BI Hikes Key Rate: The central bank raised its key policy rate this week by 25 basis points to 8.25 percent to rein in soaring inflation.

It was Bank Indonesia’s first interest rate hike in more than two years. The central bank last hiked the benchmark BI rate in December 2005, to its peak of 12.75 percent.

The decision took into account the prospect of inflationary pressures in coming months and the volatility of global commodity prices, BI senior deputy governor Miranda Goeltom told a briefing on Tuesday.

Aussie Firm Wyes Krakatau Steel: Australian firm BlueScope Steel Ltd. has expressed an interest in participating in the privatization of Indonesia’s largest steel maker, PT Krakatau Steel.

A spokeswoman for BlueScope in Australia said discussions were at a very early stage and it was too early to provide any details.

India’s Tata Steel could also bid for a stake in Krakatau Steel, according to the state-run news agency Antara at the weekend.

TUBAN ~ The authorities wrapped up a major three-day bird flu drill in Bali with an exercise focused on passengers at the island’s international airport.

In a simulation on Sunday, departing passengers were made to pass a scanner that detects body temperature. Among the travellers were three undercover personnel who simulated having high fever but insisted on leaving on their flights.

Staff steered them to a clinic at the airport and when test results showed they might have bird flu infections, the three were sent to the main hospital in Denpasar.

Despite posters notifying the public of the exercise, some tourists appeared concerned by the operations, as all personnel involved in the operation were wearing face masks.

“We were a bit worried but then we saw the posters. It’s fine, better be prepared,” said Angela Foster, an Australian tourist who was to fly back home through the airport.

“It is important as part of our bird flu containment efforts. We do not want to export a disease,” I Nyoman Kandun, the Health Ministry’s director general for handling of infectious disease, told journalists at the airport.

The simulation was the last part of a national exercise practicing how to contain the spread of a bird flu outbreak.

Indonesia is the nation worst hit by the bird flu so far, with 108 dead since the first human case appeared here in 2005.

Transmissions have so far been from bird to human but experts worry that the H5N1 virus that causes the disease could mutate and allow human-to-human transmission, leading to a pandemic.

Global warming could take a break in the next decade thanks to a natural shift in ocean circulations, although Earth’s temperature will rise as previously expected over the longer term, according to a study published on Thursday in the British journal Nature.

Climate scientists in Germany base the prediction on what they believe is an impending change in the Gulf Stream - the conveyor belt that transports warm surface water from the tropical Atlantic to the northern Atlantic and returns cold water southwards at depth.

The Gulf Stream will temporarily weaken over the next decade, in line with what has happened regularly in the past, the researchers say.

This will lead to slightly cooler temperatures in the North Atlantic and in North America and Europe, and also help the temperatures in the tropical Pacific to remain stable, they suggest.

Last year, scientists in the UN’s Intergovernmental Panel on Climate Change (IPCC) said that by 2100, global average surface temperatures could rise by between 1.1 C and 6.4 C compared to 1980-99 levels.

In the next 20 years alone, the global climate would warm by around 0.2 degrees Celsius per decade, the IPCC said.

These calculations are based on atmospheric concentrations of carbon gases - the famous “greenhouse effect” in which solar heat is stored in the air rather than released into space.

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JAKARTA ~ Thousands of Indonesians took to the streets of the capital for Labor Day rallies on Thursday, with rising food prices and an expected cut in fuel subsidies weighing heavily on workers’ minds.

“We are expecting more than 40,000 people demonstrating today,” policeman Hariyadi said as thousands of workers gathered at the central Imam Bonjol traffic circle.

Carrying banners reading “Lower Food Prices Now” and “More Pay for Workers and Farmers,” many of the demonstrators said they were alarmed at soaring inflation and the prospect of sharply higher fuel bills.

“We want the price of kerosene to come down. Food is getting expensive,” said garment factory worker Yuningsih.

Jakarta Police chief Adang Firman told reporters after monitoring the capital from a helicopter that 10,000 security personnel had been deployed to control the rallies and another 50,000 were on standby.

All May Day rallies were banned in Surabaya, the country’s second largest city, because the workers’ holiday coincided with a religious holiday, police said.

“Rallies are not allowed during a public holiday. Let’s respect Jesus’ Ascension day,” Surabaya Police chief Anang Iskandar told state news agency Antara.

If there were any rallies, they would be broken up, he said.

JAKARTA ~ State electricity company PLN has awarded contracts to build two coal-fired power plants, worth about US$890 million, to two groups.

PT Perusahaan Listrik Negara president Fahmi Mochtar said Chinese Sinohydro Corporation was awarded a contract to build the Nagan Raya power plant in Aceh province on the northern tip of Sumatra.

The other contractor, a consortium consisting of China National Machinery Corp., China National Electric Equipment Corp. and local company PT Penta Adi Samudra, was awarded a contract to build the Tanjung Awar-Awar plant in East Java province, Mochtar said.

He said the Nagan Raya plant would have two generators with a capacity of 110 megawatts each and would be completed within 24 to 26 months.

The Tanjung Awar-Awar plant would also have two generators each, with the capacity to produce 350 megawatts and would be completed in 33 months.

The two projects are part of PLN’s fast-track program to build new coal-fired power capacity of 10,000 megawatts. So far, PLN has awarded contracts for nine projects under the program.

Mochtar said PLN was still offering one more big project in Java and 15 smaller projects outside Java.

Oil Prices Rise: World oil prices rose by over US$1 in Asian trading on Thursday, dealers said, after previous sharp falls overnight in response to a bigger-than-expected rise in US crude reserves.

In morning trade, New York’s main contract, light sweet crude for June delivery surged $1.35 to $114.81 per barrel from $113.46 at the close of floor trading during US hours on Wednesday.

The contract had earlier traded at an intraday high of $115.23 before easing.

LEBIH BEACH, Gianyar ~ A sightseeing helicopter operated by local firm Air Bali crash-landed on Lebih Beach in Gianyar Regency on Wednesday afternoon with four American passengers on board, but no one was injured, police said.

The Bell helicopter experienced engine failure mid-flight and the pilot decided to make an emergency landing, an Air Bali spokesperson told The Bali Times.

The passengers and crew were unhurt but shaken by the accident, Bali Police spokesman Antonious Reniban told reporters.

However, the tail section of the aircraft was badly damaged, a Times photographer at the scene said. Witnesses said they saw parts of the tail fall off before the helicopter made its emergency landing, Reniban said.

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