$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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