Irvan Tisnabudi & Muhamad Al Azhari – The government had spent less than a quarter of the Rp 11.55 trillion ($1.22 billion) allocated to infrastructure projects this year as of the end of September, giving rise to fears that the slow pace would hamper economic growth.
The National Development Planning Board (Bappenas) said the various ministries and departments have spent only Rp 2.88 trillion so far. The spending package was aimed at countering the effect of slumping exports due to the global recession.
Economists said the slow spending would mean the expected benefits would not become evident this year.
"This is a classic problem. Every year it happens like this," said David Sumual, an economist at PT Bank Central Asia. "Since the government announced the plan, I have been pessimistic about the disbursement of the money."
Bappenas blamed the tardy spending on technical problems. The most lethargic spender was the Manpower and Transmigration Ministry, which has spent only 8.6 percent of the Rp 100 billion allocated to it. The Transportation Ministry – with Rp 2.2 trillion to spend – was another notable laggard. It has spent only 19 percent of its allocation.
Construction of an airport and a seaport in South Sulawesi, worth Rp 100 billion each, was delayed after a Transportation Ministry official involved with the projects was found guilty of bribery.
The lion's share of the stimulus package went to the Public Works Ministry, which has so far managed to spend only 57 percent of the Rp 6.6 trillion allocated to it.
The government originally allocated Rp 12.2 trillion to infrastructure spending in 2009. It later reduced the amount after the Agriculture Ministry deferred some spending until 2010 and the Transportation Ministry asked for more time to decide whether to proceed with some projects.
"Such slow spending will negatively impact on growth," David said. He added that GDP was expected to grow in the third and fourth quarters thanks to a recovery in exports due to an improvement in global trade.
BCA estimates that the economy may have grown by 4.5 percent in the third quarter compared with the same period last year, and may hit 4.7 percent growth in the fourth quarter.