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.