APSN Banner

Mega-projects go forward despite critics

Voice of America - August 21, 1997

Jenny Grant, Jakarta – In his state of the nation address last weekend, president suharto said the government must postpone some projects because of the devaluation of the national currency, the rupiah.

The Rupiah has fallen more than 20-percent against the U-S dollar since January. last week the Central Bank floated the Rupiah. It fell to an all time low against the dollar.

Finance Minister Mar'ie Muhammad also said non-priority government projects would have to be deferred.

This week the head of the Gemala group, Sofyan Wanandi, suggested the government should shelve the national car project, the state jet program, and two construction projects. But the leaders of these projects – including family and close associates of president Suharto – say they are un-willing to defer their plans. Mr. Suharto's youngest son, Hutomo Mandala Putra, said he will not re-schedule the national car project because it will strengthen the long-term fundamentals of the economy.

The government awarded the national car project to Mr Mandala Putra last year, giving his company "P-T Timor Putra Nasional" exclusive import duty and luxury tax breaks. The tax breaks allow Mr Mandala Putra to sell the car 60-percent cheaper than similar sedans.

Research and technology minister Jusuf Habibie was quoted as saying the government will not suspend any of its strategic industry programs.

Mr Habibie also chairs the Board of Strategic Industries which coordinates ten strategic industries including the state aircraft manufacturer, I-P-T-N, which is developing several planes, including the N-250 and N-2130 passenger jets.

Critics say the aircraft program is drawing billions of Rupiah from the national economy and indonesia cannot afford to continue its aircraft manufacturing industry.

Despite the call to lower spending, president Suharto's daughter, Siti Hediati Heriyadi Prabowo, this week unveiled a new mega-project – a 95-kilometer bridge linking Indonesia and Malaysia across the Malacca Straits. Mr. Suharto has approved the bridge which will be built by Mrs. Prabowo's company "P-T Malindo Transmadu" and Malaysian firm "Renong".