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Virus Disrupts China-Backed Infrastructure Projects in Indonesia

Ronna Nirmala
Jakarta
2020-02-21
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Indonesian President Joko Widodo (center) inspects a model of a China-backed high-speed railway, which will connect Jakarta to Bandung during a groundbreaking ceremony in West Java, Jan. 21, 2016.
Indonesian President Joko Widodo (center) inspects a model of a China-backed high-speed railway, which will connect Jakarta to Bandung during a groundbreaking ceremony in West Java, Jan. 21, 2016.
AP

At least two China-backed infrastructure projects in Indonesia have been disrupted because of travel bans and shipments suspended because of the coronavirus outbreak, project managers said, while employees at an industrial park have been cleared to work after being quarantined.

Thousands of Chinese nationals are constructing a high-speed railway connecting the Indonesian capital Jakarta to Bandung, and a hydropower project in North Sumatra province. But as a result of Jakarta’s ban on flights to and from China, many of the workers have been unable to return to Indonesia after going home to celebrate the Lunar New Year, company executives said.

PT Kereta Api Cepat Indonesia China (KCIC), the consortium building the railway, is expected to miss construction targets because about 300 Chinese workers are absent and some materials have not been shipped, the company’s managing director, Chandra Dwiputra, told reporters on Friday.

“I can’t talk about targets for this year,” Chandra said. “The problem is many of those who returned to China are at senior levels and this has affected decision making.”

So far, Indonesian officials have reported no cases of the coronavirus (COVID-19), whose epicenter was reported to be Wuhan, the capital of Hubei province in China. As of Thursday, at least 75,000 cases had been detected in 27 countries with most concentrated in China, according to the World Health Organization (WHO). At least 2,100 deaths have been reported.

Chandra said project directors, managers, engineers and consultants were among the absent Chinese workers. The project employs 14,000 people, including 2,000 Chinese nationals.

In addition, nearly 50 percent of materials used in the project including pipes, waterproofing materials and signaling equipment are made in China, and some manufacturers have not resumed production, he said.

“Concrete, steel and some other materials are available here, but if there are no supporting materials, construction will be disrupted,” he said.

Chandra said he had asked contractors to replace the Chinese workers with Indonesians temporarily.

“The point is I am encouraging contractors to adjust plans according to the current conditions,” he said.

However, Transportation Minister Budi Karya Sumadi said he expected no major disruptions to China-funded infrastructure projects.

“Here, there are no problems,” Budi told reporters. “On the contrary we want them to be faster,” he said.

Indonesia’s president, Joko “Jokowi” Widodo, has made improving Indonesia’s infrastructure a priority during his second term in office.

Prior to his re-election last year, Jokowi embraced Chinese investment and attended the 2017 unveiling of Beijing’s One Belt, One Road (OBOR) initiative, an estimated U.S. $1 trillion-plus initiative to build a network of railways, ports and bridges across 70 countries.

The $6 billion high-speed railway is OBOR’s flagship project in Indonesia.

Hydroelectric project

In North Sumatra, the construction of the hydroelectric power plant has been suspended because of the absence of Chinese workers and it could miss its 2022 completion target date, said Emmy Hafild, a senior adviser at PT North Sumatra Hydro Energy (NSHE).

China’s ZheFu Holding Group owns a majority stake in NSHE, which is building the 510-megawatt hydropower dam in the Batang Toru rainforest. More than 120 of the 1,200 employees constructing the plant are Chinese nationals, Emmy told local media earlier this week.

“We don’t know how long it will stop, because it depends on the lifting of the ban on Chinese entering the country,” Emmy told Kompas.com.

Environmental groups and scientists have called on the government to scrap the project, saying the plant would divide the habitat of about 800 Tapanuli orangutan and increase the risk of their extinction.

The Batang Toru Ecosystem is the only known home to the Tapanuli orangutan, which was discovered in 1939. It has been identified as a distinct species, and recently was listed as critically endangered by the International Union for Conservation of Nature.

The company has said the project would not threaten protected animals, including the orangutan.

Meanwhile, 3,000 Chinese employees at an industrial complex in Central Sulawesi province who went into a quarantine last month amid fears of the coronavirus outbreak have since been released.

Production at the Chinese-owned company, PT Indonesia Morowali Industrial Park, which employs 28,000 Indonesians, continued during the quarantine carried out by the company.

“We are grateful. … The 3,000 workers from China are declared free from the coronavirus. No one is infected,” company spokesman Dedy Kurniawan told BenarNews.

Reny A. Lamadjido, chief of the Central Sulawesi Health Office, confirmed the result.

Slower growth forecast

The project disruptions and other trade issues linked to the COVID-19 outbreak prompted Bank Indonesia, the country’s central bank, to cut the 2020 growth forecast for Indonesia, expected to be 5.1 percent to 5.5 percent, to 5.0 percent to 5.4 percent.

Bank Gov. Perry Warjiyo said the revised estimate was in line with the uncertain outlook of the global economy after the epidemic.

In addition, the Ministry of Tourism said Indonesia could lose $4 billion as a result of flight bans to and from China. About 2 million Chinese visit Indonesia annually.

China’s ambassador to the Association of Southeast Asian Nations (ASEAN) said he expected the negative impact on the economy would be temporary and short-term.

“We are hopeful that with the decisive measures taken by the Chinese government, the epidemic will be controlled and cleared up and production by manufacturers will recover,” Ambassador Deng Xijun told reporters in Jakarta.

“So we hope that people-to-people relations, normal trade and investment will be resumed as early as possible.”

Tia Asmara in Jakarta contributed to this report.

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