The Indonesian Chamber of Commerce and Industry (Kadin) has asked the government to accelerate infrastructure development outside Java, especially in the eastern part of the country.
The call comes from a series of recommendations issued at the end of the chamber’s national leadership meeting in Makassar on Sunday.
Kadin also called on the government to revive the operation of the now defunct state-owned national development bank Bapindo to help speed up infrastructure development.
Speaking to reporters after the meeting, Kadin chairman Suryo Bambang Sulisto said the work undertaken by Bapindo, which merged into Bank Mandiri, was crucial to providing long-term financing for development projects especially infrastructure, which would not only need a large amount of funds but long-term financing facilities.
“The existing banks are currently focusing more on micro-financing, such as working capital, with a short maturity period. For infrastructure development, we need a specialized bank that can provide long-term loans,” he said.
Bank Bapindo, established to finance development projects, was merged into Bank Mandiri in July 1999 as part of the consolidation of the country’s state banks. Each of the country’s major provinces have established their own development banks but their operation is not enough to support infrastructure development as they lack financing capacity.
Infrastructure development, Suryo said, was a key factor in empowering the regional economy, especially in provinces located in the least developed eastern part of the country.
Infrastructure development was a hot topic at the three-day event. Speaking at the gathering on Saturday, Osman Sapta Odang, the head of the chamber’s advisory council, said that it was time to develop infrastructure outside Java, especially the eastern part of Indonesia.
“Infrastructure challenges in Java were more in the past, challenges in the eastern region are more in the present. Improving infrastructure in the region has to occur as soon as possible to attract investment,” Osman said.
He said one of the main obstacles to investment in the eastern region was the limited availability of infrastructure.
Therefore, its new development has to be accelerated, especially for transportation means — sea, air and land — suited with planning in the respective regions.
Similar statements were shared by Trade Minister Mari Elka Pangestu, Industry Minister M.S. Hidayat and Disadvantaged Regions Minister Helmi Faizal during the meeting.
Helmi said of 184 regencies classified as disadvantaged areas, up to 120 were located in the eastern part of Indonesia.
Responding to the call to accelerate infrastructure development in the eastern region, Public Works Minister Djoko Kirmanto said in the next five years Indonesia would need at least US$200 billion for infrastructure development.
About $60 billion will come from the state budget. The rest was expected from the private sector.
Djoko also admitted that one of the main obstacles to infrastructure construction, especially roads, dealt with land acquisition.
He hoped the land acquisition bill, which would allow the government to forcibly acquire land for public infrastructure, could be approved by the House of Representatives this year as scheduled in order to help ease the land problem. (lnd)