T

he Public Works Ministry expects to take over the investment risks in toll construction projects from investors by preparing a revolving fund for land acquisition.

The request for the funds, totalling Rp 6.5 trillion (US$650 million) to buy land for toll road construction projects, has already been filed with the Finance Ministry.

Land acquisition process, with all its complexities, is considered the biggest obstacle to the government's infrastructure projects, particularly because of the uncertainty inherent in land ownership and value, which has worsened through speculation.

Fully aware that certain land parcels are designated for government infrastructure projects, speculators rush out to buy the land in the hope of selling it again to the highest bidders, causing an endless price escalation.

Uncertainty over land ownership, on the other hand, often involves arduous legal battles in court that may drag on for years.

Nurdin Manurung, head of the Public Works Ministry's Toll Road Management Agency (BPJT), said Thursday that with the requested funds, the agency would be able to cut out such risks to project investors.

"Due to time and financial uncertainties, the acquisition of land is very risky for investors," he said.

"We therefore have to take over the task of acquiring the land. By doing that we make the toll road projects more attractive and also we accelerate the process of building the roads."

Government assistance in land acquisition has been given in the past in the form of loans to project investors through the ministry. The assistance so far amounts to Rp 1.4 trillion.

The Rp 6.5 trillion will be treated differently, Nurdin said. It will serve as part of the ministry's annual budget allocation for the year 2010.

"We'll use the money as a kind of revolving fund to finance acquisition of land designated for toll road projects," he said.

Investors, he went on, would later buy the acquired land for the same price paid to the original owners in rupiah.

President Susilo Bambang Yudhoyono is expected to propose a draft for the 2010 state budget to the House of Representatives on Monday. The deliberation process is expected to take three months.

To date, Indonesia has already developed 688 kilometers of toll roads, of which 530 kilo-meters are built and operated by state-owned toll road operator PT Jasa Marga and the rest by private firms.

The government has signed new contracts with investors to develop more than 1,000 kilometers of toll roads with a total investment of Rp 84.42 trillion, of which Rp 13.24 trillion will be for land clearance.

Nine hundred kilometers of the projects are mired by land problems.

Nurdin said the government would soon tender 31 projects for 1,384 kilometers of toll roads.