Construction firms get another blow

JAKARTA (JP): Observers fear the government's plan to cut development spending will prove a further blow to the country's ailing construction sector.

Agus Kartasasmita of the Association of Indonesian Contractors estimates that the money going into development projects such as road construction will decline by between 60 percent and 70 percent.

"We understand because the government has no choices but slash spending to help cover the widening budget deficit," he said on Friday when discussing the possible impact of the government's belt-tightening.

The government has said it will cut spending for development projects to Rp 8 trillion from the originally budgeted Rp 21 trillion, as part of measures to control the budget deficit.

The association said the cut in development spending would do further damage to construction companies, which remain largely inactive due to the impact of the country's economic crisis.

Agus said he understood the government's decision, but he appealed to the government not to cut the budget in other sectors such as food procurement and educational activities.

He also urged the government not to slash the budget for road repairs.

Separately, Minister of Settlement and Regional Infrastructure Erna Witoelar said the cut in development spending would only delay the completion of projects.

"It does not mean that the projects will be halted," she said.(05)