Speeding Up Infrastructure Investment
Selasa, 14 Mei 2013 | 09:45
These days, infrastructure projects which are either controlled by the government or the private sector are being in the spotlight. The projects are the Trans-Sumatra Toll Road, Sunda Strait Bridge, Trans-Java toll road, ports, and the renovation of the Soekarno Hatta airport, along with the construction of the airport railway, as well as renewal projects in several major city airports. These are just some projects from many other projects that are still in the planning and assessment phase.
The concern includes financing issue, such as a proposal to form a special bank to support infrastructure projects.
In framework of the Master Plan for the Acceleration and Expansion of Indonesian Economic Development or MP3EI, the budget to accelerate infrastructure is exceeding IDR600 trillion. Obviously, we would remind that this is a very important and strategic issue.
Infrastructure investment is a must. Not merely because the government under the leadership of President Susilo Bambang Yudhoyono has committed to give adequate infrastructures, but it is for the sake of momentum growth.
We know, the Yudhoyono administration, has held two national conventions, namely Infrastructure Summit. Since then, the issue on the acceleration in infrastructure development is constantly adorning the media, including constraints that covering the projects.
The government finally managed to overcome one obstacle, which is considered the most important, following the passage of the Land Acquisition Act related infrastructure projects. In addition, various debottlenecking efforts have been made, including incentives for the construction of infrastructure projects to the private sector.
Thus, the door is widely open, which then it will provide the acceleration of infrastructure projects that are awaited by many investors, business people, and public as the users.
It is clear that the efforts that have been done are not a little, but these are not enough. It is also clear that infrastructure facilities are always left behind by the pace of economic growth itself.
It also explains why the rate of economic growth should be greater than the current level of 6%, but it is always held back by fears on unsustainable economy if we drive at fast move.
Then, there is a so-called moderate growth term from various policy instruments that seem restricting economic activities, such as credit restriction and down-payment policy. Since, those tend to be anti-business policies.
Indeed, the economic growth issue is not that simple. When the economy keeps pacing, where Indonesia is among the countries with the best economic performance in the world after China-and occasionally India-the inflation keeps overshadowing as the gap on infrastructure provision still exists.
Lately, the rate of inflation is considered worrisome, though still remains the best among the Indonesian economic history which had posted double-digit inflation. The inflation had even exceeded 70% during the 1997/1998 economic crisis.
The concern on inflation was mainly driven by the prices of basic needs due to distribution problems, and partly because of the trade system issues. Fortunately, the central bank is no longer adheres to the orthodox policy: not necessarily following the risk of inflation with higher interest rates.
Obviously this is the right move, considering any increase in interest rates being done will hamper the economic growth, pressuring the consumers, employment, and poverty rate.
Therefore, Bank Indonesia’s policy making measures and style which has been on the right track, should be followed by government’s seriousness in spurring the infrastructure, in order to further unravel the economic blockage which triggers inefficiencies and risk of inflation. If this happens, it’s possible that the economic growth rate keeps increasing without needing to worry over the risk of inflation.
The recently resounding infrastructure acceleration cannot be negotiable. And this is in line, indeed, with the effort to eliminate misleading fuel subsidies to consumers, in which the funds can be reallocated to infrastructure support.
Besides to provide a more fundamental basis for sustainable economic performance, the availability of adequate infrastructure will withstand the long-term economic threat. (T03/T07/aph)