http://thejakartaglobe.com/business/questions-over-dubai-firms-600m-project-in-lombok/344705
November 30, 2009 Janeman Latul Questions Over Dubai Firm's $600m Project in Lombok As Dubai World's debt crisis continues to ripple though global markets, the government on Monday questioned another emirate-owned company's commitment to a $600 million tourism project in Lombok. "We have already fulfilled all [Emaar Properties'] requirements. It's now up to them," said Harry Susetyo Nugroho, deputy minister in charge of tourism at the State Enterprises Ministry. "If they cannot fulfill their commitment, then they should call it off." The debt-laden developer and the government are facing a deadline at the end of the year to finalize the project, after negotiations have dragged for more than two years. Efforts to save the project have been helmed by special presidential envoy Alwi Shihab, the Investment Coordinating Board (BPKM) and the state-owned Bali Tourism Development Corporation (BTDC), which would be a partner in the proposed tourism joint venture. "As of today, there is no changing commitment from Middle Eastern investors, including Emaar," Alwi said from Jakarta on Monday. "They are still committed to investing in Indonesia." Alwi was confident that the dispute over the project would be settled by the deadline. The economic crisis has hit Emaar especially hard, as real estate prices plunged worldwide and financing for projects became difficult to secure. Emaar merged in October with the other three state-owned developers, Dubai Properties, SamamDubai and Tatweer, to cut costs. The new company, which retained the name Emaar, had a debt of 13.4 billion dirhams ($1.7 billion) at the time. Emaar representatives were unavailable for comment. The joint-venture between Emaar and BTDC to transform South Lombok into a world-class resort was announced with great fanfare in 2007 by former Vice President Jusuf Kalla. The plans, however, have faced numerous road blocks. Harry said a major point of contention was Emaar's demand for 85 percent of the proposed joint-venture company, called PT Emaar Lombok, despite only committing $65 million in funds. "We asked them to invest more funds if they wanted an 85 percent share. We'll see what happens if they cannot do it," he said. In June, Emaar granted the government a third and final extension ending on Dec. 31 to finalize the project, but no progress has been made since. BKPM Chairman Gita Wirjawan told the Jakarta Globe last week that he had pledged to sort the matter before the deadline. Harry also said on Monday that the government had questions about a Dubai World unit's plans to invest in a massive port project in Surabaya. Dubai Ports World, the world's third-largest port company, and state-port operator PT Pelabuhan Indonesia III, are still in negotiations over the proposed $175 million project. Related articles Projects Won't Be Pulled by UAE: Indonesian Government 10:31 PM 30/11/2009 Government Tells Dubai World to 'Take Responsibility' for Loans 9:30 PM 30/11/2009 Dubai's Debt Crisis Could Hit Investment in Indonesia 10:11 PM 27/11/2009 Australia's Distressed Assets Lure Investors 9:08 PM 18/11/2009 G-3 Economies May Hamper Asia Revival, ADB Says 10:43 PM 22/10/2009 ++++++ http://thejakartaglobe.com/business/projects-wont-be-pulled-by-uae-indonesian-government/344702 November 30, 2009 Jakarta Globe Flags of property developer Emaar Properties flying in Dubai last week. The Dubai-based Emaar faces a year-end deadline to finalize a tourism project planned for Lombok. (Photo: Steve Crisp, Reuters) Projects Won't Be Pulled by UAE: Indonesian Government Indonesian officials said on Monday that the Dubai World debt crisis would not effect commitments from investors in the United Arab Emirates to finance several major projects here, although they warned local companies to "seriously reconsider" plans to expand into the Middle East. Coordinating Minister for the Economy Hatta Rajasa said Dubai World's postponement of billions of dollars in debt repayments would not derail projects getting their funding from the UAE. "Dubai investors are still expressing their commitment to us, despite the situation. Two days ago, Al Khaimah, which planned to invest in railway projects in Central Kalimantan and South Sulawesi, came to me saying they would continue because the railway was vital to support their plan to establish a smelter business here," he said in Jakarta. Dubai, a member state of the UAE, rocked the financial world last week when it said it would ask creditors to defer Dubai World's payments $59 billion of debt as a first step to restructuring, sending a warning sign interbank lending with the second-largest Arab economy could face a downturn this year. The UAE's central bank set up an emergency facility on Sunday to support bank liquidity in the first policy response to Dubai's debt woes, which threatened to paralyze lending in the region and derail its economic recovery. "I hope that the UAE's response to Dubai World will limit this problem and not create more systemic risks," Hatta said. In March, the UAE-based Ras Al Khaimah Investment Authority and its subsidiary RAK Mineral and Metal Investments (RAKMMI) announced plans to invest in a 125-kilometer coal railway and an international port worth about $1 billion to support a planned smelter for nickel, copper and gold. The railway would also transport coal and palm oil from provincial capital Balikpapan. RAKMMI expects the project to be finished by 2012. Meanwhile, the State Enterprises Ministry urged state-owned firms to "seriously reconsider" expanding in the Middle East because of the Dubai debt problem. Two of the largest state builders, PT Adhi Karya and PT Wijaya Karya, are involved in several ongoing projects in Dubai and Qatar. "The ministry urges SOEs, especially construction companies, to seriously reconsider their plans to work on projects offered by Middle Eastern countries," said Muhammad Said Didu, the secretary for the ministry. Adhi Karya is currently embroiled in a contractual dispute with Dubai-based Al Habtoor Enginering over the building of the Shangri-La Hotel in Doha, part of the $380 million Doha City Center expansion project. Two other state construction firms, PT Pembangunan Perumahan and PT Waskita Karya, this year signed preliminary agreements with the Bin Ladin Group to work on major projects in Saudi Arabia. These include an extension to the famous Haram Mosque in Mecca and building expressways near the house of worship, worth a total of Rp 1.5 trillion ($159 million). Related articles Questions Over Dubai Firm's $600m Project in Lombok 11:04 PM 30/11/2009 Government Tells Dubai World to 'Take Responsibility' for Loans 9:30 PM 30/11/2009 Dubai's Debt Crisis Could Hit Investment in Indonesia 10:11 PM 27/11/2009 Australia's Distressed Assets Lure Investors 9:08 PM 18/11/2009 Infrastructure Spending Spree Just Ahead, Indonesian Government Says 9:57 PM 09/11/2009 [Non-text portions of this message have been removed]
