To improve Indonesia's productivity and
competitiveness in the global market competition, the Government of Indonesia
set infrastructure development as the new policy in the medium-term development
plan of 2015-2019. Infrastructure development aims to achieve economic growth
by maintaining regional economic growth. The Government of Indonesia
established several infrastructure development projects into national strategic
projects to improve economic growth.
An infrastructure development project will be
a national strategic project with the consideration that the project is
considered strategic and important to be completed in a short time and has a
goal to increase growth and equitable development in order to improve the
welfare of society and regional development. The Government is concerned and
will work towards the national strategic project with the aim of accelerating
the process of completion of the project in order to immediately promote
economic growth.
The main difference between a project
becoming a national strategic project and a regular project is the government's
attention to the project. National strategic projects will receive more attention
from the government through the granting of special facilities from the
government so that the project can be completed in a faster time. Implementers
of national strategic projects are the Central Government, Local Governments,
and/or business entities that have strategic characteristics.
The result of the national strategic project
will be the public goods provided by the Central Government to the public
society. The basic criteria of public goods that could be a national strategic
project and funded by the central government are to conform to the national or
regional medium-term development plan and the strategic plan of the
infrastructure sector and to conform to the spatial and regional plans. The
location of the national strategic project is in the region, as a result, the
project will be used in the region as a regional public good in the area where
the project is located and other areas in the vicinity.
Therefore, the public goods must fulfill
strategic criteria that have strategic role to the economy, social welfare,
defense and national security that contribution to regional GDP and national GDP, employment, socio-economic effect, and
environmental effect, have interconnection between infrastructure and inter-sector
sectors region or having complementary effects, and diversity of distribution
between islands or balancing between development in western and eastern part of
Indonesia.
Furthermore, the project should have
operational criteria in the form of proposed projects should have
pre-feasibility study and project investment value above Rp100 billion or the
project has a strategic role in encouraging the growth of the regional economy. Considering that the acceleration of
provision of priority infrastructure in an effective, efficient, timely manner
plays an important role in realizing the acceleration of economic growth to
realize the welfare of the people, the Government of Indonesia has stipulated
Presidential Regulation Number 75 of 2014 on Accelerating Provision of Priority
Infrastructure.
In
accordance with the regulation, priority infrastructure includes transportation
infrastructure, road infrastructure, irrigation infrastructure, drinking water
infrastructure, wastewater infrastructure, garbage facilities,
telecommunication and informatics infrastructure, electricity infrastructure, and
oil and gas infrastructure. With
the existence of the national strategic project, regional public goods can be
provided by the Central Government. The central government helps the transfer
of development from central to regional so that development is not only
concentrated in big cities. Thus the benefits of public goods can be felt by
the people who live in one area, but also the people who live around the area
so that the public goods have inter-regional links that are linked by the
public goods. It satisfies the principle of positive externalities of public
goods.
The Government of Indonesia has set 245
projects that become national strategic projects in Presidential Regulation
Number 58 of 2017. According to the Presidential Regulation, a national strategic
project is established which will produce public goods, both located in the
Central Government area of Jakarta, as well as in the vicinity of the capital
city of Jakarta, and other projects spread throughout the region in Indonesia.
Types of public goods built are toll roads, non-toll national roads, inter-city
railway infrastructure, railway infrastructure and facilities, airport
revitalization, new airport development, other strategic airport projects, new
port development and development capacity of ports, construction of oil
refineries, LPG gas pipelines and terminal projects, garbage energy
infrastructure projects, water supply projects, provision of communal
wastewater system infrastructure, construction of flood retaining embankments, trans
boundary postal development projects and supporting facilities, dam projects
and irrigation networks, increased broadband coverage, other strategic
infrastructure projects, construction of priority industrial zones and special
economic zones, tourism, smelter development, fisheries and marine projects,
electricity infrastructure development and aircraft industry projects.
Based on Committee for Acceleration of
Priority Infrastructure Delivery (KPPIP) data, up to the first semester of
2017, there are 26 National Strategic Projects (NSP) from various sectors that have been
successfully completed with total investment value reached Rp47 Trillion. In
addition, the Government has established a list of priority infrastructure
through the Regulation of the Coordinating Minister for Economic Affairs Number
12 of 2015 on the Acceleration of Preparation of Priority Infrastructure
consisting of 30 projects, which 43% are in construction and 10% in the
transaction stage as of June 2017 (KPPIP,
2017).
The national strategic project program that
generates regional public goods as the target of development by the Central
Government. Similarly, the funding mechanism of each project has been
determined by the Central Government, while its development can be implemented
by ministries or institutions or business entities. National strategic project
financing can be sourced from the State Revenue and Expenditure Budget;
Regional Revenue and Expenditure Budget; business entities through the
mechanism of cooperation between the government and business entities;
state-owned enterprises; regional owned enterprises; and/or other legitimate
sources of funds.
In accordance with Presidential Regulation
Number 58 of 2017, the Government has established projects and locations of
national strategic projects as many as 245 NSP and 2 electrical program and aircraft industry
program. To fund a national strategic project, the government has estimated the
required fund of Rp4,197 Trillion.
To close the financing, the Government conducted a joint cost so that the total
funds sourced from the state budget amounting to Rp525 Trillion, SOE amounting
to Rp1,258 Trillion,
and Private Rp2,414 Trillion (KPPIP, 2017).
NSP might use funds derived from the state
budget and other mechanisms outside the state budget. The funding mechanism
adopted by the Government in addition to using the state budget is through the
government's cooperation mechanisms with business entities, Non-Budget
Infrastructure Financing, and the Concept of Limited Concession Scheme (LCS).
Mechanisms other than the national budget use are taken so that infrastructure
development projects do not burden the state budget. Although project funding does not use the
national budget, however, infrastructure development projects are expected to
continue to operate and maintain accountability. The Central Government through
the Committee for Acceleration of Priority Infrastructure Delivery (KPIP)
oversees projects that have been targeted by national strategic projects.
The Government of Indonesia through the
Ministry of Finance already has a government agency assigned to finance
national strategic projects called the state asset management agency (LMAN).
LMAN is a work unit in the form of a public service agency that performs the
tasks and functions of state asset management by applying the financial
management of public service agencies.
One of the functions of the State asset
management agency as a public service agency under the Ministry of Finance is
to serve as a land bank. In carrying out its functions as a land bank, LMAN
finances land for infrastructure development to be used in NSP. Thus LMAN is the principal funding provider
for the procurement of strategic national project land whose funding is sourced
from state budget. Another
function of LMAN is to manage potential state assets to generate financial and
nonfinancial benefits and offer property solutions
(Lembaga Manajemen Aset Negara, 2018).
The existence of LMAN as supporting the task
of the Government of Indonesia to provide regional public goods with national
strategic character. The source of LMAN fund is derived from the state budget
through state equity
participation as a form of government investment. Funds provided by the
Government for LMAN from 2015 amount to Rp1.5 trillion; the year 2016 of Rp16
Trillion; the Year 2017 of Rp32.05 Trillion; the year 2018 of Rp35, 40 Trillion (Finance, 2017). The amount of funds provided by the central
government for LMAN funding shows the government's high attention to the
completion of national strategic projects in order to provide public goods.
Although the national strategic project
funding is implemented by the central government through LMAN, the project
positions are spread throughout Indonesia. To that end, the central government
is working with local governments to implement strategic projects that are
mostly located in the regions. The development of national strategic projects
in the regions is done to accelerate connectivity so as to grow new economic
centers and reduce logistics costs such as the construction of toll roads,
ports, and railways. The development result will be a regional public good
belonging to the central government.
Regional public goods that become national
strategic projects and funded by LMAN are among others toll roads, dams,
railways, and ports. Most of the new toll roads built are in the area. Total
LMAN-funded toll roads are 27 new toll roads with a total length of toll road
of 1,286.74 km with a total allocation of Rp 15.50 trillion in 2016, 2017 is
allocated Rp20.80 trillion and in 2017 Rp11.88 Trillion. The toll road segment
constructed is Pejagan-Pemalang segment; Bakauheni-Terbanggi Besar; Outer
Circle of Bogor; Manado-Bitung; Batang-Semarang; Semarang-Solo; Barrier-Trunk;
Gempol-Pasuruan; Bekasi-Cawang-Kampung Melayu; Cengkareng-Kunciran;
Cibitung-Cilincing; Balikpapan-Samarinda; Pandaan-Malang; Depok-Antasari;
Cimanggis-Cibitung; Kunciran-Serpong; Cinere-Serpong; Cinere-Jagorawi;
Soreang-Pasirkoja; Solo-Ngawi; Ngawi-Kertosono; Kertosono-Mojokerto;
Surabaya-Mojokerto; Medan-Binjai; High-Tebing Field; Palembang-Sp Indralaya;
and Pekanbaru-Kandis-Dumai (Lembaga Manajemen Aset Negara, 2018).
Besides toll roads, the national strategic
project funded by LMAN is a dam. The number of LMAN-funded dams amounts to 26
dams across Indonesia with a total area of 31.84 million m2. The
allocation of land acquisition for 2017 reached Rp2.22 Trillion. Dams to be
built include Keureuto, Aceh; Way Sekampung, Lampung; Lau Simeme, North
Sumatra; Three Dihaji, South Sumatra; Rukoh, Aceh; Margatiga, Lampung; Karian,
Banten; Ciawi, West Java; Sukamahi, West Java; Cipanas, West Java; Kuningan,
West Java; Leuwikeris, Ciamis, West Java; Gongseng, East Java; Pidekso, Central
Java; Tugu, East Java; Bener, Purworejo Central Java; Tapin, South Kalimantan;
Lolak, Bolaang Mongondow, North Sulawesi; Kuwil Kawangkoan, North Sulawesi;
Ladongi, Southeast Sulawesi; Passeloreng, South Sulawesi; Karalloe, South
Sulawesi; Tanju, Dompu, NTB; Sidan, Badung, Bali; Panukkulu, South Sulawesi;
and Way Apu, Buru, Maluku (Lembaga Manajemen Aset Negara, 2018).
In order for infrastructure development
projects not to burden the state budget, there are several alternative funding
for national strategic projects pursued by the Government of Indonesia. One of
the mechanisms taken by the Government of Indonesia is through the scheme of
cooperation between the Government and Business Entities or Public Private
Partnership (PPP). With the scheme, it is expected that the limited
availability of funds in the state budget could be overcome. To build
infrastructure projects, the government invites private parties to participate
in supporting development through funding of infrastructure projects.
To simplify the investment climate and
business implementation in Indonesia and support the ease of implementation of
the PPP, the Government of Indonesia has established policy reform and
developed the instruments needed to support the implementation of the PPP
scheme in Indonesia. The government seeks to support the implementation of the
PPP through fiscal reforms, namely to issue support in fiscal contributions
such as Viability Gap Funding (VGF), Availability Payment (AP), Land Revolving
Fund and risk allocation guidance as the basis for guarantee of project
implementation by one of the SOEs namely PT Penjaminan Indonesia Infrastructure
(PT PII).
To support the fiscal reform related to PPP,
the government also implemented institutional reform through the establishment
of several institutions that play a role in accelerating the provision of
infrastructure, namely the Committee for the Acceleration of Provision of
Priority Infrastructure (KPPIP). KPPIP was established to coordinate the
acceleration of priority infrastructure projects. The Indonesian government
also has a state-owned enterprise engaged in infrastructure financing, PT
Sarana Multi Infrastruktur (PT SMI). PT SMI is tasked to finance and build
infrastructure project preparation either through consultancy services or
infrastructure development projects in Indonesia. The existence of PT SMI is
expected to support the acceleration of infrastructure development with a focus
on the implementation of public-private partnership program by involving
various financial institutions both private and multilateral (PT
Sarana Multi Infrastruktur, 2018).
PT SMI has a subsidiary company called PT
Indonesia Infrastructure Finance (IIF) which was established to be a catalyst
in accelerating infrastructure development in Indonesia. In addition, PT IIF is
expected to increase private participation in financing infrastructure
development in Indonesia through the provision of fund-based products such as
long-term loans and non-fund based products such as guarantees and other
services related to infrastructure projects.
The next step of improvement made by the
Government of Indonesia to support the KPBU is the general regulatory reform
through arrangements in the acceleration of infrastructure development.
Government support through the reform of ease of conducting business in
Indonesia as well as supporting the ease of implementation of the above KPBU is
expected to facilitate and multiply the implementation of the KPBU in
Indonesia, which ultimately helps the provision of public goods in Indonesia.
Examples of the implementation of the KPBU are the Palapa Ring Broadband
Project The Western, Central and Eastern Package, which is the first Government
Business Entity (KPBU) project to implement an Availability Payment (AP)
scheme. Availability Payment also involves key strategic investors and
financial investors who can increase trust and confidence of other potential
investors to implement the KPBU project in Indonesia. Not only for investors,
the benefits are also felt by the Ministry of Communications and Information
Technology, with this project, transfers of knowledge from strategic investors
to Ministry of Communications and Information Technology and local investors.
In addition, the capacity of Ministry of Communications and Information
Technology can also be enhanced related to procurement of PPP projects with fiscal
support from the Government such as AP.
Another funding mechanism that does not
burden the State Budget is the Government's Non-Government Infrastructure
Financing (PINA). PINA is a Non-Government Financial Investment Financing that
raises alternative funding sources to contribute to financing strategic
infrastructure projects that have commercial value and have a positive impact
to improve the Indonesian economy (KPPIP, 2017). The PINA program is designed
to fill the funding deficiencies in priority infrastructure projects that
require large capital but are still considered commercially feasible.
Currently, the PINA program has succeeded in
pushing initial financing on nine toll roads worth Rp70 trillion, five of which
are Trans Java toll road. In this PINA pilot program, PT SMI and PT Taspen provide initial equity
financing to PT Waskita Toll Road amounting to Rp3.5 Trillion, bringing the
total equity to Rp9.5 Trillion out of the total requirement of Rp16 Trillion. To fund infrastructure projects but still not
burden the state budget, the Government of Indonesia seeks to seek alternative
funding mechanisms for the state budget. The new alternative that the
Government will take in infrastructure financing is the Limited Concession
Scheme (LCS). Through this scheme, the Government is expected to obtain fresh
money for infrastructure funding by optimizing existing infrastructure assets
through concession granting. LCS implementation tends to be easier to implement
given the short preparation time (about 6-18 months) and this scheme has been
successfully implemented in a number of countries formed a positive precedent
in the private sector. Details of the national strategic projects according to
Presidential Regulation Number 58 of 2017.
The high portion of funding for
infrastructure projects has benefited Indonesia's economic growth. The high
allocation of infrastructure expenditure in state budget during 2012 until 2016 has a positive
correlation with the increase of GDP as follows:
(Trillion Rupiah)
Year |
2012 |
2013 |
2014 |
2015 |
2016 |
Infrastructure Budget |
907,45 |
1.011,88 |
1.164,70 |
1.316,88 |
1.439,38 |
GDP Infrastructure Sector |
145,5 |
184,3 |
177,9 |
290,3 |
317,1 |
Source: KPIP Report January-June
2017
As one of the impacts of the massive
development in the infrastructure sector, Indonesia's economic growth in 2017
reached 5.19% and GDP per capita reached Rp51.89 million (Berau, 2018). A number of infrastructure-related sectors
have contributed to an increase in the growth rate of the construction industry
contributing 10.25% of total GDP with a growth rate of around 0.61% in the
first quarter of 2017 (KPIP report of first semester 2017). In more detail,
based on KPPIP report there is an indication that the development of projects
in the NSP list has driven the economy in the project development area
concerned. For instance, the regional economy in West Papua Province increasing
because of the regional public goods. With total investment value of NSP
reached Rp106 Trillion, West Papua Provincial regional GDP in the construction sector increased
significantly by 12.45% in 2014; 9.73% in 2015; and 9.77% in 2016 compared to
the average GDP growth in the national construction sector which is only in the
5% range (KPPIP, 2017). In addition, growth in the construction
sector grew higher than that of the West Papua Provincial GDRP in general which
grew by 5.44% in 2014; 4.1% in 2015; and 4.52% in 2016. For the labor sector,
the construction also showed employment in West Papua increased from 22,980
workers in February 2014 to 30,388 in August 2016 (KPPIP,
2017).
The high value of NSP investment located in
the region and into regional public goods, although still under construction,
has shown a positive effect of increasing GDP growth in other regions, for
example in East Java Province with total investment value of Rp83.4 Trillion
growing 5, 4% in 2014; 3.6% in 2015 and 5.07% in 2016. Meanwhile, Central Java
Province with the total investment value of NSP which has entered construction
phase worth Rp44.3 Trillion grew 4.38% in 2014; 6% by 2015; and 6.88% in 2016. GDP growth shows the benefits of regional
goods, even though the projects are under construction. Thus, if regional public
goods have been completed, it will have potential benefits for the regions,
both in terms of increasing the regional GDP as well as from the use of regional public
goods and the economic impact of the implementation of NSP is also expected to be
more felt for the community.
The Government of Indonesia has a new policy
of massive infrastructure development aimed at achieving economic independence
while maintaining that regional economic sectors can continue to advance and
support the economic movement of the central government. Some infrastructure
projects become national strategic projects with the consideration that the
project is considered strategic and important to be completed in a short time
and aims to increase growth and even distribution of development.
The result of the national strategic project
will be the public goods provided by the Central Government to all the people.
Most locations of national strategic projects are located in the regions and
will become regional public goods used in the region.
The high portion of funding for infrastructure projects has benefited
Indonesia's economic growth. As one of the impacts of the massive development
in the infrastructure sector, Indonesia's economic growth in 2017 reached 5.19%
and GDP per capita reached Rp51.89 million.
Penulis:
Hendro Nugroho, Kepala Seksi Informasi, Bidang Kepatuhan Internal, Hukum dan
Informasi, Kantor Wilayah DJKN Sulawesi Selatan, Tenggara, dan Barat
(KPPIP), C. f. (2017). KPPIP Report January-June. Jakarta.
Presidential Regulation Number 58 of 2017. (2017, June 15). Jakarta.
Berau, I. S. (n.d.). Badan Pusat Statistik. Retrieved March, 2018
from Badan Pusat Statistik:
https://www.bps.go.id/subject/169/produk-domestik-bruto--pengeluaran-.html#subjekViewTab3
Finance, M. o. (2017). Government Financial Report. Jakarta:
Ministry of Finance.
Indonesia, G. o. (2014, July 17). Presidential Regulation Number 75 of
2014 . Jakarta.
KPPIP. (n.d.). Retrieved March, 2018 from Komite Percepatan Penyediaan
Infrastruktur Prioritas: https://kppip.go.id/proyek-strategis-nasional/
Lembaga Manajemen Aset Negara. (n.d.). Retrieved
March, 2018 from Lembaga Manajemen Aset Negara: http://lman.kemenkeu.go.id/lman/pendanaan.xhtml