Infrastructure development needed to boost economic growth<\/p>\n
The West Java administration held a two-day summit last week to
\noffer 57 infrastructure projects worth Rp 35 trillion (US$3.53
\nbillion) to investors as part of the province's efforts to boost
\neconomic growth from the current 5 percent to 8 percent over the
\nnext five years. The projects are expected to reduce unemployment
\nand poverty in the province. The Jakarta Post's Zakki P. Hakim
\ntalked to Asian Development Bank (ADB) senior advisor Vladimir
\nBohun, whose institution supported the event financially. The
\nfollowing are excerpts from the interview.<\/p>\n
Question: Why was the ADB interested in the West Java
\nInfrastructure Summit?<\/p>\n
Answer: Because we believe that (infrastructure) projects at
\nthe subnational level, which means the provincial and district
\nlevels, will become increasingly important if the (central)
\ngovernment wants to achieve its macroeconomic targets. It needs
\ninfrastructure development at all levels from national,
\nprovincial to district. Without it, it would be difficult to
\nachieve the goals.<\/p>\n
Now that we have infrastructure projects being offered at both
\nthe national and regional levels, which approach do you think is
\nmore important?<\/p>\n
The whole thing is still fluid. You know, this morning (on
\nThursday) Sri Mulyani (State Minister for National Development
\nPlanning) said the government was still catching up with the new
\nlaws, and there was still local confusion on how decentralization
\nshould really work.<\/p>\n
Therefore, for this year, we will not see a significant
\nimprovement in infrastructure development. But we hope that the
\ngovernment can get its act together and next year the
\ninfrastructure summit will start to work out.<\/p>\n
Do you mean a significant improvement as regards only
\ngovernment spending on infrastructure projects?<\/p>\n
No, both. The public sector resources for infrastructure have
\nto be increased and at the same time large-scale private sector
\npartnerships need to be achieved. Only with such a combination
\ncan Indonesia (improve its infrastructure). If the government now
\nin the state budget allocates billions of dollars
\nfor fuel subsidies, then that money will not be available for
\ndevelopment purposes.<\/p>\n
The ADB has a tagline 'Fighting poverty in Asia and the
\nPacific'. How does that apply to its involvement in the event?<\/p>\n
Yes, poverty alleviation is the main goal but equally
\nimportant is economic growth. If I put it another way, you can't
\nachieve poverty alleviation without sound economic growth and you
\ncan't achieve sound growth without good infrastructure. So, you
\nsee the link.<\/p>\n
Did you get the impression from this event that most of the
\ninfrastructure projects are concentrated in urban areas, mostly
\nin the more advanced northern part of the province, instead of
\nbeing spread evenly to help rural areas?<\/p>\n
I like (this morning's) speech by Coordinating Minister for
\nthe Economy Aburizal Bakrie, who put equal emphasis on
\ncommercially viable projects where the private sector is welcomed
\nand needed, but also on infrastructure development in rural areas
\nthat calls for the public sector obligation. Both are equally
\nimportant.<\/p>\n
Are you optimistic after this summit?<\/p>\n
The government has expressed its political will from the
\nhighest level, starting from the President through his top
\nministers and they started with the Infrastructure Summit in
\nJanuary in Jakarta. That is continuing here.<\/p>\n
Now, this will have to be translated into reform -- some
\nimportant reforms have been implemented -- but it has to continue
\nand also (the implementation of) what we call \"model projects\".<\/p>\n
Projects that have been selected in a transparent way, where
\nthe private sector sponsors have been selected through
\ncompetitive bidding. Such projects need to be implemented.<\/p>\n
You can do the same thing at the provincial level. You have
\nthis Cikalong port project, which is technically, economically
\nand financially viable, and would be a good example of a public-
\nprivate partnership. The public sector at the provincial level
\nprovides the port infrastructure and then you select the private
\nsector to build the superstructure, like cranes, for operating
\nthe port.<\/p>\n
Would it be desirable for other province to follow what West
\nJava has done?<\/p>\n
Yes, sure it's necessary. Because one can't achieve, manage
\neverything from the center under the current decentralization.
\nAll levels must be involved and have to follow the same goals.<\/p>\n
But not necessarily through holding a summit?<\/p>\n
This (the summit) is just to express the will, that they want
\nto do it and will proceed with the reforms, and also to publicize
\ninformation and projects. It's a good beginning, but it's
\ncertainly not the end.<\/p>\n
I understand that the ADB supported the event financially. Why
\ndo you do this?<\/p>\n
Yes, we have been pleased to be co-sponsor, exactly because we
\nsee infrastructure investment at the provincial level as very
\nimportant.<\/p>\n
So, if other provinces proposed holding a similar event, would
\nyou also help finance them?<\/p>\n
That could be difficult because we don't have unlimited
\nresources. We hope this will pose a good demonstration so that
\nother sponsors may step in to do the same.<\/p>\n
Again, this is a good beginning and we welcome very much the
\ninitiative of the provincial administration and the (central)
\ngovernment.<\/p>",
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"sponsor": "Okusi Associates",
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