Cement projects may be canceled over deadline
Cement projects may be canceled over deadline
JAKARTA (JP): The government will revoke several cement making
firm's investment licenses if the firms fail to start projects
before next month's deadline, State Minister of Investment
Sanyoto Sastrowardoyo said yesterday.
He said the cement-making projects that were likely to lose
their licenses were mostly in Central Java.
"The validity of the licenses of these projects have expired.
The projects should have been completed in three years, but so
far nothing has been done," he said.
There are 12 cement plants and oil refineries in Central Java
that have investment approval and are working on projects.
"But from the beginning of this year until today we have not
had to revoke any licenses yet," said Sanyoto, who is also the
Investment Coordinating Board chairman.
He did not say how many of the projects were foreign
investments.
Earlier this month it was reported that four mega projects
were due to begin in Central Java this year.
The projects include foreign investment ventures PT
Consolidated Electric Power Asia (CEPA) Indonesia, PT Mitra
Global Telekomunikasi Indonesia and national private investment
companies PT Semen Gombong and PT Semen Grobogan.
PT CEPA Indonesia will spend Rp 4.2 trillion on a 1,300
megawatt power plant in Jepara. PT Semen Gombong will spend Rp
586 billion on a cement plant billion along with PT Semen
Grobogan which will spend Rp 630 billion. PT Mitra Global
Telekomunikasi Indonesia is spending Rp 1.3 trillion to install
400,000 telephone lines.
Sanyoto said that between January and Feb. 15 this year the
government approved 105 domestic investment projects worth Rp
26.98 trillion (US$11.73 billion) and 113 foreign investment
projects worth $5.63 billion.
Last year the government issued $29.9 billion in foreign
investment licenses, down from $39.9 billion in 1995.
Domestic investment approvals in the corresponding period were
worth Rp 100.7 trillion, up from Rp 69.9 trillion.
Sanyoto said most investments were in the textile and
downstream and midstream chemical sectors.
"But we would like to see more investments in components, such
as for the electronics and automotive industries. We have a lot
coming in from Japan, Taiwan and Korea and this is a good trend,"
he said.
He said investors were seldom attracted to invest in upstream
chemical industries because of the huge capital needed to develop
the plants.
He said investments needed for an upstream chemical plant
could reach $2 billion.
"Apart from the huge capital, you need to wait for about eight
years to earn a profit and another eight years to see your money
return," he said.
"Upstream industries have small profit margins that rely on
large economies of scale," he said.
He said the increase in foreign investment in Indonesia was
mostly because of industries relocating.
The impact of the stronger dollar against the yen had little
to do with decisions to relocate, he said.
"There is some impact (of relocations) but not much. It is
certainly better for those who have their loans in yen," he said.
(pwn)