Where will all the money come from?
LIKE many politicians, President Joko Widodo of Indonesia (known as Jokowi) enjoys being seen in a hard hat. On April 23rd he tweeted a photo of himself resplendent in a gleaming white one to his 10m followers while visiting the site of a future airport in Central Java. The previous week he posted several photos of his trip to another airport being built, this time in West Java, complete with a hat and an orange construction vest. (Pictured is Jokowi on yet another such outing, to a mass-transit railway project in Jakarta last year.) More surprisingly for a head of state, many responses to these tweets have been broadly positive. The overwhelming impression among Indonesians is that their president gets shovels into the ground, as well as inspecting their use before cameras.
After years of relative neglect, the amount Indonesia spends on roads, railways, energy plants and the like has surged. Jokowi’s predecessors promised much but delivered little. But after he took office in 2014, Jokowi took advantage of a fall in the oil price to put a cap on an expensive fuel subsidy provided by the government. This gave him more fiscal leeway to splurge on infrastructure projects. In that year 178trn Indonesian rupiah ($15bn) were allocated to infrastructure in the state budget. By 2017 the amount earmarked was more than double that. Jokowi’s government has plans for 222 “national strategic projects” involving roads, railways, bridges, power stations and much else. Of these, 127 are under construction and over 20 have been completed. This year’s budget calls for 856km of new roads to be built across the archipelago.
The spending, sorely needed, has boosted Jokowi’s popularity. According to a survey in 2017 by the ISEAS Institute in Singapore, nearly three-quarters of Indonesians approved of his efforts, with rural dwellers particularly keen on them. Sometimes he gets credit where it is not due. In Medan, the capital of North Sumatra, a new railway line between the city’s main station and the airport has turned a journey that can take several hours by car to one of only 55 minutes. The railway opened in 2013 under the previous president, but a banner in the station shows a white-shirted Jokowi going through the ticket gates. On the train, a video shows him shaking commuters’ hands. People waiting at the station express approval of Jokowi and say the railway is an example of what he has done.
It is easy to see why Jokowi’s projects are so popular. Many of the roads on and between Indonesia’s 13,000 islands are still terrible, having been all but ignored for decades under the highly centralised government of Suharto, Indonesia’s president for three decades until 1998. In parts of rural South Sulawesi, for example, endless potholes make for bone-rattling bus rides. The capital desperately needs work on its sewer system. In 2016 the city’s head of planning estimated that only 4% of Jakarta’s 10m residents had access to it. The rest flush into drains through which the waste flows untreated.
But even if Jokowi wins a second term as president in 2019, which looks likely, it may be hard for him to ensure that these ambitious projects get finished. Complex regulations do not help. Each sector—roads, energy and so on—has its own laws and regulatory bodies related to procurement and drawing up contracts, says Jeffrey Delmon, an infrastructure specialist at the World Bank. So each has a different way of doing things.
Indonesia also suffers from a shortage of skilled labour and poor safety on construction sites. On April 17th two people were killed by the collapse of a bridge in East Java and of an overpass being built in North Sulawesi. Earlier this year an internal footbridge in the Jakarta Stock Exchange caved in, injuring over 70 people. In Jakarta alone there were 10% more construction accidents last year than in 2016. Acquiring land is tricky, too. Plans for a China-backed high-speed railway between Jakarta and Bandung, a city in West Java, have been held up for two years, partly because it is costly and complicated to move so many people on one of the most densely populated islands in the world.
The government’s big hand
Jokowi’s eagerness to get projects off the ground has also introduced another problem: an over-reliance on state firms. Although China and India in particular appear eager to invest in the archipelago, many private investors only want to back projects in Java, the most populous island, rather than in rural parts. Despite Jokowi’s pledge to ensure that only a third of infrastructure is publicly funded, government money is still being used extensively. By one estimate, state enterprises are currently involved in 80% of the projects in some shape or form. According to data from the World Bank, private investment only made up 9% of total investment in infrastructure in 2011-15, down from 19% in 2006-10.
At the mayor’s office in Medan, Ridho Siregar, an employee there, praises Jokowi’s infrastructure binge. In the past few years new highways, bridges and dams have helped to transform the city, the fourth-biggest in the Indonesian archipelago. But the official admits there is an awful lot to do. “Especially for the highways, it’s a bit late,” he says.
permasalahan regulasi memang menjadi masalah makanya ada usaha serius untuk menyerderhanakan regulasi di birokrasi sekarang