Retail sales to grow 10 percent in 2009

Despite an estimated slowdown in Indonesia's economic growth in line with the global economic downturn, the nation's retailers may still enjoy at least a 10 percent increase next year, says a retail association. 

The Indonesian Retail Merchants Association (APRINDO) said a cut in sales revenue growth was inevitable amid the current adverse global economic condition. 

"But knowing that people always buy food whether the economy goes up or down, then a growth of at least 10 percent is certain," APRINDO secretary general Rudy R.J. Sumampouw said recently. 

At a time when many of the country's industries -- in particular export-oriented ones -- are struggling to cope with a weakening demand, a 10 percent growth in sales will still be good, although it will be slower than this year's estimated growth of 15 percent, he said. 

"Even the 15 percent growth this year was lower than the initial projection of 20 percent," Rudy said, adding that by the end of this year, retail sales involving APRINDO's members would reach about Rp 74.5 trillion (US$6.7 billion) up from Rp 65 trillion in 2007. 

Sales from APRINDO's members contribute about 20 percent to retail sales nationwide, he said. 

"So far this year there have been no reports of layoffs or store closures from our members. In fact, since 2007, retail stores have been growing around 15 percent," Rudy said. In 2007, the retail industry absorbed about one million workers. 

This year, APRINDO's 300 members have at least 7,500 stores nationally. It has five store formats: Hypermarkets, supermarkets, minimarkets, department stores and specialty stores such as single-brand outlets. 

About 100 of them are hypermarkets such as Giant, Carrefour, Makro, Hypermart and Alfa Gudang Rabat, and 30 percent of them are centered in Jakarta, he said. 

He said that for next year's projection, growth of new stores could be slower. "With the coming elections, much will depend on next year's political conditions," he said. 

"This global crisis means some of our members have taken preventive measures such as postponing expansion plans; outlet development has been reduced by 30 percent." 

Dandy Herlandy, executive secretary for the Jakarta chapter of the Indonesian Shopping Centers Association (APPBI), said that between 2007 and 2008 the number of malls had grown from 65 to 75 in Greater Jakarta. 

Noel Trinder, CEO of retail giant Matahari Putra Prima, said its Matahari Department Stores would open three to five new outlets next year, while its Hypermart will open six to eight in 2009. 

Matahari Department Stores has already opened five new stores this year. "We are cautiously optimistic about the outlook for next year," he said. 

Matahari Group has nine core retail businesses, including Matahari Department Store, Hypermart and Foodmart. This year's group sales will be between Rp 11.5 trillion and Rp 11.7 trillion, he said. (iwp)
Source: The Jakarta Post , Jakarta | Mon, 12/22/2008 11:05 AM | Business 

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Better news for Rusina Mining at Acoje

When Proactive last covered Rusina, a mere month or so ago, Rusina CEO Rob Gregory had just announced the loss of Rusina’s usual revenue stream. After some careful belt tightening, cash was set to stretch past summer 2009, while European Nickel continued to move the Acoje nickel laterite project onward through pre-feasibility.

At the time Rob Gregory hinted that it wasn’t just a question of hunkering down until the long economic winter eventually thaws. Proactive hadn’t thought to be writing another article so soon, and it makes a change to report news that bucks the general gloomy trend.  

For more detail on the projects mentioned here, interested readers are referred to a wealth of background information in previous articles this year.

Hors d’oeuvres.


Direct shipping of Acoje’s laterites has never been the main game, but was a very handy starter operation while it lasted. Depressed nickel prices mean it will be a while before this resumes in earnest, but a Japanese buyer has recently taken delivery of a trial shipment of 7,500 tonnes of nickel laterite ore, shipped by Rusina’s Philippine partner, DMCI. The change is that the ore was 2.15% nickel, almost double the average grade and significantly higher than past shipments. A certain amount of high-grading won’t do significant damage to a laterite tonnage of 50MT (two-thirds indicated, the rest inferred) and further shipments are possible. Margins are low but it all helps.

Main Course.


The ‘main course’ for Rusina is the 40:40:20 joint venture between Rusina, European Nickel and DCMI to process the bulk of the Acoje laterites, using European Nickel’s heap leach technology. Crudely, this involves mining the near-surface laterites (strip ratio 0.46), and subjecting it to European Nickel’s proprietary heap leach technology. Most people know that nickel laterites can be difficult to process, but European Nickel’s technology is known to work well at Caldag in Turkey.

Rusina and European Nickel have just published the pre-feasibility study, and it is good news. In addition to opex costs of $3.10/lb – notably economic below today’s $4.40/lb nickel price – the study features an Internal Rate of Return of 28.3%, 3-year payback and forecast annual sales of US$260m, inclusive of by-product credits (mainly cobalt). This translates to US$108 million of free cash flow annually. The study assigns a post-tax NPV of US$375 million using a 10% discount rate and notes there is quite a bit of potential to improve on these figures by extending the mine life.  

There are two routes to increase the resource. The first is by infill drilling and firming up all the Inferred resource (40%) to Indicated status (currently 60% of the resource). The second route is by adding tonnage from the Zambales Chromite deposit, and the combination is expected to extend the mine life beyond 20 years by the time the Definitive Feasibility Study is published.

All this is predicated upon a long-term nickel price of $6/lb and cobalt at $10/lb, which should be realistic, bearing in mind that operating nickel mines are falling by the wayside in today’s price environment. Supply-side factor will kick in once Chinese stockpiles clear next year.  

For the technically minded, the leaching agent is dilute sulphuric acid. Sulphur prices have retreated by a factor of 8 from their peak, which means Rusina are more likely to source prills from abroad and burn them on-site than use pyrites from the recently acquired Barlo tenement. Electricity is a nice by-product from the sulphur-burning process and can be sold back to the grid. Incidentally, Barlo holds interesting metal potential in its own right, and if not needed for sulphuric acid, Barlo’s pyrites will be gladly taken by the fertilizer industry.

The nickel will be recovered in a precipitation plant in a two stage concentration process producing two saleable products. The first stage primary nickel product ("PNP") will contain 39% nickel and 1% cobalt and the second stage nickel product (SNP) will contain 25% nickel and 1% cobalt.

The next stage is a trial operation which will contribute to the bankable feasibility study. Rusina is currently constructing the trial pads that will start being irrigated early 2009, and plans to employ a Chinese EPC (Engineering Procurement Construction) contractor. Since the plant is basically a copy of European Nickel’s operation at Caldag, Turkey, it makes sense for speed, economy and accuracy to employ the Caldag contractors, and the added links to China won’t hurt either.  

Regulars will know that EN are earning their 40% by paying US$10m for the development to full Definitive Feasibility stage, so there is no drain on Rusina’s cashflow. The DFS should be complete by the end of 2009, at which point $498m in funding will need to be found, pro rata to the JV ratios. This includes 10% contingency. How will this be found? There are options, but let’s see how the market lies in H2 next year.

Exploration.


Dessert comes in the form of some surprise drilling results. Back in the September operational update, Rusina reported assorted results at Acoje. Part of this was to explore the chromite potential of the property – regular readers will remember that Acoje was originally a metallurgical-grade chromite mine which produced for over fifty years. Drilling targeted three near-surface virgin loads for extensions beneath their outcrops, with one additional deep (320m) hole exploring beneath the old workings. PGMs were also assayed.

The deep hole confirmed high grade chromite intercepts, including 6.05m of 44.4% chromite and another intercept of 3.60m at 42.9% chromite. This would be exploited from tunnel extensions to the old underground mine and wouldn’t come cheap, although the near-surface pods close by are an easy bonus. A joint venture partner would be needed, and Rob Gregory reckons an end user smelting group would make an ideal match, not least because it would eliminate marketing costs. Speaking of costs, chromite prices are down from $450/t to $200/t, and opex costs would likely be under $100/t. However, there’s a long journey to travel before feasibility studies begin.

What made some of us sit up were the anomalous PGM results that were returned within the massive chromite, including 0.4m at 1758 ppb platinum and palladium (1.76 g/t Pt + Pd), with palladium as the dominant component. Previously, the PGMs were thought to be restricted to black dunite nickel sulphide pods, which are quite separate from the chromite mineralisation, but if Rusina eventually exploits the chromite, these PGMs are virtually a free bonus. More intriguingly, it opens up new geological interpretations. Watch this space.

by David Rowland, Soource: http://www.proactiveinvestors.co.uk/companies/news/3806/better-news-for-rusina-mining-at-acoje-3806.html

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RI wants China to open market for tropical fruits

The Agriculture Ministry said Saturday that it had requested to China to open its market to Indonesian tropical fruits.

"We have asked the Chinese government to open its domestic market to tropical fruits from Indonesia and we have also proposed that certain particular fruits from our country be exported to China," Syukur Iwantoro, head of the agriculture ministry`s quarantine commission, said as quoted by state news agency Antara.

Iwantoro and a number of Agriculture Ministry officials are currently in Beijing at to sign a memorandum of understanding (MoU) on cooperation and consultation in the field of phytosanitation to ensure product and consumers security between the two countries.

The MoU was signed by Indonesia and China`s General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ).

Iwantoro said he had asked the Chinese government to import tropical fruits such as avocado, durian (durio zibeethinus), dukuh (lansium domesticum), water melon, melon, rambutan (nephelium lappaceum), guava, and mango (mangifer indica) from Indonesia.

Based on research, Iwantoro said those fruits had a potential market in China and therefore Indonesia wanted to export them to the country.

"From the result of our discussion with AQSIQ, we were given a signal that Indonesia has an opportunity to export a number of its tropical fruits to China if they have been registered with AQSIQ," he said.

Source: The Jakarta Post | Sat, 12/13/2008 7:58 PM | Business 

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Ministries at odds over market protection

The Trade Ministry and Industry Ministry are at odds on how to protect the domestic market from a projected influx of imported goods as the global economic slowdown cuts demand, resulting in massive excess in supply in the international market.

The two ministries differ on the implementation of plans by the government to introduce cuts in import duties on certain product categories under the framework of free trade agreements (FTAs).

The Industry Ministry has proposed to the Finance Ministry that the scheduled cuts in import duties be delayed to help protect the domestic market, the ministry's secretary general Agus Tjahjana said recently.

"A team at the Finance Ministry is discussing our proposal pertaining to the possibility of suspending the implementation of scheduled cuts in import duties to cope with the crisis," Agus told The Jakarta Post.

The Finance Minstry's fiscal policy agency head Anggito Abimanyu, who chairs the team, confirmed the deliberation to the Post.

The Industry Ministry's inspector general Sakri Widhianto previously said his ministry had drafted a proposal suggesting a postponement of cuts in import duties agreed under FTAs.

"The government should temporarily delay the implementation of low import duties stipulated by FTAs. Otherwise, local products may be threatened by imported goods," he added.

However, the Trade Ministry's secretary general Ardiansyah Parman said Asia-Pacific Economic Cooperation members had agreed "not to impede trades by any means".

Scheduled cuts are usually locked in a free trade agreement (FTA), which is negotiated by the Trade Ministry and which requires a signatory country to lower its import duties on particular goods incrementally, in many cases, until reaching zero via a series of yearly adjustments to help provide wider market access for countries within the FTA.

Industry Minister Fahmi Idris said: "In three recent world meetings, leaders predicted many countries would resort to policies that may cut across WTO rules to save their markets and industries amid the current conditions."

By contrast Ardiansyah said: "We (signatory members) won't take any steps to protect our respective domestic markets because it will harm global economic growth," he told the Post.

Ardiansyah argued that there are still many ways to protect the domestic market, without compromising the country's commitments to global trade, citing for example a recent regulation by the Trade Ministry aiming to reduce illegal imports and dumping.

The ministry has issued a regulation -- to take effect starting Feb. 1, on imports of particular products which stipulates that only five ports and certain international airports can serve as entry points for selected imported goods in five product categories, namely electronics, garments, toys, footwear, food and beverages.

The seaports are Belawan in North Sumatra, Tanjung Priok in Jakarta, Tanjung Emas in Semarang (Central Java), Tanjung Perak in Surabaya (East Java) and Soekarno-Hatta in Makassar (South Sulawesi).

Goods under these five categories entering through other ports will be considered illegal.

Source: Mustaqim Adamrah , The Jakarta Post , Jakarta | Sat, 12/13/2008 11:19 AM | Business 

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World markets mostly down as dismal data weighed

World markets were mostly lower in choppy trading Thursday, as investors mulled dismal economic data from China and a hefty, recession-fighting interest rate cut by South Korea's central bank.

Highlighting signs that the world's fourth biggest economy is weakening much faster than expected, China said Wednesday that its exports fell in November for the first time in seven years, prompting some investors to cash in on recent gains.

"This signals that China's economic growth is going to slow down noticeably," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong.

Japan's benchmark Nikkei 225 stock average closed up 0.7 percent, or 60.31 points, at 8,720.55 and Hong Kong's Hang Seng edged up 0.2 percent to 15,613.90. South Korea's Kospi gained 0.8 percent to 1,154.43.

But markets in Australia, China, Singapore and India fell while major European bourses opened lower. Britain's FTSE-100 was down 1 percent at 4,325.92, Germany's DAX slipped 1.8 percent to 4,718.05 and France's CAC-40 fell 1.5 percent to 3,270.14.

The Nikkei rebounded in afternoon trading on renewed optimism over the approval late Wednesday by the U.S. House of Representatives of a $14 billion bailout plan for ailing automakers.

A collapse of the U.S. auto industry would be catastrophic for exporting countries like Japan that rely heavily on American consumer spending, and investors were reassured despite the certainty of strong opposition from Republican senators.

Japanese automakers extended gains, with Honda Motor Co. jumping 7.9 percent and Toyota Motor Corp. advancing 4.8 percent.

South Korean stocks rose after the central bank carried out its biggest interest rate cut ever, slashing a key rate by a full percentage point to a record low of 3 percent.

But gains overnight on Wall Street, where the Dow Jones industrial average rose 0.8 percent to 8,761.42, failed to lift regional sentiment overall.

Stock futures pointed to a weaker session in the U.S. on Thursday. Dow futures fell 49 points, or 0.6 percent, to 8,712 and S&P 500 futures were down 1.8 points, or 0.2 percent, to 894.

In China, the benchmark Shanghai Composite Index fell 2.3 percent, or 47.44 points, to 2,031.68 after Chinese leaders ended a top level economic policy meeting without announcing any fresh initiatives to spur growth.

Banks and steelmakers were lower, as was Shanghai market heavyweight PetroChina, which slipped 1.5 percent to 11.42 yuan.
"Everyone knows that 2009 is likely to be the most difficult year ever for developing China," said Peng Yunliang of Shanghai Securities. "People are truly worried."
Major carriers China Southern Airlines and China Eastern Airlines jumped 9.9 percent to 3.66 yuan and 4.28 yuan, respectively, after the airlines announced details of plans for government cash infusions.
Oil prices edged higher on hope for a significant OPEC production cut next week. Light, sweet crude for January delivery was up 59 cents to $44.11 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.In currencies, the dollar was trading at 92.45 yen from 92.85 yen. The euro stood at $1.3151 from $1.3008

Source: http://www.thejakartapost.com

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Foreign investment up, Jakarta takes most

Endowed with rich natural resources and a large population, Indonesia is becoming more attractive for investors as indicated by an increase in the number of realized direct investment projects involving foreign businesspeople.
Chairman of the Investment Coordinating Board (BKPM) Muhammad Lutfi said Wednesday actual domestic and foreign investment had reached US$14.2 billion in the January to November period, higher than the full-year target of $9.92 billion.
Of the total, $12.5 billion was foreign direct investment (FDI), and the remaining $1.7 billion was domestic-based.
“FDI jumped by 40 percent during the period ... But domestic investment plunged by 51 percent,” said Lutfi, who was a member of President Susilo Bambang Yudhoyono’s campaign team during the 2004 election.
“The drop in domestic investment is due to the fact that local companies prefer to form joint ventures with foreign companies in order to pay less tax,” he said, adding that the condition was unlikely to continue as the government would soon implement a new tax law.

Under the new tax scheme, income tax will be slashed to 28 percent in 2009 and to 25 percent in 2010 from the current 30 percent.

The actual investment figure excludes those in the sector of oil and gas, mining, banking and financial institutions, including insurers.

Jakarta received the largest chunk of FDI, reaping $9.62 billion from 404 projects, followed by West Java with $2.39 billion from 255 projects, and Riau with $460.9 million from eight projects.
In domestic investment, West Java ranked the top with Rp 3.67 trillion (US$334 million) from 52 projects, tailed by East Java with Rp 2.56 trillion from 37 projects, and Banten with Rp 1.95 trillion from 29 projects.
According to Lutfi, the transportation, storage, telecommunications, metal, machinery, electronics and automotive sectors were the largest contributors to the investment.
“The good news is that so far some 650,000 people have been employed in the realized investment projects (begun) between January and November.” “This is a sign that our investment climate is getting better. We hope the trend will continue, especially through intense and serious efforts by local administrations to net more investors,” Lutfi said.
Last year, FDI reached $10.34 billion; with top sectors including transport, storage, communications and chemicals and pharmaceutical.
Domestic investment topped Rp 34.8 trillion ($3.16 billion), primarily due to projects involving the paper and printing industry, the food industry and the metal, machinery and electronics industry

Source: http://www.thejakartapost.com/news/2008/12/11/foreign-investment-jakarta-takes-most.html

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PGN expects robust sales in 2009 on demand from power producers

PGN expects robust sales in 2009 on demand from power producers  State gas distributor PT Perusahaan Gas Negara (PGN) expects sales to grow by 33 percent next year on rising demand from power producers. 

Sales volume is expected in 2009 to increase to between 700 and 800 million cubic feet per day (MMScfd), up from 600 MMScfd forecast for the end of this year, PGN president director Hendi Prio Santoso told reporters Wednesday. 

"Demand from power producers is very high. If we can manage to fulfill this demand we are optimistic for next year, despite the crisis," Hendi said. 

"But, we need further evaluation to examine how big the crisis will impact upon the industry and how long it will last," he said, adding that in the meantime PGN would focus on meeting demand from power producers -- its biggest customers. 

Currently, PGN hold contracts to supply 260 MMScfd to power producers. 

Despite the forecast growth in demand, Hendi said PGN would probably not increase its gas price. "We may maintain current price levels, unless we receive new gas supplies at higher cost." 

PGN currently sells gas at an average price of $5.5 per million British thermal units (mmbtu) and buys gas at a price of $3.9 per mmbtu. 

Riza Pahlevi Tabrani, PGN finance director, said capital expenditure for next year could reach $200 million financed by a mixture of internal budget and loans, the latter mostly from the Japanese Bank for International Cooperation and the World Bank. 

"Most of it will be used to develop the pipeline transmission network," Riza said. PGN finished 1035 kilometers of transmission and distribution pipelines in August this year. The pipeline system has a total capacity of 970 MMScfd. 

PGN is one of the state enterprises obliged by the government to buy back their shares to benefit from the large fall in stock prices to help improve liquidity. 

Hendi said PGN has so far only spent Rp 2.5 billion buying back its shares from Rp 400 billion allocated for that purpose. 

PGN booked Rp 2.04 trillion in net profits in the third quarter this year, up 56.8 percent from Rp 1.30 trillion in the same period last year.
Source: Alfian , The Jakarta Post , Jakarta | Thu, 11/27/2008 10:58 AM | Business 

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