Infrastructure – Jokowi’s Challenge (Part 1 of 2) Scott Younger  ;  Director of Nusantara Infrastructure Tbk.

JAKARTA POST, 11 Maret 2015

                                                                                                                                     

                                                                                                                                                           

The new government, which is barely getting into its stride, very early established acceleration of the infrastructure requirement for the nation as a top priority, recognizing that tackling the fundamental issues of poverty and unemployment, the perennial bugbear of a developing country, greatly depended on providing good access, communications, power and water to its citizens. People’s expectations have been raised. A number of key projects, some outstanding for many years, have been once again emphasized for early attention and, for the long neglected maritime arena, a new strategy tabled. The acute power shortage is recognized in the need to push ahead with 35,000 MW of new coal-fired power station construction, especially to support the industrial heartland of Java and key industrial zones elsewhere, e.g. in Sumatra. The 2012 Land Acquisition Law recognized the inability of the long-standing prevailing law to resolve land acquisition disputes to allow infrastructure projects to proceed. Too many key projects were being stalled due to land disputes. However, the inability of the 2012 initiative to make a difference to this major obstacle in the infrastructure space has led to the recent land reform regulation, which is expected to at last allow a time limit to objections over land purchase for projects. One major project, the important 2,000 MW coal-fired power plant at Batang, Central Java, is now expected to proceed to completion as quickly as possible through application of the new regulation to overcome a land dispute that has held up completion for many months. The regulation will be used to speed up land acquisition conflicts for other major projects. For Jakarta, there are several obvious challenges on the transportation front not least the long overdue construction of the Soekarno-Hatta rail link and the monorail (first stage) in time for the 2018 Asian Games, particularly since it is unlikely that the important MRT project will be ready in time as a result of remaining land acquisition matters. There are also the continuing issues of water supply, sanitation and flooding, exacerbated by a sinking city in the north. The revocation of the 2004 Water Law, not a good move by the new administration, will be a disaster unless a suitable replacement is effected quickly. Water governance reform and the desperate need for investment will otherwise be brought to a halt and more people will suffer, especially the poor. The challenge altogether is daunting and the question is how can it be done, at least in part, under current administrative structures and the insufficiency of properly trained human resources, both in terms of quantity and quality. There is the additional challenge of how to successfully attract private sector interest and funding to top up the significant shortfall from government budgets, even following the significant first step towards removing fuel subsidies It is to be admired that the government has set ambitious targets, even though these cannot be achieved in a 5-year time frame. Some suggestions are proposed, however, which could make a difference, provide tangible results and a foundation for continuing onto meeting targets that will obviously take longer to realize. In macro-planning, divide the development needs for the Greater Jakarta conurbation from the rest of the country. In other words, there should be two government teams to address the often quite different political and administrative requirements of what will be the world’s outstanding meta-city from the sustainable economic development of the rest of the country. Both equally important, but offering different challenges. Adopt a much more proactive approach to the education and training of the country’s professionals and technical workforce. While this is also a serious worldwide issue, it is alarming that the country is currently short of over 100,000 professional engineers to address the needs of the huge infrastructure challenge. We have to attract more young people to enter engineering and scientific subjects and stay with and develop successful careers while building and maintaining the country’s foundations of growth, and being suitably rewarded such that the lures of the service industries do not take away the brightest and best. The challenge is only going to increase as we cope with the additional impact of the upcoming ASEAN Economic Community. It is important that the private sector experience and funding sources, national and international, be fully engaged along with the government in dealing with this serious challenge and any impediments to private sector involvement eased and ultimately removed. Improving the ease of company start-ups, often reflecting private individual initiative, through an one-stop facility at the Investment Coordinating Board (BKPM) is a step in the right direction, but more will need to be done. While the principle of Public-Private Partnership (PPP) is well understood and has been emphasized for project delivery in Indonesia over the past decade, implementation of key projects under this model has been more than disappointing, effectively still waiting to occur to the frustration of both public and private sector parties. When addressing the detail of preparing projects for PPP bid, it has gradually become clear that no one solution would fit all types of project and this was compounded by poor project preparation and inadequate regulatory and risk-reward structures. There is little doubt that the principle of PPP is valid for a good number of projects, although not all, but a fresh approach is needed. One idea that has been circulating in the corridors of power for some time has been the establishment of a cross-sectoral/cross ministry PPP Center, answerable to the highest levels of government. This should be able to work provided that the chief officers of the center espouse the right backgrounds and include experience from both public and private sectors and academia, where appropriate. Outputs must be clear, achievable and quickly implemented, with many of the technical and non-technical (e.g. legal) components of a given project dealt with in parallel to save time. One of the most promising plans that came out of the last administration in 2011, in my opinion, was the MP3EI, the 6-Corridor Masterplan for the sustainable equitable development of the archipelago. The masterplan recognized the important differences that make up the different regions of the country while underlining the issues that are common to all areas, e.g. infrastructure and education. It could also be used to stimulate provincial governments which, with regional implementation of development largely placed in the hands of district governments in 1998, largely left the provincial tier without an adequate mandate to raise the standards at regional provinces. There is a realization that this must change and it is time for governors and provincial governments to lead the charge. The MP3EI document made many good points and could well provide the framework for regional development without cutting across the strategies being laid out by the new government, e.g. maritime highway. ●