The Indonesian House of Representatives (DPR) have approved a grant of Rp. 297 billion (US$25.2 million) for the PT Bali Tourism Development Corporation (BTDC) in connection with their ongoing joint venture in Lombok with the Timur Tengah Emaar Properties LLC.
As reported by Bisnis.com, the value of the DPR's grant represents the variance between the fair market value and the book value of the 1,175 hectare parcel of land held by PT BDTC in the Regency of Lombok Tengah. The land represents the 15% participation of PT BTDC in its joint venture with Emaar Properties.
The land parcel was once owned by the Lombok Tourism Development Corporation (LTDC) and held under receivership by the PT Perusahaan Pegelola Aset (PPA). Indonesia's Minister of Finance, Sri Mulyani, stated that the fair market value of the land is Rp. 557.6 billion (US$47.25 million) while the asset value acceptable to the investor is the book value of Rp. 260 billion (US$22 million).
According to the Finance Minister speaking before Commission XI of the DPR: "The variance of Rp. 297.6 billion is being called a 'grant.' This is necessary because any amount in excess of Rp. 100 billion can only be expended with the approval of the DPR (House of Representatives)."
Sri Mulyani told the press that the provision of the grant as an incentive to cover the value variance forms a part of the government's policy to attract foreign investors to Nusa Tenggara Barat. "The grant is an incentive given by the government in the form of a discount on the value of the land," explained Sri Mulyani, adding that she hoped the Emaar Properties project would bring other investment linkages which would allow the Lombok project to go ahead.
PT BDTC is the government-owned company that operates the Nusa Dua Complex in South Bali.
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