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SingCham Weekly:  Positive Capital Market in 2018

Monday, 8 January 2018

Tax office sees rise in taxpayer compliance

The government’s concerted effort to boost tax revenue, including its flagship tax amnesty brought a positive side effect in 2017 as taxpayer compliance hit the highest point in four years. The rate stood at 72.6% last year, up 9.45% from 63.15% posted in 2016, the office reported. The figure also outperformed the 60.42% in 2015 and 59.12% in 2014. The tax office managed to collect Rp7.83tr in taxes from individual tax payers in the past year, up 47.32% from 2016. That compares to a 35.66% drop posted in 2016 from a year earlier. Despite reaching a four-year high, the latest compliance rate was still below 75% targeted by the tax office for 2017.

Consumers’ optimism continues to strengthen

Consumer Survey of Bank Indonesia (BI) indicates improvement in consumer optimism in December 2017, as reflected by the Consumer Confidence Index reaching 126.4, higher than the previous month of 122.1. In an official statement BI explained, the increasing consumer confidence was driven by improved consumer perceptions of current economic conditions and consumer expectations of economic conditions in the future.

Jasa Marga to operate 285 km of toll roads in 2018

Jasa Marga is estimated to operate a toll road of approximately 285.92 km this year. The length of the operating toll road includes 142.96 km of toll roads that were delayed in operation last year. President director Desi Arryani revealed that the company could operate at least 175 km of toll roads this year, excluding the operation of the Solo-Ngawi and Ngawi-kertosono toll roads that should be operated last year. The company also proposed the construction of the Tomang-Cengkareng flyover to overcome the density on the toll road leading to Soekarno-Hatta airport. This toll road construction will be done if JORR 2 is no longer able to reduce the density in the Inner City toll road and the South Jakarta-Cikampek II toll road has shown results.

Ministry of Agriculture to regulate floor and ceiling price on live bird and egg

This is following the recent hikes of live bird and egg price in consumer level by c.3% and 7% yoy. Though the regulated price is still unknown, but Pinsar (Indonesian Poultry Association) suggests prices to range at Rp16,500-20,000 for live bird and Rp17,000-21,000/kg for egg.

 

Flash floods strand commuters, stall cars

Flash floods in eastern Singapore stranded commuters and caused several vehicles to stall following heavy rain on Monday morning. Widespread rain fell over the island on Monday morning, with the heaviest rainfall recorded at Kim Chuan Road. The 118.8mm of rainfall that fell in the area between 6.20-10.25am was about half of Singapore’s average monthly rainfall in January, according to national water agency PUB. The agency said in a statement on Monday that flash floods occurred in nine locations in the east, from parts of Tampines to sections of Bedok and Upper Changi Rd.

Govt disappointed with Keppel bribery scandal

The Government is “extremely disappointed” with the conduct of Keppel Corp — whose offshore and marine unit was involved in an international corruption scandal — and stressed it does not condone improper conduct overseas by Singapore companies. Responding to parliamentary questions filed by several Workers’ Party (WP) MPs on the bribery scandal, Senior Minister of State for Finance and Law Indranee Rajah said that the Government has zero tolerance for corruption, and warned firms not to “import” corrupt practices into Singapore. She reiterated that state investment firm Temasek Holdings, which holds stakes in large companies such as Keppel under its portfolio, holds board members of these government-linked firms responsible for doing the right thing, and they could be replaced if they fall short of the required standards.

 

Tuesday, 9 January 2018

Govt expands fuel contract duration

The Downstream Oil and Gas Regulatory Agency (BPH Migas) has extended the duration of distribution contracts from one to five years in a bid to encourage private firms to supply fuel to less accessible regions. The longer contract period is expected to provide greater certainty in building distribution networks on their own. Currently, Pertamina operates around 6,800 gas stations nationwide. Nonetheless, it only fully owns 170, while the rest are jointly-owned with various partners. Meanwhile, AKR only ran 129 gas stations across the country as of August 2017. This year, Pertamina and AKR have targeted to establish 50 and four fuel stations, respectively, under the one fuel price program, bringing the total to 54 stations, similar to what BPH Migas set for 2017.

2017 budget deficit down to 2.42%

The 2017 revised state budget (APBN-P) is thinning under initial assumptions. Latest data released by the Ministry of Finance shows, the budget deficit only 2.42% to GDP, lower than the previous of 5.57%. The decline was in line with additional state revenue of Rp4.2tr until Jan 8, 2018. At the same time, state expenditure down to Rp15.6tr.

PLN to issue US$2bn Komodo Bonds in 2018

Perusahaan Listrik Indonesia is preparing to issue rupiah-denominated global bonds to raise US$2bn for financing the country’s power development, its president director said. The bonds, also known as “komodo bonds,” will be offered for the second time, after last month’s issuance by state-owned toll road operator Jasa Marga, which raised Rp4tr. PLN, which has a monopoly on distributing power in the country of 260 million people, will use the issuance proceeds to support the government’s 35,000 megawatt power development plan and to pay debts. The electrification project requires about US$140bn, while the company’s debts have been estimated at US$4.32bn.

 

MAPI to focus on specialty store

After closing Lotus & Debenhams department store, Mitra Adi Perkasa is planning to focus on specialty store outlets this year. Based on Kontan’s news on Nov. 17, MAPI predicted the realization of additional stores last year will exceed the initial target of 200 outlets. As of Sep. 30, MAPI already has 1,916 outlets spread across 68 cities.

Bond price might rally this year

Bank Indonesia’s intention to regulate the proportion of marketable securities held by banks could deepen the bond market in Indonesia. The new regulation is also expected to encourage stabilization of yield and price of Indonesia government bonds. Previously, Bank Indonesia guided that it will issue a new regulation that will require banks to have a minimum holding of marketable securities, amounting to a certain percentage of their third-party funds. It guided that the new regulation will be implemented in mid 2018. On the other hand, the Financial Services Authority now requires non-bank financial institutions to own 20-30% of their investments in the form of government bonds.

 

Investor residency scheme brings in S$1.8bn between 2011-2016

From 2011 to 2016, Singapore’s investor residency programme has brought in investments which generated S$1.8bn in total business expenditure, and created more than 6,000 job opportunities in industries such as infocomm media, engineering and financial services, said Senior Minister of State (Trade and Industry) Sim Ann in Parliament. The Global Investor Programme (GIP) scheme — which was launched in 2004 — accords permanent residence (PR) status to foreign investors with substantial business track record and successful entrepreneurial background, provided that they intend to drive their business and investment growth from Singapore. To qualify, foreigners have to invest a minimum of S$2.5m in Singapore through a business, or in GIP funds that invest in Singapore-based companies. As of June last year, a total of 1,826 applicants have been granted PR status since the programme’s inception.

Crimes where suspects can be detained without trial

Seeking the renewal of the Criminal Law (Temporary Provisions) Act (CLTPA), the Ministry of Home Affairs (MHA) tabled amendments to the Act which will, among other things, specify the scope of criminal activities for which suspects could be detained without trial. The ministry proposed adding a Fourth Schedule listing the types of activity for which the Minister for Home Affairs can make orders for detention or Police supervision. The list includes unlicensed moneylending, involvement in secret society activities, human trafficking, murder, robbery with firearms, gang rape and kidnapping. The ministry said it had “considered the observations of the Court of Appeal” in the case of alleged match-fixer Dan Tan Seet Eng, whose detention under the Act was ruled unlawful by the courts in Nov 2015.

 

NTU aims to become a tech-savvy campus with new Smart Pass, tech courses

A new degree programme in artificial intelligence, modules on information and communication technologies, an all-in-one smart campus card, as well as drones and painting robots. These upcoming initiatives under the Smart Campus initiative are aimed at transforming the Nanyang Technological University (NTU) into a tech-savvy campus in “the months and years to come.” The NTU Smart Pass will be rolled out to the university’s 40,000 students and staff members in stages. NTU is also looking into developing a Smart Alumni Pass. Replacing the current student matriculation card, the new pass, which comes with a contactless identity chip and the NETS FlashPay function, functions as an identity card, an access card and a cash-free mode of payment that can be used at both public and on-campus vendors.

 

 

Wednesday, 10 January 2018

Government will impose excise tax for e-cigs by July 2018

The proposed excise tax amounted at 57% from selling price. Association of e-cigs stated that such regulation will impact to a total of 5,000 e-cigs stores with average sales of Rp3mn per day. In total, these business reached Rp15bn sales per day or Rp5-6tr per year.

Jakarta – Bandung HSR project delayed, Kertajati Airport to serve Haj flights in 2018

The Coordinating Minister for Maritime Affaris Luhut B. Pandjaitan said that the completion of the high-speed railway (HSR) Jakarta – Bandung project may be backwards from the target considering it has not been running yet. Thus, the mega-project still needs to be re-evaluated. He said, the delay in this project is not because funding issue, but the business feasibility that needs to be reviewed again. He mentioned that the loan from China for this project has not been disbursed. He added that after evaluation, the cooperation with China will remain in place, because the agreement between two consortium Indonesia and China has been established. Related to the Kertajati Airport, Luhut optimistic that the airport can serve Haj flights in 2018. He mentioned, the airport runway will be extended to 3,000m x 60m from the current 2,500m x 60m. The airport will be the first airport in Indonesia that will accommodate airbus A380 aircraft and serve the Haj flights this year.

Motorcycle sales pace to pick up in 2018

The motorcycle market throughout 2017 were improved although the wholesales distribution still decreased slightly by 0.76%. This year, sales pace were driven faster by 3%. Based on AISI, motorcycle sales throughout 2017 as much as 5.88mn units or slightly declined by 0.76% compared to previous year that more than 5.93 mn units. According to AISI’s chairman, for this year will have 2-3% increment in the sales volume. Optimism towards the increase of motorcycle distribution to dealer is based on several factors such as: the government promises not to increase electricity tariff and fuel price.

SMRA exceeds 2017 marketing sales target

Summarecon Agung succeeded to exceed the marketing sales target to Rp3.56tr throughout 2017. The number is equivalent to 102% of the target set by the company. The increase in sales was helped by the launch of property product such as the Symphonia cluster in Serpong, Topaz & Ruby commercial projects in Bandung, Kalista cluster in Karawang and the rest is property project from Bekasi and Kelapa Gading.

 

Minister Susi told to stop sinking fishing ships

Coordinating Maritime Affairs Minister Luhut Binsar Pandjaitan has prohibited Maritime Affairs and Fisheries Minister Susi Pudjiastuti from continuing her policy of sinking fishing boats caught illegally catching fish in Indonesian waters. The Maritime Affairs and Fisheries Ministry started cracking down on illegal fishing by foreign ships in 2015. More than 380 vessels have since been scuttled or destroyed. Minister Susi has insisted that she will continue to sink illegal ships in Indonesia because it is part of the law to enforce tough punishments against illegal fishing. The Indonesian Chamber of Commerce and Industry (Kadin) has expressed its support for Coordinating Maritime Affairs Minister Luhut Pandjaitan and Vice President Jusuf Kalla’s call to put an end to the illegal boat-sinking policy.

Singapore property rebound just started

Credit Suisse Group AG and Morgan Stanley are calling the end of Singapore’s property downturn, after a second consecutive quarterly increase in private residential prices. Home prices may rise as much as 10 per cent this year, according to analysts at Credit Suisse, while Morgan Stanley and OCBC Investment Research expect as much as an 8 per cent increase, according to reports from the brokerage firms. Private residential prices rose for a second straight quarter in the period which ended on Dec 31, reinforcing signs that the city-state’s property market is emerging from a four-year slump.

 

Thursday 11 January 2018

Ministry to finish review of delayed railway project

The government seeks to finish a review on the construction of Jakarta – Bandung railway project worth US$5.9bn this month, after a two-year delay in construction. With the delay and mounting doubts over the financial viability of the project, President Joko Widodo instructed Coordinating Maritime Affairs Minister Luhut Pandjaitan and SOE Minister Rini Soemarno to review the project. Luhut said the review also checked the feasibility of developing a 140-km track and other options, such as a 200-km track connecting Jakarta to Kertajati Airport in Majalengka, West Java.

JSMR allocates Rp44tr

Jasa Marga allocates capex worth Rp44tr to realize the development of new toll roads along 200-km every year. AVP corporate communication Dwimawan Heru explained that the budget consist of Rp32tr for cash capex and non-cash capex Rp12tr. The capex allocation increased by 40% compared to last year of Rp26tr. Meanwhile, this year, the government targets toll road operation totaling 545.78-km for business portion and 68.8-km for government portion.

 

WIKA expects loan from China Development Bank to be disbursed in Jan 18

WIKA expects the US$700mn loan facility from China Development Bank to finance the High-Speed Train project to be disbursed in Jan 8. It also cited that talks of additional length to the railway is still a plan as of now, with no changes to the funding scheme currently. The SOE Minister cited that previously, the loan disbursement was waiting for the completion of land acquisition Halim. Now that the land acquisition is done, the construction of the tunnel could be continued.

 

PTPP’s net profit to reach Rp1.7tr

Pembangunan Perumahan’s net profit in 2017 is estimated to reach Rp1.7tr or up 67.6% compared to 2016 amounting to Rp1.02tr. President director Tumiyana said, to maintain the stability of performance in 2018, it aims new contracts around Rp50tr and total revenue of Rp28tr. As for net margin is projected below 2.1%.

 

Positive Capital Market in 2018.

The Jakarta bourse has set a target of listing 35 new companies this year, on the back of improving economic growth and upcoming regional elections that are expected to boost consumption in the country. Companies planning to go public this year is expected to exceed the official target of 35. There are several challenges this year in the domestic market, including hype surrounding the biennial multi-sport event Southeast Asian Games, regional elections and the International Monetary Fund and World Bank meeting in Bali. Communication construction service LCK Kedaton, solar panel manufacturer Sky Energy Indonesia, coal producer Borneo Olah Sarana Sukses and local shariah lender BTPN Syariah are expected to go public in the first quarter this year. Kioson Komersial was the first startup to go public in 2017 which raised Rp45bn and its share price has risen more than eight-fold since. Integrated offshore shipping company Pelayaran Tamarin Samudera was recorded as the highest gainer last year among the newly-listed 36 companies. Its share price jumped more than 13 times.

Committee to study problem of deliberate online falsehoods

As a small and diverse country with high Internet penetration, Singapore can suffer disastrous consequences from the spread of falsehoods online. Ministers and Members of Parliament (MPs) unanimously backed a motion by Law and Home Affairs Minister K Shanmugam to appoint a Select Committee to study ways to deal with the scourge. There is consensus that: The spread of online falsehoods is a huge problem that warrants immediate attention.

 

Friday, 12 January 2018

 

RI braces for swelling coal production

Indonesia has thrown in the towel on its plan to set a coal production cap starting in 2019, as domestic production has kept soaring from one year to the next amid the government’s need to boost non-tax state revenues (PNBP). Through its 2015-2019 strategic plan, the Energy and Mineral Resources Ministry initially planned to gradually decrease the country’s annual cost production from 419 million tons in 2017 and 406 million tons in 2018. Then, the ministry aimed to limit coal production to a maximum of 400 million tons per year starting in 2019, so it could prioritize it for domestic use. In fact, the realized domestic coal production stood at 456 million tons in 2016 and 461 million tons last year. “For 2018, we can only tolerate a 5% increase in domestic coal production to around 485 million tons,” Bambang Gatot Ariyono, the Energy and Mineral Resources Ministry’s mineral and coal director general said.

TLKM considers issuing Komodo Bond

State-owned telco company, PT Telekomunikasi Indonesia (TLKM), is considering the option of issuing global bonds denominated in rupiah (Komodo Bonds) to fund its acquisition plan in 2018. The bonds will only be issued if TLKM decides to expand anorganically through acquisition. For 2018, TLKM aims for double digit revenue growth over 2017’s achievement. It also posted robust revenue growth of 14% in both 2015 and 2016 previously.

SSIA gets remaining payment from toll road divestment 

Surya Semesta Internusa will receive the remaining payment for the divestment of its ownership in PT Lintas Marga Sedaya (LMS), the operator of Cikopo – Palimanan toll road, for more than Rp2tr. As known, last year SSIA divest its shares in PT LMS to Astratel Nusantara in a transaction worth Rp2.56tr. Head of Investor Relations, Erlin Budiman said, 15% of the payment, or Rp384bn, was received in May 2017, the remaining payment of 85%, or Rp2.18tr will be done next week. Of the payment, SSIA will get a net cash of Rp1.9tr. Of this amount, Rp550bn will be used to repay the bonds payable in 2012 amounting to Rp550bn, then Rp1tr for the development of Subang area, then the rest is for capex, Erlin said.

SMRA forms partnership with Bandung local government

SMRA, through its subsidiary Mahkota Permata Perdana (Summarecon Bandung), formed a partnership with the Provincial Government of West Java on Wed (10/1) for the infrastructure development in East Bandung. Total area of the project is around 4.8ha. Both will partner together to build roads, roundabouts, and a flyover that will connect the Gedebage Padaleunyi toll road exit with other public roads. Going forward, there is plan to build a new flyover toll road (Bandung Intra Urban Toll Road)

 

Bukalapak becomes Indonesia’s 4th unicorn startup

Bukalapak CEO Achmad Zaky announced that the e-commerce platform had officially become Indonesia’s startup unicorn, as the company was now valued at over US$1bn. This achievement has made Bukalapak the country’s 4th unicorn startup after ride-hailing app Go-Jek, online booking platform Traveloka and e-commerce platform Tokopedia. The government has set a target of creating five unicorn startups by 2020. Bukalapak’s achievement has taken Indonesia closer to that target. the company is currently building a research and development (R&D) center in Bandung, West Java. Set to start operating in mid-2018, the R&D center aims to attract 200 engineers to create innovative products.

Comfortable retirement plan in Indonesia.

How much do we need to have a comfortable retirement in Indonesia? If you earn, for example, Rp30m (US$2,100)a month before retirement, then what is the amount that you should have after you retire. How much assets do you need to have to generate that amount of money? Based on the calculations of a financial analyst, the value of assets in Indonesia that you ought to have for retirement if you want to have a earning of Rp30m a month is, at least, Rp6.3bn. There could be other considerations such as interest rates, inflation, tax, transaction costs, etc. that may have an impact on the estimation. Careful retirement planning is essential to provide a comfortable retirement and the plan should be flexible to accommodate changes that can happen along the way.

Merged junior colleges will combine names of both schools

Eight months after news of their mergers sparked a strong public reaction, the Ministry of Education (MOE) announced the merged junior colleges (JCs) will combine the full names of both colleges, with the older school’s name coming first. This is to “reflect the history and heritage” of the JCs, it said. The names of the four merged JCs will be: Anderson Serangoon JC (to be sited at Anderson JC); Yishun Innova JC (to be sited at Yishun JC); Tampines Meridian JC (to be sited at Meridian JC); and Jurong Pioneer JC (to be sited at Pioneer JC).