Public Expose of Indonesia Districts and Cities

indonesia infrastructure

Picture Source: http://gdb.voanews.com

The investment value of government’s infrastructure projects that ready to be realised in 2013 is estimated of IDR 434 trillion or 4.56% of GDP.

However, in order to achieve the ideal fund allocation of at least IDR 300 trillion in the next year, one of the options that will be taken is to cut the budget of energy subsidy up to 50% from the normal allocation.

Minister for National Development Planning / Head of Bappenas Armida Alisjahbana explains that the total investment of IDR 434 trillion is a combination of government and private infrastructure investment. In this case, the central government will allocate IDR 188.4 trillion for infrastructure spending in the 2013 state budget plan and may increase to Rp 200 trillion subject to the plan for raising electricity tariffs by 15% is approved by the House of Representatives.

Government’s infrastructure investment

fund is also obtained from regional infrastructure spending plan which is estimated at IDR 96, 56 trillion, or about

18% of the total fund transfer to region in the 2013 state budget plan of which about IDR 518 trillion. Additional infrastructure investment funds outside the government is obtained from the state-owned enterprises, which is estimated to reach IDR 77 trillion, while the private sector is around IDR 60 trillion.

All aggregated value reached 4.56% of gross domestic product [GDP]. This percentage is important because there is rule of thumb infrastructure investment of at least 5% of GDP.

The Government, he added for the post 2013. It continues to strive for infrastructure investment that can be driven to over 6% of GDP in order to support economic growth above 6%.

The amount is based on the portion of Indonesia infrastructure investment on GDP before the economic crisis in 1998 that ranges from 7% to 8%.

In short-term government will concentrate on the value creation strategy through the linkage between infrastructure spending with private project investment plan based on the Master Plan for the Acceleration Indonesian (MP3EI).

The synchronization was implemented in the government work plan in 2013 state budget plan that planned to continue until 2014.

The other strategy, is focus on government spending for infrastructure development of eastern Indonesia as an effort to support priority programs such as food sustainability.

Associated with efforts to achieve the ideal infrastructure investment spending amount, which are worth about IDR 300 trillion, Deputy Finance Minister Mahendra Siregar said his ministry will improve the utilization of tax through the state budget, including the possibility of taking the option to cut energy subsidies by half.

Government wants to increase the year 2014 infrastructure budget up to IDR 400 trillion.

“With the potential spending of fuel subsidy at the amount of IDR 300 billion, IDR400 trillion for infrastructure budget is actually not too high,” he said.

For 2013, the government has allocated a budget of USD 20 billion for the realization of various projects such as highways, railroads, and new airports.

According to the President, Indonesia requires an investment of not less than USD 250 billion for building the infrastructure.

“T o solve the problem of financing, Indonesia is always open to the participation of other governments, and the private sector to invest in our country,” the president said

Public Expose of Indonesia Districts and Cities as the investment destination. The magnitude of domestic consumption and the total population in Indonesia can become the investor consideration to make their investment in Indonesia, although there are many policies that need to be improved especially in terms of licensing.

The main thing to be done by Indonesia government is to create innovation in various investment sectors and no longer solely depend on cheap labor and focused on natural resources.

On the other hand, the emergence of various government policies related to the entrance of investors, make foreigner investors need to reevaluate every existing opportunity. The factor of laws, government regulations and politics often lead to various constraints.