TO SPUR ON INFRA STRUCTURE PROJECTS

Pressures on the Government to spur on in­fra-structure kept storming ini. All believed that with better basic infra structure the potential for economic growth would be better. Poor infra structure as handi­cap had been the main obstacle in jacking up economic growth to above 6%.

Now there were signals that the Government would pay more attention to infra-structure develop­ment. The banking sector was known to be ready with their financing as liquidity condition was good. Now it was only a matter of how the Government planned to realize their infra structure development whatever the execution platform.

Good news breezed out that the Government had allocated fund from the APBN State Budget for capital spending and infra structure development amounting to Rp 200 trillion in 2013. With high disci­pline in fiscal management and effort to reduce subsidy for oil the Government, through the Ministry of Finance predicted they were in condition to allocate fund of around Rp 250 trillion to Rp 300 trillion for in­fra-structure building in 2014.

The Government was fully aware that infra structure building was most important in pursuing national economic target growth. The Government also realized that to meet target growth of above 7%, sound infra-structure was needed. According to the Master plan of Indonesia's Economic Development Expansion and Acceleration Plan (MP3EI) financing for Indonesia's economic acceleration plan from 2011 to 2015 needed fund of more than Rp 4,000 trillion, while infra-structure development alone need­ed fund of Rp 1,786 trillion.

The Government should not merely rely on APBN State Budget to provide all the fund needed for infra-structure, so the role of the private sector was also badly needed to speed up infra structure building in Indonesia. So the role of the private sector was needed to speed up infra structure development in Indonesia. In this case the capital market could serve as the right forum to raise fund for infra structure de­velopment through release of promissory notes in the form of shares or bonds.

By early 2013 the capital market had been developing satisfactorily which made Indonesia earn the Investment Grade rating. Today the effort needed was to make the best of Indonesia's magnetic appeal in investment whereby to drum up investors to invest particularly in the infra-structure sector.

There was still one good news that the Government had stipulated 13 out of 37 Public Private Partnership Projects (PPP) was ready for transaction process this year. The projects were most ready ad­ministration wise and in terms of space availability. Over the year the Government had prepared 37 PPP projects to be offered to the private sector.

The project consisted of 12 toll road proj­ects, 11 clean water projects, 4 sanitation projects, 2 railway projects, 3 land transportation projects, 1 airport project and 1 harbor project.

24 PPP projects which could not make trans­action this year had some hindrances to face which were most crucial, among others limited project prep­arations, uncertainty of Government's financing, and the least attention by ministries who failed to under­stand that this project could jack up infra structure growth in Indonesia.

The problem of financing for project initiation and lack of attention by the related ministries was visible in the minimum fund provided for execution of the projects this year. Besides, support from the Ministry of Finance to set some budget for non PPP project was still limited.

Supposedly the Government-private collabo­ration projects (KPS) was more observed and all tech­nical ministries could consider to spur on the projects and execute them well, Last year only three projects were planned but it turned on that there were 18 ten­der projects; which means it was indeed a good re­cord.

The PPP projects which were at construction stage were among others: drinking water project of the Tangerang Regency worth USD 55.89 million. The Nusa Dua Ngurah Rai airport Benoa tol road worth USD 196.10 million, the Solo-Ngawi tol road USD 570.89, the Ngawi-Kertosono tol road worth USD 425.78 million.

Thirteen PPP based projects which were at preparatory transaction stage this year were projects ready for sale for the private sector compared to three previous projects offered for 2012. The PPP projects being offered this year was more ready in terms of feasibility study, with complete quotation documents and ready-for-use land. This PPP project this year was scheduled to be ready by mid 2013 and all was ready for tender.

The projects were among others the South Bali Drinking Water project with investment value of USD 287 million, PLTA Karama USD 78 million, Drink­ing Water Project for Semarang City USD 1.33 billion, Drinking Water Project for the Regency of Lamongan, Restoration of Drinking Water project in Palu, Central Sulawesi USD 30 million.

In addition to that, other projects planned for tender in mid 2013 were revitalization of railway sta­tion and development of pedestrian pavement in Ma­lioboro, Yogyakarta USD 870 millon. Greater Jakarta Seawage Treatment plan USD 200 million, DKI-Beka­si Water Supply USD 189 million, Surakarta Waste Disposal USD 30 million, Monorail Makassar USD 435 million, Batam Solid Waste USD 100 million, Ja­karta Integrated Urban Transport Hub Development project USD 177.78 million; Soekarno Herta airport Manggarai Railway project USD 2 billion.

Of the entire PPP projects, there were three projects ready for tender in January 2013, i.e. the Drinking Water project of South Semarang, Drink­ing Water project of Lamongan, and Restoration of project in Palu. Meanwhile three other projects would come up this February to be followed up by transac­tion soon.

Infra structure projects in some regions would energize investment and business while employment opportunities were also widely open. All in all, unem­ployment in the region would be reduced. The local GDP would increase as well. The impact was that people's welfare would be bettered.

Many circles rated the slow PPP performance now was more caused by regulations and bad insti­tutional system. The technical ministries normally wished that PPP projects used pure Rupiah without involving the private sector. Such would make the private sector see that investment climate in Indone­sia had high degree of uncertainty. On the other hand there was overlapping regulations plus unprofessional bureaucracy who wished that infra structure develop­ment used fund from the APBN state budget by vari­ous considerations.

Now the Government was determined to ex­ecute infra structure development and the public was looking forward to the realization. Would the Govern­ment continue with their promises, the public could make their judgment soon. The Government must be aware the public was becoming more critical and able to judge which minister perform well and who were not serious.

The Government 's office was only two more years left and still activities had to be reduced by po­litical campaign which was time consuming and en­ergy draining; so the advice for the Government was to perform well by building infra structure. The public had for long been longing for sound infra structure they the way they were in other developing countries.

Through infra structure, economic activi­ties could be well accelerated and the result would be benefited by the general public, such would be the achievement of a sound and responsible Govern­ment.

Business News - February 06,2013