Indonesia’s political pikes

The Indonesian government has killed toll road projects worth $1.9b on the grounds they involved nepotism linked to the family of former president Suharto, or other malpractice. The projects include an elevated road north-south through Jakarta, two major inter-island bridge projects, and a Central Java pike. One of the toll bridges was linked to Suharto’s grandson, Ari Sigit, a West Java province toll road with his son Hutomo “Tommy” Mandala Putra, while the elevated Jakarta project was being developed by a company connected with his eldest daughter Siti “Tutu” Hardiyanti Rakmana.

Another 16 toll road projects, still in the tender process by the state-owned toll road operator PT Jasa Marga, have been cancelled on grounds of “irregularities” or because the new government judges the subsidies involved unjustified.

The Indonesia Bank Restructuring Agency is conducting a study on another five toll road projects, including the $100m Pondok Pinang-Kebon Jeruk outer ring road in Jakarta, and the $150m Cikunir-Cilincing-Tanjung Priok ring road. Reviews are being done on the $80m Palimanan-Cirebon toll road in West Java, the $240m Bekasi-Cawang-Kampung Melayu toll road in Jakarta, and the $38m Surabaya-Gresik project in East Java province.

The public works minister Rachmadi Sumadhidjo said recently that so far, there are no indication of corruption, collusion and nepotism in the PT Jasa Marga’s remaining 46 toll road projects.

Since Suharto’s resignation in May of last year amid riots and clamor for “reform,” Indonesian government agencies have been canceling hundreds of concessions awarded through “corruption.” It is difficult to know how much of the alleged corruption is truly corruption and how much is ‘payback’ time. Toll roads were the subject of major riots during the unrest before Suharto’s downfall, in part because many concessions were so closely associated with the Suharto’s extended family.

Indonesia with 150m pop, with over half in the island of Java, has developed a considerable motorized middle class and a manufacturing industry that needs quality roads. Almost all motorways have been developed through toll concessions, many in partnership with the state owned PT Jasa Marga.