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Govt to review rules on PPP, procurement
The government will review a presidential regulation on public-private partnerships (PPP) and a presidential decree on government project procurement rules to ease bottlenecks hampering development
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he government will review a presidential regulation on public-private partnerships (PPP) and a presidential decree on government project procurement rules to ease bottlenecks hampering development.
State Minister for National Development Planning Armida Alisjahbana said Tuesday she had been requested by the President to prepare a draft for the review as part of the state ministry’s 100-day program.
“Our deadline will be on Feb. 1 2010,” Armida said in a hearing with House of Representatives Commission XI overseeing financial affairs.
Armida said the government expects to add a new provision to the presidential regulation No 67/2005 on PPP so that a government private partner can divest its share in an infrastructure project, which it won through a bidding process, to another company.
Secretary to State Minister Syahrial Loetan said in a separate occasion on Tuesday that the presidential regulation would also adopt a new provision on land acquisition.
Land acquisition is the biggest issue in the development of the government infrastructure projects as the process often meets problems such as overlapping ownership and conflicting spatial planning made by different central and regional government bodies.
The plan to add a new provision on land acquisition is in line with the government plan to issue a regulation-in-lieu-of-law that will amend the 1961 law on the revocation of land and building rights.
Syahrial said the government also plans to introduce a new scheme that will involve a revolving fund to purchase land from the original owners in the hope of reducing risks for investors.
“The funds can be repaid later by investors … A partnership with the private sector is essential to compensate the government’s lack of funding in developing infrastructure projects,” Syahrial said.
A total of Rp 2,100 trillion (US$222.5 billion) is needed to finance infrastructure projects in the country annually, of which the government can only provide 15 percent.
Various PPP programs have been offered to business players since 2005, but only a few resulted in project development. . Over the past five years, the government only managed to develop 85 kilometers of new toll roads or 7.8 percent of the 1,095-kilometer target.
Currently Indonesia has 693 kilometers of toll roads, in comparison to other emerging markets such as Malaysia with 6,114 kilometers and China with 45,400 kilometers.
The second review that will be carried out by the state ministry in its 100-days program, Armida said, is on the presidential decree No 80/2003 on the government’s procurement program.
Armida said the scope of the decree will be expanded so as to cover the procurement of non-traditional good and services, particularly those pertinent to the creative industry, innovation, laboratory research and education.
“There will be a new co-financing scheme,” she said at the hearing.
The review on the presidential decree will be accompanied by a review on the existing guide book on government procurement programs, Syahrial said.
“Many companies which are interested in participating in the government’s procurement program have complained of the state of the guidebook, which they considered to be confusing and unclear,” he said.
