National strategic projects worth Rp4,666tn to be completed in 2024
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Proyek strategis nasional senilai Rp4.666 T rampung tahun 2024
13 April 2023
Jakarta - National strategic projects (PSNs) that were completed from 2016 to 31 March 2023 reached 156 projects with an investment value of Rp1,080.2 trillion. There are still PSN projects and programmes worth Rp4,666.2 trillion that must be completed next year as the total investment value of the 210 infrastructure projects and the 12 PSN programs reaches Rp5,746.4 trillion. 2024 is the deciding year.
President Joko Widodo wants to complete all remaining PSN projects and programmes before the end of his administration in 2024. “2024 is a critical point for PSNs as the President wants all projects to be completed in 2024. Hence, there will be no delayed projects,” Deputy for Coordination of Territorial Development and Spatial Layout of the Coordinating Ministry for Economic Affairs Wahyu Utomo said in Jakarta on Tuesday (11/4/2023) night.
He made the statement at the dissemination of the performance information of Coordinating Ministry for Economic Affairs in the first quarter of 2023 at the Coordinating Ministry for Economic Affairs Office with several media. The event that was hosted by Coordinating Ministry for Economic Affairs Secretary Susiwijono Moegiarso was also attended by Expert Staff for Regulation, Law Enforcement, and Economic Resilience Elen Setiadi and International Economic Cooperation Coordination Deputy Edi Prio Pambudi who talked about different topics.
However, Wahyu underlined that the PSN projects and programs worth Rp4,666.2 trillion that have not been completed have progressed to a certain stage, so they are not at zero. “There are several projects that have operated. There are also [several] that are in construction. So, there is an investment spent,” he added.
According to Wahyu, some of the projects and programmes have reached a progress of 30% and 60%. “For projects that must be completed in 2024, the progress has reached 60%. However, the construction progress of multi-year projects that are potentially completed after 2024 reaches around 30%,” he explained.
Wahyu who is also the Chairperson of the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) said that the minimum criteria of a project or a programme to be considered completed was that it has already reached a financial close, acquired a funding guarantee, and completed its permit. “If these three criteria have been fulfilled in 2024, there is a certainty that it will be completed [in 2026 at the latest],” he explained.
According to Wahyu, the list of PSNs was last updated at the end of 2022 with the issuance of Coordinating Minister for Economic Affairs Regulation Number 21/2022. Based on the coordinating minister regulation, there are 210 projects and 12 programmes that are PSNs that are estimated to have a total capital expenditure (capex) of Rp5,764.4 trillion. “The PSN projects cover 14 sectors, and there are 12 programmes,” he revealed.
The 14 sectors include roads (53 projects), dams and irrigation (56 projects), area (24 projects), railways (14 projects), plantation (1 project), energy (16 projects), clean water and sanitation (13 projects), airports (6 projects), tourism (1 project), education (1 project), seawall (1 project), technology (6 projects), and housing (2 projects).
Meanwhile, the 12 PSN programmes include the special economic zone (SEZ) programme, the sugar and palm oil industry programme, the smelter programme, the superhub programme, the electricity programme, the economic equality programme, the toll road exit access programme, the food provision programme, the strategic tourism area programme, the waste management installation programme, the border area programme, and the area development acceleration programme.
“The area development acceleration programme is the last programme, which includes IKN (Nusantara Capital City). IKN is included in the area development acceleration programme, excluding West Java, Central java, and East Java that have their own presidential regulations,” Wahyu stated.
A project is considered a PSN so that it can be realised in a short amount of time to improve economic growth through infrastructure development in Indonesia. In that effort, the government through Coordinating Ministry for Economic Affairs is initiating an acceleration mechanism to provide infrastructure and issue related regulations as the legal umbrella that regulates them.
Using the mechanism, KPPIP selects projects that are considered strategic and highly urgent to provide facilities for the implementation of the projects. With the facilities, the strategic projects are expected to be completed faster.
Completed projects
Wahyu mentioned that, until 31 March 2023, there were 156 projects worth Rp1,080.2 trillion that have been successfully completed. Meanwhile, 37 projects and 9 programmes are partially operating, 79 projects are in construction, 4 projects are in the transaction stage, and 43 projects and 3 programmes are in the preparation stage.
From January 2023 to 31 March 2023, there were 3 projects completed, 9 projects partially operating, and 3 projects completing the preparation stage. “This year, there are 30 national strategic projects worth Rp288 trillion that are set to be completed,” Wahyu said.
Meanwhile, last year, from the target to complete 25 projects, all were realised with an investment value of Rp320 trillion. Next year, KPPIP will set 31 projects to be completed with an investment value of Rp172 trillion (excluding industrial estates).
According to Wahyu, there were 22 projects that used the state budget (APBN), implemented the public-private partnership (PPP) scheme, and were state-owned enterprise (SOE) assignments worth Rp195.3 trillion in 2014. Some of the budget that reaches Rp29.7 trillion is provided by the APBN, excluding IKN as some of it has been realised until 2023. “The additional land procurements in fiscal year 2024 are predicted to reach Rp21 trillion,” he revealed.
KPPIP is targeting that there will be projects that will be completed after 2024, but their land, permit, and funding issues have been resolved. “PSNs that are set to be completed after 2024 reach 56 projects worth Rp1,963 trillion, excluding industrial estates. They include the continuity of JTTS (Trans-Sumatra toll road) project, East-West (EW) MRT, Jakarta LRT, and Cirebon-Semarang gas pipeline,” he stated.
Wahyu added that, in line with President Jokowi’s direction, there could be no delayed projects in the first half of 2024. His agency is currently reviewing potential projects to be continued. “We are trying so that no project is delayed. However, if we think that it cannot be realised, we will review it to decide if it has to be continued or not,” Wahyu said at the Coordinating Ministry for Economic Affairs Office on Wednesday (12/4/2023).
He said that the land procurement process was currently still a hinderance in PSN implementation. Wahyu said that the effort to procure lands was still hindered by consignment or the placement of compensation money at local district courts as the landowners do not agree with the amount of compensation offered by the committee.
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