\"Delays: A general view of Jakarta\u2019s mass rapid transit construction site on a busy street in Jakarta. Investors hoping for
\nPresident Jokowi to speed up infrastructure works have been disappointed by delays. \u2013 EPA<\/p>\n
JAKARTA: Investors hoping for President Joko Widodo to speed work on Indonesia\u2019s infrastructure projects have been disappointed,
\nwith a plan for a US$2bil airport railway line in the capital spotlighting the delays and bureaucratic infighting involved.<\/p>\n
Nearly half the 10 projects to which Widodo gave priority when he took office last year are languishing for lack of cooperation
\namong ministries he has been unable to whip into line.<\/p>\n
\u201cSomebody has to coordinate the orchestra of stakeholders,\u201d said Emma Sri Martini, head of government-owned infrastructure
\nfinance firm Sarana Multi Infrastruktur (SMI). \u201cIf decisions for infrastructure are slow, there won\u2019t be activity in any
\nsector.\u201d Widodo is racing against time to create sufficient jobs for the 2 million Indonesians who enter the workforce annually,
\nas he struggles to revive economic growth that has fallen to the weakest pace in around six years.<\/p>\n
His promised splurge on roads, ports and power plants is critical as Indonesia\u2019s traditional engines of growth, consumption and
\ncommodity exports, are faltering, while businesses are shedding jobs fast.<\/p>\n
When governor of Jakarta, Widodo had managed to break an almost decade-long impasse over construction of a ring road around the
\nIndonesian capital, and investors had hoped to see him, as president, repeat the feat on the national level.<\/p>\n
Nine months into his tenure, the signs are not encouraging.<\/p>\n
The airport railway line, designed to cut the travel time to one of the world\u2019s busiest airports to 30 minutes from as much as
\nthree hours, has suffered a delay of at least two years in construction.<\/p>\n
Officials have locked horns over its route and how to fund it, but in the absence of significant government support, it hardly
\noffers private investors a worthwhile return.<\/p>\n
\u201cThe project is indeed taking quite a long time because of the preparation for all the studies,\u201d said transport ministry
\nofficial Sugiadi Waluyo.<\/p>\n
Just last month, for example, newspaper Bisnis Indonesia reported that Transport Minister Ignasius Jonan had sought a route
\nchange to take advantage of existing tracks.<\/p>\n
But all the authorities involved must sign off on the change, leading to a delay, SMI\u2019s Martini said. \u201cA single decision might
\nseem simple, but the consequence can be a delay multiplier.\u201d The route must be hammered out before potential investors from
\ncountries such as China, Japan and South Korea will take even the first step, she added.<\/p>\n
As the government weighs the merits of one-off or deferred funding for the railway project, it expects private bidders to get
\nreturns chiefly from future traffic volumes and fares.<\/p>\n
\u201cThere\u2019s potentially a lot of appetite for the airport train project, but the main question for investors and lenders is, \u2018How
\ndo you make money out of it?\u2019\u201d said Mark Giblett, group head of Asia project finance for Sumitomo Mitsui Banking Corp.<\/p>\n
Many companies preferred to be paid to build and operate railways for a fixed time, as that carries a lower revenue risk, he
\nadded, but such a structure meant the government would have to shoulder most of the costs.<\/p>\n
Another question hangs over the financial feasibility of two railway lines to a single airport, as the state railway firm is set
\nto complete a separate line next year, at a cost of 1.2 trillion rupiah (US$90mil).<\/p>\n
Government officials say the lines target two different markets, airline passengers and commuters, but investors worry.<\/p>\n
\u201cMost airport rail links struggle to make money, more so if there are more than one line servicing the airport,\u201d said Raj
\nKannan, managing director of Tusk Advisory, who advises potential investors in Indonesia\u2019s infrastructure projects.<\/p>\n
Widodo must act fast as Indonesia risks falling behind neighbours who are aggressively building infrastructure.<\/p>\n
Indonesia\u2019s cost of moving goods was as much as 27% of gross domestic product in 2013, outstripping Malaysia, Thailand and
\nVietnam, a study backed by the World Bank showed.<\/p>\n
Investors are eager for Widodo to speed things up.<\/p>\n
\u201cThe biggest thing that Jokowi thought he could do, and that he realised that he cannot do, is coordinate all his ministries,\u201d
\nsaid OCBC Bank economist Wellian Wiranto, referring to the president by his nickname.<\/p>\n
\u201cHe has to step up, because at the end of the day, he\u2019s the ultimate coordinator.\u201d<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesian-construction-works-delayed", "image": "infrastructure_cranes.jpg" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }