Many oil and cement projects delayed
JAKARTA (JP): Minister of Investment Sanyoto Sastrowardoyo said yesterday that most companies licensed by his office to build new cement factories and oil refineries have delayed their investment projects.
The minister told Commission VI of the House of Representatives, for industry and investment, that the delay in the construction of new cement plants was mostly caused by investors' difficulties in raising investment funds.
He said that his office has approved 46 investment projects for the establishment of new cement factories since 1991 but only six of them have so far been realized.
The high interest rates at home and the restrictions imposed by the government on raising loans from overseas financial institutions are the main constraints on the establishment of the cement factories.
Sanyoto, who is also chairman of the Investment Coordinating Board, said that his office will cancel the licenses if, after three years, the investors make no progress on their projects.
"We have to be strict in applying regulations," he told reporters after the hearing.
Of the 46 projects approved by the investment board since 1991, 41 are sponsored by local investors planning to invest Rp 23.67 trillion in the cement plants, which will have total production capacities of 67.04 million tons per annum. The other five projects are coordinated by foreign companies, which plan to spend $1.53 billion on them. The five projects will have combined production capacities of 8.10 million tons per annum.
Sanyoto said the six projects which have already begun construction are owned by PT Semen Tonasa in South Sulawesi, PT Semen Bosowa Maros also in South Sulawesi, PT Indocement Tunggal Prakarsa and PT Semen Gresik in East Java.
Refinery
Unlike in the cement industry, investors in the oil refinery projects delayed their projects due to uncertainty in the sales of their planned oil products.
"They are waiting for a change in the law related to the sales of oil products in the country before going ahead with their projects," he told the commission.
According to the existing law, the state-owned company Pertamina is the only company allowed to process, distribute and market oil products on the domestic market.
For years the government has been working on the amendment of the law to end the monopoly given to Pertamina and to allow private companies to enter the refinery business. But no significant progress has so far been made.
Sanyoto said yesterday that only one of the 12 oil refinery projects approved by his office since 1994 has been realized.
The oil refinery which is now under construction is owned by PT Asia Pacific Petroleum Indonesia, which plans to invest around $7.5 million in it.
The 11 delayed refinery projects include the ones owned by PT Buana Ganda Perkasa in Probolinggo, East Java, PT Norco Internusa in Gresik, East Java, PT Indo Moody oil Co in Pare-Pare, South Sulawesi and PT Indo-Xo Ltd in Sorong, Irian Jaya.
The others are owned by PT Hammet Oil Refinery in Serang, West Java, PT Paras Refining Co in Situbondo, East Java, PT Kilang Pare-Pare Nusantara in Pare-Pare, PT Sabang Oil Refinery Corp in Bontang, East Kalimantan, PT Pusat Minyak Indonesia Timur in East Lombok, West Nusa Tenggara, and PT Hemoko Selayar Internasional in Selayar, South Sulawesi. (hen)