AGO legal opinion is not binding in JORR case

AGO legal opinion is not binding in JORR case

A'an Suryana, The Jakarta Post, Jakarta

Chances remain wide open for the Malaysian Consortium (MC) to
participate in Jakarta's Outer Ring Road toll road project,
despite a recent Attorney General's Office's (AGO) legal opinion
which barred the Malaysian firm from taking part in the project.

A senior government official asserted on Saturday that the
legal opinion was not binding, and it merely served as a legal
consideration for the policy maker: the government.

"The final decision would be determined by the Financial
Sector Policy Committee (FSPC), which will closely cooperate with
the Ministry of Resettlement and Regional Infrastructure (on the
issue)," Mahendra Siregar, an senior staff member at the
Coordinating Ministry for Economic Affairs, told The Jakarta
Post.

FSPC groups several economic ministers that has a final say on
the country's major corporate and bank restructuring program.

The FSPC should have decided last week whether to bar the MC
from taking part in the project, but the decision was delayed for
unknown reason.

"It's high level process among the ministers. The decision is
expected to come up the week after," Mahendra said.

The government's latest statement was made following the
office's legal opinion last week, which asserted that the
Malaysian firm had no right to take part in the high-profile
56.87 kilometer toll road project.

According to the office, the consortium failed to meet
technical requirements in a previous tender held by PT Jalantol
Lingkarluar Jakarta (PT JLJ), a company funding investor for the
project.

Meanwhile, Minister of Resettlement and Regional
Infrastructure Soenarno added that the Malaysian firm had also
failed to meet requirements by a presidential decree in 1998 on
"Government and Private Company Cooperation in Development and
Maintenance of Infrastructure Projects".

"The appointment of the Malaysian firm was not held in a
transparent and competitive procedure," Soenarno has said.

The dispute dates back to the mid 1990s when three local
companies, linked to the Soeharto family, initiated the JORR
project under a build-operate-transfer (BOT) scheme with state-
owned toll road operator PT Djasa Marga.

The project was a complete failure in 1997, as the financial
crisis struck the country.

Due to the crisis, the three companies were unable to pay bank
loans, which forced the Indonesian Bank Restructuring Agency
(IBRA) to take over the loans of some Rp 1 trillion (US$115
million) and the project.

IBRA then teamed up with Djasa Marga to set up JLJ, to proceed
with the project and to find new investors.

In January 2000, president Abdurrahman Wahid and Malaysian
Prime Minister Mahathir Mohammad signed a memorandum of
understanding, stating that MC was appointed as a strategic
investor to continue the project.

Unfortunately, the House of Representatives (DPR) then
annulled the government's decision as the toll fee proposed by
the consortium was too expensive, namely Rp 500 per kilometer.

The decision forced the government to hold an open tender to
resolve the deadlock. However, the open tender was a failure as
all bidders failed to meet government's requirement of paying Rp
1.2 trillion into an escrow account as a sign of their
seriousness, plus the need to post a bond of up to US$20 million.

Since then, the government, which is represented by FSPC
remains in the dark to pick up one company to execute the
project.

However, it is likely that Djasa Marga would be in charge of
the project, should the FSPC finally bar the Malaysian firm from
taking part.

It is a public knowledge that Soenarno is a staunch supporter
of Djasa Marga.