Agus Martowardojo: (JP)

No issue has generated more ill will between Finance Minister Agus Martowardojo and his Cabinet peers than the US$10 billion Sunda Strait Bridge (SSB) and economic zone project.

Agus’ decision to review the presidential decree authorizing the project for legal flaws that may potentially cause state losses has met with opposition from Agus’ boss, Coordinating Economic Minister Hatta Rajasa, and also from Public Works Minister Djoko Kirmanto, who is responsible for the project.

An official at the Cabinet secretariat who declined to be named to discuss the situation, said that Hatta and Djoko considered Agus a “deserter” for refusing to comply with President Susilo Bambang Yudho-yono’s order for construction of the project to get under way as soon as possible.

“It’s Agus versus everyone,” the official said. “As finance minister, it’s obvious that all matters must be arranged carefully to avoid future financial risks. But this has been considered by others as an attempt to block the project.”

Agus’ decision has exacerbated the strain on a relationship with Hatta that has been said to have been under stress since early this year.

The tension between the pair has been a regular topic of conversation behind closed doors at the House of Representatives, the Finance Ministry and the Office of the Coordinating Economic Minister, according to sources.

Hatta and Agus, however, have played down problems, even inviting The Jakarta Post for a private discussion in February to reaffirm their cordial relations.

The ministers have said that they were working constructively together on policies, including the SSB project, which is scheduled to begin in 2014.

However, a recently leaked letter that Agus sent to Djoko calling for a review of the SSB project has irritated ministers already upset by Agus lack of support for the

bridge.

In the letter, Agus proposed that Djoko seek a revision of the presidential decree authorizing the project, claiming that it was insufficient to ensure legal certainty for the

undertaking.

The proposal may also risk the initiator of the project, the Graha Banten Lampung Sejahtera consortium, from getting preferential treatment during the tender process in building the SSB, as currently stipulated by the decree.

The consortium comprises companies controlled by politically wired tycoon Tomy Winata and the regional governments of Banten and Lampung provinces.

One Cabinet minister on the President’s economic team who declined to be named told the Post that preparations for the construction project had been extremely frustrating, given the pressures applied by various sources.

“Pak Agus is so rigid on the legal side that it makes it almost impossible to make progress on the project,” the minister said.

Agus, who is not affiliated with a political party, has repeatedly declined to comment.

However, the interim chief of the Finance Ministry’s fiscal agency, Bambang Brodjonegoro, has said that the decree provided an inadequate legal framework to cover the fiscal risks posed by government guarantees for the project.

Bambang said that there had been no hidden motivation to strip Graha Banten Lampung Sejahtera of its preferential bidding consideration, claiming that revisions were needed to ensure fairness during the tender process.

The Finance Ministry proposed revising the decree in June as it had not been involved in drafting the original decree, Bambang added.

Hatta expressed disappointment with Bambang’s statement, saying that Finance Ministry officials had been on hand when the decree was discussed: “Do I need to open the attendance list of our meetings on the decree?”

“If the ministry’s representatives attended the meeting then it means their institution was involved. There’s no need for a minister to directly attend the meeting, if his representatives, either deputies or officials, are present,”

Hatta said.

A source close to Hatta who declined to be named said that opposition to Agus’ proposals had been growing among ministers.

“It irritates other ministers, because Agus submitted the proposal when the consortium had already gone a long way in looking for investors and conducted pre-feasibility study. Agus should have come up with his proposals earlier,” the source said.

After a contentious coordination meeting last week, Hatta established a team to analyze Agus’ proposal, and to come up with a final decision to resolve the deadlock by next week.

Hatta will lead the team, which will also be comprised of Djoko, Cabinet secretary Dipo Alam, State Secretary Sudi Silalahi, Law and Human Rights Minister Amir

Syamsudin, Industry Minister M.S. Hidayat and National Development Planning Board (Bappenas) head Armida Alisjahbana.

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