Abstract
In March 2009, Indonesia' s National Development Planning Agency (Bappenas)
reportedly opened up
eight major infrastructure projects in transport and
utilities as public private partnerships (PPPs). The
government has
admitted that it cannot bear the burden of financing its long-term
infrastructure
programme (2010-2014), which consists of 87 projects,
solely though public funds and is thus seeking
private sector
participation.
According to the Jakarta Globe, the total value of the
contracts the government is offering through these
eight projects is
US$4.5bn. These eight projects are ' ready to go' , which is defined as having
completed
bidding documents, a dedicated team to handle the procurement
and the government' s backing in terms of
land acquisition and financing
guarantees, the newspaper notes. It remains to be seen if this will tempt
potential investors, previously put off by the arduous land-acquisition
processes in an already difficult
operating environment compounded by the
financial crisis, uncertain demand for energy and transport
infrastructure, and tightening liquidity.
The Ministry of Public Works
will reportedly receive IDR1.7trn (US$147.9mn) of the Indonesian
government' s US$6.15bn stimulus package. The fund will be used to construct up
to 3,000km of road
projects in 2009, and is forecasted to create almost
55,000 new jobs. The funds will be used to support
existing national roads
as well as to fund four Bina Marga projects: Lintas Timur Sumatra in
Lampung
Province, the Amplas flyover in the north Sumatra provincial town
of Medan, the Manado-Mapangat
Road in North Sulawesi Province, and the
Manokwari-Sorong Road in West Papua Province. Indonesia
has experienced
very rapid growth in the total number of road vehicles in circulation. Despite
being given
a high priority in government spending programmes, road
construction in Indonesia as a whole has
progressed at a slower pace.
According to the Asian Development Bank (ADB), infrastructure investment in
Indonesia has risen to
3.0-3.5% of GDP. However, this is still
substantially lower than the 5-6% of GDP witnessed before the
onset of the
Asian financial crisis in 1997. Most of the recent investment has been by the
government,
with private investment accounting for only about 1% of GDP
between 2000 and 2006. BMI forecasts
that the construction sector will
reach a value of US$75.33bn in 2013, up from a figure of US$37.56bn in
2008.
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