New bill to lure highway investors: Minister
New bill to lure highway investors: Minister
Rendi A. Witular, Jakarta
The much-anticipated bill on toll roads is expected to
facilitate the liberalization of the sector, paving the way for
more foreign investment, a minister said.
Minister of Settlement and Regional Infrastructure Soenarno
said the bill was designed to open the toll road sector to
private investors, while eliminating barriers that often surfaced
during the construction phase of toll roads.
"The bill will help liberalize the sector by separating the
functions of regulator and operator, both of which are currently
held by state toll operator PT Jasa Marga," Soenarno said on
Monday after a hearing with the House of Representatives
Commission IV for transportation and infrastructure.
At present, Jasa Marga is involved in all toll road projects,
whether as part of a joint venture or as the sole constructor.
Soenarno said the bill required the establishment of an
independent body specifically tasked with regulating and
supervising the toll road sector.
The bill is also expected to resolve the two greatest problems
faced by investors: land acquisition and determining the toll
rate.
According to the bill, investors will have the freedom to
decide upon toll fees and a time frame for its increase in their
business plan, as well as the concession period for operating the
road. The proposed independent body, along with the
infrastructure and settlement ministry, is to review and approve
the business plan.
The new mechanism will enable investors to draw up a schedule
of interim toll fees as early as possible in the process to
calculate the feasibility of the business.
At present, tariff hikes are entirely dependent on the
government.
Another crucial point raised in the bill is an obligation for
landowners to cooperate in land acquisition and compensation
processes, so the toll road projects may proceed smoothly.
Numerous infrastructure projects in the country have run
aground due to problems acquiring land, with investors facing
widespread protests and rejection from landowners.
The most recent toll road project halted due to land
acquisition problems is the 1.3 km segment of the Veteran-Ulujami
stretch of the Outer Ring Road in South Jakarta, originally set
for completion in May 2003.
Five plots of land remain to be acquired for the project, and
Jasa Marga was forced to change the route after lengthy and tough
negotiations with landowners that produced no solutions.
Soenarno said the bill would allow disputes that emerged after
the land price had been agreed upon to be resolved in court while
the construction project continued.
The bill also allows toll operators to seek financing for
highway projects by issuing asset-backed securities -- a type of
bond backed by underlying asset pools -- in which the toll road
will be used as collateral.
"Financing is the most crucial issue in toll road projects. We
plan to help toll operators gain easier access to financing
resources, so they may complete our massive toll road projects in
time," said Soenarno.
He was referring to the 1,486 km toll road that will link
Merak, Banten, and Banyuwangi, East Java, which is expected to
cost about Rp 86 trillion with completion scheduled for 2009.