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Businesses fed up with slow, uncertain govt infrastructure partnerships
Waning interest in public-private partnerships could pose a risk to President Prabowo Subianto’s infrastructure agenda, which still largely depends on private investment.
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Major link: Construction is underway on July 2, 2024, on section 3 of the Bayung Lencir-Tempino Toll Road in Sebapo, Muaro Jambi regency, Jambi. (Antara/Wahdi Septiawan)
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usinesses are expressing frustration with the government’s public-private partnership (KPBU) scheme, citing overly complicated procedures and lengthy timelines that hamper the feasibility of projects offered. They are calling for a faster process with clearer project specifications to ensure smooth execution and more predictable returns.
At an infrastructure financing event on June 3, Public Works Minister Dody Hanggodo conveyed concerns from the Indonesian Chamber of Commerce and Industry (Kadin), noting that many businesses are "fed up" with participating in KPBU projects.
He said this must be addressed quickly, as private sector involvement is crucial for infrastructure development given the government’s limited fiscal capacity.
“If even local players are losing interest, how can we hope to attract foreign investors?” Dody said, as quoted by Antara.
While President Prabowo Subianto may not be as aggressive as his predecessor Joko “Jokowi” Widodo in pushing infrastructure, his agenda still includes some ambitious megaprojects, including a giant seawall along Java’s northern coast, the construction of 3 million homes annually and the development of support infrastructure for food estates.
There are Rp 1.9 quadrillion (US$116.78 billion) worth of infrastructure projects planned throughout 2025 to 2029, including roads, bridges, dams and housing. However, the government is set to only contribute Rp 1.15 quadrillion or 60.5 percent of the total.
The remaining Rp 753.1 trillion will require funding from other sources, especially private investors through the KPBU scheme.
