Abstract
President Susilo Bambang Yudhoyono – who was re-elected in July 2009
– has claimed that
infrastructure projects will be among his major
priorities over the next five years as the country seeks to
boost growth
and reduce poverty. BMI believes that as the global economy begins to recover
in the
second half of the year foreign investment funds will begin flowing
into Indonesia once again, and that
the government should take advantage
of this opportunity to secure financing for key infrastructure
projects.
The Yudhoyono government has already been active in this area,
pledging to improve the country’s roads,
airports, power plants,
bridges and irrigation system. According to the National Development
Planning
Agency (Bappenas) the government will finance at least 29% of the
total IDR1,430trn (US$140bn) that is
expected to be spent on
infrastructure between 2009 and 2014. The shortfall will be met by both local
and
foreign investors. As well as boosting economic growth, large-scale
public works projects will also
provide employment. However, Indonesia has
not been as severely impacted by the global financial crisis
as other
countries. Unemployment stands at 8.1%, which is down from 9.3% in 2008.
Following the re-election of Yudhoyono, the biggest question is arguably
whether Indonesia can join the
BRIC (Brazil, Russia, India, China) league
and make the group ' BRIIC' . Goldman Sachs in 2005
identified Indonesia as
one of the ' Next 11' big emerging markets, and in Indonesia itself a group
of
business leaders and politicians have initiated a ' Vision 2030' plan to
raise GDP per capita to US$18,000,
have 30 companies in the Fortune 500
list, and make Indonesia one of the five biggest economies in the
world by
2030. Reducing the country’s infrastructure deficit will be vital to
achieving these ambitious
goals.
In general the climate for
investments in Indonesia’s infrastructure sector appears to be
improving,
although the country still suffers from a number of structural
problems that are restricting economic
development, including power
outages and transportation bottlenecks. BMI believes that an undeveloped
financial sector is also a serious issue, as it has made it difficult to
secure long-term financing. Despite
this, BMI forecasts that the
construction sector will reach a value of US$71.66bn in 2013, up from a
figure of US$37.35bn in 2008, driven by the fiscal stimulus package that will
concentrate on
infrastructure works.
In positive news, PT Perusahaan
Listrik Negara (PLN), Indonesia' s state-owned electricity company,
has
reportedly secured US$437.1mn in loans from a consortium of 23 regional banks.
In addition, it has
signed a US$1.06bn loan agreement with the China
Export Import Bank and the Bank of China. Both
agreements will go some way
to help PLN implement its ambitious plans to develop Indonesia' s
electricity generating capabilities. Under the ' fast-track' programme, PLN
will develop 10,000MW of
coal-fired generating capacity through the
construction of 35 power plants, to come online by 2011. Thus
far,
according to the Jakarta Globe, 33 power plants have been contracted; however,
four have yet to
secure financing.
| 
View Cart
