Soekarno-Hatta to Jakarta Rail Line Attracts Global Investors

Eiffage Concessions, one of the largest European firms that engages in the public works sector, has expressed interest in the railway construction project that will connect the Soekarno-Hatta International Airport and Manggarai district in South Jakarta.

The government has previously detailed a plan to build two railway lines — express and commuter ­— connecting soon-to-be-expanded Soekarno-Hatta International Airport with Manggarai.

While state-owned airport operator, Angkasa Pura II, and state railway operator, Kereta Api Indonesia, will jointly handle the Rp 1.7 trillion ($178 million) commuter line, the government has invited private firms to participate in the express line which will be more costly.

Jacques-Nicolas Ojea, an Eiffage Concessions representative, revealed the French firm’s interest in the 19.3 kilometer railway line during an event on public-private partnership (PPP) infrastructure projects held by the Indonesia Investment Coordinating Board (BKPM) in London on Wednesday.

“Our company is interested in developing the Manggarai-Soekarno Hatta Railway line,” said Ojea, as quoted by state news agency Antara.

Ojea said that he will visit Jakarta in the near future to discuss the plan further. “A day would not be enough [time] to talk about this huge project,” he added.

In addition to Eiffage, companies from the United States, Japan and Spain were said to have shown interest in the project. The express line is an elevated railway track that will go directly to Manggarai from the airport. The project would cost $1.1 billion and the government is currently conducting a feasibility study to determine the best possible routes.

The commuter line has begun and will be fully operational in 2014. The project will involve the construction of additional tracks on the existing line to Tangerang.

The Soekarno-Hatta airport is currently undergoing a massive $1.2 billion overhaul that will increase its capacity to 62 million passengers a year.

The airport, which is the 12th busiest in the world, suffers from overcrowding. Last year it handled some 51.5 million passengers, well above its maximum capacity of 22 million passengers per year.

Aside from the railway project, BKPM deputy chief Tamba Hutapea, said that at least four more PPP infrastructure projects were also being offered during the event.

The projects include a water treatment plant in East Java with an estimated value of $78 million, a 60.1-kilometer toll road in West Java ($1 billion), a 450-megawatt hydro power plant in West Sulawesi ($1.3 billion) and a solid waste management facility in Riau Islands ($120 million).

“We have held similar events in Hong Kong and Amsterdam and are planning for another in New York,” he added.

Tamba said the event is not only aimed at interested investors but is also an opportunity to learn about past experiences in handling PPP projects from the host country. “England is one of the countries which has a long experience in PPP schemes,” he noted.

http://www.thejakartaglobe.com/business/soekarno-hatta-to-jakarta-rail-line-attracts-global-investors/545552

Let the Private Sector Clean Up City’s Trash

If there was any doubt that a radical rethink is needed for the provision of public facilities in Jakarta, than the fact that nearly 50 percent of the city’s garbage trucks will be inoperable in two years’ time should prove a convincing argument.

Eko Bharuna , the head of the city’s sanitation office, said that in 2010, 201 of the city’s 797 garbage trucks were already unusable and that number is expected to rise to 367 trucks by 2014.

He added that most of the trucks were at least 15 years old, which is a bad sign in a city that currently produces some 6,500 tons of waste a day.

If things stay as there are, Jakarta’s residents better brace themselves for a huge stink.

And the amount of garbage the city is churning out daily will only rise along with the rapid rise of the metropolis’s population. There is a certain urgency to rapidly deal with the prospect of having to handle rising amounts of waste with dwindling resources.

Thankfully, however, the city government is adopting a fresh approach in an effort to solve its garbage problem.

Eko said that in the future, the city sanitation office would only act as a regulator while the operator of the city’s waste transportation as well as processing services will go into the hands of the private sector.

But the government should also bear in mind that garbage disposal and processing is a public service and that it should not try to make a profit when handing over the business to the private sector. Private businesses are there to make profit, but in this case, profits should also be restricted so as not to burden the public purse.

The government has ample time to prepare for this well ahead. It still has hundreds of garbage trucks in operation, for at least another couple of years.

It might have taken some time to get to this stage but this move is highly welcome. The government should not be in business and where the private sector can do a better job, it should hand over the reins.

The government should focus on ensuring that regulations are business friendly and not too cumbersome but leave the private sector to manage such facilities efficiently and effectively.

Editorial: Let the Private Sector Clean Up City’s Trash | The Jakarta Globe.

Airport and toll road become priorities in 2012

JAKARTA: Ministry of National Development Planning reveals the priorities in infrastructure construction next year, which is included in Indonesia’s Master Plan of Economic Development Expansion Acceleration (MP3EI).

The priority of infrastructure development will be focused on MP3EI projects and Metropolitan Priority Area (MPA), said Dedy Supriadi Priatna, Deputy of Facility and Infrastructure at Ministry of National Development Planning (Bappenas).

The projects include expansion of Tanjung Priok Port with investment of US$1.17 billion and expansion of Soekarno-Hatta Airport. The airport expansion features modification of terminal and taxiway, Dedy said.

In addition, the priority include some toll road projects, including Serangan-Tanjung Benoa toll road in Bali with investment US$196.1 million and Pasir Koja-Soreang toll road in West Java with investment of US$143.5 million.

There is also Bandung Intra Toll Road, which will be constructed inside the capital of West Java Province, with investment of US$800 million. Another toll road will connect Cileunyo-Sumedang-Dawuan in West Java with investment of US$1.01 billion.

The first groundbreaking of Cileunyi-Sumedang-Dawuan (Cisumdawu) will take place in January 2012, building 6.35-kilometer road with investment of IDR1.02 trillion.

The groundbreaking may start after the signing of construction agreement on Dec 1 between Directorate General of Road Construction at Ministry of Public Works and the winning contractor consortium, consisting Shanghai Corporation Construction Group, PT Waskita Karya and PT Wijaya Karya.

At the signing ceremony, Director General of Road Construction at Ministry of Public Works Djoko Murjanto said that the start of construction in the Rancakalong-Sumedang section would be completed to increase the project feasibility to 17%.

The feasibility is crucial, as a bidding will be taken to find investor for the project under a public private partnership. Part of the construction uses funding from 2012 State Budget and loans from China.

In the meantime, Binjai-Medan-Kuala Namu-Tebing Tinggi toll road will start construction with investment of US$790.8 million. According to data of MP3EI projects, the 16.91-kilometer road from Medan to Kuala Namu will get funding from China as much as IDR1.22 trillion. The signing of the contract took place on December 12.

In Kalimantan, three main construction project priorities are Malory International Harbor in East Kalimantan with US$1.78 billion investment value, extension of Tjilik Riwut Airport in Central Kalimantan US$11.3 million and Tayang Bridge in West Kalimantan IDR740 billion.

The construction of two special economic zones, Sei Mangke in South Sumatera and Tanjung Lesung in Banten, Dedy continued, also become government main focuses. According to MP3EI project data, SEI Mangke needs IDR334 billion while the construction of industrial zone needs IDR2.50 trillion.

Tourism spot Mandalika in Lombok, West Nusa Tenggara will also become new economic zone in 2012. The development requires IDR829 billion to construct infrastructure, public facilities, hotels, villas, residential areas and golf field.

Airport and toll road become priorities in 2012 – Bisnis.com.

Finance Ministry urged to issue regulation on MP3EI gap fund

JAKARTA : The Ministry of Finance is urged to immediately issue regulation on viability gap fund by the end of the year, to speed up the construction of five nation-scale project in 2012. “This regulation must be issued in the end of December to speed up those projects. Otherwise, there will be another delay,” Dedy Supriadi Priatna, a Deputy Minister of National Development Planning Agency, this week end. Some of the projects, under the acceleration and expansion of economic development masterplan MP3EI, are Lampung water supply worth US$50 million and Umbulan project US$300 million–US$500 million in Pasuruan, East Java. Next, Dedy who is in charge on infrastructure and utilities said Maros project US$50 million, railway infrastructure in Central Borneo US$1,5 billion–US$3 billion, and Ampo terminal US$50 million. Such regulation will allow private investors to obtain viability gap fund VGF in cash after the construction phase on infrastructure finished. The government must work hard in formulating the regulation to justify the lumpsum system. The fund will be given to projects that economically viable, but having profit gap under investor’s expectation.

Finance Ministry urged to issue regulation on MP3EI gap fund – Bisnis.com.

Adhi Karya targets 2.7 triliun rupiah from EPC contracts next year

JAKARTA: State-controlled construction firm PT Adhi Karya Tbk is eyeing IDR2.7 trillion from new contract from engineering service, procurement and construction (EPC) projects in 2012.

The company will be more focused on EPC projects for power plant and oil and gas exploration, said Operational Director Sumadiono.

“We will be more selective next year, thus 2012 EPC projects’ target is lower than this year,” he said yesterday.

Contract for EPC projects in 2011 are expected to reach IDR4.6 trillion. Up to November, the company has netted IDR3.8 trillion.

Some of Adhi’s major EPC projects this year include the residual fluid catalytic cracker project from PT Pertamina (Persero) in Cilacap worth US$847 million and central processing plant in Blora.

President Director Kiswodarmawan said that total contract for next year is expected to hit at IDR13.3 trillion, 6.4% higher than this year target at IDR12.5 trillion.

Contracts being carried over to 2012 are estimated to reach IDR11.5 trillion, of which IDR6.44 trillion will come from construction, IDR5.92 trillion from EPC, IDR35 billion from property and IDR5 billion from real estate.

Revenue is projected to reach IDR9.42 trillion in 2012, 34.5% higher than this year target of IDR7 trillion.

“Net profit is projected at IDR204.65 billion, higher than IDR183.37 billion targeted for this year,” he added.

Adhi Karya is planning to construct a 100-storeys tower as the new symbol of Jakarta starting in mid-2012, estimated to cost around IDR2 trillion.

To finance the project, the company is planning to conduct rights issue in the second half of 2012 and proposing a share subscription option to the government.

Adhi Karya targets 2.7 triliun rupiah from EPC contracts next year – Bisnis.com.

Bukit Asam and Huadian to Build Coal-fired Power Plant

State-controlled coal miner Tambang Batubara Bukit Asam and a Chinese partner have won a tender to build a pair of coal-fired power plants with a total capacity of 1,240 megawatts in South Sumatra.

The two new plants, each with 620 MW capacity, will be built in Tanjung Enim near the Banko Tengah coal mine and will cost $1.59 billion.

Bukit Asam (PTBA) is working with Huadian, a Chinese state-owned power company, to complete the project.

Construction is expected to start by the end of next year. Operations at the first unit are expected to commence in June 2016, and three months later for the second unit.

Electricity output from the plants will be sold to state utility company Perusahaan Listrik Negara. The project is considered vital for the nation’s development because it is intended to meet increasing electrical demand in Java and Sumatra.

“In the financing of the project, worth $1.59 billion, will solely be the responsibility of China Huadian and does not need guarantees from the government of Indonesia,” PTBA said in a statement on Tuesday.

In terms of financing, 75 percent of the total will come from debt and the remainder equity.

PTBA said it is committed to suppling the plants with a total of 5.4 million tons of coal annually from its Banko Tengah coal mine. The low-grade coal will have about 4,200 kilocalories.

“The company has been eying this project for a while to construct and to distribute its coal,” said Reza Priyambada, an analyst with Indo Surya Asset Management.

“This would be a positive support for the company’s business, because besides getting income from the construction services PTBA is also securing a market here.”

Project negotiations had been ongoing since March 2005, and a memorandum of understanding was signed a month later.

Reza added: “If the company will be responsible for the power source supply, then it will also create income for it and it will have a clear buyer for a certain amount of its coal production for as long as the contract lasts, even when it only has the minority stake in the construction.”

He did not know the magnitude of this contract compared to others owned by PTBA or other coal miners.

PTBA will have a 45 percent stake in the project and Huadian the remaining 55 percent.

PTBA’s Banko Tengah coal mine will also develop a 307 kilometer railway, called Transpacific Railway, which is expected to be operational in 2014.

The new rail line will be able to transport up to 27 million tons of coal per year. It will move coal from the South Sumatra mine to the neighboring province of Lampung.

Shares in PTBA closed steady at Rp 16,500 on Wednesday.

Bukit Asam and China Partner to Build Coal Plants | The Jakarta Globe.

Indonesia’s rating upgraded one notch to investment grade

JAKARTA: Indonesia successfully has its sovereign debt rating upgraded one notch to investment grade. Fitch Ratings raised Indonesia’s sovereign debt rating from BB+ to BBB- after 14 years of waiting.

Director of Fitch Rating for Asia Pacific Philip McNicholas said that the international rating agency upgraded Long-Term Foreign- and Local-Currency Issuer Default Ratings with stable outlook. Wheres, the short-term Long-Term Foreign- and Local-Currency Issuer Default Ratings were upgraded to F3.

“The rating upgrade reflects the strong economic growth, and lower debt to GDP ratio. Besides strengthening liquidity, Indonesia has run prudent macroeconomic framework,” he said in a press statement.

Following the rating upgrade, Fitch projects the gross domestic product (GDP) will grow at average of more than 6% annually until 2013although global economy is less conducive.

The ratings agency perceives Indonesia’s strong growth is sustained by domestic economy and less depending on external loans. Yet, the growth prospect still needs to be tested against external shocks.

On the other hand, Fitch highlighted the weak structural issues, such as low income per capita, that is US$3,600. This figure is still far below BBB rating standards that require average income US$9,800 per capita. Yet, the relatively strong fundamentals of Indonesian structure in some categories have raised the rating to BBB-.

“Problems realted to climate change, bad infrastructure and corruption must be settled.”

Coordinating Minister for Economic Affairs Hatta Rajasa saw the rating upgrade has reflected the prudent fiscal management and macroeconomic policy of the government. He in fact did not show any worries on possible massive capital inflow after the rating upgrade as there are abundant investment opportunities to keep the investors to stay.

Ryan Kiryanto, Head of Economist of PT Bank Negara Indonesia Tbk, said that the upgrade to investment grade will build stronger confidence at the market to invest in Indonesia. Still, more capital is expected to flow into real and infrastructure sectors.

Ryan said the upgrade will benefit the financial sector as the country will be the target of foreign capital in terms of portfolio and foreign direct investment (FDI).

“Yields of Indonesian soreveign and corporate debts will come down as risks are becoming lower. This is the time for the government and corporations to issue bonds,” he added.

Similarly, I Made Adi Saputra, Analyst at PT Nusantara Capital Securities, also sees the benefit of the rating upgrade to sovereign debts. Foreign investors, according to him, become more interested in Indonesia’s bond market.

High demand will lead to good bargaining power for the government to determine lower yields.

Rahmat Waluyanto, Director General of Debt Management at Ministry of Finance, said that Indonesia is eligible for investment grade with its low debt to GDP ratio, moderate inflation rate and low budget deficit. Adding to these, Indonesia’s yields and credit default swap of sovereign bonds confirm the eligibility. “Global sukuk of Indonesia offers 4% yield, and 5-year CDS is at 150 basis points.”

Governor of Bank Indonesia Darmin Nasution agrees if the rating upgrade relates to success of Indonesia’s fiscal and monetery regulators to maintain macroeconomic stability and high growth.

President Director of PT Bank Mandiri Tbk Zulkifli Zaini welcomed the rating upgrade as a driver for more foreign capital to flow into national financial system, thus helping banks cut the cost of fund. (NOM)

Indonesia wins back investment grade – Bisnis.com.

Jakarta Govt freezes license for new gigantic malls

JAKARTA: The Government of DKI Jakarta halted license for new giant malls in the city up to 2012, as the existing ones have potentially led to traffic and environmental problems.

Totally, the capital city contains 132 malls and 432 shopping centers, each on more than 5,000 squaremeter (sqm) space including department store, hypermarket, wholesale center, shop, and traditional market.

Governor of DKI Jakarta Fauzi Bowo confirmed that the policy is based on Jakartan developers’ recommendation.

“It’s not our one-sided policy but considering inputs from developers, urging the evaluation of license for new mall and shopping center as there are many unoccupied units in the existing ones,” he said yesterday.

Today, 563 units of mall and shopping center operated mostly in Central and South Jakarta. Thus, new license needs to be limited temporarily, The Head of Jakarta Planology Agency at Jakarta Provincial Government Wiriyatmoko said.

The Agency has obligated its officials to be more selective and to reject any application for shopping center, shop, and mall with land area of more than 5,000 sqm.

“Provincial Government has published Instruction of DKI Jakarta Governor on moratorium of license issuance for such mall and shopping center,” he said yesterday.

Wiriyatmoko, acting also as Daily Executive of Office Building Control and Supervision of DKI Jakarta, added the agency has a duty to socialize the governor instruction.

“Our agency has addressed an official letter to Chairman of Indonesia Real-Estate and Chairman of Indonesian Shopping Center Operators Association (APPBI) of DKI Jakarta to suspend the constructions of shopping center until the end of 2012,” he said.

On the other hand, the government will provide license for shopping center construction on less than 5,000 sqm area, as long as it is built on a strategic location which is considered not to burden the traffic and to disturb environment.

Chairman of APPBI DKI Jakarta Handaka Santosa informed that mall and shopping center in Jakarta still has potential to grow by 5%-10% of total units that has been already operated today.

Previously, Ferry Salanto, Research Division Manager at Colliers International said there are three units of mall and shopping center that will be completed this year, namely Kuningan City, Area 51, Green Tebet.

He mentioned total retail space supply in a period of January-March 2011 reached 3.93 million sqm following additional supply by 2,663 sqm. “Until the end of this year, there will be 89,000 sqm of shopping center space in Jakarta,” he said.

Jakarta Govt freezes license for new gigantic malls – Bisnis.com.

Jasa Marga’s subsidiary seals IDR1.55 trillion loan for JORR W2 construction

JAKARTA: PT Marga Lingkar Jakarta, a subsidiary of PT Jasa Marga Tbk, sealed credit syndication worth IDR1.55 trillion to fund the 7.67-km Jakarta Outer Ring Road (JORR) West 2 toll road project.

The Jakarta Outer Ring Road West 2 (JORR W2) will connect Kebon Jeruk with Ulujami toll road.

Such credit syndication is derived from the syndication of Bank Mandiri (IDR1.4 trillion) and Bank DKI (IDR150 billion) with 15 years maturity and 4 years of grace period.

It’s 70% of the total funds needed for the project around IDR2.23 trillion, while the remaining IDR680 billion will be from the company’s equity.

Thus, the company is now waiting for the acquisition process of 10 hectares land, Marga Lingkar Jakarta (MLJ) President Director Sonhadji Surahman said.

“A land acquisition committee team has been authorized to conduct the acquisition process. Therefore, we don’t know how many [percentage of land] that has been acquired,” he said after signing the credit agreement yesterday.

Kebon Jeruk-Ulujami toll road is considered as the key road to reduce traffic jam in Serpong Road in South Tangerang, following the prohibition for truck and container to use inner city toll road. Thus, such heavy vehicles from Cikampek and Merak could use the ring road without passing to Serpong road.

Sonhadji added the company will review the project construction plan, whether it will be kicked off after acquiring 100% of the land or in parralel with the land acquisition process.

Banking sector, he added, doesn’t provide a deadline to implement the construction plan. Earlier, the company plans to complete the construction in 18 months.

Meanwhile, PT Adhi Karya Tbk and PT Wijaya Karya (Wika) Tbk have won the company’s project auction and therefore became the project contractors.

Bank Mandiri’s Corporate Banking Director Fransisca Nelwan Mok said that the banking credit is given as a form of support to strengthen interconnectivity through the addition of alternative access to the freeway.

Such addition is expected to curb distribution and transportation costs.

Up to September 2011, Bank Mandiri has disbursed IDR9.6 trillion to finance the construction of toll road infrastructure. From such figure, IDR1.8 trillion was bilateral financing and the remaining IDR7.8 trillion as credit syndication.

Bank DKI provided such credit after considering that Jasa Marga as MLJ’s parent company is a key player in toll road business with 73% market share, Bank DKI Director Mulyatno Wibowo said as cited from the bank’s press release.

Head of Toll Road Regulatory Agency (BPJT) Ahmad Ghani Gazali said that such credit should be given after acquiring 75% of land area with a grace period for the next six months.

As planned, the toll road construction will be divided into four sections, i.e. first section covering 1.95 km, second section 1.50 km, third section 2.35 km, and fourth section 2.07 km.

In the concession project of JORR W2 North toll road, PT Jasa Marga Tbk controls 65% shares and PT Jakarta Propertindo (Jakpro) owns the remaining 35%.

Jasa Marga’s subsidiary seals IDR1.55 trillion loan for JORR W2 construction – Bisnis.com.

PLN will continue the plan to import gas supply

JAKARTA: State utility firm PT Perusahaan Listrik Negara (Persero) will see an obstacle in importing gas, as the construction of gas receiving terminal will complete by 2012, said Top Economic Minister Hatta Rajasa.

“Where the imported gas will be stored if there is no receiving terminal. We can’t put gas in pocket,” said Hatta at Presidential Palace today, in response to questions on PLN’s plan to import gas.

Receiving terminal is needed since imported gas could not be carried in drums, unlike LNG that can be delivered by ordinary vessel.

Once the receiving terminal is built, gas trading can start, he affirmed.

As earlier reported, the state utility firm will go ahead with its gas import plan from several countries though the government has committed to providing gas supply of 372,557 billion Btu for electricity production in 2012.

PLN President Director Dahlan Iskan in the meantime viewed that the need for gas supply is urgent and the state utility firm has to find the supply from any sources, both domestic and abroad.

Gas import needs receiving terminal, Economic Minister says – Bisnis.com.