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Indonesia’s key infrastructure projects remain on schedule in 2019

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The Cileunyi-Sumedang-Dawuan Toll Road in West Java, Indonesia, is currently under construction and expected to be completed this year. MINISTRY OF PUBLIC WORKS AND PUBLIC HOUSING OF THE REPUBLIC OF INDONESIA

Indonesia’s key infrastructure projects remain on schedule in 2019

Although a number of Indonesia’s infrastructure projects were delayed as investors worried that the presidential and legislative elections in April would cause political instability, many key infrastructure projects were completed on time.

The Committee for the Acceleration of Priority Infrastructure Delivery (KPPIP) recently published data showing that at least 30 national strategic projects (PSN) with a total value of 165.3 trillion rupiah ($11.9 billion) were completed – and ran smoothly – last year.

The 30 completed PSN projects consisted of four airports, four water reservoirs, nine roads (toll roads and national roads), six special economic zones (SEZs), two train projects, one seaport, two smelters and two technology-related projects, said Wahyu Utomo, the head of KPPIP’s implementation team, on December 26.

The road projects included the 140.9km Bakauheni to Terbanggi Besar toll road and the 100km Terbanggi Besar to Pematang Panggang toll road, which are part of the Trans-Sumatra network.

Other major completed toll roads include the 36.4km Jakarta to Cikampek II elevated toll road and the 231.84km Morotai Ring Road. Non-road projects include the Kertajati Airport, Syamsuddin Noor Airport, Tjilik Riwut Airport, Palapa Ring Broadband project and the Bitung and Morotai SEZ development.

Wahyu said with the completion of these projects last year, the government had finished 92 national strategic projects out of the 223 projects undertaken between 2016 and 2019.

‘The biggest problems’

Wahyu said many infrastructure projects were hampered by overlapping regulations, which made permits for infrastructure development difficult to obtain.

Wahyu suggested several points to be improved to accelerate infrastructure development and the ease of doing business – more straightforward project document preparation, more financing alternatives and improved human resource quality.

“Based on our experience [over the last four years], overlapping regulations are among the biggest problems,” he said, adding that he hoped such difficulties would be resolved through the issuance of an omnibus law currently being prepared.

Separately, data from the Public Works and Public Housing Ministry showed that from 2015 to 2019, the government had built 1,500km of new toll roads, 3,867km of new roads, 58,346km of new bridges and 61 water reservoirs.

Nationwide cement sales declined slightly, by 0.34 per cent year-on-year, to 63.23 million tonnes as of November. Although cement sales actually picked up in the second half of the year, the postponement of several infrastructure projects in the first half as a result of the elections led to an overall decline in annual sales.

Delays to a number of infrastructure projects also affected state-owned construction firms. PT PP, for example, lowered its 2019 contract targets to 45 trillion rupiah from 50.3 trillion rupiah as a result of project delays, president director Lukman Hidayat told the press in October.

State-owned construction firm PT Waskita Karya revised its new contract target to 45 trillion rupiah from 55 trillion rupiah, said operational director II Bambang Rianto.

Even though it remained optimistic that it could still reach its new contract target, state-owned construction firm PT Wijaya Karya’s (Wika) annual revenue declined.

During the first nine months of this year, Wika’s revenue fell by 12.89 per cent year-on-year to 18.3 trillion rupiah due to decreasing earnings from infrastructure, buildings, energy and industrial plants and industry segments. Despite the lower revenue, Wika still managed to book a 48.3 per cent year-on-year increase in net profit of 1.57 trillion rupiah over the period.

State-owned Jasa Marga suffered a similar decline. It booked 21.15 trillion rupiah in revenue as of September, down by 22.76 per cent year-on-year. Finance director Donny Arsal said the decrease was caused by declining construction revenue.

Publicly listed toll road operator Jasa Marga’s net profit also dropped by 15.18 per cent year-on-year to 1.5 trillion rupiah in the first nine months of this year.

Wika’s share prices grew by 18 per cent last year, while Jasa Marga’s share prices grew by 25.58 per cent year-to-date as of December 23.

The performances of their shares were much better than those of PT PP, Waskita Karya and Adhi Karya, all of which were in the red.

Infrastructure development will still be a major focus of government next year and over the next five years. To support infrastructure development, the government has allocated 430 trillion rupiah in the 2020 state budget, higher than the 420 trillion rupiah allocated for the 2019 state budget.

THE JAKARTA POST/ASIA NEWS NETWORK

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