Indonesia is boosting its infrastructure development in an effort to provide economic benefits to its people and increase the country’s competitive edge in the face of the ASEAN Economic Community (AEC).
“For this purpose, the government has selected 30 infrastructure projects worth some IDR 851 trillion as priority projects to be developed until the end of the current government in 2019,” Luky Eko Wuryanto from the Chief Economic Ministers office said on Wednesday.
The 30 projects were selected by the government through the Priority Infrastructure Development Acceleration Committee (KPPIP)
They will receive various forms of guarantees from the government, such as political, license and financial guarantees.
The guarantees for the 30 projects for the 2016 to 2019 period will be regulated under the Presidential Decree No. 3 / 2016 on National Strategic Project Acceleration according to Luky, who is the deputy for infrastructure and Regional Development Acceleration at the office of the Chief Economic Minister.
Luky revealed this while speaking to the press during the Infrastructure Outlook 2016 event on Wednesday.
“We had initially chosen 225 strategic projects and one strategic program, but we finally decided on 30 priority projects. Some of the projects have been in progress, such as the Manado-Bitung project, which has entered a period of deciding its tender winner,” said Luky.
He added that following the inclusion of infrastructure projects as priority projects, executives and companies carrying out the projects will get facilities and guarantees.
The facilities and guarantees will be regulated under the Presidential Instruction (Inpres) No. 1/2016 and Presidential Decree (Perpres) No. 3/2016. Perpres No. 3 has just been signed by President Joko Widodo.
The facilities include acceleration of licensing process and land clearance for executor companies. The guarantees consist of guarantee options, such as political guarantees, such as government policy consistency and license facility guarantee or financial guarantee from the state budget, which will be provided selectively by the Finance Ministry.
According to Luky, the decision to designate 30 priority projects will serve as a breakthrough in the acceleration of project realization. So far, infrastructure projects are often constrained by licensing and land clearance problems, which raise doubts among investiors.
“Our target in providing these facilities is to ensure that by 2019, the projects will be carried out and realized,” he noted.
According to National Development Planning Minister and Head of the National Development Planning Board (Bappenas), Sofyan Djalil, the 30 priority projects constitute infrastructure projects, which will have multiple economic effects for the people.
The 30 priority projects cover several development schemes, such as pure government projects, cooperation projects with business entitles (PKUB), private-government partnership projects (KPS) and projects that have been especially assigned to state-owned companies (BUMN)
According to Sofyan, the participation of the PKBU and the KPS in the implementation of the projects will be helpful in the development of infrastructure as a whole in Indonesia.
This is because besides the 30 priority projects, there are still other pure state budget funded projects whose development will be accelerated by the government, such as the development of 48 reservoirs, Sofyan said.
“The funds needed to develop the infrastructure are big. State budget funds will be used for projects located outside Java Island. If the private investors have the intention of developing infrastructure, we will support it,” he said.
The Director General for Risk and Financing Management at the Ministry of Finance, Robert Pakpahan said the KPPIP will map the financing schemes for the 30 priority projects.
He will also study the possibility of increasing the viability gap funding (VGF) allocation for priority projects. During the 2016 State Budget, VGF was only given to two projects with a total value of Rp 1,1 trillion.
“We will provide the facility for the 30 priority projects. We will see whether they need to VGF facility, political and financial guarantees. We will support them in the economic aspects so that investors are attracted,” Robert said.
The total value of the 30 priority projects is estimated to exceed Rp851 trillion.
The 30 priority infrastructure projects include the toll road sections of Balikpapan-Samarinda, Manado-Bitung, Serang-Panimbang and Trans-Sumatera (eight sections: Medan- Binjai, Palembang-Indralaya, Bakauheni-Terbanggi Besar, Pekanbaru-Dumai, Terbanggi Besar-Pematang Panggang, Pematang Panggang-Kayu Agung, Palembang-Tanjung Api-Api, and Kisaran-Tebing Tinggi).
Also included are the Soekarno-Hatta Ekspres train (SHIA), the Mass Rapid Transit (MRT) in the South-North Jakarta lane, the Makassar-Parepare railway project, the international hub port of Kuala Tanjung and the international hub port of Bitung.
Others are the Karangkates IV & V (2×50 megawatt) hydro power plant (PLTA), the Kesamben PLTA (37 MW), the Lodoyo PLTA (10 MW), the Cikarang-Bekasi-Laut (CBL) Inland Waterways.
An then, the Light Rail Transit (LRT) in South Sumatra, the Jakarta, Bogor, Depok and Bekasi the integrated Light Rail Transit (LRT), the National Capital Integrated Coastal Development (NCICD) phase A, the Jakarta Garbage Management System and the West Semarang Garbage Management System.
Some other projects are the Sumatra 500 kilowatt (kV) High Voltage Direct Current (HVDC) Transmission, the 500 kV Central-West Java Transmission Line, the Central Java Power Plant (PLTU) Batang, the Indramayu PLTU, the South Sumatra Mulut Tambang PLTU 8, 9, 10.
Also the Bontang Refinery pant, the Refinery Development Master Plan (RDMP) projects in Balikpapan, Cilacap, Balongan, Dumai and Plaju, the port in West Java’s northern area, the Tuban refinery plant, the Palapa Ring Broadband project and the East Kalimatan railway project.