Tempo English

Bank Loans for Plantations Difficult to Grow

Jakarta – High business risks that lead to bad credits have limited the growth of bank financing for the plantation sector. Edi Setijawan, deputy director for banking research and regulation at the Financial Services Authority (OJK), said that the credit portion of agriculture and plantation only accounts for five percent of the total bank loans.

One of the main causes for the low rate of bank loans for the plantation sector is the violation against environmental sustainability committed by plantation companies. Banks are reluctant to give loans because many companies are involved in cases illegal deforestation, land disputes, and bribery to obtain permits. Because of the limited fund disbursement and the many number of plantation companies implicated in legal issues, the risk of bad credits have increased.

According to Bank Indonesia (BI), the total amount of commercial bank loans disbursed to plantation companies reached Rp537.5 trillion in the first quarter of 2014. Of the figure, non-performing loans (NPL) amounted to Rp3 trillion, or 1.6 percent of the total loans. In the same period, the loan value in the plantation sector reached Rp30.8 trillion, of which 9.1 percent (Rp2.8 trillion) are non-performing loans.

Seeing this trend, Edi asked the banking industry to boost the abilities and skills of their employees who deal with the plantation sector. One way, said Edi, is for OJK to ask local banks to recruit employees—particularly credit analysts—who are experts in the plantation sector, for the sake of reducing the risk.

Wono Budi Tjahjono, vice president of PT Bank Mandiri (Persero), acknowledged the high risks of financing plantation businesses. According Wono, Mandiri limits its financing to large enterprises and cooperatives. "We cannot give loans to individuals or companies without that are not vouched by core companies," said Wono.

As of April 2014, Bank Mandiri has disbursed Rp54.7 trillion loans for the plantation sector, with and NPL ratio of 0.17 percent.

Joko Supriyono, secretary general of the Indonesian Palm Oil Association, said the plantation sector is hampered by the government's spatial policy that is still problematic. According to Joko, there are no comprehensive spatial rules.

This problem is recognized by Darto Wahab, a plantations policy analyst from the Coordinating Ministry for the Economy. Darto highlighted the absence of clear regulations relating to land use. As a result, the performance of the plantation sector and its commodities are difficult to control.

Trade Ministry Set to Issue Export Permits for Miners

Jakarta – The Trade Ministry has expressed its commitment to issuing the raw mineral ore export permits (SPE) for US mining giants Freeport and Newmont. Trade Minister Muhammad Lutfi, however, said Thursday, June 05, 2014, that he was still awaiting the decisions from the Energy and Mineral Resources Ministry and the Finance Ministry regarding the commodities' export duties.

According to Lutfi, his institution wants the government and miners to seal the deal immediately to maintain the present phase of productivity and step up mineral exports.

Lutfi said yesterday the meeting discussing issues on copper and gold concentrate exports had come to the final stage. He added both the government and mining companies were now in talks on the export duties.

“When everything is done, the export permit can be issued,” he said.

Earlier, the Coordinating Economic Minister Chairul Tanjung said that there were four companies, including Freeport and Newmont, who had agreed to deposit guarantee funds. He said the companies would receive relaxation on export duties at 25 percent, based on the Finance Minister's Regulation number 6/PMK.

Obama to Name First Envoy to Somalia in Decades

Jakarta - U.S. President Barack Obama will announce the first American Ambassador to Somalia since the civil war erupted more than 20 years ago.

"As a reflection both of our deepening relationship with the country and of our faith that better times are ahead, the president will propose the first U.S. ambassador to Somalia in more than two decades," Under Secretary of State for Political Affairs, Wendy Sherman, said on Tuesday, June 3, 2014, as reported by Al Jazeera.

Sherman said that Obama will directly announce the ambassador who will be based in Nairobi, Kenya. As reported by Al Jazeera, Although the U.S. never formally ended its relationship with Somalia, the embassy in Mogadishu was closed in 1991 due to bloody chaos and power struggle among clan chiefs.
The darkest moment of the two countries' relationship was in 1993 when the bodies of U.S. soldiers were dragged along the streets of Mogadishu by a mob after Mohamed Farah Aideed’s loyalists shot down two Black Hawk helicopters. Thousands of Somalis and 18 American soldiers were killed in the battle between the fighters and U.S. soldiers.

The government of Somalia took control of the country in August 2012 and became the first to be given global recognition since the regime of dictator Siad Barre fell in 1991. The U.S. recognized the new government in January 2013.

Sriwijaya Air Provides 28,750 Extra Seats for Eid Al-Fitr

Jakarta - Sriwijaya Air prepares 28,750 additional seats starting from July to August to anticipate surge of passengers ahead of Eid Al-Fitr.

"It's possible that we will add extra flights if there are more passengers," said Agus Soedjono, corporate communications senior manager at Sriwijaya Air on Wednesday, June 4, 2014.

The airline will also increases flight frequencies to several routes, such as flights to Kualanamu, Padang, Pangkal Pinang, Solo, Tanjungpandan, Jogja, Surabaya, Denpasar, Ujung Pandang, Malang, and Dili.
At the same time, Sriwijaya Air's sister company NAM Air will also provides additional flights for the Pontianak-Yogyakarta and Surabaya-Denpasar from once to two times per day.

Rupiah Corrected, Investors Move to Stock Market

Jakarta - The increasing trade deficit has prompted market participants to move their assets from currency market to the stock exchange. On yesterday's trade, the Jakarta Composite Index (JCI) closed 30 points (0.61 percent) higher at 4,942.16.

Kiswoyo Adi Joe, an analyst from Investa Saran Mandiri, said the index gain was caused by technical factors following last weekend's sharp correction. However, the reinforcement has not represented a change in JCI's direction. "The index movement is still on a flat trend; in wait for the official results of the presidential election."

According to Kiswoyo, market participants—particularly foreign investors—are still waiting for the right moment to enter the market. That's why he believed that the index gain was driven by domestic investors' transaction and investment switching. "Investors are moving their assets from the money and bonds market as their prospects are becoming more limited."

Amid Indonesia's weakening economic fundamentals, investors seemed unaggressive in accumulating stocks; as evident in the low trading volume, with foreign net sales only reaching Rp250 billion.
Today the index is expected to move sideways between 4,900 and 5,000. The JCI will enter a bullish trend once it closes 5,100. Kiswoyo recommended investors to look at consumer-based stocks, especially ahead of the fasting month. "For example, Unilever, Tiga Pilar Sejahtera, and Indofood," said Kiswoyo.

Suryadharma Ali: I never disbursed the haj funds

Jakarta - Resigning from his job as Religious Affairs Minister after his indictment for corruption, Suryadharma Ali chose to ensconce himself at his home in South Jakarta. "At this time, I will stay home. I need to consolidate," said Suryadharma, who is chairman of the United Development Party (PPP).
The previous week, the Corruption Eradication Commission (KPK) had charged him with misusing the haj funds during the 2012-2013 period. Since then, friends and fellow party members have come to visit him, among them PPP Deputy Chairman Lukman Hakim Saifuddin and Achmad Dimyati Natakusumah and party elder, Hamzah Haz.
He spoke briefly to Tempo reporter Indra Wijaya and other reporters waiting outside, as he escorted his guests out the door. He admitted the case had become a 'disaster' and upset his family life.
Is it true you invited your family and friends on the haj pilgrimage in 2012?
I'm not ready yet to explain this matter. It's a long story. Pray that I can overcome this burden.

Are you denying the charges?
What is certain, we did not reduce the quota for people to leave (on the haj) that year. That's essential. Yes, there are quotas reserved given by the Saudi Embassy for a number of government officials. This is intended to maintain good relations between the two countries.

Who is authorized to determine which people can use this special quota?
That's the prerogative of the minister, as regulated by the Constitution. But the interpretation and rationale can differ.

How is the trillion-rupiah haj funds managed?
That's why I asked Pak Anggito Abimanyu to be the director-general of haj and umroh affairs. If I had recruited from inside the ministry, many of them would not qualify because most of them were trained in religion, not economics. Pak Anggito is an economist, he would know how to manage money. When I first offered him the job, he was shocked and refused it.

Who can disburse those funds?
I have never disbursed those funds. I don't have the competence to withdraw the money from the haj funds. Why not ask the director-general for haj and umroh affairs. (*)

Jakarta Monorail Owner Stops Sponsoring Jakarta's Birthday

Jakarta – Asset management and investment company PT Ortus Holdings will not be donating any money for Jakarta's 487th birthday celebration this year. Ortus is the majority owner of PT Jakarta Monorail, a private corporation that develops the two-line monorail system in the capital—a project that has yet to start.

Last year, Ortus funded a number of major events in Jakarta's anniversary celebration, including a dance performance and a monorail exhibition at the national Monument (Monas). "Ortus will not be a sponsor this year," Bambang Sugiyono, head of the Jakarta Anniversary Committee, said yesterday.

Jakarta's Acting Governor Basuki Tjahaja Purnama, also known as Ahok, confirmed that Ortus will not co-sponsor Jakarta's 487th anniversary. "No they are not [sponsoring this year], it seems that we will not have dances like in last year's celebration," he said at City Hall on Tuesday.

When asked whether the discontinuation has anything to do with the monorail project delays, Ahok only laughed. "If that's the case, it would mean that they have hidden intentions, would not it?" Ahok joked.

The assumption was denied by PT Jakarta Monorail director, Sukmawati Syukur. She said that the relationship between the Jakarta administration with the company is not as severe as what the media reported.

According to Sukmawati, there is a possibility that Ortus will not make any donations because they earmarked the funds for corporate social responsibility (CSR). "It is likely that they have allocated the funds for other events this year," she said.