This should be able to work provided that the chief officers of the center
espouse the right backgrounds and include experience from both public and
private sectors and academia, where appropriate. Outputs must be clear, achievable
and quickly implemented, with many of the technical and non-technical (e.g.
legal) components of a given project dealt with in parallel to save time.
One of the most promising plans that came out of the last administration in
2011, in my opinion, was the MP3EI, the 6-Corridor Masterplan for the
sustainable equitable development of the archipelago. The masterplan recognized
the important differences that make up the different regions of the country
while underlining the issues that are common to all areas, e.g. infrastructure
and education.
It could also be used to stimulate provincial governments which, with regional
implementation of development largely placed in the hands of district
governments in 1998, largely left the provincial tier without an adequate
mandate to raise the standards at regional provinces.
There is a realization that this must change and it is time for governors and
provincial governments to lead the charge.
The MP3EI document made many good points and could well provide the framework
for regional development without cutting across the strategies being laid out
by the new government, e.g. maritime highway.
The question of water supply and related environmental
issues appears frequently in national and international media and in global
discussions.
Access to fresh water is fundamental to the foundation of human habitations and
endeavors and, thus, water is arguably the most important infrastructure matter
to be faced in this century, especially since the population has expanded at an
increasingly unsustainable rate since the 1970s.
In the case of Indonesia, which is well blessed with fresh water resources
compared with many other parts of the world, it has not handled its water
issues properly over the past 40 years, a period over which its population has
doubled.
Three-quarters of its 131 water basins exhibit stress conditions, meaning that
demand is dangerously close or exceeds supply, with those in high population
density areas, quite severely.
While plans for much needed water storage have been made and some have been
around for many years, there has been a continual postponement of the
implementation of construction of key reservoirs for storage.
Today the availability of water per capita is one of the worst in the world,
despite the resources. A decade ago, and little has been done since, Indonesia
stood at 57 cubic meters per capita per annum, compared with Thailand with
1,200 cubic meters per capita per annum and the USA with 6,000 cubic meters per
capita per annum.
The government estimated the funding required for water supply over the current
five-year period to meet Millennium Development Goals (MDG) is $30 billion,
with $35 billion the complementary figure for sanitation.
The government is expecting the private sector to come forward with about half
this amount.
This means that the government — and it recognizes this — is going to have to
move quickly to resolve the issues that affect private sector participation
arising from the cancelation by the Constitutional Court of the 2004 Water Law,
which, albeit, had flaws.
The revocation of this Water Law is a major setback to water governance reform
and the bringing in of much needed investment from the private sector.
While it is evident that large coal-based power stations must provide the base
load for Java and other industrial centers, such as in Sumatra, there are many
suitable opportunities for developing electric power from renewable
sources.
Indonesia has some of the most plentiful coal resources in the world, but is
also well-supplied with significant renewable resources — hydro (76 gigawatts)
and geothermal (29 GW: 40 percent of world reserves).
While there has been a number of successful developments in both hydro and
geothermal fields, the risk-reward ratio has not been previously conducive to
investment, although tariff structures have recently been improving for
mini-hydro schemes (less than 10 megawatts), an area where the private sector
has been encouraged to invest.
There are some main hydro developments on the table but, although the
government would like to see today’s paltry geothermal output trebled over the
next decade, many problems remain, not least concerning issues with local
population sensitivities on top of the risks associated with exploration.
Work still has to be done to improve the enabling environment for private
sector players.
The government has set a target for the development of 35 GW of coal-fired and
geothermal power stations, a crisis call since supply is shortly to be
outstripped by demand unless additional power is made available. This demand is
particularly directed toward the industrial heartland of Java and locations in
Sumatra.
It is unrealistic to expect this amount of new power to be added in the next
five years and past experience with two 10 GW “crash” programs under the past
administration, with neither completed, cannot be seen as encouraging.
However, design and construction must proceed as fast as possible and tendering
processes accelerated. Several mine mouth power projects based in Sumatra have
already been identified and preliminary front end work undertaken.
Efficient moving of people and goods to and from and around the country is
vital for sustainable economic growth. There is a vast volume of investment
required and work to be done across all modes of transportation, whether sea,
air or land.
The lack of good transportation communications, with Indonesia having arguably
the highest logistics costs compared with other countries in Asia, is adversely
affecting growth targets. Good efficient transportation nationally could easily
add 2 to 3 percentage points to the gross domestic product (GDP) as set out in
a 2011 McKinsey report.
Until about 2010, the investment in ports had been minimal over the preceding
two decades. There was much catching up to do and the main ports of entry, in
particular Jakarta’s Tanjung Priok, were straining to cope with a steady and
fast growth in sea trade. Waiting times for shipping were at an unacceptably high
level.
The steps that have been taken by Pelindo II (now the Indonesian Ports
Corporation) to increase berthing capacity in order to vastly increase the
container handling capability at Jakarta and to take a major step in greatly
reducing waiting times for container ships from more than six days to a current
two to three days have to be commended (in Singapore, one day or less).
In aviation, the country has seen spectacular double-digit passenger growth
over the past few years and Soekarno-Hatta International Airport is now the
eighth busiest in the world with more than 60 million passengers
annually.
A new runway and terminal are to be provided and Soekarno-Hatta will then be
expecting to cope with at least a third more passengers and thus rank in the
top three busiest globally.
In parallel with this physical expansion is the urgent need to upgrade the air
traffic control systems, a matter that requires attention right across the
country.
However, even with this undertaking, more airport capacity is going to be
required in western Java to accommodate passenger growth and the expansion of
Jakarta to a population of 50 million.
Plans to construct the 25-million-passengers per annum terminal at Kertajati in
West Java must be accelerated along with the toll road link from Bandung.
Very important to the success of developments in the ports and aviation
sectors, is the provision of good road and, where appropriate, rail
connections.
In the latter case the decade-long project of providing a rail link to the
Soekarno-Hatta airport must be seen as an urgent priority, particularly with
the large growth taking place at the airport, as discussed above.
The plan is to have this $2 billion project completed under a public-private
partnership (PPP) scheme, but the problem has been that the return on
investment for the private sector input has not been found to be adequately
attractive and this has led, along with other PPP schemes, to the introduction
of Viability Gap Funding support by government. The mechanism remains to be
tested.
Looking at the country as a whole, however, it is the road infrastructure that
provides the main basis of land connectivity.
Overall this is a big problem and much investment is required not only to
upgrade, often poor standard, regional roads, but also provide for more.
The increase in budget allocation is going to require acceleration in the
release of project’s from the Public Works Public Housing Ministry, whether
central or regional.
It should be remembered that some 90 percent of the national road network is in
the hands of provincial or district governments, mostly the latter, which
raises the other problem of the regional skills base to undertake the work
properly and in a timely fashion. Too much of the national road system is in a
sub-standard condition.
Considerable training and skills transfer is still required to ensure that
value for money is produced in road expenditure.
