Infrastructure issues have becoming more severe from time to time in Indonesia. Roads and bridges are poorly maintained and unable to meet traffic demand. People also have to bear with frequent electricity blackouts, which is an obvious evidence of infrastructure lacking in power sector. In airport and seaport sectors, they are experiencing over capacity and lack of equipment. Soekarno-Hatta airport was designed to accommodate around 22 million passengers a year, but now is forced to handle more than 43 million passengers at its peak.
As quoted from the World Bank, there are two main views on how infrastructure contributes to poverty reduction: 1) as a precondition and stimulus for economic growth, and 2) as a direct means for the poor to lift themselves out of poverty. Realizing its significant importance, the Indonesian government has made infrastructure development in its top agenda. However, this is not without a challenge. The government estimates for the period of 2010-2014, there is a need of IDR 1,429 trillion (approximately USD 150 billion) worth of infrastructure required at national level to support growth. However, the government could only provide around IDR 451 trillion (31%) of the total funding required for such development.
There is slight reasonable prospect to significantly raise public financing in infrastructure, so the development of infrastructure will have to rely greatly on private investments. The government launched Public-Private Partnership (PPP) program in 2005 in order to facilitate investment in infrastructure sector.
This blog is designated as a medium to promote awareness in the development of infrastructure in Indonesia, as well as a forum of discussion amongst PPP practitioners, infrastructure specialist, legal experts, and general community. You are welcomed to take discussion anytime or just to put a comment in one of the articles.
Best regards,
Mutiara
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