GOVT TO ACCELERATE INFRASTRUCTURE DEVELOPMENT

By Andi Abdussalam

Jakarta, Feb 22 (ANTARA) - The government will accelerate the realization of infrastructure projects worth US$90 billion as part of its efforts to integrate the country's six economic growth corridors, to offset inflation and boost finished goods exports.          In essence, the government wishes to accelerate and expand economic development in which all sectors and development focuses are integrated regionally. In the future, exports will be carried out in the form of finished goods.          "We do not want to only export raw materials. Each region must have a prime product. Therefore infrastructure and manufacturing development will be done based upon regional potentials," Chief Economic Minister Hatta Rajasa said on Monday.          He said that the funds that have been discussed several times amounted to US$90 billion to be put in infrastructure, airports, and railway and toll road development.          "That is what is meant by acceleration," the chief economic minister said.          In that way, the government hopes that inflation could be offset and economic growth could be boosted.          If the best scenario is implemented, the Indonesian economy could grow by 7.1 percent to 7.6 percent during the 2011 - 2014 periods. It even has the potential to reach 8 percent in accordance with expectation if infrastructure is improved.          "If the participation of the private sector in the development of infrastructure could reach 50 percent of the needed investment, and the government increase increases its spending for transportation infrastructure to 20 percent, the matter (8 percent growth) could be reached," Fauzi Ichsan, senior economist of Standard Chartered Bank, said.          He said that toll roads, electricity plants and ports were among the infrastructure facilities that needed to be improved. After all, the development of infrastructure in the last decade had run very slowly and depended on the government budget.          "The government is not yet able to allocate the needed funds while the participation of the private sector is still beyond expectation," Fauzi said. Moreover, the lack of infrastructure is the main factor causing investors to be reluctant to make their investment in Indonesia.          Fauzi listed six points that discouraged investors, namely legal uncertainty or corruption, regional autonomy, insufficient infrastructure, labor affairs, taxes and import duties.          In addition, the distribution of national land transportation system remains imbalanced while the development carried out on the islands outside Java is still below their real potentials.          "Compared with those of its ASEAN neighbors, Indonesia's ports are outdated and are overloaded so that they place Indonesia in a less competitive position in the face of international trade," said Fauzi.          At the same time, land transportation infrastructure, such as roads,  toll roads, railways and bridges are still concentrated in Java.          "Java is resided by 59 percent of the population and accounts for 7 percent of the country's land areas but it only contributes about 58 percent to the country's gross domestic products (GDP)," he said.          Therefore, Indonesia needs to overcome its infrastructure constraints to assure the growth of its economy based on its potentials --namely to grow by about 8 percent per annum-- and  to contain inflation in line with efforts to push down prices to a level equal to those in other countries in Southeast Asia.          Therefore, according to Chief Economic Minister Hatta Rajasa, the government is planning to accelerate Indonesian economic development through six economic growth corridors that would integrate economic development in Sumatra, Kalimantan, Java, Bali, Nusa Tenggara, Sulawesi, North Maluki, Papua and Maluku.          "There are three pillars in the corridors namely infrastructure, connectivity and human resource development and science and technology development," Hatta Rajasa said.          Regarding the implementation of the government plan, Hatta said a team would be established to monitor the implementation and problems met during the process so that they could be settled quickly and correctly. "There will be task forces assigned based on corridors in which there are also sectors," he said.          Hatta said in the economic acceleration program there are eight main programs and 17 main economic activities. The eight programs include industry, agriculture, mining, energy, marines, tourism, information and telecommunication and strategic zone development. The 18 activities meanwhile cover manufacturing industry involving products such as steel commodities, food and drinks and other commodities, mining that includes nickel, copper and other commodities.          In the infrastructure development, Industry Minister MS Hidayat has offered Japanese companies cooperation to develop infrastructure facilities in the country's six economic corridors.          The minister offered the cooperation during a meeting with Japanese businessmen grouped in the Japanese chamber of commerce (Keidanren) at his office last week.          "We plan to develop infrastructures along Jabodetabek (Jakarta, Bogor, Tangerang and Bekasi), ranging from Cikarang, Karawang to Banten so that we will have complete infrastructures," he said.          He said the ministry would discuss cooperation priorities with  Keidanren to develop the infrastructures. "We also promoted industrial clusters that need Japanese investment in the energy field," he said.          Earlier, Japanese business leaders grouped in the Keidanren led by its, Hiromasa Yonekura, have reaffirmed their commitment to helping the Indonesian government implement its infrastructure development program as part of the ASEAN-Indonesia connectivity system.          In a meeting with President Susilo Bambang Yudhoyono who was accompanied by Hatta Rajasa last week, the Japanese business leaders expressed their commitment to the development of priority metropolitan area as one of the Indonesian development corridors.           "The President presents five areas where cooperation needs to be increased namely transportation, food sector, renewable energy development including geothermal, environment and power plants," Hatta said.              (T.A014/A/HAJM/16:55/a014) 22-02-2011 16:45:1