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Budget cuts to hit projects
As it scrambles to cut this year’s spending due to low tax revenues, the government has promised that proposed budget cuts will not affect major infrastructure projects
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As it scrambles to cut this year’s spending due to low tax revenues, the government has promised that proposed budget cuts will not affect major infrastructure projects.
In reality, however, it looks to be quite a different story.
“Two-thirds of Indonesia’s territory is covered by ocean. It is the largest archipelago in the world.” That is how President Joko “Jokowi” Widodo likes to describe the country that he leads during his overseas visits.
At the same time, he has long emphasized the need to establish a “maritime highway” — with ships, seaports and other facilities — to connect the country from its westernmost to easternmost tip in an attempt to boost competitiveness.
However, this plan may be stymied by the significant cuts proposed for the sea transportation directorate general at the Transportation Ministry, the agency tasked with helping realize the plan.
As much as Rp 1.2 trillion (US$90 million) will be cut from the sea transportation directorate general’s budget, the largest spending reduction among all directorates general under the purview of the ministry.
The cuts will impact financing for port facilities in Tanjung Mocoh, Riau, and Labuhan Angin, Medan, Nort Sumatra, as well as a lighthouse in Ambon, Maluku.
Director general for sea transportation Antonius Tonny Budiono said the agency had made a priority scale to determine which projects would be postponed. “There is no rush for [a planned] patrol ship as it is a multi-year project,” he said.
Tonny claimed that the ministry would continue constructing new ships for pioneer routes and navigation vessels, adding that the ministry had just finished improving 91 ports across the archipelago.
The agency is only one of many that will be affected by the Rp 50.02 trillion cuts to be made across ministries, agencies and others as part of the austerity measures.
The second- and third-largest cuts in the Transportation Ministry will take place in the directorate general for railways with a Rp 996 billion reduction and the directorate general for air transportation with Rp 809 billion.
In the railway sector, funding allocations for several national strategic projects have not been given exemptions and may be affected.
For instance, the Madiun-Kedungbanteng double-track project in East Java, which is a part of the trans-Java railway project, will see Rp 25.54 billion temporarily removed from its budget.
The Makassar-Parepare railway construction in South Sulawesi, part of the trans-Sulawesi project, is facing the same fate with the postponement of its Rp 70.5 billion concrete pads work.
Prasetyo Boeditjahjono, the director general for railway transportation, said the reduced budget had prompted the ministry to prioritize project outside Java Island.
A strategic national air transportation project will also see “spending trim”, namely the revitalization of the HAS Hanandjoedin Airport in Bangka Belitung. The airport was initially set to receive a new Rp 1.1 billion cargo x-ray machine, but it will have to make do with existing facilities for now.
Director general for air transportation Suprasetyo was not immediately available for comments.
Meanwhile, the Public Works and Public Housing Ministry, Jokowi’s other strategic ministerial post, will suffer from Rp 8.49 trillion of cuts.
The ministry’s secretary general, Taufik Widjoyono said the ministry would focus on postponing some of the 1,000 projects worth Rp 4.9 trillion that had not yet been put to tender, as well as leftover projects from previous bidding and reducing unnecessary operational costs.
The directorate general of Bina Marga, which oversees road construction, will receive the biggest cut with Rp 4.6 trillion from its initial allocation of Rp 45.2 trillion.
Both Finance Minister Bambang Brodjonegoro and Finance Ministry director general for budgeting Askolani said that so far no changes had been made to the austerity measures during deliberations at the House of Representatives. The government hopes to pass the state budget revision bill into law in early July.
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