Key projects ready to start as early as next month

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Sat, 02/21/2009 9:57 AM  

The government says infrastructure projects will be started as early as March to stimulate the economy amid the worsening global economic downturn. 

Finance Minister Sri Mulyani Indrawati said on Friday that ministries and government agencies had made preparations to start their new projects in March. 

“Based on the projects they’ve submitted, they’re ready to start implementing them in March.”

The government has included in its economic stimulus package Rp 10.2 trillion directly for the real sector, Rp 8.4 trillion of which is allocated to labor-intensive infrastructure projects. 

This amount is on top of over Rp 90 trillion already set aside in the 2009 state budget for infrastructure projects  under the auspices of various relevant ministries. 

Bambang Susantono, the deputy to  the Coordinating Minister for the Economy in charge of infrastructure, said the Rp 8.4 trillion of funds would be adequate to help cover important infrastructure projects. 

“The spread is good enough in terms of spatial coverage, areas, sectors. There are funds for trains, roads, ports and airports,” he said. 

The government has said there are 13 sectors whose infrastructure will be boosted this year to help mitigate the impact of the global economic slowdown. 

These include  multi-year project contracts covering roads, power plants and electrical transmission, airports, markets, trains, railways and ports, as well as handling disasters and developing low-cost apartments, village roads, irrigation schemes, fishermens’ houses and drinking water supply schemes. 

The start up of government-led infrastructure projects will be a major factor determining whether the economy can reach a full-year growth rate of between 4 and 5 percent this year, as forecast. 

Analysts have said the economy is bracing for the blows from the worst impacts of the global slowdown in the second half of the year. 

If the government is late in stimulating the economy, the economy may experience negative growth in the third quarter, said Purbaya Yudhi Sadewa, the chief researcher of Danareksa Research Institute. 

The government has created the Indonesia Infrastructure Fund Facility (IIFF) to help mobilize more funds to finance infrastructure projects in Indonesia. 

The Asian Development Bank has said it will inject Rp 1 trillion in funds to the IIFF out of Rp 4 trillion needed by the government. 

The government has said the Infrastructure Fund may be up and running by as early as March

Bambang said the World Bank and German development bank KfW had expressed interest to also support the IIFF. 

“We’re expecting additional funds of Rp 3 trillion to bring the capital (of IIFF) up to Rp 4 trillion this year,” he said. 

He added that the Finance Ministry had prepared the board of commissioners and directors of IIFF. 

“The selected people have said if they are chosen, they’ll expand the capital to Rp 20 trillion in the next five years,” said Bambang. 

The government expects the IIFF to provide equity and to finance infrastructure projects under the tried and practiced public-private partnership (PPP) mechanism.