Wednesday, 25 November 2015


Budget absorption, foreign debt (ULN) position, and budget politics have been highly considered for the accelerated development of maritime infrastructure projects. Coordinating Ministry for Maritime Affairs believes that the central and local governments have sufficient funds for infrastructure projects. “In our office there is no problem with budget absorption. But, the regional governments have a fund of IDR 214 trillion, which was been transferred, but it is still unused. So, a Presidental Regulation is issued to encourage regional budget absorption, “Coordinating Minister for Maritime Affairs, Indroyo Susilo, told Business News (July 24).

The Coordinating Minister for Maritime Affairs did not always run smoothly in speeding up development. President Joko Widodo formed a Maritime Coordinating Ministry Office with high expectations. The society at large also hopes to accelerate infrastructure development in the region. “In the first seven months (October 2014 – April 2015), we were excited, our expectations were high. While, the first seven months, we were still busily looking for office building, personnel and others. But Thank God, our budget absorption, until May 2015, has reached 11 percent.”

This figure is relatively higher than other ministries. Suppose that the Ministry of Energy and Mineral Resources has just absorbed budget of around seven percent. The Ministry of Tourism absorbed 8.5 percent. Low budget absorption cannot be separated from concerns about the criminalization of budget officials. The Coordinating Minister for Maritime Affairs sees the need to speed up infrastructure project development. “New project has been at the stage of feasibility study, and continues to detailed engineering design stage. These two stages will be running from July to August 2015. After that, we will sign the contract. In October, no later than December 2015, we’ve been able to see the physical work of the infrastructure projects.”

The state budget is divided into four, namely personnel expenditure, social assistance expenditure, and goods and capital expenditures. Personnel expenditure is absorption of budget to pay salaries and various amenities to civil servants and members of Armed Forces and Police Forces. While, social assistance expenditure is budget absorption for the provision of Raskin (rice for the poor), scholarships for civil servants, market operations and so forth. “The one most likely to encourage economic growth is capital expenditures only. Budget politics, in addition to overcoming the problem of budget absorption, we will also accelerate the realization of cooperation projects with China, Japan and others.”

In cooperation projects with foreign countries, Indonesia must be a co-leader. Suppose a fast railroad construction project connecting Jakarta and Bandung. The consultant is JICA (Japan International Cooperation Agency), but the Indonesian government has made a detailed engineering design. The cost of the project, the feasibility study (FS) stage only absorbs 2.5 percent of the budget. “But the impact could reach 90 percent (of the total project). At the FS stage, we can immediately find out about specification of engineering design. So that when we want to know about the use of transformers, boilers or other machines, we are able to decide. We request a local brand, to comply with local content requirement. If we do not know (at the FS stage), they would give it to foreign parties. Machine brands will be occupied by China, Japan, Germany and so forth.”

Construction of infrastructure projects will be charged to the state budget (APBN) and will weaken the position of Indonesia’s foreign debt. On the contrary, Coordinating Minister for Maritime Affairs invited economists and NGOs to learn from many examples of development during the era of Bung Karno (the first president of the Republic of Indonesia), we learn from the success of development, and the present opportunities.”

Infrastructure projects are a concern of the administration of President Joko Widodo and Vice President Jusuf Kalla. 35,000 MW, shipyards and others. The Government will also build five new ports in five cities, namely Benoa (Bali), Sorong (West Papua), Bitung (North Sulawesi), Makassar (South Sulawesi) and Surabaya (East Java). “We built 45 thousand power transmitters, five container ports, shipyards and so forth, and where did the money come from? It was from foreign debt. The President and the Vice President agree. (E)

Business News - July 28, 2015

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