Mon, 22 Dec 2003

RI needs Rp 613t in infrastructure investment

Sandy Darmosumarto, The Jakarta Post, Jakarta

The Indonesian government will need much more assistance from the private sector to help finance the development of the country's sub-standard infrastructure, which is seen as crucial to boosting economic growth.

The Committee on Policy for the Acceleration of Infrastructure Development (KKPPI) predicted last week that Indonesia would require tens of billions of dollars to build key facilities over the next six years.

"Indonesia will need around Rp 613 trillion ($US72 billion) in infrastructure investment between 2005 and 2009," said Bambang Susantono, who chairs the KKPPI secretariat.

"The government will incur a $31.34 billion financing gap even if macroeconomic conditions improve and debts are better managed."

Bambang expressed the need for the government to raise infrastructure management standards in order to better maintain and improve existing facilities. Management reform and new financing schemes are crucial in attracting the private sector back a host of projects stalled since the late 1990s economic crisis.

Christopher Findlay, a professor at Australia National University's School of Public Policy, commented on the need for more private sector participation to assist the government in the management of the funds and technology that are required to boost infrastructure development.

Besides improvement of the investment law, improvement of the country's infrastructure sector are among the conditions demanded by foreign investors to allow them to make fresh investment.

New investments are vital if the country wants to push economic growth to the 7 percent per year range, which is seen as the minimum needed to provide sufficient jobs for the millions of unemployed, with around 2.5 million new workers entering the job market yearly.