Indonesian gov’t eyes $26B in 2017 budget for infra programs

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StreckeLVR07The Indonesian government has allocated IDR346.6 trillion (US$26.2 billion) in the draft 2017 state budget for infrastructure development, emphasizing that economic advancement hinges on adequate infrastructure and strong connectivity.

The requested infrastructure budget for next year is IDR29.5 trillion more than the IDR317.1 trillion allocated in the revised 2016 state budget.

Comprised of more than 17,000 islands, Indonesia needs to build connectivity to facilitate its inter-island, inter-provincial, and inter-city transportation systems and to support economic development, legislator Fauzih Amro of Commission V on transportation of the House of Representatives said in a written statement.

“Sea, land and air connectivity has a positive impact on the country’s economic growth,” he added, as quoted by Antara News.

Overall infrastructure support is set at IDR4.2 trillion in the 2017 budget proposal and will come in the form of a land cultivation funding program, industrial zone development, investment climate improvement, and infrastructure-related policy coordination, among others.

To increase connectivity, 815 kilometers of new road sections, 9,399 meters of bridges, and an initial 550 kilometers of railway tracks are to be built, apart from constructing and expanding a total of 55 seaports and 14 airports.

“Over the past two years, the government has been accelerating the construction of national roads covering 2,225 kilometers, toll roads 132 kilometers, and 160 bridges spanning 16,246 meters,” Indonesian President Joko Widodo noted in his State of the Nation Address in Jakarta on August 16.

The President revealed that the government targets building 703 kilometers of national roads and 8,452 meters of bridges in 2016.

The construction of railways is being carried out not only in Java but also in Sumatra, Kalimantan, and Sulawesi. To date, the length of railway tracks that are operational has reached 5,200 kilometers.

Widodo noted that 179 kilometers of new railway tracks were completed in 2015, and 271 kilometers of tracks are now under construction. Moreover, the government is currently building urban railway transportation systems, such as mass rapid transport systems, light rail trains, and a commuter line.

On railways, Transportation Minister Budi Karya Sumadi has called for an increase in the contribution of urban transportation systems to the logistics network from 10% to 25%.

“As its contribution is still small or just 10 percent, we hope trains would be able to contribute 25 percent to the transportation systems,” Budi said earlier this month.

Other infrastructure plans to be pursued include those in the field of food sovereignty, which entail developing tertiary irrigation networks for 200,000 hectares of rice fields and adding 144,614 hectares of new areas for rice cultivation.

The target in the energy sector, on the other hand, is to provide 64,200 gas connections to households in cities and to set up 128 new and renewable energy-based power plants.

Additionally, the infrastructure development in the housing, drinking water, and sanitation sectors is aimed at building 11,400 flats, upgrading the quality of 113,300 privately built houses, and installing 491,520 drinking water connections in villages.

Meanwhile, there will also be a budget for economic infrastructure, to be used to build infrastructure facilities needed to ensure the smooth flow of goods and services as well as to accelerate the production process.

This involves budget financing for, among others, infrastructure activities related to transportation, irrigation, telecommunications, and informatics.

Allocation for economic infrastructure in the draft budget is IDR336.9 trillion. Of this amount, IDR161 trillion is set aside for the expenditures of ministries and agencies under the Public Works Ministry, the Transportation Ministry, the Energy and Mineral Resources Ministry, and the Agriculture Ministry.

Also, some IDR2.7 trillion of the IDR336.9 trillion will go to a viability gap fund and a grant fund for various regional infrastructure activities, while IDR133.7 trillion will take the form of a special allocation fund for various infrastructure-related fields, such as transportation, roads, irrigation, drinking water, sanitation and village energy development, and village funds for infrastructure development.

The remaining IDR39.5 trillion will be provided in the form of government investment in a housing financing liquidity facility and a government participation fund for state-owned companies. This is in an effort to increase the role of state-owned companies in creating a multiplier effect for development.

Meantime, social infrastructure is to receive an allotment of IDR5.5 trillion to fund infrastructure development in the education sector.

Photo: Feldbahn