Govt reschedules projects worth $35.6b<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced
\nyesterday the postponement or review of Rp 105 trillion (US$35.6
\nbillion) worth of government and state-related projects as part
\nof the drastic measures to cope with the currency crisis.<\/p>\n
Speaking before the House of Representatives' plenary session,
\nMar'ie said the government would slash its investment spending by
\nRp 3.28 trillion or 8.4 percent of its development budget for the
\ncurrent 1997\/1998 fiscal year.<\/p>\n
\"The 1997\/1998 budget will end up with a deficit of Rp 9.2
\ntrillion unless spendings are cut to offset the anticipated
\ndecline in government tax revenues and an extra burden of oil
\nfuel subsidies caused by the weaker rupiah,\" Mar'ie said.<\/p>\n
The rupiah has fallen by 23.53 percent against the U.S. dollar
\nsince the start of the year, he said.<\/p>\n
Mar'ie yesterday delivered a statement to the House on the
\nrupiah turmoil over the last two months and what measures will be
\ntaken to address the impact of the currency crisis.<\/p>\n
\"Even though there has been a considerable negative impact
\n(from the currency crisis), we hope this event can be used as a
\nmomentum to consolidate the national economy by implementing
\nvarious structural adjustments,\" Mar'ie said.<\/p>\n
\"These structural adjustments are needed so that all sectors
\nof the economy are well prepared to face economic globalization,
\na development that is already underway,\" he added.<\/p>\n
As part of the retrenchment program, the government also
\ndecided to postpone Rp 38.92 trillion worth of investment
\nprojects sponsored by state and private companies and to review
\nother projects worth Rp 62.69 trillion, Mar'ie said.<\/p>\n
Mar'ie added that private mega projects like the $560-million,
\n558-meter Jakarta Tower, the $2-billion, 65-kilometer world's
\nlongest bridge connecting Sumatra and the Malaysian peninsula and
\na $950-million bridge linking Java and Sumatra, should be
\npostponed.<\/p>\n
\"Implementation of these projects can be resumed after the
\neconomy recovers and the objective of this retrenchment program
\nhas been achieved,\" Mar'ie told the plenary session.<\/p>\n
The hardest hit areas would be the mining, energy, public
\nworks and transportation sectors, the minister said.<\/p>\n
He said the government postponed 14 power generation projects
\nvalued at $5 billion -- out of 29 power projects that had been
\nnegotiated -- and reviewed nine others worth $4.9 billion.<\/p>\n
Besides, the government would delay two oil refineries worth
\n$800 million.<\/p>\n
The government would also postpone 29 toll road projects and
\nreview 19 others.<\/p>\n
The $285-million integrated Manggarai Terminal in Jakarta and
\nthe $176-million Surabaya-Madura bridge in East Java were also
\nrescheduled.<\/p>\n
But Mar'ie said social welfare and poverty alleviation
\nprograms would continue.<\/p>\n
Foreign aid projects funded by soft loans from the
\nConsultative Group on Indonesia (CGI) creditor consortium would
\nalso be carried out as planned.<\/p>\n
Despite budget constraints, Mar'ie said the government was
\ncommitted to meeting all of its foreign debt obligations on
\nschedule.<\/p>\n
\"If the situation permits, the government may even amortize
\nits high-interest foreign debts ahead of schedule,\" Mar'ie said.<\/p>\n
He called on the private sector to meet all of its foreign
\ndebt obligations to maintain the country's credit risk among
\nforeign debtors.<\/p>\n
\"You can imagine if one private company, hopefully there will
\nnone, run default on their foreign debts. It will affect the
\nwhole country and increase our country's risk,\" Mar'ie told
\njournalists after the House session.<\/p>\n
But the finance minister refused to comment on whether the
\nnational car project, headed by President Soeharto's youngest son
\nHutomo Mandala Putra, would be cut.<\/p>\n
PT Timor Putra Nasional, the owner of the national car
\nproject, is set to receive US$690 million in syndicated loans
\nfrom a consortium of state and private banks to build its
\nassembly plant in West Java.<\/p>\n
Mar'ie yesterday also explained other policies aimed at
\nstabilizing the rupiah, reducing the current account deficit to
\nthree percent of the gross domestic product, establishing a sound
\nbanking sector and creating a vibrant private sector business.<\/p>\n
To facilitate non-oil exports, the government would provide
\nincentives to exporters in the form of preshipment financing.<\/p>\n
In addition, import duties on several raw materials and
\nintermediate products would also be slashed.<\/p>\n
Sales taxes on consumer and luxury goods would be raised to
\ncurb imports.<\/p>\n
The government is now in the process of merging the seven
\nstate banks to only two or three to improve efficiency and will
\ncontinue to encourage mergers among private banks.<\/p>\n
\"Insolvent banks that cannot be helped through merger or
\nacquisition will be liquidated at the least cost to depositors,\"
\nMar'ie said.<\/p>\n
The government, he said, would also continue to reduce banking
\ninterest rates by gradually further cutting the rates on Bank
\nIndonesia's short-term papers.<\/p>\n
\"This is important to promote the recovery of private
\nbusiness,\" Mar'ie said.<\/p>\n
The government would also ease rupiah liquidity but gradually
\nso as not to affect rupiah stability, he added. (rid)<\/p>\n
Editorial -- Page 4<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/govt-reschedules-projects-worth-356b-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }