Indonesia's New Presidential Unit To Tackle Delayed Infrastructure, Push Investment Talks

The Jakarta Globe

Indonesia will tackle stalled toll road, power plant, and mining projects in order to eliminate bottlenecks and speed up economic growth, the head of a new presidential delivery unit told Reuters on Monday.

The new unit, set up last week when President Susilo Bambang Yudhoyono announced his new cabinet, will also urge talks between investors and the government over big energy and mining projects, many of which have foundered because of uncertainty over cost recovery issues related to the spending and ownership.

Kuntoro Mangkusubroto, who was appointed head of the new unit, told Reuters in an exclusive interview that his work would cover a diverse array of problems “from infrastructure to mining” in order to remove barriers to investment in Southeast Asia’s biggest economy.

“Here are the problems the nation is facing - toll roads, mining, power plants, logistics,” he said.

President Yudhoyono “wants the unit to help him make sure that all government programs, the strategic ones, can be implemented effectively and on time. One of my functions is to be an extension of the president in getting input, especially from investors.”

Indonesia has lagged rivals China and India when it comes to attracting investment, and this has held job creation and economic growth in check.

“With toll road construction, plans set up years ago have not been accomplished. That is something we are ready to de-bottleneck,” he said, noting that the east-west Java toll road, which stretches over 1,000 km along the main island and would enable faster transport of goods, has made very little progress.

Indonesia may issue a new land acquisition law soon, making it easier to obtain the land required for big projects. The new law, which may be issued as a presidential decree, could be very effective, Kuntoro said.

Energy and mining projects also need to be tackled, he said, adding that to reach agreement on many of the stalled projects, the government and investors “have to be ready to open their minds, that’s the key for success”.

A former energy and mining minister who later headed the post-tsunami reconstruction work in Aceh province, Kuntoro has a reputation for cutting through red tape to get things done fast. In Aceh, he insisted on having the authority to appoint contractors to build new homes, extend visas for foreigners involved in the reconstruction effort, and got exemptions from customs and import duties for medical and other equipment.

That helped ensure that out of $7.2 billion of pledged funds, 93 percent had been disbursed by 2008, he said.

Yudhoyono, who won a second, five-year term in July, appointed a mix of technocrats and career politicians in his new cabinet last week.

While investors welcomed the appointment of reformers and technocrats including Finance Minister Sri Mulyani Indrawati and Trade Minister

Mari Pangestu, they were less enthusiastic about some of the less well known names and political appointments.

Some analysts are concerned that the new unit headed by Kuntoro, whose job is equivalent to a minister, could face resistance from vested business interests or less reform-minded ministers.

“I’m just a stone’s throw” from the president, said Kuntoro, speaking from his new office in a wing of the white, colonial-era, Istana.

“It’s the president who gives me the instructions to make sure all plans are implemented.”

He will work with 13 staff reporting directly to the president and providing daily reports to Vice President Boediono, a technocrat whose focus is on structural reform of the economy.

Reuters