[Kabar-indonesia] 18 Biz/Econ Reports: BI Rate Now Seen at 10.75 vs 10.25 [+JSX Up; Rupiah Down]

[JoyoNews at aol.com]

18 Reports:

- Indonesia year end BI rate now seen 
  at 10.75 pct vs 10.25 previous estimate:
  ANZ economist
- Indonesia Shares End Up On Easing 
  Inflation Data; Banks Up [highest closing
  level since May 19]
- Indonesia Rupiah Ends Down; Lower 
  CPI Spurs Dollar Covering
- Semen Gresik to sell Rp 2t of bonds to
  build plant (US$220 million)
- Indonesia's Niaga plans 1.5 trln rph 
  bonds in 07 (US$165.2m)
- JP: Arpeni H1 profit down, rebound 
  expected in H2 
- Indonesia's BTN plans 1 trln rph 10-year
  bond issue
- Indonesia Bk Niaga To Use 20% Of 1H
  Net As Interim Div
- Indonesia's BNI set to increase
  credits
- Private equity fund Henderson expands
  team in Asia
- UOB 2Q Net Nearly Triples On 
  One-Time Gains
- Indonesia's Gajah Tunggal to expand
  tyre output
- Malaysia's AirAsia to bid for landing rights in
  Singapore - report
- Indonesia could become heavy equipment
  exporter: German exec.
- Indonesia eyes S. Korean businessmen to
  develop timber estates
- Tight supply, Malaysia gains boost Indonesia
  palm oil prices
- Papua New Guinea To Launch Program To
  Deter Coffee Pest
- Japan To Propose 16-Nation Free-Trade Zone
  At ASEAN Mtg [previously sent]

Indonesia year end BI rate now seen at 
10.75 pct vs 10.25 previous estimate - ANZ

JAKARTA, August 1 (XFN-ASIA) - ANZ has raised its forecast for Bank
Indonesia's key interest rate at the yearend to 10.75 pct from 10.25
pct amid a slower-than-expected moderation in the inflation rate, ANZ
economist Jasmine Robinson said.

The central bank has cut the key interest rate, called the BI rate,
twice so far this year -- by 25 basis points each in May and July --
after keeping it steady at 12.75 pct from December 2005 to April amid
spiralling inflation.

'Inflation has eased but at a much slower pace than we had initially
anticipated,' Robinson said in a note.

She said apart from the impact of the massive fuel price hike last
October, drought-induced hikes in food prices have kept inflation
elevated.

'This has prompted us to raise our projection for average inflation in
2006 to 14.7 pct from 12.7 pct earlier,' she said.

-----------------------------------

Indonesia Shares End Up On Easing Inflation Data; Banks Up

JAKARTA, August 1 (Dow Jones)--Indonesia shares closed higher Tuesday,
led by gains in the bank, telecommunications and consumer sectors,
following a benign inflation report for July, dealers said.

"As expected, share prices moved higher after inflation eased in July.
The buying reflects investors' optimism that the central bank will
continue to cut its key interest rate at the board of governor's
meeting next week," said Rifki Hasan, an analyst with Paramitra
Securities.

The Jakarta Stock Exchange Composite index ended up 20.044 points 
at 1371.693, the highest closing level since May 19.

Gainers led decliners 74 to 35, with 70 stocks unchanged.

Volume was 1.1 billion shares valued at IDR1.5 trillion, compared with
1.05 billion shares valued at IDR1.27 trillion Monday.

The official Central Statistics Agency said Tuesday that Indonesia's
consumer price index for July climbed at a slightly
slower-than-expected pace of 15.15% on year, compared with June's
on-year inflation of 15.53% and 0.45% on month.

Hopes that the central bank will cut its benchmark Bank Indonesia
Rate, currently at 12.25%, spurred gains in the banking sector. Lower
interest rates could increase banks' net interest margins and reduce
the debt burdens of many companies, analysts said.

Bank Mandiri, the nation's largest bank by assets, gained 2.3% to
IDR1,800, Bank Central Asia, the second-largest bank, rose 2.4% to
IDR4,275 and Bank Negara Indonesia, the third largest bank, ended up
2.7% to IDR1,130.

Bellwether Telekomunikasi Indonesia rose 2.7% to IDR7,650 after
reporting first half net profit rose 53% on year due mostly to an
increase in its revenue from cellular and internet services.

Dealers said the lower interest-rate outlook for this year also
spurred buying in car distributor Astra International, which gained
3.1% to IDR9,900 on expectations car sales will pick up in the second
half of this year.

Consumer goods producer Unilever gained 0.6% to IDR4,250 on
expectations its 2006 full-year sales will improve due to a
strengthening consumer purchasing power.

Dealers expect shares to trade higher Wednesday further buying in most
blue chips.

-------------------------------------------------------------

Indonesia Rupiah Ends Down; Lower CPI Spurs Dollar Covering

JAKARTA, August 1 (Dow Jones)--The Indonesian rupiah closed lower
Tuesday with market participants covering dollar short positions after
official data confirmed inflation eased in July as the market had
expected, dealers said.

The dollar closed at IDR9,107, up from Monday's close of IDR9,063.

"Inflation was slightly lower than expected, and will likely pave way
for Bank Indonesia to cut interest rates," a dealer with a foreign
bank said. "But, it was all expected and what were are waiting for now
is the size of the rate cut."

Analysts expect Bank Indonesia to cut its one-month benchmark rate 
by between 25 and 50 basis points from 12.25% next Tuesday after data
released earlier in the day shows inflation eased to 15.15% on year in
July from 15.53% in June. The July inflation figure was also lower
than average forecast of four economists polled by Dow Jones
Newswires, which called for 15.37% inflation.

Indonesian bond prices were steady late Tuesday as investors are
waiting for the actual rate cut next week, dealers said.

"Several bond prices rose when inflation news hit the market, but 
they slid back later in the day," a bond dealer said.

June trade data for Indonesia also failed to excite the local market
despite record exports as the trade surplus was a disappointment,
dealers said.

Indonesia's trade surplus fell to $2.81 billion in June from $3.28
billion in May on higher imports of petroleum products. The trade
surplus was below market expectations of $3.08 billion. But on the
brighter side, exports rose to a new record high of $8.48 billion in
June, up from $8.34 billion in May, the Central Statistics Agency
said.

Dealers expect the greenback to trade between IDR9,060 and 
IDR9,125 Wednesday.

--------------------------------------

Semen Gresik to sell Rp 2t of bonds to build plant

JAKARTA, August 1 (Bloomberg): PT Semen Gresik, Indonesia's 
biggest cement maker by sales, said it plans to sell Rp 2 trillion 
(US$220 million) of bonds to fund the construction of a plant.

The cost of building the plant would be about Rp 3 trillion, of which
about Rp 1 trillion will come from the company's own cash, Finance
Director Cholil Hasan told reporters in Jakarta Tuesday. He didn't
elaborate on the timing of the sale.

------------------------------------

Indonesia's Niaga plans 1.5 trln rph bonds in 07

JAKARTA, August 1 (Reuters) - Medium-sized Indonesian lender 
PT Bank Niaga Tbk said on Tuesday it was planning to sell 1.5 trillion 
rupiah ($165.1 million) in bonds early next year to help fund its long-term
loans.

Catherine Hadiman, a director of the bank, told reporters the paper is
scheduled for the first quarter of 2007 and will have a maturity of
3-5 years.

"Earlier, we had planned to issue it this year, but we delayed it to
the first quarter of next year as we expect economic conditions will
improve by then," Hadiman said.

The bank, controlled by Malaysia's Bumiputra-Commerce Holdings Bhd ,
expects its 2006 net profit will be lower than last year's 547 billion
rupiah.

It has also lowered its target for loan expansion for this year to 5
trillion rupiah from 7 trillion earlier.

Many Indonesian banks have been hammered since the central bank raised
its benchmark interest rates to a six-year high last year to curb
inflation.

Niaga, a bank with a market capitalisation of $764 million, reported a
15 percent rise in its net profit to 353.5 billion rupiah for the
first half of this year and a 29.8 percent rise in its net interest
income to 1.11 trillion. (

-----------------------------------------------------------

Indonesia's BTN plans 1 trln rph 10-year bond issue

JAKARTA, August 1 (Reuters) - Indonesia's state-owned home lender, PT
Bank Tabungan Negara (BTN), said on Tuesday it plans to issue 1
trillion rupiah ($110.1 million) in ten-year bonds this year to expand
its loans.

Previously, the lender had said it planned to issue paper with
five-year maturity at the end of the first half or the beginning of
the second half of 2006.

PT Mandiri Sekuritas, a subsidiary of Indonesia's largest lender, PT
Bank Mandiri Tbk , and PT Standard Chartered Securities Indonesia will
joinly underwrite the issue.

As of April, BTN had total assets of 30.4 trillion rupiah. Last year
the bank reported a net profit of 436.7 billion rupiah, up from 370.1
billion.

-----------------------------------------------------------

Indonesia Bk Niaga To Use 20% Of 1H Net As Interim Div

JAKARTA, August 1 (Dow Jones)--Indonesia's PT Bank Niaga (BNGA.JK)
plans to put aside 20% of its first half net profit for an interim
dividend payment.

Bank Niaga's spokeswoman Catherine Hadiman said the dividend will be
paid to shareholders registered as of Aug. 11.

In the January to June period, Bank Niaga's net profit rose 15% on
year to IDR353.49 billion from IDR307.49 billion a year earlier.

Malaysia's Commerce Holding Berhad owns 64% of Bank Niaga.

------------------------------------

The Jakarta Post
August 1, 2006

Arpeni H1 profit down, rebound expected in H2 

The Jakarta Post, Jakarta

Publicly listed shipping firm PT Arpeni Pratama Ocean Line expects that the 
coming into effect of a new policy prioritizing local shipping lines and the 
prospects of increased commodity traffic this year will make up for slippage in 
its first-half profit. 

Arpeni's net profit for the first six months ending June 30 fell by nearly a 
fifth to Rp 73.8 billion (US$8.2 million), director Ronald Nangoi said, from 
Rp 92 billion in the same period last year. 

The company made a total net profit of Rp 168.7 billion last year. 

However, Arpeni managed to maintain an upward trend in its revenues, which 
reached Rp 652.1 billion during the first half -- a 37 percent rise from the 
same period a year earlier. 

"It's a bit too early to estimate this year's outcome, but we still believe 
that an increase of at least 20 percent (in both revenues and profit) is within 
reach," Ronald said Monday during a company briefing to investors. 

"The lower first-half net profit was due to a rise in interest payments on 
our bonds during the second quarter." 

Arpeni raised $160 million from a global bond issue in May last year. The 
company's president director Oentoro Surya had said that it would set aside $70 
million from the bond proceeds to help finance the purchase of 28 new vessels 
worth $132 million in an attempt to boost revenue by more than 30 percent. 

The company operates 43 vessels at present, with a total capacity of 600,000 
tons of general cargo, coal, oil and gas per annum. 

It controls 44 percent of the domestic shipping market, and handles 3 percent 
of export shipments. About 60 percent of its customers are foreign companies 
and 40 percent domestic. 

Ronald said he was upbeat about the rest of the year based on the fact that 
maritime trade in Indonesia was continuously increasing -- growing by around 6 
percent per year to reach 699 million tons in 2005. In addition, commodity 
prices were also high, particularly for Arpeni's main cargo, coal. 

The government has also been consistently implementing the new maritime 
cabotage policy since late last year, Ronald said, which would further boost the 
business prospects of domestic shipping lines. 

The new policy will require all domestic shipping to be transported by local 
carriers by 2010. Many other countries worldwide impose similar requirements. 

Arpeni shares, which are traded under the name APOL on the Jakarta Stock 
Exchange, closed unchanged at Rp 1,350 on Monday. Rival shipping line, Berlian 
Laju Tanker (BLTA), also remained unchanged at Rp 1,780. 

---------------------------------------

Indonesia's BNI set to increase credits

JAKARTA, August 1 (Asia Pulse/Antara) - Publicly listed state bank PT
Bank Negara Indonesia (BNI) (JSX:BBNI) targets to increase its
outstanding credit to Rp68.4 trillion (US$7.6 billion) by the end of
this year.

BNI President Sigit Pramono said he is optimistic the bank could post
an increase of 9.2 per cent or Rp5.8 trillion in credit this year as
projected in its working plan.

By June 2006, the bank, which has assets valued at around Rp146.3
trillion recorded a 2 per cent decline in outstanding credit to
Rp60.54 trillion compared to the same period last year.

On the contrary, the third party funds held by the bank. rose 11 per
cent to Rp116.91 trillion bringing down its loan to deposit ratio from
58.27 per cent to 51.78 per cent, Sigist said.

Its Corporate Director Achmad Baiquni said consumer credits and sharia
financing grew faster than corporate credits in the first half of this
year.

-------------------------------------------------------------

Private equity fund Henderson expands team in Asia

TOKYO, August 1 (Reuters) - Henderson Private Capital, the private
equity operation of Henderson Global Investors , said it has named
Carol Lee and Sigit Prasetya as senior principals in its Asia team.

Buy-out firms, which snap up companies, restructure them and sell them
at a profit, have been flocking to Asia in recent years to tap into
the growing region and find relief from fiercely competitive markets
in Europe and the United States.

Henderson Private Capital manages about $1.5 billion, while its Asia
team has $210 million in Henderson Asia Pacific Equity Partners I L.P.
to target companies in the region.

In September 2005 the group announced the launch of Henderson Asia
Pacific Equity Partners II L.P. a pan-Asian growth equity fund focused
predominantly on India, Southeast Asia, South Korea and Greater China.

Last year, private equity funds raised a record $20.5 billion to
invest in pan-Asian companies and buy-out shops such as Europe's
Permira and the U.S. firm Kohlberg Kravis Roberts & Co. [KKR.UL]
entered the region.

Lee, who will join the Hong Kong office and concentrate on South
Korea, has 12 years of private equity and investment banking
experience, having previously worked at U.S. investment banks Merrill
Lynch and JPMorgan in New York and Hong Kong.

Prasetya, who joins the Singapore office and will concentrate on
Southeast Asia, has 13 years of relevant experience. He joins from
Morgan Stanley , where he was the head of its investment banking
business in Indonesia and responsible for the firm's financial
institution business in Southeast Asia.

------------------------------------

UOB 2Q Net Nearly Triples On One-Time Gains

SINGAPORE, August 1 (Dow Jones)--United Overseas Bank Ltd. (U11.SG)
Tuesday said second-quarter net profit nearly tripled from a year ago
due to gains from the sale of noncore assets.

UOB, Singapore's number two lender by market capitalization after DBS
Group Holdings Ltd. (D05.SG), posted net profit of S$1.13 billion for
the quarter ended June 30, up from S$409 million in the year-earlier
period.

Its earnings were in line with the S$1.14 billion average estimate of
three analysts polled by Dow Jones Newswires.

"The rise in earnings was mainly due to a one-time gain of S$689
million, which comprised the gain from divesting stakes in Overseas
Union Enterprise Ltd. (O07.SG) and Hotel Negara Ltd. (H11.SG), as well
as the special dividend received from OUE in the second quarter of
2006," UOB said in a statement.

Excluding the one-off gains, the bank's second-quarter net profit
increased 8.3% on year to S$443 million as higher interest income
helped offset a 21% rise in operating expenses.

On a quarter-to-quarter basis, net profit for the April-to-June period
rose about 1% from the S$439 million posted for the first three months
of 2006.

In contrast, rival DBS reported last week second-quarter net profit
rose 16% from the year-ago period to S$549 million excluding one-time
items, and 6% from the previous quarter.

"One thing people should focus on is the funding cost," said Macquarie
Securities analyst Ismael Pili. "UOB and Oversea-Chinese Banking Corp.
(O39.SG) engage in time deposit wars... but DBS doesn't need to."

DBS has access to a large pool of cheap savings deposits due to its
ownership of POSBank, the former state-owned Post Office Savings Bank,
which has the largest branch and automated teller machine network in
Singapore by far.

UOB said net interest income for the quarter rose 17% to S$671 million
from the year-ago period on increased loan volume and interbank money
market activities. Its net interest margin fell to 1.97% from 2.04% in
the first quarter although it was unchanged from the second quarter of
2005.

The bank's non-interest income, excluding income from one-off gains,
dropped 7.1% to S$310 million as higher fees from fund management and
investment-related activities weren't enough to offset a net loss of
S$67 million from investment securities.

UOB's Malaysian operations recorded a 45% rise in net profit before
tax to S$93 million during the second quarter, its Thai operations saw
net profit gain 28% to S$24 million, while Indonesia's contribution
fell 5% to S$31 million, the Singapore bank said.

UOB's overseas operations in total accounted for 34% of operating
profit before amortization and impairment charges in the first half of
2006 compared with 28% in the same period last year, Chief Financial
Officer Lee Wai Fai said at a media and analysts' briefing.

UOB's staff costs increased 30% from a year ago, partly due to the
consolidation of Bank Buana Indonesia (BBIA.JK) into its accounts,
which increased the bank's headcount to 19,150 from 13,328 a year ago.
Bank Buana accounted for about 10 percentage points of the rise in
staff cost, Lee said.

Despite the higher costs, which boosted UOB's expense-to-income ratio
to 42.7% from 39.5% in the first quarter, the bank "will continue to
invest in talent and infrastructure to support its regionalization
efforts and growing platform," Deputy Chairman and President Wee Ee
Cheong said.

UOB declared a special dividend of 20 Singapore cents, compared with a
special dividend in specie of shares in United Overseas Land Ltd. -
now called UOL Group Ltd. (U14.SG) - worth 28.5 cents around this time
last year.

The regular interim dividend for the half year was unchanged at 20
cents a share.

UOB didn't provide an outlook but Wee said the core business remains
strong, and the bank's regional expansion is on track and beginning to
bear fruits.

---------------------------------------

Indonesia's Gajah Tunggal to expand tyre output

JAKARTA, July 31 (Reuters) - Indonesian tyre maker, PT Gajah Tunggal
Tbk , plans to build two new factories at a combined cost of $170
million to increase tyre output, the company said on Tuesday.

It intends to build one radial tyre factory and one motorcycle tyre
factory, which are expected to start operating in 2009, said the
company's president director Catharina Wijaya.

With the new factories, the tyre maker expects to increase radial tyre
output to 45,000 units per day, from the current 30,000 units a day.

Motorcycle tyre output is expected to reach 105,000 units a day, from
37,000 units per day at present.

"It will needs $170 million of funds to build the plants," Wijaya said.

The company would finance the project from funds raised via $325
million of bond issues last year and from internal cash, she said.

In the first half of 2006, sales revenue was 2.65 trillion rupiah, up
from 2.33 trillion rupiah, but net profit fell to 126 billion from
204.4 billion.

------------------------------------------------------------

Malaysia's AirAsia to bid for landing rights in Singapore - report

KUALA LUMPUR, August 1 (XFN-ASIA) - AirAsia Bhd is making a fresh
attempt to secure landing rights in Singapore, the New Straits Times
reported.

Citing unnamed sources, the newspaper said the budget airline has the
support of the Malaysian government in its bid.

The report said the budget airline submitted to the Malaysian
government a list of destinations for its flights, which include
Singapore.

Since 2003, AirAsia has made several attempts to fly to Singapore but
has been faced with a series of bureaucratic blockades from the
relevant authorities there, the newspaper said.

The report added that AirAsia's Indonesian low-cost carrier AWAir also
failed to get approval from the Civil Aviation Authority of Singapore
to fly to Singapore in October last year.

-------------------------------------------------------------

Indonesia could become heavy equipment exporter: German exec.

JAKARTA, August 1 (Asia Pulse/Antara) - Indonesia could become a heavy
equipment exporting country if government always took active part in
international industrial exhibitions where the country can study new
technologies, a German businessman said.

"By learning new and latest technologies, Indonesia can anticipate
market demands and develop into a producer of international heavy
equipment," Chairman & CEO of Vorsitzender Geschaftsfuhrung Messe
Munchen Gmbh, Manfred Wutzhofer, said here on Monday, after making a
presentation for the Bauma Exhibition 2006 in Shanghai (China) and
Bauma Exhibition 2007 in Munich (Germany).

According to him, the Indonesian participation in the Bauma Exhibition
2004 in China was rather small, only about 2.0 per cent, while Asia
reached 8 per cent, Europe 85 per cent and the U.S 4 per cent.

"We have high hopes in the Bauma Exhibition 2006 in Shanghai, as
Indonesia will send more participants than last year's, considering
the importance of the exhibition's role in science and technology of
the heavy equipment industry," he said.

Bauma is the biggest international trade exhibition of heavy equipment
and building construction industries.

The exhibition, he said, would feature machinery and equipment for
building construction, civil engineering equipment and road
construction, water distribution installations, railway tracks , and
machinery for the cement and mining industries.

"So the exhibition is an opportunity for countries to display their
skills and potentials in building construction technology as well as
for an exchange of information," he said.

According to Wutzhofer, Bauma was at the moment eyeing potential
markets for holding the exhibition such as China, India, Russia, and
the Gulf Region.

--------------------------------------------------------------

Indonesia eyes S. Korean businessmen to develop timber estates

SEOUL, August 1 (Asia Pulse/Antara) - The Ministry of Forestry hoped
South Korean businessmen would invest in the development of 500,000
hectares of industrial timber estates (HTI) in Indonesia, a member of
cabinet said.

"South Korea is one of the countries expected to take part in
expediting the development of 8 million hectares of such estates,"
Minister of Forestry Malam S Kaban said after meeting Agriculture and
Natural Sciences Faculty Dean Prof Lee Junjae and President of IUFRO
Lee Donkoo here Monday.

With a view to luring South Korean investors, the minister is
scheduled to sign a memorandum of understanding with the National
Forest Cooperation Federation, Samsung and Posco.

In a seminar held at the Agriculture Faculty of Seoul National
University, Kaban invited the country's business world to support the
ministry's efforts to improve Indonesia's degraded forests.

Apart from the implementation of forest and land rehabilitation
programs, he said the ministry would continue to intensify HTI
development.

According to him, the Indonesian government would not set a limit for
businessmen who are interested in investing in HTI.

To support the private sector's role in developing HTI, Kaban said the
government would extend the current concession period to 100 years
which they could use to obtain capital from banks.

-------------------------------------------------------------

Tight supply, Malaysia gains boost Indonesia palm oil prices

JAKARTA, July 31 (Reuters) - Lingering tight supplies in the domestic
market and a rally in Malaysia crude palm oil futures pushed
Indonesian palm oil prices up for the second straight day on Tuesday.

Buyers poured into the market to buy palm oil before prices rose further.

At the state marketing centre's auction, crude palm oil prices rose by
2.2 percent to 4,297 rupiah a kg, from 4,203 rupiah on Monday.

Crude palm oil at a local auction in North Sumatra's Medan, the key
port for palm oil exports, rose 4.6 percent to 4,300 rupiah a kg, from
4,110 rupiah a kg last Thursday. There were no local auctions in Medan
last Friday and Monday.

"Palm oil prices are unrealistic. There are more buyers now in the
market than sellers. The rally in prices has prompted panic buying,"
said a trader in Medan.

Problems in crude palm oil shipments to Jakarta boosted cooking oil
prices to 4,875 rupiah a kg on Tuesday, up from 4,800 rupiah a kg on
Monday.

"We haven't delivered any cooking oil for the last two days. We may
get fresh supply of crude palm oil next week," said a trader in
Jakarta.

Extended gains in Malaysia crude palm oil futures also contributed to
gains in local palm oil prices, traders said.

Malaysian crude palm oil futures rose nearly 2 percent on Tuesday on
expectations that the strong export performance will continue in
August and higher prices of rival soyoil.

The benchmark third-month October <KPOV6> contract on the Bursa
Malaysia Derivatives ended up 32 ringgit at 1,673 ringgit ($456) a
tonne. The third-month contract has risen more than 6 percent in the
last one week.

The bull-run in palm oil prices also pushed up export prices although
the market was quiet as sellers were on the sidelines, waiting for
prices to go up further, said another trader in Medan.

Sellers offered August shipment at $445 a tonne, free on board
Belawan, up from $435 a tonne on Monday. But buyers did not bid for
the shipment.

September shipments were offered at $445 a tonne, free on board
Belawan, higher than $437.5 a tonne on Monday. Bids were seen at $435
a tonne without any deals reported.

-----------------------------------------------------------

Papua New Guinea To Launch Program To Deter Coffee Pest

SINGAPORE, August 1 (Dow Jones)--Papua New Guinea will launch an
emergency response plan to safeguard its coffee industry from a deadly
pest discovered in neighboring Indonesia, industry officials said
Tuesday.

Papua New Guinea's Ministry of Agriculture and Coffee Industry Corp.,
a company created by the government to promote the country's coffee
industry, will work with counterparts in Indonesia to ensure the
coffee berry borer pest doesn't cross the shared border into Papua New
Guinea, while preparing an action plan in case it does, said Potaisa
Hombunaka, general manager of the growers' division at CIC.

Hombunaka said CIC has "yet to confirm" whether the pest has not
already spread to Papua New Guinea.

The cost of the program hasn't been finalized, but will be in the
millions of kina, he said. PGK1 is equivalent to approximately 35 U.S.
cents.

"Coffee's a really big part of the economy, it looks after 2.5 million
people - nearly half the population," Hombunaka said. "So we (will)
really have an emergency, should the coffee borer come across."

Papua New Guinea is a small producer of high-quality, organic arabica,
much of it grown in isolated mountainous regions that are difficult to
access by road. In 2005, it produced 1.27 million 60-kg bags.

Arabica is cultivated on a smaller scale across the border in the
Indonesian province of Papua, where the coffee berry borer pest has
been known to exist since 1999 in the district of Wamena, Hombunaka
said.

However, the pest only became a concern after CIC officials were
informed that coffee was also grown very close to Papua New Guinea's
border, while on a routine visit to Wamena.

"We were told coffee is also growing in Oksibil, so in June a
scientist went there and yes they grow coffee and yes the coffee borer
is there as well," Hombunaka said.

Oksibil is about 10 kilometers from the Papuan New Guinea border. Two
other villages even closer to the border are also believed to be
cultivating coffee. The CIC plans to visit later this month to check
for infestations.

The CIC fears the pest could be spread by people carrying berries or
plant material from the Indonesian side to villages in Papua New
Guinea.

Hombunaka said the only solution is to quarantine the beans in affected areas.

The coffee berry borer is a pest originally from Central Africa. It
eats into coffee berries where it produces larvae, which can then
quickly decimate a crop if left untreated.

Hombunaka said farmers can use a biological fungus to spray the trees,
but noted that the trees in the areas CIC visited were neglected.

"The coffee plantations were not healthy in terms of maintenance," he said.

Because of this, the CIC wants to ensure the borer is contained in the
affected areas, so as "to quarantine and delay or prevent the pest
from coming across to our side."

------------------------------------------------------------

Japan To Propose 16-Nation Free-Trade Zone At ASEAN Mtg

TOKYO, August 1 (Dow Jones) -- Japan's trade minister will propose
forming a 16-nation East Asian free-trade zone covering half of the
world's population and a quarter of its gross domestic product at an
upcoming regional forum, an official said Tuesday.

Economy, Trade and Industry Minister Toshihiro Nikai will call for a
pan-Asian free-trade area - involving Australia, China, Korea, India,
Japan and New Zealand, along with the 10 members of the Association of
Southeast Asian Nations - at an ASEAN ministerial gathering in Kuala
Lumpur later this month, according to ministry official Hideyasu
Tamura.

The proposed free-trade area has a combined population of 3.1 billion
people and combined GDP of almost $10 trillion, or almost half of the
world's population and a quarter of its GDP.

That's more people than the European Union and the North American Free
Trade Agreement nations combined, and it comes close to the U.S. GDP
of $12.5 trillion.

The figures are based on United Nations and World Bank figures for
2005. GDP measures the value of all goods and services produced within
a country.

Nikai, who unveiled the proposal in Japan in April, has also said
Japan will want to create a regional economic policy think tank
modeled on the Paris-based Organization of Economic Cooperation and
Development to coordinate regional policy and promote economic
integration.

Comprised mainly of industrialized nations, the 30-nation OECD strives
to help governments achieve sustainable economic growth and publishes
detailed economic statistics. Japan and South Korea currently are the
only East Asian members.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and Vietnam.

------------------------------------------
Joyo Indonesia News Service
------------------------------------------