As the final deadline of Friday nears for agreement on a $600 million mega-tourism project on Lombok Island to be jointly developed by the government and Dubai-based Emaar Properties, government officials say it is now up to Emaar to push through with the development.
In an effort to save the troubled project, Alwi Shihab, the president’s special envoy to the Middle East who played a major role in persuading Emaar to invest in Lombok, will meet today with Mohammed Al Alabar, the chairman of Emaar Properties, in Dubai.
“I’m frustrated about this project,” Alwi told the Jakarta Globe by telephone before leaving for Doha in Qatar on Monday. “Indonesians have a bad habit of taking things for granted.”
“In March, our officials thought that they had three months [to settle the deal], in May, they thought they had another 30 days,” Alwi said, adding he had asked State Minister for State Enterprises Sofyan Djalil to summon high-level government officials to a meeting last week to plan on how to save the deal.
The meeting ended with a resolution that Alwi should tell Emaar they had to speed up the development. In turn, Alwi was to point out to Emaar officials that the Indonesian side was already working on the airport, roads and utilities to service the project. Land acquisition problems and disagreements about joint venture arrangements have caused the deal to halt earlier.
Alwi said that the outcome of the meeting was in effect a “take-it-or-leave-it” offer. “If we don’t do anything, then Emaar will think that we’re not serious about the investment,” he said.
The project, located in Central Lombok district, envisioned the development of 1,200 hectares along seven kilometers of pristine beachfront that would have transformed Kuta and Tanjung A’an beaches over the next 12 years into a world-class resort and residential community.
Emaar and the Bali Tourism Development Corporation (BTDC), a state-owned company, were supposed to have established a joint venture company, Emaar Lombok, for the project.
To accelerate the project, Emaar set up an office in Jakarta in May 2008 and gave a six-month deadline to November of that year for the Indonesian side to produce a detailed master plan for supporting infrastructure, including an international airport, access roads, as well as the resolution of land acquisition issues.
Emaar extended the deadline to March this year as some of the requirements had not been met. However, it also closed its Jakarta office in the same month, before granting another three-month extension after senior government officials intervened before the deadline .
I Made Mandra, BTDC’s president director, acknowledged to the Jakarta Globe that the joint venture company had yet to be established due to some disagreements, particularly over land acquisition.
“Emaar didn’t want to have any land problems with the local people,” Made said. “If they want faster action on the land issue, it’s impossible.”
The land issue revolves around problems regarding 1,200 hectares of land needed for the development. Of this, approximately 1,000 hectares granted to the project by the West Nusa Tenggara government still needed certification from the National Land Agency, while the remaining 200 hectares were still occupied by locals.
According to I Made, Emaar has been unwilling to compromise on the land issue and is demanding that it get the full allocation of land. “If this is their reason for abandoning the deal, then so be it,” he said.
Striking a positive note, Muhammad Lutfi, chairman of the Investment Coordinating Board, said he was optimistic the agreement would push through, although there were “nine or 10 things” that needed to be ironed out. The land issue “can be a problem,” but the government now had cooperation from the local governor and the district head, he said.
“We couldn’t agree on it in February so it was extended three months. And now we are in the final process.” The ball is now in Emaar’s court, he said.
“If we [ultimately] don’t have an agreement [with Emaar], we can develop this with whoever we want and I’m very confident we will have a taker,” he added. “If Emaar, at the end of the day with the [economic] situation in the world, isn’t ready for it, we can go with somebody else.”