Jakarta may chop 14 ‘slow’ projects
JAKARTA: Indonesia’s chief economic minister said on Monday 14 infrastructure projects, worth 264 trillion rupiah (RM74.57 billion), are expected to be dropped from the government’s strategic development plan due to lack of progress.
These projects would be dropped if they didn’t meet some requirements by the third quarter of next year, said Darmin Nasution, which is the end of President Joko Widodo’s current term.
Infrastructure development is one of Joko’s main economic platforms as the economy struggles to remove logistical bottlenecks.
Darmin said the government wanted to focus on the 222 infrastructure that were still on its list of “strategic projects”, with a combined value of around 4,100 trillion rupiah.
Rating agencies have previously warned that balance sheets of stateowned enterprises (SOEs), which have been taking up most of the government’s infrastructure projects, have worsened as they took on more debt to fund projects.
“By slowing the pace of implementation, it could mean the government is prioritising infrastructure projects, which may limit contingent liability risk, but have implications for medium-term growth,” said Moody’s sovereign analyst Anushka Shah ahead of Darmin’s announcement.
Moody’s upgraded Indonesia to one notch above its lowest investment grade last week, a move that could help Southeast Asia’s largest economy get cheaper financing for its projects.
S&P cautioned against the same issue last month while the government had said it would monitor liquidity risks of SOEs, especially those in construction and power sectors.
There were also safety concerns that led to the government suspending a number of road and rail construction projects for a short evaluation earlier this year.