Japanese firm to start subway project next year

JAKARTA (JP): Itochu Corp. of Japan has pledged to start the construction of the repeatedly delayed 14.5-kilometer subway project next year, Governor Sutiyoso said yesterday.

The company, together with the Japanese government, also vowed to fund the US$1.5 billion project by providing a soft loan at an interest rate of 0.75 percent per annum and with an option to make the payment over 40 years, said Sutiyoso.

Itochu has estimated that the project would be completed in 2003.

According to Sutiyoso, the Japanese commitment was verbally disclosed to him during his controversial three-day visit to the Philippines this week.

The governor, however, refused to give other details about his meeting with the Japanese investors.

"The details (of the Japanese commitment) will be submitted by the foreign investor next month," he told the media.

Showing a photocopied invitation signed by Ryuji Nakamura of Almec Corporation Japan, Sutiyoso said he was in the Philippines at the invitation of Almec, a consultant for Itochu.

In the letter dated 23 June 1998, Nakamura invited Sutiyoso "to discuss, examine and experience the MRT (Mass Rapid Transit) system in Manila".

Sutiyoso said he was happy with the trip and willing to imitate the construction system of the Manila subway in developing the Blok M-Kota subway here.

"I chose the Manila subway construction system as it employs 60,000 people a day. This would be more appropriate to be implemented here in Jakarta," he said.

The previous proposal for the country's first underground subway submitted by a consortium of Indonesian, Japanese and German companies, called the Indonesia Japan European Group (IJEG) cost "too much money and would use much high-tech equipment", Sutiyoso said.

"As there are so many people who need jobs these days, we'll choose a project which will employ a great number of people," he said.

According to Sutiyoso, IJEG's proposal would cost $2.4 billion.

A cooperation agreement on the project between the city administration and IJEG, in which Itochu led the Japanese companies, was signed in August 1995.

The planned 17-station subway was initially scheduled to start in April last year but was delayed until June. It was delayed again due to the monetary crisis.

Sutiyoso hoped that the project could be carried out soon.

At the least, he said, the construction work from Blok M to Monas (the National Monument) could be completed before his first tenure ends in 2001.

The exchange rate for the project's funding has been set at Rp 10,000 per US dollar.

"I am optimistic that we can pay the debt on time as I think we won't be hit by the economic crisis for 40 years," he said.

Based on the current rate of Rp 14,000 per US dollar, the $1.5 billion investment to be prepared for the project is equivalent to 21 trillion, or 16 times the city's 1998/99 fiscal year budget of Rp 1.3 trillion.

Sutiyoso's departure for the Philippines on Tuesday afternoon, which occurred without any explanation, was queried by city councilors as it came at a time when the city was struggling both with the impact of the prolonged crisis and to bring the security situation under control.

Until Wednesday, the only available information about Sutiyoso's journey came from a source at the city administration who said that Sutiyoso was to attend a junior soccer game.

Deputy Governor for Administrative Affairs Abdul Kahfi then clarified that the governor was on a mission to restore the city's image overseas after Jakarta was hit by massive riots in May and to attract foreign investors to return to the city.

Kahfi said that it had no relation to any soccer game and that the city paid for the trip.

Asked whether he met the Philippine officials or businessmen, Sutiyoso said that the visit was too short to meet that many people.

However, he admitted that his visit was also related to a junior soccer game there.

"I am chief of the mission but I had asked people from the Ministry of Education and Culture to replace me.

"I got a permit from the minister of home affairs to go and I also sought verbal permission from President Habibie during the inauguration of the cheap market at Monas (last Saturday)," he said.

The governor said he watched one soccer game. (ind)