Saturday, August 20, 2005

West Java signs 11 MOUs on infrastructure development

Source: The Jakarta Post

Business and Investment - August 20, 2005

Zakki P. Hakim and Yuli Tri Suwarni, The Jakarta Post/Bandung

The West Java administration has signed 11 memorandum of understanding (MOU) on Friday with foreign and domestic investors aimed at developing infrastructure in the province.

The MOUs, signed at the closing of the West Java Infrastructure Summit, formalized a number of public-private partnerships to develop infrastructure in areas such as electricity, water supply and waste treatment as well as non-infrastructure projects such as a bonded industrial zone and sugar cane plantations.

"The MOUs concern a very limited number of projects offered at the event. We expect participating investors at the event to see which projects in West Java need capital," West Java governor Danny Setiawan said.

A total of 174 foreign and domestic investors attended the event that offered 57 infrastructure projects worth Rp 35 trillion (US$3.5 billion). The event was part of the administration's effort to boost the province's economic growth from the current 5 percent to 8 percent in the next five years.

Danny said West Java needs Rp 50 trillion annually to develop up to 200 infrastructure projects but the administration had only prioritized 57 for the summit.

The event was jointly organized by the province's Chamber of Commerce and Industry (Kadinda), consulting firm PA Asia Ltd. and supported by the Asian Development Bank.

Among the signatories were PT Gunung Semesta Raya, a subsidiary of Artha Graha Network, and Chinese investors who wish to build a 1,000-hectare bonded industrial zone in Karawang worth $70 million, Kadinda chairman Iwan Dermawan said.

The Artha Graha Group would be the developer of the so-called China Industrial Estate project, which would need site preparation and work on access roads, electricity, telecommunications, water and waste treatment networks, construction information provider firm PT BCI Asia said in its website

Iwan said the Artha Graha Network, through PT First Mujur Plana & Industri, also signed an MOU to develop a Rp 1 trillion sugar cane plantation.

Other MOUs signed were for cooperation with Singapore-based United Engineers Pte. Ltd. for tap water supply and Keppel Corp. Ltd. for waste and water treatment; and Hong Kong-based Golden Concord Holding Ltd., Malaysia-based Geo Fusion Sdn Bhd, South Korean Kiikforum Inc. and Sam-an Engineering Consultants Co. Ltd. for developing power plants.

Local signatories included PT Medco Duta for developing geothermal power plants and PT Dirgantara Yudha Artha for developing the Pasirkoja-Soreang toll road and for waste treatment plants.

"To make the MOUs come about, we have to create a conducive climate by ensuring legal certainty, simplifying procedures and getting the commitment of provincial, regency and mayoralty administrations," Iwan said.

Juan Casla, economic cooperation program manager of the delegation of the European Commission to Indonesia, expected provincial administrations to have a better chance for successful reform, given that today provinces had more autonomy under the decentralization drive.

"Everything that can be done locally has a better chance for success," he told The Jakarta Post, adding that the chance was better for West Java as the administration had initiated a "legal security working group".

The group -- involving a number of prominent law firms -- recommended that the administration establish a special court chamber for investment cases in Bandung, and educate selected top judges in economic and industrial development, particularly the role of infrastructure in developing countries.

Other recommendations included giving advice to national authorities on tax division issues; a more integrated approach to investment-related licenses and applications, the introduction of competition for management of public services, and the introduction of the use of the "landlord" model in project developments to avoid undue political and civil service interference.