Summit only produces 3 winners bidders so far

Urip Hudiono, The Jakarta Post, Jakarta

With the country in dire need of fresh investment in the infrastructure sector, the government has only managed to drum up three winning bidders for turnpike projects out of the total of 91 projects on offer during the first Indonesian Infrastructure Summit held nine months ago.

Of the remaining 88 projects, some 42 projects worth US$12.5 billion, are at the final stages of the tender process.

Coordinating Minister for the Economy Aburizal Bakrie said on Tuesday at a preparatory seminar for the second Infrastructure Summit that a number of Australian companies had expressed interest in developing turnpike projects, while Japanese companies such as Sumitomo and Mitsubishi had expressed interest in power generation projects. Meanwhile, Chinese and U.S. firms had bid for projects in the oil and gas sector.

The government had hoped to attract a total of $21 billion in investment on the back of the first Infrastructure Summit, with the projects expected to be completed within the next five years.

Aburizal reiterated the importance of infrastructural development if sustainable economic growth was to be achieved, unemployment reduced and poverty alleviated.

"The government has identified infrastructural development as the primary means for achieving annual economic growth averaging 6.6 percent over the next five years," he said.

"Developing the country's infrastructure, however, will need some $140 billion. While the government can finance up to 20 percent of this, the rest must come from the private sector," he explained.

For this, the government had been working on improving the country's business climate to attract more investors to the infrastructure sector, including improving the legislative frameworks in the power, highway and water sectors, as well as land acquisition. The government is also preparing an infrastructure funding scheme and a risk management unit for investors.

As regards the role of local administrations, Aburizal expressed the hope that they would support the second summit by offering infrastructure project opportunities in their regions and collaborate with the government in preparing the tenders for these projects.

"The bidding must be conducted in a fair, transparent and accountable manner," he said.

Aburizal also expressed the hope that the regions would be willing to provide a return rate of between 20 percent and 25 percent for investors involved in local-currency projects and repeal any regulations that could cause them concern.

State Minister for National Development Planning Sri Mulyani Indrawati highlighted the importance of local administrations working together with each other to effectively develop their infrastructural needs.

"There is a tendency for regions to compete with each other in building their own ports and airports," she said.

"Competition between regions in attracting investment should not result in chasing after just prestigious projects, but forgetting their duties to improve public welfare."

Mulyani also mentioned the importance of local administrations in focusing on the future maintenance of infrastructure projects in their regions.

The government plans to hold the second Infrastructure Summit next February after postponing it from November due to unfavorable economic conditions caused by rising oil prices.