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Indonesia and Japan have resumed negotiations over loans to
finance the construction of a mass rapid transportation (MRT) system in
Jakarta, after the deal was deadlocked over the proportion of local
components to be used in the project.
With negotiations progressing, it is likely that Indonesia and Japan
will ink a deal for the loan, Transportation Minister Hatta Radjasa
said.
"Negotiations are ongoing. The loan is likely to be made available as
Japan has agreed to accommodate our request to supply some of our local
content to the project," Hatta told reporters at the Presidential
Palace recently.
He reiterated that both parties had for now agreed that 60 percent of
the components needed in the project would be equally divided - 30
percent from Indonesia and 30 percent from Japan -- while the remaining
40 percent were still subject to negotiation.
"There is some progress. We are now exploring the possibility that the
40 percent could be added equally to Indonesia and Japan and the
remainder to overseas companies which are not related to Japan," said
Hatta.
Japan and Indonesia recently failed to reach a lending deal for the
financing of the high-profile subway project, which would run 15.4
kilometers from Lebak Bulus in South Jakarta to the Hotel Indonesia
Circle in Central Jakarta.
The main sticking points were Japan's insistence on a higher interest
rate and on having the loans be tied, meaning that Japan would have the
final say on which technology and components would be used.
Vice President Jusuf Kalla has said that any new negotiations would be
possible only if Japan agreed to accommodate Indonesia's demand that
the MRT project use 75 percent local components.
The government has estimated the cost for the MRT project at US$767.66
million, with $521.75 million expected to come from foreign loans and
the remaining $245.91 million from local funding.
Hatta said Japan was offering a total of US$870 million for the project
with an annual interest rate of 0.4 percent and a payment period of up
to 40 years, conditions deemed by the government to be fairly
competitive.
"I am not sure when the loans will be disbursed should both governments
manage to reach a deal, as Japan will have to allocate the loans in its
upcoming state budget. But for sure, private parties in the two
countries are now gearing up for the project," he said.
The government has recently established a consortium to take over the
financing and construction of the project, with members including
several state companies and a company linked to the family of Vice
President Kalla.
The subway is expected to play a major role in the capital's overall
transportation system, providing hundreds of thousands of people with
rapid transportation to and from work, as well as easing the city's
legendary traffic jams.
Some 9 kilometers of the track would take the form of an elevated
railway and the remaining 6.4 kilometers would be an underground subway.
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