Japan readies $52.9b for first corridor

The Jakarta Post, Jakarta | Sat, 10/23/2010 12:27 PM

Japan has earmarked US$52.9 billion to help Indonesia finance projects in the first of six economic corridors intended to sustain the flow of goods in the country and in the Southeast Asia region.

“It may even be increased to $60 billion if needed,” Coordinating Economic Minister Hatta Rajasa told reporters on Friday. The agreement was reached during his recent visit to Japan.

The economic corridors are defined as six economic development highways, mostly located along coastlines, which would connect centers of economic growth in five islands: Java, Sumatra, Kalimantan, Sulawesi and Papua.

Hatta said the first economic corridor, spreading along the east coast of Sumatra to the western part of Java, including Greater Jakarta and Banten, would comprise a total of 44 projects to be developed in two phases 14 projects in the period 2010-2014 and 30 projects in 2015-2025.

Hatta said the projects on the corridor would be developed using various financing schemes.

“Those projects may be financed purely by private sector or using the public-private partnership scheme,” he said, while mentioning coal fire power plants and railway transportations as two of projects would be financed by private sector

According to the Investment Coordinating Board (BKPM), five prioritized projects worth US$4.44 billion are ready to be offered to investors now: The Soekarno-Hatta Airport - Manggarai railway track ($735 million), the Tanah Ampo cruise terminal in Bali ($30 million), the Medan-Kualanamu tollroad in North Sumatra ($475 million), the Umbulan tapwater plant in Pasuruan, East Java ($200 million), and a large 3,000 MW coal-fired power plant in Central Java ($3 billion).

Vice President Boediono has declared those five projects as pioneer projects under the PPP scheme.

Hatta said a strong economic growth engine driven by strong export and investment flows had made Indonesia’s economy more stable.

“We have quite strong macro economy fundamentals,” he said.

However, he said, Indonesia should put more effort into infrastructure development.

“With rapid infrastructure development, we will have faster economic growth,” he said, adding that Indonesia should better promote the development of infrastructure and of the real sector.

The 14 projects proposed for the first phase of development in the first corridor are already listed and will comprise ports, bridges, and toll road developments.

These will include the renovation of the Dumai port in Riau province, the expansion of the Lampung-Panjang road in Lampung province, the developments of coal-fired power plants, provision of road infrastructure for mines and electricity infrastructure in North Sumatra, the renovation of Soekarno Hatta airport, the development of the long-awaited Manggarai-Soekarno Hatta railway, the development of the Lahat-Kertapati coal railway, the development of another coal railway in South Sumatra, the development of the Medan-Binjai toll road, the development of Kuala Namu airport in North Sumatra, the development of the Pekan Baru-Kandis toll road, the development of the 400-kilometer Medan-Pekanbaru road, and the development of the Belawan shipping line in North Sumatra.

Hatta said he would complete the master plan for the six corridors in three months as requested by the president. (ebf)