Govt to roll out Rp 380t infrastructure projects

JAKARTA. The government will offer up to 30 sizeable infrastructure projects totaling Rp 380 trillion (US$32.74 billion) to investors starting next year, under a public-private partnership (PPP) scheme.

Coordinating Economic Minister Hatta Rajasa said on Wednesday the government would prioritize projects that brought multiplier effects for the economy.

Among them are projects on dams, airports, railways, ports, toll roads and power generators.

“The government will issue a new rule to prepare for the priority projects, notably under the PPP model, aiming to make them more transparent and accountable by adopting international best practice,” Hatta said on the sidelines of the Indonesia International Infrastructure Conference and Exhibition at the Jakarta Convention Center.

For each of the projects, preparations would include thorough feasibility studies carried out before the offering, he added.

In addition, the government would provide necessary incentives, including financial leverage through a viability gap fund, on a case-by-case basis to attract investors, according to Hatta.

A viability gap fund allows the government to allocate state funds to cover up to 40 percent of the total value of an infrastructure project using the PPP scheme.

Infrastructure remains one of the major bottlenecks in Southeast Asia’s biggest economy.

With limited funds to improve infrastructure, the government has encouraged the private sector to be more involved in PPP projects.

The projects the government has selected include the Medan-Binjai toll road in North Sumatra, the
Balikpapan-Samarinda toll road in East Kalimantan, the Makassar-Pare-Pare railway system in South Sulawesi and the Karama hydropower plant in West Sulawesi.

They are featured in Indonesia’s Masterplan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI), which is aimed at boosting its gross domestic product (GDP) to around $4.5 trillion by 2025, enabling it to be one of the world’s top 10 economies.

Official statistics say the total value of realized MP3EI projects has reached Rp 737.9 trillion since 2011, when the MP3EI was launched. Around 45.4 percent of that figure, or Rp 355 trillion, was derived from investments in infrastructure projects.

The government claims progress in infrastructure development has helped improve Indonesia’s competitiveness ranking by 12 places to 38th in the Global Competitiveness Index (GCI) report published by the World Economic Forum in September.

Luky Eko Wuryanto, deputy for infrastructure and regional planning at the Office of the Coordinating Economic Minister, said each of the projects offered would be worth at least Rp 500 billion.

He expected at least five out of the 30 projects would be ready to be offered by mid-next year.

Feasibility studies for the projects would be carried out by early next year.

“It will be good if we can offer around five projects to investors [in mid-2014],” Luky said. (Linda Yulisman/The Jakarta Post)