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Jakarta Post

Incentives promised for Sunda Strait Bridge investors

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Thu, March 13, 2014   /  12:59 pm

The government says it will offer certain incentives for investors willing to take part in the construction of the Sunda Strait Bridge, which will connect Indonesia'€™s largest islands of Java and Sumatra.

Coordinating Economic Minister Hatta Rajasa said in Jakarta on Wednesday incentives would be given so that the construction of the country'€™s longest bridge would no longer face delays.

'€œWe will provide incentives. [If any constructors are interested in the project] let us sit together and discuss the proposals,'€ Hatta said after opening the Trade Ministry'€™s working meeting on Wednesday.

Hatta, however, declined to disclose what kind of incentives the government would offer, saying it was to be discussed with interested parties and concerned ministries.

The bridge, which is part of the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) for the Sumatra Corridor with a total estimated budget of Rp 225 trillion (US$19.6 billion), is planned to connect Bakauheni Port in Lampung, Sumatra with Merak Port in Banten, Java.

Hatta said the bridge would be important as it would provide road access between the two busy
islands, making it easier for the distribution of goods and reducing logistical costs for around 2 million vehicles passing through the ports per year.

According to data from the World Bank, Indonesian businesspeople must spend around $2,225 on a 12-meter container delivery with an average lead-time of 5.4 days, while their counterparts in other countries generally spend only $341 with an average lead-time of only 2.8 days for a similar delivery.

Hatta said besides being aimed at connecting the two busy islands, the bridge would also boost economic activities as its construction would automatically stimulate the development of surrounding areas.

He said the government would continue its plan to construct the bridge.

President Susilo Bambang Yudhoyono issued a presidential decree on the construction of the bridge in December 2011, regulating that the project could be carried out under a public private partnership (PPP).

Under the decree, the government awarded the role of project initiator to PT Graha Banten Lampung Sejahtera, a consortium of the Banten and Lampung administrations formed by business tycoon Tommy Winata. The construction plan, however, had lead to confusion.

State-owned toll road operator PT Jasa Marga president director Adityawarman said recently his firm was ready to take part in the mega project, but he required the government to provide a tax holiday.

'€œThis is a huge project and we need collaboration between public and private firms. There'€™s a possibility we will get our return on investment in 30 years after the bridge has been constructed,'€ he said.

Paramadina Public Policy Institute co-founder Wijayanto previously said the mega project was not feasible, considering that the constructors had to reap around Rp 67 billion per day before they saw a return on their initial investment. (koi)