Indonesia needs $52b for infrastructure projects

Indonesia needs $52b for infrastructure projects

JAKARTA (JP): Indonesia needs US$52 billion in investments for
four major infrastructure projects for electricity,
telecommunications, roads and water supply within the next five
years, a minister said.

"To give some idea of the enormous problems we face, consider
Indonesia's infrastructure requirements over the next five
years," State Minister for National Development Planning
Ginandjar Kartasasmita told an APEC expo and business meeting at
the Jakarta Trade Center in Kemayoran yesterday.

He said, for example Indonesia must increase the switching
capacity of its telecommunications networks by 160 percent from
three million to eight million lines, at a cost of $6 billion and
increase electricity generation capacity by 60 percent from 22
gigawatts to 36 gigawatts at a cost of $25 billion.

"Over 10,000 kilometers of new roads must be constructed,
including 310 kilometers of toll roads, at costs of $13 billion,"
he said.

Ginandjar, who is also chairman of the National Development
Planning Board, said Indonesia also plans to expand the capacity
of its water supply distribution to cover another 22 million
people, including the provision of small scale supplies to 22,000
villages, at the cost of $7.8 billion.

"The amount of infrastructure investments needed in Indonesia
over the next five years will exceed $50 billion, absorbing close
to 20 percent of the country's total investment funds, both
public and private, for all activities," Ginandjar said.

He said raising that amount of funds will be an enormous
challenge and the government, whose financial capability is
limited, is inviting private sector companies to provide a major
portion of the funds.

Bonds

"If funding is the only constraint, private sector capital can
be raised by selling infrastructure bonds, such as those already
floated by the state-owned toll road company PT Jasa Marga and
the state electricity firm PLN," he said.

The government announced last week that the state-owned
domestic telecommunications operator PT Telkom, PLN and Jasa
Marga will float shares on domestic and overseas markets
following the successful debut of PT Indosat's dual listing on
the domestic market and the New York Stock Exchange. Indosat, the
provider of international telecommunications services, raised
$800 million from the sales of its shares on the New York Stock
Exchange and Rp 650 billion ($297 million) on the domestic
market.

Ginandjar told reporters that privatization should be
clarified. Privatization has two directions which are: providing
the opportunities for private firms to operate businesses which
were previously state run firms and offering the assets of state
firms to the private sector.

"We don't need to sell PLN, just offer some electricity
projects to private firms," he said.

Ginandjar said that in road construction projects, the
government has decided state firms will not construct toll roads
anymore but will conduct feasibility studies, while the
constructions will be offered to private companies.

PLN's president, Zuhal, told reporters that his company,
currently serving around 15 million customers, will establish
subsidiaries which will offer shares to the public. "Preparation
for this will likely be completed by next year or 1996," he said.
(icn)