T

he government will need US$550 billion in investment for infrastructure projects between 2015 and 2019 to resolve the current infrastructure crisis, an official at the National Development Planning Agency (Bappenas) has said.

'€œBased on our study, we'€™ve found that in the next five years Indonesia will face a time of infrastructure crisis. A lot of infrastructure projects need to be realized if we want to be called a middle-income country by 2025,'€ said Bastary Pandji Indra, the Director for Public-Private Partnership (PPP) development at Bappenas said on Thursday.

Based on the agency'€™s data, the investments include $107 billion for road projects, $91.6 billion for water resources, $55.9 billion for clean water and waste and $47.2 billion for sea transportation.

Bastary said that out of the required $550 billion in investment, the state budget could only allocate around Rp 1,100 trillion ($97.3 billion).

'€œWe may be able to push the state-owned enterprises to invest around Rp 350 trillion'€ Bastary said.

'€œMoreover, we would like to see the PPP program implemented better in the future so we can get at least Rp 648 trillion from the private sector,'€ he continued.

Even if this financing was achieved, he said, the country still faced a gap of more than Rp 2,000 trillion to realize the infrastructure projects target.

That is why the agency had come up with the expectation that the government needed to raise at least $299.1 billion in investment.

'€œWe would be pushed to achieve the full scenario, but the government is not fully ready to cooperate with the private sector,'€
Bastary said.

'€œThe government mostly gave the private companies projects that are not supported by the state budget and they also haven'€™t carefully thought about the revenue and how to earn profits from such projects. That is why the projects offered to the private sector are not very lucrative,'€ he said.

Bastary said that the 2009-2014 midterm plan stipulated that the government hoped for at least one-third of the total investment for infrastructure projects to come from private sector.

'€œIt has turned out that we can only achieve around 3 percent of our target for the investment in infrastructure,'€ Bastary said.

The Transportation Ministry'€™s airport director Bambang Cahyono meanwhile said that the PPP program had not yet been successful in the aviation sector because Indonesia'€™s airport income came mostly from domestic flights.

'€œIf you invested millions of US dollars but most of your income was in rupiah, it would take quite a long time to finally receive a profit. Therefore, a lot of private companies are reluctant to join the PPP program in the aviation sector,'€ Bambang said.

Having been twice revised, Bastary said that the government was currently in the process of again revising Presidential Decree No. 67/2005 on PPPs.

'€œWe used to generalize the procedures for all the PPP projects. Projects with values of less than Rp 200 billion faced the same the procedure as those with values of trillions of rupiah. In the draft revision, we are easing the procedures for projects that have lower investment values,'€ Bastary said.

Not only would the government ease the tender process, he said, the government would also diversify the projects under the scheme.