Raju Gopalakrishnan, Jakarta – Big spending cuts unveiled in Indonesia on Tuesday will severely affect President Suharto's family, among the most sheltered members of the country's business elite, economists said.
Finance Minister Mar'ie Muhammad told a parliamentary commission that the government would postpone projects worth 39 trillion rupiah (about $13.22 billion) until the region's financial crisis dies down.
"This shows President Suharto is willing to cut projects which are white elephants," said economist Christianto Wibisono, head of the Indonesian Business Data Centre.
Projects worth some 69 trillion rupiah would also come under fresh review, the finance minister said.
Foremost among those to be postponed was a project to link Indonesia's Sumatra island to peninsular Malaysia with a 95-km (60-mile) bridge, the world's longest.
Estimated to cost about $2.0 billion, the bridge was to be built by a consortium including Malaysia's Renong Bhd and an Indonesian company controlled by Siti Hediati Heriyadi Prabowo, Suharto's second daughter.
His eldest daughter, Siti Hardianti Rukmana, was among those linked to the construction of a rail and road terminal in Jakarta's Manggarai district. The $285 million project was among those Mar'ie said would be shelved temporarily.
Rukmana was also involved in the construction of a $176 million bridge linking Indonesia's main island of Java to Madura along with Japanese partners. This too has been postponed.
A project backed by a Suharto grandson, Ary Sigit, for a $950 million bridge linking Java to Sumatra has also been shelved. "But not everything has been cut," said Wibisono, pointing to the controversial national car project headed by Suharto's youngest son Hutomo Mandala Putra, which has received pledges of $690 million in loans from private and state banks.
Japan, the United States and the European Union have brought complaints against the project before the World Trade Organisation because of the tax and tariff benefits the national car has been given. Wibosono said the car project had already been launched while the others were still on the drawing board.
"People will say that this is a gesture by the president to cut unrealistic projects but he (Suharto) doesn't want to surrender all the decisions to the people," he said.
Other projects to be postponed include the $560 million Jakarta Tower, a 558-metre (1,830 foot) high telecommunications tower which was to be among the tallest structures in the world.
The tower was to be built by a company in which Suharto's cousin Sudwikatmono and two other businessmen hold a majority stake.
State-controlled firms PT Telekomunikasi Indonesia and PT Indonesia Satellite Corp held 20 percent stakes each with state-owned television network TVRI holding the rest.
Also to be postponed were two refineries and 14 power generation projects, which together were to cost $5.8 billion. Mar'ie did not give details on which projects these were.