Monday, 16 February 2015

Pembangunan Perumahan to clinch 65% Govt contracts.
Pembangunan Perumahan (PTPP) is targeting to clinch around Rp27.5t worth of new contracts in total for 2015. Out of that, 65% are expected to come from government and SOE projects, while private projects are expected to make up around 35%. With carry-over contracts worth Rp27.7t, PTPP will have a total 2015 orderbook of Rp55.2t. This year, PTPP is allocating capex of Rp1.8t, significantly higher than that in 2014. Rp800b will be used for PP Properti, Rp150b for a precast factory in Lampung, Rp100b for a power plant, and Rp100b for a toll road.

Availability of Heavy equipment recorded.
The Ministry of Public Works and Housing will soon record construction heavy equipment data to improve the business system of the domestic heavy equipment industry. The Director General of Building Construction says that due to the government’s big plan to accelerate infrastructure development in the next five years, demand for heavy equipment will rise. However, if the supply chain management of heavy equipment does not work well, project execution will be affected. Therefore, the Ministry and two construction associations (ie Association of Producers and Owners of Heavy equipment and Construction in Indonesia-Appaksi and The National Development Agency for Construction Services-LPJKN) will keep track of the availability of domestic heavy equipment. The objective is to provide feedback to producers and importers to understand the distribution of heavy equipment that is operational in Indonesia.

Budget 2015 approved.
Parliament approved the 2015 Budget on 13 Feb 15. Both the government and parliament have agreed on 5.7% economic growth and deficit of 1.9%. State revenue is expected to be Rp1,762t while state expenditure is budgeted at Rp1,984t. The lower revenue is due to lower oil & gas revenue. On the expenditure front, investment budget will rise 10%, with infrastructure expenditure budgeted at Rp270t, up by Rp100t compared with the Rp170t in 2014.

Jokowi to stop sending domestic workers abroad.
President Joko “Jokowi” Widodo plans to stop the sending of domestic migrant workers overseas, arguing that doing menial chores abroad undermines Indonesian pride and dignity. Jokowi said that he felt “ashamed when discussing the matter in [recent] bilateral talks with Malaysia. He has instructed the manpower minister to make a clear road map and set a timeline to stop the programme to restore their “pride and dignity.”

RI request international community respect over death-row.
The Indonesian government has requested the international community, including the United Nations, to respect the country’s sovereignty in upholding Indonesia’s laws through its firm decision to execute drug convicts, whose crimes have caused serious damage to the country. Following a call from the UN to drop the plan to execute drug traffickers later this month, President Jokowi insisted that he would not submit to pressure from any parties, including the UN, and thus would be firm in rejecting clemency for narcotics-related convicts who were on death row.

PM surgery for prostate cancer.
Spore Prime Minister Lee Hsien Loong has been diagnosed with prostate cancer. Mr Lee will undergo surgery to remove his prostate gland on Monday. The robot-assisted keyhole prostatectomy will be conducted at the Singapore General Hospital. Prostate cancer is the third most common cancer among Singaporean men according to the Health Promotion Board. While the exact cause of the disease is unclear, the risk of getting it rises after the age of 50. The surgery went smoothly, and he is expected to recover fully.

Tuesday, 17 February 2015

Matahari strong results in line with expectations.
Matahari Department Store (LPPF) reported 2014 net income of Rp1,419b, up 23% yoy from Rp1,150b in 2013. The reported result is in line (2.7% below) with consensus’ forecast of Rp1,458b. 2014 sales grew 17.3% yoy while operating profit grew 14.8% yoy. 2014 net income grew 23.4% yoy on the back of a lower interest cost from a debt paydown. 4Q14 sales grew 14.6% yoy, but higher operating expenses caused operating profit to grow by 6.2%. LPPG’s debt paydown led to a 43.1% yoy growth in the company’s 4Q14 net income.

Wijaya Karya new contracts of Rp2.3t in Jan 15.
Wijaya Karya (WIKA) has bagged Rp2.3t worth of new contracts in Jan 15. Currently, the company has ventured into a 2x 600 MW Independent Power Producer (IPP) project worth US$10.4b or Rp130t in Lampung. WIKA will have a 20% stake in the project while the other stakeholders will be Mitsubishi Corporation and PT Tambang Batubara Bukit Asam (PTBA IJ) with undisclosed proportions. WIKA also targets to win a Rp1t mixed used building project in Kuching, Malaysia.

Automobile: Four-wheel sales down 9%.
The Association of Indonesia Automotive Industries Indonesia (GAIKINDO) reported that four-wheel sales declined 9.13% yoy in Jan 15 from 103,609 units to 94,149 units. Out of the five of biggest players of sole agent brands in Indonesia’s domestic market, only Honda booked positive car sales growth, up 75% yoy from 9,635 units 16,855 units. Toyota reportedly saw a 24% yoy decline in car sales, from 35,886 units to 27,166 units. Daihatsu recorded a drop in sales by 10% yoy from 16,084 units to 14,536 units. Mitsubishi and Suzuki booked a drop in sales by 15% yoy from 13,403 units to 11,365 units and 14% yoy from 14,687 units to 12,683 units respectively.

Govt to develop new industrial estates worth Rp192t in next 5 years.
In order to attract more foreign direct investments (FDI) in the future, the Ministry of Trade & Industry (MTI) is planning to develop 13 new industrial estates worth Rp192t in the next five years. The industrial estates would be developed in both Java (more focused on technology and consumer goods) and outside of Java (focused in logistic sectors). According to MTI, the first industrial estate would be built in Teluk Bintuni, West Papua with total investments of Rp31t.

Aberdeen aims to be in top 10 list
New fund manager Aberdeen Asset Management is preparing to start its business in Indonesia soon as it aims to be one of the country’s top 10 fund managers by assets under management in the next five years. The company, part of Scotland-based Aberdeen Asset Management Plc, was launched in December last year after its overseas headquarters completed the acquisition of 80% of the shares of NISP Asset Management in September 2014.

Huge impact if Indonesia bans maids.
A potential ban on Indonesian maids working overseas will have a major impact on Singapore, which depends heavily on Indonesia for domestic help, according to maid agents. There are about 125,000 Indonesian maids in Singapore, based on Indonesian embassy estimates, making up about half of the 218,300 domestic worker population. Indonesia has been a good and reliable source of domestic workers for many years. A ban could have a serious impact on Singapore. If it happens, the maid industry may be affected badly.

Singapore economy stronger than expected.
Singapore’s economy grew more than initially estimated last quarter as a strengthening U.S. recovery boosted demand for the island’s exports. Gross domestic product grew an annualized 4.9% in the three months through December from the previous quarter, when it rose a revised 2.6%. That compares with a January estimate of a 1.6% gain and the median forecast of 2.2% in a Bloomberg News survey of 13 economists. A plunge in oil prices is generating more disposable income in the U.S., Singapore’s third-biggest export destination in December, while the euro-area economy picked up momentum at the end of last year. The Monetary Authority of Singapore unexpectedly eased policy last month, sending the currency to the weakest level since 2010 against the greenback.

Wednesday, 18 February 2015

Adhi Karya from monorail to LRT.
Management of Adhi Karya (ADHI IJ) is considering changing the design of its monorail project into light rail transit (LRT) to get the necessary approval from the local government. Management said that system-wise, it will be similar to the monorail but the investment cost will be higher. Nonetheless, the Ministry of Transportation has not indicated a timeline in the issuing of a draft for a Presidential Decree for this mass transportation project due to the uncertainty regarding ADHI’s eligibility and ability for the railway project. Currently, a Presidential Decree and state-fund injection are needed to realise this railway project.

Automobile: Astra’s unit sales decline 20%.
Gaikindo released January car sales of 94,139 units, a decline of 9.1% yoy from 103,609 units in Jan 14. Unit car sales rose 19.5% mom from Dec 14’s 78,802 units. ASII reported a 20% yoy decline in unit sales to 43,715 units (Jan 14: 54,821 units). ASII’s market share declined from 53% in Jan 14 to 46% in Jan 15. Toyota’s volume declined 24% yoy to 27,175 units (Jan 14: 35,886 units). Daihatsu’s volume declined 10% yoy to 14,536 units (Jan 14: 16,084 units). Honda recorded unit sales of 16,855 units, up 75% yoy from 9,635 units in Jan 14, and 234% mom from 5,047 units in Dec 14.

Govt to increase royalties on mining.
Finance Minister Bambang Brodjonegoro proposes to increase royalty tariff for all mining products so that the government could increase the non-tax state income from non-O&G sectors. Bambang says that in the revised 2015 state budget, the non-tax state income target from the mineral and coal sectors has increased by Rp7.1t to Rp31.7t. The increase in the royalty tariff will be included in the revision of Government regulation (PP) No.9 2012 that regulates the types and tariffs of non-tax state income. The government aims to issue the revised regulation in 1H15. The change in royalty tariff is being finalised. Previously, the government through the Ministry of Energy and Mineral Resources (ESDM) has spoken of the plan to increase coal royalties according to the calorific values. The smallest increase is the increase from 3% to 7% for coal with 5,100 Kcal/kg or less. The government intends to increase 2015 non-tax state income as the actual income was below the target in 2014.

Interest rate: Bank Indonesia cuts rate to 7.5%.
Bank Indonesia reduced interest rate by 25bp from 7.75% to 7.5%. In addition, Bank Indonesia expects loan growth of 15-17% in 2015.

Govt suspended Kalbe Farma drug licenses.
The Food and Drug Monitoring Agency (BPOM) has suspended the licenses of two drugs produced by listed pharmaceutical company Kalbe Farma following the recent deaths of two patients at the Siloam Hospital in Lippo Karawaci. The agency’s investigation has indicated that Kalbe, the largest listed pharmaceutical company in SE Asia, is responsible for the deaths. BPOM investigators suspect that the cause of death was an accidental swap of the two drugs — anaesthetic Buvanest Spinal and antihemorrhagic Asam Tranexamat Generik — during surgery on the two patients. The hospital conducted urological surgery on one patient and a C-section on the other. It turned out the content didn’t match the labels, causing problems for the patient. Less than 24 hours after the injections, both patients were dead.

MAS to investigate research report on Noble.
The Monetary Authority of Singapore said it was reviewing a report by Iceberg Research that claimed Asian commodity trading firm Noble Group used aggressive accounting to mislead investors. MAS is expected to take appropriate action if there are breaches of the Securities & Futures Act. Noble, listed in Singapore but based in Hong Kong, has rejected the little-known research firm’s allegations made in a report posted online. Noble Group saw its shares slide for a second straight day in a rout that has wiped US$770 million (S$1.04 billion) off its market value, hit by a report that has questioned its accounting practices. The rout has also raised questions over the power of small research outfits to inflict damage on listed firms, with investors keen to see the response from regulators and Noble shareholders such as sovereign wealth fund China Investment Corp which has a 9% stake.

Singapore turns to service as global economy weakens.
Spore is counting on its position as an Asian financial hub to bolster services exports as overseas demand for its goods falters amid an uneven global recovery. Services trade is set to increase with a rising middle class in the region boosting demand and a planned regional economic community set to lower barriers to trade. A government push to reduce the island’s reliance on cheap foreign labor is also pushing manufacturers to move into services such as design and research and development. Financial and other business services, including accounting and legal practices, make up close to 40% of Singapore’s services exports.

SG50 and 50 Shades of Grey.
A quirky Singapore Twitter hashtag #sg50shadesofgrey, inspired by box-office hit Fifty Shades Of Grey, has made headlines abroad. The hashtag, a portmanteau of the film’s name and Singapore’s SG50 golden jubilee celebrations, was featured on the BBC and Hong Kong newspaper South China Morning Post. Why was #sg50shadesofgrey popular? Perhaps because it also happens to be the year Singapore celebrates its 50th year of independence. Singapore has a “stereotypical reputation for being straight-laced, kind of boring, not very creative, clean, efficient but dull” which poet Alvin Pang hopes to change and have some fun.

Thursday, 19 February 2015

Public Holiday for Lunar or Chinese New Year (Indonesia & Spore)

Friday, 20 February 2015

Lion Air left thousands stranded.
Nearly 500 police officers were deployed to quell disturbances that flared into violence at Soekarno-Hatta International Airport as thousands of angry Lion Air customers were forced to wait for up to 24 hours due to a series of delays that went largely unexplained. The passengers’ frustration had been brewing since Wednesday night with Lion and airport officials providing no explanation for severe flight delays. Waiting passengers said they were given no food or temporary accommodation as compensation. It grounded 16 flights across the country since Thursday, stranding 6,000 passengers at the start of a traditional long weekend period to mark Chinese New Year, with the delays apparently caused by a combination of mechanical problems and the high number of travellers. AirAsia moved the boarding area for its passengers to another terminal to avoid the throngs demanding answers over the Lion Air situation. Lion Air said the delays – triggered after three of its fleet encountered mechanical problems – were exacerbated by the massive crowds travelling for the peak holiday season.

Higher barriers for expat workers.
An English degree (no related fields accepted), a teaching certificate, five years of experience and an HIV test from your country of origin. That’s the job requirement to get a job with a starting salary of $1,200 a month in Indonesia. With native-language English teachers needing to fulfill a laundry list of requirements to get a work permit, commercial schools are short of teachers. These are the most stringent conditions that are applied for English teachers in the world. The government is still raising new barriers, including a plan to require proficiency in Indonesian from foreigners seeking employment in the country. Red tape, corruption and complicated rules that are often contradictory continue to discourage foreign investment and run counter to President Jokowi’s promises to simplify bureaucracy.

PLN shady coal contract with miner.
An acquisition proposal by a publicly listed company in Singapore has revealed a deal suggesting that Indonesia’s state-controlled electricity company, Perusahaan Listrik Negara, or PLN, has awarded or is in the process of awarding several contentious contracts to purchase coal at more than twice the market price. Building materials supplier NH Ceramics says that a Singapore coal miner it plans to acquire, BlackGold Asia Resources, won a tender in December last year through its Indonesian subsidiary, Samantaka Batubara, to supply coal for a new PLN power plant in Riau.