April 2010 | Just Economic Info

Archive for April 2010

Mulyani concerned over Rupiah appreciation

Friday, April 30, 2010 · Posted in National

Finance Minister Sri Mulyani Indrawati expresses concern that the strengthening value of Rupiah against US dollar over the past four months can impact negatively on the country’s competitiveness and hurt its exports.

Mulyani said in Jakarta on Wednesday although the country’s exports still showed “positive level” when compared to its imports, there was a possibility that “negative signs” would emerge, following Rupiah’s appreciation.

“These days all developing countries will face fairly huge international capital flows, and this will affect their currencies’ exchange rates,” Mulyani said in her address before hundreds of central and regional government officials in a meeting discussing the national development planning for 2011.

“Indonesia is among countries experiencing very strong appreciation with its currency. India’s currency has only increased by 5 percent, and other countries’ under 10 percent.

“Rupiah’s appreciation, however, has reached 15 percent over the first four months of the year. This will really determine our economic competitiveness,” she added.

Mulyani said the government predicted smaller export growth in 2011 compared to the growth this year.

thejakartapost

South Korea's economy grows 1.8 percent in 1st quarter

Monday, April 26, 2010 · Posted in News

South Korea's economic growth sharply accelerated in the first quarter of 2010 amid a rebound in manufacturing, exports and spending, the central bank said Tuesday.

Gross domestic product expanded 1.8 percent in the three months ended March 31 from the fourth quarter last year when it grew 0.2 percent, the Bank of Korea announced.

South Korea, Asia's fourth-largest economy, has recovered strongly from the global downturn boosted by record-low interest rates, government stimulus spending and robust exports as overseas markets recover.

The central bank said earlier this month it expects the economy to grow in 2010 at its best pace in four years. Moody's Investors Service, meanwhile, rewarded South Korea with a higher credit rating for emerging from the global crisis with its finances intact.

Growth figures for the first quarter are likely to intensify speculation regarding the timing of any move by the Bank of Korea to raise its key interest rate from the current record low 2 percent.

The GDP results are preliminary and may be revised.

Tuesday's figure marks the fifth straight quarter that South Korea's economy has grown after contracting over the final six months of 2008.

Despite growing in every quarter in 2009, the economy managed to expand a meager 0.2 percent for the year, the worst performance since it contracted 5.7 percent in 1998 during the Asian economic crisis.

Prospects this year, however, look much brighter. The central bank on April 12 raised its 2010 economic growth forecast from 4.6 percent to 5.2 percent on stronger exports and domestic demand. If achieved, that would be the best performance since a similar expansion in 2006.

Moody's on April 14 lifted South Korea's government bond ratings to A1 with a stable outlook from A2 - the first increase since July 2007. A1 is the fifth-highest level and six rungs above "junk" status.

Manufacturing grew 3.6 percent in the first quarter after contracting 1.7 percent in the fourth. Exports also rebounded to expand 3.4 percent after shrinking 1.5 percent.

Government spending jumped 5.7 percent after a contraction of 2.4 percent. Private spending, meanwhile, improved to grow 0.6 percent from the fourth quarter's 0.4 percent expansion.

South Korea's economy also grew in the first quarter compared with the same period the year before, expanding 7.8 percent. That was the best performance since an expansion of 8.1 percent in the final quarter of 2002.

thejakartapost

UK retail sales rise worse than expected

Sunday, April 25, 2010 · Posted in News

Retail sales volumes during March rose by 0.4% from the month before, a smaller increase than had been expected, official figures have shown.

The increase was below the average 0.6% rise predicted by analysts, and some economists said this could mean lower than expected growth for the economy.

Sales had risen strongly in February, but this came after January's sales had been disrupted by the cold weather.

March's sales volumes were up 2.2% from a year ago, the figures showed.

The Office for National Statistics also revised the monthly sales growth seen in February up to 2.5% from its initial estimate of 2.1%.

However, sales volumes during the first three months of 2010 were down 1.7% from the final three months of 2009.

Analysts said weakness in consumer spending could have hit economic growth in the first quarter of 2010. The initial growth estimate for the first three months of 2010 is due to be released on Friday.

"March's disappointing growth in retail sales fuels our suspicion that the upside for consumer spending - and hence overall economic growth - will be limited in 2010 as households still face very challenging conditions," said Howard Archer at IHS Global Insight.

However, some analysts took a more positive view of the figures.

"Month-on-month data is extremely volatile," said Amit Kara at UBS. "But the message from today's data... suggests that the February bounce back was not isolated and there is still a little momentum in retail sales growth."

source: BBC

Indonesia to raise power capacity to 15,000 MW

· Posted in National

Indonesia aims to increase its electricity capacity to 15,000 megawatts this year to support its economic growth target of 7 percent by 2014, a senior minister says.

"The15,000 MW capacity can be achieved through construction of new power plants," Coordinating Minister for the Economy Hatta Radjasa told a seminar organized by the Bogor Institute of Agriculture (IPB) in Jakarta on Saturday.

Hatta said that adequate power supply would help boost economic growth and increase competitive edge of the country’s industrial products in the world market.

The extra supply of electricity would keep state power producer from rotating blackouts.

"There would be no longer rotating blackouts throughout the country starting in June," he said as quoted by Antara.

He said the government's middle term target was to overcome power shortage in 2012-2013.

European airport start to reopen for flights

Monday, April 19, 2010 · Posted in News

The first flights in northern Europe have taken off after five days of inactivity caused by the spread of volcanic ash from Iceland.

Three flights departed from Amsterdam's Schiphol airport late on Monday, bound for New York, Shanghai and Dubai.

There are hopes that many routes within Europe will be able to resume operations on Tuesday.

But UK air traffic officials said a new ash cloud spreading from Iceland cast doubt on plans to reopen UK airspace.

Earlier, the UK air traffic control body, Nats, said the flight ban would be lifted over Scotland, Northern Ireland and the north of England.

But it later said there was now a worsening situation in some areas. The outlook for Northern Ireland is most uncertain.

"This demonstrates the dynamic and rapidly changing conditions in which we are working," said a statement from Nats.

British Airways says it is "reviewing" its plan to resume flights from London airports from 1800 GMT, in the light of the latest reports.

Three zones

EU transport ministers proposed creating a core no-fly area, a limited-service zone and an open-skies area.

Dutch Transport Minister Camiel Eurlings said his country "taking a lead" in restarting flights, but warned that further suspensions might prove necessary if the situation worsens.

Swiss and northern Italian airspace will reopen from 0600 GMT, and France is opening some air corridors to Paris.

But the skies over Germany are due to remain closed until 1200 GMT.

The BBC's Nik Gowing at Frankfurt airport says that judging by the tranquil early morning scenes in the normally busy terminals, very few people will be flying on Tuesday.

The International Air Transport Association earlier labelled the chaos a mess and an embarrassment for Europe.

The body says its losses have soared over $1bn (£650m; 740m euros), since much of Europe's airspace was closed last week because of ash from southern Iceland's Eyjafjallajoekull volcano.

The European Union has admitted there were shortcomings in the way the decision to close parts of Europe's airspace was reached.

An official with the EU Transport Commission, Helen Kearns, said there was loose coordination in the decision-making process and that, working with the same scientific information, different countries had reached different conclusions.

She said, however, that in the future when deciding whether planes should be grounded, there'd be no change in the policy of putting safety first.

Warships deployed

Experts had earlier said the volcano - which erupted last Wednesday for the second time in a month - was now spewing more steam and less ash.

A US official said on Monday a Nato F-16 fighter jet had suffered engine damage after flying through the volcanic ash cloud.

In the high temperatures of an engine turbine, ash can turn to molten glass and cripple the engine.

Meanwhile, the UK deployed three Royal Navy warships to help pick up stranded passengers from Spain and the Channel ports.

In Spain, where all airports were open, the government offered to let Britain and other European countries use its airports as stopovers to get passengers moving again.

'No timer'

Airspace in Belgium and Denmark is also due to begin opening from Tuesday morning.

But Finland shut its airports again until Tuesday afternoon.

Airports have already reopened in Austria, Estonia, Hungary and Turkey.

EU Trade Commissioner Karel De Gucht said the bloc's economy would suffer badly if the disruption continued for a long time.

"What makes me a little bit afraid is that there is no timer on this volcano," he told news agency Reuters.

The shroud of fine mineral dust particles from the volcano has spread from the Arctic Circle in the north to the French Mediterranean coast in the south, and from Spain into Russia.

source : BBC

Toyota agrees to pay $16.4m fine

· Posted in Business

Toyota has agreed to pay a record fine of $16.4m (£10.7m) in the US for failing to report defects in some of its vehicles' accelerator pedals.

The Japanese carmaker denied hiding the defects, but again acknowledged that it could have handled the issue better.

Some 2.3 million Toyotas were recalled in the US in January amid reports the accelerator pedals could become stuck.

Later on Monday, Toyota announced it was recalling about 34,000 Lexus GX 460 and Land Cruiser Prado SUVs worldwide.

The company said it would update the vehicles' stability-control software programme to reduce the risk of them sliding sideways when turning sharply at high speeds, partly because the fuel tank and the presence of the driver might make the left side of the vehicle heavier.

The move comes less than a week after the US consumer magazine, Consumer Reports, warned that the Lexus GX 460 was prone to roll-overs, prompting Toyota to recall nearly 10,000 sold in the US and Canada.

Toyota had earlier announced the recall of 600,000 Sienna minivans in the US, saying prolonged exposure to road salt might result in excessive corrosion of the spare-tyre cable, and that the tyre might fall off the vehicle.

'Possible litigation'

After paying the biggest fine ever handed out by the US Department of Transportation on Monday, Toyota insisted it had not violated safety regulations and was only paying the fine "to avoid a protracted dispute and possible litigation".

"I am pleased that Toyota has accepted responsibility for violating its legal obligations to report any defects promptly," said Transportation Secretary Ray LaHood in a statement.

"By failing to report known safety problems as it is required to do under the law, Toyota put consumers at risk."

Toyota overtook General Motors in 2008 as the world's biggest carmaker, but has since blamed its quality control problems on its rapid expansion.

Executives from Toyota were fiercely criticised in the US Congress and the company's once high reputation has been left in tatters.

Toyota has recalled more than 8m vehicles since late 2009 for brake and accelerator defects, and is facing 97 lawsuits for damages for injury or death linked to claims that cars were faulty.

source: BBC

PC sales may grow 35 percent, highest in Asia Pacific

The Indonesian Computer Entrepreneurs Association (Apkomindo) expects a significant increase in the sales of ICT products within the next few years thanks to improvements in people’s purchasing power.

The association’s chairman Suhanda Wijaya said in Jakarta on Monday personal computer (PC) sales could, for example, increase by 35 percent this year to between 3.6 million and 3.8 million units up from 2.8 million in 2009.

This increase would surpass the average PC sales growth in the world of between 15 percent and 27.5 percent.

“This makes Indonesia the country with the highest ICT sales growth in the Asia and Pacific region,” he said.

Besides the improvement in people’s purchasing power, the sharp increase in the sales of Information and Communication Technologies (ICT) products is also partly explained by the low prevailing penetration rate of ICT products in the country, he said, adding that the penetration rate of the ICT products in Indonesia is only about 4 percent at present, much lower than the comparable figures for neighboring Asian countries.

With this low ICT penetration rate, combined with a rapidly rising Internet penetration rate which is now rising to about 10 percent, the country’s ICT market still has a lot of room for future expansion, he added.

He said that PC sales in the first quarter of this year had already reached 800,000 units, much more than double from 300,000 in the same period in 2009, which had declined by 25 percent from 400,000 in the first quarter of 2008 partly due to the continuing negative impact of the 2008 financial crisis.

“Sales in 2009 were down due to the psychological effects of the global financial crisis at the end of 2008, which caused stagnancy in sales both in the first and second quarters,” he said.

Suhanda also said the PC market would benefit from the stronger rupiah and the full implementation of the ASEAN-China Free Trade Area (ACFTA).

“Almost 90 percent of ICT products are still imported from China and other Asian countries,” he said, adding that the zero percent import tariffs on goods from China, fully effective since Jan. 1, would now make PC products in the shops even more affordable to Indonesian customers.

The stronger rupiah against the greenback would also make the retail prices of ICT products more affordable in the domestic market, he addedApkomindo has suggested that all ICT product transactions be worked out and denominated in local currency only. “This will increase the sales volume as a result of price stability, thus attracting foreign investors to make their investments in the country,” he said.

At present, traders normally prefer to peg the prices of ICT products to the US dollar to hedge and avoid losses that could occur following any fall in the value of the rupiah against the dollar.

Deputy Trade Minister Mahendra Siregar said that the government was preparing a set of regulations that would promote production of ICT products in the country.

“We have to increase local component content in ICT production in the country,” he added.

Suhanda noted that the use of domestic components in ICT products already exceeded 20 percent, higher than just 10 percent in 2009. “Yet, it’s still under 30 percent,” he said.

Meanwhile, the vice chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Anindya Bakrie acknowledged that some ICT producers in other countries were considering relocating their plants to Indonesia due to the rapid growth of the domestic market resulting from the tariff rebalancing introduced by the government.

“They [overseas producers] are seeking opportunities to get closer to customers,” he said.

thejakartapost

Iceland volcano: Airlines 'to lose $200m a day'

Sunday, April 18, 2010 · Posted in Business

Airlines will lose at least $200m (£130m) per day in revenues as a result of the volcanic ash-linked disruption, the industry's governing body has said.

The International Air Transport Association (IATA) said its members would also lose further money as a result of expensive contingency plans.

Meanwhile accountants KPMG said it expected UK flights alone to cost airlines in excess of £200m per day.

All UK flights in England and Wales were grounded on Friday.

Those airspace restrictions will remain in place until at least 0700 BST on Saturday, and widespread restrictions are now in place across Europe.

Conservative estimate

British Airways' website said it is cancelling all its flights to and from London airports on Saturday.

The carrier said that following the lifting of flying restrictions to Scottish air space, a small number of flights from the US originally scheduled for other UK destinations will fly into Scotland overnight.

German flag carrier Lufthansa announced that all its European flights would be cancelled until at least 1100 BST on Saturday.

And Ryanair has said none of its flights in northern Europe would operate until at least Monday afternoon.

Some restrictions in Scotland are being lifted from 1900 BST on Friday, however.

The IATA said its estimate of a $200m daily loss of revenues was "initial and conservative".

"In addition to lost revenues, airlines will incur added costs for re-routing of aircraft, care for stranded passengers and stranded aircraft at various ports," its director of corporate communications, Anthony Concil, said.

KPMG was less conservative in its estimates, predicting a £200m loss in traffic revenues as a result of the UK shutdown, assuming that all ticket sales would have to be refunded to passengers.

Shares in major European airlines fell on Friday as the volcanic ash cloud spread across Europe.

British Airways saw its share price fall by 3.3%, while Air France-KLM lost 3.4%, and Lufthansa was down 4.1%.

The falls appeared to reflect concerns among investors over the impact the stoppages could have on the airline industry.

But Douglas McNeill, a transport analyst at Charles Stanley Securities, said the financial impact would be small providing the stoppages were short-lived.

"Clearly if you aren't flying, you're not generating revenue from passengers," he told the BBC.

"For a large network carrier like BA or Lufthansa you're talking about £10m a day - but that's of limited commercial significance.

"A couple of days like this won't matter too much. If it goes on for weeks, that's a different story."

Few businesses hit

Dr Ashley Steel, Global Chair for Transport and Infrastructure at KPMG, agreed that grounding the fleet would cost an airline like BA "tens of millions of pounds", but said that the companies needed to look at how they could better cope with such events in the future.

"These unprecedented events underline again the need for mergers and global alliances in the airline industry because truly global airlines will be much better placed to deal with the financial fallout from these types of events," he said.

The effect on the wider economy, however, is not expected to be as great.

Howard Archer, chief European economist at IHS Global Insight, said the impact on trade would be minimal assuming the stoppages were not prolonged.

"Some businesses will be affected by the inability for freight to get in and out of the country. But as long as the disruption is not too long, this should not be a major problem," he said.

Imports and exports by air freight represent just 1% of UK trade by weight, according to the think tank Oxford Economic Forecasting.

However, in value terms, around 30% of exports are transported by air - with the pharmaceutical industry particularly reliant on air freight, due to the high value and low weight of their products.

'Potential disruption'

No problems have been announced yet but Chris Snelling of the Freight Transport Association said problems could emerge.

"Stuff that's being air freighted is almost always needed at short notice," he said.

"The pharmaceutical industry produces goods with short shelf lives sometimes and they need to get to the doctors and hospitals very quickly. Exporting beyond Europe has become impossible."

Mr Snelling added that manufacturing industries also relied on getting spare parts to keep factories going.

"If firms suffer problems with equipment, they may find it hard to get replacement equipment at short notice. You might see factories being restricted in what they do or potentially shutting down. You could start to see a lot of disruption."

source: BBC

Tanjung Priok back on track after Wednesday’s Koja chaos

· Posted in Business

The Koja disturbance did not have a major effect on export-import flows in the Tanjung Priok port in North Jakarta, not far from where the incident took place, Transportations Minister Freddy Numberi said, expecting the Jakarta administration to settle the problem immediately.

“Two or three shipments were delayed, But now [shipments] are back to normal again. There’s no problem,” Freddy said Thursday on the sidelines of the Asia-Pacific Ministerial Conference on Public-Private Partnerships for Infrastructure Development 2010.

“What’s important for us is that exports keep running,” he said.

Freddy could not estimate the total losses resulting from the Koja disturbance, which left two people dead and hundreds injured.

A standoff had lasted almost all of Wednesday, as Koja residents fought public order officers who wanted to demolish a sacred memorial site of historic Muslim figure Arif Billah Hasan bin Muhammad Al Hadad (alias Mbah Priok) in the area.

State-owned port firm PT Pelindo II claims to be the legal owner of the land, comprising 20 square meters of the memorial complex and 300 square meters which occupied illegally.

Freddy said Pelindo II may consult the State-Owned Enterprises Ministry and Jakarta administration regarding losses resulting from the incident.

Coordinating Economic Minister Hatta Rajasa expressed concerns.

President Susilo Bambang Yudhoyono urged the Jakarta administration to seek a solution to the disturbance to avoid anyone “fishing in murky waters” — meaning to take advantage of a bad situation.

Trade Minister Mari Elka Pangestu said the government should manage the disturbance to avoid further unrest.

“It occurred at an entry point to our country. I haven’t had any reports of potential losses caused by the disturbance. As said by the President, we should be able to manage this problem as well as possible to avoid any potential unrest,” Mari said.

University of Indonesia economist M. Chatib Basri said the Koja disturbance would not likely have a severe impact on Indonesia’s export-import activities.

“We often face incidents in this country, so no severe damages will result from this problem. It will have no impact. We are already immune,” he said.

Evy Suharyanto, a spokesman for the customs and excise office, said some containers were held at Koja cargo storage because they had been damaged.

Toto Dirgantoro, the secretary-general of the Indonesian Exporters Association, said earlier that cargo unloading had been forced to stop because of the incident, causing losses to exporters, although he was unable to estimate how much.

thejakartapost

Google profits beat expectations

Friday, April 16, 2010 · Posted in Business

Internet giant Google has reported a 37% rise in first-quarter net profit, beating analysts' expectations.

Profit for the three months to March came in at $1.96bn (£1.26bn) compared with the $1.42bn it made a year ago.

Revenue climbed 23% to $6.78bn, helped by an increase in online spending by advertisers.

"Going forward, we remain committed to heavy investment in innovation," Google chief financial officer Patrick Pichette said.

He added that the investment would both "spur future growth in our core and emerging businesses as well as to help build the future of the open web".

Google also said it had taken on nearly 800 employees in the quarter, its biggest increase in staff since the first quarter of 2008.

Its global headcount now stands at 20,621.

'Solid quarter'

The amount of money the company made from pay-per-click online advertising rose 15% from the same quarter last year, as the internet advertising market continues its recovery from the recession.

"They had a very solid quarter, which we expected," commented Laxmi Poruri, analyst at Primary Global Research.

"Search advertising bounced back strongly relative to other forms of media."

Despite the results coming in ahead of forecasts, Google shares fell 4.6% to $568 in after-hours trading.

"The stock may be reacting to uncertainty going forward in terms of currency fluctuations overseas and investors seeking more clarity on China," Ms Poruri said.

Last month Google decided to stop filtering results from its search service in China, redirecting all its mainland China customers to an uncensored Hong Kong-based site instead.

The Chinese government responded angrily to the move, saying it was in violation of a written promise that the company would abide by China's laws requiring it to filter results.

Google dominates the search engine market. It has about a 65% share of the US market and about 90% in Europe.

But it is a distant number two in the Chinese market, which is dominated by Baidu.

source : BBC

Bank of America returns to profit

· Posted in Banking

Bank of America (BoA) has returned to profit, reporting a net income of $3.2bn (£2.1bn) in the first three months of 2010.

This compares with a $194m loss in the previous quarter, but is 24% lower than profits of the same period a year ago.

The giant US bank said record sales and trading activity at its capital markets arm - including acquisition Merrill Lynch - had driven the latest results.

BoA said it was having to put aside less money for losses on bad loans.

Markets took the news well, and European banks with major capital markets businesses rallied, with Barclays jumping 1.35% and Credit Suisse up 1.3%.

Bonanza

BoA's strong results follow impressive first quarter numbers from JP Morgan, released on Wednesday.

Like JP Morgan, BoA earned the bulk of its income - some $3.2bn - from its business on the global capital markets, which includes former investment bank Merrill Lynch that BoA bought in a rescue acquisition at the height of the crisis.

This has offset losses the US firm made on its more traditional banking businesses of deposit taking and lending.

Record home repossessions

Traditional lending in the US mortgage market has proven to be a growing thorn in the side of all the American banks, including BoA.

Losses at the bank's home loan division increased to $2.1bn, up from only $0.4bn a year earlier, as Americans continued to struggle to repay their mortgages.

Hopes that the US housing market might be on the mend were dealt a blow as home repossessions jumped to the highest monthly rate on record in March, according to online property broker RealtyTrac.

With many banks now seeking to dump a large backlog of repossessed houses on the market, the outlook for house prices remains highly uncertain.

'Improving economy'

However, BoA believes their lending business has turned the corner.

"With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy," said Chief Executive Brian Moynihan.

The bank's credit card business has swung back into profit, making early $1bn, compared with a loss of $1.8bn a year ago.

And although losses in its home loan division continue to rise, the bank decided to reduce the amount of cash it sets aside against future loan losses across the entire bank by some $3.6bn.

source: BBC

Venezuela, RI to improve trade, investment relations

Wednesday, April 14, 2010 · Posted in Business

Venezuelan business leaders are exploring opportunities to improve cooperation with Indonesian partners in trade and investment.

"We would like to improve trade and investment relations, including those in tourism, technology, chemicals and natural gas," Mirtha Quintero, manager for commercial promotion of Foreign Trade Bank of Venezuela (Bancoex), said at a seminar in Jakarta on Tuesday.

The trade mission seminar was held by a visiting 20-member Venezuelan delegation representing two governmental agencies and 13 companies from various sectors such as aluminum, agribusiness, beverages, chemicals, food and telecommunication technology.

"We can expand trade or investment relations because Venezuela has much potential, especially in natural resources," Diono Nurjadin of the Indonesian Chamber of Commerce and Industry said. "The bilateral trade between the two countries is still below US$100 million a year."

Dementio Marotta, vice president of Bancoex, hoped that the business seminar could attract more Indonesian businessmen to invest in Venezuela.

"We have abundant and various natural resources," Marotta said.

According to Marotta, Venezuela is the third country with largest oil reserves in the world after Saudi Arabia and Iran. It is also known as a producer of raw materials such as iron-steel, bauxite, gold, diamond, copper, coal, phosphate and zinc.

Over the past few years, bilateral trade between Indonesia and Venezuela increased from $34 million in 2000 to $96 million in 2009, according to Bancoex.

But according to data from the Indonesian Trade Ministry, Indonesia's exports to Venezuela reached $38.3 million and imports $1.3 million, resulting in a $37 million surplus for Indonesia.

Indonesia's exports to Venezuela mostly consist of technically specified natural rubber, fabrics, footwear and cotton, while Indonesia imports are rubber or plastic, cyclic amides, silicon dioxide and aluminum alloys from Venezuela.

The diplomatic relationship between the two countries was officially opened on Oct. 10, 1959. The first economic agreement was signed in Caracas on Sept. 26, 1991

thejakartapost

Garuda to phase out old Boeings

· Posted in Business

National flag carrier Garuda Indonesia plans to phase out 16 old Boeing planes as part of rejuvenation of its fleet.

Garuda, however, will buy or lease 24 new planes to increase its fleet to 116.

"As of today we operate 72 planes. This year Garuda will receive 24 new planes, but actually we will only have 8 more planes, because 16 classic units will be phased out,"
Garuda president director Emirsyah Satar was quoted by Antara on Tuesday.

The arrival of 23 units of Boeing 737 New Generation and one unit of Airbus 330-200 will help the company improve efficiency and safety, he added.

He said the lease of some of the 16 planes had expired and therefore they would be returned to their owner in France.

By 2014 the company will operate 116 planes consisting of 90 Boeing 737 NG and 26 A330-200s.

Garuda spokesman Pujobroto said all classic Boeing 737 300, 400 and 500 would be phased out.

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BPK reveals inefficiencies, will audit tax violations

· Posted in National

The Supreme Audit Agency (BPK) will launch a special investigation into alleged corruption in the tax office following its regular audit in the second semester, BPK chief Hadi Poernomo said.

Speaking at a hearing session at the House of Representatives on Tuesday, Hadi said the upcoming investigation was a response to recent corruption cases involving junior tax official Gayus Tambunan and former top tax official Bahasyim Assafie.

Gayus allegedly amassed Rp 28 billion (US$3.08 million) within a year through brokering tax deals while Bahasyim was found in possession of suspicious funds worth Rp 64 billion stored in his family members’ bank accounts.

The tax cases occurred after the government launched a massive reform program that includes a policy of ensuring the salary level of tax officials is among the highest within the government.

The cases have so far implicated dozens of officials from the tax office, the Attorney General’s Office and the police, who allegedly conspired in brokering legal cases in relation to the two suspects. Some officials have been named as suspects while some have been demoted from their posts.

Hadi said the investigation into illegal practice within the tax office would be part of the agency’s regular audit.

“It’s just a matter of timing,” he said hinting that a special investigation outside the regular audit period was possible under a special order from the House.

The upcoming investigation, Hadi said, would focus on identifying regulatory violations, conflicting regulations and regulation ambiguities.

At the hearing session, Hadi also revealed that an audit into government spending in the second semester of last year showed indications of state fund misappropriation worth a combined Rp 730.45 billion and $2.23 million.

Hadi said the BPK had classified the alleged misappropriations into 46 cases, which have been reported to the police and the Corruption Eradication Commission.

The audit into spending in the second semester also resulted in a series of accounting recommendations to the central and regional governments on how to validate Rp 1.5 trillion worth of unaccounted spending.

The second semester audit also includes an assessment on the spending of state firms. Hadi said PT Indonesia Power, a subsidiary of state-owned electricity firm PT PLN, failed to carry out efficient measures in producing electricity due to the inability to secure gas supplies to fuel its combined-cycle power plants.

The failure, Hadi said, had cost the company Rp 27.94 trillion within the second semester as it had to rely solely on diesel fuel instead of gas.

Ilya Aviani, the BPK’s main auditor, said the inability to secure a gas supply was mainly because Indonesia Power had no contracts with gas distributors that would secure a sustainable supply.

Hadi, former director general of taxation, attracted public attention after he reported his wealth to the KPK last month as demanded by government regulation.

According to the report, he had generated an additional Rp 12 billion worth of assets to his Rp 26 billion wealth in 2006.

Hadi said his wealth mostly came from donations. Many said they were skeptical about the new BPK chieftain, but Hadi maintained the donations were legitimate.

thejakartapost

China resists Obama overture

Tuesday, April 13, 2010 · Posted in Market

Chinese President Hu Jintao has resisted pressure from President Obama to raise the value of the Chinese yuan.

He told Mr Obama that it would "neither balance Sino-US trade nor solve the [US] unemployment problem", Chinese official news agency Xinhua reported.

However, Mr Hu indicated that the Chinese were preparing to change their policy on the yuan in their own time.

The Chinese and US presidents were meeting at the sidelines of a 47-nation nuclear summit in Washington DC.

According to Xinhua, Mr Hu said that detailed measures for reform should be considered in the context of the world's economic situation, as well as China's.

China News Service reported that Hu said China "is firmly committed to the direction of reforming the... exchange rate regime. This is based on the needs of China's own economic development."

However, he added that "outside pressures will not advance [reform]".

For his part, Mr Obama called on his counterpart to switch to a more "market oriented" exchange rate, according to senior White House official Jeff Bader.

China has pegged its currency to the dollar since 2008 in response to market volatility during and after the financial crisis.

Market reaction to the comments was fairly muted, but seemed to interpret Mr Hu's comments as reducing the immediate prospects of any rise in the yuan's value.

Other Asian currencies such as the Malaysian ringgit and Korean won, lost between 0.5% to 1% against the dollar in early trading, ending strong rallies recorded during the past two months.

Markets had previously been speculating that if the yuan were allowed to appreciate, this would lead to similar rises in the currencies of other Asian countries that compete with China for exports to the US and Europe.

Trade sanctions

The meeting follows widespread speculation over the possibility of a trade war this year between the two nations.

Many economists, including Nobel prize winner Paul Krugman, have criticised the Chinese for pegging their currency to the dollar.

They say this gives the Chinese an unfair advantage, by making Chinese exports artificially cheap, and this acts as a drag on the rest of the world economy.

The meeting between the two presidents follows a hasty visit to China by US Treasury Secretary Tim Geithner on 8 April, and a decision on 3 April to postpone an important Treasury report.

That report, which was due to be delivered this month to Congress, would have stated whether the Treasury Department deemed China to be a "currency manipulator".

This would have opened the way for Congress to impose trade sanctions on China, a move advocated by many congressmen as well as Mr Krugman.

Meanwhile, the Chinese commerce ministry has introduced a duty of up to 64.8% on imports of US electrical steel, and 24% on those from Russia, accusing the two countries of selling the steel at abnormally low prices.

The move follows a decision by the US government to impose an import tax on Chinese pipes.

source : BBC

US customers given Lexus warning

· Posted in Business

Japanese carmaker Toyota is facing further safety concerns after a US consumer organisation warned customers not to buy one of its models.

Consumer Reports issued a recommendation not to buy the Lexus GX 460 four-wheel drive because of fears that the car could roll over.

The last time it judged a vehicle's performance unacceptable was in 2001.

Toyota said it was concerned with the results of Consumer Reports' testing and was looking into the claims.

But it said its model "meets or exceeds" all federal government testing requirements.

The carmaker has recalled over eight million cars globally due to safety fears over faulty accelerators, floor pedals that stuck in mats and braking issues.

'Injury risk'

Consumer Reports said it had judged the Lexus GX 460 a "Don't Buy: Safety Risk" because of a problem experienced during its standard emergency-handling tests.

"When pushed to its limits on our track's handling course, the rear of the GX we bought slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control," it said.

"We believe that in real-world driving, that situation could lead to a rollover accident, which could cause serious injury or death."

However, it also said that it was not aware of any such reported incidents.

The GX 460 has been on sale for about three months in the US and, according to the consumer group, about 5,000 vehicles have been sold.

Toyota said in a statement: "Our engineers conduct similar tests and we feel these procedures provide a good indication of how our vehicles will perform in the real-world.

"However, we will try to duplicate the Consumer Reports' test to determine if appropriate steps need to be taken."

Toyota is currently facing a record $16.4m (£10.7m) fine from the US Transport Department for failing to notify it about defective accelerator pedals.

The company must decide by the end of this week whether to challenge the fine.

source: BBC

Stronger rupiah could hurt exports: Analysts

· Posted in National

While the fast appreciation of rupiah against the US dollar will make imported products cheaper, analysts have warned that “too strong” rupiah would hurt Indonesia’s exports.

The appreciation of the rupiah against the greenback may lead to danger signals for Indonesia’s exports if it stays stronger than Rp 9,000 to the dollar, analysts say.

“A too strong rupiah will eventually undermine exports because our exports will be less competitive,” state lender Bank Negara Indonesia chief economist Tony Prasetiantono told The Jakarta Post on Thursday.

He said the rupiah should be ideally maintained at about Rp 9,000 to the dollar because if it strengthens further, that is below Rp 9,000 to the dollar, it could result in negative impacts on Indonesia’s exports.

The currency traded at Rp 9,053 per dollar on Thursday after reaching a 30-month-high at Rp 9,038 a day earlier, Bloomberg reported.

Tony said if the rupiah further appreciated, for example, to Rp 8,900 a dollar, exports could consequently decrease by 5 percent. “At the same time, imports could increase by 5 percent, which might cause a problem in the country’s balance of payment,” he added

He said the government should closely monitor the situation because the country’s trade surplus had begun to decline due to the increase in imports. According to him, the monthly surplus in January and February was only US$1.5 billion, lower than the monthly average surplus of about $2 billion.

He said Bank Indonesia, the central bank, which always intervened when the rupiah was too weak, should do the same thing to make sure the rupiah was not too strong. Besides maintaining the rupiah at a reasonable level, the central bank should keep a close eye on the inflow of foreign funds, especially possibly hot money invested in government bonds and stocks.

Meanwhile, Standard Chartered Bank senior economist Fauzi Ichsan said he admitted there might be some negative impact from a stronger rupiah against exports, but that such an impact would be “small”.

“Exports indeed will be more expensive on a stronger rupiah. But import costs will decline accordingly,” he told the Post. He also said the trade surplus was forecast to decline from $44.7 billion in 2009 to $21.5 billion this year partly due to the stronger rupiah.
“But [the good news is] we still have a surplus in our current account, which means our foreign reserves automatically continues to rise,” he said.

Meanwhile, Deputy Trade Minister Mahendra Siregar earlier said non-oil exports were estimated to have reached $27.35 billion in the first quarter of this year, the highest level for the first quarter since 2008. Non-oil exports already reached $9.25 billion in January and $9.1 billion in February.

thejakartapost

Rising anti-smoking policy hurting RI tobacco exports

Monday, April 12, 2010 · Posted in National

The government is expecting a slower annual growth in exports of tobacco and its products from average 18 percent in the past three years to an average of 15 percent growth in the next five years.

Industry Ministry director for beverage and tobacco industries Warsono said Friday the government expected a slower rate of growth as the main cigarette export destinations had introduced stricter controls on smoking.

“It will be good enough if we can make cigarette exports grow by 15 percent — slower than the 18 percent realized in the past three to five years – because it is becoming harder to export cigarettes nowadays,” he said.

“For example, the United States has banned [clove] flavored cigarettes [to be sold in its domestic market], with the issuance of a new bill, while the European Union (EU) has further limited smoking areas available to the public.”

The US Food and Drug Administration has banned cigarette flavorings, including clove or kretek, cherry and chocolate, since last year as sweet flavors are considered to encourage young people to smoke.

Indonesia is among the world’s five largest cigarette makers, besides China, India and the US, and the world’s largest kretek cigarette producer. Indonesian cigarettes make up 99 percent of the US market for the kretek product.

Indonesia also exports tobacco and tobacco products to the EU (tobacco and cigars) and former Soviet Union countries, as well as other developing countries in Africa and Asia.

According to the ministry’s latest data, in 2008 unprocessed tobacco exports were worth US$151.02 million, while cigarette and cigar exports stood at $357.8 million.

The ministry has forecast tobacco exports will reach $401.7 million and cigarette and cigar exports will reach $1.06 billion by 2015, the data shows.

Warsono said he had yet to receive data on exports of tobacco and its products in 2009.

Meanwhile, the government is limiting the production of domestic cigarettes — only for sale in the domestic market — to promote public health over dangers of smoking.

The government’s limit on domestic cigarette production is set at 240 billion sticks by the end of this year — a decline from 245 billion sticks produced last year.

The limit will eventually reach 260 billion sticks by 2015.

The government also has increased excise tariffs on cigarettes from Rp 65 per stick to a maximum of Rp 320 per stick, depending on whether they are hand-rolled or machine-rolled, to discourage people from smoking.

The regulation came into force on Jan. 1 this year.

The government also has increased import duties to 40 percent and has imposed 40 percent excise tariffs on imported cigarettes for the same reason.

Indonesian cigarette companies employ about 600,000 people with total sales revenues of more than Rp 800 trillion (about $8.8 billion) a year.

thejakartapost

China posts rare trade deficit as imports surge

· Posted in Market

China has reported a rare monthly trade deficit for the first time since May 2004.

The country's foreign trade was up nearly 43 per cent in March to over $231bn, out of which exports accounted for about $112.1bn and imports about $119.4bn.

In the same month, China's trade surplus was down 4 per cent with the US and over 13 per cent with the EU, compared to March 2009.

Chinese officials have blamed the $7.2bn monthly deficit on the rising volumes and prices of raw materials across the world, such as coal, iron ore, crude oil and copper, that the country has to import to sustain its blistering economic growth.

Even as Chinese imports have surged, exports still remain weak, especially to the Western markets. It may be up to three years before the country's exports reach the levels they were before the global economic crisis, according to some Chinese politicians.

China's monthly trade deficits are likely to continue in the remaining months of the first half of 2010 and will possibly improve in the second half, China's People's Daily said, quoting Yao Jian, spokesman of China's Ministry of Commerce.

In recent months, the Chinese government has come under increasing pressure from the US government for keeping the yuan artificially depressed to help boost its exports.

China's ministry of commerce has cited the latest trade deficit figures to argue that no change is needed in the country's currency regime.

source :newstatesman

China bank lending falls sharply

· Posted in Banking

Lending by Chinese banks fell sharply in the first three months of the year after the government's efforts to clamp down on new loans proved successful.

Banks lent 2.6 trillion yuan ($381bn; £247bn) between January and March, a 43% drop on the 4.6tn yuan they lent a year earlier, the central bank said.

The state is trying to curb lending to prevent the economy from overheating and prices from rising too fast.

It has set a limit for lending for the whole of 2010 of 7.5tn yuan.

This is well below the 9.6tn yuan lent last year. Much of this lending boom was sparked by government stimulus measures.

At the end of 2008, the government announced a 4tn-yuan stimulus plan to boost the domestic economy.

Partly as a result of the stimulus measures, the economy grew by an impressive 8.7% in 2009.

Trade deficit

The government is now keen to rein in spending to cool growth.

It is also concerned about inflation, which hit a 16-month high of 2.7% in February.

In January, the government ordered banks to hold more cash in reserve, while state media reported that it had ordered banks to stop lending altogether for the last 10 days of the month.

The central bank also said on Monday that China's foreign exchange reserves hit a record $2.5tn (£1.6tn) at the end of March.

This was despite the fact that the country recorded its first monthly trade deficit in nearly six years.

Rising volumes and prices of raw materials left China with a deficit of $7.2bn in March, the bank said.

source : BBC

Most Asian markets open higher in early trading

Sunday, April 11, 2010 · Posted in Market

Most Asian stock markets edged up in early trading Friday, led by overnight gains on Wall Street as strong U.S. retail sales data boosted confidence in recovery in the world's biggest economy.

Japan's benchmark Nikkei 225 stock average rose 17.25 points, or 0.2 percent, to 11,185.45. Australia's benchmark was up 0.3 percent at 4,973.70.

But South Korea's Kospi index slipped 0.9 percent to 1,718.04.

In New York overnight, the Dow Jones industria average gained 29.55, or 0.3 percent, to 10,927.07 as investors took heart from strong U.S. retail sales data in March.

Discounter Target Corp., department store Macy's Inc., clothier Gap Inc. and Victoria's Secret parent Limited Brands Inc. posted double-digit increases in March sales that beat Wall Stret analysts' expectations.

Overall, sales in stores open at least a year rose 9 percent in March, based on an index of 31 retailers compiled by the International Council of Shopping Centers.

In currencies, the dollar rose to 93.60 yen from 93.11 yen in New York late Thursday. The euro stood at $1.3357,little moved from $1.3356.

thejakartapost

Report: China had $7.24B trade deficit in March

· Posted in News

China posted a $7.24 billion trade deficit in March, its first in almost six years, the official Xinhua News Agency reported Saturday, citing customs figures. Officials say the trend will be short-lived.

The March deficit was China's first since it recorded a $2.26 billion deficit in April 2004.

The return to deficit after many years of surplus could help ease reassure on China to allow the value of its currency to rise against the dollar - a key source of contention with the U.S. and other trading partners.

But even China's minister of commerce, Chen Deming, described March's deficit as only a "blip on the radar," the state-run newspaper China Daily said Friday.

Market trends are the main factor determining the trade balance, said Chen, who had said earlier that China expected to announce the deficit for March.

Exports totaled $112.11 billion in March, up 24.3 percent from a year earlier. Imports reached US$119.35 billion, up 66 percent compared to the same period last year, Xinhua reported.

Total exports and imports in March reached US$231.5 billion, up 42.8 percent from a year earlier, it said. The full trade figures were to be announced later Saturday.

Economists say the deficit reflected weak exports to the United States and other major markets still struggling to recover from the recession. Strong imports of commodities and components to fuel China's own booming industrial sector contributed to the 66 percent jump in imports - albeit from a relatively low base the year before when China was also just emerging from a slowdown.

"Surging raw materials prices, for crude oil, iron ore, and nonferrous metals, which China buys a lot of for its own strong domestic economy, are another factor," said An Yun, an analyst at Chang Xin Asset Management.

China's global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion.

Chinese officials have resisted pressure to allow the yuan to rise in value, saying the trade sector remains weak and prey to weaknesses elsewhere.

"China has to be prepared for the uncertainties on the global market as they would create problems and pressure for the nation," Chen, the commerce minister, was quoted as saying.

thejakartapost

RI exporters yet to adapt to ACFTA

Sunday, April 4, 2010 · Posted in Business

The free trade agreement between ASEAN and China (ACFTA) has been cited as not being been “effective” for Indonesia as imports from China surged in the first two months of 2010 over the same period last year.

The Central Statistics Agency (BPS) announced Thursday that non-oil-and-gas imports from China surged by 55 percent to US$2.79 billion in the first two months of this year, from $1.8 billion in the corresponding period last year.

According to BPS data, non-oil-and-gas goods from China topped Indonesia’s imports, contributing 18.58 percent to the total non-oil-and-gas imports.

However, non-oil-and-gas imports from China decreased slightly by 1.8 percent from $1.41 billion in January to $1.38 billion in February, while Indonesia’s non-oil-and-gas exports to China were worth $986.2 million in February, down 2.4 percent from $1.01 billion in January, the data shows.
BPS chief Rusman Heriawan said declines in both Indonesia’s non-oil-and-gas exports to and imports from China were a result of both countries’ traders using an older trading mechanism that was not under the ACFTA.

“The ACFTA was initially expected to boost exports to China and imports [from China]. Apparently, it did not [happen that way],” Rusman said at a conference at his office.
“In February, which was expected [to see the ACFTA come into
effect], the ACFTA was in fact not [effective yet]. This means businesses have not responded to the ACFTA yet.”

In the initial phase of implementation of the ACFTA that came into effect early this year, the government scrapped 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector and five others in the agriculture, mining and maritime sectors.
An influx of manufactured products from China is expected accordingly. Indonesian exports to China (mostly are raw materials) will consequently enjoy zero duties, unlike China, which exports mostly manufactured products.

Indonesia exports mostly liquefied natural gas, as well as mining and agriculture commodities (including coal, bauxite, crude palm oil and cacao) to China.

Separately, Trade Minister Mari Elka Pangestu said it was more important to have Indonesia’s non-oil-and-gas exports to China continuing to grow than to have a surplus trade balance, despite the presence of the ACFTA.

She also said there was “good” news in bilateral negotiations between Indonesia and China in regard to the ACFTA in response to local manufacturers calls for renegotiation.
The results would be announced Saturday in Yogyakarta, when Indonesian and Chinese delegations are due to hold a joint commission meeting.

thejakartapost

Loans limited to 'good quality' borrowers, says Bank

· Posted in Banking

Personal loans and overdrafts will only be available to "better quality" borrowers in the next three months, according to a survey of lenders.

Tighter credit scoring for non-credit card unsecured lending, already seen this year, will continue, the Bank of England's report said.

The availability of mortgages will remain steady, lenders told the Bank.

The report also found the availability of credit to businesses increased in the first three months of the year.

This included higher lending to the commercial property sector, and lenders said they expected the increasing approval of loans to the corporate sector to continue in the next three months.

"Lenders reported that the increase in credit availability had been supported by slight improvements in their funding costs and by an improved economic outlook for businesses," the Bank of England's Credit Conditions Survey found.

Households

The effect of the poor weather and the end of temporary stamp duty relief meant that demand for mortgages fell in the first three months of the year, although this is expected to rise again.

The supply of mortgages is set to remain broadly unchanged, reflecting lenders' expectations that there will be "little change" in conditions in the housing market in the coming months.

The latest mortgage and house price data has suggested a relatively slow start to the year in the UK housing market.

The Bank's report said that there was more appetite for risk among lenders, with credit card lending as the economic outlook improved. However, demand for credit card lending fell in the first quarter of the year.

The number of people defaulting on unsecured loans fell by more than lenders anticipated in the first three months of the year.

An unexpected fall in the past three months in medium and large firms defaulting on loans was also recorded in the survey.

Source : BBC

Toyota sees its US sales rebound after price cuts

· Posted in Business

Toyota's US sales bounced back in March as substantial discounts helped to win back customers who had been shaken by the firm's mass safety recalls.

The Japanese carmaker saw its US sales jump 40.7% last month compared with a year earlier. The big rise came after its sales slumped by 8.7% in February.

Ford and General Motors also saw their sales rise last month, up 39.8% and 20.6% respectively.

Chrysler, the third of the "Big Three" US car firms, saw its sales fall 8.3%.

'Brand trust'

Toyota has had to recall more than eight million cars worldwide due to problems with accelerator pedals and brakes.

"Toyota's strong sales performance in March reflects our customers' continued confidence in the safety and reliability of our vehicles, and their trust in the brand," said Don Esmond, senior vice president of automotive operations for Toyota Motor Sales USA.

"We are standing by our cars, and we're grateful that our customers are standing by Toyota."

Toyota is the world's largest carmaker, both in terms of revenues and sales.

Nissan's US sales rose 43.3% in March, while Hyundai's added 15.4%.

source: BBC