$200 billion needed for infrastructure: Soeharto

$200 billion needed for infrastructure: Soeharto

JAKARTA (JP): Indonesia needs more private investment,
including foreign investment, to finance the development of its
infrastructure which will cost about US$200 billion over the next
10 years, President Soeharto said last night.

Indonesia requires huge investment in basic infrastructure to
sustain its high economic growth with a more equitable
distribution of wealth, Soeharto said while opening an
international conference on infrastructure at the State Palace.

"For this reason, the provision of basic infrastructure by the
private sector is extremely important," he said.

"As a general illustration, the infrastructure development
required in Indonesia over the next 10 years is estimated to cost
around $200 billion, most of which is expected to come from
private investment," he said.

Because of the vast finance required, Soeharto continued,
Indonesia is seeking various private finance options, including
those from international financial markets.

He said that to attract more foreign investment for
infrastructure, Indonesia would continue to open its doors widely
to foreign investment and maintain its free-foreign exchange
regime.

"This is the reason why we shall continue to encourage the
creation of a more open economic system through deregulation and
reduced bureaucracy," the President said.

He said the private sector had been increasingly involved in
financing the country's infrastructure over the last 10 years,
especially toll roads, power generation and telecommunications.

In addition, Soeharto said, the government is offering water
projects to private investors, including clean water projects for
households and industry.

By giving the private sector a bigger role in infrastructure
development, Soeharto said, the government could focus more on
the development of society, a more equitable distribution of
wealth and alleviation of poverty.

He said that during the current Five-Year Development Plan,
which will end in March 1999, the private sector is expected to
contribute 77 percent of the investment in infrastructure
development.

The government last year upwardly revised its target for
investment in the current five year development plan to Rp 815
trillion ($345.3 billion) from its previous target of Rp 660
trillion to attain a targeted growth rate of 7.1 percent a year.

He called for improved bilateral, regional and multilateral
cooperation so that the use and allocation of resources and
technology could be maximized.

Also important is the role of multilateral financial
institutions which, according to Soeharto, have allocated more
than 60 percent of their loans toward infrastructure development.

The three-day, ministerial-level international conference on
infrastructure, sponsored by the World Bank, features a number of
foreign dignitaries, including Malaysia's Deputy Prime Minister
and Minister of Finance Anwar Ibrahim.

The conference is being attended by 30 ministers, 36 senior
government officials, 26 bankers and 68 senior executives of
multinational companies from 18 countries.

The meeting will discuss topics on regulatory and other
policies to optimize investment in infrastructure, financing
alternatives, contracting mechanisms for private investors and
sectoral strategies to balance public and private interests. (rid)

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