Thu, 14 Apr 2011

From: The Jakarta Globe

By Faisal Maliki Baskoro
As many as 16 infrastructure projects are being offered to foreign investors this week at an international forum, but prospective investors say the government should focus more on fixing the regulatory framework needed to expedite existing projects.

Jean Emmanuel Seixas, a representative from French engineering and consulting company Egis, said on Wednesday that the government should focus on its most important projects.

“I think there are too many projects the government is trying to offer,” he said on the sidelines of the three-day Indonesia International Infrastructure Conference in Jakarta.

The government is offering 16 projects worth more than $30 billion at the forum, which is hosted by the Indonesian Chamber of Trade and Commerce (Kadin).

“We’re actually interested in some of the projects, especially the railway projects. However, there are still several issues like land acquisition and transparency that need to be resolved,” Seixas said.

“Land acquisition is the main problem. How can we build without land? After we acquire the land, we can see the other problems that may arise afterward.”

He also noted a lack of transparency and fairness in tender projects that tend to discourage many potential investors.

Crumbling infrastructure has been blamed for hampering Indonesia economic growth and scaring off potential investors. In response, the government has led a push to upgrade the nation’s roads, ports and power stations.

Ignatius Jonan, president director of state railway company Kereta Api Indonesia, shared Seixas’s concern over too many projects being offered.

“The government is planning to build or upgrade several railway tracks. With the land acquisition law still uncertain, we’d rather focus on our own capacity expansion because that is more feasible,” he said.

Among the projects on offer are a 33-kilometer railway connecting Soekarno-Hatta International Airport and Manggarai, the Purukcahu-Bangkuang railway and the Bali tourism railway.

“We’ve decided to pull out of the tender for the SHIA-Manggarai railway project, but we’re doing a feasibility study on the 500-kilometer railway encircling Bali,” Jonan said.

He said the Bali railway project was estimated to cost around $2 billion and would involve KAI, the provincial administration and the Transportation Ministry.

“The Bali government will provide the land, the ministry will provide the railway and KAI will provide the trains and will be the operator,” he said.

Tundjung Inderawan, director general for railways at the Transportation Ministry, said the land acquisition law was crucial for the progress of the railway projects and that the ministry needed extra funds to finance land acquisition.

“Just for the airport railway project, we have Rp 450 billion [$52 million] for land acquisition. That is not enough as we need at least Rp 1.5 trillion. We need a lot more for our projects,” he said.

Unlike KAI, MEC Holdings, a unit of Dubai’s Trimex Group, said it had completed the land acquisition for its $1 billion railway project to connect its mining site in Kutai to a port. The link is part of a 130-kilometer railway project in East Kalimantan.

“Our key to success lies in our personal approach to the people living near the planned coal railway. We told them the benefit of the railway and they understood. We acquired the land last year,” Mashael Al Naimi, head of corporate communications at MEC, said on Wednesday.

Deputy Finance Minister Anny Rachmawati said the land acquisition law should be passed this year, paving the way the way for foreign investment.

She also said the government had increased land acquisition funds from Rp 1.4 trillion to Rp 3.4 trillion last year, with plans to raise it to Rp 4.9 trillion by 2013, she said.