Despite the government’s decision to increase the infrastructure budget for 2017 by 10.56 percent to Rp 346.6 trillion (US$26.64 billion) compared to Rp 313.5 trillion this year, the government has a disbursement track record of less than 100 percent.

In 2015 the budget absorption rate was 72 percent compared to 78 percent in 2014. This year, despite the government’s promise not to cut funding for priority infrastructure, budget cuts are still likely for non-priority projects.

According to PwC advisor Julian Smith, turning an infrastructure project into a PPP could ease the financial burden of the government and state-owned enterprises (SOEs). However, to attract investors, the project had to be prepared, from feasibility studies, legal standing, to land clearing.

"There are investors from China and Japan that get support from their governments [and] even pay for the feasibility studies,” he said. Most countries’ governments were less proactive, Smith went on. “What the Indonesian government has to do more is to understand what motivates private investors and create the conditions [necessary for investment],” Smith told The Jakarta Post at the PwC-The Jakarta Post Indonesia infrastructure seminar in Jakarta on Tuesday.

He said if the projects were well prepared, investors from all over the world would come because the Indonesia’s infrastructure market was now one of the biggest in the world. (evi)

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