Rabu, 07 November 2012

INVESTMENT OUTSIDE JAVA REQUIRES INFRASTRUCTURE DEVELOPMENT

 By Andi Abdussalam
          Jakarta, Nov 7 (ANTARA) - The acceleration of infrastructure development, particularly through the construction of routes such as the Trans-Sumatra highway and Trans-Sulawesi railway, is a must to implement the government's plan of boosting investment outside Java Island.
         The Capital Investment Coordinating Board (BKPM) plays a crucial role in evenly distributing investment and speeding up infrastructure development outside Java, particularly in Sumatra and in the eastern regions of the country.

         "We hope that the construction of the Trans-Sumatra highway, which will pass through the Sunda Strait and connect the Sumatra Island with Java, is completed soon. The population of Java has exceeded 100 million. For future development, Sumatra should become the priority for the BKPM. The board should explore the prospects of infrastructure development here," said Refrizal, a member of the House of Representatives (DPR) Commission VI on investment affairs, here on Tuesday.
         Moreover, the government's plans with regard to investment procedures have not yet been put in place. The government should play a more active role in promoting projects to domestic and foreign investors. It should do this as soon as possible if it wants to increase investment outside Java," he added.
         BKPM Chairman Chatib Basri stated on Tuesday that his agency would continue to increase investment outside Java in an effort to ensure even distribution of economic growth in the country.
         "Apart from the oil and gas sector, investment outside Java Island is negligible. That is because of infrastructure problems. But we hope there will be balanced infrastructure development in Java and other islands outside Java in the future," he said.
         According to BKPM data, up to September this year, approximately 55.8 percent of total domestic investment, worth Rp36.6 trillion, was made in Java. The island also attracted the highest foreign direct investment (FDI) during the period, worth US$95 billion, accounting for nearly 52.5 percent of total FDI in Indonesia.
         However, other islands such Maluku and Papua are lagging far behind, with domestic investment worth Rp3.4 billion and Rp97.8 billion, respectively, and FDI worth US$98.8 million and US$728.8 million, respectively.
         Therefore, the government is determined to promote infrastructure development outside Java in an effort to boost investment in the region.
         The government is planning two major projects, with a total budget of nearly US$59.1 billion, which are expected to boost economic activities between Java and Sumatra.
          The two mega projects are the 27.4 km Sunda Strait Bridge (JSS), which will require an investment of US$27.8 billion, and the 2,000km Trans-Sumatra toll road , which will cost US$31.25 billion.
         Expected to boost transportation and economic development on the two islands of Java and Sumatra, the two projects are scheduled to be completed by 2025.
          So far, Sumatra and Java are linked through the Trans-Sumatra highway and the ferry services between Bakauheni port (in the eastern tip of Sumatra) and Merak harbour (in the western tip of Java).
         The government is also stepping up efforts to implement infrastructure projects in the eastern regions. One of such projects is the Trans-Sulawesi Railways, involving investments worth US$2 billion.
         "The Trans-Sulawesi Railways needed US$2 billion in funds. A Russian investor has expressed interest in financing the project," Coordinating Minister for Economic Affairs Hatta Rajasa said last month.
         The construction of the railway tracks across six provinces in Sulawesi will be done by the private sector in cooperation with state-owned companies. "If the private company that wins the project is willing to involve state-owned railway company PT Kereta Api Indonesia (KAI), there will be no problem as long as no one is disadvantaged," he said.
         Recently, West Sulawesi Governor Anwar Adnan Saleh revealed that his province is one of the six provinces through which the Trans-Sulawesi railway tracks will pass.
         He said a number of countries, including Russia, China, Germany, Japan and South Korea, have expressed their interest in developing the railway project, which is expected to begin in Sulawesi island next year.
         It seems that the countries will compete with each another to win the tender for the project, said Anwar, who is also the head of the Sulawesi Regional Development Coordinating Board (BKPRS).
         "But the Indonesian government has yet to decide the country with which it will cooperate in building the much-needed project in Sulawesi," he added.
         An economic observer from the University of Brawijaya, Ahmad Erani Yustika, stated that if the government succeeded in providing adequate infrastructure facilities, Indonesia could easily attract foreign investors.
         However, he pointed out that there were many problems facing infrastructure development across the nation.
         The recent regulation on land clearance has yet to yield results in the field and the government needs to pay more attention to the problem, Ahmad said.
         "I do not see a strong political will to increase investment at home. The government still seems to dithering on this issue, which could negatively affect investment. The bureaucracy is not yet efficient enough and the development of infrastructure is slow," he noted.
         Meanwhile, BKPM deputy chief for promotion affairs Himawan Hariyoga predicted that there would be robust investment in 2013 despite the lack of infrastructure and global uncertainties.
         Investment will grow by 37 percent and reach Rp390 trillion in 2013, from this year's Rp283.5 trillion, he said.
   "Other than the country's economic growth, there are many factors that attract investors to the country and contribute to investment growth," Himawan continued.

        He added that potential investors would increasingly focus on emerging economies such as Indonesia because of the economic slowdown in advanced nations.***2***

(T.A014/INE/S012)



(T.A014/A/KR-BSR/S012) 07-11-2012 19:31:

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