Toll Road - Photo by Cabinet Secretary

JAKARTA (TheInsiderStories) – The Indonesian Government proposed Rp409 trillion or $30.3 billion for infrastructure spending next year to the legislative. Why should the government allocate such huge spending?

In the 2018 State Budget draft, the budget of infrastructure spending reached 18.56 percent of total spending, up to 5.33 percent from outlook infrastructure spending by the end of this year of Rp388.3 trillion ($28.8 billion).

In broad outline, infrastructure spending is allocated to ministries of Rp161.2 trillion and the regional governments of Rp182.8 trillion. The ministry that get the largest allocation is Minister For Public Works and Human Settlements of Rp104.2 trillion or 25 percent of total spending.

Meanwhile, the regional government get more infrastructure fund than the ministries. The central government set condition that all regional government must allocate at least or 25 percent of general transfer fund for infrastructure so it projected to reached Rp120.9 trillion.

For central government, infrastructure spending will be used for sport facility and infrastructure of Asian Games 2018 from renovation sport venues in Gelora Bung Karno Stadium and Jakabaring Sport City until the two block apartment towers development. Light rail transit (LRT) Jakarta and Palembang as part of Asian Games are also partially funded by State Budget.

Another infrastructures that will built by Minister For Public Works and Human Settlements next year is 23 kilometers new road, 47 new dams, 225 “embung”, 781 kilometers irrigation, 7,062 flats unit, 174,000 house renovation and 6,000 new house development, water treatment for 853,286 household.

Meanwhile, Ministry of Transporation that received Rp44.2 trillion has the plan to purchase 220 bus rapid transit, 4 ferry ports, 17 new ports, 15 new airports, and 639 kilometers railway lines. In this year, Ministry of Transportation is working on renovating Bandara Adi Sumarmo and 296.7 kilometers railway double track along the north of Java.

Ministry of Energy and Mineral Resource that get Rp2.8 trillion of infrastructure fund from State Budget will utilize it to buy 175.782 units of solar lights for people who live in remote area. They also plan to build 1-megawatt solar power and two-units mini-hydro plant.

Not only related directly to the economic interest, the Government also allocate Rp9 trillion of total Rp409 trillion infrastructure for social infrastructures such as education and health. With Rp9 trillion, the Government has a plan to build 45 of junior high school and elementary school, 2,000 new classes, and 8,623 of classes rehabilitation.

Overall, the infrastructure spending is only covered 40 percent of Rp1,000 trillion ($74 billion) infrastructure investment yearly. The government will push the private investors to engage in infrastructure business with various schemes, including Rp3 trillion guarantee budget in form of viability gap fund (VGF) to attract the private sectors to fill 60 percent gap ($44 billion) of investment need. (RF)


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