Few Deals, but Plenty of Ideas for Indonesian Infrastructure
Tito Summa Siahaan
Few deals may have been signed during the Indonesian International Infrastructure Conference and Exhibition 2012 that concluded in Jakarta on Thursday, but many people in attendance offered ideas to overcome the nation’s logistics crisis.
The only tangible progress announced at the event was an agreement between Bandung-based Panghegar Group and China National Machinery for a feasibility study into a mass rapid transit system in the West Java city.
But senior attendees remained upbeat about the value of the annual summit, which aims to stimulate discussion among stakeholders to find solutions for Indonesia’s dilapidated infrastructure.
Hatta Rajasa, the coordinating minister for the economy, admitted the government’s limited capability to finance the nation’s Rp 4,000 trillion ($41.9 billion) MP3EI economic master plan, and called for greater private sector involvement, in form of public-private partnerships.
“The government alone is unable to fulfill this target,” he said. “Although the National Development Planning Agency [Bappenas] has an increased share of the state budget, from Rp 167 trillion in 2012 to Rp 194 trillion in 2013, and there is increased budget allocation from local government, still there is a funding gap.”
Hatta said that in the next five years, Indonesia needed at least $250 billion worth of infrastructure investment in order to sustain economic growth at a rate of at least 6 percent and improve the nation’s resilience against crises.
He said the current administration had made progress in policies to accelerate infrastructure development.
One of those is the release of a presidential decree on land acquisition, implementing a land law approved by lawmakers late last year.
Suryo Bambang Sulistyo, chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said the private sector had committed $135 billion toward investments in infrastructure. He said he believed there was growing interest from local companies to invest in infrastructure by establishing partnership with foreign firms to overcome their limited capabilities.
Armida Alisjahbana, the minister responsible for Bappenas, echoed Suryo’s assessment, saying forming a consortium was the right approach for local private companies seeking to participate in infrastructure projects.
She acknowledged that local private companies had limited capabilities in terms of the finance and technological know-how required for some infrastructure projects.
“This form of consortium has gained ground, like in the construction of a coal-fired power plant in Central Java,” she said.
Armida was referring to a $3.2 billion project being developed by a consortium uniting Japan’s Electric Power Development and Itochu with Indonesian coal miner Adaro Energy.
The three-day conference was held at the Jakarta Convention Center.