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View all search resultsGovt faces hurdles in bridging infrastructure funding gap
The government is banking on corporate participation to bridge Indonesia’s infrastructure funding gap, but experts warn that strained finances of state-owned construction firms and the current reluctance of private investors to commit to large-scale projects may hinder progress.
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Construction work is underway on July 2, 2024, on the Bayung Lencir-Tempino toll road in Sebapo, Muaro Jambi regency, Jambi. (Antara/Wahdi Septiawan)
T
he government is banking on corporate participation to bridge Indonesia’s infrastructure funding gap, but experts warn that strained finances of state-owned construction firms and the current reluctance of private investors to commit to large-scale projects may hinder progress.
Finance Minister Sri Mulyani Indrawati said the investments needed to finance infrastructure projects from 2025 through 2029 were projected at US$625 billion, of which the government could only cover about 40 percent.
The rest is expected to come from state-owned enterprises (SOEs) and the private sector.
“We are facing a big funding gap. This will necessitate private sector participation and support from many partners and will require innovative funding mechanisms,” Sri said at an infrastructure conference in Jakarta on June 12.
SOEs under financial pressure
Indonesia's infrastructure SOEs have been underperforming and burdened by debts accumulated over the years from carrying out massive government projects.
In the first quarter of this year, four of them, PT Adhi Karya, PT PP, PT Wijaya Karya and PT Waskita Karya, reported a total of Rp 184 trillion (US$11.25 billion) in liabilities, which marks only a slight improvement from Rp 210 trillion a year earlier.
