President Joko “Jokowi” Widodo had instructed the National Development Planning Agency (Bappenas) and the Investment Coordinating Board (BKPM) to establish financing schemes, or business plans, for strategic projects. The decision was made to facilitate financing issues the government was facing in implementing 225 projects.
“President Jokowi has instructed Bappenas and the BKPM to set a business plan for each of the projects so that each will not be entirely financed by the state budget. If a private company is interested in a particular project and has a business plan, such as for the Patimban port project, it can cooperate to work on the project,” Pramono said at the Presidential Palace in Jakarta.
President made the statement after a limited Cabinet meeting, during which the progress of strategic projects was evaluated. During the meeting, the President claimed that 86 projects or 44 percent of the total projects had been implemented while the remaining 139 projects, or 56 percent, were in the planning stage.
President highlighted that amid the ongoing global economic slowdown, the 225 strategic projects must address fundamental issues, namely to drive economic growth at both the national and regional levels.
Meanwhile, Coordinating Economic Minister Darmin Nasution said the 225 projects and several power plant projects, which the government counted as strategic projects, needed to be completed immediately. The projects are stipulated in Presidential Decree (Perpres) No.3/2016 and Presidential Instruction (Inpres) No.1/2016. “They comprise 52 railway projects, 19 train projects, 17 airport projects, 13 port projects, 10 clean water projects and the development of 60 reservoirs,” Darmin said.
In terms of regions, 89 projects will be located in Java, followed by 46 in Sumatra, 28 in Sulawesi, 24 in Kalimantan, 16 in Bali and West Nusa Tenggara, 13 in Maluku and Papua, and 10 in other provinces. Eighty-six projects have been implemented while the 139 others are in the planning phase.
The 35,000 MW power plant project, work contracts for the construction of plants to produce 17,800 MW of electricity had been signed. “The work contracts for the 15,500 MW electricity plants, which will be built by independent power producers, and about 3,750 MW, which will be handled by state electricity firm PLN, will be signed this year,” Darmin said.
He further said the President had highlighted that funding schemes for the projects should be decided as soon as possible. There should be an immediate decision on which projects are to be financed by the state budget, state-owned enterprises, provincially owned firms, private companies or public private partnership (PPP).
Realizing that an economic turbulence can happen every times and protecting a national economic from the impact of a global and regional economic uncertainty, the Indonesia’s government had released a number of en economic packages. At least, the government’s has released 12 economic packages to protect Indonesia from the world economic slowdown, with the country recording progressive growth last year amid stagnant global financial conditions, also aiming to boost the country’s economy.
Some Strategies
The Indonesia’s government has an intention aiming to boost a national economic resilience. To reach those target, the government must be supported with all of a national stakeholder. Besides, the government need to do some an economic strategies such as the easing of monetary policies and fiscal expenditures because the easing of Indonesia’s monetary policy, which had been pursued consistently, could boost economic growth.
More further, increasing investment, both government and private investment, because Indonesia’s slow pace of economic growth in the first quarter of 2016 is mainly due to the limited growth in both government spending and investment. Government spending, mainly from capital expenditure to build infrastructure, Indonesia might benefit from the economic slowdown in developed countries, making Indonesia more attractive for foreign investment.
Indonesia’s economy recorded 4.92 percent growth in the first quarter of 2016, lower than the country’s growth in the previous quarter, which stood at 5.04 percent. However, the economic growth in the first three months of 2016 was higher than the same period last year.
A private investors were in wait-and-see mode, despite the government’s efforts to speed up infrastructure projects. He further explained consumer spending was still growing strongly supported by basic food prices, which remained stable.
On the external side, along with improvements in some export commodities, Indonesia’s overall export performance had improved although it was still experiencing a contraction phase.
Another strategies are consumer spending is also expected to improve, in line with controlled inflation and rising earnings expectations. Along with that, the implementation of the economic policy packages is expected to boost investment and exports.
A number of an economic observer has suggested that BI would continue to monitor developments, both domestically and externally. At the same time, the central bank would continuously strengthen coordination with the government to continue to boost economic growth, while it would continue to maintain the country’s macroeconomic stability, because ones need to Indonesia’s economy will grow at a higher rate on an ongoing basis.
Last but not least, an economic stability also depend on a politic and security stability, the state apparatus must be effectively coordinating among them. Furthermore, a security and police apparatus can support the government to reach our development goals with their participation to reducing a security uncertainty including an illegal economic activities such as illegal logging, illegal smuggling, illegal mining and illegal fishing also a tax avoidance are still running until now. The security apparatus and law enforcement communities should implement a stricly rule of law to tackle these problems, because it havs a capacity to be an economic sabotage next time. Clearly, a security appratus is still has a significant role to support Jokowi’s administration program on a national economic plan. The capacity of security and an intelligence apparatus to minimizing potential threat on all levels are a significant contribution supporting government program and it must be appreciated.
*) Toni Ervianto is an economic and a politic observer. Residing in Jakarta.
