INDONESIA: Indonesia in transition

Asean’s biggest economy has become an investment hot spot, but regulatory uncertainty, endemic corruption and skilled labour shortages are big challenges, say Thai companies.

Rapid economic growth but a sharp rise in income inequality. Well-connected industries thriving and the number of millionaires forecast to triple by 2015 — even as half of all households hover near the poverty line. Such are the contrasts in Indonesia today.

“Indonesia is in a huge transition period from being an inwardly focused, lower-end economy to one that’s evolving very quickly with average growth of about 6.5% per year,” says Somsak Pipoppinyo, director of the Finance, Industry and Infrastructure Directorate of the Asean Secretariat.

“Being a consumer market of 240 million people, with more than 10% of this number in the middle to upper-income class, the self-reliant economy has a lot to offer for new investors.

“That is really good news for Thailand, as we now have a number of big business players and consumers at our doorstep.”

He said big businesses from Thailand such as the coal producer Banpu Plc, Siam Cement Plc, Bangkok Bank and Thai Union Frozen Group have already responded to this huge opportunity. However, beneath the impressive headline figures seen in recent years, there is a darker side to doing business that all companies have experienced.

“Banpu ventured into Indonesia, where coal resources are abundant, in 1990. Over the last decade, we’ve become the fourth largest Indonesian coal producer with full production capacity of around 20.5 million tonnes per year,” said Pongsak Thongampai, president-director of the Thai company’s Jakarta-listed subsidiary PT Indo Tambangraya Megah.

“However, the problems that we’ve been through frequently involve dealing with the uncertainty of regulations and fees which are considered vague, conflicting and subject to interpretation, particularly to foreigners.”

AFRICA: Namibia: Cement Import Duty Remains in Force

THE cement import duty which is supposed to serve as an infant industry protection measure for Namibia's only cement manufacturer, Ohorongo Cement, remains in force after a ruling which was given in the High Court in Windhoek this week.

In the latest round of a legal battle over the cement import duty, a close corporation which is importing cement into Namibia, Jack's Trading CC, did not succeed with an attempt to give effect to a previous court order in which the import duty was declared invalid.

An application by Jack's Trading for the previous court order in its favour to be put into effect while an appeal against that judgement remains pending in the Supreme Court was dismissed by Judge Dave Smuts on Monday. Judge Smuts, not pleased with the way that important information had not been provided to the court by the Minister of Finance and the Commissioner for Customs and Excise before his first judgement in the matter was given, ordered the Finance Minister and Commissioner for Customs and Excise to carry the legal costs of Jack's Trading in this latest round in the litigation about the import duty.

Judge Smuts also dismissed an application in which Ohorongo Cement asked him to rescind his previous judgement, based on an argument that it had been erroneously granted.

It was argued on behalf of Ohorongo Cement that the company should have been cited in the case as an interested and affected party, and that it had been an error to ask for the initial court order declaring the import duty invalid because at the time that was done the government notice announcing the duty had not yet been published in the Government Gazette.

Jack's Trading relied on a copy of a government notice, signed by Finance Minister Saara Kuugongelwa-Amadhila and dated July 27, for its application to have the import duty imposed by the Finance Minister with effect from July 27 declared to be of no force and effect.

Judge Smuts first heard arguments in the matter on August 15, and delivered his judgement on August 31. What emerged afterwards, and which he was not informed about with the first hearing of arguments, was that the notice in which the import duty was announced was promulgated in the Government Gazette on August 15, and that the import duty applied with effect from April 18.

In his judgement on Monday, Judge Smuts commented that the inference on the facts before him were inescapable - that the Finance Minister or Commissioner for Customs and Excise or their representatives had misled the court by not disclosing the further notice of August 15 to the court in circumstances where there was a duty on them to inform the court about it.

In view of the subsequent notice after the one signed by the minister on July 27, it would in his view not serve any purpose to grant the application to execute the court's order about the invalidity of the minister's July 27 notice, Judge Smuts added.

However, due to “the very unsatisfactory conduct” of the minister or Commissioner of Customs and Excise or their representatives in failing to disclose the publication of the August 15 notice to the court, the judge decided to order them to pay the legal costs of Jack's Trading.

The Finance Minister imposed an import duty of 60 percent on cement until 2014. In 2015, the import tariff would be lowered to 50 percent, while it would drop further to 42 percent in 2016, 24 percent in 2017, and 12 percent in 2018.

The court has been informed that Ohorongo Cement, which is providing direct employment to 316 people, has invested some N$2,25 billion in Namibia through setting up its cement manufacturing plant near Otavi, with an additional N$500 million invested in other infrastructure.

PAKISTAN: Cement exports to India decline by 15.67 percent

Cement exports to India have declined by15.67 percent in the first quarter of the current fiscal year, as it stood at 137,742 tons against 163,340 tons in the corresponding period last year, an official said on Tuesday.

Aizaz Mansoor Sheikh, chairman of Association of Pakistan Cement Manufacturers (APCMA), said that Pakistan’s cement was preferred by the Indians because of high quality and the sector is expecting a quantum jump of at least 0.5 million tons in the last fiscal year on easing of non-tariff barriers (NTBs) by India but it did not happen.

Exports to India, in fact, have been on constant decline ever since the two countries opened their borders for liberal bilateral trade.

The decline is not due to the lack of cement demand in India but because of very stringent non-tariff barriers, he said.

The installed and unutilised capacity of the cement industry in Pakistan could be effectively exploited through exports to India, which is being granted status of the most favoured nation (MFN), if the non-tariff barriers are removed, said Sheikh.

The APCMA chief said that the government of Pakistan must persuade the cement industry’s case, which is facing problems due to the non-tariff barriers in India, despite increase in the demand.

Cement is one of the industries having potential to help bridge the gap between the volumes of trade between the two countries in which Pakistan’s exports are far less, he said.

Hence, it will be a win-win situation for the two countries in the future if their exports are level and local industries are encouraged to meet the demand of each other’s market through their strong sectors, they added.

Sheikh urged the two governments to avail the opportunity and strengthen each other as Pakistan is best cement provider to India having lots of demand in the construction sector, while its production units are running on full capacity.

It is an irony that Pakistan liberalised its trade with India last year, short-listing a few items in the negative list but the Indian government has not fulfilled its promise to withdraw all non-tariff barriers, causing hurdles in the free flow of trade between the two countries, he said.

Cement exporters, having potential to export a big quantity to the Indian market, are facing a resistance by the Indian government as NTBs are not removed even after having been specifically mentioned during various rounds of official and unofficial talks between the two countries, said Sheikh.

Exporters’ issues, including a complex six to seven months process to obtain a certificate from the Indian authorities should be resolved on a priority basis because it was committed by the Indian government for having a status of the most favoured nation from Pakistan, said APCMA chairman.

The quality certificate for cement exporters is valid for one-year period, despite six to seven months procedural duration, he said, adding, but none of the exporters is allowed to continue their exports after expiry of certificate limit that is needed to get renewal in a brief period.

The complicated process of quality certificate holds on cement exports of many companies at a time, hence, the exports quantity shrinks gradually, he said.

The procedures have not been eased by the Indians and the certification cost is very high as the exporters have to bear heavy expenses for the visit.

Exporters said that Pakistani and Indian railways could exchange the same number of wagons for transportation of goods; however, the Pakistani wagons could not carry big cement orders due to restriction by the Indian government as a rule of reciprocal.

The railways wagons from the Indian side are limited for cement exporters, which increases their cost of cement transportation heavily, they said.

Cement manufacturers said that Pakistan should cement trade ties with India on equality basis rather than giving easy access to the Indian company in the exchange of nothing in the presence of the non-tariff barriers.

They demanded the government to raise the issues of NTBs with the Indian government for immediate solution and allow Pakistani cement makers to explore markets in all potential provinces on a priority basis.

AFRICA: Afrimat posts a profit

South African open pit mining company Afrimat on Thursday reported a 16.3% rise in diluted headline earnings per share for the six months ended August 2012 to 34.2 cents from the previous corresponding period’s 29.4 cents. 

The miner said the main reason behind the rise in earnings was the acquisition of Clinker Supplies during the period‚ which had stimulated an increase in Afrimat’s key division‚ namely mining & aggregates. 

“Tough market conditions continued to impact sales volumes in the other regions and high energy costs and a strike in KwaZulu-Natal also had a negative impact. All processing plants are fully commissioned and well placed to supply market demand and should sustain revenue going forward‚” the miner said on Thursday. 

Revenue jumped 32.5% to R671m from the previous period’s R506m. 

It also declared an interim dividend of 8 cents‚ up from the 6 cents declared in 2011. 

The miner expects the recovery in the mining sector to remain slow and under pressure. However it feels it is well positioned to capitalise from its strategic initiatives such as its investment in industrial minerals through the Glen Douglas Dolomite operation and its acquisition of the Clinker Group. 

“These initiatives‚ supported by ongoing product diversification in attractive growth sectors‚ such as industrial minerals and open cast mining‚ should see volumes increase‚” Afrimat said.

PERU:Cementos Pacasmayo invertirá US$88.4 millones en nueva Planta en Piura

Una nueva planta construirá Cementos Pacasmayo en la ciudad de Piura, proyecto en el cual realizará una inversión de US$ 88.4 millones, anunció la empresa al dar a conocer sus resultados al tercer trimestre del 2012.

Por lo pronto, firmó el contrato de suministro e ingeniería (básica/detalle) con las compañías internacionalesThyssenKrupp Polysius y Loesche para la construcción de la nueva planta.

Se estima que la capacidad de la planta serán de 1.6 millones de toneladas métricas de cemento y un millón de toneladas métricas de clinker, detalló la cementera.

A setiembre de 2012, Cementos Pacasmayo invirtió S/. 185.1 millones, de los cuales, destinó S/. 8.7 millones para la construcción de planta de ladrillos de diatomita, S/. 49.8 millones para la ampliación de planta de cemento de Rioja.

También, S/.11.15 millones para la ampliación de planta de cemento de Pacasmayo, S/. 6.8 para el proyecto de fosfatos, S/. 12 millones para el proyecto de salmueras, y S/. 96.3 millones en bienes de capital.