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Minister Admits Indonesia to Fall Short on Infrastructure Goals

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BY TITO SUMMA SIAHAAN | JULY 24, 2013 10:21AM

A senior minister has admitted the government will not fulfill its infrastructure development promises before the president leaves office late next year.

President Susilo Bambang Yudhoyono has selected 11 infrastructure priority projects for his second term in office, which started in 2009, but National Development Planning Minister Armida Alishjahbana said at least four of them would not be achieved in time.

“Based on our review, we discovered four infrastructure programs that are still far from the objectives,” Armida told an event to break the Ramadan fast on Monday.

The projects in question include the building of railroads, toll roads and subsidized apartments.

Armida blamed the delays on problems with land acquisition, which are a significant factor in Indonesia’s lackluster infrastructure development, with the delays exacerbated by a lack of action from regional governments.

The national government has turned to public-private partnerships given its limited ability to finance infrastructure, but Armida said lower level governments had been reluctant to take part.

“Regional governments have to work to make infrastructure projects more attractive to the private sector. They need to gain deeper understanding on public-private partnership schemes,” she added.

“Next year, there is still a Rp 57.33 trillion [$5.6 billion] gap in infrastructure financing in order to achieve our objectives.”

The project that is furthest from its goal is toll-road construction.

The government sought to construct 1,296 kilometers of toll roads between 2009 and 2014 with help from the private sector, but has so far only completed 296 kilometers of toll road.

On the program to expand the capacity of 19,370 kilometers of roads across the country, only 10,830 kilometers have been completed so far.

On the railway track objective, the government has constructed 319 kilometers of tracks, below the 954-kilometer objective. It built 435 subsidized apartment twin-blocks, while the objective was to add at least 650.

The government fared better on other fronts in its infrastructure targets.

Since 2009, it claimed to have built or rehabilitated 275 airports, compared to a target of 205, and 607 seaports, compared to a target of 300.

Other priority projects that may yet reach their target include improvement to broadband connectivity, which currently covers 88 percent of the regencies and municipalities.

The National Development Planning Agency (Bappenas) says it needs Rp 186.84 trillion in infrastructure financing next year, while the government’s indicative budget only gives it Rp 129.51 trillion.

Infrastructure spending accounted for less than 5 percent of Indonesia’s gross domestic product last year and the government is striving to bring it back to the pre-1997 level of 7 percent.

This year, the government estimates that its infrastructure spending will amount to Rp 438.1 trillion, up from Rp 385.2 trillion last year.

In the 15-year Masterplan for the Acceleration and Expansion of Indonesia Economic Development (MP3EI) released in 2011, the government identified 400 key projects to advance the economy.

The plan designated specializations for each of six geographic corridors and promoted strengthening connectivity and science and technology.

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Taken from Jakarta Globe: http://www.thejakartaglobe.com/business/minister-admits-indonesia-to-fall-short-on-infrastructure-goals/

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