BPGS demands $350,000 annual payment from PT Indobuildco

JAKARTA (JP): The Gelora Senayan Management Board (BPGS) has demanded that PT Indobuildco which runs the Hilton International Hotel and Hilton apartments, pay a US$350,000 annual fee for the land use permit.

Chairman of the Gelora Senayan Executive Directors (DPGS), Yasidi Hambali said on Thursday that the board might consider terminating its land lease to PT Indobuildco should the latter reject the demand.

PT Indobuildco is leases 14 of a 275-hectare lot in the Senayan area, which is under the supervision of the Gelora Senayan Management Board (BPGS). Their 30-year lease expired on Jan. 1 this year but the building-use permit will only expire in 2003.

PT Indobuildco had been negotiating an extension of the lease since 1999, the same year the company was placed under the Indonesian Bank Restructuring Agency (IBRA) which named it the 32nd largest debtor, with a total debt of Rp 836 billion ($88,000).

Yasidi said that according to a government decree, any building on government land should pay a fee of a maximum of three percent of the value of the land.

"Based on the decree, we are supposed to receive about Rp 60 billion annually. But we are not a government body, we deal with national sports and its development. Therefore, we could ask for more than three percent of the land price. However, in a bid to assure a constant cash flow, we have only asked for $350,000."

The money will be given to the government via BPGS.

Yasidi said PT Indobuildco had requested BPGS to lower the demand to $200,000 but BPGS had stood firm on its decision.

"We have received full authority from IBRA to make this demand. If PT Indobuildco rejects our demand and takes legal action, we may make a bigger demand. We have been accommodating them. We don't understand why they are so stubborn.

"If the PT Indobuildco doesn't extend the lease, the land will automatically be returned to BPGS."

Last year, PT Indobuildco had offered to pay $50,000 in annual fees or three percent of the value of the land, for another 30 years.

Yasidi had said earlier that the fees from companies leasing lots in the Senayan area would be used to build new sporting venues and support sports development.

BPGS handed over Rp 4.5 billion to the National Sports Council (KONI) -- whose chairman is the vice chairman of BPGS -- to help it groom athletes for the 1999 Southeast Asian (SEA) Games in Brunei Darussalam and Rp 2 billion for the 2000 Olympics training program.

At the end of 2000, BPGS also handed over Rp 5 billion to KONI to support the training program for the 2001 SEA Games to be held in Kuala Lumpur in September. (ivy)