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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 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.
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