(Bloomberg) — Indonesia’s government said it can only directly fund 30 percent of its infrastructure program for the next five years, and is relying on state-owned enterprises and private investors for the rest.
The government will focus on building transport infrastructure outside the country’s most populous island of Java, and rely on private investors to take on projects such as ports on Java, Sugihardjo, a senior official at the Ministry of Transportation, told a business gathering in Jakarta late Thursday.
“So for that reason we need to build a conducive investment climate,” Sugihardjo said in the Jan. 22 gathering.
“National and international investors, please go to areas where there is already visible economic growth.”
After freeing up budget funds by cutting fuel subsidies, Indonesia is planning to boost spending on ports, roads and other works this year to achieve an economic growth target of
5.8 percent. The government plans infrastructure spending of
281.1 trillion rupiah ($23 billion) in its revised 2015 budget, which needs to be approved by parliament.
The total cost for Indonesia’s infrastructure needs over five years is 5,519.4 trillion rupiah, Andrinof Chaniago, the country’s planning minister, said in November.
State companies will fund development via debt sales, as well as rights offerings and the government budget, Rini Soemarno, who heads the Ministry of State Owned Enterprises, said in a Jan. 16 interview in Jakarta. Projects that will start this year include rail, toll roads and a port in Sumatra, and cement and fertilizer plants in Papua, she said.
By Chris Brummitt