Joko gets building again

Joko gets building again

With his victory in the April polls confirmed by the elections commission on May 21, Indonesian President Joko Widodo is preparing to press ahead with an ambitious infrastructure drive in his second term, starting with 415 trillion rupiah (US$28.8 billion) allocated in the 2019 state budget.

The sum is a 1% increase from 410.7 trillion rupiah in 2018 and will be build, expand and revamp 2,007 kilometres of roads, 27,067km of bridges, 415.2km of railway tracks, 48 dams, an irrigation network and four new airports.

Mr Widodo and his running mate, the octogenarian Muslim cleric Mar'uf Amin, won 55.5% of the votes in the April 17 election. Prabowo Subianto and his vice-presidential candidate Sandiaga Uno won 45.5% votes and they are challenging the result in court, but observers believe their legal case is very weak. In any case it is still five months before the president will be sworn in for a new term that will run until 2024.

For the remainder of his first term in office, Mr Widodo and his cabinet are pushing through 223 infrastructure projects listed on the National Strategic Projects (PSN) register, said Wahyu Utomo, chairman of the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP).

"We aim to increase the phases of those projects by the third quarter of 2019 when this cabinet ends," he told Asia Focus. "Projects that are in the preparation phase will at least progress to the project tender phase, or even to the land acquisition phase."

As of May, the government had completed 77 projects, including a 140.9-kilometre stretch of toll road from Bakauheni port on the southern tip of Sumatra to Terbanggi in Lampung province, which is part of eight-section Trans Sumatra toll road system.

Other roads completed include one on Morotai Island; the 302km trans-Maluku road in Maluku province; and main roads connecting Palu and Parigi Moutong in Central Sulawesi, as well as the provincial capitals of Gorontalo and North Sulawesi provinces, also on the island of Sulawesi.

On May 20, the president also inaugurated the Rotiklot Dam in Belu district of East Nusa Tenggara province, near the border with Timor Leste. The dam can irrigate 139 hectares of land and will also be able to generate hydroelectric power and supply water to tourist attractions and households in Belu. The dam is one of the seven being built in the province.

"Most of the national projects are in the transport and water reservoir sectors, in accordance to the president's target to increase connectivity by building more roads, seaports, airports and railway tracks, while constructing dams is related to food security," Mr Wahyu said.

As well, he said, building and expanding airports in major tourist destinations is part of a plan to increase revenue from non-oil and gas sources.

"The government views that we can longer rely on the oil and gas revenue stream so we have to diversify to tourism, which is more sustainable," he said.

The government is looking to welcome between 18 million and 20 million foreign tourists this year, compared with 15.8 million last year, which was short of its target of 17 million. However, it was still a significant increase of 12.6% from 2017.

But developing new airports may not have the immediate economic impact expected. The Kertajati airport, located at Majalengka in West Java, has struggled since it opened in May 2018. Some airlines cancelled flights due to low demand while those that are still flying report very low occupancy. In fat, the airline operated at less than one percent of its annual capacity of 5 million passengers in its first year.

Even Vice President Jusuf Kalla has criticised the airport, saying a proper feasibility study was not done and the location is far from being strategic. The airport is located between two major cities with international airports, Jakarta and Bandung. It is about three-hour drive from Jakarta and 100km from Bandung, in a district with slightly more than 1.1 million people.

The administration's infrastructure drive aims to spur economic growth, which Mr Widodo ambitiously targeted at 7% annually when he first ran for office in 2014. Expansion has been around 5% annually ever since, and the government has set a 5.3% target this year. The Asian Development Bank projects Indonesia will grow by 5.2% this year and 5.3% next year.

"We will try to maintain what we have achieved so far. If this year we can achieve 5.3%, we expect to achieve 5.6% next year," chief economic minister Darmin Nasution said on May 23.

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