Nurfika Osman, Jakarta – Government spending on improving infrastructure and transportation facilities will likely fall significantly in 2014 as legislators have proposed a sizable cut in the budget allocation for the public works and transportation ministries.
The lower budget will undermine the government's commitment to build and improve the country's inadequate infrastructure, which has become a bone of contention among business players.
During plenary deliberations of the government's 2014 state budget at the House of Representatives (DPR), the government proposed a budget allocation of Rp 110.01 trillion (US$11 billion) for the Public Works Ministry, which oversees infrastructure development.
However, House Commission V on public works and transportation only sanctioned budget funds of Rp 68.7 trillion, or around Rp 40 trillion less than proposed. This figure is even less than the Rp 77.9 trillion the Public Works Ministry received this year.
Meanwhile, the Transportation Ministry only secured Rp 33.55 trillion, Rp 25.7 trillion less than the Rp 59.3 trillion proposed. Similar to the Public Works Ministry, the total is less than the Rp 36.9 trillion the ministry received this year.
Results reached during the initial deliberations at the House will be included in the draft of the 2014 state budget, which will be formally submitted to the House on Aug. 16 for further deliberation. Coordinating Economic Minister Hatta Rajasa said the government's total spending in the 2014 budget would reach about Rp 1,900 trillion, rising from Rp 1,772 trillion this year.
Public Works Minister Djoko Kirmanto admitted that the low budget allocation would hamper the growth of infrastructure, which would in turn hamper the flow of goods and people in the country.
"We understand that we are likely to face a slowdown in the infrastructure sector next year. However, we are going to continue working as best as we can in order to deliver the best results to the people," he said.
He said that the toll-road division, managed by Bina Marga, suffered the largest cut from its proposed Rp 52.8 trillion budget, with the commission only approving Rp 32.9 trillion. In a bid to lessen the impact next year, he said the ministry would try to accelerate the crucial projects they were currently working on, such as the Medan-Kuala Namu-Tebing Tinggi road in North Sumatra.
Contacted separately, Transportation Ministry spokesman Bambang S. Ervan said the ministry was currently identifying projects that should be prioritized to enhance the country's connectivity in order to maintain economic growth.
Bambang said budget funds for projects that were in line with the government's Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) would not be cut. "[Budgets for the] Trans-Java double track railroad, pioneering flight services and shipping services to help develop remote areas will not be cut," he said.
According to Transportation Ministry data, the railway directorate general received the largest cut of Rp 8.16 trillion from its proposed Rp 18.23 trillion budget. The second-largest was the sea transportation directorate general, whose budget was slimmed down by Rp 7.8 trillion from the planned Rp 17.61 trillion.
Economic analyst Imam Sugeng from the Institute for Development of Economics and Finance said infrastructure and transportation issues remained unresolved problems across the country.
"Since [the New Order Regime under Soeharto], we have only spent 1.5 to 2 percent of our total GDP [gross domestic product] annually on infrastructure. That is a huge decrease from the previous 4.5 percent that we spent during Soeharto's presidency," Imam said.
He said the main problem lay in the lack of vision among Indonesia's leaders. "They think that investment will always come to Indonesia because we enjoy strong economic growth and have a growing middle class, regardless of whether infrastructure is built or not. Therefore, I am disappointed with [the leaders'] lack of vision for the future."