Monday, 16 March 2015

Rukun Raharja bank loan of US$70m.
Rukun Raharja (RAJA) has obtained a loan of US$70m from HSBC with a maturity period of five years. The company will use the funds to pay off its debt and to finance its capex. The company has allocated capex of US$40m in 2015 to develop gas pipelines. One of the pipeline projects is located in Gresik, East Java with total investment of US$23m and length of 20 km. It is set to distribute 15 mmscfd per day to Perusahaan Listrik Negara (PLN). Moreover, RAJA plans to build a 7-km gas pipeline in Jambi with total investment of US$21m and to enter a JV with General Electric to build a power plant with capacity of 10 MW.

Total Bangun venture into precast business in 2015.
Total Bangun Persada (TOTL) recently established two precast companies named Total Pola Persada and Total Pola Formwork mainly focused in Java. These subsidiaries are 60%-owned by TOTL while the remaining 40% is owned by Pola Inti Perkasa, with total equity funding of Rp100b. The precast business is expected to generate revenue of Rp20b this year.

Mid-class property segment still promising.
The Indonesia Property Watch (IPW) believes that the outlook of the property industry is still promising this year, based on the following: a) inflationary rates are declining, leading to lower mortgage rates. The government has recently cut the BI rate by 25 bp to 7.5%, and b) greater budget for infrastructure developments could also boost property demand. The most promising segment, according to IPW, is the mid-class residential segment with the ASP of a unit ranging between Rp500m-1b. IPW also highlighted that the Serpong area has the most potential for bringing in landed property demand this year.

PAP distributes fliers on WP issue.
In Spore, People’s Action Party (PAP) activists in Aljunied GRC, Hougang and Punggol East went door-to-door to hand out fliers which criticized the Workers’ Party management of the town council. PAP is urging residents to ask WP Members of Parliament about the financial management of the town council. At the Parliament, the WP said that there had been no criminal wrongdoing or loss of money on the issues raised. The WP also acknowledged lapses in management, but said these were largely borne of inexperience and human error, and that the party has since put in place safeguards to rectify the situation. Although the general election is not expected until around 2016, political parties have already launched their first salvo of political mud-slinging.

Khazanah under pressure over Malaysia Airlines layoff plan.
Khazanah Nasional is reportedly under pressure to ditch plans for massive job cuts at Malaysia Airlines. The plan was to lay off one-third of the carrier’s workforce – around 6,000 positions – as part of a RM6 billion (US$1.62 billion) restructuring move. The National Union of Flight Attendants Malaysia, which represents about 3,500 cabin crew members, had sent out a notice of intention to the government to stage a picket in protest against layoff plans. Malaysia’s flagship carrier had earlier announced that it is in the process of reviewing supplier contracts and cutting fleet capacity. It is scheduled to emerge as a newly re-branded private company by July.

PKR vice-president Nurul Izzah arrested.
Nurul Izzah Anwar, the vice-president of the Parti Keadilan Rakyat (PKR) and daughter of Malaysian opposition leader Anwar Ibrahim, has been arrested by police on Monday, under the Sedition Act for comments she made about the judiciary in parliament. The White House has issued a statement condemning the conviction of Malaysian opposition leader Anwar Ibrahim for sodomy. Anwar was jailed in February, and his party PKR and opposition coalition Pakatan Rakyat have waged a local and international campaign to secure his release.

Regulator blocked healthcare takeover bid.
Singapore’s anti-trust regulator blocked a takeover on Malaysian IHH Healthcare’s planned purchase of a local unit of India’s Fortis Healthcare on the grounds that it would lessen competition. The Competition Commission of Singapore said that the proposed transaction would have resulted in a “substantial lessening of competition” in the affected markets.

Extra long weekend for Jubilee National Day celebration.
As part of Singapore’s Jubilee celebrations, Aug 7 has been declared a public holiday. This will make Fri 7 to Mon 10 Aug an extra-long weekend to celebrate Singapore’s 50th birthday. Many activities are lined up during the Jubilee Weekend to commemorate the special milestone year in Singapore’s history. This will include programmes at the Marina Bay; Singapore Botanic Gardens; West Coast Park, Pasir Ris Park and Sembawang Park; and at the Singapore Sports Hub. All museums and heritage galleries will open during the four days. Visitors walking into Sentosa via the Broadwalk can now enjoy free entry all day till the end of the year.

Tuesday, 17 March 2015

Telkom seeking loan of Rp4.98t.
Telekomunikasi Indonesia (TLKM) is seeking a loan of Rp4.98t or US$150m through its subsidiary Telekomunikasi Selular (Telkomsel). TLKM plans to allocate capex of Rp23t for 2015, of which Rp10t will be used for Telkomsel’s business expansion plan. For 2015, the company plans to build 12,000 new base transceiver stations (BTS) and aims to expand its customer base by 3% from 140.3m customers in 2014.

Coal reference price for Mar 15 up 7.7% mom.
The Ministry of Energy and Mineral Resources (ESDM) has set the coal reference price (HBA) for Mar 15 at US$67.76/tonne, or up 7.7% mom (Feb 15: US$62.92/tonne). ESDM stated that the price increase is primarily driven by the increase in the international market, ie Newcastle index, rather than the limitation on national coal production. The HBA has been based on the average of four common coal price benchmarks namely Indonesia Coal Index, Platts Index, New Castle Export Index and Newcastle Global Coal Index. The HBA coal price benchmark is set for coal with calorific value of 6,322 kcal/kg GAR (Gross As Received), total moisture of 8%, sulphur content of 0.8% as received (ar), and ash content of 15% ar.

Jokowi’s eight stabilisation policies.
In response to the weakening rupiah (-4% in Feb-March), President Jokowi and his economic team will issue a new economic package with eight new policies to stabilise the rupiah. They include: a) tax allowance for investment in some sectors or regions, b) formulating a fairer and new tax scheme for shipping companies, c) fixing balance sheets and SOEs will be encouraged to undertake reinsurance, d) the government will apply cost dumping on import duties, d) tax allowance for companies with 30% or more products destined for export markets, e) value-added tax (VAT) elimination for shipyards, f) increasing “nabati” component in biofuel to reduce oil imports, g) tax incentives for foreign companies which retain or reinvest their dividends in Indonesia. The economic policy package will take effect in Apr 15.

More limits on foreign workers.
Manpower Minister Hanif Dhakiri said the government will raise requirements on foreigners working in Indonesia in order ensure more jobs available to local workers. The Manpower Ministry is preparing a regulation that will, among other things, limit the type of jobs available to foreign workers and require potential workers to speak Bahasa Indonesia. The minister, however, did not address concerns over closing the skill gap between local and foreign workers.

Local diamond manufacturer launched.
Local diamond manufacturer, IIa Technologies launched its diamond greenhouse in Singapore, touted to be the world’s largest. The 200,000-square-foot facility will use the company’s patented diamond-growing process to produce colourless, high quality Type IIa diamonds. The company produced a 3.04-carat white diamond, which it touts as the the “world’s largest, laboratory-cultivated” piece, that was recently showcased in New York City.

ViewQwest launched world’s fastest home broadband.
Fibre broadband service provider ViewQwest launched the world’s fastest home broadband plan in Spore – becoming the first provider outside of Japan to do so – but due to the limited global infrastructure and a lack of applications that require such ultra-high speeds, consumers might not be able to fully reap the benefits at this point in time. Following a trial which began in November, ViewQwest introduced two 2Gbps plans for home users, at S$89.95 and S$99.95 a month.

Telcos allegation of smear campaign.
The major telcos here have been dragged into a controversy over the conduct of social media agency Gushcloud, with M1 and StarHub asking the authorities to look into allegations that Singtel, through the agency, incentivised social media “influencers” to conduct a smear campaign against them. Singtel has distanced itself from Gushcloud’s actions and clarified that it did not issue the brief that asked the influencers — a term used to describe people having a substantial reach and following on social media platforms — to complain about the other two telcos’ services or network connections. The brief, written by a Gushcloud employee, has since been circulated online. Singtel said it uses different digital agencies for its campaigns and Gushcloud was among the agencies that it had hired in June last year.

SIA in talk to buy Jeju Air.
Singapore Airlines (SIA) is in discussions to purchase a stake in South Korean low-cost carrier Jeju Air. Jeju Air plans to make an initial public offering in the fourth quarter of this year, making it the first listed Korean low-cost carrier. Jeju’s market capitalization is currently around 700 billion won (US$619.30 million) based its the over-the-counter market share price.

Wednesday, 18 March 2015

Coal production declines in Jan-Feb 15.
The Ministry of Energy and Mineral Resources (ESDM) says national coal production in Feb 15 was 29m tonnes. As such, total coal production in Jan-Feb 15 reached 65m tonnes, 18.8% lower yoy (Jan-Feb 14: 80m tonnes). Out of 65m tonnes, the export volume was 53m tonnes while the domestic demand was 12m tonnes. The decline in production was due to weak coal prices. In addition, the government has started to issue registered exporter certificates in order to control export volume. Currently, there are 290 registered exporters which consist of 40 companies with Contract Coal of Work (CCoW), 191 mining permit holders and 61 mining permit holders for transport and sale (or coal traders). According to ESDM, the government has projected total coal production of 425m tonnes by end-Dec 15.

Biodiesel producers ready to increase production.
A few days ago, the government announced a new policy to increase the mandatory content of biodiesel for domestic diesel fuel from 10% to 15%. This policy has received a positive response from biofuel producers. The Association of Indonesian Biofuel Producers (APROBI) states that they are ready to accommodate the government policy to increase biodiesel production in 2015. What producers need are the government’s consistency in policy implementation and the absence of delays. If the policy is implemented, biodiesel producers will have to supply about 5m kilolitre (KL) of biofuel (BBN). Producers are ready to supply the required volume as the installed production capacity is currently about 6.75m KL. Based on data from APROBI, 23 companies have license for biodiesel production, but only 10 companies actively produce biodiesel for the export market.

Logistics could grow 15%.
Frost and Sullivan stated that Indonesia’s logistics market revenue could grow 15.2% yoy from Rp1,810t (estimated for 2014) to Rp2,086t due to: a) strong growth in private consumption, b) increase in trade value, and c) infrastructure improvement. Indonesian logistics association ALI forecasts that logistics in e-commerce and project logistics have huge growth potential. Logistics in e-commerce could grow 30% yoy, but within 2-3 years, project logistics growth could outpace logistics in e-commerce growth.

Too many, too similar shopping malls.
Singapore has “far too many” shopping malls that are too similar to one another, and this is unsustainable for the retail sector here, said the regional head of Al-Futtaim Group. He said that Singapore is ‘over-retail’. There are far too many stores, far too many malls in Singapore and not enough shoppers – and these are similar types of stores. There is not enough differentiation in the stores. He said that for such a small market, if it’s to be viable in the longer-term and sustainable, there has to be some differentiation (among) the stores.

Legal action against Singtel for smear campaign.
The fallout from the Singtel-Gushcloud saga continues after rival telcos M1 and StarHub indicated that they are assessing their legal options. This follows Singtel’s apology for its role in an exposed Gushcloud marketing campaign brief to its influencer network, which asked them to “complain/lament about competitor’s (M1/Starhub) services/network connections”, and ultimately promote a Singtel youth mobile plan. The influencers, who are people with a substantial reach and following on social media platforms, would have received up to $4,000 in cash incentives, and other benefits, for successful sign-ups. StarHub wants Singtel to take responsibility to “retract and correct” all false and disparaging comments perpetuated by Singtel and Gushcloud’s staff. Singtel has terminated its relationship with Gushcloud, and apologised to StarHub and M1.

PAP distribution of fliers is not an offence.
The distribution of fliers by the People’s Action Party (PAP) activists in Aljunied GRC, Hougang and Punggol East is not an offence, said police in a statement. The police said that the distribution of fliers in itself is not an offence in Singapore. A police report was lodged by a member of the public about activists distributing fliers in the past week in Workers’ Party-controlled Aljunied GRC’s five wards.

Thursday, 19 March 2015

Pembangunan Perumahan targets Rp1.4t new contracts.
Pembangunan Perumahan (PTPP) is targeting to achieve new order growth of 40% in 2015, or worth Rp1.4t vs Rp1.0t in 2014. PTPP also aims to book revenue of Rp1.38t, up 49% yoy from Rp924b in 2014. The company plans to open another precast plant in Lampung with capacity of up to 200, 000 tonnes per year. The precast factory is expected to produce Concrete Spun Pile D 800 and D1000 with length of 36 metres. Currently PTPP operates two precast factory which are located in Sadang and Cilegon.

Oil & Gas investment increases by US$144.25m.
The investment commitments in national O&G exploration increased by US$144.25m, after the announcement of the auction winners of the first stage O&G blocks in 2014. According to the Ministry of Energy and Mineral Resources (ESDM), 12 companies came in as auction winners of the first stage conventional and unconventional O&G blocks. Some of the winners are major O&G companies including Pertamina, StatOil ASA, Shell Exploration Company BV and Petronas Carigali.

740% surge in flight bookings for 4-day national day weekend.
There has been a 738% surge in bookings for flights leaving Singapore on 7 Aug, compared to bookings last year. The leap in travel plans happened within 48 hours of the public holiday announcement on Saturday, said Skyscanner, an online platform which monitors the booking of flights and finds the cheapest options. This despite Speaker of Parliament Madam Halimah Yacob encouraging Singaporeans to stay home to celebrate the Jubilee. Travellers are also leaving slightly earlier.

Delay in completion of Jakarta MRT.
Jakarta may not be able to enjoy the first mass rapid transit (MRT) system in 2018, as previously scheduled, as its construction has been hampered by land acquisition issues in several areas of South Jakarta. The head of the Jakarta governor’s team for development acceleration, Sarwo “Yani” Handayani, said that negotiations with land owners on Jl. Fatmawati had proved difficult and could cause delays for the construction of the MRT in that section. Jakarta, along with co-hosts Palembang in South Sumatra and West Java province, will host the Asian Games in 2018.

Friday, 20 March 2015

Jokowi requests to replace monorail with LRT
During a meeting with the SOE minister and several SOE companies, President Jokowi instructed to replace the previous plan  to construct a monorail  system  in  Jakarta  with  a  Light  Rail  Transit  (LRT)  system. Separately,  Kiswodarmawan, CEO of Adhi Karya stated  that  the investment  for  LRT  will  cost  around  IDR250bn  per  km  and  will  be  integrated  with  neighboring  toll-roads.

SOE bank consolidation to continue
Government plans to merge SOE banks will continue by remodeling SOE banks’ management members, i.e Ahmad  Baiquni and  Suprajarto, formerly Bank Rakyat Indonesia directors, have been appointed to Bank Negara Indonesia’s board of directors. SOE Ministry’s Deputy for Business Services, Gatot Trihargo stated all SOEs will be consolidated, not only banks. The current management rotation is expected to ease SOE consolidation ahead.

Permata Bank lower lending.
PermataBank has set its sights lower for its lending growth this year as it is being cautious over macro-economic conditions. The bank, owned by conglomerate Astra International and Standard Chartered Bank, expects its loans to grow 10% this year, lower than last year’s 11%, according to an executive at the bank. The bank had decided to be conservative this year after it posted a 20% compound annual growth rate (CAGR) in loans in the past five years, higher than the industry’s average 18%.

Centrepoint to get makeover.
Shopping mall The Centrepoint, which has seen an exodus of long-time tenants, will get a $50 million makeover in two months’ time. After its revamp, it will have a new tenant mix, a more open layout and zones focused on fashion, beauty, lifestyle, sports, dining and the home. The eight-storey complex has been a familiar sight in Orchard Road for 32 years. But it has failed to retain heavyweight tenants such as supermarket chain Cold Storage – the latest to announce it will be making its exit. Tenants said they survive on the patronage of tourists and regular customers, and that the mall is usually quiet except on weekends, perhaps due to competition from newer malls along the shopping belt.