Infrastructure Acceleration for 7% Growth in Economy

Photo by President Office

JAKARTA (TheInsiderStories) – President Joko Widodo is indeed focusing on developing infrastructure in all sectors, the main capital for achieving the economic growth of minimum 7 percent, then Indonesia could reach the so-called established country status by 2025, leaving current status as the emerging country.

Indonesia’s economy grew by 5.18 percent in the second quarter (Q2) this year, compared to revised 4.88 percent in  2015, but still far from that of targeted 7 percent. World Economic Forum (WEF) in its report about Global Competitiveness Index placed Indonesia at 41 of 140 countries and placed Indonesia at 60 for countries with best infrastructure development and connectivity.
The government sets the economy to grow by 5.4-6.1 percent in 2018. It allocates Rp455 trillion budget (3.1 percent of GDP) for infrastructure development in 2018, higher than Rp387.7 trillion set for this year (2.8 percent of GDP).
The budget for infrastructure development next year is up 17.35 percent compared to this year’s budget. In 2010, budget for infrastructure reached Rp86 trillion or 8.21 percent of GDP, then consistently increased until this year.
The important step in boosting the economic growth, for Widodo, is to develop infrastructure in all sectors so the economic activity would increase significantly. The President in 2016, issued president decree (Perpres) number 3/2016 regarding the acceleration of national strategic projects implementation.
And through the Committee for the Acceleration of Priority Infrastructure Delivery (KPPIP), the Government has chosen 225 projects for infrastructure and one program of electricity as the National Strategic Projects which then focused on 30 projects as the priority.
After being evaluated, some 20 projects valuing of Rp33.5 trillion were excluded from the list by end 2016 as they finished for development while 15 projects were revoked as they failed to comply with the criteria.
Until June 2017, 5 projects (2 percent of total 245 projects) entered final stage of development, 130 projects (53 percent) were under construction, 12 projects (5 percent) were in the transaction process, and 100 projects (40 percent) were prepared for development.
For electricity projects, per April 2017, 743 megawatts (MW) have been in operation, 13,816 MW under construction, 8,210 MW led into the financial close as they have reached agreement for purchasing power, 5,845 MW under procurement, and 7,212 MW under planning.
Being once again evaluated, President Widodo issued Perpres Number 58.2017 regarding the amendment of the previous Perpres, adding 56 strategic projects including 55 new projects and one program (aircraft industry) with estimated investment of Rp1,206 trillion, then total said projects reached 245 projects and 2 programs (electricity & aircraft), with total estimated investment of Rp4,197 trillion.
This investment for national strategic projects are funded by the state budget Rp525 trillion, state-owned enterprises (SoEs) and regional governments Rp1,258 trillion, and private sector Rp2,414 trillion.
By KPPIP, after doing evaluation, then the priority projects amounted 37 projects, with new projects included into the list were such as 2 toll road projects, 2 electricity projects, 2 clean water supply, 4 oil and gas projects, and 1 train project. KPPIP also expanded the development on 2 projects; Trans Sumatera toll project and mine mouth power plant project.
That is right that President made building public facilities and infrastructures, his main mission from the start of his leadership. But despite the best of his intention, only a few projects run without obstacles.
The classic problem in the implementation of said projects is land acquisition. In a move to tackle this problem, the Government issued Perpres Number 56/2017. The aim is to address the social impact of land acquisition processes.
Below is the projects by regions under the revised projects which consist of 15 sector and 2 programs;
1) Sumatera, 61 projects with investment value of Rp638 trillion
2) Kalimantan, 24 projects – Rp564 trillion
3) Java, 93 projects – Rp1,065 trillion
4) Bali-Nusa Tenggara, 15 projects – Rp11 trillion
5) Sulawesi, 27 projects – Rp155 trillion
6) Maluku & Papua, 13 projects – Rp444 trillion
5 sectors with high investments;
a) Energy, 12 projects – Rp1,242 trillion
b) Electrivity, one program – Rp1,035 trillion
c) Roads, 74 projects – Rp684 trillion
d) Train, 23 projects – Rp613 trillion
e) Estate, 30 projects – Rp290 trillion
KPPIP reported that the investment realized during 2016 reached Rp505.88 trillion, funded by State Budget Rp77.96 trillion, SOEs/Regional SOEs Rp88.36 trillion, and private sector Rp339.55 trillion. For 2017, the investment is targeted for Rp385.18 trillion, then increase to Rp569.2 trillion in 2018, Rp626.66 trillion in 2019, and Rp2,109.66 trillion by 2020.
The said investment does not include 16 projects as their investments have been determined yet. They are smelter, housing, infrastructure for special economic zone (SEZ), and roads.
Under evaluation of KPPIP, 25 projects are maintained as the priority projects, while 5 projects will be revoked;
1) High voltage direct current (HVDC)
2) PLTU Mulut Tambang (mine mouth) South Sumatera 9 & 10
3) PLTA Karangkates IV and V (2×50 MW)
4) PLTA Kesamben (37 MW)
5) PLTA Lodoyo (10 MW)
(Written by Linda Silaen, Email: