Jakarta, Aug 28 (ANTARA) - The total fund of Rp361.45 trillion allocated from the draft state budget of 2013 and other sources, will be inadequate for developing infrastructure in the country and maintaining a sustainable economic growth rate.
Ideally at least 5 percent of the Gross Domestic Product (GDP) should be assigned for infrastructure development and achieving sustainable economic growth.
The draft state budget has set aside Rp188.4 trillion for this purpose, while the regional budget will contribute Rp96 trillion, Rp77 trillion will come from state-owned companies and about Rp60 trillion from the private sector.
Therefore, the total Rp361.45 trillion promised for development only accounts for 4.56 percent of the GDP, which is less than the 5 percent needed.
"Funds for infrastructure development have been culled not only from the state budget, but also from other sources, and if taken together the total amount will not account for more than 4.56 percent, which is lower than the required 5 percent for maintaining sustainable economic development," Minister for National Development Planning Armida Salsiah said on Tuesday.
She also pointed out that prior to the economic crisis of 1998, the Indonesian government always set aside a fund for infrastructure development amounting to about 7 percent of the GDP, but after the crisis, this allocation has dropped to about 3.5 percent.
"Now we are trying our best to gradually raise the budget for infrastructure to 5 percent," Salsiah stated.
"However, even the 5 percent is not sufficient for carrying out poverty elimination programmes, because if the state does that, it will have to further increase its investment in infrastructure expansion to between 7 percent and 8 percent of the GDP," she added.
The minister said that funding for infrastructure growth will be raised gradually. For this purpose, the government is collaborating with state-owned firms and the private sector to expand infrastructure in various sectors under the Master Plan for the Acceleration and Expansion of Indonesia¿s Economic Development (MP3EI).
For instance, the Indonesian government has set aside a budget of US $20 billion for investment in infrastructure development in the transportation and energy sectors.
Finance Minister Agus Martowardojo said last year that the investment for infrastructure growth in the 2010 to 2014 period is estimated at Rp1,400 trillion. However, the government has only been able to finance around 30 percent of this total figure.
The government also plans to accelerate infrastructure development to help integrate the country's six economic growth corridors, offset inflation and boost finished goods exports.
If these plans are implemented effectively, the Indonesian economy could grow between 7.1 percent and 7.6 percent during the 2011 to 2014 period. It even has the potential to reach 8 percent if infrastructure is improved quickly.
"If the participation of the private sector reaches 50 percent of the total amount needed, and if the government increases it¿s spending for transportation infrastructure to 20 percent, then the goal of 8 percent economic growth is achievable," Fauzi Ichsan, a senior economist at the Standard Chartered Bank said.
Referring to the development of road infrastructure, President Susilo Bambang Yudhoyono said the government has set aside US $20 billion or Rp$190 trillion for the country¿s infrastructure development in 2013.
"Most of the funds will be needed to develop the energy and transport sectors,¿ Yudhoyono said during the inauguration of the Asia Pacific Ministers and Regional Governor Conference (APMRGC) on sustainable infrastructure development on Tuesday.
With the budget set for 2013, the government plans to extend national roads by 4,218 kilometers, build an additional 559 kilometers of new roads, and lay down 380 kilometers of new railway tracks and develop 15 new seaports.
These sustainable and continuous infrastructure development efforts are aimed at meeting the development goals for the millennium. ¿The development of infrastructure facilities such as bridges will positively impact people¿s economy,¿ the president said at the Indonesia International Infrastructure Conference and Exhibition (IIICE) 2012.
However, Indonesia still needs around US $250 billion for further infrastructure development.
"Indonesia is always open to other countries or private parties investing here," Yudhoyono said, adding that faster development of infrastructure is needed to sustain the economic growth of the region.
The president said he hopes that APMRGC will end by encouraging stronger cooperation for infrastructure development among the regional countries.
Altogether, he pegged the cost of infrastructure construction in the country at US $250 billion.
These funds will be needed for the advancement of electricity, energy, roads, railways, airport and seaport infrastructure and for expanding the country¿s information and communication technology systems, he said.
The president therefore invited governments and investors from other countries to participate in Indonesia¿s infrastructure development.
"In order to support the program, we have forged various comprehensive and strategic partnerships. We have developed a public-private partnership (PPP) scheme, which should hopefully attract more investors," he said.
He also pointed out that many of the ongoing infrastructure projects under the MP3EI programme have been financed through this scheme. ***2***(T.A014/INE/A014/KR-BSR/A/A014) 29-08-2012 16:56:1
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