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Analysis: Questions raised about BSD, PIK following inclusion as PSNs
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Motorists drive on May 4, 2016 along the Jakarta Pantai Indah Kapuk (PIK) International Bridge connecting PIK 2 Sedayu Indo City and Golf Island in North Jakarta. (JP/Dhoni Setiawan)
T
he government recently approved 14 new national strategic projects (PSN), including Pantai Indah Kapuk (PIK) 2 and Bumi Serpong Damai (BSD) in Banten, both of which are developments by publicly listed property companies. However, with these projects set to be funded by private investors, questions have been raised regarding the reasoning behind their inclusion as PSNs.
Regarding the PSN in PIK 2, known as "Tropical Coastland" spanning 1,755 hectares, the area is slated to be developed as a green area and eco-city aiming to become a green tourism destination. The project has received support from the Tourism and Creative Economy Ministry, and with construction work set to begin this year and continue until 2060, the project has a planned investment value of Rp 65 trillion (US$4.09 billion).
Meanwhile, the BSD project entails the development of a 59.6-hectare integrated area focusing on education, health care, biomedicine and the digital economy. With a planned investment value of Rp 18.54 trillion, the project has gained the support of the Health Ministry. Additionally, discussions are ongoing to develop the area into a special economic zone, with several criteria that still need to be met and evaluated.
According to reports, the two projects were proposed as PSNs from 2021-2022. It was only after a lengthy process that their technical recommendations were issued this year. Now, with the projects listed as PSNs, the stages and administrative procedures can be expedited by the relevant ministries.
Despite the reasons for proposing BSD and PIK 2 as PSNs, both areas have already grown rapidly into developed and self-sustaining areas, prompting questions about the true motives behind their inclusion as new PSNs. Of note are the property conglomerates behind the development and management of the BSD and PIK 2 projects. The former is part of PT Bumi Serpong Damai (BSDE), under the Sinar Mas Group, while the latter is part of the Agung Sedayu Group and Salim Group.
As all three property conglomerates are part of a local consortium led by Agung Sedayu Group founder Sugianto "Aguan" Kusuma, planning to invest about Rp 20 trillion in the new capital city of Nusantara (IKN), observers suspect that the inclusion of BSD and PIK 2 projects as PSNs is a form of reciprocal support for the conglomerates investing in the IKN. Specifically, the government appears to return their support by designating BSD and PIK 2 as PSNs.
Moreover, the government's move is viewed as part of a broader agenda to ensure the success of the IKN's construction into a capital city, given the government's struggle to attract foreign investors thus far. According to Transparency International Indonesia (TII), there is a notable lack of clear information, such as the rationale for designation and details on project planning and budgeting, regarding the two projects, as neither BSD nor PIK 2 were ever mentioned or reflected in the annual reports of the PSN organizing committee.
