Indonesia set to abandon infrastructure schemes worth $19bn

Bedevilled by lack of progress, 14 major infrastructure schemes will be dropped by the government of Indonesia if they don’t pass certain tests next year.

On the block are railways in Kalimantan and South Sumatra, plus several airports and sea ports in Java. Altogether the schemes are worth $19bn.

The projects have until the third quarter in 2019 to show signs of movement or they will be struck off the government’s development plan, Indonesia’s chief economic minister Darmin Nasution said yesterday, reports Reuters.

That deadline coincides with the end of President Joko Widodo’s current term.

Infrastructure improvement is one of the president’s main economic policy platforms as the Indonesian economy wrestles with logistical pinch points.

However, 222 projects are still on the government’s list of "strategic projects".

The targeted projects "have land (acquisition) problems, investor problems, and even there are problems related to the feasibility of the project itself," Transportation Minister Budi Karya Sumadi told reporters.

Indonesia is struggling with its ambitious infrastructure plans. A lack of technical capacity was highlighted in February when the government halted all major transport projects after a spate of accidents. A subsequent report found that 80% of construction projects in the capital Jakarta were unsafe and breached regulations.

Reuters’ analysis points to concerns that state-owned companies delivering infrastructure projects are racking up large debts.

Bureaucratic hurdles may also be hampering progress.

Widodo’s flagship scheme – the country’s first high-speed railway, a $6bn, Chinese-funded and delivered link running between Jakarta and Bandung – was launched in January 2016 but work has been stalled by difficulties in acquiring the necessary land for the route.

That project has also been hit by funding delays. China Development Bank, which had agreed to cover 75% of the cost with loans, has repeatedly delayed disbursement of the funds, reports Nikkei Asian Review in a broader study of China’s Belt and Road Initiative.

Image: Indonesia’s President Joko Widodo after winning the election in 2014 (Wikimedia Commons)

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