Fri, 29 Sep 2006
Govt wants quid pro quo for risk guarantees

Urip Hudiono, The Jakarta Post, Jakarta

The government, in return for agreeing to provide loan guarantees for major infrastructure projects, will expect investors to deliver the projects on time and to fulfill their output targets.

A failure to do so, State Minister for National Development Planning Paskah Suzetta said Thursday, could lead to the government seeking compensation, or to reduce the scope of its risk guarantees.

"The principle is that there should be a quid pro quo for a government's guarantee," Paskah said.

"If the government guarantees the project risks, then investors must also do their part. If their work is unsatisfactory, then the government should have the right to file a claim."

Paskah said that such "mutual safeguards" were needed as there was growing concern among the public that the guarantees extended for major infrastructure projects could lead to bigger state liabilities, apart altogether from greater pressure on the national budget.

"So, I don't think it will come at the expense of anyone -- it will be a win-win solution," he said, adding that the proposal would also be applied to the projects that will be offered during



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