Best Government Infrastructure Strategy, East Asia Pacific 2016
Reasons to be cheerful
Much has happened regarding Indonesia’s infrastructure since the election of president Joko Widodo two years ago. The roads remain pitted, the rail lines creak and queues still snake around airports but optimism and signs of change are everywhere. A long anticipated land acquisition bill will make it far easier for central and local officials to buy and allocate land for development, helping officials in Jakarta build much needed highways, ports and power plants. Infrastructure is a long road for Indonesia but at least it has made a start.
A tax amnesty law, passed June 28, is designed to claw back an estimated $76bn in undeclared offshore funds: money the state will channel into infrastructure — and use to cut debt, narrow the fiscal deficit and boost social spending. Plans to build a high speed rail network are already in train: a consortium led by China Railway Corporation and funded by lending from China Development Bank is set to build a $5bn line running between Jakarta and the country’s third largest city, Bandung.
Finance minister Sri Mulyani Indrawati has also spoken of the need to find new funding methods to finance Indonesia’s “huge” infrastructure needs. One obvious way to tap new sources of funding is to push through measures to build out the relatively diminutive Islamic finance sector.