Govt announces details of project cutback program
Govt announces details of project cutback program
JAKARTA (JP): The government announced yesterday details of
156 government and state-related projects worth Rp 111.18
trillion (about US$38 billion) which it will either postpone or
review as part of the retrenchment measure to cope with the
rupiah's sharp depreciation.
Minister/State Secretary Moerdiono said 81 of the projects
were placed on hold and another 75 were under review.
However, the cutback does not affect the other 85 projects
worth Rp 67.60 trillion, including the N-250 domestic passenger
plane program and a liquefied natural gas (LNG) plant at Bontang
in East Kalimantan.
The national car project, headed by President Soeharto's
youngest son Hutomo Mandala Putra, is also not included in the
cutback lists.
PT Timor Putra Nasional, the owner of the project, is set to
receive $690 million in syndicated loans from a consortium of
state and private banks to build its assembly plant in West Java.
"To safeguard economic continuity and the general progress of
the national economy, it is deemed necessary to take steps to
deal with the monetary fluctuation and the arising consequences,"
Moerdiono said.
Minister of Finance Mar'ie Muhammad said last week that the
government would end up with a Rp 9.2 trillion deficit unless
spending was cut to offset the anticipated decline in government
tax revenues and an extra burden of oil fuel subsidies caused by
the weaker rupiah.
The rupiah and other Southeast Asian currencies have been
under attack following the devaluation of the Thai baht on July
2. The rupiah has dropped by about 20 percent since then.
The retrenchment list includes 81 projects worth Rp 49.57
trillion which will be postponed. The transportation sector is
the worst affected with 62 projects worth Rp 33.01 trillion and
the mining and energy sector with 14 projects valued at Rp 14.68
trillion.
"A special team has been established to evaluate the projects.
It is possible for the government to carry out a postponed
project when deemed urgent, but we will be very cautious,"
Moerdiono said.
The $285 million integrated Manggarai Terminal in Jakarta, a
new airport in Medan, North Sumatra, and the operation of a
railway service for Greater Jakarta are among the delayed
projects.
Seventy-five projects worth Rp 61.62 trillion are under
review. The mining and energy sector leads the list with 11
projects worth Rp 39.13 trillion, followed by the transportation
sector with 32 projects worth Rp 10.92 trillion.
It also includes six cement plants, the installation of
security equipment for 50 airports, the Tanjung Jati A power
plant and the $1.77 billion Tanjung Jati C power plant in Jepara,
Central Java.
The continued project list includes 85 projects worth Rp 67.60
trillion. The mining and energy sector will go ahead with 22
projects worth Rp 29.86 trillion, transportation sector with 30
projects worth Rp 18.33 trillion, followed by the industrial
sector with 13 projects worth Rp 9.05 trillion.
Other projects which are not affected by the cutback program
include Umbulan Spring Water in East Java and the Bekasi Timur-
Cawang-Kampung Melayu toll road.
"We are closely monitoring the situation and will inform the
public about any new government measures," Moerdiono said.
The value of the projects was based on an exchange rate of Rp
2,900, he added. (prb)
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