T

he government will allocate up to 60 percent of fuel subsidy reallocation for infrastructure projects, with around Rp 42 trillion (US$3.44 billion) for the Public Works and Public Housing Ministry.

'€œBased on the visits conducted by the President yesterday, the allocated budget for infrastructure may be increased by up to 60 percent,'€ Public Works and Public Housing Minister Basuki Hadimuljono told reporters on Wednesday.

The ministry initially proposed a total Rp 12 trillion from the fiscal savings to finance the ministry'€™s clean water and sanitation projects (Rp 7 trillion), irrigation system and dams (Rp 4 trillion), and housing projects (Rp 1 trillion).

'€œWe requested an additional Rp 30 trillion from the fiscal savings since the previous proposal did not include roads and bridges in border areas,'€ the minister said.

However, he said that the budget allocation was still under discussion with the National Development Planning Agency (Bappenas).

'€œIt is possible that the figure may increase, since we have also been assigned to construct 49 dams over the next five years, an increase from the previous target of 30 dams,'€ the minister said on the sidelines of the second high-level meeting on infrastructure development with Japan'€™s Land, Infrastructure, Transport and Tourism Ministry at his office.

The government raised the price of subsidized fuels effective on Nov. 18 in a move that Finance
Minister Bambang Brodjonegoro said would free up between Rp 110 trillion and Rp 140 trillion in the 2015 budget to be spent on productive projects.

Basuki previously said that his ministry was tasked with building at least five irrigation dams a year to support the government'€™s food security program and that the ministry'€™s directorate general for water resources had previously flagged 49 locations as potential new dam sites across the archipelago, five of which are expected to begin construction next year.

During the meeting with Japan'€™s Land, Infrastructure, Transport and Tourism deputy minister, Hideo Tokuyama, Basuki said that the ministry was seeking cooperation with the Japanese government on the exchange of knowledge amid the current administration'€™s focus on infrastructure development.

'€œThe assistance that we require is not just in finance but also in technology and expertise. It will be very useful in accelerating development,'€ he said.

The ministry'€™s head of international cooperation, Zevi Azzaino, however said that cooperation with Japanese government infrastructure projects initiated by the government could not rely on the state budget alone.

'€œFor example, the ministry proposed Rp 42 trillion from the fuel subsidy reallocation; it can only be used to construct 10 dams, while we are aiming to build 49 dams. That'€™s why we are seeking assistance from other countries,'€ Zevi said.

Bappenas previously said that the new administration would need Rp 236.6 trillion in investment
for infrastructure development in 2015.

However, Bappenas deputy chief for infrastructure Dedy S. Priatna said that out of the required Rp 236.6 trillion in investment, the state budget might only allocate Rp 150.9 trillion.

Dedy said that the agency was still waiting for direction from President Joko '€œJokowi'€ Widodo on how to fill the Rp 85.72 trillion gap in financing, whether by accelerating the public private partnership (PPP) scheme or assigning state-owned enterprises.

The government will include the additional gain from the subsidy cut in the revised draft budget, which will be submitted for discussion in the legislature in January 2015.