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Two more local firms have entered the fray to win a license
for the construction and operation of the US$1.6 billion Palapa Ring
fiber-optic project.
"Previously, we had three local investors expressing an interest in
participating in the project. They are PT Telkom, PT Bakrie Telecom and
PT Wireless Indonesia. Now we have two more, both are locals but one is
backed with overseas funding," posts and telecommunications director
general Basuki Yusuf Iskandar said Tuesday in Jakarta.
Director of Telecommunications Budi Santoso said that the two new
companies were PT Agela Communications Indonesia and PT Potensi Bumi
Sakti.
"We have had a meeting with Agela, at which they stated they wanted to
bid for the entire Palapa project," Budi said.
Budi also said that Potensi had already lodged its letter of intent and
was scheduled to meet with posts and telecommunication officials
Thursday.
The Palapa Ring project is part of the government's plan to increase
telecommunications penetration in Indonesia, which currently stands at
only 20 percent.
The project involves the construction of a fiber-optic ring connecting
Sumatra, Java, Kalimantan, Nusa Tenggara, Sulawesi, Maluku and Papua,
and eight network connections, or backhauls.
With an estimated 35,280 kilometers of undersea and 21,807 kilometers
of underground fiber-optic cable, the project will connect 33 provinces
and 440 cities.
Construction is expected to start in early 2008, with the ring network
to enter into full operation in 2011.
Considering the enormous task, funding and risks involved, the
government is encouraging the establishment of consortiums to bid for
different parts of the project.
"The idea is to set up consortiums for the project. Some investors have
agreed to this, but others want to go it alone," Basuki said.
Since the project was first put on the table in November last year at
the 2006 infrastructure conference, the government has been encouraging
consortiums to bid in the hope that this would generate competition and
this lower bids.
"With more investors and consortiums, we hope that the construction
process will be faster," State Minister for Information and Technology
Sofyan A. Djalil was quoted as saying.
The government is also offering various incentives to investors,
especially those willing to invest in the fiber-optic network in the
eastern part of the country.
"The form of the incentives will be discussed later. I think they will
be different for those who invest in Java and those who invest in the
eastern part of Indonesia. Even without incentives, the project itself
is highly profitable," Sofyan said.
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