Japan firms get nod for subway project

Japan firms get nod for subway project

JAKARTA (JP): The government gave the nod on Tuesday for
Japanese firms to build a subway system in the city and an
electric railway connecting the capital to Surabaya, East Java,
according to a business leader.

Chairman of the Indonesian Chamber of Commerce and Industry
Aburizal Bakrie said that President B.J. Habibie has given the
"green light" for the two projects to proceed after a business
delegation under the Japan Federation of Economic Organizations,
known as Keidanren, proposed to him their participation in the
building and financing of the two mega projects.

"The President said both of the two projects proposed by Japan
had received the green light from the Indonesian government,"
Aburizal quoted Habibie.

At its Tuesday meeting with Habibie here, the prominent
Japanese business lobby group proposed that the Indonesian
government lists the two projects when it requests soft financing
from the Japanese government through its Official Development
Assistance (ODA) program.

"We hope the Indonesian government will assign high priority
to these two projects when they submit their request of ODA to
the Japanese government," Keidanren Chairman Takashi Imai told a
press briefing Monday afternoon.

Aburizal said investment in the 14.5-kilometer subway project
is estimated at about US$1.5 billion and the electric railway
connection to Surabaya would cost about the same amount.

On Tuesday, the Keidanren delegation, which is scheduled to
leave for Malaysia today, also met with Coordinating Minister for
Economic, Finance and Industry Ginandjar Kartasasmita and Kadin
representatives.

Meanwhile, a special envoy for Japan and South Korea, Kusumo
A.M., said Tuesday the Japanese loan required that 50 percent of
the projects' technical expertise and material inputs are
imported from Japan to boost its domestic economy.

The recovery of Japan's economy, which has been in the
doldrums, is believed to be a key factor in rescuing the region's
ailing economies.

"The Keidanren wants to concentrate on financing
infrastructure projects which will combine ODA and private sector
financing," he told reporters after the Japanese met with
Ginandjar.

Kusumo said the ODA financing might come partially from the
US$30 billion fund pledged by Japan under the so-called Miyazawa
plan, and from the Ministry of International Trade and Industry.

The two megaprojects were canceled by the government in August
1997 due to financing difficulties in the wake of the rupiah's
sharp plunge against the U.S. dollar.

The subway project, which will connect the Blok M shopping
area in South Jakarta and the commercial district of Chinatown in
West Jakarta, was initially planned to be built by a consortium
of Indonesian, Japanese and German companies.

Jakarta Governor Sutiyoso announced last July that the project
would resume and would begin construction early next year through
a new consortium led by Japan's Itochu Corp, which scaled down
the investment estimate from $2.4 billion to $1.5 billion.

But in August, the government announced that the project would
be delayed again.

The project was aimed at helping solve the city's chronic
traffic density and reducing pollution, but many criticized the
government which it said should instead concentrate on providing
basic supplies to survive the current crisis.

At the press briefing Tuesday, Imai said the economic downturn
had forced Japan's manufacturing base in Indonesia to export its
products, which were previously sold in the local market.

"Japan views Indonesia as a manufacturing base into the
future," he said. (das/prb/rei)