Indonesia warns state firms on Dubai fallout

www.chinaview.cn 2009-12-01 12:01:52

JAKARTA, Dec.1 (Xinhua) -- Indonesian State Enterprises Ministry has warned state firms engaging in business in Dubai to watch out for developments in the Dubai World's debt crisis and its impacts, before investing further, a paper said here Tuesday.

Global markets are tumbling after Dubai World, the conglomerate that has long been the chief engine behind Dubai's explosive growth, last Wednesday announced it needed at least a six-month reprieve from paying its debts.

Secretary to the State Minister for the ministry Said Didu quoted by the Jakarta Post as saying that several Indonesia's state construction firms, such as Adhi Karya, and Wijaya Karya have been working on infrastructure projects there.

"State construction companies should stop or postpone their plans to expand their businesses in Middle-East countries," Didu said in a hearing with lawmakers.

State firms, including construction firms PT Adhi Karya and PT Wijaya Karya, may have to temporarily put a brake on their expansion in the Middle East as it is feared the fallout of the Dubai World default could trigger a knock-on effect.

Adhi Karya, for instance, has just completed the construction of a 35-floor apartment at Al-Burj in Dubai, the world's highest tower complex.

It is eying several other projects in the region, including an 106 million U.S. dollars project in Oman, in cooperation with a local company, Adhi Oman.

Meanwhile, Wijaya Karya has two new projects that should be started by the end of the year. One of them is the construction of two power plants each having the capacity of 2 x 500 megawatts in Saudi Arabia.

Meanwhile, the development of a resort project in Lombok, West Nusa Tenggara of Indonesia, to be largely financed by Dubai-based real estate developer Emaar Properties seems to have hit a snag with the Indonesian government now questioning the firms's commitment to the project.

Emaar, a subsidiary of Dubai World, signed a joint venture agreement with the Bali Tourism Development Corporation in 2008, under which it is committed to investing 600 million U.S. dollars to build a resort.