Tue, 08 Feb 2011

From: The Jakarta Globe

By Faisal Maliki Baskoro
The government hopes improving infrastructure and developing science and technology under a new master plan for economic development will help Indonesia become one of the world’s top 10 economies by 2030.

Six economic corridors make up the crux of the plan, which details a set of government priorities for the next 15 years. It is designed to push per capita income to between $12,855 and $16,180 by 2025 and to $26,000 by 2030. It is now just above $3,000

“The master plan is a business plan for a credible, incorporated Indonesia. It will try to come up with breakthroughs and cut off problems of the past,” Hatta Rajasa, the coordinating minister for the economy, said on Monday at a forum introducing the master plan to the private sector.

According to the master plan, six regions will be designated as main economic corridors.

Sumatra will be developed as an agricultural and national energy center, while Kalimantan will focus on mining and energy, Sulawesi-North Maluku on agriculture and fisheries, Bali-Nusa Tenggara on tourism and supporting national food self-sufficiency, Papua-Maluku on natural and human resources, and Java on industry and services.

The master plan also prioritizes eight sectors: manufacturing, agriculture, fisheries, mining, tourism, telecommunications, energy and industrial zones.

Hatta said realizing the master plan would require $932 billion in investment until 2030. The first stage, which will end in 2014, will cost around $76 billion for infrastructure, with the second stage requiring $856 billion until 2030.

Edwin Utama, from Boston Consulting Group, the project manager tasked with developing the master plan, said the amount of investment required would necessitate plenty of private participation.

“The private sector will lead this development, while the government will act as a regulator, facilitator and catalyst,” Edwin said. “As much as 90 percent of the funding will come from the private sector and the remainder from the government.”

Under the public-private partnership program, he said, the government would provide incentives and minimize risks to help lure investors.

The government has also offered state and private companies from Japan the chance to participate in the master plan. The Japanese government would provide funding and advice on coal, geothermal and related infrastructure projects, and firms such as Sumitomo, JGC Corp., Electric Power Development and others would cooperate with Indonesia on power projects.

Iman Notodisuryo, the president director of Medco Ethanol Lampung and a participant at the forum, however, said the master plan was the same old deal the government had offered for years.

“There are no significant breakthroughs, and the government has failed to deliver simple solutions to our main concerns,” he said.

He said the private sector’s main concerns were mostly legal issues, red tape, incentives and infrastructure.

“It’s a good idea to involve the private sector, but we still don’t see a solution to our concerns, which are land acquisition issues, overlapping bureaucracies, fiscal or monetary incentives and the availability of access,” Iman said.

He also said that since the master plan was a long-term vision, he doubted the government could sustain the level of commitment needed to see it through to completion.