Indonesia Headline News (7th of Sept)

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High logistics costs impede higher economic growth for Indonesia: WB

"The costs of logistics across Indonesia account for some 24 percent of GDP (Gross Domestic Product), higher than in neighboring countries. Cutting costs and improving the quality of logistics and transport systems would vastly improve Indonesia’s access to international markets and increase trade," a senior trade specialist at the World Bank, Henry Sandee, said in an official release.

One of the report’s case studies examines inefficiencies at Jakarta’s Tanjung Priok Port.

"The waiting time (dwindling time) for containers at Tanjung Priok has increased from 4.8 days in October 2010, to 8 days in 2013. This is creating more bottlenecks for Indonesia’s exports and imports," Sandee said.

Other findings suggest that opening the 24 hours a day, 7 days a week, has not translated into faster processing of documents or of goods.

The report also said that using Cikarang Dry Port – an integrated facility that supports Tanjung Priok in handling import and export shipments, as well as domestic transactions -- may reduce costs and time. Yet, due to infrastructural and institutional constraints, Cikarang Dry Port remained under-utilized.

Source: Jakarta Post

JCI continues slide

The Jakarta Composite Index (JCI) weakened once again during the first trading session on Friday.

The index dropped by 0.41 percent to 4,034.10.

The three worst performing sectors were construction with a drop of 1.32 percent, trade (0.98 percent) and finance (0.87 percent).

Source: Kontan.co.id

Korean delegates see wood pellet potential in RI 

Han Gyu-seong, chairman of Korea Association of Pellet, made the statement before around 50 Korean business delegates during the “Biomass Industry in Indonesia” business forum organized by the South Korea Embassy in Jakarta on Thursday.

Three forum discussed the prospects and challenges in developing Indonesia’s biomass potential, specifically wood pellets.

The East Asia nation saw an increase in pellet consumption, with 2013 figures estimated at 500,000 tons, compared to 174,000 tons in 2012.

Wood pellets, which can be used to fuel power plants, are compressed biomass deriving from sawdust and waste from sawmilling.

Korea is currently looking for biomass sources overseas, including from Indonesia, as the East Asian country is enforcing a 2012 energy policy mandating firms to resort to renewable energy to cut carbon emissions.

It is also targeting a 20 percent boost in renewable energy use as well as aiming to reduce fossil fuel consumption.

“Korea is the world’s 10th-largest energy consumer, fifth-largest oil importer, second-largest coal importer. Sixty-four percent of its electricity is produced from fossil fuels,” Han said.

Korea imported 122,447 tons of wood pellets in 2012, mainly from Russia, Malaysia and Vietnam.

According to data from Korea, Indonesia offers the cheapest pellet, with the cost, insurance and freight (CIF) price of US$ 131 per ton, below Vietnam’s US$ 144 per ton, and Malaysia’s US$ 141 per ton.

In Indonesia, Korean firm Depian Co. Ltd will work with state-run PT Inhutani III toward developing forest industries and a facility in Pelaihari, South Kalimantan, through PT SL Agri.

Depian has stated its readiness to invest US$20 million in the project, which will supply wood pellets to South Korea.

They will start building the planned facility in October and expect to start operating the plant by March 2014.

The plant will be able to produce 30,000 tons of wood pellets annually, before being upgraded to 100,000 tons annually in 2016.

Trees would be planted on 5,000 hectares to 8,000 hectares of industrial forest that PT Inhutani III was currently preparing, said SL Agri president director Muhammad Akbariah last month.

Source: Jakarta Post

Rupiah depreciates further to Rp 11,650

The rupiah traded among banks in Jakarta on Thursday afternoon weakened by 245 points to Rp 11,650 per US dollar from Rp 11,405.

“It’s likely that the dollar’s selling will continue to occur this week,” Ariston said, as quoted by Antara news agency.

A financial market analyst for PT Platon Niaga Berjangka, Lukman Leong, said that in the short-term, the rupiah would continue to feel outside pressure, from concerns about both Syria and the US Federal Reserve's financial stimulus reduction.

“For the mid- and long-term, we see that the rupiah can be strengthened by declines in inflationary pressures that were previously contributed by subsidized-fuel price hikes and Idul Fitri,” Ariston said.

Moreover, he added, declining demand for oil imports was anticipated to narrow the deficit.

According to BI’s median rate on Thursday, the rupiah exchange rate weakened to Rp 11,125 per US dollar from Rp 10.093. (ebf)

Projects raise demand for heavy equipment

Based on the revised state budget, the government has allocated Rp 208 trillion (US$18.19 billion) for infrastructure, an increase of Rp 10 trillion from that initially proposed.

PT Gaya Makmur Traktor (GMT) president director Tjandi Mulyono said the distributor of a number of heavy equipment brands such as Wirtgen, Takeuchi and Xuzhou Construction Machinery Group is confident that his company will see a 30 percent increase in sales in the second half of this year.

“Even with Indonesia’s current economy, we booked a 25 percent increase in the first half of this year compared to last year,” Tjandi said on Wednesday on the sidelines of a heavy equipment expo that will run until Sept. 7.

Source: Jakarta Post

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