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Govt to offer 25 PPP projects worth Rp 278.35 trillion next year

Jakarta Post - December 18, 2020

Dzulfiqar Fathur Rahman, Jakarta – The Public Works and Housing Ministry is offering 25 infrastructure projects worth Rp 278.35 trillion (US$19.7 billion) under public-private partnership (PPP) next year to private investors to plug the cash-strapped budget.

Public Works and Housing Minister Basuki Hadimuljono said on Monday that the projects would be offered consecutively in four quarters next year.

"There will be [projects] in settlement, housing and water resources [among others]," he said during a virtual discussion.

For the water resources projects, the ministry has put on bid the development of the Rp 5.9 trillion Ir. H. Djuanda drinking water system (SPAM) in Purwakarta, West Java, for the first quarter next year. The system is expected to make clean water accessible for 3.9 million residents in the dense Greater Jakarta region by 2023, sourced from the country's largest dam in Jatiluhur.

Meanwhile, in the third and fourth quarter of 2021, it will also offer the Rp 6.08 trillion Merangin Reservoir in Jambi and Rp 3 trillion Matenggeng Reservoir in Central Java, consecutively. Both are considered to have higher investment appeal than other reservoirs. The Maringin Reservoir, for example, has the potential to generate a substantial amount of electricity at 107.45 megawatts.

"Reservoir projects of public-private partnership usually hinge on the potential revenue from the raw water and electricity," Basuki added.

The government has increasingly relied on the private sector to take part in developing, financing and managing the country's ambitious infrastructure projects under the National Medium-Term Development Plan (RPJMN) to ease the strain on the state budget.

The ministry is offering the projects to cover the lion share of the funding needed to develop the government's infrastructure projects between 2020 and 2024. The state budget can only cover some Rp 623 trillion or around 30 percent of the needed funds to realize all the infrastructure projects, the ministry estimates.

Meanwhile, for the first quarter next year alone, the ministry is also offering eight toll road segments and one bridge to investors, which have a total length of 380.8 kilometers and value of Rp 117.3 trillion.

One of those projects is the 32.4 km Semanan-Balaraja toll road connecting Jakarta and Tangerang, as well as a 37 km access road that connects the Cikopo-Palimanan toll road in West Java with Japan-backed Patimban Port in Subang.

For the third quarter, the ministry is offering the Cikunir-Karawaci segment of the elevated inner city toll roads and the Cikunir-Ulujami segment of the Jakarta Outer Ring Road (JORR), among other projects, with a total estimated investment of Rp 48.37 trillion.

As of mid-November, there were 158 ongoing infrastructure projects under the PPP scheme, worth around Rp 1.308 quadrillion, ministry data show. These projects are either in the transaction, the preparation or the planning stage.

Minister Basuki also said his office would focus on projects aimed at reducing unemployment and poverty for next year, as well as to boost recovery for the pandemic-battered economy.

The ministry, which received a Rp 149.81 trillion allocation in the 2021 state budget, will focus on projects like food estates in Central Kalimantan, North Sumatra and East Nusa Tenggara, industrial parks in Batang regency in Central Java and Subang regency in West Java, five priority tourist destinations and labor-intensive programs.

For the five priority tourist destinations, it allocated Rp 3.51 trillion for the development of the infrastructure at Borobudur in Central Java, Toba Lake in North Sumatra, Labuan Bajo in East Nusa Tenggara, Mandalika in West Nusa Tenggara and Manado-Bitung-Likupang in North Sulawesi. The development includes road and housing development, among others.

Initially, the government was planning to finish developing the five priority tourist destinations this year, the ministry stated. But the pandemic caused delays as it limited the number of workers allowed to work at a time.

"We will also renovate locals' houses, so that they will be decent to serve as homestay [accommodation] around the tourist destinations, so they will be not only spectators but can also enjoy the tourism pie," Basuki said.

Mandalika is aimed at tapping into the MotoGP market with a motorcycle race in 2021, while Labuan Bajo is banking on summits for the G20 countries and ASEAN in 2023, according to Ricky Pesik, an expert staff member on digital and creative industries at the Tourism and Creative Economy Ministry.

The development in the five locations is part of the government's efforts to develop 10 new destinations to attract foreign tourists, called the 10 New Bali.

However, the government will need to first promote tourist destinations that are more prepared to accommodate guests when the country reopens to foreign tourists in the short run, according to Ricky.

"So the destinations more prepared in terms of infrastructure are Bali, Yogyakarta, Bandung [West Java], Jakarta and Bintan [Riau], which have a very big market in plain sight, such as Malaysia and Singapore," said Ricky.

Source: https://www.thejakartapost.com/news/2020/12/18/govt-to-offer-25-ppp-projects-worth-rp-278-35-trillion-next-year.htm