Arab investors may back monorail

Two investors are seeking a second chance at financing the monorail project after the House of Representatives approved the Islamic bond law last Wednesday, monorail developer PT Jakarta Monorail (JM) says.

JM director Sukmawaty Syukur said Monday the two Middle Eastern investors had been waiting for an invitation from the company and the administration ever since they noticed the law had been passed.

"The investors, from Dubai and Abu Dhabi (in the United Arab Emirates), found out we recently passed a law regulating sukuk (Islamic bonds), although unfortunately it came too late," she said.

The investors asked JM about getting involved in the project, citing the new law, she said.

The House endorsed the Islamic bond or sukuk law to woo investors from Middle Eastern countries who are now reaping windfall profits from higher oil prices.

The new law is expected to accommodate Middle Eastern investors offering Islamic-based financial schemes in business partnerships.

Sukmawaty said JM told investors it would try to woo them back to the project if the administration agreed to consider sukuk schemes they may propose.

"When we received a letter from them asking to get involved in the project, we told them the decision was now in the hands of the city administration," Sukmawaty said.

Separately, city secretary Muhayat said the administration had yet to decide on the future of the delayed project.

The administration were discussing the issue with the National Planning Board (Bappenas) and the Coordinating Ministry for Economics, he said.

Muhayat said the administration was considering "taking out a low-interest loan from the central government."

"Officials from the administration, Bappenas and the ministry are still working on possible financial schemes and delegating our responsibilities."

Muhayat also said the administration would not likely grant JM permission to accept prospective investors using sukuk financial schemes, citing future risks for the administration.

"Those investors are private companies. They mean business," he said.

"We will need to do lot of talking if JM wants to get these investors involved."

The US$480-million project has been stagnant for years because of financial difficulties. The monorail was originally scheduled for completion in 2010.

Several foreign investors, including those from Middle Eastern countries, had offered partial investment in the project, but withdrew when their financial schemes were found not to conform to Indonesian regulations.