The government is currently seeking to attract Saudi Arabian investors for development projects in Indonesia, especially in the infrastructure sector
he government is currently seeking to attract Saudi Arabian investors for development projects in Indonesia, especially in the infrastructure sector.
On Monday, around 150 Saudi Arabian investors gathered at a forum in Jakarta to learn of Indonesia’s potential projects.
Transportation Minister Budi Karya Sumadi said the projects presented to the Saudi Arabian investors included the development of Lombok International Airport in West Nusa Tenggara (NTB), valued at between Rp 5 trillion (US$400 million) and Rp 10 trillion.
“We have a concept for the Saudi Arabian investors in Mandalika, Lombok. We’ve given the investors a chance to cooperate through concession cooperation within a certain time period for the airport,” he told the press on Monday.
His statement referred to the limited concession scheme (LCS), in which the government offers concessions to private sector actors for infrastructure assets that are already operational and generating profits. The private sector actor is then expected to invest in the expansion project and enjoy the benefits for a limited period of time.
He said Lombok International Airport only needed a runway extension.
“If a whole new [airport] needed to be built, it would be expensive. The most important thing is that they get added value from their investment,” he said.
At present, the airport runway is 1,250 meters long, but is planned to be extended to 3,000 meters.
Traffic at the airport increased by 34 percent in 2016 alone to 3.4 million passengers.
Meanwhile, Budi added that he had also presented the development of Silangit Airport, near the scenic Lake Toba, as well as Kuala Tanjung Port, both in North Sumatra.
The port, the overall development of which will cost Rp 34 trillion ($2.5 billion), will be part of the Sei Mangke special economic zone (KEK) with its supporting infrastructure worth $22 billion.
State port operator Pelindo I is currently in charge of building the port, which boasts a strategic position near the Malacca Strait and the east-west world trade route.
Budi said he also urged the investors to invest in emerging tourist destinations in Indonesia, including Lake Toba, Yogyakarta, Mandalika and Labuan Bajo.
Meanwhile, Budi also said the government would offer railway related projects such as the light rail transit (LRT) project between the Sinarmas Land-backed township of Bumi Serpong Damai (BSD) and Soekarno Hatta International Airport in Banten.
The project is estimated to cost around Rp 20 trillion.
“The reason is because there are a lot of [potential] passengers traveling between [BSD] and the airport. The purchasing power is also quite high and we need to reduce traffic congestion [to the airport],” he said.
The government recently officiated the opening of the railway connecting inner-city Jakarta and the airport.
Infrastructure development is one the main priorities of President Joko “Jokowi” Widodo’s administration, and is expected to spur economic growth.
Budi admitted he would rather offer already ongoing projects to investors rather than those that needed to be started from scratch, which rarely charmed investors.
Commenting on the matter, Habab Alhanaya, the chairman of the Investor Association of Saudi Arabia in Indonesia, said the Saudi Arabian investors already had an interest in Lombok, in the form of hotels and housing.
“Our priority today is on the real estate sector. [...] The first priority is real estate, then tourism and then we will also develop the transportation sector,” he said.
However, he said the investors expected a simplified bureaucratic process, as presently it could take five months to establish a company in Indonesia.
“It certainly hinders investment in Indonesia,” he said.
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