Investments turn sour in Kendari

Hasrul, The Jakarta Post/Kendari

Two business partners of holding company PT Artha Graha have pulled out their stakes in projects in Kendari, Southeast Sulawesi, blaming a public outcry about the group's investment ventures in the area.

They are property investor PT Bumi Artha Makmur and timber and rattan processor PT Sumber Air Sultra.

The companies had totally halted all investment activities in partnership with Artha Graha, such as the three-star Kendari Beach Hotel construction, despite it being 80 percent complete, with investments reaching tens of billions of rupiah, Artha Graha consortium group chairman Robert Kasenda said on Saturday.

All activities had also stopped in the timber and rattan venture together with Southeast Sulawesi Village Cooperatives Center.

"Two of our business partners have withdrawn their investments in Kendari as was conveyed in the official letter submitted to the Southeast Sulawesi provincial administration," Kasenda said.

The planned pullout was final and could well be followed by Artha Graha's 17 other partners, he said.

Kasenda blamed the pullout on a climate "uncondusive to business" which he blamed on one-sided media reporting of the group's ventures.

Reports have revealed the construction of the Hotel Kendari Beach was illegal as the group had not acquired a building permit from the local administration.

Others have accused the consortium of dividing the land into lots and illegally using property documents as loan collateral.

"The local media have been lopsidedly reporting news about the presence of the Artha Graha Consortium since Nov. 22. The reports, whether they included comments from the public or from the administration, were clearly detrimental to us. A public opinion was formed saying that our investment activities were not legal," Kasenda said.

He said all of the company's business activities in the province had been initiated through memorandums of understanding with the Southeast Sulawesi administration.

The pullout was confirmed by PT Bumi Artha Makmur director Tommy Bungaran.

"We are resolute because we consider the investment climate in Kendari as not conducive," he said.

He said the much-publicized criticisms in the local media had concerned the legalization process of the businesses they had invested in.

"As a company in which property is one of our fields, we understand the need to secure building permits for construction purposes. But in line with the Kendari Mayor's commitment, we were asked to build the hotel first, then after completion a permit would be issued to us. The mayor's commitment is what we hold on to, and we were not the only ones facilitated in this way, other businesses were too," Tommy said.

The reports and accusations had caused unease in many of the investors grouped in the project and some of them had panicked, he said.

Not only that, requests by several investors grouped in the consortium for it to immediately pull out of the province had caught the attention of others.

"Those statements have made everyone feel uneasy and made the situation even more tense," Tommy said.

The Kendari municipal administration said it regretted the move and requested the consortium to review its plan to pull out its investments.

"The administration has thus far supported investment activities in the area and it would be proper if the investors reconsidered their plans to withdraw," Kendari Mayor Masyhur Masie said at his office on Saturday.