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.