Government Insists Lombok Deal Not Dead

The Jakarta Globe, Janeman Latul, March 17, 2009

High-ranking Indonesian government officials and Emaar International PJSC have denied that the Dubai-based development company has killed its massive $600 million project to turn a major portion of Lombok Island into another Bali.

“The government of Indonesia and Emaar have extended a delayed joint venture agreement to get the project underway for another three months,” an Emaar spokesman said in an e-mail from Dubai. The spokesman asked that his name not be used.

“Emaar has met its contractual obligations and the Indonesia Investment Coordinating Board [BKPM] has now asked Emaar for an extension of time to meet their obligations under the joint venture agreement,” the e-mail said.

Emaar closed its Jakarta offices on Friday and will coordinate further activities from Dubai, the spokesman said.

“Initially, Emaar set up its Jakarta office to establish a ground presence to drive the project forward and meet the JV obligations, leading to the finalization of negotiations with BKPM.”

However, Emaar does appear to be facing serious financial difficulties amid the global financial crisis, and is closing projects across the globe. The company suffered a 2008 fourth-quarter loss of $481.9 million, and its share price has fallen dramatically.

It was also reported from Dubai on Thursday that the company canceled its annual general meeting without giving a reason

Alwi Shihab, the presidential envoy to the Middle East region, told the Jakarta Globe by telephone from Taipei that the government received verbal confirmation on Friday from Emaar’s chairman, Muhammad Alabbar, that the project would be extended for another three months, although no written confirmation had yet been received.

“We could not get confirmation for the three-month extension until last Friday, when the UAE deputy prime minister and UAE Chamber of Commerce chairman met with the Indonesian task force,” Shihab said. “The chairman called Emaar’s chairman and asked him about the project. According to him, they agreed to extend the time for another three months,” he said.

Winarno Sujas, the Tourism Ministry’s director for business and investment, told the Jakarta Globe on Friday that Vice President Jusuf Kalla would summon related ministries for a meeting today in a bid to save the project.

Correction

On the Monday, March 16 edition of the Jakarta Globe, we reported that Dubai state-owned Emaar Properties PJSC had “announced” it was canceling a $600 million plan to develop a stretch of beach on the island of Lombok into a resort.

Later in the article, we attributed comments about the company’s problems dealing with Indonesian officials to Emaar Indonesia.

None of these comments came from an official spokesperson for the company.

They were all made by Emaar officials.

Neither Emaar Indonesia nor its parent company have made an announcement that they are quitting Indonesia.

We regret the error.