BIOFUEL INCREASINGLY IMPORTANT AMID EXPENSIVE OILS

By Andi Abdussalam

Jakarta, May 31 (ANTARA) - Much has been said about developing and using alternative energy in Indonesia but not much of it has been realized so far.         A discourse on it, however, emerged again in recent days as the world crude price is sky-rocketing, forcing the government to raise domestic fuel oil prices.         Academics and experts are now being urged to conduct more research to identify alternative energy products in anticipation of an energy crisis with the crude price in the world market having reached US$135 per barrel.         "We are encouraging researchers to continue studying alternative energy sources that could replace expensive fuel oils," the rector of West Sumatra-based University of Andalas (Unand), Prof. Dr Musliar Kasim. said over the weekend.         The Unand rector's appeal is relevant given the country's land potentials to grow cassava, maize and sweet potato plants which could be developed to produce bio-diesel and bio-ethanol.         "West Sumatra has the potentials to develop cassava, maize and sweet potato plantations to produce vegetable-based fuel oils," Musliar Kasim said.         He said Unand was backing the government's appeal to the people to work together in overcoming the energy crisis in the country following the significant increases in fuel oil prices.         besides maize, other agricultural commodities such as palm oil, coconut, jatropha curcas and kapok were also potential sources for bio-diesel production as alternative energy to replace diesel oil.         Bio-ethanol can be produced from maize, cassava, sago and sweet potato and replace premium gasoline.         But the agricultural product that has the greatest potential of serving as an alternative energy source to replace premium is oil palm waste which can be converted into ethanol. Malaysia recently developed this kind of energy, said Kasim. <br>         According to Ahmadin Luthfi of the National Agency for Assessment and Application of Technology (BPPT), palm oil (CPO) wastes can also be processed further into bio-diesel as vegetable-based fuel or an alternative to diesel oil.         Bio-ethanol can also be produced from maize. In Kebumen district, Central Java, for example, a factory processing maize into bio-ethanol has been established. The factory which is managed by PT Bio Prima Energi Mandiri was the first of its kind to operate in Central Java.         Kebumen District Head Rustrianingsih, who officiated at the factory's commissioning last week, said the presence of the maize-based bio-ethanol factory was urgently needed amid the shrinking of natural oil reserves.         "Now is the time for the government and private businesses to think of producing alternative energy amid the upward trend of fuel oil prices," Ristrianingsih said.         She said that the establishment of the factory was supported by the region's maize production potentials which in 2007 reached 27,202.69 tons.         Owing to declining oil reserves and increasing fuel oil prices, the prospect of alternative energy businesses in the country is virtually bright.         However, careful studies and researches are needed to assure the potentials of other sources of energy other than oil.         "We are encouraging researchers to continue carrying out studies on renewable energy resources in West Sumatra because this province has extensive land for the development of bio-fuel plants. West Sumatra has supporting suitable climate conditions," Musliar Kasim said.         Such an activity is really important owing to the fact that in the last several years Indonesia's national oil production capacity has continued to decline.         Due to the decline in its oil production, Indonesia is planning to quit the Organization of Petroleum Exporting Countries (OPEC) next year.         Indonesia's oil production reached its first peak in 1977, at approximately 1.6 million barrels per day, rising from 500,000 barrels per day in just 10 years. Production peaked a second time 1995, again just over 1.6 million barrels a day.         Since 1995, production has steadily declined and in 2006 was down to just 1 million barrels per day, or roughly a 37.5 percent decline, making the country a net oil importer.         Earlier in 2007, the government announced a target of increasing oil and gas production by 30 percent to 1.3 million barrels per day and 8.5 billion cubic feet per day, respectively by 2009.         The average oil production of the country in the January-May 2008 period, however, was still recorded at 977,835 bpd.         In order to find alternative energy sources in the wake of the decline in the country's oil production, the government is called on to provide more funds for researchers to carry out their studies. In Unand, for example, there are about more 1,000 researchers who are ready to carry out studies.         "They have produced 118 research findings and spent some Rp7 billion on their work since 2007," Musliar Kasim said. (T.A014/A/HAJM/14:40/a/f001)         (T.A014/A/A014/A/F001) 31-05-2008 14:40:31

RI STUDYING US RESPONSE ON NAMRU-2 DEAL

By Andi Abdussalam         Jakarta, May 30 (ANTARA) - Indonesia is studying the United States response on Jakarta's draft memorandum of understanding (MoU) on a proposal for the extension of cooperation with the US Naval Medical Research Unit No.2 (NAMRU-2) on its service in the country.         Indonesia has proposed to the US government a draft MoU on the NAMRU-2 service extension in November last year. "I have received the US response to the MoU last week," Foreign Minister Hassan Wirajuda said on Thursday.         A team of inter-departmental officials are discussing the new proposals from the United States, according to the foreign minister without giving details on US response.         But the Indonesian government has yet to decide any position with regard to the new proposal. Last month, many quarters raised an opposition to the government's plan to extend the cooperation with NAMRU-2.         "The government should stop and take over the operation of Namru-2 laboratory," Mutammimul Ula, member of the House of Representatives' Commission I which deals with foreign affairs, said.         During 30 years of operation in Indonesia, NAMRU-2 failed to provide the country with concrete benefits in the defense and health fields.         Mutammimul Ula claimed that other legislators agreed if the drafting process of a Memorandum of Understanding (MoU) released by the Foreign Ministry is terminated.         "Indonesia has now established cooperation with various institutions like the World Health Organization (WHO) to carry out researches and data transfers," he said adding that therefore the extension of cooperation with NAMRU-2 was not necessary.         Indonesia and the United States began cooperation on NAMRU-2 in the 1970s on researches of communicable diseases in Indonesia.         Since 2004, NAMRU-2 at the U.S. Embassy in Jakarta has provided assistance to the Indonesian government at the request of the Ministry of Health. It has helped in transporting specimens to one of four WHO Influenza Reference Laboratories.         NAMRU-2 conducted tests in 2004 and 2005 on samples taken from humans demonstrating signs of a flu-like illness and who were queried about their degree of contact with poultry; collaborated the Center For Disease Control (CDC) in Atlanta on NAMRU-2's Viral Disease Program.         The NAMRU-2 project was terminated on January 1, 2006, however, as its contract with Indonesia expired on December 31, 2005.         Indonesia took the decision to terminate NAMRU-2 activities based on an agreement reached among the Ministry of Foreign Affairs, Ministry of Defense, the Ministry of Legal and Human Rights Affairs, the Ministry of Health, the Ministry of Home Affairs and other relevant agencies.         However, tests on samples of bird flu suspects to identify the H5N1 strain of virus still continued until January 2007, after which the health minister stopped sending virus specimens to the reference laboratories.         "But the on-going research such on malaria, dengue and diarrhea is still continued," Health Minister Siti Fadilah Supari said last month.         The health minister herself was reluctant to extend cooperation with NAMRU-2, though the government had proposed last November an MoU cooperation extention.         Siti Fadilah Supari said NAMRU-2 had begun conducting researches on communicable diseases in Indonesia in the 1970s but the results of which were not yet concrete for the elimination of contagious diseases in Indonesia.         Therefore, according to the minister, the government should thoroughly consider it before it decided to extend the cooperation.         "Should the cooperation be extended, the government must firmly state its attitude in the new agreement," she said.         It was reported earlier that the United States had asked diplomatic immunity for all of its NAMRU-2 officials if its service was to be extended.         US Health Minister Michael O Levitt during a working visit in Indonesia last month asked the Indonesian government to give diplomatic immunity to Namru-2 staffers.         Indonesian Defense Minister Juwono Sudarsono said that the Indonesian government was only prepared to grant diplomatic immunity to two US NAMRU-2 staff members.         "We are sticking to our stance that not all of Namru-2 officers will be granted diplomatic immunity. We will give the immunity to only two of the 20 US naval officers with Namru-2," he said.         Previously, Foreign Minister Hassan Wirajuda said that in the proposed MoU, the Indonesian government included details of revisions in the previous provisions of the agreement.         "After we held an inter-departmental meeting, the Indonesian government decided to improve the provisions in the NAMRU-2 cooperation agreement," the minister said. (T.A014/A/HNG/A/E002)         (T.A014/A/A014/A/E002) 30-05-2008 22:03:19

GOVT, PUBLIC TRANSPORT OPERATORS PLAYING 'TUG OF WAR' ON FARES

 BY Andi Abdussalam

     Jakarta, May 29 (ANTARA) - The government, operators and users of public transportation have been playing a three-sided `tug of war' on tariffs over the past few days following last week's fuel oil price hikes.

        While their representatives are still holding talks with the government, public transportation drivers on the ground are unilaterally raising transport fare rates they would ask passengers, often with exchange of harsh arguments, to pay for.

        Metromini and mikrolet mini buses in Jakarta, for example, have raised their fares by Rp500 per passenger while air-conditioned buses increased their tariff by Rp1,000 per passenger.

        Some drivers even went on strike. Drivers of urban public transportation vehicles (angkot) went on strike in three West Jakarta locations on Wednesday to urge the government to set new fares in adjustment to the newly raised fuel oil prices.

        At the same time, the Organization of Public Transportation Owners (Organda) was holding talks with the government, demanding a government subsidy or a fare increase by 30 percent.

        Previously, the organization threatened to unilaterally raise public transportation fares by 40 to 50 percent, or call a nation-wide strike if in a week's time the government did not set a fair rate.

        "We are resolved to stage a nation-wide strike. We will do it so that passengers no longer need to pay the arbitrarily inflated fares as they do now. The public was already carrying a heavy economic burden so we should not add to their hardships," Organda Chairman Murphy Hutagalung said on Monday.

        Besides asking for a subsidy or an increase of 30 percent fare, Organda in a meeting with Vice President Jusuf Kalla on Wednesday, also asked the government to abolish all forms of illegal levies and burdening regulations as well as to improve infrastructure and eliminate illegal public transport operations.

        "The five-point demand was formulated during a plenary meeting held by Organda on May 25, 2008. The vice president has received our proposal and he will discuss it with the relevant agencies," said Murphy.

        He said that Organda had proposed a subsidy which is equal to the amount of the difference between the old and new fuel oil price hikes. The requested subsidy for premium gasoline, for example, is Rp1,500 which is the difference between its old price of Rp4,500 and its new one Rp6,000.

        The government on Friday increased the price of premium gasoline from Rp4,500 to Rp6,000 per liter, diesel oil from Rp4,300 to Rp5,500 and kerosene from Rp2,000 to Rp2,500. The average increase was 28.7 percent.

        "So, the amount of subsidy we are asking for depends on the types of fuel oils that have had their prices raised," Murphy said.

        In the meantime, the government has yet to decide whether or not it would provide subsidy to public transportation.

        "We have discussed the subsidy problem at the vice presidential office before the government announced fuel price hikes. But no decision has been made because we still need to see its technical aspects," Transportation Minister Jusman Syafii Djamal said.

        On Wednesday, the minister attended a meeting between the vice president and the Organda executives to discuss the subsidy and fare problems. Minister Jusman Syafii Djalal said one of the technical aspects was to grant subsidy incorporated with the use of smart cards.

        The government is launching a try-out program in certain cities to restrict fuel oil consumption where consumers have to use smart cards when refilling at fuel oil stations.

        "We are still considering whether public transportation operators would be provided with subsidy by using smart cards," the minister said after attending the meeting.

        Vice President Jusuf Kalla is, however, still considering the Organda's proposal for subsidy. The vice president said previously that public transportation operators had actually been enjoying subsidies.

        He referred to certain types of fuel oils which were still subsidized. "There is fuel oil which the government is still providing a 50 percent subsidy," Jusuf Kalla said.

        The vice president considered that the increased rate by 30 percent as proposed by Organda was too high, saying fuel oil cost accounted for only 16 percent of all the operation costs of public transportations vehicles.

        "So, if transportation fares are to be raised, the appropriate increase is about five percent. For this the government allows it to be increased by 10 percent," the vice president said.

        Organda's Jakarta branch had earlier demanded that the Jakarta city administration provide fuel oil subsidy for public transport, reduce the taxes and abolish various other levies transport operators had to pay.

        "We want an increase of 40 percent to 50 percent in the tariffs, unless operators of public transportation vehicles are allowed to buy fuel oils at the old (subsidized) price," chairman of Organda's Jakarta branch, Harry Rotty said.

        In response to Organda's threat, the government called on public transportation operators not to unilaterally raise their tariffs.

        "We have to be aware of the fact that the people cannot afford a high increase in public transportation fares and that high tranport fares will fuel inflation," Minister Jusman Syafii Djamal told a transportation workshop in Aceh on Thursday. (T.A014/A/HAJM/A/S012) 19:55/) 
(T.A014/A/A014/A/S012) 29-05-2008 19:57:07

GOVT ALLOWS BASIC TRANSPORTATION COST TO RISE BY 15 PERCENT

By Andi Abdussalam

     Jakarta, May 27 (ANTARA) - The government has issued a ruling that following the recent 28.7-percent increase in fuel oil prices, economy-class public land transportation rates in the country can be raised by not more than 15 percent. The norm was set with the aim of preventing the rates from being raised by the public transport operators unilaterally and exxessively.

        But in reality, bus and minibus owners or drivers in many parts of the country had already reacted to the fuel oil price hikes announced on Friday (May 25) by increasing their tariffs or suspending operations pending an announcement on new fares by local authorities.

        Transportation Minister Jusman Syafii Djamal has written to all governors in the country notifying them about the 15-percent limit on transportation fare raises.

        "This should be used as a reference for raising public transportation fares so that any increase in intercity bus economy-class fares or city and rural transportation fares will not be excessive," the minister said in his letter No. AJ.302/1/1/Phb-2008 sent to the governors.

        In the government's calculations, as a result of the fuel oil price hikes, the basic cost for the operation of intercity buses increased by about 15 percent.

        Based on its calculations, the basic costs for region I, which covers Sumatra, Java, Bali and Nusa Tenggara, increased from Rp100.26 per kilometer per passenger to Rp115, and for region II which covers, Kalimantan and Sulawesi) increased from Rp110 per kilometer per passenger to Rpp126.5.

        "With such an increase in transportation operating cost, the rate for intercity bus economy-class fare increase should be at a maximum of 15 percent. This means that in region I, the upper limit fares are set at Rp150 per passenger per kilometer and the lower limit was set at Rp92 per passenger per kilometer, while in region II, the upper limit was set at Rp165 per passenger per kilometer and the lower limit was set at Rp101 per passenger per kilometer," the minister said.

        In the meantime, it was reported from a number of provinces in the country that public transportation operators had unilaterally raised transportation fares at a rate ranging from 20 to 35 percent.

        Passengers had no choice and were forced to pay the fares they had raised unilaterally. The Organization of Land Transportation Owners (Organda) could understand if some operators had raised their fares while waiting for the government decision.

        Organda's branch for Semarang,

Central Java, is proposing an increase of about 20 percent for public transportation fares. Sri Marjoko of Semarang office of Organda said that in response to the fuel oil hikes by an average of 28.7 percent, Organda wanted that public transportation fares should also be increased by about 20 percent.

        "The 20 percent increase is calculated based on operational costs and increase of spare-parts prices following fuel oil price hikes," he said.

        Actually, Organda and local authorities are still discussing fairer rates for the increase in public transportation fares following the fuel oil price hikes.

        In Jakarta for example, Organda and the Jakarta administration were until Monday still discussing the hikes of public transportation fares.

        "We are still discussing the rate of fare hikes in Jakarta with Organda. There is no decision has been reached yet. It is not correct if we decide it alone. Let alone if it concerns intercity bus fares," Jakarta Governor Fauzi Bowo said on Monday.

        The Jakarta Transportation Council also met with Organda on Tuesday to discuss the fare hikes in Jakarta but so far they had not reached a decision.

        Head of Jakarta Transportation Service Nurachman said that his side would discuss the option of raising fares with Organda. There are other options for Organda in connection with the fuel oil price hikes, which included subsidy and tax cut facilities.

        "If subsidy and tax cut facility options are not taken then the public transportation fares should be increased. In calculating it, the a rate should be set not more than 15 percent. Transportation owners should go on strike only as a last option if other options are not met," said Nurachman.

        He said that his side has called on Organda not to go on strike because it would have wide impact on the general public while the options of raising fares or providing subsidies were still under discussion.

        Organda has previously threatened to go on strike if public transportation fares are not increased soon, or one week at the latest after the fuel oil prices were raised. But Nurachman has predicted that the negotiation process for raising the rate of public transportation fares could need more than one week.

        The fact on the ground now is that while discussions were still going on some public transportation owners have unilaterally raised their fares.

        Metromini and mikrolet mini buses, for example, have raised their fares by Rp500 per passenger while air-conditioned buses increased their tariff by Rp1,000 per passenger.

        Transportation Minister Jusman Syafii Djamal hoped that all relevant parties, including the central government and regional administrations would take concrete steps to help reduce the potentials that could cause high cost economy.

        "Illegal levies and other undesired actions that would put burdens on public transportation owners must be reduced," he said. 

 (T.A014/A/HAJM/A/O001) (T.A014/A/A014/A/O001) 27-05-2008 20:54:34

CASH ASSISTANCE MAY BREED PEOPLE'S BEGGING MENTALITY

 By Andi Abdussalam

     Jakarta, May 18 (ANTARA) - While millions of poor families across the country are waiting for direct cash assistance (BLT), many quarters have raised objections to the government's program, saying it could breed the recipients' begging mentality.

        Around 19.1 million poor families throughout Indonesia will receive a cash assistance of Rp100,000 each plus cooking oil and sugar packages per month in compensation for the increased price of goods following the government's decision to raise domestic fuel oil prices.

        For its BLT program, the government has earmarked Rp41.1 trillion for distribution to the poor beginning in June 2008. The would-be recipients have now begun receiving BLT cards.

        "The cards for first stage recipients in ten cities have been distributed. We hope all poor families in the ten cities would have received them on May 21, 2008," Secretary General of the Ministry of Social Affairs Chazali H Situmorang said this week.

        Though millions of people are badly in need of the assistance, some quarters have voiced criticism against the government's program.

        "We reject the BLT program and other assistance of its kind because it does not solve the essence of problems being faced by the people," Agustinus Edy Kristianto, director of the publication and education affairs of the Indonesian Legal Aid Institute (YLBH), said.

        He said that the distribution of BLT and other such assistance like the social safety net (JPS) often missed its target and is prone to misappropriation.

        The YLBH executive also criticized the government's plan to raise fuel oil prices, saying the policy constituted a package leading Indonesia to economic liberalism.

        "Reducing subsidy is in line with the policy of the International Monetary Fund (IMF) which advocates the market mechanism," Kristianto said.

        Rejection of the government's program also came from at least 26 villages in Blitar district, East Java. "The BLT assistance will adversely breed the people to become beggars," Abdul Chamim, chief of Karanggayam village, Srengat subdistrict, said.

        Chamim, coordinator of the village heads who rejected the assistance scheme in Blitar, said he objected to the government's plan because it would only trigger conflicts among villagers and create lazy people who were actually expected to be creative in how to get rid themselves of poverty.

        "It would be better for the government to cancel the plan and replace it with a program on people empowerment, on health and education, or on a labor-intensive program," Chamim said after a meeting with a number of members of villagers' board of representatives.

        Instead of receiving direct cash assistance, the people would prefer to have a job. Therefore, the people want the government to open more job opportunities.

        "Many villagers in various regions voiced their aspirations. They said the value of the BLT was too small. They wanted the government to offer more job opportunities instead," Eka Komariah, member of the Regional Representatives Council (DPD), told an interactive discussion on fuel oil price hikes and the effectiveness of the BLT.

        Besides, the distribution of the BLT could also create envy and trigger a new conflict in society. According to Tjahjo Kumolo, chairman of the Indonesian Democratic Party of Struggle (PDIP) faction in the House of Representatives (DPR), the direct cash assistance could not be provided equitably so that it would create social envy.

        He said that the BLT was to be distributed to the poor based on data collected in 2005. "This would create social envy because it does not cover all poor families," he added.

        West Java's Karawang District Head Dadang S. Muchtar said the distribution of a BLT in the past had always created a conflict in society. "This year BLT will undoubtedly create fresh social envy and trigger the outbreak of a social conflict," he said.

        He said the government's data on poor families were often inaccurate. People who felt they were poor but gained no assistance would protest.

        Therefore, the Karawang district head suggested that the BLT be provided in the form of infrastructure development that would facilitate the people's economic activities.

        The same aspirations were also voiced by hundreds of village heads in West Java's Cirebon district. They objected to the BLT, saying it had always served as a trigger of social unrests.

        The village heads expressed objections during a training program at Cirebon's Apita Hotel last week. They said they would welcome it if the BLT was changed into a labor-intensive program for villagers.

        Momon Sayaman, one of the village heads, said it would be better for the government to use the BLT for developing infrastructure facilities and creating jobs for the local people.

        In spite of the objections from many sides, millions of poor families are now still waiting for the assistance as the government has begun distributing BLT cards to the would-be recipients.

        Secretary General of the Ministry of Social Affairs Chazali H Situmorang said that for 2008 the assistance would be distributed in two stages.

        In the first stage, the assistance for three months will be distributed in June and in the second stage, the assistance for four months will be provided in September.

        In the meantime, military and police officers are ready to secure the distribution of the direct cash assistance to 19.1 million poor families.

        "The distribution of the BLT is actually the responsibility of regional governments but security officers are ready to help and maintain security," Deputy Police Chief Insp. Gen. Makbul Padmanegara said.

        The same thing was also voiced by Indonesian Defense Forces (TNI) Commander General Djoko Santoso. He said that TNI personnel were ready to guard the BLT distribution.

        "We will assist police in securing the distribution of the cash assistance," he said. (T.A014/A/HNG/A/S012) (T.A014/A/A014/A/S012) 18-05-2008 15:07:43

RI'S OIL OUTPUT SHOWING UPWARD TREND

By Andi Abdussalam

     Jakarta, May 14 (ANTARA) - Government officials are upbeat that Indonesia's oil output will exceed one million barrels per day (bpd) this year after observing an upward trend in the country's oil production since January.

        "Indonesia's oil production could exceed one million (bpd) at the end of this year," Head of the Upstream Oil and Gas Regulatory Body (BP Migas), R Priyono, said Tuesday.

        According to data made available by BP Migas, Indonesia's average oil output in the last five months was 977,835 bpd. However, the figure is still well below the country's daily oil consumption of about 1.2 million bpd.

        In order to narrow or fill the gap between consumption and output, Vice President Jusuf Kalla said the government was planning to raise its oil output by 200,000 bpd to 1.2 million bpd by 2010.

        "I think we will be able to raise our crude oil production to 1.2 million bpd by 2010 as we have adequate potential oil resources," he said at a dialog with employees of state oil and gas company Pertamina's processing unit in Balikpapan, East Kalimantan, last week.

        According to R Priyono, the prediction that the one-million bpd production level could be exceeded was based on the upward trend in national oil production in 2008.

        Priyono said Indonesia's daily crude and condensate production in January was recorded at 955,847 bpd, February 986,848 bpd, March 985,872 bpd, April 978,060 bpd and May 982,550 bpd.

        It is expected that the upward trend would help the government raise its oil output and achieve its target since Indonesia had turned from an oil exporting state to an oil importing nation.

        Early in 2007, the government announced a target of increasing oil and gas production by 30 percent to 1.3 million barrels per day and 8.5 billion cubic feet per day, respectively by 2009.

        Indonesia, once one of the most important oil exporters in the world, has become a net oil importer in recent years due to a continued decline in its crude production.

        Its oil output reached its first peak in 1977, at approximately 1.6 million barrels per day, rising from 500,000 barrels per day in only 10 years.

        Production peaked a second time in 1995, again just over 1.6 million barrels a day but it began to decline steadily in the years that followed.

        The country, now the second smallest member of the Organization of Petroleum Exporting Countries (OPEC), is in a dire need of private investment to boost oil and gas output in its aging fields.

        Oil industry observer Dr Kurtubi said Indonesia's failure to manage its oil wealth properly in the past few years had caused its crude oil production to decline and led to its dependence on oil imports which had now placed the country in a difficult position.

        Kurubi said that as a result of the improper management of the country's oil potentials, the government was now facing difficulties in maintaining the state budget amid the sky-rocketing crude prices in the world market.

        "Indonesia could have reaped huge profits from the current world crude price hikes but mismanagement of our oil potentials has caused us to face difficulties now," Kurtubi said.

        In the current situation where crude oil prices have surged to around US$125 per barrel, the government had to spend a large amount of funds on oil imports.

        "If we want to be safe and gain profit from world crude price hikes, we have to pump up at least 1.3 million barrels per day. If that level is achieved we will be safe in the face the world oil turbulences," he said.

        With an output of 1.3 million barrels per day, the government could afford Rp26 trillion to Rp30 trillion in fuel oil subsidy without having to raise domestic fuel oil prices, Kurtubi said.

        According to Vice President Jusuf Kalla, Indonesia has large potentials to raise its oil production to meet its rising consumption, he said.

        "We have so far been able to export our oil. The market for our oil is already clear. In this country of 220 million, we will not lose the market," he said.

        BP Migas chief R Priyono said the upward trend of the country's oil output could be further boosted now that new oil fields have started production.

        He said additional crude production would come from 16 new oil fields whose plan of development (PoD) would be carried out this year. The volume of additional production from the new fields was predicted at 71,000 equivalent barrels of oil per day (boepd).

        "We are optimistic the upward trend in Indonesia's oil production would continue," he said. (T.A014/A/HAJM/15:00/....) (T.A014/A/A014/N001) 14-05-2008 14:59:31

TEMASEK TO CHALLENGE JAKARTA COURT`S VERDICT

By Andi Abdussalam 

        Jakarta, May 13 (ANTARA) - Singapore's state-owned investment firm Temasek Holdings Pte. Ltd is planning to file an appeal with Indonesia's Supreme Court after its objections against the country's anti-trust body ruling that it had violated Indonesia's anti-monopoly law were rejected by the Central Jakarta District Court last week.

        Temasek had previously filed an appeal with the Central Jakarta district court over a ruling in November last year by the Business Competition Supervisory Committee (KPPU) that it and its subsidiaries had violated Indonesia's anti-monopoly law, particularly the law's articles on cross-ownership.

        Lukas, a lawyer for Singapore Technologies Telemedia (STT), one of Temasek's subsidiaries, said his client would appeal the Central Jakarta district's verdict, which he said was far from being just and had weakened legal certainty for investment, particularly foreign investment, in Indonesia.

        "The verdict is not in line with the basis of cooperation in the protection of investors who have been invited by the Indonesian government," he said.

        Lukas said there was a very basic problem as there was no proof that his client controlled majority stakes in Indonesia's Telkomsel and Indosat. This was clearly stated in the notarial deeds on the Singaporean companies participation in the Indonesian firms.

        "The charges against STT must fulfill two aspects, namely control of the majority stake and occupying a dominant position in the market, before STT can be declared a violator of Article 27, Law No. 5 / 1999," he said.

        The Central Jakarta District Court found on Friday last week that Temasek had violated Article 27 of Law No. 5 /1999 on Monopolistic and Unsound Business Competition Practices.

        "Temasek Holdings violated Article 27 point (1), Law No. 5 / 1999," Presiding Judge Andriani Nurdin said.

        The court ordered the Singaporean state-owned investment firm to sell or reduce its stakes in the two Indonesian mobile-phone-service providers, Telkomsel and Indosat, bringing forward a deadline.

        The court also fined Temasek, Telkomsel, Indosat and each of its subsidiaries Rp15 billion (US$1.6 million) and gave Temasek a choice of relinquishing at least 50 percent of its shares in both Telkomsel and Indosat or letting go of all shares in either company within a year.

        The KPPU in November last year found Temasek Holdings guilty of cross-ownership in the two domestic mobile telecommunication companies leading it to abuse its dominant position in the market and to practice monopoly.

        The business competition law bars a company from having a controlling stake in another company in the same business sector with a market share of 50 percent or more.

        The KPPU said last year Temasek had to let go all indirect shares either in PT Telkomsel or in PT Indosat, and to pay a fine of Rp25 billion for breaching the anti-monopoly law.

        Temasek owns a 54.15 percent stake in SingTel Group which holds a 35 percent stake in Telkomsel, while Singapore Technologies Telemedia (STT) which is wholly owned by Temasek controls 75 percent of Asia Mobile Holdings which in turn has a 41.9 stake in Indosat.

        The largest market shareholder in Telkomsel was found guilty of violating article 17 of the law, particularly of abusing its dominant power to determine the interconnection tariffs among operators.

        The Central Jakarta District Court's ruling last week was welcomed by the KPPU. Litigation Affairs chief of the KPPU Muhammad Reza said his side was satisfied with the court ruling.

        "We are satisfied with the court's verdict," he said.

        In the meantime, Temasek's subsidiary SingTel said it was disappointed by the court's verdict to reject Temasek's appeal.

        "SingTel is deeply disappointed with the Central Jakarta District Court's ruling to uphold the KPPU decision. The court's ruling is without any basis and we object strongly to it. SingTel and SingTel Mobile do not own majority shares in any Indonesian company. Further, neither SingTel Mobile nor SingTel controls Telkomsel. Telkomsel is majority-owned and controlled by PT Telkom," SingTel said in a statement on Friday.

        "The facts are Temasek has no shares in Indosat and Telkomsel, and plays no role in their business decisions and operations,' Temasek managing director for strategic relations Goh Yong Siang was quoted as saying by the Strait Times in its website.

        According to KPPU chairman Syamsul Maarif, consumers had suffered a loss of between Rp14 trillion and Rp31 trillion over the past three years due to the high cellular phone tariffs determined by the two cellular phone service providers.

        "The cellular phone tariff is 40 percent higher than that in neighboring countries," Maarif told MetroTV in a dialog on The Economic Challenge on Monday evening.

        But Goh said both Telkomsel and Indosat were regulated businesses, operating within the guidelines of the Indonesian Telecommunications Regulatory Authority (BRTI).

        Therefore, Temask would file an appeal with the Supreme Court as soon as possible, he said, adding the Central Jakarta District Court had ignored the government's decision to privatize Indosat.

        "The divestment in Indosat was done at the government's request because it needed revenue. The court should have respected the government," Temasek lawyer Todung Mulya Lubis was quoted as saying by the Jakarta Post. (T.A014/A/HAJM/A/O001) 13:00/... ) (T.A014/A/A014/A/O001) 13-05-2008 13:13:00