Business World

Indonesia needs some $150B for infra plan

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JAKARTA — Indonesian President Joko Widodo is still chasing some $150 billion to fund his ambitious nationbuil­ding agenda, almost half-way into a five-year infrastruc­ture plan.

The government has so far received pledges for just over half the funds needed to help develop the road, airport and railway projects planned in a $327 billion pipeline, latest government figures show. Just $15 billion has come from the state budget, with the bulk committed by private investors, including from China.

Mr. Widodo, known as Jokowi, needs outside money for his nation-building program after government revenues were battered by the end of the commoditie­s boom and as tax compliance remains poor. With China making a massive push to build infrastruc­ture and new trade routes across Asia through its Belt and Road Initiative, the world’s second-largest economy looms large as an obvious backer for Jokowi’s plans.

“In reality, there is only handful of countries with a surplus of money,” Rainier Haryanto, the program director of the Indonesian government’s Committee to Accelerate Priority Infrastruc­ture, said in an interview in Jakarta. “The US, they are in debt. The Japanese, they are also in debt,” he said, but the Chinese have the money to lend. “At the end of the day, cash is king.”

As Southeast Asia’s biggest economy continues to struggle for revenue, the Widodo government is leaning even more on the private sector. It’s estimated the state budget will only be able to fund about $25 billion of the projects that are yet to start, while Indonesia’s legions of state-owned companies — numbering in the hundreds — will account for some $48 billion. About $83.5 billion will have to be stumped up by the private sector.

Some urgency may be required. The World Bank says Indonesia has a $1.5-trillion infrastruc­ture gap compared to other emerging economies. A lack of good roads and transport corridors across the archipelag­o — a string of more than 17,000 islands that would stretch from New York to London — are adding to logistical barriers and driving up costs for business. —

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