TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Private sector to boost financing role for infrastructure projects
Unlocking infrastructure potentials: PT Nusantara Infrastructure technical director John Scott Younger (second right) chats with Indonesia Investment Coordinating Boardâs (BKPM) Infrastructure Investment Planning director Rudy Salahuddin (middle), flanked by Public Works and Peopleâs Housing Deputy Minister Hermanto Dardak (second left), PricewaterhouseCoopers Indonesia adviser Julian Smith (first left) and Quad Event Management president director Seno Adhi Damono, after speaking in the opening session of the Global Infrastructure Leaders Forum in the Jakarta Convention Center, Tuesday
Change Size
U
span class="inline inline-center">Unlocking infrastructure potentials: PT Nusantara Infrastructure technical director John Scott Younger (second right) chats with Indonesia Investment Coordinating Board's (BKPM) Infrastructure Investment Planning director Rudy Salahuddin (middle), flanked by Public Works and People's Housing Deputy Minister Hermanto Dardak (second left), PricewaterhouseCoopers Indonesia adviser Julian Smith (first left) and Quad Event Management president director Seno Adhi Damono, after speaking in the opening session of the Global Infrastructure Leaders Forum in the Jakarta Convention Center, Tuesday. JP/ Jerry Adiguna
The private sector aims to boost its involvement in government infrastructure projects with financing contributions expected to reach up to 40 percent of total investment needed for such projects in five years.
Data from the National Development Planning Board (Bappenas) showed that the government would need around Rp 5,500 trillion (US$420 billion) in investment for infrastructure projects in 2015-2019. Around half of the investment would be sourced from state and regional budgets.
During the Global Infrastructure Leaders Forum 2015 on Tuesday, conference leader John Scott Younger said the private sector could contribute up to 40 percent of the financing needed for infrastructure projects with support from the government.
'Over the last five years the number of works done by the public sector is around 70 percent and it has been increasing to the point that private sector is only doing about 10 percent or something. That does not encourage private sector to come in[to] the projects,' said Younger, who is also a director of publicly listed PT Nusantara Infrastructure.
'The government needs to [have] an approach which really does bring in new players not just investors, as we need other people to build the infrastructure. We don't have the capacity,' he added.
According to Younger, the government was not only facing a shortage in funding but also in human resources, particularly in the number of engineers, which made it unable to keep pace with an increasing number of infrastructure projects.
Separately, multinational professional service network PricewaterhouseCoopers' (PWC) advisor for Indonesia, Julian Smith, said the growth of infrastructure companies and investment would help boost the country's economic growth, which was targeted to reach up to 8 percent in the next five years.
'It is expected that private infrastructure companies in Indonesia can continue to grow in line with a more advanced infrastructure sector. The private sector can thus contribute positively to economic growth in Indonesia,' Smith said.
Meanwhile, the Public Works and Public Housing Ministry's acting head for regional infrastructure development, Hermanto Dardak, said that in the country's more developed areas such as the western region, several infrastructure projects were already feasible for the private sector.
Particularly for toll-road projects, Hermanto said that several financially viable projects would be handed over to the private sector using the build-operate-transfer (BOT) scheme.
The country's central and eastern parts, including Kalimantan and Sulawesi, are less financially feasible and the government would provide viability gap funding (VGF) for private sector organizations wishing to be involved in infrastructure projects there, Hermanto said.
Some of the infrastructure projects that have already implemented the scheme are the Balikpapan-Samarinda toll road in East Kalimantan, the Medan-Tebing Tinggi toll road in North Sumatra, the Manado-Bitung toll road in North Sulawesi, the Cileunyi-Sumedang toll road in West Java and the Solo-Ngawi-Kertosono toll road in Central Java and East Java.
