Korean investors eye railway projects

The Jakarta Post, Jakarta

Nearly 40 South Korean businessmen representing the country's major companies are visiting Indonesia to take a closer look at a number of infrastructure projects offered by the government.

The Korean contingent in the republic is part of the two countries' economic partnership agreement.

The business executives together with senior officials from Indonesia's ministry of construction and transportation, and the ministry of planning and budget met their Indonesian counterparts here Monday to discuss the projects, which include the development of railways, toll road and sea ports.

"Many Korean companies expressed their interests in railway development projects in the country during the meeting," the deputy minister for infrastructure and regional development at the office of the Coordinating Minister for the Economy Bambang Susantono said.

"They will discuss their proposals with related ministry officials."

The Korea Development Institute's (KDI) managing director Kim Jay-Hyung said the Korean companies and the Indonesian government were currently discussing projects including those on railway and seaport construction, but he refused to elaborate further.

"Infrastructure development is an essential element for economic growth," Kim said.

"Limited public budget, however, won't be able to fulfill the demand.

"Therefore, encouraging private sector capital investments in infrastructure facilities is an alternative method to fulfill the demand."

The Korea-Indonesia partnership program was initiated in December 2006 to foster a mutual economic relationship between the two countries.

In October this year, both governments signed a memorandum of understanding (MoU) aimed at sharing knowledge and experiences, attracting Korean companies to invest in Indonesia, and building productive partnerships.

The deputy chief for infrastructure at the National Development Planning Agency, Dedy S. Priatna, said the country's infrastructure development required a total investment of US$65 billion for the 2005-2009 period, while the government was only able to provide S$25 billion.

To fill the gap, participation of the private sector was essential.

However, Dedy added, inviting foreign parties to take part in the development of the projects faced some major problems, including those related to land acquisition, laws and regulations that needed to be adjusted to facilitate partnership program, a lack of domestic capital market to finance partnership projects and the poor quality of project preparations.

He said those issues needed to be fixed to accelerate the country's slow pace of infrastructure development.

The government was currently finalizing a scheme to determine the maximum cost of land acquisitions in major infrastructure projects, an issue noted as one of the major causes of project delays. (adt)