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Tycoon losing tight grip on Tanah Abang
The role of private developer PT Priamanaya Djan International in operating Block A shopping center in Tanah Abang, Central Jakarta, is on the verge of losing the stake as the city administration insists on taking over the management
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he role of private developer PT Priamanaya Djan International in operating Block A shopping center in Tanah Abang, Central Jakarta, is on the verge of losing the stake as the city administration insists on taking over the management.
Priamanaya, which was founded by tycoon Djan Faridz (now public housing minister), and city-owned market operator PD Pasar Jaya are currently facing a legal dispute as both fight over the right to operate Southeast Asia's largest textile and clothing market.
Governor Joko 'Jokowi' Widodo said on Tuesday that he had communicated with the company via minister Djan, who visited City Hall a day earlier, to convey his purpose.
'We want to settle this issue amicably. [The city administration] wanted [Priamanaya] to hand over the right [to operate Block A] to us. A business-to-business negotiation is ongoing,' he told reporters at City Hall.
Jokowi, however, refused to answer when asked further about the negotiation. 'A legal process is also ongoing. I can't comment further on the issue,' he said.
During his visit to City Hall on Monday, Djan ' who was among Jokowi-Ahok's gubernatorial campaign major sponsors ' refused to answer reporters' questions.
Pasar Jaya lawyer Desmihardi said that the city company was in talks with the private company over a
contract renegotiation.
'Both Pasar Jaya and Priamanaya have agreed to have an out-of-court settlement, the discussion is currently ongoing, while waiting for the legal process at the court,' he said.
Desmihardi said that among issues currently being discussed were new clauses in a renewed cooperation contract.
'We expect to draw a conclusion within one or two months. Once it is settled, we will announce the result to the public,' he told The Jakarta Post.
In 2003, Priamanaya won the right to rebuild the block, which caught fire in the same year. The fire gutted some 3,000 kiosks out of a total of 7,594 in the textile market.
A 2003 cooperation contract stipulated that Pasar Jaya would provide a 8,900-square-meter plot of land, while the company would provide Rp 800 billion (US$78.4 million) to rebuild the center and would be entitled to operate Block A until 95 percent of the total outlets were sold.
In 2012, Priamanaya filed a lawsuit against the Jakarta administration with the East Jakarta District Court regarding a troubled working contract to operate Block A between the company and Pasar Jaya.
In the lawsuit, the company demanded the rights to operate the Blok A shopping center until 95 percent of the total outlets were sold and within the period of 20 years, while Pasar Jaya aimed to terminate the contract.
The initial contract ended in 2008, but was extended to 2009.
The State Development Comptroller (BPKP) estimated that the state faced losses of up to Rp 179.56 billion in unrealized revenue. It found that only 42 percent of the new kiosks had been sold as of early 2011 and put the remaining on lease.
In June, the court found Priamanaya guilty of violating city building planning and failing to pay unsold units' service charge totaling Rp 8.2 billion. The court ordered the company to pay a Rp 8.2 billion fine.
However, the court stated that Priamanaya retained its right to operate the center until 95 percent of the total outlets were sold. Both Priamanaya and Pasar Jaya have filed an appeal against the verdict.
The textile market's Block A has built a reputation as the center of textile and clothing trading since 1735.
The 160,000-square-meter market has modern facilities like air conditioning, elevators and escalators. On the top floor, a mosque can accommodate up to 2,000 people.
With almost 8,000 kiosks and some 80,000 shoppers at busy times, transactions in Block A alone can amount to Rp 500 billion per day. The market, known as a wholesale center for clothes, shoes and batik, has attracted buyers from as far as Malaysia, Brunei Darussalam, Africa and Saudi Arabia.
How the case develops
Block A market legal dispute
Feb. 19, 2003: Block A market of Tanah Abang is destroyed by a fire.
October 2003: City market operator PD Pasar Jaya signs an agreement with directly appointed developer PT Priamanaya Djan International to carry out the first phase of the renovation of Block A.
2008: Pasar Jaya and Priamanaya extend their partnership until 2009.
April 2011: Pasar Jaya ends the agreement with Priamanaya, after the city administration, which is Pasar Jaya's largest shareholder, lost Rp 300 billion (US$33.9 million) from the partnership.
March 2012: State auditor BPKP finds Rp 179.56 billion (US$18.71 million) of state losses in unrealized revenue due to the deal.
July 12, 2012: Priamanaya sues the Jakarta administration after Pasar Jaya decides to terminate the management contract.
June 4, 2013: East Jakarta District Court rule in favor of Pasar Jaya as the rightful operator of Block A market. The court, however, allows Priamanaya to control the market until it sells 95 percent of the kiosks.
Pasar Jaya also sues Priamanaya for breach of contract, accusing the latter of violating an agreement on building design and for not paying the 5 percent service charge imposed on unsold kiosks. The court orders Priamanaya to pay Rp 8.2 billion to Pasar Jaya.
July 2013: Pasar Jaya and Priamanaya files an appeal with the high court over the rulings. Both parties agree to renegotiate the contract.
