Thursday, December 16, 2004

Government to woo potential infrastructure investors

Source: Jakarta Post

Dadan Wijaksana, The Jakarta Post, Jakarta

The government plans to invite at least 500 potential local and foreign investors to the Infrastructure Summit in January, where it will unveil a framework for planned infrastructure projects over the next five years.

Trade counsels and representatives from neighboring countries, local and global commercial banks, trade chambers and business associations, and national and multinational firms will be among those invited to the summit, State Minister for National Development Planning Sri Mulyani Indrawati said on Wednesday.

Also to receive invitations will be research centers, think thanks, non-governmental organizations and other interest groups.

At a press briefing prior to a seminar on infrastructure, Sri Mulyani said the list of invites would likely grow in view of the amount of financing necessary for the massive infrastructure projects the government has planned over the next five years.

"The funding required over the next five years for the sector will be between Rp 700 trillion (some US$77 billion) and Rp 1,030 trillion, with most of this money having to come from the private sector," said Sri Mulyani.

The government has said it requires financing to build roads, railways, ports, airports, power plants, telecommunication facilities, natural gas transmission and distribution facilities, water plants, irrigation facilities, housing and other crucial infrastructure.

The figures mentioned by Sri Mulyani, however, are much higher than the Rp 600 trillion mentioned earlier by President Susilo Bambang Yudhoyono.

The National Development Planning Board (Bappenas), chaired by Sri Mulyani, has been ordered to draw up a road map for investment in the infrastructure sector for presentation at the Infrastructure Summit on Jan. 17 and Jan. 18.

Improving infrastructure is deemed vital by the current administration to achieve the targeted 6.5 percent average annual economic growth.

Not only will improved infrastructure help attract investment to the country, the development of infrastructure projects will create significant numbers of job -- an important benefit for Indonesia, where about 40 million people are unemployed.

Sri Mulyani said of the total financing needed for the planned infrastructure projects, the state budget could provide about Rp 200 trillion, with about Rp 200 trillion more coming from the domestic banking sector.

The remaining money will have to come from the private sector, both domestic and international investors, including global financial institutions such as the World Bank and the Asian Development Bank, Sri Mulyani said.

Funding needs for road network in 2005-2009 -------------------------------------------- Program Funds -------------------------------------------- Road maintenance Rp 58.1 trillion New road development Rp 100.0 trillion Toll roads Rp 90.2 trillion ---------------------------------------------Total Rp 248.3 trillion ---------------------------------------------Source: Bappenas