INDONESIA NEED US$65 BILLION TO BUILD INFRASTUCTURE

The Government of Indonesia (GOI) targets to chalk up an economic growth of 6% per annum, the target could be reaching with the support of adequate infrastructure to facilitate economic development.

Around US$65 billion will be needed to finance several larger infrastructure projects in the country in 2005-2009. Around 38% or US$25 billion of the fund are expected to come from the state budget, US$14 billion from local banks, insurance and pension fund companies, US$10 billion in multilateral and bilateral loans, US$16 billion in investment by the private sector including foreign investors.

The GOI has invited investor to Infrastructure Summits in 2005 and 2006 in Jakarta and offered large infrastructure projects.
The government offered 91 projects valued at US$22.5 billion in 2005 but only five project shave been in the process of construction, 15 projects are to be implemented and 28 in the stage of preparation for tender.


Various problems still come in the way of realizing the projects. The progress made in stabilizing the macro economic indicators including lower inflation rate and credit interest rates gave hope of bringing the projects into reality.

Indonesian Competitiveness Declines

The competitiveness of the country in attracting foreign investors has declined as a result of the infrastructure being not adequately available, whereas the country badly needs foreign investment to boost the economic growth.

Until early 1997, the country's infrastructure grew steadily, investment in infrastructure contributed 6% to the country GDP every year. In the past several years, quantitavely, the country's infrastructure grew sluggishly contributed only 2% to the GDP and qualitatively the sector has contracted.

Time to Build Infrastructure

The end of 2006 was marked with improvement of the macro economic indicators such as fairly strong 5.6% economic growth, lower inflation rate to 8% and Bank Indonesia (Central Bank) benchmark interest rate to 9.75% and the increase in the Jakarta
Composite Share Price Index to a record high of 1,800 points and export value to an all time record of around US$100 billion.
No less important is the appreciation of the rupiah to reach the level of 9,100 per US dollar with foreign exchange reserve exceeding US$40 billion. All the indicators are encouraging contributing to stronger economic fundamentals.

However, the real sector has remained in the doldrums. In the first three quarters, the manufacturing sector grew only by 4.11% down from a growth rate of 6% in 2006or falling far short of target set by the industry minister. The slow revival of the real sector diminished the significance of the real sector is feared to undermine the economic growth in mid and long terms.

The improvement of the macro economic condition provides a good momentum for the government to boost development of infrastructure to attract foreign direct investment to the country.

In addition, the government need remove various other bottlenecks hampering the private sector for taking part in infrastructure development. The government should launch major deregulation measures such as in infrastructure management, land clearing, tariff systems, and tax incentives. Participation of the private sector is absolutely needed with the poor financial condition of the government.

PRESIDENT TO LAUNCH POVERTY-HANDLING PROGRAM IN FEBRUARY

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono was reported to officially launch the PNPM, a new program designed to accelerate the handling of poverty in urban and rural areas by empowering the people`s economy as of February this year.

"If possible at the end of this year or in February, the people`s empowerment national program (PNPM) will have been launched nationally," said Dr Sojana Royat, Deputy Minister for Poverty Handling at the People`s Welfare Coordinating Ministry, said after attending a meeting on PNPM here on Wednesday.

The launching will be highlighted with a dialogue between the head of state and members of the community, so that the people as a whole will directly know how to participate in the program.

The official launching was designed to provide the people with a information on concrete steps the government has taken to minimize poverty and to create job opportunities, he said.

PNPM is like a instrument which accelerates the handling of poverty and creates people-based job opportunities in 2007, 2008 and in many years to come.

In 2007, PNPM will only handle two programs, namely sub-district development program (PPK) and urban poverty handling program (P2KP).

In 2008, the score of work will have to be extended to become five programs, namely (1) PPK, (2) (P2KP), (3) unfortunate and special regional development program (P2DTK), (4) infrastructure and socio-economic zone development (PISEW) and (5) joint business groups (KUBE).

Under the PNPM program, the number of poor people in 2007 reached 31.92 million or about 9.76 million poor families consisting of (1) rural PNPM target of about 21.92 million poor people (5.46 million poor families) and (2) urban PNPM with a target of about 10 million people people (2.5 million poor families).

In the meantime, new job opportunities that could be created is predicted to range from 12.5 up to 14.4 million annually with an assumption that there are 8 to 20 villages participating in each sub-district for PPK and P2KP programs and each village creates at least 250 new job opportunitoes each year.

In addition, the number of sub-districts included in PNPM program in 2007 reached over 2,891 sub-districts consisting of 2,057 rural PNPM-related sub-districts and 834 urban PNPM-related sub-districts.

Each sub-district was reported to get direct public assistance of Rp500 million to Rp1.5 billion annually tailored with the number of poor people in each sub-district.

PNPM fund for 2007 is estimated to reach Rp4.42 trillion devided into rural PNPM amounting to Rp2.48 trillion and urban-PNPM standing at Rp1.95 trillion, Sojana stressed.

Of the total, Rp3.62 trillion will be taken from the state budget of 2007 and around Rp813 billion constitutes a constribution from the regional governments through cost-sharing mechanism.

PNPM will however give a certain portion of the budget in revolving funds and direct public assistance (BLM) to be managed by wormen, he said. (*)


Copyright © 2006 ANTARA
January 18, 2007

GOVT TO DEVELOP FISHERY INDUSTRIAL CLUSTER

Jakarta (ANTARA News) - The ministry of fishery and marine resources is set to develop fishery industrial clusters in some districts this year to promote their leading fishery products.

The ministry`s spokesman, Saut P Hutagalung, said here on Wednesday that under the program a district would only focus on developing some of its leading fishery products.

"Then the district will only produce one commodity so that it will be competitive," he said.

He said that actually this program had alredy been developed by other countries such as Japan and Vietnam under their one village one commodity program.

He said the government had already set 10 main fishery commodities to be developed under the cluster system, such as tuna, shrimp, seaweed, crabs and aquarium fish.

He said tuna clusters would be developed in Bitung, North Sulawesi, Benoa in Bali, Makassar in South Sulawesi, Padang and Bungus in West Sumatra, Sorong in Papua, Kendari in Southeast Sulawesi, Prigi in East Java, Cilacap in Central Java and Jakarta.

He said the development of the program would also involve the private sector as well as cooperatives.(*)


Copyright © 2006 ANTARA
January 18, 2007