Economist calls for subway postponement
JAKARTA (JP): The city administration's ambitious US$1.5 billion Fatmawati-Kota subway project received strong opposition from a noted economist on Tuesday.
Sri Mulyani of the University of Indonesia's Institute for the Development of Economy and Management (LPEM-UI) suggested the city administration should postpone the project, saying it was not an urgent scheme for the city's development program.
"The city administration has no sense of crisis if it continues with the project," Mulyani said after a seminar on people's economic empowerment at City Hall.
"The city administration should also be careful with the special yen loan which was offered to finance the project."
She said the Japanese government had its own interests in the construction project as city administration would have to include their suppliers and construction companies in it.
"This project will involve a huge amount of money. It will only be a heavy burden to the city administration in the short term," she said.
However, she acknowledged that Jakarta needed a mass rapid transit system, including the subway project, to settle the traffic problems.
Vice President Megawati Soekarnoputri gave her approval to the subway project after Governor Sutiyoso met with her last week at her residence in Kebagusan subdistrict, South Jakarta.
The 15-kilometer project, which will begin from Jl. Fatmawati in South Jakarta to the Kota area in West Jakarta, will continue construction in 2001 after it was postponed in 1997 due to the economic crisis.
The Japanese government is financing the project with a special yen loan, which has a 0.75 percent annual interest rate and a maturity period of 40 years, including a ten-year grace period.
The memorandum of understanding (MOU) of the project was signed in 1995 between the central government, the city administration and an Indonesian-Japanese-European consortium.
The consortium includes Japanese companies led by the Itochu Corp., European firms led by Ferrostaal AG of Germany and Indonesian firms led by PT Citra Lamtorogung, PT Bukaka Teknik Utama, PT Bakrie Investindo, PT Pembangunan Jaya, PT Lippo, PT Suhamthabie and PT Steady Safe.
Chairman of the Indonesian Transportation Society (MTI) Suyono Dikun said recently that the infrastructure of the project should be financed by the government, while the operational costs should be covered by private investors.
An executive of the National Development Planning Board (Bappenas), Ali Imron, said last Wednesday that former president B.J. Habibie agreed to continue the project and asked the Japanese government to disburse the loan.
"But the World Bank later sent a letter signed by its country director Dennis de Tray, expressing their disagreement and asking the Indonesian government to review the project," Imron said. (jun)