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em>Infrastructure bottlenecks rank high among the constraints hindering the Indonesian economy from delivering its true potential. Much of the responsibility in infrastructure development, particularly on roads and dams, lies with the Public Works Ministry. To determine a better sense of where the country is in terms of infrastructure development, The Jakarta Post’s Andi Haswidi and Nurfika Osman recently spoke to Public Works Minister Djoko Kirmanto. Below is an edited version of the interview.

Question: Some say that the Public Private Partnership (PPP) approach is not that successful. What do you think and why?

Answer: Honestly, the Public Private Partnership scheme has not yet brought success in the country, but the change is tremendous. For instance, when constructing the Jagorawi toll road in 1978, the state set up a company called PT Jasa Marga that acted as a toll road operator. However, Jasa Marga also emerged as regulator because we did not open the service to the private sector. We revised the law on roads and established the Toll Road Authority Agency (BPJT) as regulator in 2004. This law puts Jasa Marga only as operator and it has to compete with other investors if it wants to construct toll roads. It really attracts the private sector to invest in toll roads.

Do you think the high interest rate for the PPP scheme is also a crucial problem here?

Yes, it is, because if we compare the interest rates of our banks to the banks in foreign countries, our interest is high. When the interest rate is high, the rate of return becomes lower. It is a bottleneck, but I think we are accustomed to this condition.

Regarding land acquisition, the law was passed last year, but why did the government take such a long time to issue the presidential decree?

The debates among those who are experts in law are contentious. I am an engineer, not a lawyer, so I think logically. If a project could not be done in the first place, I would say no. But for lawyers, it is different.

I led the last meeting and told everyone that we needed to finish the elaboration next week so that the President could sign the decree in early June, because this factor is very crucial to end land acquisition problems in the country.

Transition of older projects was the main issue during the deliberation process, whether they should be included under the old regulation or the new one. We have recently come up with a solution. Projects that are currently under way can adhere to old regulations, but if they are not completed before December 2014, they will be required to use the new Land Acquisition Law and the new presidential regulation.

Projects that might be affected by the new regulation are the Trans-Java toll road because several parts of the project are not finished yet, such as the Kanci–Semarang toll road section.

What are your plans regarding ASEAN Connectivity?

The air and sea transportation sectors are the key here and it is the domain of the Transportation Ministry. The most important thing is that we are internally integrated well, such as connecting Banjarmasin to Pontianak before we connect to ASEAN. Just as Hatta Rajasa said; internally integrated, globally connected.

We have to strongly build internal integration, such as construction of ports across the country. I am close to the transportation minister and he has taken brave steps by buying small ferries to operate in pioneer routes to Sorong, Manokwari and Jayapura.

I went to Sorong yesterday and, God willing, an 18-kilometer road heading to the port will be finished next year. Our team is negotiating with the indigenous people there.

What is the rate of capital spending under your department?

It is because we are accustomed to being involved in tender processes. If the House of Representatives has agreed on our proposed budget in October, we will start the tender in November, even before the funds are disbursed by the Finance Ministry. But, we will not sign the working contract at that time.

I can check the progress of the project at anytime; so can the workers here.

People are afraid of this mechanism, but I stand by to protect them by issuing circulars, telling my men that I will be responsible for the policy.

Last year, we only absorbed 93 percent of a Rp 57 trillion (US$6.09 billion) budget due to a new regulation in a tender process and saving policy. We usually absorbed 95 percent or more, so last year year’s figure is not good.

This year we will spend Rp 62.5 trillion from the state budget and we have just received a Rp 12 trillion fund from last year’s budget surplus.

Some 51 percent of the budget will be used for western part of Indonesia and the rest for the eastern part of Indonesia. We allocate the surplus budget for East Nusa Tenggara, West Nusa Tenggara, Papua and Maluku.

So you are creating software to monitor the progress of any project?

Yes. We created this and it is accessible through many devices —from my iPhone 4 to my personal computer.

We have all the data here, so when I visit a project site, they cannot lie. As to our project in Bengawan Solo, I have all the data here.

This is what we call e-monitoring and we have been using this for several years. We also have
e-procurement so we do not have to meet one another when we tender a project. The problem is if an area does not have good Internet access.