Govt gets $151m loan from ADB for road projects
The Jakarta Post, Jakarta
The Asian Development Bank (ADB) has approved US$151 million in loans to Indonesia to help fund road rehabilitation projects in Sumatra and Kalimantan.
In a media statement released on Friday, the Bank said the fund would be spent to rehabilitate a total of 1,300 kilometers of roads and repair -- either widen or replace altogether -- about 40 bridges.
The roads and bridges are located on the Trans-Sumatra central and eastern corridors and include the Trans-Kalimantan highway, which links production areas and markets through 10 provinces on the two islands.
"By improving the condition of these high-priority transportation links, the project will boost trade and investment, promote regional cooperation, and improve accessibility and living conditions in isolated areas," said Manzoor Rehman, the project team leader, in the statement.
The roads also serve interregional trade by providing a corridor from Indonesia to other ASEAN members through links with Malaysia and Brunei Darussalam. The Kalimantan highway, in particular, is a major link between Brunei, Indonesia and Malaysia.
"As such, it will boost economic growth and improve the welfare of the poor."
The fund, which carries a 25-year term including a grace period of five years, will cover about 70 percent of the project's cost, estimated at $215.8 million, with the Indonesian government contributing about $64.8 million.
The Ministry of Public Works will be the executing agency for the project, slated for completion in June 2010.
Assisting the improvement of Indonesia's roads since 1976, the ADB has extended loans to the sector amounting so far to $1.57 billion for 15 projects.
Most of Indonesia's basic infrastructure, including roads, is in bad shape, with the government -- crippled financially by the 1997-1998 economic crisis -- concentrating more on achieving fiscal sustainability and cutting spending for such projects.
Lack of fresh investment from the private sector has only made it worse, attributable mainly to the adverse investment and business climate here at home.
The ADB said that the deteriorated roads have increased the transportation costs for the agriculture, plantation, petroleum and industrial sectors in the country, including Sumatra and Kalimantan.
"With fiscal constraints likely to remain, external support is critical to preserving, upgrading and developing priority links and supporting economic recovery," said Rehman.