House of Representatives endorses pro-investor bill on highway

Rendi A. Witular, The Jakarta Post, Jakarta

The House of Representatives endorsed on Wednesday a key bill on highway development that is expected to lure badly needed investment for the construction of toll roads, but runs the risk of landowners having to surrender their assets for unfavorable government-determined prices.

Minister of Settlements and Regional Infrastructure Soenarno said the bill was designed to open the toll road sector to private investors, while eliminating barriers that often surfaced during the construction phase of toll roads.

"The bill will erase obstacles faced by toll operators, especially during the land clearance. This is important since most of our toll road projects have been hampered by such problems," said Soenarno.

"At present, we are in dire need of sufficient and efficient transportation infrastructure, in order to support economic growth and create more jobs," he said.

Numerous infrastructure projects in the country have run aground due to problems related to land acquisition, with investors facing widespread protests and rejection from landowners and backed by regional administrations.

Articles 59, 60 and 61 of the bill, stipulate the elimination of the rights for the public to protect land ownership, unless it agreed to the compensation rewarded by the government for the land.

The articles will allow land disputes to be resolved in court, while the construction project continues.

Public complaints, however, will be accommodated by article 62, which stipulate the rights of the landowners to file its complaint with the court and receive reasonable compensation from losses resulting from the construction of the toll road.

During the plenary session, House deputy chairman A.M. Fatwa said the much-anticipated bill would help the country to address problems in transportation and distribution infrastructure, which had become a serious problem because of the rapid rise in the number of vehicles on the roads.

"The bill is expected to support the country's economic growth, and all stakeholders involved in the construction of toll roads should cooperate and help to make the process goes smoothly," said Fatwa, a senior lawmaker at the National Mandate Party (PAN).

Another crucial point included in the bill is the liberalization of the toll-road sector by separating the functions of regulator and operator, both of which are currently held by state toll operator PT Jasa Marga.

At present, Jasa Marga is involved in all toll road projects, whether as part of a joint venture or as the sole constructor.

The bill requires the establishment of an agency called the Toll Road Regulator Agency (BPJT) specifically tasked with regulating and supervising the toll road sector. However, the agency will remain under the auspices of the Ministry of Settlements and Regional Infrastructure.

BPJT is expected to be set up within 12 months after the endorsement of the bill.

The bill is also expected to resolve problems in determining toll fees, which will enable investors to draw up a plan as early as possible in order to calculate the fiscal feasibility of the project.

However, the government will still hold the rights to decide the interim toll fees and concession rights based on input from the toll operators. The fees will be reviewed and evaluated every two years with adjustments for inflation.

Some key articles of the highway bill

1. Toll Road Regulator Agency (BPJT) is tasked with:

- Recommending interim toll fees to Minister of Settlements

and Regional Infrastructure.

- Taking over toll roads after the concession period expires.

- Providing facilities for investment and land clearance.

- Supervising highway operations and services.

2. The government will take over the construction of toll roads

or its operations in order to ensure its sustainability, if

later in the development process the toll operator

encounters constraints, which cannot be settled.

3. Toll concessions will be given to companies based on

a transparent tender process.

4. Toll operators should provide alternative highways if the

construction of its toll roads will have a possibility of

disturbing the existing highways.

5. The government will have the right to revoke the titling of

private land and registers it under the ownership of the

state, unless the landowner agrees to the compensation

offered based on the existing regulations on land ownership.

6. Any individual or institution that intentionally disrupts the

construction or operation of the highways will be penalized with a maximum of an 18-

month imprisonment and/or a fine of Rp 1.5 billion

(some US$166,000).

7. Any individual or institution that unintentionally disrupts the

the construction or operation of the highways will be penalized with a maximum of

three months in prison and/or a fine of Rp 300

million.