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 Questions Over Dubai Firm’s $600m Project in Lombok

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PostSubject: Questions Over Dubai Firm’s $600m Project in Lombok   Tue Dec 01, 2009 10:28 am

Jakarta Globe Nov 30
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.

Jakarta Globe
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