Govt to sign railway deal with Sam-An

Rendi A. Witular, The Jakarta Post, Jakarta

The government will sign a US$270 million investment deal with South Korean engineering company Sam-An Corp. next month to help modernize the railway system in Greater Jakarta.

Minister for Transportation Hatta Radjasa said before meeting with President Susilo Bambang Yudhoyono on Wednesday that Sam-An would reorganize and manage the railway system around and leading into the capital for more than 15 years.

"The ministry has issued a license for Sam-An to reorganize and manage the railway. We expect the company to materialize their investment next month," he said, adding that the revitalization work would be completed by 2008.

The company will provide about 300 new train cars, dozens of new train stations as well as a ticketing system that will minimize the number of passengers riding trains without purchasing a ticket.

It is estimated that half of the approximately 450,000 passengers who use the railway system in Greater Jakarta each day do not purchase tickets due to a lack of enforcement by officials from ailing state railway operator PT KAI.

Hatta said Sam-An would take over the operation of the Greater Jakarta railway system from KAI under a kind of build-and- transfer mechanism.

Dow Jones reported late last month that Sam-An was first asked by the Jakarta administration to conduct studies on upgrading the railway system in 2003, and the government indicated its intention to allow the South Korean company to go ahead with the project.

Sam-An specializes in the design and construction of hydropower dam facilities, seaports and transportation and traffic systems. The company has participated in constructing South Korea's subway system and railroads, including a high-speed railway.

Regarding a plan to spin off KAI's Greater Jakarta unit, Hatta said his ministry and the Office of the State Minister for State Enterprises were currently working on the plan and expected it to be finished next month.

"Aside from spinning off the unit, the government is also working to revise the law on railways to facilitate the greater involvement of the private sector. Private investors will eventually control the Jakarta train system as well as railways in other areas," said Hatta.