Updated News August 31, 2010
- Regent Urged to Speed Up Electronics Procurement
- Engage Papua Now to Avoid Trouble Later: Experts
- 2011 Rate Hike Set to Reduce Govt Power Subsidies by Rp 8 Trillion
- Indonesian Coal Mines in Sumatra, Kalimantan Draw Interest From India’s NTPC
- Illegal Sand Miners Must Be Arrested
- Indonesian coal miner Harum Energy to sell 26.5 pct in IPO
- Indonesian Negotiators on Montara Spill Fail
- Indonesia's crude oil production rises in August
- Adaro's Income Drops 7 Pct
- Frustrated travelers demand ‘real’ international airport
- Lion Air requests permit for extra flights
- Govt Helps Merpati Airways Rp 2.1 Tn
- GM will invest US$150 million in Indonesia
- Lion not interested in flying to Europe
- BKPM ready to open early tender for 5 projects
- Small contractors' share may expand
Government Relations & Economic Development
Regent Urged to Speed Up Electronics Procurement
Rofiuddin. Tempo Interactive, Semarang – 31/08/2010
Central Java governor Bibit Waluyo has issued a letter instructing the regency/municipal governments in his work area to accelerate the establishment and the utilization of electronic goods and procurement of services. “The regional governments that have established this service are proven to be more transparent, accountable, rapid, and efficient,” Bibit said in the letter.
In the letter, the governor attached the regency/municipality’s newest data in responding to the establishment and utilization of the Electronic Procurement Agency (LPSE). The regency/municipalities that have established LPSE are Kebumen, Banyumas, Semarang, Salatiga, Pemalang, Tegal, and Pekalongan. Meanwhile, the regions that are not ready to form the LPSE are Grobogan, Wonogiri, Wonosobo, Purworejo and Sukoharjo. Other areas are preparing to establish LPSE and have joined management training.
Engage Papua Now to Avoid Trouble Later: Experts
Nivell Rayda. The Jakarta Globe, Jakarta – 31/08/2010
The government must rethink its relationship with Papua as soon as possible if it wants to avoid further civil violence and more adamant calls for independence, activists and social scientists have said.
“If security conditions in Papua could be equated to a volcano, a violent eruption is due very soon,” said Amiruddin al Rahab, of the civil-society Papua Working Group (Pokja Papua).
Amiruddin said on Monday that Papuans felt excluded from government policies and economic programs aimed at bringing prosperity to the province.
“Programs from Jakarta have not addressed the real problems in Papua — namely the need for health care, education and economic empowerment,” Amiruddin said.
“Papuans want their voices heard. The government needs to stage a balanced and mutual discussion with Papuans.”
Ikrar Nusa Bhakti, a senior researcher from the Indonesian Institute of Sciences, said that massive investment and exploitation of the natural resources in Papua had led to resentment of outsiders, both foreigners and other Indonesians.
“Immigrants coming to Papua from Java and elsewhere have better work opportunities and access to education, creating social and economic disparities. For the Papuans, money coming from Jakarta or abroad only means environmental destruction,” he said.
But he pointed out that dialogue with the government may be difficult because of Papua’s decentralized population.
“Papua consists of many tribes and communities. Finding a figure that can be accepted collectively [to speak for] the Papuans is difficult,” Ikrar said.
Ikrar said internationally sponsored talks like those that took place between Indonesia and former combatants in the Free Aceh Movement (GAM) might not work due to the lack of a unifying figure.
“The government must instead appoint a team that can reach out directly to the Papuans and conduct negotiations with them,” he said.
Poengky Indarti, executive director of human rights group Imparsial, said that the government had a history of violence toward Papuans that had already soured relations.
“Every time the Papuans express their voices against social and economic injustices, the military automatically views it as an act of treason or separatism,” Poengky said.
“There are countless demonstrations that have ended with the military or police using excessive force and violence. This has led to resentment toward the central government, particularly knowing that not a single perpetrator of violence has been prosecuted.”
A report published by the University of Sydney’s Center for Peace and Conflict Studies last month warned that a repeat of the 1991 East Timor massacre was likely to occur in Papua, after calls for an internationally sponsored referendum of independence intensified.
The report predicted that as Papuans grew restless about their conditions they would stage large-scale demonstrations, risking increasingly violent military responses.
Energy and Mining
2011 Rate Hike Set to Reduce Govt Power Subsidies by Rp 8 Trillion
Alfian. The Jakarta Post, Jakarta – 31/08/2010
The government has reaffirmed plans to increase power rates by 15 percent starting January next year, saying the hike will allow it to reduce subsidies by up to Rp 8 trillion.
During a hearing with lawmakers from House Commission VII overseeing energy and mining, Energy and Mineral Resources Minister Darwin Zahedy Saleh proposed lawmakers allocate Rp 41.02 trillion for power subsidies in 2011.
“This figure is proposed based on the assumption that a policy to increase power rates by 15 percent will be introduced as of January next year.
“If this policy is not carried out, the required subsidies could reach Rp 49.14 trillion,” Darwin said.
He added that the proposed budget was had been formulated with several other assumptions, including the Indonesian Crude Price (ICP) a US$80 per barrel, and the rupiah at Rp 9,300 per $1.
The subsidy figure was also formulated based on an estimate of power usage reaching 153.85 Terra Watt Hours (TWh).
State power firm PT PLN is the sole power distributor in Indonesia. PLN said a significant growth in power consumption had been seen since the first semester of this year.
The company produced 83.3 TWh of power in the first semester of this year, representing an 11 percent increase from the production in the same period last year. The company had only anticipated a growth of 7 percent.
Currently, all PLN customers pay subsidized power rates, except those households with an allocated capacity of 6,600 volt amperes (VA) or more.
On July 1, the government and House of Representatives increased power rates by 10 percent on average, anticipating a power subsidy deficit of Rp 4.8 trillion.
However, the policy drew strong criticism from businessmen because of a miscalculation made in the corresponding government regulation.
Business associations said the increase was in fact far higher than what had been promised, with increases between 39 and 101 percent.
In response to the criticism, the government agreed to revise the regulation and capped the increases at 18 percent.
The increase does not apply to customers whose power capacity is between 450 VA and 900 VA.
Darwin said the government was still formulating a power increase policy for 2011.
“We will continue to protect low-income earners, but we are still discussing the formula. Our commitment is to switch the pricing subsidy to a direct subsidy,” he said.
Indonesian Coal Mines in Sumatra, Kalimantan Draw Interest From India’s NTPC
Reuters, Jakarta – 31/08/2010
India’s top power utility NTPC is looking into purchasing stakes in two coal mines in Indonesia as it seeks access to the fuel to help end blackouts in India.
NTPC was studying two mines in Sumatra and East Kalimantan, which might together have as much as 1.8 billion metric tons of coal resources, its chairman R.S. Sharma said on Monday.
The purchase could be completed by March 2011, he said, declining to name the mines.
NTPC would seek a majority stake in the mines, Sharma said, also declining to name the current owner. The mine in East Kalimantan may have coal resources of about 1 billion tons and the one in Sumatra about 800 million tons.
The purchase had been delayed because the coal had a high moisture content and NTPC was studying ways to improve the fuel’s quality, including mixing it with dry coal to enhance the potential to generate heat, he added.
NTPC is among a number of Indian energy companies that are seeking assets across the world, specifically in Indonesia, to meet demand for electricity and petroleum products from factories and households in the world’s second-most populous country.
State-owned Coal India, the world’s largest producer, and Tata Power are among companies already looking to buy mines overseas.
Reliance Power, controlled by billionaire Anil Ambani, is considering investing $5 billion to build a railway and developcoal mines in South Sumatra, Yopie Hidayat, a spokesman for Indonesian Vice President Boediono, said in Jakarta last week.
Essar Group also bought the Aries coal mines in the Kutai region of East Kalimantan, which hold as much as 100 million tons of power-station coal, the company said in a statement on March 25.
“Domestic coal supply may not be able to keep pace with NTPC’s plans to add generation capacity,” said Rupesh Sankhe, a Mumbai-based analyst with Angel Broking. “That is sending all power companies overseas looking for mines.”
Coal demand in India, Asia’s third-largest energy consumer, might double from 2008 to 2015 to exceed 1 billion tons, energy consultant Wood Mackenzie said on July 1.
India could face a shortfall of 189 million tons a year by 2015, leading to a two-fold increase in imports, global consultancy KPMG said late last month.
India’s annual coal output of 535 million tons would fall short of demand from power generators by as much as 80 million tons by next year, Alok Perti, additional secretary for India’s coal ministry, said on July 7.
Coal is used to fire more than half of India’s current installed generation capacity, according to the Central Electricity Authority.
NTPC aims to lock-in fuel supplies to feed its rising generation capacity, currently at 32.2 gigawatts, but expects that to rise to 75 GW by 2017.
NTPC expected to import up to 15 million tons of coal in the next financial year as its annual requirement of the fuel could rise an estimated 6.5 percent to 165 million tons, Sharma said.
It is expected to import 12 million tons in the current fiscal year.
Currently, state-trading firms import coal for NTPC. “This is a stop-gap arrangement for one to two years,” Sharma said, adding that he hoped his firm could directly buy 40 percent to 60 percent of its coal imports in 2011/12.
“It is destination coal for us now,” he added. “We are working all out for that.”
NTPC planned capital expenditure of as much as 290 billion rupees ($6.19 billion) in the year ending March 2011, including for acquisitions, he said, without elaborating further.
The New Delhi-based utility would use part of its $3 billion in cash reserves and also raise debt to fund the purchase of mines in Australia, Indonesia and Mozambique that could supply as much as 10 million tons of coal a year, Sharma had said on July 14.
NTPC’s shares have declined 17 percent this year compared with a 4 percent rise in the benchmark Sensitive Index of the Bombay Stock Exchange.
They fell 0.5 percent to 195.55 rupees at 12:46 p.m. in Mumbaitrading.
Illegal Sand Miners Must Be Arrested
Anang Zakaria. Tempo Interactive, Jakarta – 31/08/2010
Central Java governor Bibit Waluyo is urging the police to take firm action against illegal sand miners in Mount Merapi area. “They should be arrested,” he said in Magelang yesterday.
Bibit was concerned that the continuous sand mining will damage the natural condition of Merapi. The slopes of Mount Merapi are water catchment areas. “Not only for Magelang, but for Yogyakarta as well. If the water catchment areas are damaged, then what will we drink?” he asked.
He said he was disappointed with how sand mining around Mount Merapi was being operated. Although these activities are obviously threatening the environment, the regional government is not serious in stopping them. “I am confused as to why nobody can stop them,” he said.Bibit came to Magelang to install Sigit Widyonindito and Joko Prasetyo as Magelang Mayor and Deputy Mayor, respectively, for the 2010-2015 period.
Indonesian coal miner Harum Energy to sell 26.5 pct in IPO
Reuters, Jakarta – 31/08/2010
Indonesian coal-miner PT Harum Energy said on Tuesday it plans to sell up to 715 million new and existing shares, equivalent to 26.5 percent of its enlarged share capital, in an initial public offering scheduled for October.
The company did not say in its statement how much it planned to raise in the IPO, but a stock exchange official had previously said Harum Energy aimed to raise as much as $400 million.
The firm said in a statement it will use $80 million from the IPO to develop its coal mines in Kalimantan this year, including the development of a hauling road, and to buy additional crushers, 10 tug boats and 10 barges. The rest of the funds will be used for capital expenditure over the next two years and to repay part of its debt.
Harum Energy, which is part of Tanito Coal Group, had previously put its IPO plan on hold, sources told Reuters in July.
But as the Jakarta stock market climbed to new all-time highs and attracted foreign investors, Harum revived its IPO plan, a source with direct knowledge with the plan told Reuters on Tuesday.
The company said in a statement published in Kontan newspaper that it plans to sell 650 million new and existing shares, with an over-allotment option to sell an additional 65 million shares.
Harum Energy reported first-quarter net profit of 134.1 billion rupiah , and total assets of 2.2 trillion rupiah as of March 31.
It reported full-year 2009 net profit of 767.5 billion rupiah, compared with 120.4 billion rupiah in 2008.
Revenue in 2009 was 4.5 trillion rupiah, up 76 percent from 2008, based on coal sales of 6 million tonnes and production of 4.5 million tonnes.
Harum Energy has already appointed Goldman Sachs <GS.N> and Deutsche Bank <DBKGn.DE> as international underwriters for the IPO, and PT Mandiri Sekuritas and PT Ciptadana Securities as local underwriters.
Indonesian Negotiators on Montara Spill Fail
Tempo Interactive, Jakarta – 31/08/2010
Indonesian negotiators on Montara oil spill compensation failed in the first attempt to seek damages from PTTEP Australasia at a meeting in Perth on August 26th. PTTEP Australasia said the government’s team was supported with credible data.
The information came from a maritime activist in East Nusa Tenggara Ferdi Tanoni who received the result of the meeting between the Timor Sea Advocacy Team led by Third Deputy of the Environment Department Masnellyarti Hilman and PTTEP Australasia from the West Timor Care Foundation who monitored the negotiation from Perth.
Ferdi said today (31/8) “the claim put forward (by the Indonesian side) was rejected by Montara operator because it was not backed by credible data. The Advocacy team only sought claim for damages without supporting data which was dismissed by Montara.”
The West Timor Care Foundation’s network in Perth also informed Tanoni that PTTEP Australasia refused to discuss compensation sought by Indonesian government of around US$1.4 – 2.4 billion.Ferdi said the advocacy team should first conduct a scientific research on damages by the oil spill, from ecological to economical. “If there is no scientific evidence, what could be demanded? This is embarrassing Indonesia.”
Indonesia's crude oil production rises in August
Muklis Ali. Yahoo News, Jakarta – 31/08/2010
Indonesia's crude oil production rose 2.6 percent in August due to increased output from several wells but condensate output dropped 3 percent, an official at the country's energy watchdog said on Tuesday.
Crude production rose to 833,800 barrels per day in August, up from 813,000 bpd in July. The condensate output was down to 128,000 bpd from 132,000 bpd in the same period.
"There are technical problems at several gas fields which caused condensate output to fall. We expect output to be stable next month," the official, who declined to be named, told Reuters.
The official at the mines and energy ministry had previously predicted that Indonesia would fail to meet its target in the 2010 budget for crude and condensate production of 965,000 bpd, but that its impact on the national budget would not be significant. [ID:nJAK453596]
Indonesia has struggled to attract fresh investment to develop new fields, partly due to uncertain regulations.
Indonesia has offered new exploration rights and has said it will offer new incentives to oil and gas investors, including more favourable tax treatment and production splits.
But industry players have said the incentives are not enough. Major global oil contractors working in Indonesia include Exxon Mobil <XOM.N>, Chevron <CVX.N>, ConocoPhillips <COP.N>, and France's Total <TOTF.PA>.
Following are monthly Indonesian crude and condensate output figures, with volumes in barrels per day:
Crude Condensate Total
August 833,800 128,000 961,800
July 813,000 132,000 945,000
June 833,700 130,000 963,700
May 832,800 140,000 972,800
April 825,800 140,000 965,800
March 821,600 140,000 961,600
February 824,100 135,000 959,100
January 815,200 130,000 945,200
Adaro's Income Drops 7 Pct
Arinto Wibowo. VIVANews, Jakarta – 31/08/2010
PT Adaro Energy Tbk (ADRO) booked a consolidated net business income for six-month period which ended on June 30, 2010, worth US$1.3 billion.
The income rises 12 percent compared to the same period of 2009, which is triggered by the strong production growth.
In a release, Adaro stated on August 31 that the production volume and sales in the first semester of 2010 increased by 20 percent and 22 percent respectively to 21.6 million tonnes and 21.8 million tonnes.
However, since Adaro has to report it financial performace in the Rupiah denomination, the currency's fluctuating rate may reflect the company's unreal financial performance.
Adaro Energy Managing Director, Garibaldi Thohir, said the decrease in income (rupiah) in the first semester of 2010 has been estimated earlier. Despite the rise in production and sales compared to the same period of 2009, the high precipitation affects the company's net profit and business income.
"We're hoping that the average selling prices for the second half of this year are better. If the weather is good, we'll meet the market expectation for 2010," he said.After full integration was carried out to coal supply chain in May 2009, Adaro continues its betterment in cost efficiency.
In addition, by restructuring some contracts for selling agents, Adaro may reduce operating costs by 12 percent.Adaro's profit was down by 38 percent to US$125 million, or a decrease by 49 percent.
Transportation
Frustrated travelers demand ‘real’ international airport
Multa Fidrus. The Jakarta Post, Tangerang – 31/08/2010
Frequent flyers have urged Soekarno-Hatta International Airport operator, PT Angkasa Pura II, to eliminate technical glitches and improve services as the holiday season approaches.
The company has been recently plagued by technical faults that have led to big delays for travelers.
“I missed my flight to Surakarta in Central Java because of a blackout at the airport earlier this month.
Even though the management claimed the power was only down for less than two seconds, I witnessed the chaos,” Devi Primayanti told The Jakarta Post on Monday.
She was referring to the airport blackout on Aug. 6, which caused delays for at least 63 flights and shut down crucial flight control systems.
Devi said the momentary blackout caused her to wait at the wrong boarding gate and ultimately miss her flight.
“Flight information screens were blank because of the blackout,” she said.
She added that the announcers also did not give clear information about the new departure times.
“I had to buy another ticket and wait in a very long line because so many flights were delayed,” she said, explaining that she arrived at the airport at 8 a.m. and finally arrived at her destination at 4:30 p.m.
Having taken for granted a system that has been operating almost unchanged since the 1980s, the airport operator has faced many technical problems amid increasing passenger numbers.
The radar system failed for 30 minutes on Sunday after a series of blackouts hit the airport.
A blackout also struck the airport on Aug. 3 when a loading crane fell on a power cable at Muara Karang power station in North Jakarta.
A businesswoman who relies on air travel, Devi complained that Soekarno-Hatta hardly deserved to be called an “international airport”.
“I usually wait for a long time to check in and pay the airport tax.
“I often feel sorry for old people, who can’t sit because of the lack of chairs in the hall,” she said.
Chatrine Siswoyo, another frequent flyer, complained of discomfort at Terminal 2, which services international flights.
She said the international airports in Surabaya, East Java, and Surakarta were better than Soekarno-Hatta.
“I think the management needs to renovate this old airport. I feel ashamed when my foreign friends visit Jakarta,” she added.
Edwina, an NGO activist who flies around the country twice a month, agreed with Chatrine.
“The rest rooms in the airport are dirty and have an awful smell. It’s embarrassing to have an airport under such conditions.”
Angkasa Pura’s public relation manager, Andang Santoso admitted there were many glitches and errors in his company’s system but they were working hard to improve it toward the holiday season.
“God willing, there will be no errors at Idul Fitri. We expect an increase in the number of passengers as of this coming weekend,” he added.
Following Sunday’s radar crash, the Transportation Ministry announced plans to install a new radar system worth Rp 700 billion (US$77.7 million).
Hery Bhakti, director general for air transportation at the ministry, said the construction of a new radar system right next to the old radar had been planned for a while.
“[The plan] has been on our program list. We will continue to implement the plan this year,” he said.
Lion Air requests permit for extra flights
The Jakarta Post, Jakarta – 31/08/2010
Private airline company PT LionAir is seeking the government’s permission to add extra flights to cope with the surge in passengers a week before and after the Idul Fitri holiday which falls on Sept. 10.
Edward Sirait, Lion’s director of general affairs, said the additional flights were needed to meet the increase in passengers traveling on the company’s most preferred routes such as Jakarta-Padang, Jakarta-Batam, Jakarta-Yogyakarta, Jakarta-Solo, Surabaya-Bandar Lampung, Surabaya-Banjarmasin, Surabaya-Denpasar, and Surabaya-Makassar.
“We requested the extra flights to meet demand on these routes,” Edward said, adding that Lion had already sold out for 90 percent of seats for those routes. According Edward, Lion would use Boeing 737-900 Next Generation aircraft to for the extra flights.
Govt Helps Merpati Airways Rp 2.1 Tn
Arinto Wibowo & Agus Darmawan. VIVAnews, Jakarta – 30/08/2010
This year, the government will supply PT Merpati Nusantara Airlines with financial aid by Rp 2.13 trillion, which has been approved by the House of Representatives (DPR)'s Budget Committee today. Head of the budget committee, Malchias Markus Mekeng, said that the agreement has been discussed with the working committee, which has approved the subsidiary loan agreement (SLA) of 2010 to Merpati with some conditions.
According to him, Merpati will in the next three months be requested to present the grand design of transportation infrastructure to eastern Indonesia.
"Therefore, we agree to improve the financial condition of Merpati. However, three months since the SLA is approved by the Budget Committee, the grand design must be addressed," said Mekeng today, Monday, August 30.
Deputy Finance Minister Anny Ratnawati said that in the SLA agreement, Merpati is obligated to advance its financial condition. "We'll ask for a business review as well as the details on its management," he said.
GM will invest US$150 million in Indonesia
Siti Munawaroh. Bisnis.com, Jakarta – 31/08/2010
General Motors Company, a US automaker, will invest US$750 million in Thailand and Indonesia, including to allocate US$150 million to reactivate the factory in Pondok Ungu, Bekasi, in the next two years.
GM will also invest US$600 million to build a factory of power train diesel (vehicle components) in Thailand. While in Indonesia, GM plans to reactivate its factory and produce the latest passenger car, i.e. PM7 model (People Mover Seven Seater), to meet the market demand.
For GM, both Indonesia and Thailand along with Malaysia have promising prospect for a vehicle market to grow. Therefore, GM is ambitious to be part of the rapid growth in South East Asia by embarking on its new principle “We Build Where We Sell.”
Tim Lee, President of GM International Operations (GMIO) during his visit to Jakarta, Monday night admitted that Indonesia is an important market for the company after Thailand. He ensured that the investment worth US$150 million (equal to IDR1.35 trillion with exchange rate of IDR9,000 per US$) in Indonesia is to reactivate the production facilities of PT GM Autoworld Indonesia (GMAI).
“We will continue to discuss it with the government of both local and central to fix the infrastructure, such as road, traffic and water, to support the production process in our factory. We plan to win Indonesia’s auto market,” he uttered.
Tim hopes the Chevrolet brand cars could be more developed in Indonesia and increases its market shares in national auto market. He appreciates the 89% growth of GM sales in Indonesia in January-July this year. The growth rate surpassed the increase in national market that grew 70% during H1.
Arif Pramadana, Corporate Planning and Public Policy Director GMAI added that the company is expecting the contribution of local component for PM7 around 25%. As for the Asean content, it will be more than 40%. "This will surely give lots of benefits to our local component industry."
Lion not interested in flying to Europe
Raydion Subiantoro. Bisnis.com, Jakarta – 30/08/2010
Lion Air is not interested in asking the European Union (EU) to lift its travel ban since the airline has no plan to fly to the EU countries.
President Director of Lion Air Rusdi Kirana said the airline was only wiling to be audited by the EU if the government, in this case the Ministry of Transportation, said them to do so.
"We won't register to have the EU lift its travel bank against us. Lion has no plan to fly there. However, if the government appoints us to be audited, Lion will accept that," he told Bisnis last week.
He continued Lion would still focus on strengthening the domestic route networks as the local flight market was estimated to keep growing in the future.
Lion Air, together with Batavia Air and Indonesia AirAsia (IAA), is part of the second-batch airlines suggested to the EU to have their travel banks lifted.
In the category, only Metro Batavia and IAA have their travel bans lifted. In the first batch, those airlines that have their travel banks lifted are Garuda Indonesia, Mandala Airlines, Airfast, and Premiair.
Garuda follows up the travel ban lift by opening Jakarta-Amsterdam via Dubai (UAE) route. In the meantime, other airlines have not flown to Europe.
Only Batavia plans to serve flights to London and Amsterdam in the next three years. In the meantime, Rusdi expressed his confusion why the EU had not lifted its travel ban against the EU.
"I don't know why they [the EU] don't lift our travel ban. What is certain, we won't register to be audited by the EU."
Marketing and Distribution Director of IAA Widijastoro Nugroho once said the travel ban lift by the EU had made European citizens no longer hesitate to fly with low cost carriers (LCC).
"To convince European citizens that it is safe for them to travel in Indonesia or travel overseas from Indonesia, they can fly with Indonesia AirAsia," he said
Infrastructure
BKPM ready to open early tender for 5 projects
A. Dadan Muhanda. Bisnis.com, Jakarta – 31/08/2010
Investment Coordinating Board (BKPM) believes that it can open an early tender for five infrastructure projects worth $4.44 billion with public scheme in October this year after revising several regulations which due on September.
If those could be finished in September, we could start the tender in October," said Head of BKPM Gita Wirjawan today.
The five-revised candidates are: first, Presidential Decree No. 90/2007 on BKPM. The board will have an extra job-description to issue tender and accept delegation from technical ministries to deal with infrastructure projects.
Second, Presidential Decree No. 27/2009 on investment. The licensing and administration process through BKPM one-door service might be revised.
Third, Presidential Decree No. 42/2005 on Committee on the Policy for the Acceleration of Infrastructure Development (KKPPI).
Numbers of institutions will be their member which are: BKPM, National Land Authority, Ministry of Environment and Ministry of Forestry.
Fourth, tender process will be aligned with Presidential decree No. 13/2010 on construction service and Presidential Decree No 54/2010 on procurement of goods/government services.
Fifth, Ministry of Finance Decree No. 38/2006 on underwriting infrastructure project. Government committed to give their support to infrastructure project either by capital investment, guarantee, land acquisition or other fiscal policies.
The five ready-to-tender projects are Imbalan's drinking water project, Center Java's steam power plant, Medan-Kualanamu's toll road, Manggarai-Soekarno Hatta Airport's railroad and Tanah Ampau, Bali's port.
Small contractors' share may expand
A. Dadan Muhanda. Bisnis.com, Jakarta – 31/08/2010
Market share of small-scale contractors may rise from 10% to 15-18% following the elevation of maximum project value from IDR1 billion to IDR2.5 billion.
The project value increase is stated in the Presidential Decree No. 54/2010 on Government’s Goods and Services Procurement, revising the Presidential Decision No. 80/2003, which was released early this month.
Chairman Central Management of Indonesian Contractors Association (Gapensi) Soeharsojo said that the elevation of the maximum project value to IDR2.5 billion offers better chance for small and medium scale contractors to improve their competitiveness.
According to Soeharsojo, 75% of construction projects worth more than IDR10 billion, is the domain of large contractors. Meanwhile, 15% of construction market is left for medium scale contractors with project value from IDR1 billion to IDR10 billion.
“Market share of projects amounting less than IDR1 billion is only 10%. In the meantime, 88% of our 66,000 members are small contractors. We expect there will be an increase of market share under this new regulation.”
The new policy also limits the role of foreign contractors in the projects funded by both central and local governments.
Foreign contractors, under this new regulation, are only allowed to work on the projects worth more than IDR100 billion.