Poor infrastructure retards RI: WB

Poor infrastructure retards RI: WB

Dadan Wijaksana, The Jakarta Post, Jakarta

The World Bank, one of the country's long-standing main lenders,
warned on Tuesday of the need to boost spending on infrastructure
projects to avoid a crisis in the largely abandoned sector and
improve the country's long-term economic growth prospects.

Describing infrastructure development here as "highly
unsatisfactory," the Bank said that Indonesia was lagging behind
in almost all infrastructure sectors -- leaving the country with
some of the poorest infrastructure in the region.

"Unless some serious new investment and improved management
take place in infrastructure, Indonesia's long-term growth will
be threatened," said World Bank country director for Indonesia
Andrew Steer during a seminar here held to mark the launch of the
bank's report on Indonesia's infrastructure.

The dilapidated state of infrastructure here is seen as a
contributory factor to the relatively modest economic growth of 3
percent to 4 percent over the past couple of years --
insufficient to absorb the 2.5 million new workers entering the
job market each year. Analysts have said that growth must reach 6
percent to 7 percent per year to create more jobs.

The report was titled, "Averting an Infrastructure Crisis: A
Framework for Policy and Action."

While the government has blamed the stagnant state of the
country's infrastructure on the massive economic crisis in the
late 1990s, the report also pointed at other issues as being
equally attributable.

They include a failure to optimize the use of public
resources, poor targeting of public subsidies, inadequate public
management, insufficient mobilization of domestic finance, a
nonconducive institutional and regulatory framework for private
participation, as well as pervasive corruption.

The accumulation of those factors had made the country among
the poorest in terms of infrastructure networks, the report said.
As a result, only 1.3 percent of the country's 215 million
population had access to network sewerage, the lowest percentage
in Asia.

In addition, only around half the households in this country
have access to electricity. In comparison, the proportion of
households in the Philippines, Thailand, China and Vietnam that
have secured access to electricity services reaches 80 percent,
82 percent, 98.6 percent and 75.8 percent respectively.

Indonesia has 9.1 telephone subscribers per 100 people, still
low when compared with 21.9 in the Philippines, and 22.2 in
Thailand. Roads in and around major cities are also heavily
congested throughout the day.

To help tackle such problems the bank urged the government to
formulate a clear-cut strategy to direct more investment into
infrastructure, which mostly centers on two crucial points:
reducing endemic corruption and optimizing the role of
decentralization.

"You simply aren't going to get investment in infrastructure
if corruption is so deep," Steer said. The report estimated "the
total amount of money lost through corrupt procurement practices
ranges from US$700 million to $2.1 billion per year."

As for decentralization, while it presented enormous
opportunities for improved infrastructure provision, if not well-
managed, it would remain a liability.

Coordinating Minister for the Economy Dorodjatun Kuntjoro-
Jakti said: "If Indonesia is not successful in developing
infrastructure I'm afraid that the coveted growth of 6 percent to
7 percent will be just a dream," Dorodjatun said, adding that due
to constraints in the state budget, the private sector had to be
involved.