T

he Economic Research Institute for ASEAN and East Asia (ERIA) has completed a master plan for the development of economic corridors in eastern Sumatra and northern Java.

A senior policy advisor for ERIA, Takahiro Seki, said Thursday that the institute was now ready to introduce the master plan to related governmental institutions so that they could start supporting the projects.

“The success of the economic corridors’ development will depend heavily on the government’s efforts to optimize the public-private partnership [PPP] scheme for infrastructure development,” he told a press conference at ERIA’s office in Jakarta.

Indonesia has identified six economic corridors — eastern Sumatra-northwest Java, northern Java, Kalimantan, western Sulawesi, East Java-Bali-East Nusa Tenggara and Papua — as those most important to spur the country’s economic growth.

The development of the six corridors will be carried out under the Indonesia Economic Development Corridor (IEDC) project, with the aim of enhancing growth of economic sectors in targeted areas by creating supportive policies and clear institutional frameworks, in addition to building necessary infrastructure.

The project manager for IEDC, Edwin Utama of the Boston Consulting Group, said that the master plan had identified economic sectors in eastern Sumatra and northern Java that had to be prioritized.

“In Sumatra the focus is on palm oil, rubber and coal, while in Java the sectors are manufacturing industries like food products, transportation equipment and textile products,” he said.

He listed examples of infrastructure essential to the plan, including, ports, highways and rail roads so that sectors like palm oil, rubber and coal, could relieve transportation problems that hindered productivity and efficiency.

The Japanese government has announced its commitment to partly finance power plants, ports and road projects required to accelerate the development of the IEDCs in Java and Sumatra, a report from Bloomberg said.

The Indonesian government has estimated that the development of economic corridors in those two areas will cost more than US$89 billion.

Japan will provide funds and advice on coal and geothermal projects as well as related infrastructure for the economic development corridors, according to documents circulated at the Japan-Indonesia Joint Economic Forum in Tokyo.

Edwin said investments, both from local and foreign investors, would have a decisive effect on the success of the projects.

Many investors have been reluctant to invest in infrastructure projects due to unclear regulations and sophisticated processes.

After completing the first master plan, Seki said, the institute would continue working on the second master plan for the Kalimantan and western Sulawesi corridors and prepare a concept plan for the East Java-Bali-East Nusa Tenggara and Papua corridors.

The IEDC project is part of a comprehensive Asia development plan formulated by ERIA. The plan will be submitted and discussed at the 5th East Asia Summit in Vietnam in October 2010.

ERIA is a research institute initiated by experts from 16 countries. The establishment of the institute was formally agreed to by all country leaders at the 3rd East Asia Summit in Singapore in November 2007.

Among the members of the institute’s governing board are ASEAN Secretary-General Surin Pitsuwan and Vietnam’s deputy chief of the party central committee Dinh Van an. (rdf)