their taxes through the secured system.

Still, the number is a small portion of the five million taxable companies in Indonesia, only 550,000 of which regularly pay their taxes.

“In two years, we target to have 100,000 taxpayers in our system,” Achilles president director Charles Guinot said in an interview last week.

“Then we will go for the 500,000 [mark] and the 5 million.”

OnlinePajak targets small and medium enterprises that usually do not have enough time or resources to deal with the long administrative process of paying taxes, including the value added tax and corporate income tax.

“The companies are really the ones who are heavily burdened in tax compliance,” Charles said.

Indonesian companies spend 259 hours a year in average to prepare, pay and file their taxes, compared to the Asia Pacific average of 231 hours, according to a 2014 report by PricewaterhouseCoopers.

Guinot said that OnlinePajak could cut the time SMEs spend to complete their tax obligations by a half — from 20 hours a month to 10 hours a month.

OnlinePajak is one of several companies providing web-based tax services that are integrated with the Indonesian tax office’s online system.

Officials have encouraged tax payers to shift to the online program  as part of its effort to improve compliance and meet its ambitious target of collecting $94 billion in tax revenue this year.

Achilles’ Guinot said his company ultimately aims “to help the government collect taxes.”

The France-based firm is committed to keeping OnlinePajak free for its usersAchilles will instead offer software solutions to clients in other areas that link to the tax payment system, such as accounting and employee and payroll management.

“We don’t want tax payers to pay for paying their taxes,” Guinot said.

GlobeAsia

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Jakarta. Net income at Bank Danamon Indonesia, the country’s sixth-largest lender by assets, declined by 22 percent in the first quarter amid flat growth in interest revenue and a rising number of bad loans.

Danamon’s net income dropped to Rp 687 billion ($171 million) in the January-March period, from Rp 875 billion in the same period last year, the company said in a statement on Thursday.

The lender’s net interest income was unchanged at Rp 3.4 trillion.

Other operating income, including from banking transactions and gains from financial instruments and currency transactions, dropped 14 percent to Rp 978 billion.

The lender’s gross non-performing loan (NPL) ratio increased to 2.69 percent of its overall lending from 2 percent in the first quarter of last year. The NPL ratio is a measure of unpaid loans owed to a bank.

As a result, Danamon also had to set aside Rp 1.1 trillion for impairment losses, up 26 percent from the same period a year ago as the company saw rising bad loans in the mining, manufacturing and construction sectors.

Still, Danamon’s outstanding loans remained at Rp 135.7 trillion of end of March, as significant increase in loans to medium-sized businesses could not make up for the slump in the retail and wholesale segments.

Danamon’s automotive loans through wholly owned subsidiary Adira Finance remained at Rp 48.2 trillion.

“This growth was in line with the lower industry demand,” the lender said in the statement.

Sales of new cars and pick-up trucks fell 14 percent to 282,569 units in the January-to-March period, according to the Indonesian Automotive Industry Association (Gaikindo). The association attributed the drop to consumers’ slowing purchasing power and businesses delaying vehicle purchases as they continue to cope with lower commodity prices.

Finance Minister Bambang Brodjonegoro said he expected Indonesia’s economy to grow by around grew 5 percent in the first quarter of this year.

Still, Danamon sees a silver lining in its financial performance. Its loan-to-deposit ratio improved to 92.7 percent compared to 94.1 percent last year, providing room that should allow it to expand its lending further. Bank Indonesia requires banks to maintain their LDR at between 78 percent and 92 percent, or else deposit a reserve with the central bank.

“[A] healthy loan-to-deposit ratio ensures that the bank has a solid foundation for future growth,” said Sng Seow Wah, Danamon’s president director.

GlobeAsia

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Jakarta. Sinar Mas Group, a diversified conglomerate owned by tycoon Eka Tjipta Widjaja, secured $1.5 billion in loans from Chinese financial firms, as President Joko Widodo continues to foster business ties between Indonesia and China during a four-day visit to the world’s second largest economy.

Sinar Mas secured the loan from China Development Bank and ICBC Financial Leasing to fund the company’s expansion  in the power, pulp and telecommunication industries.

Sinar Mas’s board of management signed the loan agreement in Beijing on Friday in the presence of Joko and China’s Prime Minister Li Keqiang.

“This agreement strengthens collaboration between Chinese financial institutions and us,” said Franky O. Widjaja, Sinar Mas vice president. “The agreement reflects our full support of the government’s efforts to boost electrical capacity across Indonesia to 35,000 megawatt in five years — particularly to meet industry demand.”

Dian Swastatika Sentosa, a coal and power business unit of the Sinar Mas Group, signed a $510 million loan deal with China Development Bank to develop a 300 megawatt power plant worth $480 million in Musi Banyuasin, South Sumatra, and a 100-megawatt power plant in Kendari, South Sulawesi, worth $200 million.

Sinar Mas received another $700 million in loans to further develop its pulp and paper industry, while Smartfren, the conglomerate’s mobile phone operator, secured $300 million.

Separately, private equity firm China Minsheng Investment announced on Friday it would invest $5 billion to develop an industrial park in Indonesia. The investment is part of an agreement worth $40 billion with the Indonesia-China Business Council.

China’s direct investment plans for Indonesia have reached $13.7 billion in six months, according to Indonesia’s Investment Coordinating Board, or BKPM.

China — whose foreign direct investments are mostly in the mining, machinery and electronics, and food and beverage industries — still lags behind Singapore and Japan in terms of realizing investments in Indonesia.

China’s President Xi Jinping has pledged to provide aid for Indonesia’s infrastructure projects, including the development of industrial estates, power plants, ports and a monorail system.

GlobeAsia with additional reporting from Reuters

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Jakarta. The Indonesian unit of UK-based Aberdeen Asset Management plans to start offering its signature mutual fund for retail and institutional investors in the next quarter, as it embarks on a path to serve the local market and become one of Indonesia’s 10 largest mutual funds by 2020.

The plan follows a steady transition after Aberdeen acquired 80 percent of local asset management firm NISP Asset Management from NISP Sekuritas, the securities arm of OCBC NISP Bank, in September, and renamed it PT Aberdeen Asset Management.

Sigit Wiryadi, PT Aberdeen Asset Management’s president director, said in an interview on Thursday that the company would relaunch six NISP mutual funds — including equity, fixed income, balanced and money market funds — under Aberdeen’s brand in the next three months, pending approval from the Financial Services Authority, or OJK.

The fund manager has been adjusting the funds to comply with Aberdeen’s simple and long-term-oriented investment philosophy.

“Last year we threw away a lot of junk, or stocks that didn’t pass Aberdeen’s screening test,” said Bharat Joshi, investment adviser at PT Aberdeen Asset Management. “I like to say we put a Rolls-Royce engine in an Avanza,” he added, referring to the mass-market Toyota minivan popular in Indonesia.

Aberdeen, which manages $515 billion globally, takes pride in its discipline to invest in simple-to-understand companies, with little debt and a healthy cash flow, Joshi said. The companies must be transparent to minority shareholders and have a “driven and passionate” leader, he said.

“Even when you have those five key recipes, then you have to look at valuation,” Joshi said. That approach has shielded Aberdeen’s long-term gain against sharp declines in the market, he added.

“Being long-term investors, especially having going through the cycles in Indonesia, we know how cheap things can eventually be. So if things are too expensive than it’s OK [to pass on them],” he said.

Having invested in Indonesia since 1987, Aberdeen Asset Management now has $4.7 billion in the country’s equity and bonds, or 3.9 percent of its Asian assets.

Sigit said Aberdeen’s conservative approach would put it among the top 10 asset management firms in Indonesia, competing with the likes of Schroder Investment Management Indonesia, Manulife Aset Manajemen Indonesia, and Eastspring Investments Indonesia.

GlobeAsia

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Transport Minister Ignasius Jonan was previously the president director of state owned train operator Kereta Api Indonesia where he effected a pay raise for crucial staff. 
(BeritaSatu Photo/Danung Arifin)

Jakarta. Transportation Minister Ignasius Jonan’s calls for raising the pay of aviation officials, in particular plane inspectors, has met with mixed responses from industry insiders and observers.

Yayat Supriatna, a public transportation analyst from Trisakti University, said Jonan’s proposal was similar to moves by other ministries, such as the Finance Ministry, to raise pay standards in line with officials’ importance and to lessen the motivation for them to take bribes.

“At the [Finance Ministry’s] tax office, the salary and remuneration is higher because they have to deal with higher pressures and bigger burdens,” Yayat said.

“It should work the same at the Transportation Ministry for officials with jobs that deal with public safety.”

He also called on the government to minimize the pay gap between officials working on the ground and those with desk jobs, given that the latter tend to receive higher remuneration despite not dealing directly with public safety.

Tulus Abadi, the chairman of the Indonesian Consumer Protection Foundation (YLKI), said he expected Jonan to make such a call, having enacted a similar policy while president director of state-owned railway operator Kereta Api Indonesia.

But Tulus said he understood the minister would likely face criticism, whereas during his time at the helm of KAI, he had the sole authority and autonomy to dictate employees’ salaries.

Raising the salaries of Transportation Ministry officials, who are civil servants, will require a change in regulation that will have to be signed off by the president, Tulus pointed out.

The current government regulation stipulates a pilot inspector qualifies for a monthly salary of Rp 4 million ($306).

Pilot training and education is regarded as on par with a three-year diploma degree.

A pilot inspector doing the same role with the same qualification can earn up to Rp 80 million with a private airline.

Airline operation inspectors in Indonesia are underpaid. (Source: Indonesia’s transport ministry)

“A pilot inspector flies with the airline they supervise. They also have to maintain flying hours” Jonan said on Wednesday, when he also spoke about a “hole” in the prevailing supervision mechanism for aviation safety in Indonesia.

Uchok Sky Khadafi, director of the Indonesian Forum for Budget Transparency (Fitra), said he understood that remuneration is important for civil servants with high-pressure jobs, but warned there was also a need for strong supervision to ensure civil servants did not abuse their power.

“Supervision is as important [as the remuneration],” Uchok said.

Jonan is racing against time to improve the country’s air transportation safety, with the European Aviation Safety Agency scheduled to inspect Indonesian airlines in May.

GlobeAsia & Suara Pembaruan

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Jakarta. Bloomberg, the world’s biggest provider of financial data and news, is reaping the benefit of it expansion in Indonesia in the past three years, having seen its business grow by double digits with more banks, mutual funds and corporate treasuries signing up for its dealing platform.

Bloomberg Business News grew by more than 12 percent last year, with an average of double-digit growth over the last 10 years, according to company data.

Bloomberg chairman Peter T. Grauer told GlobeAsia in an interview on Thursday that the company remained upbeat about the growth potential in Indonesia.

“The areas we’ve been particularly focused on here revolve around the mutual fund market, [and] we [are] quite proactive with our Instant Bloomberg Dealing platform in the forex market,” he said.

“We have expanded our news footprint a little bit so we can cover local news better, and we’ve seen benefits from that investment in seeing solid double-digit growth in our business here.”

The company launched Instant Bloomberg Dealing, a chat-based platform for foreign exchange traders, in 2013, and more than 40 local banks have signed up for foreign exchange and money market trading.

They join more than 100 global banks across 46 countries that use the platform for trade negotiations, execution and processing.

The instant dealing platform complemented Bloomberg Fxgo, a multi-bank trading platform offering commission-free electronic foreign exchange trading.

“We are seeing that as Indonesia’s economy continues to grow, so does the market for news, data and analysis on Indonesia and from Indonesians,” Grauer said.

Bloomberg added 5,660 desktop terminals last year, reaching a global installed base of 324,399, putting the company’s 2014 financial market revenue at an estimated $8.5 billion per year, according to a report from business market researcher Burton-Taylor International Consulting.

Bloomberg said that 18 percent of its revenue came from Asia. No specific data for Indonesia on terminal subscriptions, market share or revenue was given.

Bloomberg is the market leader in providing global financial market data services, with 32 percent market share last year, followed by Thompson Reuters at 26 percent.

Grauer was in Jakarta for a 24-hour visit on Thursday to attend the second annual Indonesian Fund Managers Association (Aprdi)-Bloomberg Indonesia Fund Awards to recognize the nation’s best mutual funds — “one of the key markets for Bloomberg in Indonesia,” Grauer said.

The country’s mutual fund assets under management grew by 19 percent last year to Rp 228 trillion ($17.5 billion).

Grauer said that Bloomberg remained committed to providing financial education, setting up the Bloomberg terminal in classrooms at nearly 800 universities and business schools worldwide.

In Indonesia, schools including Prasetiya Mulya Business School, the University of Indonesia, Gadjah Mada University and Diponegoro University are installing Bloomberg terminals to simulate real-world trading environments for their students.

GlobeAsia subscribes to the Bloomberg news service and terminal.

GlobeAsia

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