Infrastructure needed for growth

Infrastructure needed for growth

Rendi A. Witular, Jakarta

A senior economic minister warned that the economic growth
target of 5.4 percent, as set in the draft 2005 state budget, may
not be attainable unless the next government dramatically
improved infrastructure in the country.

Coordinating Minister for the Economy Dorodjatun Kuntjoro-
Jakti said lack of infrastructure for the business community
would prevent the government from achieving several targets in
next year's draft budget.

"From my experience, achieving economic growth of almost 5
percent with the present condition of infrastructure will be
extremely difficult, especially for areas outside Java,"
Dorodjatun told reporters on Wednesday after a meeting with the
Indonesian Chamber of Commerce and Industry (Kadin).

He said adequate infrastructure was essential to increase
investment and push economic growth higher.

The problem of inadequate infrastructure could be resolved if
the financial flow from the central to regional governments or
from major to minor cities reached at least Rp 120 trillion
(US$13.3 billion) over two consecutive years, he said.

With the spread of funds into regions, local governments would
be expected to use its autonomy to build their own
infrastructure, such as roads, ports and railways, without
depending on Jakarta.

A region that can provide adequate infrastructure for its
business community will have a better chance at luring investors,
Dorodjatun said.

Under the draft 2005 state budget, the Ministry of Regional
Settlement and Infrastructure will receive Rp 12.4 trillion, a
3.3 percent increase from last year. The funds will be allocated
mainly toward the building and maintenance of roads, bridges and
irrigation canals, as well as flood control and coastal security
programs.

The government is in the process of constructing a 1,000
kilometer toll road next year that will link Merak in Banten and
Banyuwangi in East Java, and a deep-sea port in Banten, which is
expected to become a hub for cargo vessels in Southeast Asia.

To realize the projects, the government has teamed up with the
private sector for funding.

In an earlier report, Kadin chairman Mohamad S. Hidayat
lamented the small allocation for infrastructure construction
compared to total state expenditures of Rp 264.9 trillion,
including Rp 64 trillion to service public debt.

Hidayat said the infrastructure budget needed to be about Rp
50 trillion to boost the economy.