SMEC Planning & Marketing Management

Business Highlight
December 2010

NATURAL RUBBER
Natural rubber exports are predicted to increase by 8% in 2011

Natural rubber exports are predicted to increase 7-8% from US$7-8 billion in 2010 to US$9-10 billion in 2011 as the commodity price remains relatively high. Currently, the demand for natural rubber exceeds its supply causing the price to increase to US$4.6/kg (SIR 20 was US$4.9 as at 21 December 2010). The decrease in rubber supply is mainly resulted from erratic weather which impacted to all rubber producing countries including Thailand and Malaysia. Thailand is currently the world's largest supplier of natural rubber with production of 3.1 million tons in 2010 with area of 2.6 million ha. However, recent data stated that Thailand production decreased 3% or 100 thousand tons. Meanwhile, Malaysia is only able to produce 1 million tons (with area of 1.2 million ha). Indonesia is estimated to reach 2.8 million tons (with area of 3.4 million ha) by the end of 2010. The increase in demand for natural rubber in Southeast Asia is inline with the increase in car production of 20%. Additionally, India also plans to increase its import volume by 80 thousand tons in 2010. Car sales in the US are also estimated to increase from 10 million units in 2009 to 12 million units in 2010.

Government will tighten the Standard Indonesian Rubber (SIR)

Government will tighten SIR which is planned to be effective at the beginning of next year. SIR 20 will be 0.16% while SIR 10 will be 0.8%. Other biggest rubber producing countries have tightened their standards since 2000. Thailand, Malaysia, and Vietnam have imposed a maximum dirt content of 0.16% while Indonesian rubber containing 0.2% or SIR 20.

PALM OIL
Crude palm oil (CPO) exports are estimated to reach US$15 billion by the end of 2010; however, the volume is estimated to decrease by 3%

CPO exports are estimated to reach US$15 billion in 2010 compared to US$10 billion in 2009 as the price is almost double from US$645/ton to US$1,010/ton. The price is projected to continue increasing to US$1,210/ton in the first semester 2011. Meanwhile, the volume of CPO export is estimated to decrease by 3% to 15.5 million tons (below target of 18 million tons set by Gabungan Pengusaha Kelapa Sawit Indonesia - Gapki). The decrease of CPO export volume is triggered by the increase of custom exit fee from 10% to 15% as recently regulated by Government.

COAL
Target for domestic market obligation (DMO) for coal in 2011 is 78.97 million tons

Ministry of Energy and Mineral Resources has set DMO quota for coal in 2011 amounted 78.97 million tons. Approximately 66.28 million tons are allocated for steam power where PLN receives 55.82 million tons or 70.69%. The remains are for PT Freeport Indonesia, PT Newmont Nusa Tenggara, and PT Pusaka Jaya Palu Power.

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The rest of the quota is for cement industry (8.86 million tons), fertilizer industry (1.97 million tons), pulp industry (600 thousand tons), and mining industry (340 thousand tons). In 2011, coal production is expected to reach 326 million tons where approximately 248 million tons are for export markets. In average, Indonesia's coal production increases by 13% for each year.
Transportation of coal in 2011 is guaranteed

National shipping business players guarantee that there are enough national fleets to transport coal for 2011. During 2010, there were additional 270 barges acquired both from shipyards in country and abroad to strengthen the domestic transport. The 270 barges were acquired from China shipyard (100 barges), Malaysia (20 barges) and Indonesia mainly from Batam shipyard (150 barges). Total investment was US$945 million. National shipping business players are also optimistic that they are able to transport the required coal capacity with the new five steam power plants (power plant) project acceleration of 10,000 mega watts (MW) which will start operating in 2011. Based on data from the Ministry of Energy and Mineral Resources (ESDM), the allocation for domestic coal in 2011 will reach 55.82 million tons. The five power plants are Indramayu West Java (3x330 MW), West Java Suralaya 1 (2x265 MW), East Java Paiton (1x600 MW) and Power Plant Lontar Banten (2x300 MW).

ELECTRICITY
Free electricity investment cost for developers

PT State Electricity Company (PLN) issued a circular to release developers from the investment costs for electricity network and travo. This will have an impact on the cost of small public housing called rumah sejahtera. The propertys cost of production will decrease along with the discharge of investment cost for electricity network and travo. The electricity investment cost is Rp3 million per unit. Ministry of public housing is optimistic that the purchase price of rumah sejahtera for landed houses (Rp55 million/unit) and vertical houses (Rp144 million/unit) will decrease by 2.08% and 5.45%, respectively.

INFRASTRUCTURE
Construction is predicted to grow 30%

Construction industry players estimate the national construction industry in 2011 will grow by 30% following the improved economic conditions (6%) and the increase in budget for the infrastructure sector as well as a relatively safe national political atmosphere. Government increases the budget for infrastructure sector in Ministry of Public Works by 56.7% to Rp57.2 trillion compared to the realization APBNP 2010 of Rp36.5 billion.

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The increase in national construction expenditure is also in line with the increase in the budget. Construction expenditure reached Rp164.9 trillion in 2008, Rp170 trillion in 2009, and estimated to reach Rp184 trillion in 2010. FOOD & BEVERAGE
Food and beverage industry and tobacco are projected to have an investment of Rp38.87 trillion in 2011

Investment in food and beverage industry and tobacco are projected to reach Rp38.87 trillion in 2011 compared to projected investment of Rp34.17 trillion in 2010. The investment by the end of 2010 is estimated Rp25 trillion under its projection of Rp34.17 trillion. Based on data released Kemenperin, as of September 2010, there were 173 projects of foreign investment (PMA) amounting US$758 million and 153 projects of domestic investment (PMDN) amounting Rp10.6 trillion. However, Franky Sibarani (Secretary General of the Food and Beverage Company) is optimistic that Kemenperin will be able to achieve the target considering the expected industry growth of 7.92% and interests from Japan and Europe investors to enter the industry in Indonesia. Based on Head of Quality Assessment and Industry Ministry of Industry (Kemenperin), Aryanto Sagala, most investment in 2011 will be contributed from food and beverage industry. It is in accordance to the strategic plans for 2010-2014 as Government plans to suppress the production of cigarettes in 2015.

TEXTILE & PRODUCTS

Cotton import is potentially reached US$2 billion

National cotton import is predicted to reach US$2 billion in 2010. Indonesia imported cotton from 75 countries, including from the United States, Brazil, and Australia. Data Central Bureau of Statistics (BPS) stated that the national cotton import as of October 2010 has reached US$1.7 billion, an increase of 41% compared to same period the previous year of US$1.2 billion. According to the Chairman of Indonesian Textile Association, Ade Sudrajat, the increase in value of cotton imports in 2010 due to the increase in cotton price by 100% from US$1.4 per kg in 2009 to US$2.8/kg in 2010. Indonesia currently imports 99.5% of the total national requirement or approximately 500600 thousand tons/year. Indonesia can only produce 2,500 tons/year. As the price of imported cotton increases, textile industry prefers export market due to a better margin compared to domestic market. Currently, US remains a primary Indonesian textile exports, with a contribution of 34% of total exports. European countries contribute about 11%. In 2010, approximately 40% of the domestic textile market is dominated by import products mainly from China, Vietnam, Cambodia, and India. The domestic textile markets turnover is estimated to reach US$10.5 billion in 2010 and US$11 billion in 2011.

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CHEMICAL
National petrochemical turnover is predicted to grow 12.9%

National petrochemical sales are estimated at US$3.5 billion in 2011 or an increase of 12.9% compared to 2010, driven by a growth of 8% in the demand and an increase in plastic raw material price. The volume of demand for petrochemical products in 2011 is estimated to increase by 8%. The value of demand for petrochemical products include polypropylene (PP), polyethylene (PE), Polymer (PVC), synthetic rubber or polystyrene (PS) and acrylonitrile butadiene styrene (ABS) is estimated to reach US$3.5 billion. Year 2011 is a good prospect for downstream petrochemical industries, especially food and beverage packaging, which is predicted to grow 15%. Meanwhile, the packaging of products is predicted to increase by at least 10% in line with increasing purchasing power, one of which is triggered by the strengthening of the rupiah against the U.S. dollar.

PLASTIC Downstream plastics industry is expected to grow only 5% in 2011

Downstream plastics industry is expected to grow only 5% in 2011, lower than this year about 7% - 8%. Several negative factors on the growth of downstream plastic industry in 2011 are the raw material supply, complicated process of import duties (BMDTP), and the increasing trend of world crude oil price. Imports of plastic raw materials, namely polyethylene (PE) and polypropylene (PP), until year end is predicted to grow 50% to more than 780,000 tons. PE and PP imports in 2011 are projected still quite high in line with increasing demand.

PHARMACEUTICAL
National pharmaceutical turnover in 2011 is projected to reach Rp42-43 trillion

The National pharmaceutical turnover is projected to reach Rp42-43 trillion in 2011, an increase of 12% - 15% from 2010. The growth is due to the volume of public consumption. In addition, Government will increase its budget allocation for drug expenditure through public health insurance programs (Jamkesmas) for the poor in 2011. Drug prices are expected to increase 2% - 3% in 2011 to adjust the movement of inflation Meanwhile, investment in the pharmaceutical sector in 2011 is predicted to stagnate. Drug producers will only increase the production capacity, purchase machinery and latest technology, or develop new product variants. Pharmaceutical market is currently dominated by branded generics segment (67%), followed by patent medicines of multinational industrial production (25%), and generic drug logo (OGB) (8%).

Import of pharmaceutical raw materials in 2011 is estimated to reach Rp9.59 trillion

Indonesia is predicted to import pharmaceutical raw materials amounted to Rp9.59 trillion in 2011. It represents 90% of total pharmaceutical raw materials. The raw materials are imported from China, India, United States, and countries in the European region.

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According to PMMC (Pharma Materials Management Club), the value of pharmaceutical raw materials business reached 25% of the total national pharmaceutical business. Meanwhile pharmaceutical market turnover is estimated to reach Rp3838.2 trillion by the end of year 2010, exceeding the initial target of Rp33-35 trillion mainly due to an increase in consumption volume. CEMENT
The needs of asphalt concrete will increase by 10% in 2011

Ministry of Public Works (PU) estimated that the needs of asphalt concrete will increase by 10% in 2011 compared to 2010. The increase is in line with the increase in length of national roads, i.e. from 34,000 km to 38,500 km. The use of asphalt concrete as raw materials is dominant in Indonesia. Approximately 90% of roads use asphalt, while the other 10% use cement. In addition, Government encourages the use of asphalt buton in 2011. It is estimated that the use of asphalt buton will be doubled to 60,000 tons in 2011. Currently, the use of asphalt buton has reached 33,477 ton.

Cement consumption estimated to increase 10% in 2011

Chairman of the Indonesian Cement Association (ASI) Urip Timuryono estimated national cement consumption in 2011 will increase by 10% to 44.33 million tons. Based on data from ASI, about 60% - 70% of cement consumption in Indonesia was from the private sector and the rest was absorbed by the government project. As of November 2010, the national cement consumption was 36.8 million tons; an increase of 6.6% compared to same period last year of 34.6 million tons. The largest cement consumption was still in Java with growth above 8%, exceeding the national cement growth of 6%. Sales of cement are mainly in retail (80%). The remaining 20% are in the form of packaging bags.

STEEL
Steel price will rise 20%

World steel price is projected to rise by 20% in 2011. According to Marketing Director of PT Krakatau Steel Tbk, Irvan Kamal Hakim, the current average price of hot rolled coils is US$700/ton, and he estimates that steel prices in the Q1-11 will increase by US$20-US$30/ton (approximately 15% - 20% increase). The increase in steel price is in line with the increase in oil prices which is predicted to reach US$100/barrel in 2011. It is also due to the increase in demand from China amounted 599 million ton, an increase of 45% from 2010. Meanwhile, the worlds demand for steel is predicted to increase 5.3% to 1.34 billion tons. Meanwhile, the world steel consumption and steel production in 2011 are estimated to be the same as 2010 which are 1 billion tons and 1.2 billion tons, respectively. This is mainly resulted from the exchange rate warfare and the economy in Europe, USA and Australia which have not yet fully recovered.

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AUTOMOTIVE
Tire price of motor vehicle tire is projected to increase by 7%

The selling price of motor vehicle tire in 2011 is projected to increase by 7% resulted from an increase in natural rubber price in the international market. Goldman Sachs Group Incorporated predicted that the price of raw rubber will increase four times to US$4.40/kg in 2011 compared to US$1/kg in 2008. Association of Indonesian Tire Company (APBI) targeted that domestic tire production for 4 wheel and 2 wheel vehicles in 2010 will reach 47.6 million units and 31.9 million units, an increase of 21.6% and 12.2% compared to previous year.

Total motorcycle sales reached 6.8 million units in 2010

As of November 2010, total national motorcycle sales were 6,858,343 units, an increase of 29% compared to same period last year of 5,300,007 units. The growth of motorcycle sales were mainly in Java, Sumatera and Sulawesi areas. According to Senior General Manager of PT Astra Honda Motor Sales, Kumala Sigit, the increase in motorcycle sales was supported by the improved purchasing power and the competitive down payment offered to the buyers. Honda still led the market share of motorcycle sales in Indonesia as of November 2010 with 3,200,533 units sold, an increase of 31% compared to the previous year of 2,443,178 units. It was followed by Yamaha in the second place with sales of 3,078,272 units, and Suzuki with sales of 43,271 units. Other brands contributed to the national sales were Kawasaki (7,851 units for January November 2010), TVS (17,406 units for January October 2010) and Kanzen (1,723 units for January October 2010). Total sales of motorcycles are projected to reach 7.2 million units by the end of 2010. Honda is estimated to have 48% market share.

In 2010, sales of Toyota-Astra Motors (TAM) showed the highest growth in Asia

In 2010, sales of TAM showed a growth of 46.6% in Asia (include 14 major countries). This performance was above the Toyota's growth in Asia which was 23.2% even surpass the growth of Toyota Motor Thailand Co. Ltd., the largest market center of Southeast Asia investment in the automotive industry, which recorded at 32.4%. TAMs sales volume of 279,600 units or 23,300 units per month was still under Thailands sales of 306,000 units or 25,500 units per month and Toyotas sales in Indonesia of 26,400 units per month. TAM maintains its position as the market leader with market share of 38.1%. Daihatsu was in the second position with market share of 15.4% (unit sales of 103,702 as of November 2010), followed by Mitsubishi of 13.6% (unit sales of 91,305), Suzuki of 9.1% (unit sales of 61,171), and Honda of 7.9% (unit sales of 52,903).

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ELECTRONICS
Electronic sales in 2011 are estimated to reach Rp28 trillion

National electronic sales value is estimated to reach Rp27-28 trillion in 2011, an increase of 15% - 20% compared to last year achievement. Several positive factors supporting the electronic market are better national economic growth, stable Rupiah against US dollar around Rp9.000, inflation of 6% and many foreign investments into Indonesia. Chairman of the Electronic Marketer Club (Electronic Marketer Club / EMC) Iffan Suryanto estimated that electronics sales in 2010 will not reach its target of Rp24 trillion, but only reach Rp23, 5 billion due to a significant drop in April May 2010. As of September 2010, electronic sales were Rp16.8 trillion. The drop was triggered by the enactment of Law No. 42/2009 on VAT and luxury sales tax. In this Act, a distributor of electronic products with a turnover of over Rp600 million entrepreneurs shall be taxable (PKP) before purchase goods from producers.

TRADE
Modern retail trade turnover is estimated to reach Rp115 trillion in 2011

Modern retail trade turnover is estimated to increase by 10% 15% to Rp110 trillion Rp115 trillion in 2011. Retail growth in 2011 will be supported by the projected economic growth of 6.7%. Increase in commodity prices and scarcity of raw materials will be the challenges for modern retail in 2011. These challenges will increase retail product prices and eventually squeeze the margins.

TRANSPORTATION
Domestic airlines passengers increased by 21.84% while international airlines passengers increased by 22.93%

As of October 2010, the number of domestic airline passengers increased by 21.84% to 35.38 million passengers from 29.04 million passengers as of October 2009, while international airline passengers increased by 22.93% to 7.93 million passengers from 6.45 million passengers.

TELECOMMUNICATION
Internet mobile market has just been explored by 40%

Opportunities for telecommunications operators to explore on the internet via mobile phone (mobile internet) are quite significant in Indonesia. In 2010, only 20%-40% of 197 million subscribers have the mobile internet services. The number of mobile devices in the world will reach 5 billion in 2010 with a penetration rate of 70% and 100% in 2020. In average 45 million mobile devices are sold every year in Indonesia.

PROPERTY
Land prices in buffer city areas are predicted to increase by 10 15%

Land prices in the Jakartas buffer areas are predicted to increase due to a prospective growth for new property projects primarily in the residential and commercial subsectors.

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Coldwell Banker Indonesia observed that land prices for residential areas in Tangerang, Depok, Bogor and Bekasi are predicted to increase by 10% in 2011 compared to year 2010. Meanwhile the land prices for commercial areas in the buffer areas will increase by 15%. COMPUTER
Software spending is estimated only reach US$400 million in 2010

In 2010, Software spending, including installation services and after-sales service, is estimated only reach US$400 million. According to the Chairman of the Indonesian Telematics Software Association (ASPILUKI), Djarot Subiantoro, software spending in Indonesia is only 20% of the total expenditure of information technology (IT) spending which is projected to reach US$2 billion in 2010. Board ASPILUKI, G. Hidayat Tjokrodjojo reveal the current software in Indonesia is still dominated by foreign, mainly for the operating system and software used to develop applications. Approximately 200 developers are ready to enter market application software implementation services in which the number is 2.5 times greater than the number of licenses. Based on the map of the national software market, the 200 application developers companies include 50 large companies category, where 20 of them are international vendors and 30 companies engaged in the distribution and system integrators.

MULTIFINANCE
Financing spare parts of heavy equipments encounter collateral constraints

The potential market for financing heavy equipment spare parts is relatively considerable considering the range of the level of the spare part unit prices. According to Hendrik K. Hadiwinata, General chairman of unity sole agent Indonesian heavy equipment, the sales of heavy equipment in 2011 are estimated to reach Rp35 trillion while the spare parts are approximately Rp15 trillion. In 2010, the sales of heavy equipments spare parts ranged from Rp10 trillion to Rp11 trillion. However, financing companies hesitate to enter heavy equipment spare part financing due to collateral constraints.

In 2010, multifinance industry will grow 20-25%

Financing Services Association (APPI) predicts that multifinance industry will grow 20-25% with conservative target of 20% in 2011. Meanwhile, total assets are expected to increase by 19.5% from Rp230 trillion in 2010 to Rp275 trillion in 2011. The industry growth is depended on the sales of motor cycles, heavy equipment and cars Approximately 90% of motorcycle sales are through credit. Currently, total sales are Rp70 74 trillion. Based on data from APPI, AISI, and the Indonesian Automotive Industry Association (Gaikindo), motorcycles sales have reached 6.20 million units as of October 2010. That number increased 30% or 4.78 million units from last year. This year target for motorcycle sales is 7 million units. Up to now, total sales for heavy equipment are Rp30 trillion. Approximately 50% of total sales are through multifinance

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companies. Last year, total sales of heavy equipment were 6,644 units while this year, total sales is estimated to reach 12,000 units. As of October 2010, car sales increased significantly by 60.4%. Total car sales were 652,322 units. Approximately 80% of total car sales are through credit from multifinance. BANK
Bank Mega expected its SME loan will reach Rp3 trillion in 2011

Bank Mega estimated that its SME loan will grow 200% or Rp3 trillion in 2011. As of November 2010, SME loan was Rp960 billion or 3.5% of total loan. As of Q310, total loan balance was Rp22.65 trillion, an increase of 30.4% from Q309 of Rp17.37 trillion. In the next five years, the loan balance is expected to have such composition as 50% (SME), 20% (commercial) and 10% (consumer and corporate).

Bakrie provide micro-finance for women

PT Bakrie Microfinance Indonesia (Bakrie Microfinance) is ready to provide micro-finance for productive women. The allocated funds are Rp100 billion per year, and the long-term target is five years with consistent growth can be more than Rp500 billion. The loan facility is limited to Rp1 million, referred to the calculation of the Grameen Bank in Indonesia of US$100 dollars. Microfinance Bakrie chose the concept of Grameen Bank to provide loans without collateral. The funding is intended for women with joint responsibility (tanggung renteng) system.

Implementation of prime lending rate is delayed

The prime lending rate implementation is delayed until the end of the first quarter of 2011 at the latest. It was initially effective starting 1 January 2011. The purpose of prime lending rate is for transparency of banking products and consumer protection. The regulation also states that banks have to disclose the effective annual interest rate. The prime lending rate includes costs such as evaluation charges, credit insurance premiums, and monthly statements costs. Chairman of the Association of National Commercial Banks (Perbanas), Sigit Pramono, noted that the regulations will potentially bring issues rather than presenting a solution. The requirement of disclosing the prime lending rate could cause confusion for retail customers. In practice, the interest rate charged to the debtor bank is the prime lending rate plus a risk premium. There is also an element of credit negotiation. Lending rate is also depended on the products offered to bank segments such as SME, consumer and corporate.

DBS targeted SME portfolio to reach Rp8 trillion in 2011

PT DBS Indonesia is targeting SME portfolio to reach Rp8 trillion in 2011. This target is a growth 100% compared to the achievement in 2010 of Rp4 trillion. DBS also set an aggressive target to grow 10 times in 2013 and 20 times in 2015 to reach 5% of the total market share of SMEs in Indonesia.

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The target was designed in line with SME business growth in Indonesia. Each year, SME businesses are able to grow about 18% - 20%. DBS plans to go in the segment of agriculture, commerce, manufacturing, infrastructure, and mining. Approximately 40% of DBSs SME lending is from Jabodetabek while the remaining 60% is from outside Jabodetabek. DBS has about 1,100 SME customers. The number of customers is expected to increase to 2,700 customers in 2011, 10,000 in 2013, and 16,500 in 2015. DBS expected SME portfolio to represent 50% of total loans in five years. Until the end of September 2010, total loans has reached Rp19, 6 trillion, an increase of 41% compared to same period last year of Rp13, 9 trillion.
BRI reduced gross interest margin for micro and SME segment to 8% in 2011

BRI reduced gross interest margin rates for micro-credit business sector, small and medium enterprises (SME) to 8% 8.5% in 2011 to narrow the competition with other banks. Currently, the range of gross interest margin for the sector is still 9% to 9.5%. BRI will enter the main markets to further accelerate and expand the reach of micro finance company. As of September 2010, Micro credit was contributed approximately 28.95% of total loans. As of September 2010, total outstanding credit at BRI Rp228.69 trillion mainly from retail (47.15%), micro (28.95%), corporate (17%), and commercial (6.90%).

OIL AND GAS

Oil and gas in 2011 is expected to reach US$15 billion

Oil and gas investment is expected to reach US$14.9 billion in 2011, mostly in the oil and gas upstream sector (US$13 billion). As of September 2010, oil and gas investment reached US$7.9 billion consisted of the upstream sector of US$7.5 billion and downstream sectors amounted to U$400 million. Oil and gas industrys challenges in 2011 are mainly target production of 970,000 BOPD (barrels of oil production per day) or an increase of 5000 BOPD from 2010, and limited capacity of oil and gas infrastructure. Government has prepared strategy to encounter the challenges including put on production wells exploratory findings and three new LNG receiving terminals.

The 10% increase in oil and gas exploration projection aims to increase the number of reserves in 2011

The 10% increase in oil and gas exploration projection aims to increase the number of reserves in 2011. Approximately 219 oil and gas contractor cooperation contracts (PSC) have proposed their investment plans of US$13.8 billion in 2011 where 10% of the value is for exploration. The 219 oil and gas PSC consist of 66 PSC and 179 exploration contractors. On January 1, 2009, Indonesias oil proven reserves (P1) was 4.3 billion barrels, an increase of 12.8% from 3.75 billion barrels in 2008. However, with the depletion rate of 8% per year, an

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increase in P1 is considered not significant, moreover, at the same time the P2 reserves (measurable reserves) and the P3 (unexpected reserves) were down by 17%. PLANTATION
Plantation revitalization interest subsidy is extended until 2014

Ministry of Finance (Kemenkeu) decided to extend the interest subsidy budget for the revitalization of the plantation until 2014. Initially, plantation revitalization budget only until 2011. Plantation revitalization program was done through expansion, renovation and rehabilitation of plantation for palm, cocoa, and rubber. The plantation revitalization activities will be on 2 million hectares (ha), covering 1.5 million ha of palm trees, 0.3 million ha of rubber, and 0.2 million ha of cocoa. Government provides incentives such as interest subsidy for three years for rubber plantations of 6% per year, and for palm and cocoa of 7%. Plantation revitalization funds until the year 2014 is Rp38, 6 trillion, of which Rp6.4 trillion is for oil palm (144.623 ha), rubber plantation (6.296 ha) and 69,995 farmers.

ADVERTISING Advertising expenditure Rp43 trillion reached

National advertising expenditure reached Rp43.76 trillion during January September 2010, an increase of 23% compared to same period in 2009 of Rp35.54 trillion. The expenditure was spent on 24 TV stations, 95 newspapers, 163 magazines and other medial. TV represented 63%-64% of total advertising expenditure followed by newspaper (30%). The rest is mainly from magazines, radio, and cinema. It is estimated that advertising expenditure will reach Rp60 trillion by end of 2010 and Rp65 trillion in 2011.

OTHERS
Rattan processing worsening industry is

Based on data from the Association of Indonesian Furniture and Handicraft Rattan (AMKRI) as of December 2009, about 220 companies or 43% of 516 companies engaged in rattan processing sub-sector, have gone out of business. The businesses for the 208 companies (40%) are in distress, and the remaining 88 companies (17%) are trying to survive. The decrease in rattan processing industry has happened since 2005, allegedly due to exported raw materials and illegal semifinished rattan. Moreover, the competitor countries such as China and Vietnam has growing rapidly and grabbing the industry market share and potential export of national rattan products. During 2005-2009, the national rattan furniture industry capacity stagnated at the level of 551,585 tons / year, while production volume continues to drop from 386,180 tons (2005) to only 174,385 tons.

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The decreased competitiveness and market share of national rattan products and lack of domestic consumption cause the needs of rattan raw materials to decrease to 104,632 tons (2009).
Express service delivery in 2011 is projected to fall 10%

Express Services Association of Indonesia (Asperindo) estimated that freight business performance for both domestic and international will likely to decrease about 10% in 2011 compared to the performance of 2010. The volume of international and domestic freight is also predicted to fall 5% -10% in 2011. One of the factors is the economic conditions in the U.S. and Europe which have not yet stable. Another factor is the domestic regulations that impede the flow of freight delivery and increase operating costs. The regulations namely P20 and P35 are on the customs, regulated agents, and restrictions policy on subsidized fuel.

DISCLAIMER The information contained in this report has been compiled from sources that we believe to be reliable. However, BII or any of its affiliates makes no representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information. BII or any of its affiliates or its related persons accepts no liability for any consequences arising from the use of the material presented in this report. This report has been prepared for information purposes only and intended for circulation within BII only.

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