Siswono urges delay of car, jet plane projects
JAKARTA (JP): A cabinet minister has suggested that expensive state projects such as the National Car and the development of Indonesia's own jet plane should be temporarily halted, and funding originally earmarked for them be reallocated for transmigration.
Minister of Transmigration Siswono Yudohusodo also suggested during a hearing at the House of Representatives yesterday that the available funds be used to set up labor-intensive projects in resettlement areas to provide permanent jobs for laid-off workers and job-seekers who could not find any work in the cities.
"It's now time for us to boldly declare a delay to the (National Car and the construction of N-2130 jet plane) projects for the time being, and instead use their budgets to finance government projects that give opportunities to help heal the country's economic wounds," he told reporters during a break in the meeting.
Siswono was referring to the carmaking operation run by PT Timor Putra Nasional, which is controlled by President Soeharto's youngest son Hutomo Mandala Putra, and the state-owned aircraft manufacturer PT Industri Pesawat Terbang Nusantara's (IPTN) jet development project headed by State Minister of Research and Technology B.J. Habibie.
Following the agreement with the International Monetary Fund (IMF) last month in exchange for the US$43 billion bailout package, Soeharto announced that neither company would receive state assistance any longer, including tax and credit privileges to Timor Putra and state budget funds to IPTN. But he said both projects would still continue, and Hutomo and Habibie have made statements to similar effect.
Timor Putra enjoyed tax breaks and access to huge credit to distribute Korean-made KIA Motors under the Indonesian brand Timor until it was ready to manufacture them locally. The import duty and luxury tax exemptions helped make production costs 60 percent less that those for other car manufacturers in Indonesia.
Last year, the government appointed a consortium of 13 state and private banks to lend $690 million in a syndicated loan to Timor Putra for its manufacturing plant. So far, there has been no further announcement about whether the planned loan would proceed.
Habibie has said the responsibility to find money for the N- 2130 would now rest with PT Dua Satu Tiga Puluh (PT DTSP), which was established by Soeharto in 1996 to find financing for the project.
The Bandung-based company is currently testing a 70-seat N-250 turboprop and has plans to spend $2 billion developing the 130- seat N-2130 passenger jet.
Siswono said the money could finance the opening of 500,000 hectares of oil palm plantations that could no longer be supported by the allocated budget for the 1998/1999 fiscal term.
"The palm oil production generated from the total area could sustain the life of approximately 250,000 households or the equivalent to 1.25 million people," he said.
Siswono urged the government to take such severe measures in order to escape from the financial difficulties and relieve the soaring unemployment.
"It takes astuteness, wisdom and most importantly courage to boldly implement severe measures to overcome the current difficulties," he said. (09)