Rio Tinto secures deal with govt on tax system for massive project

Ika Krismantari, The Jakarta Post, Jakarta | Tue, 04/29/2008 12:40 PM

Rio Tinto, the world's second largest mining company, announced Monday it reached an agreement with the government over a tax privilege for its planned US$1.5 billion nickel project in Sulawesi.

The tax facility would be given based on a combination of fixed and prevailing rates, the company said in a statement.

Rio Tinto president director Mike Jolley hailed the agreement, saying that it "would provide sufficient certainty for Rio Tinto to support the multi-billion dollar investment."

"The terms are comparable to the tax incentives provided to other industries, and to the development of large scale and high capital projects in remote areas in Indonesia," he said, although the company chose not to give details on the tax rate.

The head of a team representing the government in the negotiations, Bambang Setiawan, said he too had yet to learn of the rate details, but that the Finance Ministry had issued an official letter permitting Rio Tinto the privilege.

Chairman of the Investment Coordinating Board Muhammad Luthfi earlier said Rio Tinto would be granted a fixed-rate tax facility, also known as a nail-down tax system.

Under the fixed-rate system, a company is taxed based on rates which remain unchanged regardless of any amendments made to the tax system, while the widely used progressive system scales tax rates according to income, and are therefore subject to change.

The tax arrangement is among the company's list of items that need to be settled before it can obtain a "contract of work".

The London-based company previously settled on royalties to be paid to the government.

Under the deal, the government will get 1.5 percent of revenues from nickel-in-concentrate and 0.75 percent from refined metal.

The company's next focus would be resolving overlapping concessions with local companies, which are backed by local administrations that have issued smaller businesses mining licenses to operate on Rio Tinto's concessions.

"We have asked assistance from the government to resolve this matter. We hope that we can clear up all the problems," the firm's spokesperson Budi Irianto told the Post.

Rio Tinto plans to mine nickel in Morowali and Konawe regencies, located on the border between Central Sulawesi and Southeast Sulawesi with an initial production expected to reach 46,000 of nickel metal per year.

Numerous mining projects in the country have run aground due partly to legal uncertainties over the jurisdiction of local administrations to manage mining resources, a result of loopholes in existing laws and regulations.

VP calls for improvement of agriculture produce

Kendari (ANTARA News) - Vice President Jusuf Kalla has called on all elements of the public in Southeast Sulawesi province to increase their agricultural and plantation production in a bid to achieve greater welfare.

"Don`t live from regional election (Pilkada) activity but till the vast and fertile areas of land to step up agricultural and plantation produce so that our nation can be respected," Kalla said at an Idul Fitri gathereing here on Tuesday.

On the occasion the vice president was accompanied by Justice and Human Rights Minister Andi Matallata, Democrats Party chairman Hadi Utomo, Golkar Party Secretary General Soemarsono, Wirabuana military commander and a number of legislators.

Kalla also called on the Southeast Sulawesi provincial administration and the local people to keep up the production of the province`s main commodities such as cocoa, cashew, corn and teak.

"Show pictures of cashew, cocoa and teak instead of displaying pictures of governor and district head candidates at the street corners," Kalla said.

The vice president added that in the regional election, the people in the province should elect the new governor and district head who have the capability to improve agricultural and plantation produce such as cocoa, cashew, corn and teak.

He said all elements of the public in Southeast Sulawesi should not waste their time and energy to talk only about politics but to think about positive programs to improve the people`s welfare.

Kalla added that it would be illogical if any people in the province lived in poverty because the province had more promising natural resources than other rgions in the country.

Kala arrived in Kendari on an Idul Fitri tour which will also take him to Palu in Central Sulawesi, Gorontalo and Manado in North Sulawesi.

Meanwhile, Southeast Sulawesi Governor Ali Mazi said on the occasion the province was enjoying a conducive security situation and religious harmony, as well as provincial economic growth of 7.68 percent in 2006.

Investment in first quarter 2007 up 27.16 pct from previous year

Jakarta (ANTARA News) - Capital Investment Coordinating Agency (BKPM) Chief Muhammad Lutfi said here on Tuesday investment in Indonesia in the first quarter of this year reached Rp40.59 trillion or up by 27.16 percent compared to the same period last year.

This meant investment growth had returned to a pre-crisis level, he said.

He said "the figure represents 30 percent of the government`s investment target for the year reaching 70 percent of the expected investment of 2005 totaling Rp172.77 trillion."

Lutfi said he believed the achievement would help push economic growth to meet this year`s target of 6.3 percent.

The target of investment for 2007 had been set at Rp83.08 trillion.

According to BKPM records, foreign investment grew by 15 percent from US$2.6 billion to US$2.99 billion from January to March.

Domestic investment meanwhile reached Rp13.68 trillion or rose 60.56 percent compared to the same period last year when the figure was Rp8.52 trillion.

Five sectors that had received the largest foreign investment were pharmaceutical and chemical industries (US$1.5 million), printing, paper and paper product industries (US$394.3 million), mining (US$252.3 million), food industries (US$189.8 million) and construction (US$149.3 million).

The five biggest sectors receiving domestic investment meanwhile were printing and paper industries (Rp3.8 trillion), metal, machineries and electronics industries (Rp2.9 trillion), food industries (Rp2.4 trillion), plantations and food crops cultivation (Rp1.73 trillion) and construction (Rp1.4 trillion).

Jambi enjoyed the biggest domestic investment (Rp3.7 trillion) followed by Southeast Sulawesi (Rp2.8 trillion), Jakarta (Rp2.4 trillion), Riau (Rp1.9 trillion) and East Java (Rp672.3 billion).

The largest foreign investment meanwhile was enjoyed by East Java (US$1.5 billion), followed by Jakarta (US$662.9 million), Riau (US$392.4 million), West Java (US$200.1 million) and Banten (US$86.5 million).

"Investment in East Java remains high meaning that it has not been affected by the Lapindo mudflow disaster," he said.

Lutfi said the largest foreign investment came from Britain totaling US$1.4 billion in 17 projects while the second largest investment was from Taiwan totaling US$398.4 million in 11 projects.

Australia came third with its investment reaching US$179.2 million in eight projects, followed by South Korea US$165,2 million in 46 projects and Japan US$149.1 million in 24 projects.

Govt easing procedures of doing business in densely-industrialized areas

Jakarta (ANTARA News) - The Indonesian government is trying to loosen six procedures for doing businesses in the country`s eight densely-industrialized regions to raise its investment privilege rating to 75th in 2008 from 135th in 2006, an official said.

"We will launch the project in eight densely-industrialized regions first," Head of the Investment Coordinating Board (BKPM) Mohammad Lufti said following a limited coordination meeting with Vice President Jusuf Kalla at the Office of the Administrative Reforms Minister here on Friday.

The meeting also agreed on the formation of a small team with Administrative Reforms Minister Taufiq Effendy as its chief and the BKPM chief Mohammad Lufti as executive chief to relax the procedures for doing businesses in the regions.

The eight regions are Jakarta, Banten, West Java, Central Java, East Java, Sumatra and Sulawesi.

The six procedures cover exports and imports, enforcing contracts, paying taxes, applying for building permits, and starting a business.

"Under the current circumstances, we will be able to improve our rating to 56th from 135th on condition that other countries do nothing to improve their investment privileges," Lufti said.

Under the present procedure, a foreign investor needed 97 days to start a business in the country and the government had been trying to reduce the period to 23 days, he said.

"God willing, a foreign investor can start doing business within 23 days," he said.

Telkomsel to invest $1.5 billion this year to enhance network

The Jakarta Post, Jakarta

The country's largest mobile phone operator, PT Telkomsel, plans to expand its network by building 5,000 new Base Transceiver Stations (BTS) this year at a cost of about US$1.5 billion.

With the new stations, Telkomsel hopes to penetrate every subdistrict in Kalimantan and up to 70 percent of all subdistricts in Sulawesi, according to media statement released by the company over the weekend.

Telkomsel currently has 15,000 cellular stations throughout the country, with a third of them being installed in 2006.

With the number of cellular phone users expected to increase by 25 percent from 64 million last year to about 80 million this year, Telkomsel is optimistic it will be able to pick up between 7.5 and nine million new users, or half of all new subscribers in the country.

About 63 percent of the country's total population of 240 million is between the ages of 15 and 50, Telkomsel corporate communications manager Suryo Hadiyanto said.

"These people have an acute sense for technology and a great deal of enthusiasm for technological developments," he said, in explaining the growth of the cellular industry in the country.

According to Telkomsel, the country's cellular penetration now stands at just 25 percent of the total population. However, the penetration rate grew at an average of 67 percent per year from 2001 through 2006.

Telkomsel invested about $1.5 billion last year in expanding its network and added 10.6 million new users, giving the company a total of 34.9 million customers. Its net profit in 2006 as of September increased by 43 percent year-on-year, from Rp 14.59 trillion to Rp 20.92 trillion.

Telkomsel is one of three cellular operators in the country that introduced third generation, or 3G, services last year. So far it has 1.5 million 3G customers nationwide, with services available in 25 cities.

Excelcomindo (XL) had some 130,000 3G customers as of December, while Indosat, which just launched its 3G services in late November, has no precise customer numbers yet, but has targeted 320,000 subscribers by early 2007.

VP launches forest and land rehabilitation program

ANTARA News - 2006-12-28 14:30:03

Jakarta, December 28, 2006 (ANTARA News) - Indonesian Vice President Jusuf Kalla is scheduled to launch a national forest and land rehabilitation program in a ceremony held at Empol village, Sekotong, West Lombok, West Nusa Tenggara (NTB) on Thursday.

Kalla during the ceremony is also expected to present awards to eight governors, 15 district heads and mayors as well as 12 farmers` groups for their achievement in conducting forest and land rehabilitation programs in their respective regions.

Information from the Vice President`s Secretariat office said here on Thursday that among those receiving the awards would include Gorontalo Governor Fadel Muhammad.

During his stay in NTB, Jusuf Kalla is accompanied by Deputy Chairman of the People`s Consultative Assembly (MPR) Aksa Mahmud, Agriculture Minister Anton Apriyantono, Research and Technology Minister Kusmayanto Kadiman, Environmental Affairs Minister Rachmad Witoelar, Golkar Party Secretary General Sumarsono, and two legislators, namely Enggartiasto Lukito an and Rully Chairul Azwar.

Meanwhile, Mme. Mufidah Kalla is scheduled to visit a seaweed and cashew nut processing factory, PT Phonix Mas Persada, at Abian Tubuh, and a Lombok Pottery industry at Cakra Negara, Mataram city.

The Vice President and his entourage left Jakarta on Thursday by The Indonesian Air Force`s Boeing 737 presidential plane from the Halim Perdana Kusuma air force base.

An official reported earlier that the deforestation rate in Indonesia reached two million hectares annually while its reforestation rate was only around 600,000 hectares per year.

The deforestation rate has tended to increase from year to year, Dr. Harri Santosa, secretary of the organizing committee of the National Forest and Land Rehabilitation Program, said in Mataram, NTB Province on Wednesday.

Santosa said the deforestation rate in Indonesia was around 900,000 hectares in 1990 and it increased to 1.8 million hectares in 2004.

In 2006, the deforestation rate was recorded at 2.8 million hectares, he said, adding that the rate was two million hectares per year on the average.

The country`s total deforested areas were about 60 million hectares, he added.

Three Indonesian provinces, namely East Nusa Tenggara (NTT), Southeast Sulawesi and NTB, were currently being threatened by desertification, he added.

Govt to maximize 'local potentials' in building power plants

JAKARTA (Antara): The government will maximize the use of local resources in building coal-fired power plants outside Java currently in bidding process, a senior official at the Ministry of Energy and Mineral Resources said Tuesday.

"The local potentials include goods, manpower as well as funding," said the ministry's director general of electricity and energy utilization J Purwono.

"We will ask the contractors to use local resources including machineries, construction materials and manpower although the funding come from foreign sources, which usually are binding ones," he added.

Purwono pointed to the construction of a foreign-funded 7 megawatts (MW) coal-fired power plant which could use up to 30 percent of local content.

He also called local financial institutions to be proactive in funding power plant projects saying it could be a market for local lenders.

"Indonesian banks should also compete to finance power projects. Don't be passive," he said.

The government has announced on Dec. 19 a tender for the construction of 25 coal-fired power plants outside Java.

Four power plants will have the capacity of 100 to 200 MW to be built in Aceh, North Sumatra, West Sumatra and Lampung provinces.

Another four power plants with 50-65 MW of capacity slated for West Kalimantan, South Kalimantan, Central Kalimantan and South Sulawesi provinces.

There are also 17 plants with smaller capacities of 7 to 25 MW scattered nation wide in Bangka Belitung, Riau, Riau Islands, West Kalimantan, Maluku, North Maluku, Papua, East Nusa Tenggara,West Nusa Tenggara, Gorontalo, Southeast Sulawesi and North Sulawesi provinces.

These power plants are part of the government's plan to generate additional 10,000 MW of electricity by 2009.

As for Java island, the government has started bidding process for 10 power plants. Seven power plants will the capacity of 300 to 400 MW while the remaining three with 600 to 700 MW of capacity.

Expanding Aquaculture Production for Indonesia's Poor Fish Farmers

14 December 2006, Asian Development Bank

MANILA, PHILIPPINES - ADB will help boost the incomes of 14,000 poor fish farmers in Indonesia through a loan of US$33.3 million to enhance aquaculture production and productivity in select provinces.

The Project will support a Government program to promote community-managed freshwater, brackishwater, and marine aquaculture development among poor communities of the country.

It will be carried out in five districts of four provinces: Langkat in North Sumatra, Ogan Omering Ilir in South Sumatra, Karawang and Sumedang in West Java, and Buton in Southeast Sulawesi.

Aquaculture plays an increasingly significant role in Indonesia’s economy, employing about 2.5 million people, providing an important source of nutrition and generating valuable foreign exchange earnings and domestic revenues.

However, poor fish farming systems and lack of good quality fish and shrimp seed, along with growing environmental degradation and pollution, are holding back the sector. Other problems include lack of access to credit for smaller fish farmers, absence of marketing infrastructure, and user conflicts in open water areas.

The project, officially known as Sustainable Aquaculture Development Project, will focus on small-scale and low-cost systems that are economically sound and environmentally friendly, and that can easily be replicated by larger entrepreneurs and organizations.

It will include pioneering new schemes to help organized fish farmer groups in establishing microenterprises and marketing their products, assisted by community based and nongovernment organizations. Key public aquaculture facilities will be rehabilitated along with associated access roads.

The project will also help the Directorate General of Aquaculture (DGA) and participating district governments to formulate policies and regulations for aquaculture development and environmental management.

“Besides the increase in aquaculture production, incomes and jobs, the project is expected to generate more general benefits,” says M. Jamilur Rahman, an ADB Principal Project Specialist. “These include a cleaner environment and better health and nutrition among rural populations from overall expansion of the food supply, given that fish is a staple in Indonesia.”

The total project cost is $44.5 million, of which ADB’s contribution accounts for almost 75%. The loan is from ADB’s concessional Asian Development Fund, carrying a 32-year term, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per annum for the rest of the term.

Other contributors to the project are the national and district governments ($8.46 million) and beneficiaries ($2.76 million).

The DGA of the Ministry of Marine Affairs and Fisheries is the executing agency for the project, which is due for completion around the end of 2013.

Project Proposal: Sustainable Aquaculture Development for Food Security and Poverty Reduction Project (Indonesia) [PDF]

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