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SOEs threaten private firms
When the current administration rolled out the idea of spurring robust infrastructure development across the country, it realized many of the projects were not commercially feasible enough to lure in the necessary investment.
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Breakthrough – A railway car manufactured by state-owned train manufacturer PT Industri Kereta Api (INKA) is loaded onto a cargo vessel, which will bring it to Bangladesh. INKA has begun its first passenger train exports by shipping 15 passenger trains to Bangladesh, the first batch of the total shipment of 150 passenger trains ordered by Bangladesh Railways. (thejakartapost.com/Wahyoe Boediwardhana)
When the current administration rolled out the idea of spurring robust infrastructure development across the country, it realized many of the projects were not commercially feasible enough to lure in the necessary investment.
Because of this, President Joko “Jokowi” Widodo pushed stateowned enterprises (SOEs) to take a key role in his big ambitions to build Rp 4,796 trillion (US$352.8 billion) worth of infrastructure like toll roads, railways, seaports and airports.
SOEs are slated to provide around 22 percent of the overall investment required to realize the goal.
However, after three years, the designation seems to have more far-reaching consequences as these business entities are omnipresent in a wide range of projects. In addition to their dominance, they also tend to join hands with their peers under socalled “SOE synergy” instead of teaming up with private firms.
The stronger bonds between SOEs have risen to levels that could threaten the viability of private sector involvement in infrastructure development.
The Indonesian Builders Association (Gapensi) criticizes the pervasive presence of SOEs in infrastructure construction, saying that there was a wide gap in the number of projects tackled by state-owned developers and the 67,000 contractors grouped under the association.
Furthermore, the former does not hesitate to grab minor projects worth less than Rp 100 billion, which should be reserved for small and medium contractors.
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- Palmerat Barat No. 142-143
- Central Jakarta
- DKI Jakarta
- Indonesia
- 10270
- +6283816779933
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