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Indonesia targets $13.4 bln for 2010 infrastructure
Fri, Aug 21, 2009
Reuters

JAKARTA, Aug 21 (Reuters) - Indonesia plans to spend about 93.9 trillion rupiah ($13.4 billion) on infrastructure projects in 2010 including bridges, ports and roads, a senior planning official said on Friday, part of moves to improve ailing infrastructure and spur growth.

Southeast Asia's biggest economy needs to speed up investment in its poor infrastructure if it wants too boost growth rates and attract more investment, analysts say.

Years of under-investment and obstacles such as red tape have created a dire need in Indonesia for new power plants, ports, roads and airports that have increased the burden on the economy.

"The total capital spending of ministries and institutions for infrastructure in 2010 may reach about 65 trillion rupiah.

The remainder of the budget (about 29 trillion rupiah) will be used to revitalise some strategic industries," Dedy Supriadi Priatna, a deputy in charge of infrastructure at the national development planning agency, told Reuters.

The proposed budget, which is being debated by parliament before approval, is higher than this year's allocated public spending on infrastructure projects of more than 70 trillion rupiah.

"Some priority projects include roads, bridges, ports, power plants, dams, irrigation projects and water provision," said Priatna, who said the public works and transportation ministries would receive the biggest allocation.

President Susilo Bambang Yudhoyono said on Aug. 3 the increase in money going to both ministries was aimed at improving the quality of infrastructure and to sustain economic growth.

The government has forecast economic growth of 5 percent next year, slightly faster than the 4.3 growth forecast this year.

Some analysts, however, warned that budget disbursement needed to be more efficient to lift growth.

"For projects, what's important is not the target but the realisation. So even though the target has been increased, the remaining question is the absorption capacity," said Fauzi Ichsan, an economist at Standard Chartered Bank.

"Recurring problems such as land clearance need to be resolved. And we hope the human capacity in the regencies can be improved, not only technical capacity but also budgeting capacity," Ichsan added.

Priatna said budget disbursement for infrastructure projects had reached 20-30 percent on average as of mid-August, adding he expected the pace to pick up later in the year.

 

 
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