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Jakarta Post

Demand for Kempinski apartments drops over contract case

  • Anton Hermansyah & Arif Gunawan S.

    The Jakarta Post

Jakarta   /   Thu, February 18, 2016   /  09:24 am
Demand for Kempinski apartments drops over contract case Bird's-eye view: The homepage of Grand Indonesia's official site features sunset at the renowned Hotel Indonesia traffic circle, with Hotel Indonesia Kempinski in the background. The Supreme Audit Agency (BPK) has alleged a business deal between Grand Indonesia and state-owned hotel operator Hotel Indonesia Natour could lead to state losses of Rp 1.3 trillion. (courtesy of grand-indonesia.com)

Bird's-eye view: The homepage of Grand Indonesia's official site features sunset at the renowned Hotel Indonesia traffic circle, with Hotel Indonesia Kempinski in the background. The Supreme Audit Agency (BPK) has alleged a business deal between Grand Indonesia and state-owned hotel operator Hotel Indonesia Natour could lead to state losses of Rp 1.3 trillion. (courtesy of grand-indonesia.com)

 

One of the most prestigious apartment blocks in the heart of Jakarta, the Kempinski Residences in the Hotel Indonesia complex, has seen a sudden drop in demand following a Supreme Audit Agency (BPK) finding on dubious contracts involving Grand Indonesia and the Djarum group.

The apartments, along with Bank Central Asia (BCA) Tower, are among '€œunstated buildings'€ in a build-operate-transfer (BOT) contract signed in 2004 by state-owned hotel operator Hotel Indonesia Natour and PT Cipta Karya Bumi Indah '€” owned by Djarum's Hartono brothers.

"Recently it has become illiquid. People are afraid to buy second-hand units or rent them because there are no assurances that the contracts can be renewed," apartment owner Christanto Wibisono told thejakartapost.com on Tuesday.

The complex'€™s 290 apartments were sold under building ownership certificates (SKBG) for a 30-year period up to 2035, the same expiry date as the BOT contract between developer Cipta Karya and land owner Natour.

According to excerpts from the 2004 contract document obtained by thejakartapost.com, only four constructions were allowed to be built on Natour'€™s land, namely a five-star hotel, two shopping malls and a parking lot.

However, Grand Indonesia built two additional high-rise buildings, namely BCA Tower and the Kempinski apartments. The two additional buildings are yet to be estimated in terms of compensation from which Hotel Natour can benefit annually.

Based on a 2010 contract revision, in which PT Grand Indonesia suddenly appeared to be taking over Cipta Karya, the SKBG contract of the Kempinski apartments had been extended for another 20 years, entitling new buyers of the apartments to 50-year ownership periods.

As for existing owners, Grand Indonesia offered them renewed contract extensions for 50-year periods but charged them Rp 2 billion (US$150,000), which must be paid before Feb. 2. All of the apartments'€™ owners strongly rejected the offer and are currently in negotiations with Grand Indonesia.

Nontransparent

A source from the new Hotel Natour board of commissioners, who preferred to remain anonymous, alleged that Grand Indonesia was not being cooperative or transparent in reporting the maintenance of Hotel Natour'€™s assets currently under their management according to the new contract.

'€œEven the State-Owned Enterprises Ministry didn'€™t know about the decision of appointing Grand Indonesia as the BOT rights recipient. The state as the owner of Hotel Natour will not fail. We can'€™t ignore and omit actions that lead to potential losses to the state,'€ the board member said.

Thejakartapost.com contacted Grand Indonesia's office on Wednesday afternoon but no one was available for comment.

Meanwhile, an executive at Hotel Natour '€” who also requested to remain anonymous '€” said the BPK assessment was submitted to the ministry last week. He said the new board of directors was not involved in the case.

'€œThe current board of directors is different to the board that took in charge in 2010 and signed the contract renewal. The new management started to helm Hotel Natour in November 2015,'€ the executive said.

According to the SOE ministry's data, Aloysius Moerba Suseto was the president director of Hotel Natour during the BOT contract signing with Djarum group'€™s Cipta Karya in 2004. He led the state-owned firm for ten years from 1999.

Leaving the company in 2009, Suseto then-joined Djarum Group's telecommunication tower provider company PT Menara Sarana Nusantara Tbk as an unaffiliated director. I Gusti Hery Angligan succeeded Suseto's position in Hotel Natour before his resignation in 2011. (ags)

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