Adianto P. Simamora, The Jakarta Post, Jakarta
The government has announced that it will receive a US$16.14 million loan from the Japanese government to begin work on a mass rapid transit system (MRT) here.
The Japanese government signed Tuesday an agreement to provide the loan for the project, which will link Lebak Bulus bus terminal in South Jakarta with Kota Railway Station in West Jakarta.
The agreement was signed by Japanese Foreign Minister Taro Aso and his Indonesian counterpart, Hassan Wirayuda, who accompanied President Susilo Bambang Yudhoyono on his four-day visit to Japan earlier this year.
""The money will be used to finance preconstruction work such as designing the principal components of the system and establishing a company to manage its construction,"" Noriyuki Katsunishi, a researcher with the information and culture section of the Embassy of Japan told The Jakarta Post.
A press statement from the embassy said the interest rate of the loan was 0.4 percent per year with a repayment period of 40 years.
""It is expected the loan will contribute to the strengthening of the city's functions and the improvement of the investment climate in metropolitan areas,"" it said.
The 15.5-kilometer project was initially scheduled to start next year. Some 30 percent of the MRT rails will run underground and 70 percent at street level.
However, financing problems and a dispute between the central government and the Jakarta administration over its management delayed preconstruction work.
The project was initiated by the city administration several years ago.
It has earmarked Rp 136 billion to finance a study into the construction of the subway, traffic control, land acquisition and alternative routes during the construction.
In the early stages of negotiations, Japan said it would provide 70 percent of the total cost of the project, with the remaining 30 percent to come from the Jakarta administration, in cooperation with private companies.
Taking over the project from the administration, the central government then proposed the construction should be funded 75 percent locally so as to absorb more local workers and materials.
Japan turned down the proposal.
The government then set up a consortium consisting of 10 state enterprises and five private sector firms to manage the project.
The estimated cost of the MRT project is $767.66 million, with $521.75 million expected to come from foreign loans and the remaining $245.91 million from local funding.
Jakarta has long experienced traffic problems due to its rising vehicle population.
Currently, there are more than 2.5 million private cars in the city and 3.8 million motorcycles.
It is hoped the existence of the MRT will encourage people to leave their cars at home and shift to public transportation.
Aside from the MRT, the Jakarta administration is considering building six inner-city turnpikes with a total length of 85.28 kilometers.
