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.