Tuesday, 30 September 2014


Master Plan for the acceleration and Expansion of Indonesia’s Economic Development (MP3EI) program has been there-year-old since it was implemented in 2011. The government declared that from July to December 2014, a ground breaking ceremony will be performed on 132 MP3EI projects with an investment value of IDR 443.5 trillion.

The project is expected to provide a positive effect on the national economy. Groundbreaking ceremony on the 132 projects will be based on the commitment of the private sector and project officers.

The groundbreaking ceremony, in the second half of this year, will be done more on small projects whose value is not too big, but have a quite good effect on the economy. The small projects are basic infrastructure projects with a total investment of IDR 443.5 trillion.

In addition to the 132 projects, in the second half of 2014, there are eight other MP3EI projects schedule to be inaugurated by the government. The eight projects have been worked on before, namely there projects in Java corridor, two in Kalimantan corridor, and three in Maluku-Papua corridor.

Projects that will be inaugurated include double-track railway project across the north of Java connecting Cirebon and Surabaya with an investment of IDR 16.4 trillion, Sepinggan international airport project in East Kalimantan with an investment of IDR 2.1 trillion, and ibra airport development project, Tual baru with an investment of IDR 200 billion.

The implementation of MP3EI projects still face problems, namely preparation to project implementation, land, and funding. In terms of project preparation, the problem is in EIA (environmental impact assessment), the auction process or contract problems, and regulatory preparedness.

Then, in terms of land, there is a problem in designation of land, land acquisition, land disputes, and overlapping of regions. Meanwhile, in funding, there is immature financing scheme. Of all these problems, the realization of the investment can still be done quite well dominate the entire connectivity of infrastructure projects, because the state budget (APBN) is very limited.

Now, approaching the change of national leaders, Indonesia has high hopes on the president elect to continue with MP3EI projects because the realization to this day is very minimal. Investment realization of MP3EI in the first semester of 2014 worth IDR 25 trillion, or only 4.2% of the target for 2014 at IDR 586 trillion.

Although the results of verification states that a number of projects, which construction cannot begin in 2014, is valued at IDR 117.5 trillion, but the realization in the first of 2014 only reached 5.3%. In a video conference by President Susilo Bambang Yudhoyono during inauguration, groundbreaking, and reporting of MP3EI projects recently (September 5), six representatives of governors of the six economic corridors always requested for a sustainability of the program by the president-elect.

A majority of them considered that the improvement of the economic sector with the implementation the program that began in 2011, to this day it is still considered unoptimal, because of some obstacles that occur.

This opinion is reinforced by the statement of the Coordinating Minister of Economy, Chairul Tanjung, that the implementation of MP3EI requires a long time so that the benefits of the program cannot be enjoyed directly.

However, if economic growth is high, equitable, and qualified due to the positive impact of MP3EI, it will automatically reduce property. Employment was believed to increase.

Based on data of the half of 2014, since the lancing of this program in 2014 until the first half of 2014, MP3EI was able to absorb 7.25 million workers. Of the total workforce, high school/vocational school graduates constitute the largest portion, i.e. 2.89 million people, followed by junior high school graduates at 2.65 million people.

Meanwhile, according to data of the office the Coordinating Ministry of Economy, MP3EI project realization from May 27, 2011 until the first quarter of 2014 is IDR 838.9 trillion. The progress of the infrastructure sector from the state budget is IDR 131.8 trillion, state-owned enterprises IDR 89.17 trillion.

For project distribution, amongst others, IDR 397.7 trillion are spreading in Sumatra as much as 40 projects worth IDR 55.63 trillion, Java with 32 projects worth IDR 217.7 trillion, Kalimantan with 47 projects worth IDR 57.19 trillion, Sulawesi with 24 projects worth IDR 22,496 trillion, Bali – West Nusa Tenggara with 28 projects worth IDR 17,548 trillion, and Papua – Maluku with 33 projects worth IDR 27.15 trillion.

So, the MP3EI program has been appropriate to be continued by the new government. However there have been still plenty of obstacles in the realization of projects so far, especially land acquisition. Therefore, it is appropriate if now the office of the Coordinating Minister of Economy always encourages all central and local government officials to coordinate the execution.

And, there is also a problem in the central government, i.e. slow coordination between ministries making the licensing process too complicated. Hence, all relevant government agencies are required to coordinate with each other. One of the projects, which is delayed, is the construction of steam power plant (PLTU) in Batang, Central Java which is still hampered by land acquisition problem.

Related to this, there is a growing perception that if people will not let go of the land, the government agreed to find a new location as had previously been planned by the Coordinating Minister of Economy. The governors also believed that the government should encourage and continue the MP3EI program.

Projects in MP3EI, basically, already exist in the government’s project plan that will be done and contained in the Medium-Term National Development Plan. Thus, whether MP3Ei will be continued or not, would not affect the implementation of projects that have been scheduled. It means institutionally it may be continued or discontinued by the new government. The important thing is that the project is not lost because it is already scheduled.

President SBY also expressed his expectation to leave it to Jokowi as the president-elect, so that what has been achieved in the framework of a three year MP3EI program could be continued, because there is still a remaining 11 years. The Coordinating Minister of Economy, Chairul Tanjung, asserted that MP3EI is important to be continued by the new government.

Thus, the potential of Indonesia to become a developed country could be achieved. Indonesia has all the prerequisites to become a developed country, such as abundant natural resources, a great number of productive population and others. It will be a valuable asset if it is led by a strong leader.

The acceleration project for Indonesian economic development has been initiated by SBY administration since 2011-2012. The main focus is development of new economic center and acceleration of infrastructure that connects every region in the country. Even, the government claims that MP3EI projects could lift Indonesia’s per capita income to USD 15 thousand per year and Indonesia could become a country with the 7th largest economy at the age of 100th year of the Republic of Indonesia. (E) 

Business News - September 17, 2014

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