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)