Category: Goverment

Indonesia is said to be one of the countries that will avoid dark clouds next year. Even with this year’s G20 Summit, many commitments that ensure investment next year in Indonesia remain convincing. A nickel trading company from China, Lygend Resources & Technology, will soon conduct an initial public offering on the Hong Kong exchange and place Indonesia at the central point of the company’s massive expansion.

Launching the IPO prospectus, Lygend has ambitions to raise up to US$ 594 million or the equivalent of IDR 9.21 trillion (assuming an exchange rate of IDR 15,500/US$) to finance business expansion in Indonesia. The company’s shares will begin trading on the Hong Kong Stock Exchange on December 1.

The company said it would use 56.4% of the IPO funds for the development and construction of a nickel production project on Indonesia’s Obi Island. Then 24% of the IPO funds will be used for additional capital in Contemporary Brunp Lygend (CBL), a joint venture with Contemporary Amperex Technology (CATL).

CBL will focus on projects in Indonesia across the entire new electric vehicle (NEV) industry value chain, from nickel mining exploration, production of nickel and NEV battery materials, to NEV battery manufacturing and recycling. CBL is currently planning to set up a joint venture with Indonesian partners, namely PT Aneka Tambang Tbk (ANTM) and PT Indonesia Battery Industry (IBI).

Approximately 9.6% of the IPO funds will be used to invest in potential nickel mines in Indonesia to secure the supply chain given the increasingly crowded landscape of the nickel downstream industry. Meanwhile, the remaining 10% will be used for working capital and general company activities.

This massive expansion has enabled the nickel trading company to significantly increase exports of the metal, for which demand for nickel is very high in China. For information, Lygend itself is the largest nickel product trader in the world and the largest in China with a market share of 26.8% in 2021.

November 26, 2022, CNBC Indonesia

(https://www.cnbcindonesia.com/market/20221126141052-17-391449/korporasi-china-ini-ipo-rp-9-triliun-demi-garap-nikel-ri)

Indonesia and Chile have added a services trade protocol to their bilateral trade agreement as the two emerging economies brace for a potential global recession. At a signing ceremony on Monday, Indonesia’s Trade Ministry said the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA) could become a gateway to South America for Indonesian export goods.

“Chile has competitive human capital, is one of the developed countries in South America, and I think its economy is the best among countries [of that region],” Trade Minister Zulkifli Hasan told participants at the event in Jakarta.

From 2019 to 2021, the trade volume between Indonesia and Chile increased by around 54 percent to US$424.6 million. The minister called for a further increase to $1 billion over the next two or three years and said Chile could become an export “expansion hub” to the markets of Argentina, Ecuador, Peru and Colombia.

“The potential is very big. Because they have money, they can pay for our export goods,” Zulkifli added.

Striving to be a developed country by 2045, he said, Indonesia should expand its export markets and “dominate” the world market instead of only the traditional market of Europe, the United States, and Asia. Given the slow growth and even possible recessions in Western countries, Zulkifli said, it was necessary to find alternative export markets. He said Indonesia needed 7 percent annual GDP growth to become a developed country by 2045, which required a vast expansion of exports to Latin America, Africa, the Middle East, Central Asia, Eastern Europe, and South Asia.

Speaking at the same event, Chilean Deputy International Economic Relations Minister Jose Miguel Ahumada said the newly signed protocols would allow Indonesia and Chile to use the IC-CEPA as an “import and export platform” to each respective region. He called for a “substantial step forward” in the implementation of this protocol, which included contemplating greater access of professional services and the movement of people, instead of just focusing on trade in services. Signed in Santiago in December 2017 and taking effect in August 2019, IC-CEPA is the only CEPA-level agreement between Indonesia and a Latin American country.

November 21, 2022, The Jakarta Post

(https://www.thejakartapost.com/business/2022/11/21/indonesia-chile-add-services-deal-to-trade-agreement.html)

The Asian Development Bank has approved a US$500 million loan for the Indonesian government to reform state-owned enterprises (SOEs) in the country with the aim of improving their efficiency, resilience and corporate governance. The program will support efforts to reduce the number of SOEs and require them to focus on core operations, so that they can be financially viable and efficiently provide essential public services. Other areas include measures to improve the quality of SOE boards, strengthen financial monitoring and disclosure, and help SOEs transition to a climate-compatible business model. The German development-bank KfW will provide co-financing with a loan equivalent of €300 million (US$310 million).

“SOEs can play a vital role in fostering inclusive and sustainable recovery from the COVID-19 pandemic in Indonesia. But to deliver greater value to the public, their structural weaknesses must be addressed,” ADB senior public-management specialist for Southeast Asia Yurendra Basnett said in a statement on Friday.

The Indonesian government has made efforts to downsize SOEs in the country. In 2019 alone, there were around 143 state-run firms, or more if one includes all subsidiaries. SOEs Minister Erick Thohir has asked two deputy ministers to help with dividing these SOEs into two main groups of 48 and 73 companies respectively. The effort included forming holding companies, especially for firms with good prospects and in a healthy financial state, while some firms that are underperforming or that depend on regular state-capital injections were to be liquidated, merged or divested.

The number of SOEs has been brought down to 41 firms as of March. Erick said he aimed to push their number down further to 37 and hope a future SOEs minister could slash it again to below 30.

“So, the important note is that the corporations are shrinking but the net profit is increasing. The government efforts to downsize SOEs had made them much more efficient, enabling them to book profits. In 2021, total combined-net profits of SOEs were IDR 90 trillion, up from IDR 13 trillion a year earlier” Erick Thohir said as quoted by Kompas on March 17.

November 20, 2022, The Jakarta Post

(https://www.thejakartapost.com/business/2022/11/20/adb-provides-us500-million-loan-to-help-indonesia-downsize-soes.html)

Indonesia has attracted new investment into the electric vehicle (EV) sector, coinciding with the Group of G20 forum, where global leaders and businesses agreed on commitments to lower carbon emissions.

Indonesia Investment Authority (INA), Contemporary Amperex Technology Co. Ltd. (CATL) and CMB International Capital Corporation Ltd. (CMBI) signed a memorandum of understanding (MoU) on Monday to establish a Green Fund, which they will jointly invest in. The fund, which is expected to grow up to US$2 billion, will focus on EV value chain investment primarily in Indonesia from downstream to upstream. In addition, Chinese conglomerate Envision Energy is set to enter Indonesia’s EV battery industry, particularly in the area of raw materials.

“Electrification is an attractive solution for conventional energy in helping to reduce the environmental impact while also tapping into a potential growth market,” INA CEO Ridha Wirakusumah said in a statement.

Indonesia possesses roughly a quarter of the world’s nickel reserves amounting 21 million tonnes on a par with Australia that holds the same amount, followed by Brazil and Russia, according to the United States Geological Survey (USGS). Indonesia is expected to emerge as a global nickel hub with nearly half of the globe’s refined nickel to be supplied by Indonesia by 2030.

The fund and the Chinese firm added to a long list of investments drawn to Indonesia, as more businesses sought to harness the country’s EV ecosystem potential, along with Foxconn and Hyundai, among many others.

State-Owned Enterprises (SOEs) Minister Erick Thohir lauded the recent INA cooperation with several investors. He added that SOEs too have caught the opportunity by forming Indonesia Battery Corporation (IBC), a joint venture from four mining and energy state-run firms, that focuses on developing the country’s EV ecosystem.

Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan has reaffirmed Indonesia’s commitment to accelerating the energy transition in order to achieve the net-zero emissions target by 2060. Speaking at the BNEF Summit in Nusa Dua, Bali on Saturday, Luhut noted that the target was very likely to be achieved considering Indonesia’s new and renewable energy potential of 437 gigawatts (GW). The government, he continued, was ready to develop the national clean energy potential through state-owned electricity company PT PLN (Persero).

“Mr. Darmawan (PLN President Director) mentioned and reminded me that until 2060, the potential for renewable energy investment is around US$700 billion. This is a big cake, and that’s why I am very confident that Indonesia can accelerate the energy transition as there is so much potential that we can do in this country if we manage it well. You can see that Indonesia is committed to net-zero emissions by 2060 or faster. And again, I believe we can make it happen faster through technology and teamwork, and we are learning,” he said.

With Indonesia’s sizable potential for new and renewable energy, Luhut said this could serve as an opportunity for cooperation among countries around the world to jointly reduce carbon emissions. PLN President Director Darmawan Prasodjo noted that Indonesia’s energy transition must be carried out to guarantee the future of the nation’s children, as it is a value held by PLN in its commitment to the energy transition.

“PLN is fully committed to net-zero emissions. In the past, our main business was providing electricity to customers, but in the future PLN’s main task is to maintain a good environment, with electricity being one of the company’s business products,” Darmawan concluded.

November 15, 2022, The Jakarta Post

(https://www.thejakartapost.com/adv/2022/11/13/indonesia-ready-for-us700-billion-renewable-energy-investment.html.)

Indonesian businessmen and China have signed contracts to purchase crude palm oil (CPO) products and their derivatives. The export value of the signed CPO reached US$ 2.6 billion, equivalent to Rp. 40.3 trillion (exchange rate of Rp. 15,500). The memorandum of understanding on trade cooperation was signed by the China Chamber of Commerce for Import and Export for Foodstuffs, Native Produce and Animal By-Products (CFNA) with four Associations for Indonesian palm oil products and their derivatives.

 Minister of Trade Zulkifli Hasan alias Zulhas previously said that the agenda for signing a trade contract at the Ministry of Trade signed the purchase of 1 million tons of CPO products. Where the figure was previously planned during President Joko Widodo’s meeting with Chinese President Xi Jinping. However, not long ago the Ministry of Trade reported that the trade agreement that had been made suppressed the purchase contract of 2.5 million tons with a transaction value of US$ 2.6 billion. The transaction was carried out in the signing of 16 trade contracts by 9 Indonesian business actors with 13 Chinese buyers assisted by the China Chamber of Commerce for Import and Export for Foodstuffs, Native Produce and Animal By-Products (CFNA). Zulhas also expressed a request to make it easier for other Indonesian products to enter the Chinese market. In this way, it is hoped that the cooperation between the two countries will continue to be profitable.

For information, in January to August 2022 exports of Indonesian palm oil products and their derivatives to China reached US$ 3.6 billion. Based on data from the Central Statistics Agency processed by the Ministry of Trade, the export volume of palm oil products and their derivatives from Indonesia to China in 2021 will reach 6.6 million tons. That value increased 14.17% from the previous year. In 2021, the export value of Indonesian palm oil products to China reached US$ 6.06 billion, an increase of 82.87% from the previous year. This increase was due to the increase in world CPO commodity prices in the last year.

On the same occasion, Deputy Minister and Deputy Minister for International Trade of China Wang Shouwen, said he acknowledged that Indonesia had been a source of palm oil for China for 7 consecutive years. His party is committed to continuing to improve bilateral relations, both for CPO imports and others.

November 11, 2022, detikFinance

(https://finance.detik.com/berita-ekonomi-bisnis/d-6400751/china-borong-cpo-ri-nilainya-rp-40-t)

The Energy and Mineral Resources Ministry has extended its contract to supply gas to Singapore for five years from the initial expiry date of 2023. Energy and Mineral Resources Minister Arifin Tasrif told reporters that the government would continue supplying gas to the city-state until 2028, having considered domestic supply and demand.  He added that the volume exported under the extended contract would be lower than before to prioritize domestic demand.

“[Indonesia] still has [adequate] gas reserves, so we’re extending [gas exports to Singapore] for the next five years. We need to help each other,” he said on Friday.

Upstream Oil and Gas Regulatory Task Force (SKK Migas) head Dwi Soetjipto explained that declining gas export volumes were due to increased demand from the domestic fertilizer industry.  He estimated a 30 to 40 percent cut from the previous gas contract.

“We predict that [gas] prices will increase due to high demand,” Dwi said, also on Friday. He added that the government had yet to sign the five-year contract extension but expected it to be signed in November.

The energy minister announced in 2020 a plan to stop supplying gas to the city-state in the hope of creating added value for the nation’s natural gas and reducing its trade balance deficit.

Indonesia’s gas exports to Singapore come from several sources, including from the Corridor Block operated by ConocoPhillips (Grissik) Ltd., Repsol’s Talisman Corridor Ltd. and Pertamina upstream oil sector arm Pertamina Hulu Energi Corridor, which has a supply of 300 million standard cubic feet per day (mmscfd). Singapore’s natural gas consumption in 2020 was approximately 1.22 billion cubic feet per day (bcfd), according to a 2021 British Petroleum (BP) statistical review.

October 28, 2022, The Jakarta Post

(https://www.thejakartapost.com/business/2022/10/28/indonesia-extends-gas-exports-to-singapore-by-five-years.html?)