[Kabar-indonesia] Officials' waffling may put brakes on monorail [+Turnpike schemes]

[Joyo at aol.com]

also: VP says banks can finance land acquisition for turnpike schemes

The Jakarta Post 
Saturday, August 5, 2006

Officials' waffling may put brakes on monorail

The Jakarta Post, Jakarta

The future of Jakarta's planned monorail remains fraught with confusion as 
the project's principle actors, as well as state officials, persistently 
contradict each other on the question of financial guarantees to secure overseas 
loans.

Vice President Jusuf Kalla said Friday that the central government is willing 
to provide the guarantees for project developer PT Jakarta Monorail (JM) so 
it can secure overseas loans.

However, this can only be done if the Jakarta administration finalizes its 
contract with JM.

"We are willing to issue the guarantee. But the Jakarta administration should 
ensure with JM that the minimum requirements for the project have been met," 
said Kalla without elaborating.

He reiterated that it was the task of the city administration, not the 
central government, to guarantee the project.

"But to ensure the availability of funding, the government agreed to help the 
city in dealing with international lenders," he said.

The ambitious US$650 million project has been burdened by financial problems 
for some time, as investors have backed away from their previous pledges.

As a result, construction has proceeded at an irregular pace. Workers have 
sometimes been on the job all day and night, while at other times work has 
stopped completely for a week or two.

The latest prospective investor, the Dubai Islamic Bank, has expressed its 
commitment to invest $500 million in the project, but has demanded a guarantee 
from the government.

Finance Minister Sri Mulyani Indrawati has refused to give a blanket 
guarantee unless the project complies with existing regulations. By law, the central 
government can issue a risk guarantee for an infrastructure project only if the 
developers were selected through a transparent tender. JM was directly 
appointed by Jakarta Governor Sutiyoso in 2005, rather than chosen through a tender.

Sutiyoso upped the ante Friday when he issued what is tantamount to an 
ultimatum: Complete the project by the agreed target of 2007, or get out.

But he seemed to have made up his mind already.

"I doubt that the project can be completed next year," he remarked.

Sutiyoso repeated that in the worst-case scenario his administration could 
hold a tender. He said another option could be including the consortium of state 
and private companies for the planned Mass Rapid Transit (MRT) project in the 
monorail project.

The monorail's 14.3-kilometer green line route is targeted for completion by 
the end of 2007. It would run from Jl. HR Rasuna Said to Jl. Gatot Subroto to 
Sudirman Central Business District to Senayan to Jl. Pejompongan and back to 
Jl. Rasuna Said via 16 stations.

The blue line, running from Kampung Melayu, East Jakarta, to Roxy, West 
Jakarta, via 11 stations, would be ready by mid-2008.

JM operational director Sukmawati Syukur told The Jakarta Post that 45 
percent of the foundation for the green line was finished, including the pole 
structures for eight of the 16 stations. She added that 20 percent of the tracks' 
columns had been built.

"We would meet the target ... We would complete the line on Jl. HR Rasuna 
Said by that time," she added.

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The Jakarta Post 
Saturday, August 5, 2006

VP says banks can finance land acquisition for turnpike schemes

The Jakarta Post, Jakarta

Vice President Jusuf Kalla has assured local banks that there will be no 
problems with them providing loans to finance land acquisition for infrastructure 
projects, saying that this in no way violates banking regulations.

"Bank Indonesia Governor Burhanuddin Abdullah has told me that the banks are 
allowed to extend loans for land acquisition for expressway projects and 
affordable housing schemes. However, this does not include general real-estate 
projects," said Kalla in Jakarta on Friday.

The Vice President said that financing from local banks was essential to 
accelerating the construction of major expressway projects across the archipelago.

According to the Public Works Ministry, the construction of 57 expressway 
schemes will require a total investment of Rp 15.98 trillion (about US$1.7 
billion) for land acquisition alone over the next five years.

The government has also proposed the setting up of a revolving fund worth 
some Rp 1 trillion that can be availed off by investors for land-acquisition 
purposes.

Land acquisition costs in road-construction projects average about 30 percent 
of total costs. But should disputes arise, the cost can sometimes end up 
being more than double the figure that was originally proposed.

As a result, banks are frequently unwilling to lend money for infrastructure 
projects, something that is compounded by the difficulties they experience in 
matching their available short-term funds with the long-term nature of 
infrastructure developments.

However, the government is in the process of issuing a regulation banning the 
sale and use of land designated for expressway projects for other purposes in 
an effort to curb the rampant land speculation that often results in runaway 
project-cost inflation.

With the new regulation, landowners whose holdings have been earmarked for 
expressway projects will only be allowed to sell their land to the local 
government at a price that is slightly higher than the prevailing market value.

Woefully inadequate infrastructure has long been a major obstacle to new 
investment in Indonesia, which has seen average economic growth of between only 
three and five percent -- not enough to reduce burgeoning unemployment -- since 
the economic crisis of 1997. 

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Joyo Indonesia News Service
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