One of President Joko “Jokowi” Widodo’s hallmark campaign promises was the acceleration of infrastructure development.
ne of President Joko “Jokowi” Widodo’s hallmark campaign promises was the acceleration of infrastructure development. His ambitious targets included the construction of 24 seaports, 15 airports, power plants with a capacity of 35,000 megawatts and the development of nine million hectares of agriculture land by 2019.
During his early days as president, his clear priority and borderline obsession with building infrastructure resonated strongly with investors and the international community. His particular focus on three main sectors, namely education, health care and infrastructure, was a clear departure from his predecessor, who prioritized every sector.
His rhetoric was followed by concrete action when the revised 2015 budget included a 34 percent increase in the budget allocated to infrastructure spending. This marked the highest infrastructure budget in Indonesia’s history, and was only made possible after reallocating a decadesold budget crippling fuel subsidy to more productive spending.
Increased spending on infrastructure continued into the 2016 state budget, in which infrastructure accounted for 8 percent of the overall budget. Coupled with the first series of economic policy packages issued in late 2015, Jokowi sought to expedite development of infrastructure by signing Presidential Decree No. 3/2016, which emphasized accelerating the construction of strategic national projects. The 225 listed projects included toll roads, strategic non-toll roads, railroads, airport development and revitalization, seaports, special economic zones and the construction of dams.
Now, almost three years into his presidency 40 percent of the national strategic projects planned by his administration are under construction. Since the beginning of 2017, the President has held 22 cabinet meetings on infrastructure alone. On paper, these initiatives and numbers look undeniably impressive. But in reality, instances such as the stalled construction of the Jakarta — Bandung high speed train, uncertainty over Port of Rotterdam’s participation in building the second phase of Kuala Tanjung Port, and the outstanding 1,786 kilometers of new road to be built before 2019, are all worthy of sounding alarms.
Looking at these examples, there seems to be a major gap between intention and execution. At the heart of it, there seems to be three underlying factors contributing to the slow pace of infrastructure development, despite all the right rhetoric being said by President Jokowi.
Firstly, there is an inexorable drive toward state owned companies to execute infrastructure projects, driven in part by a deep seated belief the private sector should not benefit from state projects. This is evident in Jokowi’s instincts to make existing state owned enterprises more efficient and better governed, rather than providing room for private sector actors with better expertise to lead projects. A byproduct of this ideology includes a lack of any commercially viable public private partnerships. This includes President Jokowi’s recent comments on the Chinese consortium participation in the Jakarta-Bandung high-speed train project, where he fait accomplied the consortium to finance up to 90 percent of the project, from an initial 40 percent.
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