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Indonesia: '100 percent ownership for private sector' JAKARTA - Indonesian Transportation Minister Hatta Rajasa assured investors Wednesday that private firms -- both local and foreign -- would still be allowed to own up to 100 percent of infrastructure projects despite the upcoming amendment of the existing transportation legislation. "I can assure you that there will be no change to the 100 percent private-sector ownership principle in transportation-sector projects," Hatta told the press yesterday (Nov 1) after addressing a discussion held in conjunction with the "Indonesia Infrastructure Conference and Exhibition 2006".

The current laws governing the transportation sector -- the 1992 Railways Law, 1992 Land Transportation Law, 1992 Sea Transportation Law, and 1992 Air Transportation Law -- provide that any local or foreign-based company can build, own and operate a transportation facility through a wholly owned subsidiaries. Amendments to these laws have been drawn up, however, and are currently being deliberated by the House. While the original idea was to allow more scope for private-sector participation in transportation projects, concerns have also been expressed that the amended laws might no longer permit 100 percent ownership of infrastructure projects by private firms.

"The amended laws will end the government's monopoly in the infrastructure sector. Private firms will be given 100 percent free rein to build and operate them without the obligation to enter into joint ventures with state enterprises," he said. According to Hatta, the railways amendment bill would be passed into law later this year, the sea transportation amendment bill early next year, and the land transportation and air transportation amendment bills in June of next year. He said the new laws were part of the government's efforts to encourage foreign investors to participate in developing Indonesia's woefully inadequate infrastructure.

Analysts have long decried the abysmal state of the country's physical infrastructure as being a major factor that discouraged investment. Currently, Hatta said, the government had 17 projects to offer in the transportation sector. Most of the projects involved seaports and airports in Java, Sumatra, Kalimantan and Sulawesi, with the rest consisting of a rail line linking Manggarai in South Jakarta to Soekarno Hatta Airport in the western part of Greater Jakarta, and the double-tracking of rail lines in Greater Jakarta.

Last year, the government offered 10 projects in the transportation sector, which mostly consisted of seaports and airports. According to Hatta, Indonesia needed investment worth US$7.2 billion to generate annual economic growth of about 7.3 percent in the transportation sector. While Hatta said that the government would provide guarantees for investors, he added, "But certainly, we'll not be giving blanket guarantees. We'll give guarantees on a case-by-case basis."

On concerns that investors might run up against problems with regional administrations, Hatta said that all the infrastructure projects being offered were public-private partnerships, so that investors would only have to deal with the central government. Since the rolling out of local autonomy in 2001, many regions have issued local ordinances that conflict with national legislation.



Posted in Economy @ 03 November 2006 03:38 CET by Jeroen · 'Blog' RSS feed · permalink






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