[Kabar-indonesia] SMH: Indonesia tries to mend its ways [+Business Week]

[Joyo at aol.com]

also: Business Week: Indonesia seeks $22B for infrastructure

Sydney Morning Herald
November 2, 2006

Indonesia tries to mend its ways

caption: Going nowhere … the rusting pylons of an incomplete
monorail, another stalled Jakarta project.

By Arijit Ghosh and Wahyudi Soeriaatmadja in Jakarta

INDONESIA needs to attract $US22 billion ($28.6 billion) of
investment in roads, power plants and other infrastructure
each year to boost economic growth and create jobs but is
falling far short of that, says the nation's president,
Susilo Bambang Yudhoyono.

"Of all the challenges we face, infrastructure is on top of
the list," President Yudhoyono told investors in Jakarta
yesterday. "We all know the importance of infrastructure, it
reduces income inequality and regional disparities. Our
infrastructure problem is quite simple - there hasn't been
enough of it."

Efforts to lure investment have been stymied by regulations,
including rules that force companies planning to build ports
and airports to tie up with state-run firms that also act as
industry regulators. Mr Yudhoyono's two-year-old government
has struggled to meet pledges to streamline rules, eliminate
corruption and introduce more safeguards for foreign
investors.

The Government has estimated it needs to attract $US65
billion by 2010 to boost employment, reduce poverty and
increase economic growth. Foreign direct investment into
Indonesia fell 44 per cent in the first nine months of this
year, the country's Investment Co-ordinating Board said in a
report on October 12.

A year ago, the Government estimated it would need $US150
billion of investment by 2009. In 2005, it offered 91
projects valued at $US22.5 billion at its first
infrastructure investment conference. Of the six projects
that were eventually awarded, construction has started on
one.

"Although not all targets posed in the infrastructure summit
2005 have been met, we are learning from the challenges and
obstacles we faced," Boediono, Indonesia's economics
minister, said in a speech. "We are now more realistic and
understand that we must balance ambition with credibility."

At its second investment conference, which started yesterday
in Jakarta, Indonesia is offering investors 10 projects
valued at $US4.5 billion.

"It's encouraging to see that the Government has learnt some
lessons from what happened in 2005, keeping its objectives
attainable, ensuring that the projects are ready to roll and
also providing risk-sharing," Lim Su Sian, a Singapore
economist at DBS Group Holdings, said in an email.
Indonesia, which plans to offer as much as 500 trillion
rupiah ($71.5 billion) of road, railway and power projects
to investors in the next four years, would set aside 2
trillion rupiah in its budget next year to guarantee those
investments, National Planning Minister Paskah Suzetta said.

Indonesia also may compensate investors if demand for a
completed project falls short of government estimates,
according to a decree by Finance Minister Sri Mulyani
Indrawati. Investors may receive money or have operating
concessions extended if they face a delay in clearing land
for approved projects, according to the decree.

Bloomberg

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Business Week November `1, 2006

Indonesia seeks $22B for infrastructure

Indonesia's president appealed to foreign investors
Wednesday to pump US$22 billion (euro17.3 billion) into the
country's dilapidated roads, power plants and ports, saying
the vast capital injection is needed to tackle widespread
poverty and unemployment.

Susilo Bambang Yudhoyono made the remarks at the opening of
the three-day Indonesian Infrastructure Conference 2006,
attended by 1,060 foreign and domestic capitalists from more
than 30 countries.

Indonesia, the world's fourth largest country, is pitching
111 infrastructure projects, the largest being a US$1.5
billion (euro1.2 billion) fiber optic network and two coal-
fired power plants worth nearly US$2.48 billion (euro1.9
billion).

Jakarta hopes to find money for dozens of ports, toll roads,
water processing facilities, electricity plants and
transportation routes neglected for decades under the rule
of former dictator Suharto.

Observers see the meeting as an important gauge for the
government's ability to revitalize weak private investment
after a failed conference in January 2005.

Yudhoyono sought to shake off the nation's poor reputation
as a place of investment, arguing that reforms are weeding
out rampant corruption.

"Our anti-corruption campaign is advancing by the day,
reminding our officials, former officials and ordinary
citizens that no one is above the law," Yudhoyono said.

Associated Press

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