Indonesia plans $70bn toll-road programme to knit vast territory together

The newly-re-elected government of Indonesian President Joko Widodo has announced plans for an unprecedented programme of toll-road building to cut journey times on the world’s largest archipelago.

The country will ask the private sector to fund a $70bn investment in 5,400km-worth of new highways by 2024, which would nearly triple the length of the country’s current road network.

Shares in an Indonesian toll-road company and state-owned contractors jumped on the news.

Danang Parikesit, head of the country’s toll-road regulator, told Bloomberg that the government wants to cut the cost and time of transport around the country’s 17,000 islands to boost economic growth. 

"Infrastructure will grow rapidly and faster than before," he said, adding the government would seek private funding because it cannot foot the bill itself.

The funding-and-building spree could put pressure on Indonesian banks’ liquidity, one analyst told Bloomberg.

More than half the new roads would be built on the huge island of Sumatra, where connections between the two ends are currently poor.

A professor of civil engineering, Danang Parikesit said the regulator is also studying the possibility of building a bridge from peninsular Malaysia to Sumatra, and a bridge connecting Singapore to Bintan island.

Shares in toll road operator PT Jasa Marga gained 5.6% on the news, while state-owned construction firms saw smaller hikes, Bloomberg said.

Joko Widodo’s party PDI-P won 55.5% of the vote in April’s general election.

Image: Mount Semeru and Mount Bromo in East Java, Indonesia (Riza Nugraha/CC BY 2.0)

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