Anton Hermansyah, Jakarta – Indonesia needs to convince investors that its infrastructure projects could run in a structured manner in an effort to cover the US$146 billion financing gap by private funding, global banking giant HSBC said.
HSBC Asia-Pacific Infrastructure and Real Estate Group co-head James Cameron said the combined government budget and state-owned enterprises (SOEs) could only provide $254 billion, or 63.7 percent, of the total $400 billion needed to support the government's strategic infrastructure projects for the next few years, leaving the gap to be potentially filled by private funding.
However, technical difficulties, such as prolonged land acquisition, has discouraged private investors and left the government struggling to offer projects under the public-private partnership (PPP) scheme, he said.
"The gap is a result of not having many bankable projects. If there were more, a lot of investors would come," Cameron said on the sidelines of the ASEAN G2B Infrastructure Investment Forum in Jakarta on Tuesday.
Cameron also praised the government's initiatives to speed up land procurement through the incorporation of the National Asset Management Agency (LMAN). However, the effects have yet to be seen as the institution will only start operations next year.
On Tuesday, nine ASEAN infrastructure projects worth between Rp 600 trillion ($45.84 billion) and Rp 700 trillion, were presented to potential investors during the ASEAN G2B Infrastructure Investment Forum. Of the nine, eight belong to Indonesia and one belongs to Laos.
National Development Planning Board (Bappenas) head Bambang Brodjonegoro said Indonesia was in a unique position as the largest economy and the most populated among ASEAN countries, which has consequently turned it into a potential market for the region to invest in physical connectivity projects. (hwa)