Government to resume mega projects
The Jakarta Post, Jakarta
Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said on Tuesday that the government would recommence the development of several mega projects at the end of next month as the country's economic fundamentals had improved.
Speaking before domestic and foreign investors here, Dorodjatun said the projects would be the engine of economic growth in the coming years.
"The projects are, among others, Tanjung Jati B in Jepara, Paiton III and IV, Tuban Petrochemical and fertilizer producer PT Pupuk Iskandar Muda in Aceh," Dorodjatun briefed investors during a business luncheon held by Ekonid, an association of German and Indonesian business interests here.
He did not provide details.
Some of the projects, such as the Tanjung Jati B power project in Jepara, Central Java, and the Tuban Petrochemical project in East Java, were halted in 1997 due to the economic crisis.
Others are new projects such as Paiton III and IV in East Java.
Dorodjatun said the country's macroeconomic fundamentals had been improving as shown by the stronger exchange rate of the rupiah against the U.S. dollar, and the buoyant stock market.
The rupiah has been appreciating since the beginning of this year.
The rupiah is firmly hovering between Rp 8,000 and Rp 9,000 per U.S. dollar, and is strengthening by the day.
The rupiah has appreciated 19.83 percent since early this year from Rp 10,473 to Rp 8,740 last week.
The JSX composite index has also improved. The stock market has been one of the best performing markets in the region.
Early this year, the JSX composite index opened at 383.5 and closed last week at 545.08. Some analysts predict the index will reach 600 by year-end.
A stable political landscape, the return of funds from overseas and the sale of bank assets by the Indonesian Bank Restructuring Agency (IBRA) are seen as contributing factors to the strengthening of the rupiah and developments on the stock market.
Meanwhile, Didik Rachbini, an economist at the Institute for Development of Economics and Finance (Indef), said the government must first discuss the new plan with legislators because there had been suspicions of cost mark-ups in some of the projects.
He added that careful planning was essential because the projects would use a huge amount of foreign loans, which could be detrimental to the economy in the future if the loans were not well managed.
"Should that happen, how to return the loans? The government should think twice before starting the projects, and a second opinion from the House of Representative is badly needed," said Didik.