As Indonesia improves its ailing infrastructure, entrepreneurs and
companies view the effort as an opportunity to invest, despite fears of
bureaucracy and corruption interfering with public works projects.
“Despite the global economic crisis, Indonesia has the chance to
really accelerate [its economic development], and it starts with
infrastructure and connectivity,” Jakob Friis Sorensen, chairman of the
European Chamber of Commerce, told the Jakarta Globe on the sidelines of
the Indonesia International Infrastructure Conference and Exhibition
2012 on Tuesday.
The three-day event, held at the Jakarta Convention Center , is
highlighting the government’s Master Plan for the Acceleration and
Expansion of Economic Development (MP3EI), a Rp 4,000 trillion ($420
billion) project that focuses on infrastructure development across the
country.. The plan, which was announced in May last year, is an attempt by
the government to boost its infrastructure by sharing the investment
burden with the private sector, similar to a public-private partnership
program undertaken by other countries such as the Philippines.
Sorensen praised this plan, saying that better infrastructure means
companies can better distribute and market their products to remote
parts of the country.
However, he acknowledged the complexity of undertaking infrastructure projects in Indonesia.
“The plans and the ideas that we want to achieve are clear and the
discussion is indeed happening, but it’s just so complicated,” Sorensen
He added that the persistent debt crisis in the euro zone has made
many European companies worried about investing in Indonesia but he
called on them not to be overly concerned — to take a chance, jump in
and participate in Indonesia’s economic development.
Russian Ambassador to Indonesia Alexander Ivanov said that Russian
interest in Indonesia remains strong, including investment in a $2.5
billion railway project in Central Kalimantan. Russian airlines are also
keen to expand in the aviation industry and other companies are keen to
build smelters for processing minerals, he said.
In his speech at the opening of the Asia Pacific Ministers and
Regional Governors Conference on Sustainable and Inclusive
Infrastructure Development 2012, President Susilo Bambang Yudhoyono said
the government has allocated $20 billion for infrastructure development
He did not specify where the money would come from, but the figure
is close to the Rp 193.8 trillion that the government has allocated for
spending on capital goods and infrastructure development in the draft
Yudhoyono said the focus of the $20 billion will be on the energy
and transportation sectors. The government hopes to extend the length of
current national roads by 4,278 kilometers. It also plans to build more
than 500 kilometers of new roads, 380 kilometers of railways and 15
For the government and investors, developing infrastructure such as
airports, roads, power and water facilities has never been easy. Aside
from land acquisition problems, supporting infrastructure development in
remote areas is challenging.
In Medan, North Sumatra, Kuala Namu Airport is on the list of
projects in the MP3EI. Construction for the airport — designed to be the
second-largest airport in Indonesia after Soekarno-Hatta International
Airport, near Jakarta — is close to completion. It was supposed to be
opened this year but the road to the airport has not been widened to
accommodate the burgeoning traffic.
It now takes more than an hour to drive along the rugged
40-kilometer public road, which has two small lanes and villagers living
on the side.
Companies including Philips Indonesia are showing interest in take
part in the country’s infrastructure push. The company is famous in
Indonesia for its electricity-saving lights bulbs.
“We had developed the right solution for lighting Indonesian
airports in a way that is environment-friendly as well as
user-friendly,” said Robert Fletcher, the company’s president director.
He said Munich International Airport in Germany conserves 300,000 euros
($376,000) in electricity costs by adopting Philips’ technology.
Kartika Wirjoatmodjo, president director of Indonesia
Infrastructure Finance, a company owned by the Finance Ministry, said
the biggest challenge is for the government to attract more of
Indonesia’s large conglomerates to invest in infrastructure rather than
investing in natural resources and mining.
Hatta Rajasa, the coordinating minister for the economy, said the MP3EI has garnered positive responses from investors.
“Within a year of MP3EI starting, we have secured some $82 billion
worth of investment in infrastructure, or 20 percent of the total,” he
Didik Junaedi Rachbini, a politician from the National Mandate
Party (PAN), and Suryo Bambang Sulisto, the chairman of the Indonesian
Chamber of Commerce and Industry (Kadin), an influential lobby group,
said the government could spend more on infrastructure if it reduced
energy subsidy costs. In the 2013 draft budget, the government has
allocated Rp 274.7 trillion for energy subsidies, 18 percent of the
total in proposed spending.
Additional reporting by Shoeb K. Zainuddin & Faisal Maliki Baskoro
Source: Jakarta Globe
Tito Summa Siahaan & Arientha Primanita | August 29, 2012