The grand plan to power up Indonesia
Jakarta is drafting US$400bil for building airports and power plants to boost economic growth.
JAKARTA: Indonesia is drafting ambitious plans for more than US$400bil (RM1.6 trillion) in building projects, from constructing 25 airports to developing new power plants, as the government seeks to stoke growth in South-East Asia’s largest economy, according to the country’s planning minister.
The sweeping proposal calls for a record 5,957 trillion rupiah (RM1.7 trillion) in investments from 2020 to 2024, Minister Bambang Brodjonegoro said in an interview this week. As much as 40% of the total will be funded directly by the government, 25% through stateowned enterprises and the rest through the private sector, he said.
About 60% of the spending will go towards transportation-related infrastructure, according to a draft of the plan seen by Bloomberg and verified by the ministry.
Such spending would build on President Joko Widodo’s strategy of using infrastructure as a key plank to boost economic growth and spread wealth beyond the main island-powerhouse of Java, where the capital is located.
Building critical ports and facilities are particularly complicated and costly in Indonesia because the country is dispersed across 17,000 islands over an area spanning the distance between New York and London.
“The only way for Indonesia to have higher economic growth is connectivity,” Bambang said in Jakarta. “We are planning to establish the equivalent of a highway for the skies by building airstrips or smaller airports for connectivity” in remote areas, he said.
Despite the potential benefits, massive projects have been challenging for the government to finance in recent years, partly due to low tax compliance in Indonesia and weak commodity prices that have strained the state budget.