Monday, 2 February 2015

Jasa Marga to acquire Solo-Kertosono toll road.
Jasa Marga (JSMR) is ready to acquire the 90.1km SoloNgawi and 87km Ngawi-Kertosono toll road projects as the current concession holder PT. Thiess Contractors Indonesia (TCI) has run into funding difficulties. The land acquisition of this project has been 80% completed and TCI is now negotiating with JSMR on the acquisition plan. The total investment on Solo-Ngawi is expected to reach Rp5.14t with 35 concession years, while Ngawi-Keertosono’s value would be Rp3.83t, with a concession of 35 years. TCI is a global coal contractor and since the plunge of global commodity prices, the company has difficulties funding this toll road project.

Wijaya Karya IPO for two subsidiaries.
Wijaya Karya (WIKA) plans to conduct an IPO for two of its subsidiaries PT Wijaya Karya Bangunan Gedung (Wika Gedung) and PT Wijaya Karya Realty. WIKA will issue 30% of Wika Gedung’s shares in 2H16 and 5% will be allocated as employee stocks (MESOP). WIKA targets to raise Rp900b with the issuance of 1t shares from Wika Gedung’s IPO. Meanwhile, Wika Realty will issue 30%, or 1t of its shares to the public by end-3Q15, with a target to raise funds of Rp800b.

Plantation: GAPKI targets 2015 palm oil production to reach 33m tonnes.
The Indonesian Palm Oil Association (GAPKI) is targeting crude palm oil (CPO) and its derivative production to reach 33m tonnes in 2015 or up by approximately 5% yoy. The Association also projects that 22.3m tonnes from that total production will be exported while 10.8m tonnes will be consumed domestically.

Economics: BI projects deflation in Jan 15.
Bank Indonesia (BI) projects that there will be a deflation of 0.12% throughout Jan 15, partly driven by the decline in the prices of domestic fuel. BI Governor Agus Martowardojo said that based on the observation of BI into the fourth week of this month, there will be a deflation of 0.12%. In addition to the lower fuel prices, the deflation was also driven by the controlled transport costs and some food prices such as chili.

No sale of plane tickets at Airports.
To improve public service, the Transportation Ministry will ban the sale of flight tickets at all airports in Indonesia. The move was aimed primarily at ending the widespread practice of ticket buying through middlemen (calo) at the airport. The regulation also stipulates that unregistered taxis are not allowed to operate at the nation’s airports and that smoking is banned in all airside areas (apron, runway, taxiway) and places that have direct access to these areas.

AirAsia needs more cash from rights issue.
Malaysian budget carrier AirAsia X announced a $109 million equity rights issue to shore up its weak financial position and reshuffled top management in a bid to turn around its fortunes. The cash is needed to fund working capital and repay debts totaling RM119m. AirAsia X, subsidiary of budget carrier group AirAsia, said that CEO Azran Osman Rani has resigned with immediate effect and Benyamin Ismail has been appointed acting chief executive. Co-founder Kamarudin Meranun has been appointed to the new role of group chief executive.

Microsoft, A*STAR team up for nation-wide operating system
Microsoft and research agency A*STAR have teamed up to build the world’s first nation-wide operating system in Singapore that will make more data available to the public, as well as between government agencies. The two organisations signed a Memorandum of Understanding to build a standard framework for the system and aim to have a prototype ready within this year. Their collaboration will focus on establishing a business structure of the framework for member agencies such as the Housing Development Board and the Ministry of Home Affairs, as well as developing a technical structure based on operating requirements.

Singapore is world’s most expensive city.
Singapore has topped the Economist Intelligence Unit (EIU) list of the world’s most expensive cities to live in. Singapore jumped five places from No 6 last year to top this year’s list after rising in the list in recent years. The city was ranked No 18 a decade ago in the EIU’s Worldwide Cost of Living Survey. Paris, Oslo, Zurich and Sydney also made the top five of the EIU list. Tokyo, the most expensive city to live in for 2013, fell to joint sixth place alongside Caracas, Geneva and Melbourne. At No 10 is Copenhagen.

Japanese civil engineer wins Changi’s millionaire draw.
A gift of chocolates for a client has led to Japanese civil engineer Seiichiro Oiyama being the latest to win S$1 million at Changi Airport. Mr Seiichiro Oiyama, 34, beat five other contestants (3 from China & 1 each from Egypt, Japan & Spore) to emerge winner at the “Be a Changi Millionaire 2014 Grand Draw.”

Tuesday, 3 February 2015

Smartfren Telecom seeking loan of US$350m.
Smartfen Telecom (FREN) is seeking a loan of US$350m to finance 60-70% of its expansion plans. The company will use the funds to replace the code division multiple access (CDMA) technology with the 4G FDD-LTE (frequency division duplex-long term evolution) technology.

Timah looking for Rp660b loan.
Timah (TINS) is looking to secure a bank loan of Rp440b-660b. The company has allocated capex of Rp1.1t for 2015, up from the Rp800b capex in 2014. About 40-60% of Timah’s 2015 capex will be funded by the bank loan.

Infrastructure: Land clearing process for private entities to ease.
The government, through the Minister of SOEs along with other ministers are discussing the potential revision or easing of the Presidential Decree No. 67/2005 regarding the government’s cooperation with private business entities in the provision of infrastructure facilities. This revision will focus on the Private-Public-Partnership programme concerning the process of land clearing. The government also hopes that the private sector may be able to help with the land clearing process for infrastructure needs. This revision will be in-line with the recent implementation of the Land Acquisition law.

Economy: It’s time to lower the BI rate.
The government should consider cutting the benchmark interest (BI) rate to boost the economy. Bank Indonesia typically raises its BI rate in the event of a depreciating rupiah and rising inflationary pressures. But, there is currently a deflation rate of 0.24% mom in Jan 15 vs an inflation rate of 2.5% mom in Dec 14 (following a significant drop in fuel prices in Jan 14) and the rupiah is expected to remain stable on the back of improving trade balance. The majority of economists and bankers in Indonesia expect 2015’s year-end inflation to reach only 5% yoy vs 2014’s 8.3% yoy. Thus, they forecast that the BI rate would be lowered by 25-50bp to accommodate the downward trend of inflationary rates this year.

Government revises two land clearing laws.
The government has revised two regulations related to the land acquisition law to accelerate the progress of its infrastructure programme. Coordinating Minister of Economy, Sofyan Djalil, stated that the government will also revisit points on the relationship between private entities and the government. The revised regulation is expected to be released by Mar 15. (Source: Investo

Gold investment scheme just a scam.
More than 100 people in Spore who had invested in a gold buyback scheme gathered at the Commercial Affairs Division in Police Cantonment Complex to lodge a report against investment company Suisse International. They said they represented about 260 investors in total, adding that 8,000 people around the world are believed to have been scammed, with losses of more than S$80 million.

Online betting sites blocked.
Visitors to online gambling sites would have found themselves shut out yesterday after the Spore authorities blocked access to several hundred of them, as laws to curb remote gambling kicked in. The list of websites to be blocked will be regularly reviewed, but details will not be made public. As the law came into force, some regular visitors to remote gambling websites found that they were unable to withdraw money that they had deposited for games on those sites.

Scoot’s Boeing 787 arrived.
The first of the 20 Boeing 787 Dreamliners that Scoot ordered in October 2012 touched down at Changi Airport to a ceremonial water cannon salute. Flown from Boeing’s factory in Everett, Washington, the plane marks the “start of a new chapter in our short but exciting history.” Scoot said it will triple in size, add new destinations, increase frequencies and grow the Singapore hub, all whilst continuing to offer competitive airfares

Wednesday, 4 February 2015

Bank Mandiri total asset value of Rp1,000t in 2015.
Bank Mandiri (BMRI) booked assets worth a total of Rp855t in 2014, making it the biggest bank in Indonesia based on asset value. BMRI is optimistic in achieving Rp1,000t worth of total assets in 2015 as the company is planning to strengthen its coverage in Indonesia as well as in Southeast Asia. BMRI ranks 9th among banks in the region. BMRI is prepared to be selected as a Qualified Asean Bank for the Economic ASEAN Community.

Plantation: Palm seeds production may reach 140m.
Based on the Ministry of Agriculture’s survey of 10 local producers, palm seeds production in 2015 may reach 140m seeds, with around 13m seeds set for domestic usage. Last year, production of seeds was estimated to reach 102m. Meanwhile, the Ministry of Agriculture has also banned the import of palm seeds since 2014 and encourages local producers to export surplus seeds.

Banks to lower mortgage rates below 9%.
Several banks are planning to lower their mortgage rates below the 9% level to boost loan growth this year. For instance, Bank Central Asia (BBCA) has confirmed that the bank will cut mortgage rates this month to stand below 9%. BBCA has already cut mortgage rates by 25 bp in Sep 14 and with the further rate cut, the bank expects to book a mortgage loan growth of 20% this year. Meanwhile, Bank CIMB-Niaga is also planning to cut mortgage rates by launching a “Special Rate Promotion for Chinese New Year” with the mortgage rate below 9% and fixed at 1 year. With this, CIMB aims to register a mortgage loan growth of 12-15% in 2015.

Transport Minister advocates new Cilamaya seaport.
The Minister of Transportation Ignasius Jonan, disputed with the Head of National Planning Committee (Bappenas) regarding his desire to develop the new seaport in Cilamaya vs the expansion of the existing Tanjung Priok seaport which Bappenas is more partial towards. To validate his stand, Mr Jonan claimed that the Cilamaya seaport is halfway closer to the industrial area in Karawang compared to Tanjung Priok. Moreover, the total investment of Cilamaya at Rp34.5t is Rp10t more economical than the value of Tanjung Priok. In contrast, the Head of the National Planning Committee reasons that the construction of Cilamaya will damage the O&G pipelines owned by Pertamina.

Electricity: Keen on building a 35,000MW power plant.
Vice President of Indonesia Jusuf Kalla (JK) said that to realise the development plans of a power generation plant with capacity of 35,000MW, the government will focus on three aspects: a) the government will give priority to the expansion of existing power plants, b) focus will then be placed on geothermal development, and c) the expansion of the mine mouth power plants. These three focuses will enable the private investment sector to build 20,000 MW out of 35,000 MW.

AXA partnership with Sanofi.
Insurance group AXA Indonesia eyes a bigger market share in the country, buoyed by its recent partnership with pharmaceutical firm Sanofi Group. AXA chief marketing officer Emmanuel Wehry said the company was upbeat about business prospects this year, citing the country’s economic potentials. The group currently has several life insurance business arms, namely AXA Financial Indonesia overseeing agency distribution channels; AXA Life Indonesia overseeing telemarketing operations; AXA Mandiri Financial Services, which is a joint venture with state lender Bank Mandiri in the bancassurance business; and Asuransi AXA Indonesia, which operates as a general insurance business.

Surabaya’s Risma one of World’s best Mayors.
Tri Rismaharini of Surabaya has been named one of the best mayors in the world, following in the footsteps of President Joko Widodo. The World Mayor Project, which since 2004 has awarded the World Mayor Prize to “honor those who have made long-lasting contributions to their communities and are committed to the well-being of cities nationally and internationally,” declared Risma the second runner-up of the 2014 edition of the award. The World Mayor Prize went to Naheed Nenshi, the mayor of the Canadian city of Calgary, and first runner-up to Daniel Termont of Ghent, Belgium, who was also conferred the World Mayor Commendation for services to European cities.

Jakarta & Surabaya most congested cities in the world.
Jakarta has been named the city with the worst traffic congestion in the world, while Surabaya has been ranked fourth among 78 international cities and regions. The Castrol-Magnatec Stop-Start Index, published by British motor-oil company Castrol, used GPS data to calculate motorists data across the globe. Drivers in Jakarta made 33,240 stop-starts annually, while drivers in Surabaya made 29,880. Motorists in Istanbul, Turkey, which took the number two spot on the index; while drivers in Mexico City, number three on the list

EU-Singapore FTA takes time to set up.
Prime Minister Lee Hsien Loong and German Chancellor Angela Merkel noted that Singapore and Germany have cooperated in many areas. And both sides agree on the benefits of a speedy ratification of the European Union-Singapore Free Trade Agreement. This would allow the trade pact to come into force so businesses and consumers can enjoy the benefits of greater economic exchange. This will take time, with Europe having its own internal processes to clear the agreement.

Booz Allen opens up in Spore.
Consulting firm Booz Allen Hamilton announced the opening of a Singapore office that will serve as a hub for the firm’s operations in SE Asia. Booz Allen’s expansion in Spore reflects an appetite across SE Asia to improve productivity and overall quality of life via the use of innovative technologies.

Thursday, 5 February 2015

BCA promotion on mortgage & car loans.
Bank Central Asia (BBCA) plans to offer interest rates of under 9% on mortgages starting the third week of February until Apr 15. This is part of a promotional programme to celebrate BBCA’s 58 birthday. Meanwhile, our channel check revealed that the car financing rate has been reduced. The following are BBCA’s car financing rates after the drop: 1-year tenor with flat interest rate 3.99%,  2-year tenor with flat interest rate of 4.49%, 3-year tenor with flat interest rate of 4.69%, 4-year tenor with flat interest rate of 4.99%, 5-year tenor with flat interest rate of 7.00%, 5-year tenor with fixed flat interest rate of 7.19% and a cap of 5.99%, and 6-year tenor with fixed flat interest rate of 7.39% and a cap of 6.49% Valid from 3-27 Feb 15.

Waskita Karya to raise up to Rp15.3t of funds in 2015.
Waskita Karya (WSKT) is targeting to raise Rp15.3t worth of funds in 2015. WSKT will generate Rp5.3t from the rights issue proceeds and the remaining of Rp10t is expected from the bank loans. The funds will be used to finance its targeted investment projects which will amount to Rp21.3t. The projects consist of toll road projects with total investment of Rp12.64t, the 500kV electricity transmission line in Lampung- Sumatera amounting to Rp5.24t and two other toll road projects valued at Rp3.46t. WSKT is aiming to achieve a 100% growth in net profit to reach Rp1.04t in 2015.

Parliament disapproves fund injection for three SOEs.
Yesterday, the Parliament disapproved higher statefund injection for three state-owned enterprises (SOE), namely Bank Mandiri (BMRI IJ), Krakatau Steel (KRAS IJ), and Rajawali Nusantara Indonesia. The Parliament did not deem it necessary to inject more funds into the bank, while there are still no details regarding the disapproval for the other two SOEs. Furthermore, the approved state-fund injection for infrastructure-related has decreased from Rp48t to Rp39.92t. Details regarding fund allocations are not available.

Plantation: Obstacles in Indonesia biofuel programme.
Due to the low CPO price situation, Indonesian Biofuel Association (APROBI) is asking for revision of the 10% mandatory formulation for biofuel production. APROBI mentioned that most of the producers are experiencing losses as a result of uneconomical conditions as a result of low CPO price as opposed to the currently higher production cost. The government is also suggesting higher subsidy for biofuel portion in the upcoming Revision of State Budget 2015 (APBN-P). A subsidy of Rp5,000/litre has been suggested for biofuel vs the current Rp1,500/litre, while subsidy for bioethanol has been suggested to increase to Rp3,000/litre from Rp2,000/litre.

More banks to lower mortgage rates.
After Bank Central Asia (BBCA) and CIMB Niaga (BNGA) confirmed that they will be cutting mortgage rates to below 9%, other big banks such as Bank Mandiri (BMRI) and Bank Bukopin (BBKP) are also planning to lower their mortgage rates. BMRI said it is still monitoring inflationary rates and trade balance before deciding its mortgage rate cut, but this rate cut is likely to happen as the bank aims to achieve its targeted loan growth of 12% this year. As for BBKP, management said it will cut its mortgage rate by 25bps to 13% soon to boost loan growth this year.

DBS deal with AIA, Prudential & Manulife.
AIA Group, Prudential and Manulife Financial are among firms shortlisted to become the insurance partner of Singapore’s DBS in a bank distribution deal worth around $1.5 billion. DBS’s bancassurance deal, under which it will distribute products exclusively of the chosen partner over 15 years, is the last major agreement of this kind available for insurers keen to tap into Asia’s fast-growing insurance market. Current DBS partner Aviva has also been shortlisted for the agreement that starts next year. DBS is keen to partner with just one insurer for all the Asian markets it operates in, but to create competition in the process and have flexibility, it has also shortlisted Canada’s Sun Life Financial, Richard Li’s Hong Kong-based insurer FWD Insurance and Metlife, who have submitted bids only for smaller markets

Singapore dollar fell to 5-year low.
The Singapore dollar will slide about 3% versus the greenback to the lowest since July 2010 after the city-state’s central bank unexpectedly eased monetary policy, according to a survey of analysts by Bloomberg. The currency will slide to S$1.39 by year-end after the Monetary Authority of Singapore (MAS) probably reduced the slope of its appreciation against a basket of currencies by a percentage point, according to the median estimates of 15 economists and strategists. The central bank, which uses the exchange rate as its main policy tool, changed its settings last week in an unscheduled announcement.

More flexibility required in CPF Minimum Sum.
The recommendations by the Central Provident Fund (CPF) Advisory Panel may provide more flexibility to CPF members seeking more control of the use of their savings, but whether it helps Singaporeans better understand a scheme often criticised for being too complicated is debatable. Much effort would have to be made to help Singaporeans understand the implications of making a lump-sum withdrawal at 65 and which of the three Retirement Sum levels — proposals unveiled by the panel — best meets their needs. The three recommended tiers as a “reframing” of the issues, would assure CPF members that it is not the end of the world if they do not meet the Minimum Sum — currently S$161,000 for those turning 55 in July.

Friday, 6 February 2015

Jasa Marga strong results but slightly below expectation.
Jasa Marga (JSMR) reported a net income of Rp1,403b for 2014, up by a strong 36.6% yoy. The reported results were driven by excellent operating expense management which resulted in a 33% yoy growth in operating profit. Despite the strong set of results, 2014 result came in 10% below consensus’ expectation of Rp1,560b. 4Q14 net income was Rp264bn, a significant increase from Rp5b recorded in 4Q14.

Oil & Gas: PLN requires 20 additional LNG cargoes.
PT PLN, a state-owned electricity company is still seeking additional supply of 20 LNG (Liquefied Natural Gas) cargoes in 2015. The additional LNG supply is required to fulfill its gas demand for 2015 which is about 475t British thermal units (btu). According to PLN, the demand for gas by power plants has increased significantly this year from 450t btu in 2014. The gas demand increase in Medan, North Sumatera is to replace fuels, while in Bali, the demand increase is due to the commencement of gas terminal operation in Benoa and steam power plant Celukan Bawang. Out of the total gas demand for 2015, PLN requires about 55 LNG cargoes. About 29-30 cargoes are required for FSRU (a floating storage and regasification unit located in West Java) which supplies gas to PLTGU (a gas-steamed power plant) in Jakarta. About 10-11 cargoes are required for PLTGU Muara Tawar.

Economy: 2014 GDP growth of 5.02%.
The Head of the Central Bureau of Statistics Suryamin said that the Indonesian economy in 2014 only grew by 5.02 %. From 2010 to 2013, economic growth dropped from 6.38% to 5.58%. The largest contributing sector to GDP in 2014 was the manufacturing industry with 21.02%. The manufacturing industry grew 4.63% in 2014, while the wholesale and retail trade, repair of cars and motorcycles grew at 4.84%, and agriculture, forestry and fisheries grew by 4.18%. Consumption expenditures of households and non-profit institutions were the highest contributors to GDP, growing 12.43 % in 2014, followed by household consumption with 5.14%, gross fixed capital formation with 4.12 %, government consumption with 1.98%, exports at 1.02% and imports at 2.19%. However, household consumption still accounts for the largest component of GDP at 56.07 %, followed by gross fixed capital formation at 32.57 %, imports at 24.77%, exports at 23.72 %, government consumption at 9.54 %, and consumption of non-profit institutions at 1.18 %.

Jokowi’s surprise national car project.
President Joko Widodo surprised Indonesians with his decision to appoint a little-known company led by a political supporter as the local partner for a joint venture to build a national car. During a visit to the factory of car manufacturer Proton in Malaysia on Friday, where he witnessed the signing of a MOU between Proton and Indonesia’s Adiperkasa Citra Lestari to set up a joint venture looking into the feasibility of developing and producing an Indonesian national car. Signing on behalf of ACL was its president director, Abdullah Mahmud Hendropriyono, a former intelligence chief and retired Army general dogged by allegations of gross human rights abuses. Hendropriyono is known to be close to Megawati Soekarnoputri.

HDB resale prices edge up 0.6% after year of declines.
After a year of consecutive monthly declines, Housing Board resale prices edged up 0.6% last month, according to SRX Property flash figures yesterday. But experts do not take this as a sign that the market is rebounding. Instead, they expect prices to continue sliding. The last time HDB resale prices rose was in January last year. They have fallen 5.7% since then. Last month’s rise was driven by four- and five-room flats, with their prices increasing by 1.1% and 1.5% respectively.

Bank officer duped 3 into investing S$1.2m.
A former UOB bank officer was sentenced to 11 months in prison yesterday for cheating three customers into investing a total of $1.17 million in unit trusts, claiming that they were principal-guaranteed. Too Jincai, 31, was a relationship manager with United Overseas Bank at the time. The three customers had wanted to place their money in fixed deposits at the UOB branch in Ang Mo Kio Hub, but Too convinced them to buy other financial products instead.