Mon, 25 Oct 2010

From: The Jakarta Globe

By Ririn Radiawati Kusuma
Jakarta. The government is unlikely to tender five infrastructure projects worth $4.44 billion that were offered through a pilot public-private partnership program this year because a key regulation is not yet ready, an official said on Friday.

Gita Wirjawan, chief of the Investment Coordinating Board (BKPM), told the Jakarta Globe that the revision was necessary to give the board a stronger legal framework to arrange licenses and other administrative procedures for investors.

Gita had previously said the regulation would be ready this month, but he now estimates it will be delayed until December.

“We had planned to offer one or two projects in October,” Gita said. “But we need to talk to more stakeholders” to complete the revision.

The projects to be offered this year were a railway project to connect Soekarno-Hatta International Airport to Manggarai in South Jakarta ($735 million), the Tanah Ampo Cruise Terminal in Bali ($30 million), the Medan-Kualanamu toll road in North Sumatra ($475 million), the Umbulan water plant in Pasuruan, East Java, ($200 million) and a 3,000 megawatt coal-fired power plant in Central Java ($3 billion).

The government has targeted a total of $160 billion in infrastructure investment to boost economic growth through 2015, with hopes that 42.8 percent of the funding will come through the partnerships.

In the public-private partnership scheme, the government offers projects to private firms along with help navigating the maze of regulations that often stops development in its tracks.

The BKPM had been appointed to serve as the “front office” for marketing and registering PPP projects, taking over that portfolio from the National Development Planning Agency (Bappenas).

The BKPM is seeking to make it easier for investors to secure permits, as dealing with local governments is often a time-consuming, frustrating process that is widely seen as a deterrent to investment.

“This is because of complicated procedures,” Gita said. “In the future, everything that investors need, we will manage here at the BKPM.”

The government has about 100 projects it intends to offer through the PPP scheme, but the slow pace of implementation has left many potential investors in doubt.

The revision will complement changes to the land acquisition law, which are expected to be approved by lawmakers by the end of this year.

Gita said the government’s plan to develop six economic corridors throughout the archipelago in an attempt to boost regional growth would also be delayed by the revision.

“We have not decided yet whether the project will run as a PPP scheme or not,” he said.

Gita said that Japan had expressed an interest in helping to develop the economic corridors, a project expected to cost $52.9 billion.

“Japan wants to build a clean, metropolitan high-technology area in each corridor in Indonesia,” he said.

In terms of funding, Gita hoped Japan would give some of the funds as a grant to Indonesia, with the rest coming from cooperative agreements between the two nations.

He added that the Japan International Cooperation Agency and the Japan Bank for International Cooperation could act as conduits for the capital.

Hatta Rajasa, coordinating minister for the economy, announced on Friday that the six-corridor plan would comprise 44 projects and would be completed in two phases, with the first to be finished by 2014 and the second by 2025.