JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo has set an ambitious target to bring infrastructure development as the backbone of the domestic economy. Yet, the completion of several Indonesia high-level infrastructure projects is still far from targeted completion.

As of the end of November 2017, the government’s achievements in National Strategic Project infrastructure development has only counted 4 projects, while 147 more are still under construction, 9 in the transaction stage, and 87 in the preparation phase.

President Joko Widodo, popularly known as Jokowi, said it was important to always directly inspect the progress of infrastructure projects. ‘I wanted to make sure all the planned government programs were properly implemented, control the running of national strategic projects, inspect the problems and find solutions’ he said last week.

He pointed out that infrastructure development is one of the keys to improve economic growth, as well as to achieve economic equity, both regionally and nationally. Therefore, all stakeholders need to improve coordination and identify debottlenecking measures.

Earlier, the government set 37 Priority Projects with a total value of Rp 2,344 trillion (US$172.6 billion). They are monitored and supported directly by the Priority Infrastructure Provision Acceleration Committee (KPPIP).

“For Priority Projects, 17 have entered construction phase, 9 are in the transaction process, and 11 are still in the preparation stage,” explained Wahyu, who also served as Chairman of KPPIP Implementation Team.

Priority Project investment value amounts to Rp 462 trillion (US$34 billion) for 17 already under construction. Meanwhile, 20 projects that are still in the preparation and transaction stage have an investment value of Rp 1,957 trillion (US$144 billion).

The Balikpapan-Samarinda Toll Road Project, Jakarta North-South Corridor MRT, Palapa Ring Broadband, Batang Power Plant and Tangguh LNG Train 3 are some examples of Priority Projects that have reached the construction stage.

As for the 35,000 MW power plant program, he reported that 3 per cent (948 MW) has been in operation, 42 per cent (15,126 MW) has entered a construction phase, 38 per cent (13,673 MW) has signed a Power Purchase Agreement, 11 per cent (3,763 MW) is in procurement and 6 per cent (2,328 MW) in the planning phase.

The government has launched several reforms to encourage the acceleration of national strategic projects, ranging from fiscal reform to institutional reform and policy reform.

In terms of fiscal reform, the government has prepared Project Development Facility (PDF) facilities for the project preparation stage, Viability Gap Fund (VGF) and Availability Payment (AP) for the auction process phase, as well as revolving land for construction. This is also intended to support the feasibility of infrastructure projects under the scheme of Cooperation between Government and Business Entities (KPBU).

Meanwhile, in the framework of institutional reform, the government has established the State Asset Management Institute (LMAN). The LMAN Public Service Agency (BLU) has the task of providing the necessary budget for land acquisition for infrastructure projects included in the PSN list.

In addition, the government has also established PT Sarana Multi Infrastruktur. Its task is to support the government’s infrastructure agenda through partnerships with private and/or multilateral financial institutions in the KPBU project. In current practice, PT SMI becomes a partner of the Ministry of Finance in the implementation of a Project Development Facility.

Meanwhile, as a form of policy reform, the government has issued Economic Policy Packages. Out of a total of 16 packages, 10 are specifically designed to encourage the provision of infrastructure.

Note that National Medium-Term Development Plan 2015-2019 is scheduled to reduce logistic costs from 23.5 per cent to 19 per cent. The will be pursued through the construction of 2,650 km of roads and 3,258 km of railway lines, the development of 24 ports and 15 new airports and energy security through the supply of 35 GW of electricity, the construction of new refineries, and the provision of broadband services throughout Indonesia.

Written by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com

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