In the 2017 State Budget the Indonesian government allocated IDR 387.3 trillion (approx. USD $29.8 billion) for infrastructure development, up from IDR 317.1 trillion in the 2016 budget. Since Joko Widodo became Indonesian President in 2014 the infrastructure budget of Indonesia has been raised rapidly, showing that Widodo kept his pledge and is serious about constructing roads, bridges, airports, harbors, and railways in an effort to enhance connectivity in Southeast Asia’s largest economy, reduce logistics costs and enforce the multiplier effect.
Indonesian Finance Minister Sri Mulyani Indrawati informed that the total of IDR 387.3 trillion that has been allocated for infrastructure spending in the government’s 2017 State Budget is further divided in IDR 377.8 trillion for the nation’s hard infrastructure, IDR 5.5 trillion for social infrastructure, and IDR 4.1 trillion for supportive infrastructure. The government will disburse these funds through several ministries and government agencies. The largest slice of the cake – IDR 98.8 trillion – goes to the Public Works & Housing Ministry.
Moreover, of the funds that are transferred from the central government to the regional governments, at least 25 percent needs to be spent by the local government on infrastructure development. This means that the regional governments will play a crucial role in the process of infrastructure development. This larger role does include some risks as human resources (including government officials) at the local level are generally low quality resources. Besides, coordination and cooperation between the central and local governments has not been optimal.
The 2017 infrastructure budget also includes IDR 9.7 trillion for the government’s Housing Loan Liquidity Facility (Fasilitas Likuiditas Pembiayaan Perumahan, FLPP), a government-subsidized mortgage program for those low-income first-time house buyers, as well as IDR 7.2 trillion worth of capital injections in state-owned enterprises.
Infrastructure Budget Indonesian Government: