Minister for National Development Planning Bambang Brodjonegoro sees Indonesia' economic growth rate will stagnate at the level of 5.3 percent in this year over the investment, exports and import development until June - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesian government increased infrastructure investment needs worth US$429.7 billion during 2020-2024, rise up 20 percent compared to $359.2 billion in 2015-2019, national development planning minister Bambang Brodjonegoro said in a written statement on Wednesday (07/3).

Brodjonegoro revealed the increase in investment was aimed at increasing infrastructure shares to gross domestic product (GDP) from 43 percent in 2017 to 50 percent by 2024.

The minister added, in order to realize these needs, the government encouraged the role of the private sector in infrastructure development through the government and business entity cooperation scheme as well as the non-government budget investment financing.

The meeting that discussed Indonesia’s development, especially the macroeconomic infrastructure investment targets, as well as infrastructure funding strategies through alternative schemes, was one of the agendas in the series of national development planning ministry’ work visits to England and France on July 1-4 2019 in the Indonesia Infrastructure Investment Forum (IIIF) 2019.

Currently, infrastructure funding through the scheme of government and private cooperation has reached 83 projects with a total investment of $40 billion. While for the non-government budget investment financing scheme, 30 projects have been created with a total value of $50 billion.

Brodjonegoro stated that later, development in Indonesia would be directed to use the two alternative schemes. The goal is that the state budget can be allocated to sectors that have a direct impact on the community in the short term.

Meanwhile, one of the provinces that participated in offering infrastructure financing was East Kalimantan. The governor stated at the IIIF event in London, England, the province offered a number of projects.

First is the special economic zone of Maloy Batuta Trans Kalimantan; Samarinda – Bontang toll road projects, development of superior destinations on Maratua Island, investment in the Berau cement plant and second segments of Coastal Road Balikpapan project.

In addition, the local government also said that there would still be the development of two oil refinery projects in Balikpapan City and Bontang. The development of an oil refinery in Balikpapan is currently under construction with an investment of $ 6.5 billion.

The completion target is estimated to be in 2023. The development of the Bontang oil refinery is just entering the planning stage with an estimated investment of $ 14 billion with a target of completion in 2027.

Meanwhile, nationally there are four projects that received attention from the government, namely $40,6 billion for water resources projects, $40,3 billion trillion for roads and bridges, $9 billion for residential infrastructure, and $49,8 billion for housing projects. The government budget is only able to meet 30 percent of the total budget required for infrastructure provision.

“So the government needs business entity cooperation and the non-government budget investment financing to meet 70 percent of the targets,” he said.

Previously, the government received fresh funding from the Asian Development Bank (ADB) worth $2.6 billion to support strategic infrastructure projects during 2019. The biggest projects targeted by ADB was the construction of two power plants, one of which was $600 million to build a power plant in Papua.

The bank has also prepared a credit facility worth $100 million to be channeled to PT Indonesia Infrastructure Finance that will be used to improve Palu, Sulawesi’ infrastructure projects such as roads, water sanitation, and irrigation facilities.

Besides, Indonesia also submitted an emergency assistance loan with the Emergency Assistance Loan for Rehabilitation and Reconstruction scheme to the ADB worth $297.91 million for the post-earthquake and tsunami rehabilitation and reconstruction project in Central Sulawesi.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com