Two more local firms have entered the fray to win a license for the construction and operation of the US$1.6 billion Palapa Ring fiber-optic project.
"Previously, we had three local investors expressing an interest in participating in the project. They are PT Telkom, PT Bakrie Telecom and PT Wireless Indonesia. Now we have two more, both are locals but one is backed with overseas funding," posts and telecommunications director general Basuki Yusuf Iskandar said Tuesday in Jakarta.
Director of Telecommunications Budi Santoso said that the two new companies were PT Agela Communications Indonesia and PT Potensi Bumi Sakti.
"We have had a meeting with Agela, at which they stated they wanted to bid for the entire Palapa project," Budi said.
Budi also said that Potensi had already lodged its letter of intent and was scheduled to meet with posts and telecommunication officials Thursday.
The Palapa Ring project is part of the government's plan to increase telecommunications penetration in Indonesia, which currently stands at only 20 percent.
The project involves the construction of a fiber-optic ring connecting Sumatra, Java, Kalimantan, Nusa Tenggara, Sulawesi, Maluku and Papua, and eight network connections, or backhauls.
With an estimated 35,280 kilometers of undersea and 21,807 kilometers of underground fiber-optic cable, the project will connect 33 provinces and 440 cities.
Construction is expected to start in early 2008, with the ring network to enter into full operation in 2011.
Considering the enormous task, funding and risks involved, the government is encouraging the establishment of consortiums to bid for different parts of the project.
"The idea is to set up consortiums for the project. Some investors have agreed to this, but others want to go it alone," Basuki said.
Since the project was first put on the table in November last year at the 2006 infrastructure conference, the government has been encouraging consortiums to bid in the hope that this would generate competition and this lower bids.
"With more investors and consortiums, we hope that the construction process will be faster," State Minister for Information and Technology Sofyan A. Djalil was quoted as saying.
The government is also offering various incentives to investors, especially those willing to invest in the fiber-optic network in the eastern part of the country.
"The form of the incentives will be discussed later. I think they will be different for those who invest in Java and those who invest in the eastern part of Indonesia. Even without incentives, the project itself is highly profitable," Sofyan said.
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