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Indonesia to spend big on infrastructure amid pandemic pressures
The government has decided to pour tens of trillions of rupiah into SOEs in pursuit of its ambitious development projects even as economists question their capabilities, especially at a time when the money would be better spent on public health.
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An illustration shows a portrait of President Joko Widodo against the backdrop of a road construction project, one of the projects in his cornerstone infrastructure development policy. (JP/Agus Dermawan T.)
T
he government is adamant about spending more than Rp 100 trillion rupiah (US$6.96 billion) to save ailing state-owned construction firms to turn its ambitious infrastructure dreams into reality.
The massive capital injections, which accounts about 4 percent of the total of the draft 2022 state budget (RAPBN 2022), is pending final approval by the House of Representatives.
The proposed state capital injections amount to an additional Rp 33 trillion to top up 2021 spending and another Rp 72 trillion for 2022.
According to data from the State-Owned Enterprises (SOEs) Ministry, more than 70 percent of the funds are earmarked for construction SOEs involved in toll road projects, namely Rp 50.35 trillion for PT Hutama Karya, Rp 10.9 trillion for PT Waskita Karya and Rp 2 trillion each for PT Adhi Karya and PT Perumnas.
State-owned railway company PT Kereta Api Indonesia (KAI) is to be given Rp 11.1 trillion for the Greater Jakarta LRT project and the Jakarta-Bandung high-speed railway project, even though a presidential regulation stipulates that the latter should not involve any state funding.
The ministry’s data show that some SOEs are not in great shape after their 2020 revenues dropped by up to 40 percent while COVID-19 ravaged the economy.
