FSPC bars Malaysian Consortium from JORR project

The Jakarta Post, Jakarta

The Financial Sector Policy Committee (FSPC) has decided to assign state-owned toll road operator PT Djasa Marga to finish Jakarta's Outer Ring Road (JORR) toll road project, barring Malaysian Consortium (MC) from participating in the project.

Syafruddin Temenggung, the head of the Indonesian Bank Restructuring Agency (IBRA), said that the decision came after considering the importance of the project.

"JORR is a strategic project. Therefore, it should proceed," he said Thursday evening after the meeting as quoted by Antara.

FSPC groups several economic ministers that have the final say on the country's major corporate and bank restructuring programs.

Last week, the Attorney General's Office, in a legal opinion, said MC should not be allowed to participate in the high-profile 56.87-kilometer toll road project because it had failed to meet requirements for transparent bidding.

The JORR project was initially owned by three local companies linked to the families of former President Soeharto. But, following the economic crisis and the downfall of Soeharto, IBRA took over the project due to the firms' failure to pay their debts to state-owned banks.

MC was appointed as a preferred bidder for the project in a memorandum of understanding signed by the president and Malaysia's Prime Minister Mahathir Mohammad in January, 2000.

Unfortunately, the House of Representatives then annulled the government's decision as the toll fee proposed by the consortium was too expensive, namely Rp 500 (about 5 U.S. cents) 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, including MC, failed to meet government requirements 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.

MC officials were not available for comment on Friday but MC representative Dato Hashimuddin Dato Abdul Kadir earlier threatened to file a lawsuit against the government if MC was ousted from the project.

The consortium would demand US$3 million in compensation for costs spent for the project.