91 infrastructure projects on offers at summit
Urip Hudiono, The Jakarta Post, Singapore
The Indonesian government will offer a total of 91 infrastructure projects worth up to US$22 billion to local and foreign investors in next week's Infrastructure Summit.
Coordinating Minister for the Economy Aburizal Bakrie said the government was also offering members of the Singaporean business community to help manage the financing of the projects, which is higher than the 37 previously stated by the government.
"We have also seriously considered (investors') suggestion of providing them with tax incentives for investing in infrastructure projects," he said on Wednesday after a two-day meeting with major companies in Singapore.
Aburizal explained that the 91 projects would be the first phase of the government's massive development of infrastructure projects over the next five years.
"Details of the projects will be presented and offered to investors through open bids during the summit," he said. "Following the two- to three-year projects, the government will then offer the next batch of projects in September or October."
The government has estimated it would need some $75 billion to finance the infrastructure-related projects. But it could only finance approximately 20 percent itself, mostly for "economically viable" projects. The remaining 80 percent is expected to come from local and foreign investors.
Head of the government's special team for infrastructure Raden Pardede earlier this week said the projects were expected to give investors a return of between 15 percent and 23 percent on average.
"We also expect investors to help in the reconstruction of tsunami-stricken Aceh by becoming the contractors or suppliers," Aburizal said.
He also explained that the government's plan to ask Singaporean financial institutions to manage the projects, was because foreign investors usually consulted with people in Singapore before investing in Indonesia.
"Foreign investors usually ask Singaporean banks and analysts about investments in Indonesia and whether the (Indonesian) government is really serious about improving investment," he said.
"Singapore can help us prepare the projects' prospectuses and offer them to the market."
On the government's plan to give tax incentives, Aburizal said the incentives would be needed as some projects -- despite being commercially viable -- would still not be attractive enough for investors.
"The projects could be more attractive if, for example, interest income paid to investors were to be exempted from taxes before the projects started generating revenue," he added.
Such policies have gained a warm welcome from the Singaporean business community, 14 different groups promised to participate in the summit.
"Many are interested in investing in the development of seaport facilities to help Indonesia's agricultural sector gain easier access to the market," said Lee Yi Shyan, chairman of the International Enterprise Singapore, a group of the city-state's prominent enterprises.
Singapore foreign minister George Yeo and Keppel marine group director Lim Chee Onn, however, warned the government to keep the projects transparent and free from corruption to ensure success.