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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