Indonesia: Private Sector Involved to Speed Up Infrastructure Development

• Apr 21, 2017

TEMPO.CO, Jakarta – Transportation Minister, Budi Karya Sumadi, argues that the Government and Business Entity Cooperation (KPBU) financing scheme used to finance government infrastructure projects will be able to accelerate construction process.

It would need more than Rp 1,000 trillion worth of funds to accelerate infrastructure developments. Meanwhile, the ministry’s four year project can only provide a Rp 400 trillion budget.

“We must fill this gap accordingly. Such as how could we attract investors. There are many projects here that can be invested upon,” Budi said on Thursday, April 20, 2017.

He gave an example which is the Kualanamu International Airport. There are at least three investors that are approached by the government to work on the airport’s project. These three investors comes from Rotterdam, China, and Dubai. The Government is also planning other regions that might be able to be invested by private companies such as Belitung and Balikpapan.

The government continues to open the chance to cooperate with private sectors. Meanwhile, the handling of smaller scale projects could be handed over to state owned enterprises.

He added that there’s a possibility that this scheme could be used to fund the LRT project. On one hand, the investment for commuter lines could be invested and managed by local private sectors. This is to bring these types of projects to other regions such as Kalimantan and Sulawesi.

Funding schemes such as this may provide a longer guarantee of payment from 15 to 20 years. State Officials will be able to be assisted in solving its financial gap while in the same time being able to have a new technology and method.

“This is a new financial scheme that is interesting and more transparent. Although I might remind you that this is not in any way an attempt to sell the nation. Because this investment would stay in Indonesia and wouldn’t be able to be taken abroad,” he said.

Source: https://en.tempo.co/read/news/2017/04/21/056868181/Private-Sector-Involved-to-Speed-Up-Infrastructure-Development