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Infrastructure group says govt facing development budget shortfall

Jakarta Post - December 18, 2018

Jakarta – The government's attempt to accelerate infrastructure development is facing a financial shortfall of Rp 187.5 trillion (US$12.92 billion), the Indonesian Infrastructure Society (MII) has said.

MII chairman Harun al-rasyid said on Tuesday that under the 2015-2019 National Medium-Term Development Plan (RPJMN), the government's Rp 1.98 quadrillion state budget allocation amounted to only 41.3 percent of the projected infrastructure development budget of Rp 4.79 quadrillion.

Harun, who is also an expert at the Bandung Institute of Technology (ITB), expressed pessimism that state-owned enterprises (SOEs) would be able to fulfill the 22.2 percent (Rp 1.07 quadrillion) they were projected to contribute to the infrastructure budget.

"Pushing the SOEs' limit will carry high risks, because they also need [a healthy] cash flow for [project] operations, even after the projects have been completed," Harun was quoted as saying by kontan.co.id.

Because of the difficulty in filling the shortfall, he added, the government often turned to the private sector for infrastructure funding, which was projected to contribute 36.5 percent, or Rp 1.75 quadrillion.

He added that the private sector was also finding it difficult to meet the government target because the projects were not packaged well. "The prospects [for the infrastructure projects] are not good, while the risks are high for the private sector," Harun said.

He thus suggested the government to sort the infrastructure projects according to their capability in meeting financing needs. He said the government also needed to ensure that the projects would not lead to increased capital goods imports, which would only widen the trade deficit. (bbn)

Source: https://www.thejakartapost.com/news/2018/12/18/infrastructure-group-says-govt-facing-development-budget-shortfall.html