Strategic projects

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