$600m Lombok Resorts Scrapped

The Jakarta Globe,  Janeman Latul, March 14, 2009 

Citing governmental paralysis and hinting that too many officials had their hands out, Dubai’s state-owned Emaar Properties PJSC has cancelled its massive $600 million property project that was to turn the pristine island of Lombok into another Bali. 

“We have closed our office in Jakarta starting Friday,” said Elly Savitri, Emmar Indonesia’s human resources manager. “Emaar has pulled out of its operations in Indonesia because the government cannot comply with the terms of the agreement with our joint venture company. 

“There have been too many delays on the realization of the project and the company just could not wait any more.” 

Elly also said Emaar had spent Rp 50 billion ($4.2 million) in consultancy fees on master plans. 

Winarno Sujas, the Tourism Ministry’s director for businesses and investment, told the Jakarta Globe on Friday that Vice President Jusuf Kalla had summoned the related ministries for a meeting this coming Wednesday in a bid to save the project. 

The cancellation of the project — announced with great fanfare in May 2007 by Kalla — is an enormous black eye for the Indonesian government and the local government of Lombok, West Nusa Tenggara Province. 

“Indonesia is our 16th global market and the Lombok development will scale up our property portfolio to a wider Southeast Asian region,” Muhammad Ali Al Abbar, Emaar Properties chairman, said at the project signing. 

The announcement of the failure of the project follows the recent pullout of the Saudi Binladin Group from a project to invest as much as $4.3 billion in developing rice crops in Merauke, Papua Province. 

The joint venture between Emaar and the state-owned Bali Tourism Development Corp. envisioned development of 1,200 hectares along seven kilometers of natural beachfront that would have transformed central Lombok’s Kuta and Tanjung An beaches over the next 12 years into a world-class resort and residential community consisting of 10,000 luxury villas, eight hotels and two 18-hole golf courses. 

Emaar’s Elly said the agreement stipulated that the government would provide a detailed master plan by last November to support infrastructure including an international airport, an access road to the property and finalizations of land acquisitions. The finalizations, however, never materialized. 

A plethora of government agencies failed to complete their part of the bargain and asked for an extension until this month. When Indonesian officials asked for another extension until June, Emaar called off its investment. 

“You understand the Indonesian government,” said an Emaar executive who asked not to be named, in a veiled reference to allegations of corruption in the local and central governments. 

Sumaryanto Widayatin, a special adviser to the Public Works Ministry, blamed unprofessionalism for the tangled negotiations. 

“I think it’s because the Ministry of Finance was worried about selling the land cheaply to Emaar,” he said, adding that the global economic crisis had also cut into the company’s liquidity. 

He said every large project in this country attracted officials who had their hands out. 

“Where in Indonesia do we not have the problem of corruption?” he asked.

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