16 PPP projects to be auctioned this year
Esther Samboh. The Jakarta Post, Jakarta - 24/02/2011
Sixteen public-private partnership (PPP) projects worth US$32.37 billion will be offered to the private sector this year as part of the government’s program to improve the country’s infrastructure, a senior official says.
Dedy Priatna, deputy minister at the National Development Planning Ministry, said Wednesday that the projects would focus on infrastructure development including toll roads, bridges, railways, seaports, power plants, water treatment facilities and cruise terminals.
The projects would be located in Bali, Central Kalimantan, South Sulawesi, Java, North and South Sumatra, Banten and Jakarta, among others. The projects aim to resolve the main issue hampering the country’s economic acceleration, Dedy said.
“Examples of the projects include the Southern Bali water treatment facility, the Tanah Ampo seaport, the Southern Banten airport, the Sunda Strait bridge, and the Soekarno Hatta International Airport — Manggarai railway,” Dedy said.
Economists have said that the country’s economy could grow at a faster pace if infrastructure issues were fixed. Standard Chartered economists Fauzi Ichsan and Eric Sugandi have said that Indonesia’s economy could grow by 8 percent if the government could provide more adequate infrastructure.
According to Dedy, of the 16 projects there is only one — the $3 billion Central Java independent power plant — that has been officially auctioned.
As PPP projects are under the supervision of related ministries, potential investors will not need to deal with the local administration to pursue the projects. The government will direct five of the 16 projects to the Investment Coordinating Board (BKPM), which will prepare documents and liaise with other agencies.
The projects are part of the government’s master plan to build six economic corridors with an estimated total investment of $4 trillion in the hopes of achieving the ultimate goal of one of the top 10 biggest economies by 2020.
The government has other plans as well, including the Integrated Economic Zone (KAPET) initiated by former President B.J. Habibie and the Special Economic Zone (KEK). Golkar lawmaker Airlangga Hartato considered the two projects “overlapping with one another”.
BKPM chief Gita Wirjawan said the Integrated Economic Zone suffered from a lack of investor interest, citing three main issues that may also hamper other infrastructure projects in the country.
“The KAPET coverage area is too wide so the management has been ineffective; basic infrastructure like roads, ports, telecommunications and water are insufficient; promotional activities are limited,” he told members of the House’s Commission VI, also adding unclear authority to the list.
Infrastruture investment accounted for 20 percent of the overall Rp 208.5 trillion realized investment last year. Significant growth in investment, which reached 54 percent in 2010, pushed the country’s economic growth to 6.1 percent, surpassing the government’s and economists’ estimates.