Widodo plans land bank to quicken Indonesia’s infrastructure

JAKARTA: Indonesian President Joko Widodo will start a land bank this year, turning his focus to accelerating infrastructure projects after freeing up budget funds in the biggest overhaul of the country's fuel subsidy program.

Widodo, known as Jokowi, will establish a land bank that will be jointly managed by the finance, public works and transportation ministries. He's also ordered agencies to complete all procurement for infrastructure projects this year by the end of March, the minister said.

Improving Indonesia's infrastructure was a key plank of Jokowi's election pledge to rejuvenate Southeast Asia's biggest economy. An unprecedented move to scrap gasoline subsidies and cap the diesel aid at the start of this year has given him access to 230 trillion rupiah ($18 billion) of savings to spend on ports, roads and other projects.

"Going forward, we will settle several issues," Brodjonegoro said. "We will expedite procurement, simplify procurement by putting forward accountability. Thirdly, easing efforts for land acquisition. If needed, the government will buy the land before constructing infrastructure projects."

Construction and property stocks on the Jakarta Composite Index rose following the comments. PT Bumi Serpong Damai rose 2.6 percent as of 3:00 p.m. in Jakarta, PT Ciputra Development climbed 3.6 percent and PT Summarecon Agung ( SMRA) gained 4.4 percent. Those compare with an increase of 0.3 percent in the benchmark stock index. Land disputes have been a frequent cause of project delays in the world's largest archipelago. In 2012, then President Susilo Bambang Yudhoyono signed a regulation that set a maximum completion time of 583 days for the land acquisition process for public projects.

The finance minister didn't elaborate on how the land bank would work.

"The idea would be to help them stream line" the infrastructure development process, Sarvesh Suri, Indonesia manager for the International Finance Corp., said by telephone from Jakarta. He said the planned move is another sign that Jokowi is serious about boosting infrastructure.

The government will also simplify the process for state infrastructure projects, Brodjonegoro said. It will review the fuel policy in two years, and will look at oil prices as well as gasoline supply in assessing the policy, he said. Any subsidy would still be a fixed amount, he said.