Govt seeks investors in London, Paris

Marchio Irfan Gorbiano



The government is offering numerous infrastructure projects worth US$90 billion to foreign investors in an effort to further increase the participation of the private sector.

National Development Planning Minister Bambang Brodjonegoro, who recently led delegates to London and Paris, said the offers were met with a positive response.

Bambang went on a roadshow along with Bank Indonesia (BI) Governor Perry Warjiyo and Investment Coordinating Board (BKPM) chairman Thomas Lembong.

They showcased investment opportunities in Indonesia’s infrastructure sector to foreign investors during Indonesia Infrastructure Investment Forum (IIIF) 2019 in London, United Kingdom and Paris, France.

Speaking to reporters via conference call from London, Bambang said the government utilized the opportunities presented by IIIF to brief potential investors of projects executed under public-private partnership (PPP) schemes and non-state-budget infrastructure funding (PINA).

He said there was increasing interest from British people to invest in Indonesia, which was partially driven by their desire to diversify their investment destinations because of the UK’s planned exit from the European Union, popularly known as Brexit.

“We are increasing interest from British [investors]. As one of the world’s financial hubs, the UK needs to continue diversifying its investments,” said Bambang recently. “When Brexit occurs, we hope to capitalize on the potential to lure more investments from the UK to Indonesia.”

Bambang said the recent conclusion of an electoral dispute, over which the Constitutional Court ruled in favor of President Joko “Jokowi” Widodo and his running mate Ma’ruf Amin, alos have a sense of optimism and certainty to the investors who attended the IIIF.

The IIIF also marked the first time the government unveiled its next phase for infrastructure development for the period from 2020 to 2024 to foreign investors, said Bambang.

In the forum, the government offered up to 83 projects worth $40 billion under the PPP schemes, while as many as 30 projects under the PINA scheme worth $50 billion were also offered to the potential investors.

The offered projects to be developed with the private sector under the PPP or PINA schemes were varied, said Bambang, including toll roads, airports, power plants clean water facilities and seaports, among others.

Despite the supposed focus on human capital infrastructure in Jokowi’s second term, his administration’s infrastructure drive – one of Jokowi’s signature policies in his first term – showed no signs of slowing.

The National Development Planning Agency (Bappenas) estimated that the country needs up to $429.7 billion, an amount equal to 6.1 percent of GDP, invested in infrastructure between 2020 and 2024.

The figure was a 20 percent increase from the $359.3 billion needed for infrastructure between 2015 and 2019 that the Bappenas previously estimated.

Such investments were required to increase the share of the infrastructure sector to GDP from 43 percent in 2017 to 50 percent in 2024.

The private sector was expected to take up the lion’s share of the projected investment financing as the government was expected to only distribute between 11.6 percent and 13.8 percent to the overall financing needs, while state-owned enterprises were expected to only contribute between 7.6 and 7.9 percent.

Bank Central Asia (BCA) chief economist David Sumual called on the government to accelerate its structural reforms if Indonesia wanted to compete with its neighbors, such as Malaysia, Vietnam and Thailand, in attracting more foreign direct investment.

“We are on the right track but we have to accelerate the reforms,” said David, citing as an example the need for the central government to step up its coordination with regional governments to ensure smoother investment realization.