Govt readies to tout same infrastructure projects, again
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MP3EI: A boat passes Bitung Port in North Sulawesi, which will be developed into a special economic zone (KEK). The government plans to build a number of special economic zones in the country as part of the Master Plan for the Acceleration and Expansion of the Indonesian Economy (MP3EI).(Antara/Fiqman Sunandar)
Despite unresolved problems that continue to deter investment in local infrastructure projects, the government is gearing up for another major pitch session.
Although several conferences over the past seven years have failed to result in the deals that are needed to drastically increase the nation’s infrastructure capacity, the government plans to hold the Indonesia International Infrastructure Conference and Exhibition at the Jakarta Convention Center from Aug. 28 to Aug. 30.
According to the Committee for the Expansion and Acceleration of Indonesian Economic Growth (KP3EI), which works under the coordinating economic minister, the focus of the conference will be implementing the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI).
The MP3EI, introduced in 2011, aims to significantly improve connectivity throughout the archipelago through creating a host of “corridors”, or areas earmarked for industry-specific economic development.
The government hopes that implementing the plan will make Indonesia one of the top five global economic forces by 2025.
During the conference, officials from 33 provinces will again present investment opportunities to lure investors to back infrastructure projects.
The government has identified 774 infrastructure projects under the aegis of the MP3EI with a total price tag of US$240 billion.
The government plans to provide 32 percent of the funding for certain projects, with the remainder slated for funding under public-private partnership (PPP) schemes.
Realizing this, however, will be difficult.
Projects slated for development under PPP schemes continue to face challenges from a complex land acquisition process, weak preparation and selection procedures and the absence of a viable gap funding mechanism.
“The government needs to know the real goal of MP3EI projects and should be more focused on fixing weaknesses in some regulations and policies to help smooth the execution of the projects,” Lin Che Wei, the founder of Independent Research and Advisory Indonesia (IRAI), said.
“The PPP scheme, for instance, is lacking any elaboration in regulation, which has led to confusion in its implementation,” Lin said.
According to the KP3EI, after the MP3EI was launched in 2011, the government broke the ground on 99 projects worth Rp 356 trillion, or 87 percent of 114 targeted projects budgeted at Rp 420 trillion.
Progress remains sluggish. Overlapping regulations have impeded the projects, according to the KP3EI.
“It can be concluded that the performance of the economic corridor working team has not been optimal, especially in terms of problem solving,” the KP3EI said in its report.
Separately, State-Owned Enterprises Minister Dahlan Iskan said on Monday that President Susilo Bambang Yudhoyono previously ordered him to involve all state-owned enterprises (SOE) in the MP3EI to compensate for a lack of private investors to ensure progress before Yudhoyono leaves office in 2014.
“The President told me last week that he wanted to discuss a number of projects that should be finished before his leadership ends with all SOE executives,” he said.