Monorail construction to resume

The Jakarta Post, Jakarta

Construction of Jakarta's monorail will resume at the end of this month after a two year delay, despite the fact that a $500 million loan for the project from the Dubai Islamic Bank has not yet been received.

"PT Jakarta Monorail (JM), the project's developer, has some $70 million of equity as a guarantee to ask for a $180 million loan from a local bank consortium to restart the Green Line (monorail) project," Governor Sutiyoso said Thursday.

It was earlier estimated the two-line monorail project would cost US$650 million.

But Sutiyoso said JM would need only US$ 480 million because it did not have to make any asset guarantee to the Dubai Islamic Bank.

The monorail's Green Line, which will run through Central and South Jakarta, is projected to cost the company US$250 million while for the Blue Line, which will run through East Jakarta and West Jakarta, will cost US$230 million.

The Dubai Islamic Bank had agreed to invest in the project on assurances the central government and the city administration would cover half of the losses incurred in the operation of the monorail.

After the government issued its guarantee letter earlier this month, several local banks including BRI bank, BNI bank, Mandiri bank and the city-owned DKI bank, showed their interest in funding the project.

"We will have problems getting loans from the Dubai Islamic Bank because the bank is offering Islamic bonds (sukuk), which are not yet regulated for in our country," Sutiyoso said.

The House of the Representatives is currently deliberating one bill on Islamic banking and the other on the issuance of Islamic bonds.

The law on Islamic bonds was scheduled to have been passed last month.

Operational director of JM, Sukmawati Syukur, said the Dubai Islamic Bank was ready to disburse the loan anytime, but that JM was constrained by legal uncertainty from getting the funds.

"In the meantime we've decided to ask for loans from the local banks because the procedure is easier," she said.(05)