Infrastructure Spending Acceleration

February 1, 2016, Bisnis Indonesia, 19 January, 2016, Page 1, Section: Front Page News

JAKARTA – President Joko Widodo has asked contractors and budget managers to undertake contracts as well as possible without messing around, both in terms of and quality.

The President also encourages the contract signing of government projects to be done early in the year, in order to boost economic growth as early as possible. In addition, infrastructure development on a massive scale will also improve the competitiveness of the nation, especially in the era of the Asean Economic Community.

“If expenditure can be made early on, things can be arranged, the management will be easy, but the important thing is the money could be circulating in the community as soon as possible, so that there is economic growth,” he said while delivering his welcome address during the Contract Signing of Strategic Activities of the Ministry of Transportation, on Monday (18 January).

On that occasion, the President asked the ranks of the Ministry of Transportation to check every job on the field on a regular basis in order to finish on time and maintain its quality. “I ask the Minister and the Directors General to be ‘street smart’; not just seeing things from above the table because there are distortions and anomalies on the field,” he said.

The President also emphasised that he would not attend the groundbreaking stage because an infrastructure project is not yet present at the groundbreaking stage. The President will make visits to inspect the projects when they have recorded work progresses, such as the Trans Sumatera toll road project.

“Do not expect me to come to the groundbreaking ceremony. I definitely will come four or five times [to inspect ongoing projects]. I can assure that; there should not be anyone messing around with the so-called quality,” said the President.

Jokowi added that, if a region is ready, the infrastructure work contracts should be given to local contractors. However, if it has to be national contractors who do the works, the subcontractors must be from the region. “This is meant to pre-empt the money from returning back to Jakarta,” he said.

Transportation Minister, Ignasius Jonan, said that Ministry of Transportation (Kemenhub) has prepared a number of strategies to speed up absorption of the budget. Last year, the Ministry of Transportation’s capital expenditure absorption reached 78 percent of the ceiling amount, up from 75 percent in the previous year.

Until early January 2016, Kemenhub has signed 12 strategic work package contracts worth Rp 2.071 trillion, from a total of 273 activity packages worth Rp 14.242 trillion, or 34.15 percent of the total. The target is for the contracts signed in the first quarter of this year to reach 70 percent of the total, or those that have been auctioned should at least account for 80 percent of the total.

Minister of PUPR, Basoeki Hadimoeljono, also expressed his readiness to accelerate infrastructure development. His ministry has carried out early auction for as many as 5,344 infrastructure project packages valued at Rp 42.74 trillion since August, in order to achieve the target of six percent budget absorption in January.

“We expect the budget absorption as of January could reach five percent to six percent; usually all this time that percentage amount is reached in May or June. Last year, in January we only absorbed 0.2 percent,” he said.

On the issue of bribery cases that have plagued the infrastructure projects at the Ministry of PUPR, Secretary General of the Ministry of PUPR, Taufik Widjoyono, acknowledged that the tender process of infrastructure projects is vulnerable to corruption. However, the government will continue to improve the situation by tightening supervision and increase the number of electronic auctions.

Meanwhile, President Jokowi said that the cost of logistics in Indonesia is today 2.5 – three times greater than the cost of logistics in other Southeast Asian countries. Therefore, efficiency in all sectors must be implemented. To that end, the construction of pioneer airports, pioneer ports, and railway lines should be prioritised.

That way, Jokowi stressed, the cost burden of logistics activities this year can be lowered, so that the benefits can be felt by the public along with price declines of essential goods, including the prices of strategic goods, such as fuel oil (BBM).

“In Java, gasoline is purchased at a price of around Rp 7,000, while in Wamena, Papua, it can reach Rp 60,000, and, hence, do we want to continue this? A solution must be found with inter-agency coordination and the support of local government offices,” said the President.  (Yudi Supriyanto/Akhirul Anwar/Gloria F.K. Lawi)

Spending for Growth
When other sources of growth have slowed, the role of government expenditure is greatly expected to boost economic expansion. More than that, if the adopted strategy is right, government spending also will contribute to economic growth.

Accelerated Expenditure in Kemenhub & Ministry of PUPR (Rp trillion)

Total work packages in 2016 Auctioned since August 2015 Auction results already announced
Kemenhub 42.57 33.87 14.43
Ministry of PUPR 73.41 42.74 9.4

Actual Expenditure of Ministry of Transportation in 2015 (%)
Personnel Expenditure: 99.48
Goods Expenditure: 93.1
Capital Expenditure: 77.09

APBN 2016 Projects in Kemenhub whose Contracts have been Signed

No. Contract Contractor
1 Procurement of Road Devices in Mamuju, West Sulawesi PT Buana Energy Prima
2 Road Transport Operational Subsidy in Lampung Province Perum DAMRI Lampung
3 Subsidy on Pioneer Sea Transport/ Five Service Lines PT Pelni (Persero)
4 Subsidy on Livestock Transport in Kupang, East Nusa Tenggara (NTT) PT Pelni (Persero)
5 Sea Transport Subsidy within the Marine Highway Framework PT Pelni (Persero)
6 Repowering KN. Merak in Bitung, North Sulawesi PT Putindotrada Wisesa
7 Works on the Runway of Domine Eduard Osok Airport, Sorong PT AKAM
8 Terminal Building Expansion of Raden Inten Airport in Lampung PT PP (Persero) Tbk
9 Works on the Runway of Syukuran Aminuddin PT Pelita Shakti
10 Construction of Railroads in Km 236,000 – 237,000 in Dumai, North Sulawesi  PT Tiga Putra Mandiri Jaya
11 Maintenance and Operation of Railway Infrastructure in Sumatera – Java PT KAI (Persero)
12 Construction of ATKP Class Building in Makassar, South Sulawesi  PT Boriandy Putra

Source: Kemenhub per 4 January 2016

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