Municipality urged to raise project costs

Municipality urged to raise project costs

JAKARTA (JP): The chairman of the Jakarta chapter of the
Indonesian Construction Companies Association, Daniel Hutapea,
has urged the city administration to review costs for the
construction of projects due to the increase in cement prices.

Daniel told the city council's commission D, in charge of
development affairs, on Tuesday that as a result of the rises
the city administration should increase the values of
construction contracts.

"The city administration should increase the value because the
projects were tendered before the hike and the increase of cement
prices will cause the increase of other building materials,"
Daniel said.

He explained that it is impossible for contractors, especially
those who won project tenders from the city administration and
have not yet finished their work, to finish their projects
because prices of all building materials have increased.

"It will be helpful if the city administration adjusts the
project values to the new prices," Daniel said.

The government has raised the reference prices of cement
across the country by an average of 40 percent in an effort to
attract more investment in the cement industry.

According to the Minister of Trade's Decree No. 48/Kp/-
III/1995, the new price of first quality cement at retail outlets
in Java is set at Rp 8,290 excluding sales tax, up by 39.79
percent from Rp 5,930 or Rp 10,360 per 50 kilogram sack.

When asked how much the city administration should increase
the value of the project, Daniel simply answered that it should
be the same as the increase of cement prices.

"The increase should be the same as the increase of cement
prices which is 39,79 percent," Daniel said, adding that there
will be no problem in the upcoming fiscal year because the
companies will adjust their tenders to the new prices.

He also urged the government to stop its protectionism of
local cement by letting imported cement be traded on the local
market. "This condition will create free market system and the
price will stay low," he added.

Chairman of the Commission Bandjar Marpaung applauded the
proposition and will recommend this issue to be discussed by the
city administration.(yns)