Strategic projects

On July 3, President Megawati Soekarnoputri inaugurated 14 giant projects at the Kujang fertilizer plant in Cikampek, West Java. Totally worth US$9.3 billion, the projects were described as strategic.

As all the projects were designed in the past, according to Economic Coordinating Minister Dorodjatun Kuntjoro-Jakti they are packed with corruption, collusion and nepotism. After renegotiation, the value of these projects could be reduced. Logically, they are now already in line with market prices. The truth will only be ascertained several years later, after they are in operation and independent parties calculate their value in real terms. It might be that the projects were resumed following bargaining between investors and those close to the authorities, for which the former had to make some payoffs.

The government can perhaps deny this possibility because all the projects, as specified by Dorodjatun, are financed with loans in export credits and investment credits.

At a total cost of US$9.3 billion, equivalent to Rp 80 trillion, the average value is Rp 5.7 trillion per project. Let's hope the loans are disbursed according to plan. We are afraid the loans are still in the form of commitments, with uncertain dates of disbursement. The creditors would surely impose conditions before making available their funds.

Meanwhile, the government cannot even meet its short-term commitments. The East Flood Canal project in Jakarta has missed its target. Its construction, scheduled to start on June 22, failed to materialize. In fact, the Rp 4 trillion project is very crucial for the control of floods, which in February almost drowned the capital. Economic recovery has therefore still a long way to go. It is not just a matter of 14 giant projects.

-- Neraca, Jakarta