$1 billion railway project postponed
The global econalypse continues to take its tolls. According to Kompas, South Korean companies Posco Co. Ltd. and Canatect Co. Ltd. have decided to postpone its railway track and coal terminal project in East Kalimantan. The $1 billion project was supposed to commence in collaboration with Indonesia’s state-owned company PT Kereta Api (PT KA).
Transportation Ministry spokesperson Nugroho Indrio regretted the decision, saying that the Indonesian government would have been willing to provide assistance to the investors.
The impact of the global crisis on the project had been foreseen, said transportation expert Taufik Hidayat, as investors take measures to maintain liquidity. According to Hidayat, the depreciation of the Rupiah would also increase the costs and maintenance of the project as most materials and components involved in the project would have been imported.
Makbul Sumadilaga, the Indonesian consultant who represents the South Korean investors, cited declining coal prices in the global market as another factor to the investors’ decision to stall the project.
The project was signed off in 2007 during President Roh Moo-Hyun’s visit to Indonesia in December, following the amendment to railway services law enacted last year, which allows greater role for the private sector in the development and operation of railways in the country.
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