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Indonesia Picks Sumitomo, Wijaya to Build Tunnel for MRT Project

May 2 (Bloomberg) -- Sumitomo Mitsui Construction Co. and a group of companies won a 3.6 trillion-rupiah ($370 million) contract from Indonesia to build an underground tunnel for a proposed mass rapid transit system in Jakarta.

The 5.9 kilometer (3.7 miles) tunnel will be built by Sumitomo Mitsui and a partner as well as a consortium of PT Wijaya Karya, PT Jaya Konstruksi, Shimizu Corp. and Obayashi Corp., said PT MRT Jakarta President Director Dono Boestami. The network’s first phase of 15.7 kilometers will be completed in 2017, Jakarta Governor Joko Widodo told reporters today.

Widodo, who was elected in September, has pledged to improve the mass transit system as traffic growth stretches road capacities, worsening congestion in the city of 9.6 million people. Domestic vehicle sales rose 23 percent to 1.1 million units last year, according to data compiled by PT Astra International, the nation’s biggest car seller.

“We can begin the work as people have been waiting for it,” Widodo said. The MRT “will attract people to use mass transportation.”

Once completed, the MRT’s phase 1 will link Hotel Indonesia circle in the city’s main business district to Lebak Bulus in the south, Boestami said. The 125 billion-yen ($1.3 billion) project will be financed by loan from Japan International Cooperation Agency, he said.

The MRT system will stretch over about 110.8 kilometers, according to a statement on MRT Jakarta website. The South-North corridor will range 23.8 kilometers and East-West corridor of about 87 kilometers.

Roads, Ports

Construction of the project has been delayed since studies were first conducted in the 1980s, illustrating Indonesia’s difficulty to push forward with projects to build roads, bridges and ports. The country missed its 2012 budget deficit target amid lower-than-expected government spending as land clearances for infrastructure projects had been slow.

The expenditure shortfall underscores President Susilo Bambang Yudhoyono’s challenge to sustain one of Asia’s fastest growth rates with spending on infrastructure. Such investment has fallen to about 4 percent of gross domestic product from more than 8 percent in 1995 and 1996, Theo Thomas, senior public sector specialist at the World Bank in Indonesia, said Dec. 6.

Jakarta ranked 181 out of 221 cities for personal safety in a survey conducted in 2011 by advisory company Mercer that ranked internal stability, crime levels and law enforcement effectiveness. The city ranked 140 in overall quality of life, below Singapore, Kuala Lumpur, Bangkok and Manila.

Indonesia’s state-owned companies also plan to build a 54-kilometer monorail line linking Jakarta and surrounding areas that can carry as many as 191,600 passengers daily. The 9 trillion-rupiah project will involve companies including PT Adhi Karya, PT Jasa Marga and PT Telekomunikasi Indonesia.

To contact the reporter on this story: Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net

To contact the editor responsible for this story: Greg Ahlstrand at gahlstrand@bloomberg.net

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