The Jakarta Post
The Transportation Ministry is struggling to lure the private sector into investing in and helping meet the targets of many transportation infrastructure projects that are crucial for growth in the country, which is dealing with a tight budget.
The ministry, which had its Rp 48.5 trillion original budget cut by Rp 8.4 trillion in total this year, is among the crucial agencies in President Joko “Jokowi” Widodo competitiveness boost as it is responsible for the construction of airports, seaports and railways, as well as the procurement of buses and ships.
Indonesia needs Rp 1.28 quadrillion to develop its transportation infrastructure, of which only 30 percent can come from the government, leaving Rp 791 trillion worth of projects to be offered to the private sector, according to the 2015-2019 National Mid-Term Development Plan (RPJMN).
“With the help of investors, our stretched funds can also be used to help develop areas that are generally hard to reach,” Transportation Minister Budi Karya Sumadi told journalists on Monday, citing as examples areas such as Sibloga in North Sumatra and Ilaga in Papua.
There is a plan to privatize the construction of 22 ports and six airports, since with the help of private or state companies that would cover the ministry’s financial gap in handling these projects.
Ports, airports and railway development will boost Indonesia’s connectivity as the sprawling archipelago with thousands of islands strives to improve its competitiveness against many other nations in the world to encourage trade of local products, which in turn will stoke growth in Southeast Asia’s largest economy.
However, as transportation infrastructure projects such as the aforementioned take a long time to provide returns on investment, the private sector will need regulatory certainty to be lured into investing, one thing that is still lacking at present, said Chris Kanter, advisory board member of the Indonesian Chamber of Commerce and Industry (Kadin).
“It is the regulatory problems that typically make it hard for the private sector to direct the money the way the government wants it to go,” Chris added.
In seeking major funding, the government has turned to Asian powerhouses Japan and China for help with transportation projects like the Jakarta-Bandung high-speed railway and the new Patimban Port in West Java that is expected to host the shipments of Japanese firms operating in the country.
The ministry is responsible for a number of national strategic projects that include a high-speed railway between Jakarta and Surabaya, segments of the trans-Sumatra railway and the light rail transit (LRT) projects in Jakarta and Palembang.
“The point is that we are giving foreign private companies the opportunity to help us with this project because of our funding problems through a process involving governance,” Budi said, emphasizing this as an example of the kind of assistance needed to meet the nation’s transportation targets.
The sluggish “maritime highway” project and the numerous new ports that the government wishes to build, such as the Kuala Tanjung in Sumatra and the Bitung in Sulawesi, are among 11 ports in the maritime infrastructure master plan that are supposed to be finished by 2019.
Major projects slated to finish in four years include the construction of new airports in Yogyakarta, Semarang and Karawang, with the ongoing revitalization of Jakarta’s crowded Soekarno-Hatta International Airport also part of the plan.