Dzulfiqar Fathur Rahman, Jakarta – The Semarang administration offered investors five infrastructure projects worth a total of Rp 17.13 trillion (US$1.15 billion) in a business forum opened on Wednesday, as it seeks to develop the Central Java capital amid the ongoing health crisis.
During the 14th Semarang Business Forum, Mayor Hendrar "Hendi" Prihadi promoted, among other projects, a light rail transit project estimated to be worth Rp 14.76 trillion, waste-to-energy plant (PSEL) in Jatibarang subdistrict worth Rp 1.2 trillion and an underpass in the city's Simpang Lima traffic circle worth Rp 850 billion.
"For investors making a deal to invest in Semarang today, we are ready to give discounts for BPHTB [land and building rights acquisition tax] and PBB [land and building tax]," Hendi said in a virtual talk on Wednesday.
The promotion of the investment opportunities comes as Semarang falls short of its investment target this year of more than Rp 35 trillion. The city administration recorded only around Rp 5 trillion in investment in the first half of the year. "It is clear we cannot meet our target," Hendi said.
The COVID-19 pandemic has battered the country's economy and investment, including in Semarang, worsening the government's struggle to attract investors.
Investment Coordinating Board (BKPM) data showed that Indonesia recorded Rp 191.9 trillion in investment in the second quarter this year, 4.3 percent lower year-on-year (yoy) than the same period last year. Domestic investment fell 1.4 percent yoy and foreign direct investment fell 6.9 percent yoy.
In Semarang, the closure of tourist attractions for around four months to curb the spread of the virus has also affected the city's economy.
Last year, Semarang's economy grew by 6.86 percent yoy, accelerating by 0.34 percentage points than in 2018. The city's growth rate was above that of Central Java at 5.66 percent yoy in 2019.
The Central Java capital city's economy shrank 5.94 percent yoy in the second quarter this year as components of economic activities fell, while the national economy also contracted 5.32 percent yoy in the same period.
"In 2020, we should be able to see growth [in the Semarang economy] by more than 7 percent," said Hendi.
The Semarang administration stated that the investment opportunities could also solve social problems, such as the city's waste management. The Jatibarang waste-to-energy plant project is expected to reduce waste volume at landfills by 80 percent, according to the administration.
The project, to be developed on 4 hectares, is projected to be able to process 1,000 tons of waste per day.
The government has allocated Rp 100 billion for the tipping fee to cover maintenance and operational costs of the project, in a public-private partnership scheme, it stated.
As of June, the government has finished the feasibility and technology studies for the Jatibarang project, according to Julian Smith, the director of consulting service company PricewaterhouseCoopers (PwC) Indonesia.
"This is a global problem and Indonesia is no different from anywhere else," said Smith. "But what we see today is hundreds of tons of waste are being sent to the Jatibarang landfill."
"The waste volume is increasing because as the economy grows, people consume more things and they produce more waste. And more and more people live in cities, so that also leads to increasing volumes."