Fri, 16 Apr 2010

As the second day of the four-day Asia Pacific Ministerial Conference on Public-Private Partnerships in Infrastructure Development drew to a close at the Jakarta Exhibition centre on Thursday, delegates were divided about how useful the event has been so far.

Some said it was run poorly and that it failed to address investors’ main concerns. But others said it was a good opportunity to explore Indonesia’s potential.

The government aims to attract Rp 440 trillion ($48.8 billion) of private investment at the conference to develop about 100 public-private partnership projects from 2010-14. The government had similarly ambitious investment targets at previous infrastructure conferences held in Jakarta in 2005 and 2006 but it is not known how much money they raised.

“The projects offered in this summit are the same as the last summit,” said one disappointed participant from France, who wanted to remain anonymous.

He said that the main concerns for investors were land acquisition and the “negative investment list” (DNI). The summit’s plenary sessions discussed challenges related to land acquisition and securities. “The plenary session should also address our concerns on the list,” he said.

He said the government has not provided satisfactory answers on the DNI. “We want to invest in other sectors beside infrastructure but foreign ownership is not allowed in some of those sectors,” he said.

He also said that land acquisition was a problem because the process could take months and sometimes investors were not able to acquire the land.

Finance Minister Sri Mulyani Indrawati told the conference that “the issue is not about the availability of the land but rather how long will it take and the price to acquire the land.” She said that in the past five years the government has worked hard to attract investors.

Not everyone was disappointed, though. Paul Oppenheim, from investment-advisory firm Plenary Group, said he could see progress, especially in policies and mechanisms to lure foreign investors.

“The projects are viable and the prices are more robust,” he said. It was Oppenheim’s first visit to an investor summit in Indonesia.

Noeleen Heyzer, executive secretary of the UN Economic and Social Commission for Asia and the Pacific, said the barriers to effective implementation of PPP schemes across Asia range from a lack of awareness among government officials to a lack of administrative and regulatory frameworks.

“To be effective, firstly the government needs to enhance knowledge of public and private partnerships, and the government needs to define the operational guidelines of the framework,” Heyzer said at the opening ceremony of the conference.

In his opening speech, President Susilo Bambang Yudhoyono said the government has worked hard to deal with the basic weaknesses of regulations relating to PPP schemes. Early this year, the government issued Presidential Regulation No 13/2010, which affirms that there will be no PPP projects offered without ensuring the required land, he said.

“The regulation also firmly details the risk sharing between the risk borne by the government and the risk borne by the private sector in line with business practices,” he said.