As the government has a limited budget to fund infrastructure development, it continues to work on necessary regulations to lure investment from the private sector.
In its report titled Meeting Asia’s Infrastructure Needs, the Asian Development Bank (ADB) points out that Indonesia requires US$1.15 trillion worth of investment between 2016 and 2030 to expand its gross domestic product (GDP) by 4.5 percent.
There is a gap amounting to $47 billion to meet the investment demand of $70 billion each year, the report says.
“It is impossible to close the gap by depending only on government funds,” said National Development Planning Ministry assistant for infrastructure Wismana Adi Suryabrata.
“That is why we’re improving regulations pertaining to investment and enhancing the execution of projects to encourage the private sector to invest in infrastructure,” he added.
Among the government’s attempts to attract greater participation from private entities is through the revision of two regulations on public-private partnerships (PPP) and non-state budget infrastructure funding, locally known as PINA.
The government has pledged to build a variety of facilities worth Rp 4.7 quadrillion ($352.9 billion) until 2019, of which 40 percent is to be funded by the state budget. The majority of the rest will rely on investment from state-owned enterprises and private firms.