JAKARTA ~ President Susilo Bambang Yudhoyono urged foreign and domestic investors this week to stump up funds to boost the nation’s flagging infrastructure sector, arguing that new laws would assure profitability.
Some 111 projects worth US$16.7 billion were on offer at the three-day summit opened by Yudhoyono, including 10 so-called “model” projects worth $4.5 billion.
Growth in Southeast Asia’s largest economy has been hindered by a lack of investment in infrastructure in recent years, leading to regular power blackouts, crumbling highways, an overburdened phone network and crowded ports.
“We estimate that over the next few years we will need at least $22 billion per year to build infrastructure in the energy sector, roads, ports, harbors, housing and water sanitation” and so on, Yudhoyono said.
“The government will provide only part of this funding, while the major portion will have to come from the private sector.”
The government held its first infrastructure summit early last year, soliciting bids for 91 projects worth $22.5 billion. Only nine deals, however, have since been secured.
Since then, Yudhoyono noted, he had issued a decree “which outlined a more robust legal and regulatory framework for public-private partnership, with strong emphasis on transparency, fairness, a level playing field and mutual benefit.”
“We know full well that a prime consideration for the private sector to invest is profitability,” he said.
“This regulation reflects our commitment to offer projects that adhere to international best practices and good governance.”
The standard of Indonesia’s infrastructure has plunged in recent years.
A government report this year showed that in 1996 Indonesia outranked Thailand, Taiwan, China and Sri Lanka in terms of infrastructure quality but the region’s former economic power now ranks close to bottom for most indicators.
“Our infrastructure problem is quite simple: there has not been enough of it,” Yudhoyono said.
“During the crisis years, we simply stopped putting money into building infrastructure, a trend which we must now reverse,” he added, referring to the 1997-98 Asian financial crisis.
Analysts warned ahead of the summit that enthusiasm for projects may be tempered by the rampant corruption and bureaucratic red tape afflicting the nation.