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Trump's first Asian resort project in Indonesia hits a snag

Local conglomerate MNC starts construction without US partner

MNC Group Executive Chairman Hary Tanoesoedibjo, second from right, and Tourism Minister Sandiaga Uno kick off construction of a concert venue at MNC Lido City. (Photo by Erwida Maulia)

BOGOR, Indonesia -- Plans to build Trump-branded country clubs, luxury resorts and residences as part of a 35 trillion rupiah ($2.4 billion) entertainment complex in Indonesia appear to have stalled, adding to the problems facing former U.S. President Donald Trump's business empire.

The sprawling entertainment and lifestyle resort, whose construction is being led by Indonesian media conglomerate MNC Group, is finally gathering speed following years of delays. But the Trump Organization, which had been linked with the development since 2015, has been scrubbed from its most recent promotional materials.

MNC Land, a property subsidiary of MNC Group, kicked off construction in recent weeks on a movie production site and a concert venue within the Lido City development in West Java about 60 km south of Jakarta. But at a presentation by MNC Land on Wednesday there was no mention of the Trump Organization's involvement.

Asked about progress of the Trump-branded parts of the project, the group's executive chairman, Hary Tanoesoedibjo, said they "won't likely pick up yet for the time being." He did not elaborate.

A half-finished golf course in Lido, previously touted as the Trump International Golf Club, was not marketed under the Trump brand at the event on Wednesday. MNC declined to explain why. The Trump Organization has not responded to Nikkei Asia's request for comment.

Construction is underway on a golf course at MNC Lido City. (Photo by Erwida Maulia)

MNC Land signed a management agreement with the Trump Organization in 2015 to build what they called "the first integrated Trump Resort and Residencies in Asia" in Lido and on the resort island of Bali. They were to have included Trump-branded country clubs, resorts and residences.

A disclaimer at the marketing gallery for Trump Residences in MNC's headquarters in Jakarta said neither of the planned Lido or Bali residences is "owned, developed or sold" by the Trump Organization. Rather, the MNC Group had planned to use the Trump name and brand under license, a common arrangement between Trump and developers.

A so-called "soft launch" of both the Lido and Bali projects in Jakarta in August 2019 was attended by Trump's son Donald Trump Jr., who is also the executive vice president of the Trump Organization. Trump Jr. brought his family with him to the event.

The uncertainty over Trump's involvement in the Indonesia projects comes at a difficult time for the former president's businesses. Disclosure forms filed as he left the White House on Jan. 20 showed that Trump's hotels, golf courses and other properties had seen total revenues fall sharply in 2020 as COVID-19 hurt the tourism and hospitality sectors.

For MNC, however, there have been signs of progress on the Lido development in recent weeks after lengthy delays. The government decided on Feb. 11 to grant MNC Lido City "special economic zone" status, which grants various tax incentives and waives some requirements for companies and investors involved in the project. Before the decision was made, construction was mostly confined to supporting infrastructure, including roads, water and electricity lines, on the largely undeveloped land.

MNC Land's share price rose 95% to 199 rupiah at one point following the government's announcement, although it has since fallen back 37% to reach 125 rupiah on Wednesday. The Indonesia Stock Exchange was closed Thursday.

The other Trump project, located on Bali, has also hit a snag. MNC Land Senior Vice President Johannes Spies did not specifically discuss the Trump portion, but said that the coronavirus pandemic is forcing the company to hit the brakes on the MNC Bali Resort project.

"The market in Bali is quite dim. At the moment, international tourists cannot go there. For the project in [Bali], we're just waiting a little bit to see what's happening with the market," Spies told Nikkei Asia on the sidelines of the groundbreaking ceremony for the Lido Music & Arts Center on Wednesday. But he added that work to clear the land near Bali's famous Tanah Lot temple is continuing in anticipation of the start of construction.

Both the Bali and Lido projects were still listed on the Trump Organization's official website as of Wednesday.

The MNC Lido City development plan: Areas marked B, C and D are the Trump-branded parts of the project. (Photo by Erwida Maulia)

The MNC Bali Resort is to span 107 hectares, while Lido City will cover 3,000 hectares once completed, a process that might take 20 years.

Tanoesoedibjo, however, said the group will now focus on just the first phase of Lido City development, which will cover 463 hectares and include a theme park, a MotoGP circuit, a retail center, three- to five-star hotels and other facilities. He said the Phase 1 development is targeted for completion in five years and estimated to cost a total of 35 trillion rupiah.

"This area is indeed under the MNC Group, but [other] investors will be able to invest here. We will invite investors from overseas," Tanoesoedibjo said. "The concept is sport tourism, wellness tourism, hospitality. We will build a data center, too."

MNC Group's investment holding company, MNC Investama has won Singapore court approval for its notes-to-shares conversion plan as part of a $231 million debt restructuring in February. MNC Investama said in a news release that the arrangement will lower its stand-alone debt by 65% to a maximum of $81 million.

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