By Mahendra Siregar/Hari S. Nugroho

MACROECONOMY

Govt. to focus on controlling inflation rate: minister

The government will focus its attention on controlling the inflation rate in anticipation of the impact of risks arising from the interest rate cuts by the US Federal Reserve, the finance minister said, Asia Pulse reported Friday (1/2/08).

"Signs of the impact of the US economic slowdown on the global economy are already noticeable. But this does not mean that our economy will grow by less than 6%," Sri Mulyani Indrawati said.

The government will focus on controlling the inflation rate because it was related to poverty reduction efforts and the people's purchasing power, she said.

"The president wants all food-related costs reduced. The steps we have already taken are reducing import duties and taxes," she said.

She said if Indonesia wanted its economy to grow by more than 6%, the consumption sector must contribute between 2% and 5% to the growth.

Rp3.7T raised in bond auction

The finance ministry raised a total of Rp3.7 trillion ($397.2 million) at an auction of two- and five-year zero coupon bonds on Tuesday (29/1/08), above its target of Rp3 trillion, Reuters reported.

The ministry raised Rp2.75 trillion from the ZC004 series of bonds, which mature on February 20, 2010 and were priced to yield 8.25%.

The ZC005 series of bonds, which mature on February 20, 2013, were priced to yield 9.41%.

Indonesian bonds have attracted strong interest from foreign and domestic investors because of the relatively high yields, particularly following the recent cut in US interest rates.

Govt.'s 2007 asset sales at Rp1.57T, above target

State asset management company PT Perusahaan Pengelola Aset (PPA) generated Rp1.57 trillion from asset sales in 2007, slightly higher than its target of Rp1.5 trillion, PPA president Mohammad Syahrial said Monday (28/1/08), Thomson Financial reported.

Syahrial said PPA also posted pretax profit of Rp71 billion last year, well over its target of Rp12.9 billion.

PPA is scheduled to cease operating on February 27 and the government has asked the company to prepare the necessary steps prior to its closure, he said.

The PPA is in charge of selling government assets that were taken over from the private sector following the 1997 financial crisis. Proceeds of the asset divestments go to help fund the state budget.

2008 forex reserves seen rising

Foreign exchange reserves are expected to reach $70 billion by the end of this year from $54.9 billion at the end of last year, central bank governor Burhanuddin Abdullah said Monday (28/1/08), Reuters reported.

Abdullah told a parliamentary hearing he expected the higher foreign exchange reserves to come from a surplus in the country's balance of payments this year. "The balance of payments surplus will likely increase in 2008, which will boost foreign exchange reserves to $70 billion by the end of 2008," Abdullah said.

INVESTMENT

BlueScope Steel to invest $113M for expansion

PT BlueScope Steel Indonesia plans to spend $113 million this year on almost trebling its production capacity so that it can meet growing demand for steel products, the company's chief said on Wednesday (30/1/08), Reuters reported.

The company plans to expand production capacity at its coated and painted zinc aluminium steel plant to 270,000 tons a year, from 100,000 tons currently.

"The expansion aims to meet increasing demand in the region," said Rob Crawford, chief of BlueScope Steel for Malaysia and Indonesia.

The company is an Indonesian unit of Australia's largest steel maker BlueScope Steel Ltd which makes flat steel products for the building and construction industries.

Bank Mega offers to buy stake in airport railway

Bank Mega has offered to buy the 15% stake offered by PT RaiLink in the Rp4.5 trillion ($500 million) rail tract project to provide alternative transport to Jakarta's Soekarno-Hatta airport from the city center, Asia Pulse reported Thursday (31/1/08).

PT RaiLink said earlier that new investors were needed with the cost swelling from Rp2.2 trillion to Rp4.5 trillion to build the 32.7 km railway from Manggarai station to the country's largest airport.

RaiLink commissioner Ronny Wahyudi said Bank Mega has offered to buy the stake worth Rp675 billion from the consortium grouping PT RaiLink, PT Jasa Marga and PT Wijaya Karya.

Two state banks -- PT Bank Mandiri and PT Bank Negara Indonesia -- have agreed to provide 70% of the fund, and the consortium is to put up the remaining 15%.

RaiLink itself is a joint venture between state-owned railway company PT Kereta Api and state-owned airport operator PT Angkasa Pura II.

The increase in the project cost is caused by the change in plan to build an elevated track for a distance of 32.7 km.

Indonesia posts fourth-biggest return on equity in 2007

Indonesia ranked fourth in countries with the highest return on equity in 2007 and is likely to perform better this year in line with other investment possibilities in Asia, Deutsche Bank said Wednesday (30/1/08), The Jakarta Post reported.

The return on equity investment in the country averaged 54.1% thanks to the economy that grew by 6.3% last year, Deutsche Bank chief investment officer Chew Soon Gek said.

"Indonesia's position comes after the China free area in third place with 66.2%, India in second place with 73.1% and China's domestic market at 96.6%," she said, citing reports from Bloomberg.

The equity returns in Indonesia, she said, were apparently higher than its "strong" regional counterparts such as Singapore with 28.3% and Japan with minus 4.1%.

Source: www.ekon.go.id