Posts tagged resources
Indonesia is considering tax holidays for major foreign direct investors, targeting new and existing businesses in an attempt to bump the country’s FDI up to a total Rp240 trillion (US$28.2 billion) by the end of 2011.
Finance Minister Agus Martowardojo said details of the plan were still being discussed, but would probably feature 5-10 year tax breaks for investors in the base metals, telecommunications equipment, oil refinery, petrochemicals, machinery and renewable energy industries.
The new plan would also cover businesses which had been in operation less than a year. Projects such as a $6 billion joint venture by South Korea’s POSCO, a $4.5 billion petrochemical complex by Honam Petrochemical Corp (also of South Korea) and a $8-9 billion oil refinery from Kuwait Petroleum Corp were said to be waiting for an announcement on foreign investor tax breaks before going ahead.
Foreign direct investment (FDI) into Indonesia in Q2 is already up 21% on the same period last year, thanks mainly to the mining sector. The government is also mulling plans to give tax holidays to smaller investors employing 100-300 people, determined to take Indonesia’s economy into the global Top 10 by 2025 and making much-needed improvements to the country’s infrastructure.
Another Malaysian petroeum giant is set to emerge, with SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd announcing a RM11.9 billion (US$3.9 billion) merger plan to form Malaysia’s largest oilfields services provider by assets. The move is bound to please the government, coming just half a year after Prime Minister Najib Razak revealed incentives to explore less profitable oilfields, and the two companies jointly received a contract from government-linked Petronas to develop an eastern field in partnership with Petrofac Ltd.
The merger was orchestrated by Integral Key Sdn, a company set up especially to handle the merger by a unit of Malayan Banking Bhd (Maybank). The company made a bid of RM4.60 per share in stock and cash for SapuraCrest and the equivalent of RM3 per share for Kencana. The merged company would have around RM6 billion ($1.98 billion) in assets and would grow from there thanks to an increased ability to handle larger and more complex projects.
Integral’s offer, which is valid until 15 August 2011, is a 2.4% premium on SapuraCrest’s 8 July share price of RM4.49 and a 7.1% premium on Kencana’s RM2.80. SapuraCrest’s share price rose 0.7% to RM4.92 on the news and Kencana’s jumped 3.9% to RM2.91. Bloomberg reports the new entity would have a market cap of RM11.1 billion ($3.66 billion) based on current prices, making it Malaysia’s second largest company of its type by market cap (after Malaysia Marine and Heavy Engineering Bhd) but the largest by assets.
Analysts say the two companies are a good fit. SapuraCrest operates drilling rigs, installing pipelines and developing oil and gas fields, while Kencana is in the engineering and fabrication business. The merger is expected to prompt other smaller players into tie-ups, and the government’s offer of development investives still stands.
source & article: Bloomberg
Singapore’s appointed aggregator of Liquefied Natural Gas (LNG) demand, BG Group, is seeking out natural gas demand beyond power generation and has its eyes on petrochemical/refinery, electronics and pharmaceutical plants as potential customers. The company has already signed on a petrochemicals firm and is “in various stages of negotiations” with companies in the other categories, who might use LNG in manufacturing processes or their own cogeneration plants. Some of these companies are already using natural gas to fuel in-house cogeneration plants and already have LNG supply, but may need to find extra sources in future.
BG Group was appointed in 2008 to source and supply up to 3 million tonnes per annum (mtpa) to Singapore for 20 years. Singapore’s six generating companies are expected to sign a deal next week that effectively guarantees them a share of the electricity market in return for their commitment, which will help secure a new $1.5 billion LNG terminal project. BG Group will source most of its LNG from Australia’s Queensland Curtis due to its proximity to Singapore.
source & full article: Business Times Singapore
Money Morning takes a look at Indonesia’s economic and investment potential, with terms such as “an open secret” and “something of a sleeper”. With a strong focus on the natural resources sector, they highlight that China is actively investing and looking for partners to form joint ventures or acquire.
As well as highlighting Indonesia’s wealth of copper, gold, rubber, coal and liquefied natural gas (LNG), MM says “Literacy rates are high, the middle class is large and growing, and there is a ton of potential in the domestic economy. Think of Indonesia as a South Seas version of Brazil, but without Mardi Gras.”
source & article: Money Morning