Vincent Lingga - Opinion Column

Editorial: Bridge hangs in the balance

Vincent Lingga, The Jakarta Post | Editorial | Tue, August 07 2012, 7:49 AM

Paper Edition | Page: 6

We know that being indecisive has been one of the main hallmarks of Susilo Bambang Yudhoyono’s presidency.

Yet it is mind-boggling to observe Yudhoyono idly standing by, letting his ministers squabble in public over his decree on such a vital piece of infrastructure as the 28-kilometer Sunda Strait Bridge, which is planned to connect Java and Sumatra, the most developed and populated islands in this, the world’s largest archipelago.

The President has often talked eloquently about how connectivity is crucial to developing a superb logistics system, to ease the movement of people and goods and build up efficient distribution networks.

Yudhoyono should have immediately raised in the Cabinet Finance Minister Agus Martowardojo’s reservations about Presidential Decree No. 86/2011 that serves as the legal foundation for the US$10 billion Sunda Strait Bridge project and the strategic development of the southernmost areas of Sumatra and westernmost areas of Java.

The decree has gone through long, comprehensive and critical deliberations, as can be seen in its 33 articles, and the 30 months Yudhoyono took to make his decision after the government officially received the pre-feasibility study report from the initiator of the project, PT Graha Banten Lampung Sejahtera (GBLS), the consortium of Tommy Winata’s Artha Graha group and the Banten and Lampung provincial governments.

But Agus’ dissenting opinions should also be appreciated because errors can happen, some important legal aspects might have been overlooked, especially with regard to such a huge project that will require government guarantees.

The President should have led the Cabinet in analyzing and cross-checking as to whether his decree on the bridge project fully complied with the three other decrees he made earlier in 2005, 2010 and 2011 regarding public-private partnership (PPP) schemes in infrastructure development.

Of utmost importance is ensuring that the President’s decree does not provide a blank check to the private investors who will develop and operate the bridge and the related strategic industrial zones.

Making necessary improvements to the presidential decree would not be the end of the world. Nor would such changes severely damage the institution of the presidency.

 Only five months ago the President also issued a decree on divestment for foreign investors in mining to improve his earlier decree on the same matter enacted in early 2010.

But for Agus to continue publicly airing his dissenting opinions about the 2011 Presidential decree is also a futile way of improving policies. Such a renegade attitude could amount to little more than hitting his head against a brick wall.

In general, we think, the decree is already quite elaborate as regards the need for good governance in the project because the regulation has been designed to build a powerful internal-control mechanism to oversee the whole project right from its planning to its development and operation.

The decree requires the President to set up a governing council in charge of laying out the direction, policies and strategy for the development of the Sunda Strait Bridge and the industrial zones at its respective ends.

The governing council comprises 21 Cabinet ministers, the Indonesian Military (TNI) commander in chief, the chairman of the Investment Coordinating Board (BKPM), the chiefs of the National Police and the National Land Agency as well as the governors of Lampung and Banten.

 It is the governing council who will appoint the Executive Board that will be charged with implementing all the policies on the project and dealing with private investors under the PPP scheme.

Whatever amendments the government makes to the regulation on the massive project, there are several basic points that have to be factored into consideration.

First, the project is vitally important, second it may take more than 10 years to build and over 35 years for investors to recoup their investment, third, the government simply cannot afford to finance the project and it should therefore be implemented under the PPP scheme, given the economic and political risks and its vital function as a public service and fourth, the bridge and the industrial zones at either end of the bridge should be bundled into a single package to make them more attractive for private investors and lenders.

Of more importance is that regulations on the project should not lead to overkill as very few companies will be technically and financially capable of implementing the infrastructure project, given its size, the huge investment, the high technology and the long-payback period required.