Seeking: $90bn to Fix Indonesia’s Infrastructure

The Bali Times

The national government hopes to attract US$90 billion of private infrastructure investment in the next five years to help it reach its growth target of seven percent.

Poor infrastructure is one of the main obstacles to unlocking the huge potential for Southeast Asia’s biggest economy, according to officials and analysts at a conference in Jakarta on Thursday.

“We plan to spend $140 billion for infrastructure spending in the next five years. However, $90 billion of that has to come from the private sector,” Investment Coordinating Board chairman Gita Wirjawan said.

The country’s investment chief admitted the job was “not easy,” with regulatory bottlenecks, red tape and corruption often cited as major deterrents to foreign capital.

The government of President Susilo Bambang Yudhoyono, an economically liberal former general, has set a growth target of 7.0 percent by the end of his second and final term in 2014.

The resource-rich, mainly Muslim archipelago of 234 million people is already among the fastest-growing countries in the world.

But Vice President Boediono said that to accelerate growth, the country had to add and upgrade infrastructure from roads and railways to ports and power plants.

“We know that such a plan will require the private sector to play a major role. Despite our fiscal healthiness, our capacity to finance large amounts of infrastructure is far short of what is required,” he said.

“With that in mind we’ve been working hard to reduce hurdles to private investment in general and in infrastructure in particular,” Boediono said in an address to an economic conference in Jakarta.

Business consultant James Van Zorge warned separately that Indonesia still had much to learn about attracting foreign investment.

“Many politicians say they want more investment but they fail to act accordingly,” he wrote in the Jakarta Globe.

“They don’t always admit it, but in their heart-of-hearts they view foreign investment as a necessary evil to be accepted grudgingly if at all.”

He added that while such attitudes were common in the developing world: “Every time a multinational gets a raw deal and is treated badly by the government, boardrooms take notice.”

Indonesia posted 4.5 percent growth last year and is projecting growth of 5.5 percent in 2010.

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