$500 bíllion urgently needed to fix Indonesia’s infrastructure problem

Reading Time: 1 minute

The World Bank, after assessing the state of Indonesia’s overall infrastructure, came to the conclusion that the country needs around $500 billion in the next five years to bridge its wide open infrastructure gap.

According to World Bank Group president Jim Yong Kim, Indonesia needs to nearly double its public spending on infrastructure and bring in more private investment to address the problem.

He said Indonesia’s population was growing faster than those in China, India, Vietnam and Thailand, which was putting even more strain on its creaky infrastructure.

“We estimate that Indonesia will have to invest $500 billion over the next five years to fill this infrastructure gap. To start, that means increasing central and sub-national infrastructure spending from 2.4 per cent of GDP today to 4.7 per cent, almost doubling as a percentage of GDP, by 2020,” Kim told an infrastructure conference in Jakarta, according to Reuters.

Apart from Indonesia’s huge population of about 260 million people, the country’s infrastructure is at odds with its topography of almost 8,000 islands which makes infrastructure planning quite complex.

There is a significant need for infrastructure investment in roads, toll roads, ports, airports, railways, water and power generation and transmission, and also particular need for health and education infrastructure.

Given the combination of growing demand and limited government funding, the role of private infrastructure finance will be crucial, noted consulting firm PwC, adding that the government of Indonesia’s stance was that the private sector will need to contribute around 30 per cent of total funding. Many projects should therefore be undertaken under public-private partnership arrangements. If successful, this could kickstart a virtuous circle of improved infrastructure and faster economic growth, the consultancy added.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 1 minute

The World Bank, after assessing the state of Indonesia’s overall infrastructure, came to the conclusion that the country needs around $500 billion in the next five years to bridge its wide open infrastructure gap.

Reading Time: 1 minute

The World Bank, after assessing the state of Indonesia’s overall infrastructure, came to the conclusion that the country needs around $500 billion in the next five years to bridge its wide open infrastructure gap.

According to World Bank Group president Jim Yong Kim, Indonesia needs to nearly double its public spending on infrastructure and bring in more private investment to address the problem.

He said Indonesia’s population was growing faster than those in China, India, Vietnam and Thailand, which was putting even more strain on its creaky infrastructure.

“We estimate that Indonesia will have to invest $500 billion over the next five years to fill this infrastructure gap. To start, that means increasing central and sub-national infrastructure spending from 2.4 per cent of GDP today to 4.7 per cent, almost doubling as a percentage of GDP, by 2020,” Kim told an infrastructure conference in Jakarta, according to Reuters.

Apart from Indonesia’s huge population of about 260 million people, the country’s infrastructure is at odds with its topography of almost 8,000 islands which makes infrastructure planning quite complex.

There is a significant need for infrastructure investment in roads, toll roads, ports, airports, railways, water and power generation and transmission, and also particular need for health and education infrastructure.

Given the combination of growing demand and limited government funding, the role of private infrastructure finance will be crucial, noted consulting firm PwC, adding that the government of Indonesia’s stance was that the private sector will need to contribute around 30 per cent of total funding. Many projects should therefore be undertaken under public-private partnership arrangements. If successful, this could kickstart a virtuous circle of improved infrastructure and faster economic growth, the consultancy added.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid