Jakarta. Indonesia’s foreign exchange reserves shrank by $40 million last month, marking continued efforts from the central bank to prop up the persistently depreciating rupiah.

In a statement published on Friday, Bank Indonesia reported that its foreign exchange reserves stood at $107.6 billion by the end of July, from $108 billion in June.

The current figure would be enough to support the nation’s import activities for roughly seven months, but with the added burden of covering the government’s offshore loans, that time frame contracts slightly to 6.8 months, according to the statement.

Bank Indonesia executive director Tirta Segara added that the central bank was forced to tap into the reserves to pay off some offshore government debts and stabilize the rupiah, which has fallen by 8.8 percent to 13,536 per US dollar year-to-date.

“On the other side of the ledger, the increase in foreign exchange receipts from the issuance of government euro bonds was able to withstand any further decline [in the reserve],” Tirta said in a statement.

The government recently booked 1.25 billion euros ($1.36 billion) from selling euro-denominated 10-year bonds last month.

The reserves should also be resilient enough in the face of the US Federal Reserve’s interest rate hike slated to occur next month, said Aldian Taloputra, an economist at Mandiri Sekuritas.

He pointed out that past events, such as the Fed’s quantitative easing announcement in 2013, showed pressure typically hits the market in the days leading up to the actual event.

“I think the market has already priced in the interest rate hike… Right now, the market’s only waiting to see just how much the Fed will increase its interest rate,” he said, adding that he projected the market to calm down as soon as the decision on the Fed rate has been made.

Foreign investors currently hold 39 percent of government bonds worth Rp 538 trillion ($39.6 billion), according to the Finance Ministry’s Directorate of Budget Financing and Risk Management, a slight rise from 38 percent at the end of last year.

Foreign investors, who made up 43 percent of trade in the Indonesia Stock Exchange (IDX) so far this year, still booked Rp 2.9 trillion net buy into the country’s stocks, despite a 8.7 percent year-to-date decline in the benchmark index.

GlobeAsia

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Jakarta. Despite widespread reports of sluggish growth prospects this year, global consulting firm PricewaterhouseCoopers sees Indonesia on the right path to materializing up to 80 percent of its ambitious infrastructure goal over the next five years, with President Joko Widodo working around the clock to smooth out reforms and accelerate infrastructure projects across the country.

In a report that was published on Wednesday, PwC forecasts  total infrastructure-related spending in Indonesia – of both government and the private sector – to increase to $90 billion in 2019, before reaching $138.6 billion by 2025.

The country was estimated to book a total of $57 billion in infrastructure spending last year, or equivalent to 6.4 percent of its gross domestic product, according to the report.

“This seems like a small increase, but actually, moving the economy is quite an achievement,” Julian Smith, an adviser at PwC who compiled the report, said in Jakarta on Wednesday.

“The overall message is quite a positive […] which says that the government is not wasting any time to attract infrastructure investment,” she said.

PwC’s report was released on the same day the Central Statistics Agency (BPS) revealed that Indonesia had posted its slowest quarterly growth since 2009. The slowdown dashes hopes that the government could meet the 5.2 percent growth target set in the revised budget for this year, analysts said.

Investment in transportation – mostly on roads – is likely to dominate the total infrastructure spending at about 37 percent, followed by utilities and manufacturing at 26 percent and 21 percent respectively, according to the report.

Joko’s administration, which came into office in October last year, has placed infrastructure development as its top mission over the next five years, targeting to roll out 35 gigawatts of electricity source and 1,000 kilometer of roads across the world’s largest archipelago.

Although Joko was able to convince skeptics of his bold infrastructure vision by slashing fuel subsidies last November and allocating the savings to infrastructure budget, more work is still needed to ensure the implementation of these infrastructure projects, according to Smith.

“[So far], the president is involved in making things happen. Things get stuck in the next level down,” he said. “What’s really needed is a coordinated action plan.”

Procurement bottlenecks, as well as nationalistic government policies against foreign private investment also presented a potential downside risk for the country’s infrastructure development goals, he added.

Overall, the government targets to spend as much as Rp 5,519 trillion ($465.7 billion) in the next five years with roughly Rp 2,216 trillion coming from the government.

The government has so far spent up to 11 percent of the Rp 290.3 trillion allotted for infrastructure, according to Finance Minister Bambang Brodjonegoro.

GlobeAsia

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Jakarta. The Ramadan festivities failed to boost spending among Indonesians last month as consumer confidence continued to weaken, according to a recent survey by the central bank.

The consumer confidence index of Bank Indonesia dropped 1.4 basis point to 109.9 in July compared to the month before, extending the downward trend it saw in June.

The report surveyed approximately 4,600 random households in 18 cities, including Jakarta; Bandung, West Java; and Semarang, Central Java.

The Islamic fasting month and the culminating Idul Fitri celebrations typically spur a spike in consumer spending as Muslim Indonesians spend their holiday bonuses, known as tunjungan hari raya, or THR, on items ranging from new outfits to foodstuffs to whip up an Eid feast.

“Consumer confidence is weakening due to the declining trend of [...] the current economic outlook index and the consumer expectation index,” the central bank stated in a report published on Tuesday.

The economy moved at its weakest pace in five months at an annualized rate of 4.7 percent during the first quarter of the year. Official figures on 2015′s second quarter are set to be released on Wednesday, with economists expecting a similar pace.

According to the central bank, Indonesians are also growing pessimistic with regards to businesses and employment in the next six months due to reports of a nationwide economic slowdown.

Still, the sruvey survey pointed out that consumers started buying durable goods — such as electronic devices and cars — again in July, after holding back on spending in the preceding month.

It also noted that consumers were more upbeat on prices for the next quarter.

“The pressure on price hikes is forecast to decline by this October,” the central bank stated. “It will mostly be seen in some goods with the highest stress on prices of staple food and processed foods, beverages, cigarettes and cigars.”

Indonesia’s annual inflation rate maintained its pace at 7.26 percent last month, from 7.3 percent in June, according to the Central Statistics Agency (BPS).

Bank Indonesia targets to maintain inflation at between 3 percent and 5 percent by the end of the year.

GlobeAsia

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Jakarta. Publicly listed Internet provider Link Net, an affiliate of the Lippo Group, reported double-digit growth in the first half of 2015, bolstered by continuously increasing demand for Internet and cable TV in Southeast Asia’s largest economy.

In an official statement received by GlobeAsia on Monday, Link Net’s profit climbed 13 percent to Rp 314 billion ($23 million) in the January-June period this year, compared to the same period in 2014. Revenues at the Internet provider climbed 22 percent to Rp 1.2 trillion.

“We are pleased with our performance in the first half of 2015, which bears testimony to the company’s strong fundamentals, as well as the strength of the team in executing our growth strategies, even in the midst of challenging times,” Roberto Feliciano, president director of Link Net, said in a statement.

The company attributed the growth to a “continued strong demand for next-generation broadband and cable TV services” in the company’s key markets, which include Greater Jakarta, Greater Surabaya in East Java and Bandung, West Java.

Link Net added 121,363 home passes in the first half of the year, covering approximately 1.5 million homes in Jakarta, Surabaya and Bandung, according to the statement.

It also saw a slight increase in the average revenue per user to Rp 415,000 as of June, from Rp 412,000 in March, according to the statement.

Link Net also attributed its healthy growth in the first half of the year to its cost-efficiency efforts, which have enabled the company to maintain its operating margin at 39 percent as of June.

The Internet provider acquired a 51-percent stake of First Media Television for approximately Rp 10 billion in June in an effort to increase focus on the cable television businesses going forward, according to the statement.

GlobeAsia is also affiliated with the Lippo Group.

GlobeAsia

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Jakarta. Amid the economic slowdown, two major lenders in Indonesia, Bank Mandiri and Bank Internasional Indonesia, managed to maintain sound profitability in the first half of 2015, with the first reporting a modest net income growth and the latter enjoying strong earning growth.

On Thursday, Bank Mandiri, the country’s biggest lender by assets, booked Rp 9.9 trillion ($734 million) in net income between this January and June, up by 3.5 percent in comparison to the corresponding period last year.

That compares well to rival BII, the eight biggest lender by assets, which posted Rp 388 billion in net income in the period, which represents a 13.9 percent rise in year-on-year calculation.

Some other major lenders, including Bank Central Asia and Bank Negara Indonesia, saw their profit growth slow in the same period.

In a press conference on Thursday, executives from Bank Mandiri explained the low profit growth was attributed to the efforts by the lender, which had sought to bulk up provisions in anticipation of rising bad loans, amid the slow growth environment.

“We’ve directed most of our earnings to provisions. It’s like our savings,” Budi Gunadi Sadikin, president director of Bank Mandiri, told a press conference in Jakarta on Thursday.

“We’re not aggressively chasing profit. We’d rather put it into our provision … so if our portfolio take a turn for the worse, we would still have some cushion,” he added.

Bank Mandiri set aside nearly Rp 4 trillion in provisions as of June this year, up 40.7 percent from Rp 2.8 trillion in the same period last year. Meanwhile, net non-performing loans ratio at the state lender rose to 1.01 percent, compared to 0.81 percent.

Despite rising bad loans, the company was still able to book a resilient loan growth during the six-month period, which boosted the company’s net interest income by 18 percent to Rp 35 trillion.

Total outstanding loans at Bank Mandiri stood at Rp 552.7 trillion up to June this year, up 14 percent from Rp 486 trillion in the same period last year.

The increase in provision, according to Budi, would place Bank Mandiri’s coverage ratio — a measure of protection against bad loans — at 168 percent as of June this year.

“Our coverage ratio has fallen by 20 basis percentage points every quarter. We’ll likely see that trend continue to the end of the year,” he said.

Kartiko Wirjoatmodjo, an executive staff at Bank Mandiri, added that the lender would attempt to keep its coverage ratio by no less than 120 percent by the end of the year.

BII

Bank Mandiri is not the only lender on the block that’s keeping a watchful eye on rising bad loans among businesses in the country.

BII — majority-controlled by Malaysia’s Maybank — although it reported sound profit growth, also reported an increase in bad loans this year as it feels the impact of the economic slowdown, the lender said an official statement on Thursday.

BII recorded a modest loan growth of 2.4 percent to Rp 108.5 trillion as of June this year as net non-performing loan (NPL) ratio at the lender increased to 2.35 percent.

“We maintain the view of continued challenging market condition for the rest of 2015, and will be selective in growing the bank’s portfolio while exercising strict pricing discipline for both loan and liquidity,” said Taswin Zakaria, president director at BII, in a statement on Thursday.

“While remain cautious in provisioning, I am pleased that we continue to demonstrate a better operating performance in the first six months,” he added.

Increase in Net Interest Income (NII) contributed to the improved performance and was achieved through the bank’s discipline in loan pricing, active liability management and an intensive bankwide implementation of strategic cost management program.

On other aspects, BII’s strong profit growth was supported by a strong growth in its net interest income, or income a lender gets from interest charges minus the cost of paying depositors.

NII rose 10.9 percent to Rp 3.1 trillion and its Net Interest Margin (NIM) — margins from lending money to customers — improved to 4.73 percent from 4.48 percent.

On funding side, BII reported a modest 1.1 percent growth in third party funds, which include savings, current account and term deposits. Third party funds rose to Rp 107.1 trillion from Rp 105.9 trillion.

Other operating revenues, or fee-based income, rose by 8.5 percent to Rp 1.1 trillion. It said the lender’s higher focus on advisory activities, insurance and credit card related fees has contributed to higher fee income for the period.

GlobeAsia

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Jakarta. Publicly-listed Energi Mega Persada, an upstream oil and gas company, on Monday released a statement saying it has raised approximately Rp 446 billion ($33 million) from selling new shares through private placement, the proceeds of which will be used to improve liquidity and boost production at the company.

The company said it has issued 4.46 billion new shares — equivalent to 10 percent of its enlarged equity. The shares were priced at Rp 100 per share in a so-called “non-preemptive rights issuance” or new share issuance without pre-emptive rights by existing shareholders.

About 51 percent of the new shares were bought by Welby Capital and 49 percent were acquired by Blossom Global Assets through Samuel Sekuritas Indonesia, the custodian in the transaction, according to the statement.

The new shares were listed on the Indonesia Stock Exchange (IDX) on Monday.

“As explained earlier, we plan to use the over Rp 446 billion proceed to fund the business expansion and working capital requirement of [Energi Mega Persada] and its subsidiaries,” Imam Agustino, president director of Energi Mega Persada, said in a statement.

Backed by this funding, Imam said the company hopes to grow production capacity between 5 and 10 percent this year.

Energi Mega Persada reported a daily production capacity of 11,718 barrels of oil per day and 217 million cubic feet of gas in the January to March period this year. The company currently has proved and probable oil and gas reserves of 158 million barrels equivalent as of March.

Didit Ratam, a director at Energi Mega Persada, also said that the company will also use proceeds from the rights issuance to pay off some of its debts.

“Consequently, EMP will show improved liquidity ratio going forward,” he said.

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Jakarta. The share price of Indonesian consumer goods companies rose on Thursday after the Finance Ministry announced it would raise import tariffs on a range of consumer goods, such as clothing, snacks and alcoholic beverages.

Under a recently issued ministerial regulation, the import duty on goods such as food, beverages, electronics, clothes, condoms and vehicles has been increased by between 10 and 150 percent with the intention of stimulating growth in the local consumer goods industry.

Responding to the news, the consumer goods sector grew 0.33 percent on the main stock index on Thursday, extending a 2.03 percent increase since the beginning of the year. That compared to 0.1 percent decline in the benchmark index.

Consumer goods producer Unilever Indonesia rose 0.31 percent to Rp 40,150, while Mayora Indah – which makes snacks and beverages – rose 1.96 percent to Rp 26,000.

Adhi Lukman, chairman at the Indonesian Food and Beverage Association (Gapmmi), said the policy  was warmly welcomed by local stakeholders as an opportunity for growth in the sector.

“I think this is a good step to harmonize tariffs, because right now, raw materials often have tariffs whereas processed goods don’t,” he said.

“Hopefully, this can help the local food and beverage industry to grow even more.”

According to Adhi, the import duty hike will bolster growth in the sector over the remainder of the year and boost competitiveness among food and beverage companies in Indonesia. He also pointed out the narrowing trade balance of the food and beverage industry as a signal that the industry is improving.

The trade deficit for food and beverage products narrowed to roughly $240 million as of May, according to government data cited by Adhi.

“In the same period last year, it was $900 million last year and the year before, it was $1.6 billion. This indicates that the industry is getting better,” he said.

However, the import duty increase could mean bad news for companies that still import some of their products like fashion and lifestyle retailer Mitra Adiperkasa (MAP).

“We’re discussing internally what our next strategy would be with this import duty increase. Tariff increases are typically passed on to customers, which would mean higher prices,” Fetty Kwartati, corporate secretary of MAP, told Globe Asia in Jakarta on Thursday.

She said that the new regulation will affect the company’s garment business the most.

Shares in MAP,which also operate consumer chains Starbucks Coffee and Spanish clothing line Zara, slipped by 0.1 percent to Rp 4,995 on Thursday.

GlobeAsia

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Jakarta. State-owned construction firm Waskita Karya has placed as much as Rp 732 billion ($54.8 million) in capital with subsidiaries Waskita Toll Road and Waskita Realty to acquire a toll road company and land in a quest to grow its toll road business.

The company injected about Rp 552.15 billion of capital into Waskita Toll Road and Rp 180 billion for Waskita Kaya Realty, it said in statements to the Indonesia Stock Exchange (IDX) on Tuesday.

“The purpose of the capital injection [for Waskita Toll Road] is to acquire 90 percent shares of Cimanggis Cibitung Tollways,” Antonius Yulianto, corporate secretary at Waskita Karya, said in the statement.

Meanwhile, Waskita Realty will use the funds to acquire more land he said, without disclosing the size or location.

Cimanggis Cibitung Tollways is the concession owner of a planned 25.4-kilometer toll road connecting Cimanggis to Cibitung, in Bekasi, West Java. The project was planned by the Bakrie Group, whereby Bakrie Toll Indonesia owns 80 percent of the company and investment holding company Bakrie and Brothers holds 10 percent.

Waskita Karya has been working on several toll projects, aiming to operate more than 400 kilometers of toll roads in the next two to three years.

Its projects include such as the 57-kilometer toll road between Pejagan to Pemalang in East Java and the 21-kilometer toll road that will connect Depok in West Java to Antasari in South Jakarta, which are both forecast to begin operations next year.

The state company is also eyeing a 125-kilometer toll road in the southern region of Bali that’s slated to cost up to Rp 40 trillion of investment.

GlobeAsia

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[Updated at 00:51 a.m. on Saturday July 11, 2015]

Jakarta. Indonesian companies looking to list on the local bourse this year face a tough time attracting investors as general malaise in the global and domestic stock markets sets in, paring back prospects for initial public offerings.

Three of eight companies that went public this year – property developer Puradelta Lestari, miner Merdeka Copper Gold and information technology firm Anabatic Technologies – slashed their offering size by 40 to 50 percent.

Two other companies have priced their shares at the lower-end of their initial indicative range, including state-controlled developer PP Properti and automotive parts maker Garuda Metalindo.

Syamsul Hidayat, the director for evaluation at the Indonesia Stock Exchange (IDX), in charge of vetting companies that want to go public, played down the trend, calling it “a calculated business decision” on the part of all the companies involved.

“[The companies] could have been planning to use that amount of funds from the start, or they could be planning to test the market first,” Syamsul told GlobeAsia. “That’s why they’re setting the price at the lower end. Generally, they could look to a rights issuance later in the future.”

He said there were still about six other companies planning to go public this year. But the total is still far short of the IDX’s target of 32 new listings by the end of the year.

Companies and securities firms are taking a hit from a combination of a bearish market, the slowest pace of economic growth in five years, and waning confidence in President Joko Widodo’s economics team, which has dragged down stock prices.

The fallout from global economic developments – from  a strengthening greenback to the Greek referendum result – have also played havoc with Indonesia’s main stock gauge, the Jakarta Composite Index.

The JCI hit a 14-month low this week, its closing level at 4,859 on Friday marking a 5.55 percent decline for the year. Total market capitalization is down 4 percent since Dec. 29, to Rp 4,972 trillion ($374 billion).

“We want to hear good news but there’s none,” said Andi Sidharta, president director of state securities firm Bahana Securities. “Even our analysts have no idea what things will look like ahead.”

Bahana underwrote three IPOs this year – those of Anabatic Technologies, Merdeka Copper Gold and PP Properti – and had been slated to underwrite three more. Of the latter, however, two have been shelved until next year.

“Uncertainty is still high [in the market] so a lot of the companies that want to go public have postponed their plans,” Andi said.

Teky Mailoa, the president director of Puradelta Lestari, which issued its IPO in March, also blamed market uncertainty for the company’s IPO cut.

Salting the ocean

Some analysts are now worried that the negative sentiment will linger over the local stock market for the next three months as investors await concrete implementation of the government’s reform promises, as well as an anticipated decision from the US Federal Reserve on interest rates.

The Fed is increasingly expected to announce a rate hike in September, which could trigger an outflow of capital from emerging markets like Indonesia.

“If companies force themselves to have an IPO in the current conditions, it’s like trying to salt the ocean,” said Haryajid Ramelan, chairman of the Indonesian Securities Analyst Association (AAEI).

“They’re wasting money. The point of an IPO is to raise money. Right now, if secondary shares are at a discount, why would investors buy new shares?

“We’re optimistic for the long term, but for this year, it looks like several companies will rethink their IPO plans,” he added, forecasting that the IDX would probably miss its IPO target this year.

Hans Kwee, a director and analyst at Investa Saran Mandiri, said companies that still wanted to go public should prepare to capitalize on the momentum once the stock market becomes bullish again, probably toward the end of the year.

“The second half should start to be better, especially once the [Federal Reserve] finally gives their announcement,” he added.

GlobeAsia

Correction: A previous version of this story stated automotive parts maker Garuda Metalindo cut its IPO size and miner Merdeka Copper Gold priced their shares at the lower-end of their initial indicative range. It was Merdeka that reduced offering size, while Garuda Metalindo sold its shares at the bottom range. 

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Jakarta. Publicly-listed Indonesian shipping firm Trada Maritime plans to hold a 5-to-1 reverse stock split next month in order to increase the company’s liquidity in the stock market, according to a listing on the Indonesia Stock Exchange (IDX) on Thursday.

The company will increase the nominal value of its shares five-fold to Rp 500 apiece from Rp 100 apiece, awaiting approval of Trada Maritime’s extraordinary shareholders meeting that’s scheduled to take place on Aug. 5, according to the statement.

The reverse stock split is scheduled for Aug. 26, the statement said.

A reverse stock split reduces the number of a company’s outstanding shares and increases its share price. However, the market capitalization of the company will stay the same.

Trada Maritime has appointed Jasa Utama Capital to acquire shares that are less than one lot after the reverse stock split at Rp 61 per share, the statement said.

“The composition of Trada Maritime’s shareholders will remain unchanged after the reverse stock split,” Trada Maritime management said in the statement.

Aside from the reserve stock split, the listed shipping company is planning to increase its base capital to Rp 3.89 trillion ($291 million), according to the statement.

Trada Maritime’s number of floating shares currently stands at 9.7 billion — valued at Rp 973 billion. After the reverse stock split Trada Maritime would have 1.9 billion shares, according to the statement.

In the statement, Trada Maritime management also said that the company is holding the reserve stock split in hopes to “theoretically improve the share price.”

“The reserve stock split and the increase in capital is also a way for the company to anticipate future corporate actions in order to strengthen the company’s capital structure and increase performance,” Trada Maritime management said.

Shares of Trada Maritime, which are listed under TRAM on the stock exchange, closed unchanged at Rp 50 per share on Friday.

GlobeAsia

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