Emaar Withdraws From US$600 Million Lombok Project

(3/14/2009)

The Jakarta Globe reports that a massive US$600 Million mega-resort planned for South Lombok is now in jeopardy.

The project of shopping, recreation areas, golf courses and luxurious hotels on a 1,200 hectare site is a "pet project" of Indonesia's Vice President, Jusuf Kalla, who personally invited Dubai's state-owned Emaar Properties to spearhead the investment.

Citing bureaucratic delays and an inability by the government to fulfill its obligations, Emaar announced that thy have closed their Jakarta office and are abandoning it plans for investing in Indonesia. Elly Savitri, a representative of Emaar said. "there have been too many delays on the realization of the project and the company just could not wait any more."

Jakarta Globe coverage suggests that greed on the part of government officials seeking hand-outs may have also played a role in a decision to cancel the project. Meanwhile, others suggest that the worsening global financial crisis may have adversely affected the liquidity of Emaar and diminished their keenness to pursue the Lombok investment.

Lombok is almost certain to be sent reeling by Emaar's decision to quit the project, seen as the catalyst for planned new roads and a new international airport in Lombok. The final project was targeted to host 10,000 luxury villas, eight hotels and two 18-hole golf courses.

Emaar told the press that they have already expended US$4.2 million in consultancy fees in connection with the Lombok project.

Jusuf Kalla's plans to woo Middle Eastern investors appears to be in serious strife. The withdrawal of Emaar from the US$600 million Lombok Project follows the recent pull out of the Saudi Arabian Bin Laden Group from a US$4.3 billion agricultural project planned for Papua.

Vice President Kalla has reportedly convened a special meeting of cabinet ministers in a last ditch effort to salvage the prestigious Lombok project.