Indonesia to spend $412 billion to improve the country’s infrastructure

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Indonesia is drafting ambitious plans for $412 billion in building projects, from constructing 25 airports to new power plants, as the government seeks to stoke growth in Southeast Asia’s largest economy, according to the country’s planning minister, Bloomberg News reported.

The proposal calls for a record 5,957 trillion rupiah ($412 billion) in investments from 2020 to 2024, Minister Bambang Brodjonegoro said in an interview this week. As much as 40 per cent of the total will be funded directly by the government, 25 per cent through state-owned enterprises and the rest through the private sector, he said. About 60 per cent of the spending will go toward transportation-related infrastructure, according to a draft of the plan verified by the ministry.

Such spending would build on President Joko Widodo’s strategy of using infrastructure as a key plank to boost economic growth and spread wealth beyond the main island-powerhouse of Java, where the capital is located. Building critical ports and facilities is particularly complicated and costly in Indonesia because the country is dispersed across 17,000 islands through an area spanning the distance between New York and London.

“The only way for Indonesia to have higher economic growth is connectivity,” Brodjonegoro said in Jakarta.

“We are planning to establish the equivalent of a highway for the skies by building airstrips or smaller airports for connectivity” in remote areas such as the Papua region, he added.

However, despite the potential benefits, massive projects have been challenging for the government to finance in recent years, partly due to low tax compliance in Indonesia and weak commodity prices that have strained the state budget. Several projects have been shelved or delayed, even as bodies including the World Bank have warned of a massive infrastructure gap limiting economic growth.

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Indonesia is drafting ambitious plans for $412 billion in building projects, from constructing 25 airports to new power plants, as the government seeks to stoke growth in Southeast Asia’s largest economy, according to the country’s planning minister, Bloomberg News reported. The proposal calls for a record 5,957 trillion rupiah ($412 billion) in investments from 2020 to 2024, Minister Bambang Brodjonegoro said in an interview this week. As much as 40 per cent of the total will be funded directly by the government, 25 per cent through state-owned enterprises and the rest through the private sector, he said. About 60 per...

Reading Time: 1 minute

Auto Draft

Indonesia is drafting ambitious plans for $412 billion in building projects, from constructing 25 airports to new power plants, as the government seeks to stoke growth in Southeast Asia’s largest economy, according to the country’s planning minister, Bloomberg News reported.

The proposal calls for a record 5,957 trillion rupiah ($412 billion) in investments from 2020 to 2024, Minister Bambang Brodjonegoro said in an interview this week. As much as 40 per cent of the total will be funded directly by the government, 25 per cent through state-owned enterprises and the rest through the private sector, he said. About 60 per cent of the spending will go toward transportation-related infrastructure, according to a draft of the plan verified by the ministry.

Such spending would build on President Joko Widodo’s strategy of using infrastructure as a key plank to boost economic growth and spread wealth beyond the main island-powerhouse of Java, where the capital is located. Building critical ports and facilities is particularly complicated and costly in Indonesia because the country is dispersed across 17,000 islands through an area spanning the distance between New York and London.

“The only way for Indonesia to have higher economic growth is connectivity,” Brodjonegoro said in Jakarta.

“We are planning to establish the equivalent of a highway for the skies by building airstrips or smaller airports for connectivity” in remote areas such as the Papua region, he added.

However, despite the potential benefits, massive projects have been challenging for the government to finance in recent years, partly due to low tax compliance in Indonesia and weak commodity prices that have strained the state budget. Several projects have been shelved or delayed, even as bodies including the World Bank have warned of a massive infrastructure gap limiting economic growth.

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