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Jakarta.
Indonesia’s House of Representatives on Friday approved a long-awaited land
acquisition bill investors hope will give a big boost to government
infrastructure projects in Southeast Asia’s top economy.
The bill is
an attempt to break the bottleneck in infrastructure development that has long
been seen as holding back growth in Southeast Asia’s top economy.
It also
presents major investment opportunities in a country where roads, ports and
airports are overloaded.
The House,
also known as the DPR, on Wednesday signaled it would pass the bill.
A day
later, Fitch Ratings gave Indonesia an investment grade rating, which could act
as a spur to much-needed investment.
Fitch had
cited weak infrastructure as one reason why it had delayed the upgrade.
The
controversial bill was passed despite a barrage of interruptions from members
of the 560-strong parliament.
Shares in
Indonesian construction, property and toll road firms have rallied this week on
hopes the bill would be passed.
Bankers say
the delay in passing the bill has been holding up the dispersal of loans to
companies for infrastructure development this year.
The main
toll road operator, Jasa Marga had described the impact of the delay on its
business as like a race car waiting for a track.
Sucorinvest
sees the bill as positive for firms such as PT Wijaya Karya, PT Citra Marga
Nusaphala Persada and PT Adhi Karya.
Though the
bill only applies to government projects, it is likely to benefit privately
operated projects on government-bought land.
The
government is relying on about $150 billion of private investment between 2010
and 2014 to overhaul its roads, railways and ports.
Without
better infrastructure, analysts say the country’s growth may start to slow
because of capacity constraints.
Human
rights groups say the bill disregards traditional land rights and could lead to
more conflict over land and forced expropriation of property.
Reuters
Reuters
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