Infrastructure projects worth Rp 28t to go up for early bidding

September 1, 2016, Jakarta Post

The Public Works and Public Housing Ministry, which is responsible for many public infrastructure projects, aims to disburse a quarter of its 2017 budget by January, even after this year’s early bidding program failed to significantly accelerate disbursement.

The early bidding program for 2017 state budget projects, which will offer the ministry’s projects to prospective contractors before the fiscal year, is set to commence in October and run until December. The program is expected to see Rp 28 trillion (US$2.1 billion) for more than 4,000 projects offered to potential contractors.

The projects include the construction of roads, bridges, dams and irrigation facilities, among others.

Public Works and Public Housing Ministry secretary-general Taufik Widjoyono said the ministry, through the early bidding program, aimed to disburse 24 percent to 25 percent of next year’s budget in January, higher than the estimated 6 percent disbursed in the same month this year.

“Last year, we only secured projects for Rp 6 trillion in the early bidding program. Now the number has increased, so disbursement can be even faster,” he said recently, adding that the early bidding program would include a total of Rp 26 trillion for multi-year contracts.

To date, the ministry still has not reached its aim to spread out budget disbursement more evenly throughout the year, although it applied the early bidding mechanism last year, as the government is pushing efforts to tackle infrastructure bottlenecks that have hindered the nation’s economy from growing at a rate of 7 percent per year, as targeted by President Joko “Jokowi” Widodo.

As of Wednesday, the ministry has merely disbursed 46 percent of the Rp 90.2 trillion in funds earmarked in the revised state budget for this year, slightly lower than the targeted disbursement
of 48 percent.

The government’s first round of budget cuts and administrative issues — including the establishment of new working units in the Cipta Karya directorate general, which oversees the construction of public housing — were cited as the main problems hindering the speedy disbursement of the ministry’s funds.

The ministry suffered from two round of budget cuts this year due to a multi-billion shortfall in tax revenue. The first round slashed its budget by Rp 8.4 trillion and the second one by another Rp 6.9 trillion just recently, forcing significant changes to multi-year spending plans.

The ministry, one of the main institutions for infrastructure development in President Joko “Jokowi” Widodo’s administration, is responsible for strategic projects, such as the construction of 1,000 kilometers of new toll roads and 49 dams by 2019.

Taufik said that despite failing to live up to budget disbursement expectations, the ministry’s spending was still better than last year, higher by 15 percent year-on-year as of August.

Public Works and Public Housing Minister Basuki Hadimuljono said the ministry was upbeat about reaching its target of 93 percent budget disbursement by the end of the year. He also said the ministry, which recorded one of the highest disbursement rates among ministries last year, should be better prepared to conduct the early bidding process for next year.

“I hope that by January next year, around 40 percent to 50 percent of the total project contracts have been signed,” he said.

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