Indonesia is drafting up ambitious plans to reinvigorate the country's economic infrastructure via multiple construction and transportation projects that total up to over US$400 billion.
JAKARTA: Indonesia is drafting ambitious plans for more than US$400 billion in building projects, from constructing 25 airports to new power plants, as the government seeks to stoke growth in Southeast Asia’s largest economy, according to the country’s planning minister.
‘The only way for Indonesia to have higher economic growth is connectivity,’ Brodjonegoro said in Jakarta. ‘We are planning to establish the equivalent of a highway for the skies by building airstrips or smaller airports for connectivity’ in remote areas such as the Papua region, he said. Despite the potential benefits, massive projects have been challenging for the government to finance in recent years, partly due to low tax compliance in Indonesia and weak commodity prices that have strained the state budget. Several projects have been shelved or delayed, even as bodies including the World Bank have warned of a massive infrastructure gap limiting economic growth.
The proposed investments exceed the US$350 billion infrastructure drive — then the largest in the nation’s history — set during Jokowi’s first term. The new spending plan is equivalent to about 5.7% of gross domestic product from 2020 to 2024, during which the government has targeted economic growth of 5.4% to 6%, according to the draft of the proposal. The government is open to the possibility of financing some projects through debt, Brodjonegoro said.
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