Megawati revives 13 'mega' projects worth $7.63 billion
Megawati revives 13 'mega' projects worth $7.63 billion
Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post,
Cikampek, West Java
In a bid to show signs of reviving investor confidence in the
country, President Megawati Soekarnoputri officially recommenced
on Wednesday 13 mega projects worth US$7.63 billion with the hope
that these would serve as the engines of economic growth in the
coming years.
Megawati said she expected these projects would become a
catalyst to lure more investments to help ignite the country's
economy.
"Next month, 80 other projects will be renegotiated to
recommence. All this should be able to get our economy on track,"
Megawati said during a ground-breaking ceremony for the expansion
of PT Pupuk Kujang fertilizer plant in Cikampek, West Java.
She also symbolically inaugurated 12 other projects in seven
provinces, including in Aceh, East Kalimantan, South Sulawesi,
North Sulawesi and West Java.
Also present were Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti, Coordinating Minister for People's
Welfare Yusuf Kalla, and Minister of Mines and Energy Purnomo
Yusgiantoro.
The projects were halted in 1997 by the previous government of
Soeharto in the wake of the regional financial crisis.
The relaunch of such projects should provide a glimmer of hope
that amid the many discouraging signs in the country, investors
would still come and invest.
With the funding for the projects coming mostly from foreign
investors, especially the Japan Bank for International
Corporations (JBIC), the government expects this would restore
investor confidence in the country.
"The successful negotiations for these projects should augur
well for future ones" Dorodjatun said.
This has come amid lingering fears that the country's economic
recovery would be dealt a huge blow following recent data showing
signs of setbacks in various macroeconomics indicators.
In the first five months of the year, not only did the foreign
direct investment (FDI) approvals decline, the country also
experienced a sharp drop in exports.
Both could have been the country's prime mover for its
economic growth.
FDI approval between January to May plunged by almost 60
percent to $1.7 billion from $3.98 billion posted during the same
period last year.
Exports in the first five months of the year also recorded an
almost 10 percent drop compared to the same period in 2001.
Although this must have something to do with the global
economic slowdown, internal factors are also believed to have
played a significant part in deteriorating confidence on the part
of investors in the country.
Among other things, legal uncertainty, confusion about
regional autonomy and labor-related disputes served as the main
obstacles for robust capital inflows.
As the government's efforts to improve those conditions seem
to be hitting snags, concerns are high that the country's
economic outlook remains bleak.
The only good news the government can boast of is that its
currency has been showing a strong performance against the
dollar.
Such a development should be hailed as encouraging, as this
would lead to a more manageable inflation, thus providing more
leeway for a lower interest rate of Bank Indonesia's promissory
notes.
However, analysts attributed the strengthening of the rupiah
more to the bearish trend of the dollar in the region, therefore
this has only little to do with internal conditions.
Elsewhere, Dorodjatun said that the projects, which are
categorized into petrochemical, electricity and fertilizer
projects, would help move the wheel of economic activities as it
would also absorb thousands of workers.