Minister assures budget sustainability

Finance Minister Sri Mulyani Indrawati assured business communities Monday (7/4/08) the state budget cashflow was sustainable despite a risk of soaring fuel subsidies and a greater demand for fiscal stimulus, The Jakarta Post reported.

"The amount of expendable cash in our state budget is now Rp64 trillion ($695 million). We are facing no cash flow difficulties at all," Mulyani said after a cabinet meeting at the State Palace.

"Revenues from oil and non-oil sectors, as well as from tax and non-tax sectors flow well to our state budget," she said.

The state budget is expected to save a total of Rp30 trillion from a 10% cut in expenditure by agencies.

"This year's deficit will also be covered through the sale of state bonds and from foreign debts," Mulyani said, adding the government had already secured an additional debt worth $500 million from the Japanese government, and another $2.6 billion jointly from the World Bank and the Asian Development Bank. She said the government will issue Rp12 trillion in bonds during the year.

Foreign investors get access to state export financing

While deliberations over a bill on state-owned Indonesian Exports Financing Agency (LPEI) are still at an early stage, the government and the House of Representatives have agreed such services will be opened to foreign investors, The Jakarta Post reported Tuesday (08/04/08).

"The distinction between domestic and foreign investment is no longer relevant," said Hasto Kristiyanto, vice chairman of the special committee for the LPEI bill.

"Both government and House members agree the state exports financing will be accessible to foreign investors," he said.

National Agency for Exports Development head Bachrul Chairi said domestic and foreign investors had the same right to export financing as long as they were registered under Indonesian companies.

"Our new laws on corporations and investment clearly state both domestic and foreign investors will be given equal treatment. So it is natural the financing be open to everyone," he said.

He added that House members had accepted the government's proposal for the agency's starting capital, which would come from government liquid assets, worth Rp4 trillion, previously stored in the already defunct Bank Ekspor Impor Indonesia (Bank Exim).

Private sector hails endorsed shipping bill

The business community on Wednesday (9/4/08) praised the newly endorsed shipping bill, saying it would improve export and import activities and give private sector players more opportunities to engage in port and shipping businesses, The Jakarta Post reported.

The Indonesian Chamber of Commerce and Industry (Kadin)'s deputy chairman for transportation, Chris Kanter, said the bill would make port operations more efficient after years of inefficiency.

"Ports are essential in supporting the national economy. The approved bill ends the monopoly of state-owned port operator PT Pelindo (I until IV)."

Competition, he said, would encourage more investors to come to the country.

On Tuesday, the House of Representatives endorsed the shipping bill, after three years of deliberation, allowing foreign and domestic private entities to operate ports on an equal footing with state companies.

"There should also be an intense public campaign explaining the contents of the bill, especially to port workers, so that stakeholders understand entirely," Kanter said.

The bill also regulates the "cabotage principle", which allows only locally flagged vessels to ship domestic cargo between ports in Indonesian waters.

"Although this principle is no longer popular globally, we still need it to protect the interests of the local shipping industry from larger foreign firms," Oentoro said, adding that as an archipelago, Indonesia needed the principle.

Port workers have called off a threatened strike over the bill, saying the government had accommodated some of their demands.

"We will also seek an independent consultant to discuss the details of the law and continue to monitor it," said Djafar Achmad, the secretary general of the port workers union. He added that operations at the country's 112 ports were running normally.

Govt. to activate aging oil fields

The government will activate 5,000 aging oil fields under a newly issued ministerial regulation in order to optimize the country's crude oil production, says an official, Xinhua reported Tuesday (08/04/08).

"There are more than 13,000 aging fields in the country, 5,000 of which could produce 5,000 to 12,000 barrels per day (bpd)," Director General for Oil and Gas Luluk Sumiarso said. Out of 13,824 oil fields only 745 are active.

Most of the aging fields are located in the working area of state-owned oil and gas firm PT Pertamina's unit.

Energy and Mineral Resources Ministry upstream director R. Priyono said that under the 2008 regulation cooperatives were not the only operators working on the aging fields.

The government and the House of Representatives' budget committee agreed late last month to set the oil lifting target for this year at 927,000 barrels per day.

Big gold discovery claimed in Lombok

Drilling at the Montong Botek high grade gold and copper porphyry target in Lombok has returned the longest mineralized intercept to date, which includes 0.25 g/t gold over 576.95 meters, New York's International Business Times reported Tuesday (8/4/08).

Southern Arc Minerals, which is developing the site as part of the Selodong Intrusive Complex (SIC) prospect, said the intercept included sections grading at 0.34 g/t gold over 113.9 meters, 0.30 g/t gold over 106.6 meters and 0.45 g/t gold over 52 meters.

The hole that returned the intercept was drilled 150 meters northwest of historic drilling to test for extensions of high grade mineralization encountered in previous work, the company said.

Returns from these holes had included 0.42 g/t gold over 442.2 meters, 0.40 g/t gold over 384.65 meters and 0.51 g/t gold over 363.50 meters.

Southern Arc said it plans to continue drilling at SIC, with further testing planned for lateral and depth extensions at Montong Botek, as well as the Blongas I and Blongas II zones.

A total of 12 other targets will also be tested by the company's three drill rigs, it added.

The SIC prospect covers an area of seven km by three km on the southeast portion of Southern Arc's property on Lombok.

Compiled by: Mahendra Siregar and Hari S. Noegroho